The rate cut worked better than I could have ever hoped: Citigroup up 4% on the day, topping 29$ a share, and a profit for me over 650$. But that only lasted for a few minutes before Fitch slashed the rating of FGIC off of AAA. This cascaded into Ambac and MBIA, as usual, and then bled into the financials and wiped out the day's gain on Citi.
C'est la vie. I didn't have a desire to sell because of the aforementioned dividend concern, and I also couldn't time a bottom for the simple reason: NO NEWS!
As I said in the last post I'd be a much better trader if I had better tools. The market started to tank and I figured it was just a part of the usual volatility: sure I might give up some gains, but that's expected. A clear downward slope until the bell: that's caused by news. I looked through Bloomberg and Yahoo but couldn't find anything. The stories weren't published until after the bell. How can I deal with this lack of complete information?
That said, I'm not looking forward to tomorrow. I predict that the bears are finally going to take over and I'll be out a job until zecco gets rolling.
Wednesday, January 30, 2008
Fed cuts rate 50 bp
After 3 days of exceptionally low volume, the fed finally made their announcement. The wait was a real nail biter, but as expected the target rate was cut 50 bp to 3.00. In fact, to hedge against a deficient cut I put in a stop order for 27.15 on C, enough to cover my transaction costs. Knowing E*TRADE's brokerage system, though, it probably would've executed at 26.23 anyway. I maintain that I would be a much better trader if I had better tools.
In fact, I like that the MauiTrader said that he never placed an order during the day. He only acts when not under pressure and after careful consideration. In fact, he doesn't call himself a trader, but rather an investor. I don't give much of a shit about these distinctions.
As for Citigroup, its stock has about a 2% gain on the day plus the dividend gets assigned today. At .32, that leaves me with an extra 64$ profit. Also read, so long as the stock won't drop 32 cents, stay long at least until tomorrow.
This trade has netted me over 500$ so far (and has been about a week long), and is not bad for my long-only penalty box. However, I wouldn't say I had any exceptional strategy beneath it:
1) I felt especially down at 22 that Citigroup, no matter how badly it has performed, was completely undervalued. If they clean up their act properly, the stock should be worth at least 40, if not back to its usual value of 60.
2) The massive bear slide we underwent in the beginning of this month generated an imminent oversold rally. I never had much sympathy for this rally (and honestly I think it will peter out in the next few days, if not by the end of today), but I need to play somewhere.
I would like to sell this position very soon. I'd hate to give up the extra hundred bucks tomorrow (as I've observed, the standard intraday vol), but I'm not sure how dividends get assigned, so I'll leave my position on until then.
I still can't short so I'll probably be out of ideas for a little while.
In fact, I like that the MauiTrader said that he never placed an order during the day. He only acts when not under pressure and after careful consideration. In fact, he doesn't call himself a trader, but rather an investor. I don't give much of a shit about these distinctions.
As for Citigroup, its stock has about a 2% gain on the day plus the dividend gets assigned today. At .32, that leaves me with an extra 64$ profit. Also read, so long as the stock won't drop 32 cents, stay long at least until tomorrow.
This trade has netted me over 500$ so far (and has been about a week long), and is not bad for my long-only penalty box. However, I wouldn't say I had any exceptional strategy beneath it:
1) I felt especially down at 22 that Citigroup, no matter how badly it has performed, was completely undervalued. If they clean up their act properly, the stock should be worth at least 40, if not back to its usual value of 60.
2) The massive bear slide we underwent in the beginning of this month generated an imminent oversold rally. I never had much sympathy for this rally (and honestly I think it will peter out in the next few days, if not by the end of today), but I need to play somewhere.
I would like to sell this position very soon. I'd hate to give up the extra hundred bucks tomorrow (as I've observed, the standard intraday vol), but I'm not sure how dividends get assigned, so I'll leave my position on until then.
I still can't short so I'll probably be out of ideas for a little while.
Thursday, January 24, 2008
Sticking with it
I decided to let my C position roll overnight, rather than locking in the next 50$ profit. 50 isn't very much and given my transactions costs it would be a huge disincentive to get back in.
Anyway, it seems that I was also rolling the dice on the earnings announcements of MSFT and CAT. MSFT came in ahead of estimates despite the fact that Vista is well-regarded as a piece of crap. Maybe I should look at the conference call transcript directly to see where their earnings are coming from, if not Vista. It is Microsoft, of course, who has more essential business products than any other tech firm.
CAT I know nothing about except that it would reflect the strength of the argricultural economy. They have large international dealings, so may not be so strongly affected by US recession. Right now I'm trying to figure out how essential knowledge of companies like this one is to trading. Certainly as regards Citigroup it may not have a big impact, but clearly the whole market moves in tandem and this is a Dow Industrial.
