Still in C

i don't know why, but when the dow has a bad day, C has a great day.

In at 2.78, today hod is 3.46

EDIT**** I'm out at 3pm. long 2.78-3.58.

For documentation's sake...

I'm long C from around 2.78. I'll post when I sell.  I really just want to make my money back to the full amount I started with.

Thank you to everyone that helped me learn so much about trading.

Ahoy, Matey's

Hello all,

Sorry I have not written in a while. As my financial markets professor once said in class "the pain of losing money is much more than the joy of profiting"

Well, that pain has kept me away from trading all together recently. That and several piled up assignments.

Today I am back to declare a gradual re-entry. This is the second time my account is visiting all time lows with a current balance of $3200. If you remember back to the week long rally the DOW had during early March, you'll notice how the pullbacks from the gains were not noticeably seen. The DJI maintained an above 7000 point value and I shorted a 3X Financial BULL ETF-ticker:FAS soon after. It's hard for me to cover losing shorts, so I held invariably longer than I should have.

I still plan on trading exclusively and heavily during the summer months. I am not satisfied with all of my experiments in trading during the school year and hope to exonerate myself from the variability I've had in my account this year through some intensive work.

I should also declare, I will now be majoring in Math alongside Economics. Good day.

This should be fun.

I'm current short FAS, but this post is more about an assignment I recently completed for today's FOMC meeting. I'm copying below, a fictitious memo to investors I have written predicting the outcome of today's meeting. I really enjoyed writing this. Skip to the last paragraph if you want my prediction!

Good Afternoon Esteemed Investors,

Needless to describe in detail, these are tumultuous economic times. We here at GEE and VEE pride ourselves on our 100% success rate with determining the Federal Funds Rate over the lifetime of this memo and wish not to fail you in these pressing times.

Among the more dire threats to the Federal Reserve’s dual mandate lies predominately the issue in credit markets.  As prescribed as a cause for the struggling repo(repurchase agreement) market, January FOMC minutes stated: “market participants reportedly were reluctant to lend Treasury collateral out of concern that counterparties might fail to return borrowed securities.” A lack of Trust coupled with low supplies of loanable funds and weak demand is causing historic congestion in the credit markets. Commercial Bank credit has fallen for the second consecutive month in December echoing the lackluster demand and dwindling supplies and month to month recovery in select areas such as liquidity in corporate bond markets and short–term funding markets have occurred; though marginal at best. Please note there remains renewed deterioration in the banking sector’s financial condition as well as consumer spending, business investment, sales of new homes, foreign demand (of US treasuries), unemployment, GDP, and industrial production. The message of the January 28 FOMC meeting is bare; the committee stands united to combat the credit crisis before all other issues. It is the committee’s belief that this will subsequently loosen the flow of capital to all other deteriorating sectors. We must let you know that the FOMC has already stated after the January 28th meeting that “policy rates would likely remain low for some time and that the FOMC might engage in additional nontraditional policy actions such as the purchase of longer term Treasury Securities.” We here at GEE and VEE do not believe the purchase of longer term Treasury Securities will be resorted to. Adverse price movements which occurred after this initial announcement were “more than reversed after the turn of the year, despite the worsening economic outlook.” Further as month to month relief comes to short term funding markets and spreads in the LIBOR decline, there is no reason for government purchases of long term treasury securities to occur.

It is difficult to find opposing views from the January FOMC meeting in media and the Beige Book Summary for 3/4/09. The Summary confirms the prevailing failure of consumer spending in all sectors including real estate, manufacturing, retail, travel/tourism, and services. Price levels are not showing signs of increasing either due to low energy prices. The summary also confirms that “availability of credit generally remained tight” through February and the opening of March. As mentioned in the 1/28 FOMC report, the summary reaffirms: “Demand for commercial and industrial loans was reported lower in most Districts,” and that “Lenders continued to impose strict standards for all types of loans”. Credit markets have not loosened in the period after the last FOMC meeting. Though some might find problems with WSJ reports that show unemployment increases beyond the FOMC projection of 4.8-5.0%, careful readings of the Summary of Economic Projections (SEP) show that the FOMC acknowledged,  “projections for unemployment rate were to be tilted to the upside”. Also, the FOMC was aware of the potential for large drops in GDP.  The 1/28 SEP reads: “projections for real GDP growth were judged to being skewed to the downside.” There should be no surprises here folks. The WSJ reports after the 1/28 FOMC meeting show that FED officers have become much more comfortable with delivering the blunt truth to the ailing economy. As the March 4^th WSJ article reminds us, the U.S. is aggressively attacking weak credit markets by injecting up to $1 trillion in new lending through TALF and associated relief to Mortgage backed Securities. Please note that the problems cited by the FED and FOMC are indeed being addressed through substantial measures.

