A Big Day

At around 2:30pm, I thought it was 11:00am... no joke.

It's hard to begin this post. As you can imagine, I feel a little light-headed right now... almost shellshocked.

Look at the above graph of the Dow. I was long between 15k and 20k of stock at that point right when it decided to drop 200 points. I mean, I was in a bunch of stocks... I had no choice but to sell, because trust me, at 3:00pm, it certainly looked like we were going to test the lows of the day, we were only 50 points away on the Dow...

I liquidated every single one of my positions. And I called my wife up to ask her if I had enough "buffer" to trade the rest of the day. She gave me a big smile and said that I was doing fine.

I now know that I was up about $11,000 when she checked at 3pm. I'm pretty sure I lost close to $10,000 between 2pm and 3pm... with all of those positions, it was hard not to.

Anyway, I'm not sure if I should do this chronologically or what. Here's my best stock of the day, HXM.



Here are my trades from the last hour of the day in this stock:

15:17 Buy 500 @ 45.97 (500)
15:22 Buy 300 @ 46 (800)
15:24 Sell 100 @ 45.89 (700)
15:24 Sell 200 @ 45.88 (500)
15:27 Buy 300 @ 46.14 (800)
15:28 Buy 400 @ 46.26 (1200)
15:28 Buy 300 @ 46.41 (1500)
15:33 Buy 300 @ 46.56 (1800)
15:35 Sell 300 @ 47.13 (1500)
15:38 Sell 300 @ 46.82 (1200)
15:45 Sell 500 @ 46.86 (700)
15:57 Sell 200 @ 48.35 (500)
15:58 Sell 200 @ 49.14 (300)
15:59 Sell 300 @ 50 (flat)

This is less skill and more like, being in the right place at the right time. In fact, I'd love to have those 500 shares I sold at $46.86 back...

My second best stock of the day was PCP. I made $3900 in him. Again, mostly in the last hour. I had 500 shares for the entire move.



And then, there's UBB...



I traded 26,000 shares of UBB alone today. I basically built up a really nice position for the run from $92 to $100. Of course, I didn't hold it all... I was selling on the way up. But here's the part that sucked. I never saw it trade $100... and really, the next thing I know it was trading $96 again. 4 points gone in less than 5 minutes. I added at around the $96 level and had over 2000 shares when it plummeted down to $94. I got out, cursing. I had just given between $5,000 and $10,000 away in the stock in very short order.

However, I did buy back, quite aggressively, though not until it traded back up to $96. I was too battered in the stock to be buying when it was $93... at that point, I was sure it was headed back to the lows. That's about the same time that I called Judy in to check my P&L. I was really dejected at that point because I knew I had just thrown thousands away. In fact, and I know this may seem crazy now, but I asked her to check because I thought I might be close to negative on the day.

Anyway, while these were my 3 big winners of the day the real deal is that I had 12 winners for over $1000 today while my biggest loser of the day was $761. That's how the numbers added up like they did.

So TBSI was my worst. The reason? It just didn't bounce! I mean, it did have a move from $26 to $28... but I didn't catch it. Luckily, I never had more than 400 shares of the stock. I got chopped multiple times in him.



Sorry this post is lame but I'm shot. I'm walking away from the computer now and going to get dinner with friends. Perhaps after dinner I'll be able to reflect some more. Right now, my head is still spinning.

Here's the stats:
P&L, $28077
Best, HXM, $4239
Worst, TBSI, -$761

shares traded, 211,400
49 stocks traded, 33 winners, 16 losers
903 trades

NOTE: If you haven't already, please vote in my poll. Thanks!

Virtual Office, $32,581. Dow, -15.69, 12,845.78.

Me, $28,077 on 211,400 shares traded.
HPT, $2200 on 175 contracts traded.
Bubs, $1057 on 2900 shares traded.
OBAT, $723 on 12,200 shares traded.
Evolution, $524 on 58,200 shares traded.
Misstrade, no stock trades.

Wow.

I'm not sure if anyone else noticed this, but the Dow rallied 300 points in the last hour of the day.

Needless to say, the market is freaking crazy right now.

Well, hey, why should the fun stop now? Just because the market ripped here doesn't mean "sub-prime" goes away.

We could get rate cuts, hurricanes, who the heck knows?

The VO kicked ass today. Bubs had his best day ever and I had my best day since the heady days of the year 2000.

