Thursday, January 17, 2008

Superchunk, "Driveway to Driveway"

Back to the college years again...

Recession Fears Spur Market Volatility

That title has to gain me at least a couple of Google search hits, no?

Anyway, I had a tough day. It started with the huge freakout in all the mortgage insurers... the ABK, MBI, PMI and RDNs of the world. Looks like they're all going bankrupt. Amazing. I can't even imagine what happens when they all go bankrupt at once.

If any of you know, please fill me in via the comments section.

I wasn't trading any of these stocks. Instead, I was watching them and listening to how my office was making money shorting XL.

I guess there's some relationship. As you can see, XL dropped 10 points in 30 minutes, or, it lost about 20% of its value at the open. Amazing. I decided to look for stocks in the same business as XL, reinsurance. I felt I had missed the trade in XL, but I figured I could find a stock that would offer up some "pin action." I found PRE.

The stock squeezed my face off very quickly. In fact, too quickly for me to react properly. I was short 400 shares and out of the money a point faster than you can say, "PRE ripped my face off." It was a difficult way to start a volatile day.

Eventually, PRE dropped and I was short around 11:30 and made my money back. I ended up $4 in the stock. Remarkable.

My trade of the day was in MOS. It was a very quick trade. I bought at $78.18 just around noon and sold a point and a half higher in a manner of minutes. Pure momentum. In a market like this, you can't always wait for the perfect setups. Sometimes you just have to go for it if you feel a momentum change.

Of course, trading like that also means you'll take some lumps. That leads me to discuss my worst stock of the day.

To be honest, I didn't even know about the news that hit in the morning. I'm still not "entitled" to news on Esignal with my new company. I'm working on getting it, but for now, I'm somewhat in the dark when I make quick trades. I just don't have the time to switch over to Yahoo and find the news. Whatever. The reason I lost money in PCR is that I was caught long right before the big drop at 3:20 or so. In fact, I was very long stock at that time because it seemed a break to the upside was imminent on the futures.

Here's what they looked like when I was getting long. Looked to me like they had started showing good upside volume and that volume was weaker on the pullbacks. They were holding a trendline, so I started loading up expecting a reaction bottom.

However, take a look below and you'll see what they looked like just 10 minutes later.

Not sure how clear that is, but the futures dropped 15 points in 10 or 15 minutes. That's a precipitous and fast drop. If you were caught long (as I was) you took some pain. I lost over half my day in that 15 minutes.

But I was happy with my gains. I'm also happy that I pressed my bets a bit there at the end. It's true, I lost, however soon that short term bottom will come. A lot of money will be made in 5 or 10 minutes for those who are long. I cut my losses as quickly as I could and called it a day.

Thankfully, another profitable day.

NOTE: If the blog has been a little dry the last few days I apologize. I'm just focusing hard on trading and getting my game back. Monday we're off for MLK day. I plan on taking a couple of hours to finish an "around the house" and "history" post. I also have loads of surf stories to tell... I guess I'll get to everything eventually.

Anyway, here's the stats:

P&L, $1235
Best, MOS, $461
Worst, PCR, -$528

47000 shares traded.
23 stocks traded, 14 winners, 9 losers.

Virtual Office, $5317. Dow, -306.95, 12,159.21.

Sanglucci, $2460 on 31,000 shares traded.
Evolution, $1532 on 67,400 shares traded.
Me, $1235 on 47,000 shares traded.
OBAT, $134 on 13,200 shares traded.
Akalawoo, $58 on 1 contract traded.
Misstrade, $0 on 2500 shares traded.
Retardo, no trades.
Wincity, no trades.
Denarii, -$52 on 1200 shares traded.

I'd be crazy to call a bottom, but I'll say that we're close to at least a short term bottom. The last hour of trade saw huge volume and capitulation like selling.

Question is, who the hell wants to buy here?

Anyway, we traded about 2.2 billion shares on the NYSE today. The VIX finally caught up with the action, skyrocketing 4 points up to 28.41. The fear is here.

As for the VO, it was pretty quiet concerning all the amazing action. I guess it was a day for the prop traders.

Short post. I'm shot, and on babysitting duty.

Morning Stock Research

If you've been following along, "the Fly" has been dead on with his market calls over the last month or so.

Still, don't forget his botched calls on ARWR or WGAT.

Anyway, he's been pushing DUG recently as a way to get short oil. If the Cambridge Energy Research Associates are correct, there may be another reason to get short oil. Increased production. Their assertion is detailed in the rather dry, but informative video below.

And below are some other interesting news stories I found today.

Bernanke will testify before Congress today, starting at 10:00am.

Drug Companies Overstate Effectiveness of Antidepressants. Depressing...

The vultures are circling. JPM looking to make a big acquisition?

Merrill Earnings Report Torpedoes Futures Market

Good Morning

Time: 6:37
Mood: Good