Reports from the fifth and twelfth Federal Reserve district verify all claims in the Beige Book summary. Retail, Manufacturing, tourism, service, finance and real estate sectors all show declining and contracted states with very low consumer spending even in the holiday season. The economic picture is bleak both nationally and regionally.

We here at GEE and VEE see not the courage in the FOMC to make the bold decision to increase the Federal funds rate. Doing so would be akin to pulling away the crutches of an already lame and aged man. Reducing the rate further, would not make lending services anymore available then a 0-.25 rate have already done.  The credit markets are severely disabled at historic proportions. Extraordinary measures in bailout funds are being pledged in this second round of funding. Ladies and gentlemen, we wish to warn that as the effects of the TALF become felt that long-term inflation will become the next threat to the FOMC as the Federal Reserve’s balance sheet continues to grow. For this reason, assuming no further shocks to the economy occur, as effects of TALF spread through the economy and credit markets loosen, the FED will refocus measures to scale back liquidity and begin to address the multitude of issues weak consumer spending and low industrial lending/borrowing have created. However, in these markets trying to anticipate future movements of the FOMC are best labeled unwise for the sake of safe investing. For the time being, please prepare investments for an unchanged rate for today, March 17^th, 2009.

 

Yours in Finance

 

Nirav Lakhani

Research Associate, GEE and VEE

 

 

 

Scalps today.

I scalped RF today. It was a pure technical read. Saw a lasting 10/60 cross and continous upticking DJI , and a following BAC. I jumped in RF at 3.48, and was out at 3.68, though it hit a max at 3.76 but failed soon after to close at 3.51

+$220

Perhaps the most satisfying part of this trade was knowing that 

I still had the edge to recognize this pattern and make an effective entry and exit after a horrible last Friday. I also realized how important it is to avoid making back to back trades just becuase you think you may not have reached your profit potential. I left about $72 on the table from my exit, but I learned this valuable lesson.

Really guys, this breakout was beautiful, just easy money. Check out the chart below

EDIT**

I love this article, let the education bubble burst--another artificially inflated sector of the economy that should come crashing down. 

BIGGEST LOSSES ON MY ACCOUNT.

Everyone has always said be careful o/n financials. Muddy goes even further to say he cannot do o/n longs. Well, GDP figures came out and sent shares of everything sliding down. My losses sum to ($1140) and I'm down 6.8% since starting to trade. This is my 3rd time ever going into losses on my account. I've recovered beautifully each time. I'm not worried  in that sense, I'm not even worried about making a bad trade for my entry. GDP fell 6.2 percent. How was I supposed to know revisions were coming out if it wasn't making headlines yesterday. In fact, I think getting out with 1k losses is good comparing to how large the implications of the GDP drop are. If you're unaware of how big of a deal this is, just read some articles.

There is one thing I did very wrong about this trade, and that is my exit. I've been great about not making exits during panics. Out of open, RF started to hit new LODS so I got out and "cut my losses." See, I never understood why people say that, b/c right after selloffs are bounces. If you just wait to "cut your losses" you will REALLY cut your losses. I recommend you take "cut your losses" out of your vocabulary if you trade. Its cliche beyond belief. It terms of numbers- I exited RF at 3.13. Right now it has bounced up to 3.66, thats $530 that could have been subtracted from my loss of $1140. 

So now, lets talk about recovery. Its strange, aynul, made a good post yesterday about some things he picked up about handling losses at the traders expo. I'm not sure what this weekend will procure from me. Perhaps some deep philisophical ramblings on my behavior are in order. What the hell, I do that everyday. Honestly, I'm just going to keep trading. I think i've got the edge already. Honestly, what just happened easily relates to poker. It's really like being Daniel Negrenau in this hand. 