NOTE: Oh, and for those who voted the Dow would hit 12,500 before 14,000 you can't declare victory just yet... the low of the day was 12,518...

"Someone Set Us Up The Bomb"

"You have no chance to survive. Make your time..."

Dow And Dinosaur Getting Smacked

Blogger not allowing me to post pictures right now... but Dow is down over 300.

I have no shorts. Instead, I've chosen to nibble at longs and I keep getting slaughtered. It's a bloodbath. Thank goodness for the risk manager.

We'll see how this ends. I'm just trying to stay in the game long enough today so I can catch the bounce.

The entire market is getting flushed.

Clarence, "The Rodent Of Stock Market Volatility"

Somehow, he eluded our traps and is back, scampering around on the floor of the exchange.



Check out the VIX. It's a traders market. However, that said, there's a good chance I'm a little smoked right now. I got wildly bullish just after 10 and took some losses. It'll be a day of big gains and big losses. It's gonna be tough.

No Waves

At least not in the ocean. A swell is suppossed to come in for the weekend, but the water will be too crowded for me then.

So we went down, looked at the water, watched a couple of guys paddling around, sipped coffee and swapped 9/11 stories. Fun!

Anyway, more bad news this morning. Just about everything on my screen looks to be gapping down. However, if I were a betting man, I'd bet on a bounce at some point today.

Harvey Danger, "Flagpole Sitta"

Footage is from Evil Dead II. Blood on the streets, indeed!

"Smart Money Is Buying This Market" - Maria Bartiromo

I figured it was a good idea to post that weekly graph of the futures. As you can see, we're just about where we were on January 1st, 2007.

It's a different story for the Dow. It's still up a few hundred points for the year.

Anyway, it was a wild day for stock trading yet again. With Hurricane Dean looming in the Caribbean and huge companies like CFC having serious trouble, this volatility shows no sign of ending. I'll say that at least in my mind, it feels like our entire financial system is about to collapse. So far, I don't think stocks have fully priced in that type of fear. I think it will take that type of fear induced capitulation plus some financial companies opening up their books and letting people know how deep the sub-slime is to hit some type of bottom... that, or some type of FED bailout in the form of a deep rate cut. But whatever, I'm a trader.

Here's my best stock of the day, UBB.



Ironically enough, I missed the short that melted the stock from 2pm into the close. I made my money on the long side, between 9:45 and 10:00. I actually think that's a really good thing because it tells me that I'm very open-minded about the market right now. I got crippled for a couple of months after the February panic because I could only see shorts. So I'm happy that while the tone of the market is overwhelmingly bearish right now I managed to pull good money from the long side.

At the same time that I caught the UBB long, I also made good money on corresponding longs in AB and CNS. It was all about the financials rallying at that point of the day due to some Fed action. Again, I'm not an economist so I really don't know what they did. But, I don't care. As a trader my job is to react to movement in the market, not to necessarily understand what's causing the movement.

In fact, often the more you know as a trader, the worse off you can be. Because when you know too much, you can start telling yourself stories. And when you start believing your stories you can get stuck in bad trades. The only story you pay attention to is the price and volume action.

Another thing I didn't understand was the movement in AMG today. And wow, my timing was also awful in this stock. Basically, it was spiking up and down a point at the time as you can see on the 5-minute graph below.



I really got sucked into him today and made bad trades over and over. All of them were on the short side. The stock was just choppy today and I shouldn't have been trading it. I think I was watching it because it's my best stock on the month. However, I need to remember that the past is gone forever. Just because I made money in him a week ago means nothing about my ability to make money in him today, or tomorrow.

Anyway, the futures are down a bit again overnight. FXY is trading $86... it doesn't look like we're close to going down just yet. However, I'd expect some type of little rally attempt soon.

Here's the stats:
P&L, $2509
Best, UBB, $1131
Worst, AMG, -$998

shares traded, 39,600
27 stocks traded, 20 winners, 7 losers
193 trades

The "Tick Fairy"

I'm not talking about NYSE "ticks", here, I'm referring to the tiny disease ridden parasites that thrive where I live.

This past weekend, I filled up my daughter's inflatable pool and placed it on the back patio. She was splashing around, talking about farm animals and puppets and generally having a blast.

That's when I noticed a small black dot under her right armpit.

"What's that under your armpit?"

Immediately, she scowled at me and tucked her arm tight against her body. Taking a look at the "black dot" let alone prying it off, would not be easy. She sensed trouble... "I want Mommy!"

