High Short Interest Names

The following stocks have high short percentages. The numbers in parentheses next to the symbol represent the short % of the float. All numbers are from Short Squeeze. I have rounded the numbers up or down accordingly.

The reason I'm posting these is because should we get some type of panic bottom, short covering could be huge. I remember from reading Reminiscenses of a Stock Operator that Livermore looked to cover shorts on huge events or down days.

Also, I just went through the stocks on my screens, not all the stocks on the NYSE. If anyone knows of other good stocks to trade with high short percentages, please share. I didn't include the homebuilders, because I generally stay away from stocks that trade below $15 a share.

Here's some stocks that could see substantial short covering during a market bottom.

VMC (11) RWT (33)
TNH (11) JLL (11)
TRA (18) MBI (37)
PMI (19) PCR (16)
MTG (25) AMG (21)
ABK (35) LAZ (14)
FMD (30) GHL (39)
FED (69) CNS (27)
DSL (59) BSC (16)
UA (32) LNN (16)
AGO (13) ARE (12)
AIT (11) AXE (10)
AZZ (9) ANR (11)

Inflation

Since a lot of people seem to be expecting a surprise rate cut now, let's talk about a potentially larger problem than a stock market meltdown.



FUN!

Stock Market Crash of 2008?

Just something interesting to think about. Last week, the S&P 500 lost 5.4%. That was the worst weekly drop in over 5 years.

Guess what? Right now the futures are down 60 points. That's almost another 5% overnight and a 10% decline in the last 5 trading days.

Meanwhile, the IBD is busy speaking truth to power. Read below.

Individual stocks continue to tumble. Stocks that led the market's most recent rally have fallen especially hard. It's odd, then, to see analysts upgrade leaders that have started breaking down.

Research In Motion, (RIMM) Potash (POT) and Fluor (FLR) each garnered upgrades Friday. All three stocks fit the profile of the leader that has started to crack in heavy volume.

Analyzing the market's past winners shows how and when leading stocks top and start to roll over. These diving leaders are exactly the sorts of stocks you should be selling to protect your capital. Yet Wall Street continues to tout these names.

No one can know with absolute certainty which way the market will turn from day to day. But it's worth remembering the lessons of the past.

When Cisco Systems, (CSCO) Microsoft (MSFT) and others started selling off in 2000, many analysts urged investors to grab them each time they fell to new bargain prices. Those that heeded that advice learned a painful lesson: When the market goes into a downtrend, the only absolutely safe place to be is in cash.

Trying to outsmart the market has proven fruitless lately. Even defensive stocks like utility, food and beverage firms have gotten slammed. As it stands, this market has few, if any, safe havens.

HPT Caught In This Mess

This is hard to watch. If you've traded, you've probably had a moment like this somewhere in your past. (h/t mdawsz)

Warning: harsh language.... NSFW.


Stock Futures Trader Having Rough Day - Watch more free videos

HPT, keep your chin up and read your blog from back in August, the last time this happened. You'll come back. You will.

More on the huge global market decline here.

UPDATE: It's a shame, but HPT's video was removed from Youtube. I'm guessing because of the harsh language. Funny... you can post a video of 14 year olds beating the shit out of each other, but you can't say the word "Fuck!" How idiotic.

Futures -43.00

I hate to disrupt the holiday with some bad news, but look out below!

The Dow futures are down 300. That would mean an open at around 11,800 tomorrow.



Here's what Bloomberg has to say about the "rout."

Dr. Brady Barr Is Still An Idiot

I've said it once, and now I have to say it again.

National Geographic should take this guy off the air before he does anything further to damage their reputation.

Now he dresses like a hippo. I wish the snake had finished him off last time...

Inner Tube Prank

Ever feel helpless drifting downstream in an inner tube?


Inner Tube Pissing Prank - Watch more free videos

Velocity Girl, "Crazy Town"

Anticipating A Bottom

For some reason, I got it in my head that we were going to finally have a reversal.



When we couldn't break down to the lows of the day at around 1pm, I took that as a bullish signal. However, the volume never picked up with the little bounce that ensued and when the rally broke, just after 2pm, my P&L went south with the futures.

Of course, we rallied again at 3pm and I got sucked in again.

So the story of my day is simple. I was transfixed on the futures all day. I'm not even going to get into individual stock trades because I was timing my trades from the moves in the futures. I was just wrong about us breaking higher.

So the two day total cost of me anticipating a rally off the lows is up to a little over $1800. Pretty annoying.

This weekend will be a real test for me and my attempts to maintain a more positive attitude.

Anyway, here's the stats:

P&L, -$681
Best, SXE, $218
Worst, GHL, -$227

38,800 shares traded.
26 stocks traded, 10 winners, 16 losers.

Virtual Office, $1449. Dow, -59.91, 12,099.30.

Evolution, $2074 on 31,400 shares traded.
Wincity, $87 on 100 shares traded.
Denarii, $86 on 1000 shares traded.
OBAT, $2 on 13,000 shares traded.
Dehtrader, -$119 on 5250 shares traded.
Me, -$681 on 38,800 shares traded.