Sometimes, probability pins you on the losing end up against a wall with hundreds of orcs glancing at you with their beady eyes through unwashed and tangled strands of hair, slowly approaching, mumbling incantations in foreign tongues while licking their lips as they stare greedily at their fresh supper. Ok ok, thats not how I feel, but its fun to talk about.

Really, its not the entry thats getting to me, its the exit. Right now RF has reached 3.78 meaning this is no longer a bounce, but a reversal. RF is a GOOD COMPANY. I'm serious. 

test done, market open

I think i'll do a minute by minute today again. I just got out of my Microecon test at 9:15 and being 9:36, i have all day to trade(though I really shouldn't). One day trade to use, and a 100% chance that it will be. I've already fought the urge to buy right off open, but I know better entries happen when volume settles. I should go find a book, or write in my journal until 10:30, but I'll probably keep the charts open just for the sheer enjoyment of looking at them.

No positions yet, updates soon.

Today's trade

In C, doubling up again, at 2.32. This is the first time i've bought right after market open-9:33am, It is a direct violation of yng's rules. We'll see how it goes... update later. 

EDIT: 4:20pm

First, It was a huge mistake to buy within 3 minutes of open. Right after I did, C tanked and I was down over $500 on my position. It was a sell off and I almost cut my losses. All in all, I held because I have a tolerance for pain when I know I might have simply been early to the party. But party there was. It was a roller coaster day, the chart says it all, I sold with about 45 seconds to market close at 2.58 for a nice $480

As you can see, I bought right at open, and held through a deep sell off. You might wonder why I held, and my reason is simple. A sell off or a buy run can happen really quick in BofA or C. A volume spike can make this happen and also, this was happening before 10:30 when volume is particularly high. It is a risky play, but I watched Bernanke's testimony real time with my trade. When he mentioned that nationalization of C did not imply a shareholder wipe, I had more confidence. This was when the first buying run of the day came around 11AM. From there, I was looking for a nice exit while checkings charts of the many other financials having good days. Since C was not hitting the same HODS BofA was, I knew it would come EOD.

Simple reasoning. Profitable trade. I'm not happy with the risk I took at 9:33AM. I'm tired of account fluctuations. I'm up 16.3% and don't want to give any of it back. 

My new hero

I've always thought traders had much to offer for economic input. Even day traders like myself. Knowing how the market will react is so much a part of setting economic policy, but traders all make up the "silent majority." Like this guy, the one reason I cannot see myself getting involved in American Economics is because a co-requisite for such positions is to be an fervent politician as well.

Rick Santelli is very emotional in this video. He sum's up what I believe much better than I could. His picture is my new desktop wallpaper.

I'm also short BAC at 4.01. Edit at EOD if i'm close or hold o/n.

UPDATE

($280) on BAC. Definitely let this one get away from me as I didn't update my position with the realtime chart patterns i saw.

I saw a reversal coming but I held. Clearly my own fault and this is why I am down for the day. Last two trades have now

been red.

-NIRAV

Yesterday.

Update.

BAC and C are plummeting under fear of nationalization- hmmmm, how did I end my last post?

My BAC short went brilliant, I covered at 4.28 from 4.73 up $485

I got ready for how stocks normal react from morning sell offs by going long on C since the pp/share was lower and I could double my position size. C did not bounce from the sell off. It continued downward. I was mad at my exit point. I lost ($380). I'm up from yesterday, but seeing my account break 6K only to fall below it again was thoroughly disappointing. 

I am, however, not mad about exiting BAC where I did, its currently at 3.20 meaning i could have had $1500 in paper profit had I held, but profit taking seemed completely reasonable way back in the 4.20's and I would not have anticipated this meltdown that has occurred.

Today I could easily trade w/ my remaining day trade, but I will restrain myself since this weekend will be big for BAC,C and the government. Right now they are both sideways anyway. It is difficult to see where things are going from here. My hunch is continued downward, but Im not sure enough to bet on things... yet.