Thus summoned, Judy came outside and in her sing-songy voice said, "Let me see what's under your arm, honey!" My daughter tersely replied, "No! You will not look under my arm!"

We stepped into the house. Extreme cajoling and perhaps force would be required here. I quietly closed all the windows.

In the next 45 minutes, the myth of the "tick fairy" was created. This particular fairy collects dead, blood swollen ticks and in return, gives little children gifts. What does she do with the dead ticks? She collects them in jars and juices them. This juice, in turn, powers her little fairy-mobile with which she delivers her presents.

While we improvised this rather disturbing story, my daughter looked at us with a face that more or less said, "Wow... that's completely messed up" but importantly, let us remove the tick.

The tick fairy brought her a little doll, that of course, was made in China.

NOTE: Daily post will be late.

Virtual Office, $4822. Dow, -167.45, 12861.47.

Me, $2509 on 39,600 shares traded.
HPT, $2100 on 109 contracts traded.
Evolution, $343 on 10,000 shares traded.
OBAT, $180 on 5800 shares traded.
Denarii, $32 on 1000 shares traded.
Bubs, -$342 on 2600 shares traded.

Despite the fact that Maria Bartiromo must have said 10 times today... I'm sorry, must have shrieked 10 times today that the "smart money is buying the market here" the market dropped almost 200 points. Ah, Maria...

But, perhaps it's true. We really don't know. I mean, I don't have friends in high places like Ms. Bartiromo does, but I do have stock software. What that software shows over and over again, is that this market sells off in high volume. When it goes up, it goes up in light volume. That's not a sign of strength.

I guess there are lots of idiots out there selling this great market.

Anyway, the VO continues to show strength... the majority of traders in the VO keeps making money in the face of all this volatility. It's a traders market to be sure. I certainly don't want too much overnight risk.

We'll see what tomorrow brings. The headline risk to this market is gigantic.

NOTE: My daily post will be late tonight. For now, I'll bump my first post of the day, "The Tick Fairy."

Sweet Jumps

In need of some humor.

The Path Of Katrina vs. The Path Of Dean

Katrina.



Dean.



I just did this comparison out of curiousity. I really want to go on vacation next week but I'm afraid oil is going to freak out. In the next few days this picture should become clearer.

Anything can happen at this point.

Stock Market Volatility

Funny.



We wake up today and hear that the FED is doing "repo action" or something like that. I'm not an economist... I don't know what they're doing.

But take a look at the futures! You see that spike up? That's when CNBC reports that the FED "cancelled their repo action."

Everyone thinks, YAY! The FED doesn't see the need for more liquidity, everything must be "okay!"

Ah... but what about that spike down? That's 5 minutes later when CNBC says that the FED cancelled the "repo action" because of "technical difficulties" and that they'll be doing it, but just a little later.

Makes for an exciting morning.

The Beatles, "Hey Bulldog!"

I'll go mainstream on your asses for a bit.

Thornburg Mortgage CEO On CNBC

Erin interviewed the CEO of Thornburg Mortgage on Kudlow and Company today.



As you can see from the above graph, TMA hasn't been on a hot streak lately. In fact, it looks like the company is blowing up. It was halted just before the market closed today and they came out and said that they'd be paying their dividend late in response to "significant disruptions in the mortgage market which resulted in the sudden and unprecedented decline in the market prices of its AAA-rated mortgage securities that began on August 9, 2007 and subsequent increase in margin calls related to its repurchase agreement financings on those securities."

Sounds great! Well, for whatever reason, the stock is bid up a dollar after hours. Perhaps everyone thought they were going to announce bankruptcy. The graph sure looks that way.

So Larry Goldstone, CEO was interviewed by Erin. I have to give her props, she asked him hard questions.

She asked him, "So, is Chapter 11 next?" No, he said... Chapter 11 doesn't solve our problem.

She said there were a bunch of rumors out there that mentioned they were going under. He said that "80% of the rumors are untrue." He continued, "We have been able to meet all of our obligations. We are navigating our way through this process."

Goldstone said that "companies are not funding their loans" and that we are in the midst of "a severe credit crisis."

Erin asked him if his lenders were "forcing them to liquidate" to which he replied in part, "They are making it difficult for us to rollover financing."

Perhaps the most important quote I took away from the interview was Goldstone stating that they "cannot finance mortgages using any of the vehicles they've used over the last 14 years."

