Beta Band, "Dry The Rain" (Live)

Ushering in the new era. "Say it out loud, it'll be okay."

Meanwhile, if you don't know this song you will like it. Give it a listen.

The RO Report, "Croup" Edition

My daughter has picked up some 18th century illness. So, I am off to the doctor. The RO will be up later.

UPDATE: I always have a tough time the day after a 3 day weekend, and today was made even more questionable by the inauguration of Barack Obama. However traders enjoyed a real smooth move today, minus the chop from 12 to 2pm.

I always love a good, peaceful transition of power. Even if the Chief Justice garbled the oath... it was a great speech, and I think, glancing at C, and BAC that everyone must be rooting for Obama right now.

Not that he's here to fix the financial system... instead, I look at those stocks and see them as symtomatic of a sick country that hasn't been treated properly. The country has been coughing like a sick dog for the last 8 years and no one has been doing their jobs to make it any better.

Time to move forward.

I'm not even sure what to say anymore. Rarely have I ever felt so certain that so many stocks were going straight to zero. Are we entering an era where money is meaningless? We're not yet at the November lows on the Dow, yet C and BAC are basically worthless... I'm slightly confused and very concerned by this action.

Nonetheless, the RO had a decent day. Probably one of the best days of the new year in fact. Sure, we have a few accounts to the downside, but the bottom 3 were all swing accounts.. active traders did okay today. Out of 30 traders today, 18 finished gross positive, or 60%. 11 traders made over $1,000 gross and 6 traders lost over $1,000. Not great numbers by any stretch, but an improvement. I was #6 of 30. Pretty pleased.

"Lucky Pierre" - Trader B, $12,728 on 414k shares traded.

2. Trader P, $8,378 on 103k shares traded.
3. Trader A, $6,096 on 302k shares traded.
4. Trader C, $4,410 on 116k shares traded.
5. Trader D, $3,247 on 190k shares traded.

"Chambermaid" - Trader H*, -$13,703 on 18,100 shares traded.

2. Trader 10*, -$6,849 on 7,000 shares traded.
3. Trader 9*, -$3,070 on 800 shares traded.
4. Trader I, -$2,588 on 49,800 shares traded.
5. Trader F, -$2,201 on 64,800 shares traded.

Goodbye Neocons!

Looking forward to the future for the first time in 8 years. The worst is behind us now.

I'm Slow

Interesting fact: It will take you 30-40 seconds to read this post, but it will take me 12 days to write it.

Anyway, we went away this weekend and instead of slaving away in front of my laptop to craft a history post, or to finish the multitude of around the house posts that I have partially finished, or to figure out how to get the ball rolling in the "book club," I hung out with my friends and family and spent some time cross-country skiing.

In short, I've fallen behind and besides the RO posts, I don't know what you can expect from this blog for the rest of the week.

We will see. Perhaps I will get a history post done, or maybe I'll discuss getting surrounded by barefoot "yoga people" while clinging to a Wizard of Oz lunchbox. The point is, I have lots of catching up to do around here. Patience.

Smashing Pumpkins, "Drown"

Congrats to Dinosister on leaving her old job and starting a new one.  Change is good.  Here's her song pick.  A surprisingly good one.

Linkday

Yep... he's still there...

A Russian professor predicts the USA is going to split. At least the Northeast joins the EU...

Ever been pissed about getting a parking ticket? You'll relate to this.

I love this story. Rich guy fakes own death, found buying Bud Light Lime.

You didn't miss episode 1 of "the Fly Show" did you?

Cornography.

Greening the ghetto. Save the world and poor people at the same time. Sign me up. No wait, I hate the world and poor people... forget it.

This was an easy article to miss, but man did it depress me. Turn off the TV and video games and start parenting again people.

Bernie Madoff rapping. Okay, maybe the dude just looks exactly like him...

The Reformed Broker hates the bailout and Cafe Metro hates him.

Toyota wins again! They beat the Big 3 to hybrid, and now they'll get electric too.

Buy local and organic... buy local and organic...

Another reason to trade... no boss to kill you with a trident!

It didn't feel like it yesterday, but is volatility about to dry up?

I'm headed up to my mountain retreat for the long weekend. I'll try and get the RO report up, but no promises when. Trade well and stay warm.

Prodigy of Mobb Deep, "Diamonds"

The RO Report, "Death" Edition

The report will be late... 9pm or so.

UPDATE: Another day, another early selloff but unlike yesterday's Plan C action, today was Plan A all the way. Gap down, test support, and then rip.

From 12:30 until just about 3pm, the Dow rallied nearly 300 points. I wasn't keeping tabs on what my mates were doing, but I knew most of them were nicely green. That all changed drastically when the market couldn't retake the highs at around 3:15. That's when the death began. Traders who were caught long got clipped as the market dove 100 points in about 20 minutes.