Behavioral Trading, and my recent trades

I made a losing short on BAC friday. My loss was ($40). This was not a bad trade, it was a good lesson learned. A lot of times I may enter shorts because I for see EOD fades. This means waiting until definitively after 3pm but usually after 3:45 or 3:50. That I did on this short, and finally covered so I wouldn't have to hold over the weekend. Like we discussed in Financial Markets today, it helps traders to sleep better knowing their money is not invested in some far off land in some far off company. The funny thing about this EOD sell-off last Friday, was that it did in fact happen but not until around 3:59. Talk about pushing off the inevitable. Plenty might have jumped out like me for similar reasons for moderate losses. Smart money did not.

Smart Money is a term Robert Shiller uses to describe profitable traders. Tim Sykes always says 90% of traders lose money and 10% are consistently profitable. While the percentages might not be weighted this way, lets assume most people lose money- a fair assumption in my opinion. We could go into all of the market theory behind this, but I don't want my fingers to cramp in the morning.  I know the discussion would get lengthy. Anyway, I think Syke's profitable traders and Shiller's smart money are one in the same. If you are one of these traders then on most days, placed in the context of news and general market fear/glee you wait for the market to speak and simply react. In the future, I plan to compile a few charts and demonstrate how I trade and my candid reasoning for doing so.

Right now i'm o/n on a BAC short. I have large unrealized gains and my entry was 4.73. Its ridiculous that BAC has such large back to back red days, but when the DJI is testing new lows, its not a big deal as it would be otherwise. I'll post tomorrow when I close

I only watch C, BAC, and DJI these days. They have volume, I don't have to chat to borrow shares, and I get immediate and accurate fills. I'm not going to stop until these banks get nationalized... I hope I'm short on that day :)

5-1

I couldn't keep the streak going today. I am now 5 for 1 on trades. Saw a signal for a breakout and jumped on it. It wasn't more than a 7c movement from my long entry-so I know I read the chart right. I held too long, and what looked like a bad EOD selloff began, so I got out. 

-$144- Long on C

Holding till EOD would have been profitable as it closed indeed 7c up from my entry, but I was on the move to study in the undergraduate library.'

Today was definitely a day to sit out. The EOD of day buying spree would have been dangerous if I had gone short-- which was my instinct when I saw the chart for the first time.

In other news, I had a humorous thought the other day when someone mentioned Bernie Madoff. Could the government, in fact, be accused of running the largest ponzi scheme ever for the tax funds they are using and the returns they are promising? Think about it.

Note* I edited my last post after Hari brought to my attention the comments I made about Americans/people that defaulted on mortgages. But, I felt very vindicated today when a CNBC reporter asked Kyle Bass, a hedgefund manager that sold short (Mortgage backed) bonds in anticipation of the subprime crisis, how he felt about betting against America. Bass said the lenders of capital should have never met with the homebuyers and homebuyers should not have taken on such risk. There is nothing wrong with Bass recognizing this and trying to profit.  Some may argue traders are responsible for the moral implications of their trades. After hearing Bass speak, I am less concerned about this dilemma and how it applies to me. 

Trust me when I say, it gave me great unrest to short banks in the past!

C

5th successful C trade. Went short this time.

+$120 on the trade. 

+$100 from referrals on Aynul and Alex to TOS.

I'm going to count the referral funds as my own to bring my new yield on my account to:

+14.84%

I left alot of money on the table with this one. I was short. Chart was simply too easy to read. If you want an example of a purely downward headed chart, view C at 11AM. I got out after I made pinch on this trade, but If I had turned CNBC as I have on now, I would have realized that i was covering too soon. 

They even said "buy on rumor, sell on news"... lmaonade. 

Wow, I shorted C at 3.77 out at 3.67.... Right now its 3.47!

Its only 11:39. But this will be a hugely talked about today. Market hasn't reacted this violently in a while. Shows the fear that exists out there.

Today is a great day for shorting. I wasn't even supposed to trade this week, but when I see such an easy C chart, I'm glad I got in for a bit of profit off this mess. I called C a short since yesterday as it did a sideways all day around 4.00, but I would not have called this. This is just awful for the market.

now at 11:44, there is finally an end to this selloff.