In other announcements E*TRADE, the worst performing stock of the S&P 500, reported a loss of $1.7 Billion, par for financials exposed to subprime. One can only wonder how well ETFC would be faring today if they'd stuck to being a brokerage. Probably similar to AMTD: only suffering a large loss in the swoon of Jan 08.
Anyway, it seems that I was also rolling the dice on the earnings announcements of MSFT and CAT. MSFT came in ahead of estimates despite the fact that Vista is well-regarded as a piece of crap. Maybe I should look at the conference call transcript directly to see where their earnings are coming from, if not Vista. It is Microsoft, of course, who has more essential business products than any other tech firm.
CAT I know nothing about except that it would reflect the strength of the argricultural economy. They have large international dealings, so may not be so strongly affected by US recession. Right now I'm trying to figure out how essential knowledge of companies like this one is to trading. Certainly as regards Citigroup it may not have a big impact, but clearly the whole market moves in tandem and this is a Dow Industrial.
In other announcements E*TRADE, the worst performing stock of the S&P 500, reported a loss of $1.7 Billion, par for financials exposed to subprime. One can only wonder how well ETFC would be faring today if they'd stuck to being a brokerage. Probably similar to AMTD: only suffering a large loss in the swoon of Jan 08.
Reversing my decision: 26$
I hate E*TRADE for that. It's just impossible to think on the fly with such a huge transaction cost looming over my head.
I decided that the market had already priced in this house price drop, and that the bulls really really want this to be an up day. Two up days in a row and we have ourselves a weeklong trade. That would also get me the C dividend, so I'm back into the position, having lost 26$ in transaction costs and perhaps 20$ in spread. Not too bad.
I decided that the market had already priced in this house price drop, and that the bulls really really want this to be an up day. Two up days in a row and we have ourselves a weeklong trade. That would also get me the C dividend, so I'm back into the position, having lost 26$ in transaction costs and perhaps 20$ in spread. Not too bad.
Bearish on housing news
I dumped the C position at a not quite optimal time, locking in about a 300$ profit. I was hoping to be less of a day trader for once with Citigroup, but one thing really got to me:
It looks like the kind of extended rally we're hoping for is one that Always starts with a two day rally, what the MauiTrader calls the follow-through. I could've imagined this follow-through happening, especially with our open, until the news came out that home prices declined for the first time in 40 years. This kind of problem would certainly hurt the economy in general and the financial sector in particular.
However, I think that I'm not in a good position to guage the impact of this news. Since it's come out 37 minutes ago, the market has bumbled around flat, and C has traded within a dime of my sell point. There's a good chance that this news has already been priced in, and that pretty much nothing can stop the bull from charging over the next few days.
It looks like the kind of extended rally we're hoping for is one that Always starts with a two day rally, what the MauiTrader calls the follow-through. I could've imagined this follow-through happening, especially with our open, until the news came out that home prices declined for the first time in 40 years. This kind of problem would certainly hurt the economy in general and the financial sector in particular.
However, I think that I'm not in a good position to guage the impact of this news. Since it's come out 37 minutes ago, the market has bumbled around flat, and C has traded within a dime of my sell point. There's a good chance that this news has already been priced in, and that pretty much nothing can stop the bull from charging over the next few days.
Wednesday, January 23, 2008
Citigroup, Dow swing up
To my surprise, the C trade generated a profit very quickly. After a bit of a swoon after my original purchase, the Dow managed to turn a 1.5% loss into a 2% gain on the day, implying about 250$ unrealized profit on Citigroup.
I'm caught in a decision of whether or not to take the money and run. This is definitely more luck than should be expected from such a trade. I was hoping for pretty much flat over the next week, maybe a little appreciation. At its best, C was up 10% on the day.
Two pieces of advice to conflict with:
1) Jim Cramer said that when he bought a stock for a dividend, and then bailed, he missed out on a whole lot of profit and security when the stock further accelerated and upped their dividend. So DON'T DROP those kinds of stocks!
2) There is hardly a pundit out there who says that we're not in for a long haul recession, and I've believed it myself for a while. But the MauiTrader says cover the shorts for the next little while. No matter what you say, a 6-day loss is a lot, even if we are in recession. We're due for a pop.
The dividend will never equal such a profit-- 250$. Not for a very long time and by then I'll be back to day trading. But what position would I likely put on tomorrow? Can I dump the stock premarket if things start to slide? Will I completely rue the loss of 200 bucks for sitting on this stock?
That's a problem with this trade: I had no goal in mind for profit. I think I'll sit on it for now, regroup by tomorrow.
I'm caught in a decision of whether or not to take the money and run. This is definitely more luck than should be expected from such a trade. I was hoping for pretty much flat over the next week, maybe a little appreciation. At its best, C was up 10% on the day.
