Wednesday, January 30, 2008

Ben Bernanke Scares The Stock Market

Let's just forget about the whole first part of the day. I traded very lightly and was up about $200.

Then, the FED cut rates and the market freaked out.

I generally trade FED days very lightly. While I like to trade when the market is volatile, the FED days typically have this "the market is going to the moon/the market is going straight to hell" type of feel to them that I just can't trade.

Mostly because the market takes the round trip from the moon and back to hell in under 5 minutes.

The fills are often horrible.

So, even after the cut, I traded with small size. I'll detail my trades in one stock, SKF. Readers of "the Fly's" blog know that yesterday I bought some in my LT account at $100.04. I figured, if I lost in the trade I could harass "the Fly" about it forever, and if I made money in the trade, it was its own reward. A win-win situation if you will...

Anyway, these were daytrades though. Completely separate from my LT account. I'll hold that position until the end of the bear market... or 2010.

2:20 Buy 100 @ $97.24
2:26 Sell 100 @ $96.01 (the low of the move on a sell-stop @ $96.50... some fill!)
2:37 Short 200 @ $99.76
2:39 Buy 200 @ $98.77
3:08 Buy 200 @ $95.25
3:09 Sell 100 @ $95.47
3:13 Sell 100 @ $96.83

So as you can see, I left dollars and dollars on the table on both sides of most of these trades. Still, I managed to make $250 in the stock. But man, if only I wasn't so damned skittish.

The reason why I didn't catch the move from 3:20 on was simply because I was waiting for a pullback to enter. This is also why I missed a lot of short opportunities in other stocks. I looked at the SPY and thought we'd maybe form a Head and Shoulders formation before heading lower. Instead, the market traded lower violently and quickly, chopping off the dudes arm.

And like they say in Afghanistan, no arm, no shoulder. Okay, that was in poor taste... let's move on.

So I missed the move. It's too bad, but I didn't want to chase. I knew that it was very possible that the market could moonshot again and I wasn't looking to get squeezed.

After this move, I think it's safe to start trading again with some size. The volatility appears to be back. Since Thursday of last week I've been taking it easy. Hopefully now the volume will come back to the market and trading will be good.

I'm going to get a lot of sleep tonight (after watching the Republican debate) and be at the desk early.

Here's the stats:
P&L, $421
Best, SKF, $251
Worst, CBI, -$97

15,600 shares traded.
16 stocks traded. 10 winners, 6 losers.

NOTE: Expect an "around the house" post about me and a valet parking dictator named "Romeo" to drop today or tomorrow.


Bluedog said...


What's your market sentiment now, post cut? Are you trimming back any longs?

I sold some NYX today and created a Bull Call Spread to manage some of my risk. It'll be interesting when GOOG, ICE and NDAQ report tomorrow.


Dinosaur Trader said...


I've been bearish since September... that hasn't changed. In my LT account I sold out of my GAIA and now only have HCBK (still up 10% there, ironically) and SKF.

I'm happy we're "on the move" again.


Bluedog said...


Thanks. I'm unwinding my NYX position a little to get more liquid. You have to be able to move in this environment to take advantage of the hills and valleys. Have you been watching TBSI, DRYS, EXM, etc.? They're waking up!