One trader got out close to the highs... bonus points if you can guess who...

Anyway, we had a nice bounce on support today. It would be much nicer for the bulls had we been talking about SPY 89 holding up... but that was way back when BAC traded in the double digits and C wasn't sub $4. That was another market. Now we're back to be excited that we actually managed to close green.

We have a long weekend and then the inauguration. There are all kinds of rumors about what's going on with C and BAC. Will they be nationalized? These are strange days. Let's hope that next week brings us more clarity.

Out of 29 traders today, 17 finished gross positive, or 59%. 6 traders made over $1,000 gross, but 9 traders lost over $1,000. We've clearly entered a more challenging trading environment. I was #5 of 29. Survivor guilt.

"Chambermaid" - Trader F, -$37,372 on 505k shares traded.

2. Trader N, -$32,018 on 252k shares traded.
3. Trader D, -$16,780 on 448k shares traded.
4. Trader E, -$12,499 on 83,400 shares traded.
5. Trader C, -$7,413 on 374k shares traded.

"Lucky Pierre" - Trader B, $44,694 on 1 million shares traded.

2. Trader A, $9,071 on 278k shares traded.
3. Trader L, $4,212 on 87,800 shares traded.
4. Trader J, $3,134 on 109k shares traded.
5. Trader S, $1,762 on 43,800 shares traded.

Please Explain...

I found a link to this commercial at Wall Street Fighter. I watched it, and frankly, I've been confused and unable to piece logical thought together ever since. Help.



Also, this was linked... which is definitely offensive, but also really funny.

Great job today with the links, WSF... it's 8:18 and I'm off my game...

Whatever Happened To JJ The SWC Pumper?

Long time readers of this blog will remember the good ole days when the platinum supercycle was about to take off and JJ the Robot, who had every single cent of his retirement in SWC, was going to die rich.



Apparently, times have changed. In a sort of "where are they now" moment, I'm just wondering what happened to this dude.

I used to have so much fun with him.

Naughty By Nature, "O.P.P."

One of the worst ever.

The RO Report, "Plan C" Edition

Plan A is, you hit support and bounce hard. You clean up on longs.

Plan B is, you hit support, base and tank. You clean up on shorts.

Plan C is, you hit support and go sideways, giving false breakouts in both directions. You chop yourself to pieces.

For me, it was a Plan C day. For the rest of the RO, not so much.

You know those lab experiments they do with mice? To test their intelligence? They see how long it takes them to discover that food is hidden and stuff? Well I'm the stupid fucking mouse. I starve and my stiff body is lifted out of the maze. Other mice have nibbled on my feet...Enough said.

Out of 28 traders today, 19 were gross positive or 68%. Not great. What's nice however is that 9 traders made over $1,000 gross and a good number just missed that mark. I was #26 of 28... bloodied and chambermaided. As punishment, I will post bad music tonight.

Oh, and B pulled off a rare George Michael...

"Lucky Pierre" - Trader D, $6,015 on 292k shares traded.

2. Trader C, $5,360 on 139k shares traded.
3. Trader A, $5,130 on 145k shares traded.
4. Trader Z, $3,976 on 111k shares traded.
5. Trader N, $3,609 on 103k shares traded.

"George Michael" - Trader B, -$10,381 on 773k shares traded.
2. Trader H*, -$4,195 on 8,400 shares traded.

3. Trader S, -$1,966 on 47,200 shares traded.
4. Trader 6*, -$1,003 on 0 shares traded.
5. Trader O, -$257 on 25,400 shares traded.

The Great Cough

I stepped into the ruckus and heard the great cough.

Let me explain… Surrounding the brightly lit trading floor that I had just entered, were many smaller offices where some of the "back office" people worked. I don't actually know what these people did, but they were an odd presence. They’d shuffle by, ignoring the 23 year old dude shouting obscenities at his monitors while simultaneously trading and watching porn, and go about their business. They were mostly older and respectable looking and it was hard to understand how we could both be employed by the same company.

Had you spent some time watching their movements, you’d notice a pattern. They’d all routinely make visits to the corner office. There was never a light on in there and the door was never fully opened. Gray curtains were drawn over its large glass walls. Perhaps they were all part of a strange cult and worshiped there, or maybe, and this is more probable, the boss worked there. One thing was obvious, the man inside the corner office was very unhealthy.

He coughed all day long like a sick barking dog. A great wet cough that signaled impending death. The cough sounded like a mix between an oil burner starting and the sound mashed potatoes might make were you to hurl them against a wall. It was, in a word, disgusting, and it was the first thing that “greeted” me as I walked onto the trading floor.

WLACK! RRRUUUG! WLACK! WLACK! GGRHUMMMM!

In my two years at Anvil I only once caught a glimpse of the man responsible for "the great cough." And I only got close enough because I lost a bet. I peered through the crack in his office door and saw him bent over at the waist, wearing a black shirt, face red, eyes wide, coughing his brains out. Hacking.

