Monday, February 2, 2009

ABBA, "Dancing Queen"

The RO Report, "RIP RO" Edition

I'm going surfing. Everyone is dead.

UPDATE: I honestly can't recall the last time I saw such a bloodbath. Now, we didn't have any one trader losing enormous size today... instead, it was like, decent losses across the board.

Widespread death. An epidemic of idiocy. The Great Depression has found its way to the RO.

It's late and I need to go eat dinner. I can't even offer much color other than the red. In fact, to mark this occasion... I'm changing the colors of this blog until the RO is no longer gay... and the song this evening will be purely horrid.

Out of 29 traders today, 3 were gross positive, or 10%. I think that's the lowest number ever. Also a sure record is the fact that NOT ONE trader made over $1,000 gross today while, get this, 19 LOST OVER $1,000 gross. Jawbreaker, perhaps this is the end afterall... I was #17 of 29. Smoked.

(One note of congrats to Trader $ and Trader X, both found their way to the RO through this blog and both avoided death...)

"Chambermaid" - Trader L, -$8,780 on 33,800 shares traded.

2. Trader F, -$8,351 on 37,200 shares traded.
3. Trader C, -$6,894 on 120k shares traded.
4. Trader V, -$6,390 on 69,800 shares traded.
5. Trader B, -$6,220 on 263k shares traded.

"Lucky Pierre" - Trader T, $668 on 6,100 shares traded.

2. Trader $, $136 on 11,400 shares traded.
3. Trader X, $129 on 7,800 shares traded.
4. Trader 9*, -$137 on 1,900 shares traded.
5. Trader 8, -$325 on 16,600 shares traded.

This Makes No Sense

I have two friends who are both trying to refinance their homes.

Their situations are drastically different. One couple is young, early 30s with a very high mortgage, close to $6,000 a month. It's some "exotic" loan. They tried to refinance and get a 30 year fixed, but were told they could not because they do not meet the income qualifications.

So, they got their first mortgage, which is just pure awful, and now they are attempting to refinance so they can lower their payments and stay in their home. But because they don't earn "enough" they cannot refinance and will probably lose their home.

A Catch 22, no?

The second situation involves my father in law. He is retired, and simply wants to reduce his mortgage payment. He is locked into a 30-year fixed already, but at over 6%. He tried to refinance when his bank was near 5%. This would have reduced his monthly payment by $300 or so. But, because he is retired and without an income, they won't let him. They told him that if he drew out of his 401k regularly, that they could count this as an income and give him the mortgage. But he doesn't need or want to draw from his 401k right now... he has the money just sitting there, but because he's not drawing on it, they won't give him the new mortgage.

Meanwhile, my high end real-estate friend tells me of people who owe a couple million on residences that aren't close to that value anymore and who are cutting deals with banks to lower their rate. Why? Because the banks don't want to foreclose on such ridiculously overvalued properties.

These banks need to burn.

A Trade In FAZ

I was going to start this post with a bold assertion along the lines of, "I milked this trade much like a perverted farmer might go at the teats on a cow."

However, you see that big run after 1pm? I totally missed that. It was a big miss, and I was humbled yet again by Mother Market.

Anyway, I caught the morning trade pretty damn good, so I'll talk about that.

It didn't start well. I woke up, wiped some sleep from my eyes and turned on my screens. FAZ was trading over $49 pre open. There was an HCPG level at $48. Not knowing about the market news that was to drop at 8:30 (Trader A would ask, "How come you never know what's going on?") I put in a bid at $48.10, hoping the $48 level would be support on a pullback.

At 8:30 when the news came out, my limit was hit and the stock immediately plummeted 4 points from my entry. How's that for a nice welcome to the trading day? It seemed bad, but in a way, it alerted me to the fact that FAZ had some good support at $44, or at least recent congestion. So I added to the position at good levels and by the time the open rolled around, I was basically back to flat on the day with only 100 shares remaining.

FAZ opened for regular trade and pushed higher before pulling back down toward the $44 level, where I added a couple hundred more shares at around 9:40.

Why was I added to this position? I had 3 reasons. First, I felt I was adding in a fairly safe area due to the recent congestion around the $44 level. Second, the HCPG level up at $48 was close enough (and I was bearish enough) that I felt it might act as a magnet. Third, and this is what really caused me to stay with this trade was the fact that on a 60-min graph, the downtrend line aligned nearly perfectly with $48.

So I felt there was a double magnet pulling the stock higher, and decent enough support just below my entry.

I'm not going to bore you with all the entry and exit details, but that was my thinking for the trade. Miraculously, it worked out according to plan and I did a solid job of exiting. I purchased again when it pulled back to the $48 level and made another nice, though smaller, trade.

I felt great.

Of course, then I moved the solid move in the afternoon, barely, and nearly lost my mind. But that's trading for you... you're a genius one moment, and a complete idiot the next. At least that's how it is for me.