In terms of where all of this trading is going, I had a good conversation with Prof. Vaidyanathan, about risk, leverage and where I think this crisis could spread: the retail sector. She warned me about greed, but pointed out that risk is a function of age, and I know I'm being risky with my position sizes and pennystocks in general. But i'm not trading a retirement account, this is mostly for learning but also because I really enjoy it. 

Also, it seems like both, Credit Default Swaps(CDS) and Collatoralized Debt Obligations(CDO) are becoming common knowledge for the havoc they created. My Micro professor spend 30 minutes explaining both to my completely indifferent classmates. 

WOW I left so much profit on this trade out there! Now I know I know how Aynul felt with BAC.

CNBC financial idiot just said:"We should see a reversal by July-August". These people are delusional. Do me a favor, don't be delusional.

My covestor chart, Sharpe Ratio, and Citi

I've made 4 trades with C in the past week and a half. I've played long and short. The trade I closed yesterday was my largest gain. All of my trades were positive. My total gain on C has been $1193.00

On that note, I am up 13.1% on the year. My Covestor chart will update soon to put me at up 50%. I'm not sure where the discrepancy is coming from. I wish I was up 50%.

Best for last! I just checked. I am ranked 63rd on the covestor top 100!!!!!! My Sharpe ratio is 1.57, probably the highest it has ever been. Check it out HERE

My focus from here will be to continue my streak of winning trades. No set backs. They take too much time to recover from.

EDIT** A friend of mine is now blogging his trading too. Check him out here.

Reflections.

After making my post yesterday. I kind of glorified my little decisions through the day. Yes I made money and made some great calls about short entries and overall movement for the day, but I'm skeptical about my own skill.

I had a good long talk with Giovanni yesterday. He worked at a 330 million dollar hedgefund this past summer so he has plenty of perspectives to represent about trading. 

My conclusions and ideas about trading: The market is made up of players in a pyramid scheme.Remember the old food pyramid, with a triangle for fats/oils at the top. Imagine that.

In the top triangle, are Ibanks

Sharing the level underneath are Market makers(specialists, floor traders etc) and Hedge funds. The later would have more real estate at this level if it could be ideal.

Underneath are mutual funds foreign long run investors, prop firms. 

At the bottom are online brokerages and their constituents. Note: The sections are divided by volume of people in each category, not by %age share of total market cap. I have no idea how to represent the market cap. The market makers are the ones who always win of course. My ideas in trading are biased by me being indian. No really, read GAMES INDIANS PLAY. It'll explain to you why if you are ever in a business transaction with an Indian odds are you are losing. I can't help it, I was taught these things since I was young. The point of this is, it is my opinion that shifts in the stocks I trade are rarely due to news. Its a psychological war between market makers and traders like me to make money off of day-to-day price variances. This is, afterall, what a true daytrader like myself, and the rest of GOTS are trying to do. This is why I recongnize the fake breakouts. They are attempts for the market makers to convince people that the stock has reversed. False, there is no news, a wave of buying has come in so that market makers can get nice short entries. The higher up you can make the stock tick, the better your entry for a short. Simple.

Conclusions with GIOVANNI: Everything I write on this blog is complete bull that my self-inflated ego vomits out everytime I make a winning trade. Thats right. Look at all of the quotes people have about trading. When your POS stock begins breaking out in your $10K short, you aren't quoting Warren Buffet anymore, you're hyperventilating into a brown paper bag and taking pointless puffs of your asthma inhaler! Even Giovanni's boss, the parter of the fund, loved reading self help books on trading. I have nothing against the guy, he's actually managed to keep his fund afloat in this mess. Good for him. I'm just saying that I have plenty of theories about how the market works. I could easily be wrong. I know what I see is profitable, but I have no idea if I'm my logic is what is going on. If you see an inefficiency, exploit it. That is what Muddy does. This is what I do. I just like to explain why I think it worked. The point of this post is, my explanations could easily be wild theories.

Hell, Muddy, probably realizes its pointless to blog like I do. People make a winning trades, move on, just realize why it worked and try it again the next market day.  

This is a very funny post, in my opinion. It feels good to be breaking even after months of being down.