Again, we had gigantic volume on the NYSE as we traded about 2.5 billion shares. That was definitely helped along by options expiration, but still, it was a heavy volume day.

Oddly enough, even though we broke the lows of yesterday, the VIX closed down a point.

Evolution had the right idea today. Make money early and leave. Almost to a man, my entire office was up decent midday and gave back from 2pm on. We all got caught trying to catch a bottom.

Picking bottoms in a bear market is not a good game to play.

Anyway, we're off on Monday because of MLK day. Should be an interesting weekend politically as the Republicans hold their South Carolina primary. Also on Saturday, is the Nevada primary.

Good stuff for us political junkies.

Enjoy the holiday.

Art Cashin's Comments

Here's a brief paraphrase of Art Cashin's comments this morning on CNBC. I think he's one of the only reliable sources to listen to on CNBC. When the market freaks out, I pay attention to what he says.

On the big stories today, GE, IBM and OPex.

I see today as a three legged stool. GE, IBM, and options expiration. Two key blue chips reported good earnings but I worry about stamina, we'll know by 11 or 11:30 with the option expiration if this rally can hold together.

On the earnings.

GE and IBM are benefitting from the weak dollar. Helps the multinationals.

On the bond insurers.

However, the bond insurers are screwed. There are problems when the ratings agencies start downgrading the bond insurers. It's a shame. They had a sweetheart business and got into the bad side of things.

On sovereign wealth funds investing in US.

Money with terrific staying power. Looking for a higher rate of return. Money doesn't spring from nowhere though, so there will be less to buy US Treasuries.

In short, Goldilocks is in the ICU sitting up and taking fluids. We'll know next week if she's going to make it.

Morning Links

• US Futures Rise... Finally.
  
• Stewie's Holy Grail.
  
• I woke up with this song in my head.
  
• The Education Of Ben Bernanke
  

Good Morning

Time: 6:42
Mood: Incredulous

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

Jimi Hendrix, "Voodoo Child" (live)

I Love Limit Orders & Robots

For months, really since the beginning of the Hybrid, it has been clear that market orders are a dead end. Not only do you incur larger fees when you use them, but you can pretty much guarantee a bad fill.

With my old company, I was perhaps a little too used to my software and I had a hard time changing my habits of entering market orders.

Since I've been forced to use new software, I set up hot keys with limit orders and have worked to use them almost exclusively. Incidentally, on Friday of last week when I lost over $600, my limit orders were disabled and I had to use market orders all day. I'm not saying that's the only reason why I got smoked, but I bet it played a small role.

I'm finally getting used to limit orders and how to trade with them.

Okay, now about my day. I was having a very slow morning, but also a profitable one. I was entering small trades and consistently making right trades. I was up a couple hundred dollars but more importantly, my win/loss ratio was excellent. That's just the type of thing that builds confidence.

Anyway, that's when I noticed the massive carnage taking place in the fertilizer stocks.

After trading so conservatively all morning, I was loathe to take risk and lose my hard fought profits, modest though they were. However, I also realized that I'm not going to make money taking 15 cent trades with 100 and 200 share lots.

So I seriously fought myself but entered an order to buy 200 shares of AGU and was filled at $61.61. The stock ticked lower. However a brief scan of the other ferts showed them all bouncing. I sold 100 shares at $61.44, but then bought 300 at $61.36 for a total of 400 shares. As it turns out, the low of the day was $61.26.



I sold 200 right away with limit orders up in the $61.70 range. And when the stock pulled back again without breaking the low, I added another 400 shares at $61.52. So I had 600. I sold most up at $62.20 before it pulled back below $62 again. I missed the run from $62 to $64, mostly because it ripped on pretty weak volume.

Anyway, it was a solid trade, I made $490 in the stock. It was the first volatile trade I've been involved with since I moved to my new company. Also, I finally added some shares. Trading with 100 shares is fine, but you really need to catch big moves for the dollars to add up.

My favorite trade of the day was in PCR in the afternoon.



I was watching the futures bump against a trendline that had been in place for the last couple of hours. Volume was building. PCR had been in a tight base since noon. When it painted red candles, it did so on low volume. So I thought, should the market pop he was a good candidate to buy. I picked it up at $37.25, right before it ran a point.

Today I focused a lot of volume. Back when you could read quotes, "tape read," traders relied on bid and ask sizes to tell them where the volume was and where it was going. The Hybrid Market has rendered that strategy dead. So watching the volume bars has become that much more important. It's really a traders only indication that there is interest in the stock. PCR showed good volume the entire move. That gave me the confidence to hold.

Anyway, this has been a rather rambling post so I'm just going to let it die. I feel good about having a good day. It was my first in over a month.

Here's the stats:

P&L, $1267
Best, AGU, $490
Worst, PEG, -$102

19,400 shares traded.
21 stocks traded, 15 winners, 6 losers.