But that cough was a presence on the trading floor as large as any trader. The man was always at work before anyone got there and no one ever saw him leave at night. Certainly he’d die in that office. One day he’d be coughing in there and something inside would give out and he’d bounce off the edge of his desk and land with a thud on the floor. They’d find his wet black lung lying next to his still body.

No one would attempt to revive him.

This dark office on the bright floor, this constant reminder of death was fitting. Death and trading made a good mix. I constantly think about death now. “Is trading aging me?” I wonder… “Is the stress killing me?”

Or just listen to the words and phrases you hear from other traders. “This SPY is killing me!” or “Whatever happened to that dude who blew up?” Even if you're doing well, you're "killing it!" Meanwhile, ask a trader who is getting smoked how he's doing and you might receive a simple one word answer as a reply, "Death."

If it’s good, it’s death. If it’s bad, even more death.

Stocks crash and they die. In an odd twist, traders are constantly seeking out the life blood of the market while risking death. We spend our time searching for a stock that has some life, hoping it doesn't kill you before you kill it…

It's a precarious position.

Anyway, while it was initially off-putting, I eventually used the cough for "perspective" reasons. Whenever I heard it, I thought of death. When I thought of death, I thought of the phrase, "this too, will pass." Bad trades die... good trades die... they all pass. Better not get attached to any trades. Indeed, as a daytrader, attachment to anything in the market is almost always a bad thing.

So looking back, "the great cough" taught me my first trading lesson.

I learned my second minutes later as I settled into my seat. Equality doesn’t exist on the trading floor.

R.E.M. "Find The River"

The RO Report, "Chop Fest" Edition

What a mess that was!

Starting at 2pm, we went into chop mode. A 100 point rip off the bottom due to some news release, followed shortly thereafter by an 80 point tank, followed again, by an 80 point rip and then silence...

It was an odd day all around, with the sectors that have been most beaten the last couple of days, oils and materials, leading the charge higher early. Then, out of nowhere, the REITs and financials joined the bullishness. Especially the REITs... where did that come from?

Basically, news played with the market today at really bad times. At 11:40 when we were near the top of our range, and again at 2:25 when we were near the bottom. If you're a trader trying to read a trend, this wrecks havoc with your system and sanity.

So the RO got hit. It has been a difficult start to this year. Out of 28 traders today, 15 were gross positive, or 54%. 3 traders made over $1,000 gross, and 6 lost over $1,000 gross. Bad numbers. I was #9 of 28. Green. Happy enough.

The Manservants win again!

"Chambermaid" - Trader A, -$9,725 on 408k shares traded.

2. Trader N, -$7,814 on 84,400 shares traded.
3. Trader P, -$2,357 on 200k shares traded.
4. Trader F, -$1,666 on 101k shares traded.
5. Trader 9*, -$1,126 on 0 shares traded.

"Lucky Pierre" - Trader B, $2,875 on 551k shares traded.

2. Trader C, $1,460 on 75,600 shares traded.
3. Trader E, $1,084 on 26,600 shares traded.
4. Trader Z, $913 on 5,600 shares traded.
5. Trader L, $607 on 23,300 shares traded.

Check the heatmap and some TA.

60 Minutes... The Price Of Oil

Here's an interesting video on the rise and crash of oil. They blame traders.

Dinosaur Trader Book Club Selection #1

A book club. Most people think Oprah. Some will think, "Oh, that's something my wife does with her friends." Others will think about that time when their parent's friend told them he had "something in his pocket" but it ended up being... okay, well, some people are really fucked up.

Anyway, I'm going with a straight-up classic to start for two reasons... First, I recently picked it up again and I'm enjoying it. Second, it just helps to read about and hear directly from successful traders.

The book? Market Wizards by Jack Schwager.



You can find loads of resources for finding setups, for plotting lines, and for reading indicators. All of these things are useful. However, there's something about big successful traders that spurs the imagination and lets you know what's possible. And with the inauguration just days away, this is the season of hope... might as well aim for the stars.

So if you're a serious trader or a beginner, this book should be in your library. Each Tuesday, I'll highlight a few of my favorite passages in a post, and hopefully they'll generate some discussion.

So next Tuesday, we can discuss Chapter 1, which is about the trader Michael Marcus. Let's see how this turns out.

Blitzen Trapper, "Furr"

I turned a bunch of people onto the Fleet Foxes on this blog... if you're one of them, check this song.

The RO Report, "Who Needs Volume?" Edition

The low volume environment, unfortunately, is continuing. But as a friend pointed out, that no longer seems to matter as far as volatility is concerned. We had about a 175 point range today in the Dow.

Another friend, Jawbreaker, just pointed out in the comment section of another post that he feels we're about to enter a very difficult phase for daytraders. This may be so. In fact, I see what he sees.