Anatomy of a Day trade

AS my fellow bloggers Yng, DV, and Il torello did yesterday, I too posted a chart with some comments on my thoughts. I particularly enjoyed Yng and DV's Anatomy of a Day trade. Here is my own below.

I kept a text file open all day, and simply timelogged my thoughts throughout the day. They are candid, unedited thoughts, often typed very quickly as I might have been in class or more interested in following a stock then typing my exact thoughts. I have no reason to be fraudulent. I was denied the internship for which I started this blog anyway, so I have nothing to prove. I wanted to share my thouhgts on how I analyze stocks I daytrade and keep track of which ones of my ideas actually hold up. You'll notice interesting things like at beginning of the day I wanted to do a long scalp on C, while for the day, long on C would have been awful.  The subject of my log is only C. Keep in mind I am already sold short 1k shares from yesterday at 3.98.  I have made in bold my best time logs. Here is my time log copied and pasted:

9:44- just missed my chance to flip positions. realized 3.94 that it hit resitance at 3.90 and it was time to go long. Currently 3.95 lets see if it faces upward resistance. The big open up this morning looks like it could be an attempt to avoid the inevitable tank which happened last night.

Had I more trades(though I do have 3 as of now, not sure if I can use them all on C) I might have flipped. 

9:46- looks like its trying to bring 60dayMA down flatlining at 3.95. Resistance at 3.96 break.

9:47- I realize I am doing way too many realtime updates, there are many more minutes in the day left.

9:50- this resistance is pathetic, and the rise is too. cues me to think this is going to be a big down day.

9:56- starting to think more and more that 3.95 is going to be your best short entry for the day. Wow thats a bold statement, I'd feel owned to be wrong.

10:12- Just back from shower, and the breakdown occured causing definite confirmation of my beliefs. Wow, its amazing how well today is working out. I guess I feel insync with C becuase I have watched it so much. Currently unrealized P/L open is 160. I am very happy that my entry is few cents above my posted entry. P/L now 180.

10:15- I have class at 11. My position is doing very well. Dow is sliding just like I expected(post about this idea later). The general market slid should cause the trop in confidence that I

m looking for. Right now, I don't see a bottom. Im not getting stopped out of this very nice trade. I'm going to walk away and check via Ipod in class.

10:17-look for breakout type buy in soon. This selloff has gone over too many percentage points already. ITs time for the day traders exit. I'm a long short today. Let's see C bleed. Red is green for me.

10:22- chatting w/ rep. considering closing and reshorting to protect gains and make more off the anti-selloff, will post convo. P/L hit top at 280 at price 3.70

10:19 lakhanin: Hi

10:19 lakhanin: I have 3 day trades left.

10:19 Rodrigo: hello

10:20 lakhanin: If i close my short from yesterday on C, will I be able to use my funds to re short C later?

10:20 lakhanin: Its a question about having the necessary funds I guess

10:21 Rodrigo: yes, but you would need to contact us to place the short later. Additionally, you won't be able to close the "new short "position today

10:21 lakhanin: ok, is that becuase it is on C which I have already traded?

10:22 lakhanin: its not becuae of PDT right b/c i have 3 trades

10:23 Rodrigo: It is only because you can not day trade with proceeds from closing a position that was held overnight

10:24 lakhanin: yea, that was my worry. Thanks.

10:24 Rodrigo: you are welcome\

10:27- the air smells like a mix of feet and Harvest cheddar sunchips(courtesy of my roomate... breakfast of champions) As we come near the end of the first hour of trading, expect sideways action as volume settles. NIce resistance break of 3.70. Currently @ 3.68. Very nice sign for my short! Will need to watch for barack giving an address, that could easily send things the other way. This is the news I will be watching for.

10:31- a moment worth celebrating. I am finally breaking even on my account for the first time since December. My account was down over 37% and I managed to work my way out. Keep in mind this is all still unrealized gains. P/L is 349.

11:12-made it to class slightly late. C at 3.73. Its hard to focus on price action etc. while learning discrete math. Not sure how the short stands, but i'm going to walk away till class ends.

11-23- wow, C is following DJI. exact scaled charts

11:29-dow will ned to break 8k for lower lows in C

11:30, bid ask just were equal. something big is about to happen, i think its a buyin.

