Wednesday, January 23, 2008

The Shorts Get Squeezed

I have a hard time going back on a day like today and making sense of my trades.

I mean it's tough to remember that at 12:30, it felt like we would be dining in hell again.

Just a few short hours later, people are ready to max out their credit cards and buy properties in Florida.

The stock market is filled with humor if you look at it in the right way. Basically, people are silly. "Human nature" is hilarious.

Anyway, the good news for me is that I didn't wait for the big afternoon rally to start making money. I was up $2000 by 10:30 due largely to an unbelievable long in FED.



This was a good and bad trade for me. Good in that I held 200 shares for the full 4 point move. Bad in that I sold out of another 500 shares between $32.40 and $32.80. But looking at the positives, I caught this one right.

You'll recall that a couple of days ago I posted stocks with high short interests. These were the stocks I was focusing on should we get a rally. This strategy really paid off. I know loads of stocks ripped today, but the moves in FED, JLL, CNS and ABK were ridiculous. Just having it in the back of my head that these stocks had heavy short interests helped my confidence level when trading them.

In short, my recent focus on research seems to be paying off in terms of helping my confidence level. I'll keep at it and the lame "good morning" posts.

So I sat on my $2000 early morning gain for the better part of the day. I churned a bit making a losing money, but not too bad. After giving back in the middle of the day recently, I cut my size so I wouldn't get too hurt.

The afternoon rally worked like this. At first, it really started on low volume and I was only a little involved. but take a look at the volume spike at 2:50 or so...



That spike told me not to worry too much about the 1x2 quotes on my screen. There were robots buying the market. They didn't show up in individual stock quotes, but they were there buying stocks with abandon.

So I started buying stocks with abandon. Not really... I'm still taking it easy... but I bought enough for now.

My two best afternoon trades were in OMG and JLL.

OMG was a break of the downtrend play. Here's a 30 minute graph where it shows up nicely.



I picked it up around $51.25 or so. It was a choppy trade, so I got shaken out a few times and had to reenter. It was pretty, but I made $700.

JLL was also a downtrend play, but it had the added benefit of being a short-squeeze play.

Here's the daily.



Unfortunately, I only had a couple hundred shares of this one. This stock trades thinly and frankly, it freaks me out a little. So, I took it easy.

Anyway, like I said in the VO post, I have a feeling trading could relax a bit up until FED day next Wednesday. That's not saying too much though since trade has been absolutely nuts. I just don't think we'll be trading over 2.5 billion on the NYSE again for awhile and I also think the VIX has topped out for awhile.

Still, it's earnings season and there's still lots of uncertainty and headline risk. Should be plenty of opportunities.

Here's the stats:
P&L, $6442
Best, FED, $1677
Worst, MEE, -$119

45,600 shares traded.
34 stocks traded. 25 winners, 9 losers

8 comments:

artha said...

Hi DT,

Very nice! I'm glad to see you doing well.

In several of your posts, you mentioned communicating with your virtual coworkers. Do you do that via IM or chat room?

Keep up the good work.

-artha

Bluedog said...

DT,

Nice work amigo!!! This market is a daytrader's paradise.

-BD

StockHunter said...

yahtzeee! a Velociraptor in a T-rex's shoes...
Very nice DT!

NOW, just don't let this get over your head bro!

MIsstrade said...

Good to see the Baton has been passed while MT is on vacation!! Keep up the good work!!!

mrkcbill said...

Good stuff. That ME is one tough sumbitch

Sanglucci said...

DT man I'ma tryna b like you! You still a herb tho... haha

Dinosaur Trader said...

I fell asleep last night at 8:30... thus, the late response.

Thanks guys (and gal).

-DT

Dinosaur Trader said...

artha,

We have a chat room. But unfortunately, it's only open to the office members.

-DT