However, I've traded 10 years, I believe he's traded 12-15... difficult markets come and go. The thing is, there's always someone making more than you... which means, in essence, that you can always do better. The easiest thing you can do, is defeat yourself. Or, to paraphrase my hero (cough! cough!) Dennis Kneale, let's not talk ourselves into a recession over here!

Anyway, today marked a bit of a change for me, as I officially change my stance back to bearish. I've been bullish since that November low, but I hated the way the bulls just let SPY 89 go. Also, the price of crude is alarming.

Now, I think we can expect something like this to play out... not particularly pretty, but perhaps more realistic than thinking the worst was behind us forever.

In blog news, I'm working hard to have another history post up on Wednesday. I also have a funny story about The Wizard of Oz and looking up the skirt of a model, but I can't work on that until I get the history post up...

Also, tomorrow I'll announce the first book for The Dinosaur Trader book club, soon to rival Oprah's in importance.

Finally, you have just one more day to vote for Jon Swift. Please do.

Okay, now the numbers... out of 27 traders today, 20 were gross positive, or 74%. 10 traders finished up over $1,000 gross and only one lost over $1,000 gross. Those are the best numbers we've seen since the start of 2009... let's hope the worst is behind us. I was #9 of 27, happy to finally make a living wage again.

"Lucky Pierre" - Trader B, $9,850 on 163k shares traded.

2. Trader N, $8,794 on 135k shares traded.
3. Trader C, $6,768 on 161k shares traded.
4. Trader H*, $4,176 on 23,700 shares traded.
5. Trader V, $2,558 on 50,200 shares traded.

"Chambermaid" - Trader M*, -$2,110 on 0 shares traded.

2. Trader J, -$521 on 10,600 shares traded.
3. Trader 6, -$502 on 1,900 shares traded.
4. Trader O, -$323 on 37,400 shares traded.
5. Trader 9*, -$322 on 1,700 shares traded.


Here's your heatmap and technical analysis of the day.

A Trade In SPY

Man, last week was so tough, it was difficult to find a trade that I wanted to highlight.

On Friday, I lost money. However, before I lost money, I was actually up decently. At one point, I was even top dog in the RO.

It was a brief moment.

What got me there was a long trade. I had been watching the $89 level on SPY. It's hard to remember if I came up with this wonderful support level on my own or if it was pointed out to my by the HCPG collective. (As an aside, a bunch of pansies read that newsletter.)

Anyway, not only did this approximate level represent the price on the downtrend line from the late November rally, but, making the support even stronger, theoretically, was the 50dma at $89.07.



So when we moved down to this level in the SPY, I started long positions in SPY and a couple of other names. I'll just highlight the SPY trade, since it was the impetus for the whole trade.

One little caveat... I bought and sold SPY many times trying to jump the gun on this one. And so I was down quite a bit before the support was hit. Looking back, it's hard to know what the heck I was thinking. This market rewards patience.

Things have changed from the gunslinging trade we were enjoying just a few weeks ago... again, adapt or die.

So I picked up all the SPY I wanted, between $89.20 and $89.28. I couple thousand. I only got so aggressive because support was either going to hold and I was going to be okay, or it would break and I would immediately exit. The low of the day at this point was $89.14, so I was realistically risking $250 to $400.

Support held. However, volume didn't exactly flood into the market like I was hoping. Instead, it slackened, so I immediately started to take profits. I sold 1200 of my 2000 share position between $89.43 and $89.57. With some profits locked in, I could now afford to sit back and watch a bit knowing that even if it came all the way back to the lows, the worst case scenario was a breakeven trade.

$89.75 became a sticky area that SPY couldn't fight its way above, so I exited 400 more shares at $89.67. So I had 400 left.

Now, I decided to move this last 400 stop to my entry instead of waiting for a new low. I'm never sure what to do in this situation... keep the stop at my original level, or move it up. Because I was down on the day and unenthused by the volume from a significant support level, I opted to move it up. As a result, at 10:30, I was stopped from the trade at $89.25.

Shortly after, the stock made a new low, but held $89. I thought it could be making a double bottom, so reentered the long and bought 1000 shares at $89.31. I put my stop at $88.99 and told myself to just walk away.

In fact, I didn't walk away. I never do...

I exited 300 SPY when it got up to the sticky $89.75 area just after 11am and then watched the stock slide backwards all the way back to my entry. This action blew. 20 minutes later I had another opportunity to exit and I sold another 200 at $89.90. I was happy the $89.75 level broke but looking back, I should have taken a friends advice and used that level, $89.70-$89.75 to stop the last 500 of my position...

Instead, I ended selling 100 more at .50 and the rest at $89.33.

Going forward, without a significant uptick in volume and volatility, I'll be following more trades like this, where I can put on some size by what I deem to be an "important level."