Another Leather Lung, "The Sound Of Animals Fighting"

For Trader A.



Meanwhile, Cramer will appear on The Daily Show this Thursday! Should be fun!!!

The RO Report, "FUCK YEAH!" Edition

It's hard for me to contain my happiness right now.

At 11 am I was up $500 and very happy. The market was up 250 points but most was on a gap up and I thought I had traded smart. There were waves. I asked Judy, "What should I do, surf? trade?" She said, "Go surf. The market will be here when you get back."

So I surfed. And when I came home I checked the office report and saw that everyone was up size. "Man..." I thought. "I could have made back my entire loss on the year." Judy felt awful. But I was like, "It's cool. But maybe you should take a sewing class and start making our clothes."

I got on the main call with the office. Trader A was unbelievably bullish. This was between 3 and 3:25 when the market couldn't pop higher. Trader D was going along with him but scared and humorously trying to get the details at the source of his bullishness. Trader A was not forthcoming with explanations for his bullishness, he was just bullish.

Consequently, everyone concluded that Trader A sold his soul to the devil.

Everyone was afraid to buy but everyone bought and the market rewarded traders who bought.

Anyway so out of 30 traders today, 26 were gross positive or 87%. 16 traders made over $1,000 gross and only 1 lost over $1,000 gross. Probably the best day for the RO this year. I was #10 of 30 or, back to being positive on the year. Yes, I can put my blowup behind me.

"Lucky Pierre" - Trader A, $42,535 on 529k shares traded.

2. Trader P, $26,344 on 722k shares traded.
3. Trader Z, $22,821 on 540k shares traded.
4. Trader D, $19,701 on 607k shares traded.
5. Trader H*, $14,173 on 27,800 shares traded.

"Chambermaid" - Trader B, -$7,128 on 776k shares traded.
2. Trader 9*, -$677 on 1,500 shares traded.
3. Trader M*, -$644 on 0 shares traded.
4. Trader T, -$246 on 4,300 shares traded.
5. Trader $, $5 on 42,600 shares traded.

Here's a "FUCK YEAH" heatmap for you.

The Daily Show: In Cramer We Trust

The next installment in my Market Wizards series is 90% complete. I will either publish it midday today or just wait for pre-open tomorrow. Until then, enjoy...

The Daily Show With Jon StewartM - Th 11p / 10c

In Cramer We Trust

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

UPDATE: Meanwhile, Barry says get long pitchforks and torches...

James Brown, "Sunny"

The RO Report, "NSFW" Edition

There's really nothing Not Safe For Work about this report, but I felt today was somewhat boring and I wanted to "sex" it up a bit.

Early on, we had a nice rally that was led by some nice strength in crude. But later we were brought down by tech and transports. Of course, financials gave back all their early gains and closed flattish. Meanwhile, the SPY put in an "inside" day. So after the early morning fun, I basically avoided the rest of the day.

I'm worried that Art Cashin was on CNBC this morning saying he has his "basket ready" to buy. He's not saying that he's bidding stocks up, but waiting for them to fall so he can buy. Then, Melissa Francis was complaining that the headlines weren't "negative enough" to create a bottom. Everyone is waiting for this massive washout which decreases the likelihood that it's going to happen.

In short, we need to start thinking of other "bottom scenarios."

The RO, which is full of big fans of all types of bottoms (I can't get enough of these bottom jokes), had a mixed day. There were some big numbers up top, but overall, it was quiet. Out of 29 traders today 18 were gross positive or 62%. 6 traders made over $1,000 gross and 6 traders lost over $1,000 gross. I was #7 of 29, happy.

"Lucky Pierre" - Trader B, $14,173 on 263k shares traded.

2. Trader A, $8,734 on 122k shares traded.
3. Trader D, $8,573 on 244k shares traded.
4. Trader C, $3,412 on 144k shares traded.
5. Trader 10*, $1,496 on 1,300 shares traded.