Two pieces of advice to conflict with:
1) Jim Cramer said that when he bought a stock for a dividend, and then bailed, he missed out on a whole lot of profit and security when the stock further accelerated and upped their dividend. So DON'T DROP those kinds of stocks!
2) There is hardly a pundit out there who says that we're not in for a long haul recession, and I've believed it myself for a while. But the MauiTrader says cover the shorts for the next little while. No matter what you say, a 6-day loss is a lot, even if we are in recession. We're due for a pop.
The dividend will never equal such a profit-- 250$. Not for a very long time and by then I'll be back to day trading. But what position would I likely put on tomorrow? Can I dump the stock premarket if things start to slide? Will I completely rue the loss of 200 bucks for sitting on this stock?
That's a problem with this trade: I had no goal in mind for profit. I think I'll sit on it for now, regroup by tomorrow.
Citigroup trade on Well-Thought-Out-Move
Many more mistakes to list:
1) I said to myself a million times yesterday, Never Cover. Never, ever cover. Sure enough FSLR had a drop of 15% this morning making up yesterday's loss. This was the original risk management system.
I think that psychologically I was handicapped because of the day trader status "upgrade" which curbed my freedom to go in one day and out another. I can blame it at least a little, but it doesn't mean I get my money back.
2) I had said on friday a short of AAPL would be an amazing trade before the close. I figured that the earnings report would come in not unlike INTC: a decent quarter but a shitty outlook. Sure enough that's what Apple said but unlike the 12% drop in INTC upon a similar anouncement AAPL dropped 17%! This also took FSLR down with it quite a bit.
This isn't so much a mistake as a missed opportunity. I probably would've covered yesterday on the open locking in a gain. If I had been a miraculous trader I would've shorted again at the high around 3:30PM yesterday, but this is all wishful thinking. Of course, none of this would've been possible given E*TURD's and NASD's awful fiat.
3) In another well-thought-out move, like the Onion said, I went long C, violating my cardinal rule: Never go Long until the MauiTrader says the bear is done. As a matter of fact he's saying now that a pop is due but to keep a close guard. I also like the fact that the dividend is going to be paid in the next few days. I can't tell if a dividend payment boosts or depresses a stock price, so that's something to look for.
I'm treating C as more of a savings account for right now until I can transfer funds into a a legitmate day-trading platform. I can only go long, and I only put less than half the available funds in the stock. I'm looking for, as Modest Mouse would say, for the stock to float on...
Many of my motivations for buying it comes from the old rain dance: it's been so long since we had an up day, we're about due for one. There's also a faux bottom with the VIX jumping to 35 finally yesterday on that amazing crash and rally.
I've also come to love C as the CIA loved the USSR back in the 70s. It's a cuddly teddy bear to me. I've seen it's stock move for the last couple months and feel that I know it intimately. It feels like a safe haven sometimes, like when tech is sliding like today. I read an article in seeking alpha that says to wait until C is trading under 20, and hopefully at 12 to buy it. Like I've said I think going long once the recession is over is going to be very fun, and we can look for the next GOOG RIMM AAPL FSLR etc. then. Even maybe a financial too. But till then I'm hoping just to float on. 12 is too low: I couldn't imagine it. 20 is likely, though: I'll monitor the stock carefully.
1) I said to myself a million times yesterday, Never Cover. Never, ever cover. Sure enough FSLR had a drop of 15% this morning making up yesterday's loss. This was the original risk management system.
I think that psychologically I was handicapped because of the day trader status "upgrade" which curbed my freedom to go in one day and out another. I can blame it at least a little, but it doesn't mean I get my money back.
2) I had said on friday a short of AAPL would be an amazing trade before the close. I figured that the earnings report would come in not unlike INTC: a decent quarter but a shitty outlook. Sure enough that's what Apple said but unlike the 12% drop in INTC upon a similar anouncement AAPL dropped 17%! This also took FSLR down with it quite a bit.
This isn't so much a mistake as a missed opportunity. I probably would've covered yesterday on the open locking in a gain. If I had been a miraculous trader I would've shorted again at the high around 3:30PM yesterday, but this is all wishful thinking. Of course, none of this would've been possible given E*TURD's and NASD's awful fiat.
3) In another well-thought-out move, like the Onion said, I went long C, violating my cardinal rule: Never go Long until the MauiTrader says the bear is done. As a matter of fact he's saying now that a pop is due but to keep a close guard. I also like the fact that the dividend is going to be paid in the next few days. I can't tell if a dividend payment boosts or depresses a stock price, so that's something to look for.
I'm treating C as more of a savings account for right now until I can transfer funds into a a legitmate day-trading platform. I can only go long, and I only put less than half the available funds in the stock. I'm looking for, as Modest Mouse would say, for the stock to float on...