Erin pressed, "So how can you continue as a going concern?" to which Goldstone replied, "We have been selling securities in our portfolio. If we had to sell all of our securities, even at these 'bear market prices' we'd still have $14.28. So we're coming back, we just have to rebuild."

Erin asked, "But what if there is no buyer? Then the value is zero!" to which Mr. Goldstone replied, "That's just not true. There are buyers of mortgages."

I'm not sure how the interview concluded, because I had to split. A friend with a boat, took us out to enjoy the good weather. The market could melt, but still, I'll take boat drinks.

TMA closed at $7.61. After hours it's trading up at $9.48. Not spectacular, but still, quite a bounce.

Come Back Mojo!

Perhaps it was my lack of sleep but today I just missed out on the volatility.

I mean, when the Dow is down 200 points, you expect to be able to find and execute some decent trades. Today, I saw a lot of choppiness and I just wasn't convinced that my positions would follow through for me.

So, I lightened up my position sizes and played defense.

I mean, really, you have to be playing offense in this market. You need to be aggressive with your positions if you want to make decent money. However, there are times when you may not be feeling it for whatever reason (like you slept in a tent in your daughter's playroom) and you just need to be smart about it. You can't force trades.

So here's my best stock of the day, TFX.



I got short at $74.25 and added all the way down to $73.50. I actually thought this trade would work out much better, but the stock ran into some buyers and I was forced to cover. I missed the second short of the day around noon because I was in full on defensive mode at that point. I stood by my rule of not trading between 12 and 2 today because I just saw lots of chop with little follow-through.

My worst trade of the day was in FED.



I was short when he decided to rally from 11 to 11:30. He basically tore my face off. Now, I'm short overnight. I fully expect to lose money in my overnight short. I am not allowed to make money in overnight trades. God won't allow it.

Anyway, these last 2 days of trading make me really want to take that vacation I've been planning on. However, Tropical Storm Dean may make that an impossibility. Not because I was planning on going to Puerto Rico or anything but because this hurricane could really mess with the price of oil.

We'll see. For now, I've updated the sidebar with a website that is tracking the storm's progress.

Here's the stats:

P&L, $117
Best, TFX, $493
Worst, FED, -$543

shares traded, 24,800
19 stocks traded, 9 winners, 10 losers
141 trades

NOTE: The CEO of TMA will be on CNBC soon. I'll post a synopsis... of sorts.

Virtual Office, $820. Dow, -211.18, 13025.51.

HPT, $500 on 26 contracts traded.
OBAT, $401 on 3600 shares traded.
Bubs, $304 on 1100 shares traded.
Me, $117 on 24,800 shares traded.
Denarii, no trades.
Misstrade, no trades.
Evolution, -$574 on 38,400 shares traded.

Well, volume was a little higher than the totals for yesterday, but still light compared to last week.

Bad news is still hitting this market. Today, Sentinel made a request to halt redemptions from it's fund. As I type, Thornburg Mortgage, TMA, is halted for trading due to pending news. Perhaps it's good news! HAHAHAH! Right. Anyway, it's tough out there...

It was a really wishy-washy day in the VO... no one really made or lost too much.

Let's see what tomorrow brings. Will the Dow hold 13,000? Will those who voted in my "poll" that the Dow would hit 12,500 before 14,000 "win?" We shall see.

NOTE: Meanwhile, if anyone subscribes to the WSJ online and wants to fill me in on the link made to my site from a comment made on this article I'd appreciate it. I'm not a subscriber... You can either email me or place a comment here. Thanks.

UPDATE: I just figured it out... The Wall Street Journal was probably just fishing for a link from my site. Pikers. Still, my request for information stands.

FLASH: Bank Run!

That's right. Trish Regan of CNBC just used the words "bank run" to describe what's going on in the credit markets.

Responsible financial journalism at its best.

Perhaps she should start yelling again...

Rumor has it that she also enjoys going to movie theaters and yelling "FIRE!"

Global Century Investments

Here's a funny S&L skit on Financial Advisors. (h/t- d.g morris)

Camping

First of all, I monitored the weather channel all day and didn't see one prediction for a thunderstorm.

Nonetheless, as we were setting up our tent, wondering about all the clouds, a thunderstorm, with lots of lightning cancelled our excursion.

In the end, we got home, wet, and pitched the tent in the playroom.

I didn't sleep well.