"Chambermaid" - Trader H*, -$3,060 on 40,800 shares traded.

2. Trader V, -$1,348 on 45,100 shares traded.
3. Trader Z, -$1,331 on 25,800 shares traded.
4. Trader N, -$1,158 on 54,000 shares traded.
5. Trader T, -$1,034 on 3,600 shares traded.

Comparisons Of Bear Markets

My friends at HCPG included the fun "Four Bad Bear Markets" graph with this Sunday's newsletter. They really know how to ruin a weekend. Anyway, they lifted it from this site, which I've never read before but am skeptical of, since a quick perusal of their blogroll shows no hints of this fine blog.

Sunday Space

No tree becomes rooted and sturdy unless many a wind assails it. For by its very tossing it tightens its grip and plants its roots more securely; the fragile trees are those that have grown in a sunny valley.

-Seneca The Younger

Tom Waits, "Martha"

No good vids on youtube, but I'm obsessed with this song right now...

The RO Report, "Bottomless?" Edition

We were asking a lot of questions about bottoms in the RO today. How many different types of bottoms are there? Do you need to be surprised by a bottom? Do you like big bottoms?

Mud flaps?

I mean it seems everyone is waiting for a huge washout, a capitulation if you will. But when you're already "down here," what would constitute a capitulation? Another 10%? 20%? Does it all have to come in one day?

Look, if this market is leaving you scratching your head, you're not the only one. It's a difficult environment for investors, swing traders and day traders. Everyone is taking their lumps. But even more than I felt it in November, I'm beginning to get the feeling that we're getting close to the elusive Bottom.

There will be a bottom. This isn't the bottomless market.

Anyway, it was a good day for the RO. Out of 28 traders today 20 were gross positive or 72%. 7 traders made over $1,000 gross and 2 traders lost over $1,000 gross. I was #6 of 28. Happy, especially considering that I started the day poorly.

And here's to Traders A and Z for leading the charge into the close.

"Lucky Pierre" - Trader A, $24,961 on 168k shares traded.

2. Trader Z, $13,101 on 271k shares traded.
3. Trader 9*, $2,234 on 0 shares traded.
4. Trader P, $2,047 on 240k shares traded.
5. Trader V, $2,023 on 103k shares traded.

"Chambermaid" - Trader D, -$20,728 on 227k shares traded.

2. Trader H*, -$3,208 on 24,500 shares traded.
3. Trader &, -$931 on 112k shares traded.
4. Trader E, -$881 on 70,200 shares traded.
5. Trader L, -$708 on 77,800 shares traded.

Week In Review

The big sensation around the stock blogosphere this week was this clip, in which Jon Stewart pointed out the ineptitude of CNBC. Even lunatic right wingers were linking it and extolling its virtues.

This is great. Stewart's agenda has always been about excavating hypocrisy and exposing it. Perhaps by attacking CNBC he can expand his base of viewers. So anyway, check out the classic clip below from the summer.

But it's cool if you want to keep watching Glenn Beck. Someone needs to ramp up the fear in this country enough so that the market finally bottoms...



Okay, let's lighten the mood up, shall we? Ever wanted to beat the shit out of McGruff the crime dog?

The CIA realizes they've been using black highlighters all these years...

Were you hungover when your history class went over WWII? No bother... here it is all condensed into a comic that you can read in about 2 minutes.

How about a national fuel economy standard? Sounds good to me! Otherwise, California is going to keep getting all the credit for being the "smart state" and that just doesn't seem to make sense to me.

A daily read for me now, check out the fun J.B had with our favorite CNBC personalities.

Should China and the U.S swap stimulus packages? Again, I'll skip the easy joke here...

Here is one company that I'm thrilled to see go under. They have 50 copies of every bullshit movie I never want to see and no copies of anything worthwhile. Looking forward to a smarter video retailer to take their place... Oh, wait.