Many of my motivations for buying it comes from the old rain dance: it's been so long since we had an up day, we're about due for one. There's also a faux bottom with the VIX jumping to 35 finally yesterday on that amazing crash and rally.
I've also come to love C as the CIA loved the USSR back in the 70s. It's a cuddly teddy bear to me. I've seen it's stock move for the last couple months and feel that I know it intimately. It feels like a safe haven sometimes, like when tech is sliding like today. I read an article in seeking alpha that says to wait until C is trading under 20, and hopefully at 12 to buy it. Like I've said I think going long once the recession is over is going to be very fun, and we can look for the next GOOG RIMM AAPL FSLR etc. then. Even maybe a financial too. But till then I'm hoping just to float on. 12 is too low: I couldn't imagine it. 20 is likely, though: I'll monitor the stock carefully.
Tuesday, January 22, 2008
Dow recoups its loss
The set up:
On monday the US markets were closed. The world markets experienced a crash worse than any seen since 2001. Accordingly US futures were trading down around 5% before the open. Bernanke issues a surprise 75 bp rate cut before the bell and the futures still don't rally.
I read in some news articles that "Futures are down despite emergency rate cut by the fed". This is my first mistake: believing that the reporters know why the market is moving in a particular way. I decide to short FSLR at about 155 before the open.
The market opens ridiculously down. FSLR (the main contender) down 11% to about 155. AAPL down 9%, C down 6%, and except FRE and FNM, no charts in the green. SKF was up about 9%.
The FSLR short actually makes money for the first 30 minutes, but then starts to tank ridiculously. The entire market swings up to about 1% down by noon. All the while FSLR with its high beta is making significant gains.
My mistake #2 is not to cover the short at the 8% loss region, which would have been at 170. The stock continues to gain until it gets to 185 when I cover out of fear. This cover (sice it was on the same day) confirms the fact that I'm a day trader and forces ETRADE to bar me from making any more trades.
My third mistake was not to consider covering half my position when things turned against me. My fourth mistake was not to let my position ride after all the day's events. I had a motivation for a loss tomorrow: AAPL was likely to report poor earnings. Tomorrow FSLR is likely to lose I'd say about 6%. We'll see.
My fourth mistake was not to have enough bullets to get into other trades. Around noon FRE was up 15% which is clearly unsustainable. A short a such time would've made around 10% in about 10 minutes. These are the opportunities I usually look for.
The strategy is a combination of technicals and fundamentals. We all know that FSLR is ridiculously overvalued and that it's a bear market. The Bear aspect is supposed to protect against losses like I had today-- this is probably why I wouldn't cut my loss at 8%.
Upon reflection though, it's quite clear that FSLR was down b/c of the global drop and popped b/c of the rate cut. Shorting before the market open on the day of a massive, unexpected rate cut is blatantly inadvisable. I hope we all know that now.
On monday the US markets were closed. The world markets experienced a crash worse than any seen since 2001. Accordingly US futures were trading down around 5% before the open. Bernanke issues a surprise 75 bp rate cut before the bell and the futures still don't rally.
I read in some news articles that "Futures are down despite emergency rate cut by the fed". This is my first mistake: believing that the reporters know why the market is moving in a particular way. I decide to short FSLR at about 155 before the open.
The market opens ridiculously down. FSLR (the main contender) down 11% to about 155. AAPL down 9%, C down 6%, and except FRE and FNM, no charts in the green. SKF was up about 9%.
The FSLR short actually makes money for the first 30 minutes, but then starts to tank ridiculously. The entire market swings up to about 1% down by noon. All the while FSLR with its high beta is making significant gains.
My mistake #2 is not to cover the short at the 8% loss region, which would have been at 170. The stock continues to gain until it gets to 185 when I cover out of fear. This cover (sice it was on the same day) confirms the fact that I'm a day trader and forces ETRADE to bar me from making any more trades.
My third mistake was not to consider covering half my position when things turned against me. My fourth mistake was not to let my position ride after all the day's events. I had a motivation for a loss tomorrow: AAPL was likely to report poor earnings. Tomorrow FSLR is likely to lose I'd say about 6%. We'll see.
My fourth mistake was not to have enough bullets to get into other trades. Around noon FRE was up 15% which is clearly unsustainable. A short a such time would've made around 10% in about 10 minutes. These are the opportunities I usually look for.
The strategy is a combination of technicals and fundamentals. We all know that FSLR is ridiculously overvalued and that it's a bear market. The Bear aspect is supposed to protect against losses like I had today-- this is probably why I wouldn't cut my loss at 8%.
Upon reflection though, it's quite clear that FSLR was down b/c of the global drop and popped b/c of the rate cut. Shorting before the market open on the day of a massive, unexpected rate cut is blatantly inadvisable. I hope we all know that now.
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