5 ways you'll know the recession is over.

Ann Coulter is smart.

Meanwhile, here's why Rush does radio now...

Sorry I'm getting so political... okay, check this out... the Kindle 2 reads the classics. Actually, Trader P just got a Kindle and he loves it.

I was never into Star Trek and I'm not gay... however, if you're gay and you like Star Trek, this is the video for you.

A cat pushing a watermelon out of a lake. I guess the message is, you too can win in the stock market?

UPDATE: I almost missed this. Duncan Neiderauer, head of the NYSE made a little news this week when he called for a reinstatement of the "uptick rule" and said that the "trader tax" legislation would "decimate" the markets. More here.

The White Stripes, "I Fought Pirhanas" (Live)

The RO Report, "Stinky Fingers" Edition

A wise man once said, "Those who try to pick bottoms get stinky fingers."

Today I think there are a lot of traders who will be washing their hands well before dinner.

What can you say about a market that bleeds significantly lower each day? You can say it's getting scary. Immediately after the close a friend called me and was like, "Dude, WTF?" That's a good thing. Let's talk about the best case scenario, shall we?

Tomorrow the jobs report is so abysmal that it bottoms the market. I think it's doubtful, since it's a Friday, but I'm just being hopeful here. People need to puke up their stocks, give up on America for good, and invest in China. When that happens, we'll bottom.

I'm hoping sometime by next Tuesday.

Anyway, it was a disappointing day in the RO. Out of 30 traders today, 16 were gross positive or, 53%. 3 traders made over $1,000 gross and 6 traders lost over $1,000 gross. I was #13 of 30. Flat. The Manservants took the day.

"Chambermaid" - Trader H*, -$13,763 on 22,900 shares traded.

2. Trader 10*, -$8,822 on 5,900 shares traded.
3. Trader A, -$3,062 on 408k shares traded.
4. Trader E, -$1,303 on 54,900 shares traded.
5. Trader &, -$1,235 on 105k shares traded.

"Lucky Pierre" - Trader B, $8,520 on 351k shares traded.

2. Trader Z, $7,284 on 112k shares traded.
3. Trader F, $3,519 on 41,000 shares traded.
4. Trader V, $989 on 50,400 shares traded.
5. Trader J, $900 on 54,600 shares traded.



BLOG NOTE: I may change up the names for the top and bottom traders of the day. If so, I'm going to let the RO members vote on the names. If you have any suggestions, list them in the comment section.

Jon Stewart Eviscerates Rick Santelli & CNBC

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

Paraphrasology

-John Cheever

The sun was hot. Dinosaur Trader sat by the green water, one hand in it, one around a glass of gin. He was a slender man-he seemed to have the especial slenderness of youth-and while he was far from young he had slid down his banister that morning and given the bronze backside of Aphrodite on the hall table a smack, as he jogged toward the smell of coffee in his dining room. He might have been compared to a summer's day, particularly the last hours of one, and while he lacked a tennis racket or a sail bag the impression was definitely one of youth, sport, and clement weather. He had been swimming and now he was breathing deeply, stertorously as if he could gulp into his lungs the components of that moment, the heat of the sun, the intenseness of his pleasure.

Spoon, "Everything Hits At Once"

The RO Report, "Jinx" Edition

The market showed a little resilience today. Okay, I'm kidding, I hate when people say that.

Early on, it was a battle between the strength of the rally in oil and other commodities and the weakness in GE. Then, Bill Gross said some stuff, GE said some stuff, and GE stabilized after dropping under $6.

Six dollars.

I understand the banks getting ass-blasted, but doesn't GE sell stuff still? I bought a refrigerator from them not too long ago. Should I not get that extended warranty?

Anyway, in the end, the market held onto its gains albeit on lighter volume and only after a nasty late-day sell off. The financials couldn't join in the fun, and therein lies the problem.

My guess is that this is just setting up bear flags, getting traders ready for the Big Washout.

The RO had an excellent day. If I wasn't in my little self-imposed trading bubble (i.e. ignoring chat and keeping my own counsel through the day) I could give you a little hint about where they made their money. As it stands, I haven't the slightest idea but I'm happy for them.

Out of 30 traders, 22 were gross positive or 73%. 12 traders made over $1,000 gross and 5 lost over $1,000. I was #13 of 30, green again. Also, I want to apologize to Trader & for jinxing his ass in last night's RO post...

"Lucky Pierre" - Trader B, $30,433 on 458k shares traded.

2. Trader D, $21,852 on 414k shares traded.
3. Trader A, $20,905 on 415k shares traded.
4. Trader Z, $10,019 on 188k shares traded.
5. Trader T, $6,046 on 6,300 shares traded.

"Chambermaid" - Trader &, -$7,386 on 84,800 shares traded.
2. Trader N, -$2,136 on 292k shares traded.
3. Trader P, -$1,823 on 279k shares traded.
4. Trader F, -$1,433 on 52,400 shares traded.
5. Trader E, -$1,086 on 100k shares traded.

Larry Hite: Market Wizard

(Each week I've been discussing a new interview from Jack Schwager's canonical trading book Market Wizards. This week I discuss the interview with Larry Hite.)

I had very low expectations for this interview. The subtitle was "Respecting Risk," and I thought, "How dull, another dude here to tell me to cut my losses short while trading in the stock market." But I was pleasantly surprised by Larry Hite and what he offered.

First of all, from a completely non-trading perspective, Hite told great anecdotes while making his points about trading. I get the feeling that in some of the Market Wizard interviews, the interviewees were like, "Who is this Jack Schwager guy, and why is he asking me all these questions..." and so they offer lots of terse responses.

Hite wasn't like that. He offered page-long responses to many of Schwager's questions with nice little stories about death and success peppered here and there. And hey, they conducted this interview from Windows of the World, the restaurant that used to sit atop the World Trade Center... perhaps that made me a little nostalgic.

Anyway, so lets get right into one of the long meaty answers that Hite offers. Schwager asks him about trading systems, but I think Hite's response speaks more to human psychology, and why the market will always be here. It also hints at why we'll eventually bottom.

People don't change. That is why this whole game works. In 1637, tulips in Holland traded for 5,500 florins and then crashed to 50, a 99 percent loss. Well, you might say, "Trading was relatively new then; these people were primitive; capitalism was still in its infancy. Today we are much more sophisticated." So you go to 1929 and find a stock like Air Reduction which traded at a high of $233 and after the crash fell to $31, a decline of 87 percent. OK, you might say, "The Roaring '20s were crazy times, but now things are surely different...

Hite offers more examples, but you get the point. However, if you really need more, check this table put up by Barry over at The Big Picture, (a blog that refuses to link me) in his discussion of Zombie Banks.

At a few separate times during the course of the interview, Hite says that trading is boring. He's not into exchanging war stories. As he puts it, "I don't trade for excitement; I trade to win." That makes a lot of sense to me.

I mean, if you read this blog, you know about the RO and how on any given day some dude normally makes $20 grand, and some dude normally loses $8 grand. There's a lot of excitement in those numbers and often traders will vacillate between winning and losing all day. My goal is to always be in the top 10 and just stay there throughout the day. It's a little boring, but it'll extend my life a few years, I know it.

Now we get to the portion of the interview where I decided that I really liked Hite. Schwager asks him how he has been able to achieve returns far above the industry average. Hite answers that they manage risk. "The truth is that, while you can't quantify reward, you can quantify risk."

In a nutshell, this is how I used to trade back in my sun filled early years. I'd sit at my desk and hold 30 or 40 positions knowing that I could get out if they went a quarter point against me. I entered, knowing where I would get out and let them run if they worked. Sure, I got stopped out of many, but a large percentage also ran. Often, out of those 30 or 40 positions, I'd only have 1 or 2 big winners and then the rest of them would cancel out.

The hybrid market really changed this equation. With all the 100 and 200 share static moving stocks 40 or 50 cents on no volume, managing my risk became a much more difficult task. This is the story of the last two years for me, figuring out how to manage my risk once again.

Also, I liked Hite because he didn't claim to really "know" anything about the markets he was trading. "Fuck yeah!" I thought. I mean, aren't 95% of analysts always wrong? You can only manage your personal risk, you can't know a market. Schwager asks Hite about how he can trade so many different markets successfully and Hite replies, "We don't trade markets, we trade money." When asked how he differentiates a trade in gold versus a trade in cocoa, Hite answered, "They are both a 1 percent bet; they are the same to me." Indeed.

This helped me come to terms with the apparent fog I've been in for the last decade. People who know I trade are always asking me about the stock market. I always respond, "I don't know anything about what the stock market is going to do." I think that often, people walk away thinking I'm some sort of crackpot. But it's the truth and it always has been, I simply don't know. Further, I don't know what credit derivatives are, I don't care about the relation between bonds and stocks, and fundamental analysis is and always will be silly.

To a trader, these things, these specifics are rather unimportant. You just care about managing the money you have, finding good entries, and managing your risk. Hite really drove that point home and I walked away from the chapter more confident than ever in my utter ignorance and disregard for the minutia of the markets.

Next week we will venture into Part II of Market Wizards where the focus shifts away from commodity traders to stock traders.

What It's Like To Trade

Normally, I post videos under the title, "Another Person Who Shouldn't Trade." However, I know I have a small audience out there who doesn't trade at all. They wonder what it's like... well, watch the following clip. It's something like this.


Hunter Barely Avoids Lion Charge - Watch more Funny Videos

Kayne West, "Can't Tell Me Nothin'"

The RO Report, "Weight" Edition

It's funny when the market gaps up in the morning. You wonder while you glance at a green reading for the futures, "What are they doing up there?"

Simply put, what could possibly drive this market higher right now?

Unfortunately, it doesn't appear that we can expect any economic news or earnings to drive prices higher. So what do we need? Lower prices. And hopefully those lower prices will bring in buyers again to put a floor in this market.

I'm starting to get a very non-technical, non-scientific feeling that we're due for a nice disaster day soon, that will bottom us out for awhile. Today I put some bids in my long term account starting at $68 in the SPY. We will see.

The RO had an average day. But amidst the mediocrity, there are some standouts. "Trader A" has been on a tear. It's always nice to see a trader catch fire. Sometimes, that helps pull everyone else up. Also, "Trader &" has been doing very well, and he's new. That too is hopeful.

New blood can wake the old complacent traders out of their slumbers...

Anyway, out of 28 traders today, 17 were gross positive, or 61%. 8 traders made over $1,000 gross and 4 traders lost over $1,000 gross. I was #13 of 28. Green and happy because I made some mistakes early and I had to fight back.

"Lucky Pierre" - Trader A, $25,464 on 140k shares traded.

2. Trader T, $4,138 on 7,200 shares traded.
3. Trader N, $2,492 on 32,400 shares traded.
4. Trader &, $2,282 on 17,200 shares traded.
5. Trader L, $2,005 on 61,000 shares traded.

"Chambermaid" - Trader C, -$7,078 on 277k shares traded.

2. Trader Z, -$4,926 on 158k shares traded.
3. Trader H*, -$4,883 on 24,500 shares traded.
4. Trader E, -$1,139 on 75,500 shares traded.
5. Trader B, -$778 on 652k shares traded.



As always, head over to Alphatrends for your daily technical analysis. And also be sure to click this link and check out this chart comparing 1929 and our current decline. The chart plots "calendar days from the top" on the X axis and "percent from top" on the Y axis... very interesting.