11:55- out of class, starting to get nervous about profit taking. wish I had cnbc to tell me the general market news and what obama is saying. When you trade what everyone talks about it there is so much more pressure to stay ahead of the curve. Only now realizing this.

11:59- just realized my math prof has facebook. Roflcopterz. Seeing some naive cycling/channeling in C at the moment. Resistance at 3.58 is strong. I've witnessed two attempts to break and dow looks like it could make back some losses having turned away from 8020's to 8040's now.

12:12- I've started to think that we might have seen C's lowest lows already. It just hit 3.70

12:13- nevermind, i think its going to be and EOD fade, here we could see a nice run even to the 3.80's showing reversal. It will be fake breakout. Need to add some longs to take profits from before the EOD death happens. DOW will not end above 8k. mark it as my opinion.

12:20-put it this way, it takes a ton of other shorts for the selloff that happened before 10:30 this morning to occur. I know they haven't covered yet. WE are all waiting tocover.

12:47- not happy with this run, far from the 60 day MA and a new recent high at 3.77

12:58- if i was over pdt, i feel like I would have sold way before. But i'm not over and I have no ewya of telling.

2:33- Through my class on Financial markets and there was a solid sell off after the brief breakout. I must admit, the breakout was killer. Much better a real one then that yesterday. I'm sure several were spooked.I shouuld identify an target exit now since its bounced of lows for today more than once. I want DOW to end under 8K, but i'm not going to but my money there any longer. Look for me to cover soon.

2:56-i've stopped watching a lot. dow looks like its breaking off highs. IT won't rise, question is when its going to decide to let everyone know 8K this week is no good

3:07-final hour of trading. At this point i don't care if my prediction is true or false, i'm closing my trade before the weekend. I'm going to cover REAL soon, both on my real account and youngmoney account.

3:21-8004!!!! break BROKE!!! as i wrote this

7998

3:21- this is what i wanted all day!!! bleeding to follow

3:25-can it hold under 8k?

3:30- holding 7982 at the moment. C consequently broke LODS. 3.57.

3:38 nlods at 3.56 I think i should cover before the squezze leaves me w/o profits in the .55 range

3:41-AHHHHH i covered at 3.59, i made the wait not worth all it could have been. but hey, my net PL on C is now 10% of my net worth.  Much remains to be said about perfect exits as tough as these. I really did not want to get squeezed into the 3.60's with this trade. I know many more are anxious to cover their trades. I saw the DOW squeeze and pulled the trigger on my C trade. Very nice. Green on my account and very green on this trade! Celebrate.

3:55- i've watched the markets enough. I don't care if DJI actually ends under 8k. It is at this exact moment and I have closed my trade. Today was a success.

the downside to trading liquid stocks.

With all of my recent involvement with Citigroup lately, I've picked up some observations about price/volume and 10/60 crosses relative to future movements.

These observations are compared against all that I know of momentum stocks, and illiquid penny stocks. First, expect these guys to tick. With so many shares moving often, no one is satisfied with sideways action. Next, sell offs and breakouts are not secure for long! This is huge. If you are sub 25k "day-trader" then you need to be at the screen watching price/vol. Take a look at how C cycles downward with progressively lower lows after 1pm. I knew my short was valid. Initially my stop was at 4.05.  This stop was placed on the uptick, right after I entered and right after the 10/60 cross. I got more confident in my position as time passed but when I first entered, to guard against break out it was a great decision. I saw the resistance at 4.03. If it broke, I could have lost much more since I am short, and C had a great day just yesterday. Well after the two cycles I decided I could layback. So, when the stock brokeout  past 4.05, I knew what the market was up to. C was going to end the day down. When I stock is due to be down, the best way to end the day profitable is to short. Luckily I beat the crowd in at around 12:30. So, I sat and watched while the stock cycled and sure enough, it hit BOTTOM after the best breakout of the day. A few months ago I would have cut my losses at 4.04, or maybe during the second breakout. Hell, I probably would have flipped positions and went long. These are classic mistakes. This is why fewer people make money than those that lose in the market. I hold panic buys and sells accountable.

Today was special because C was cycling. The strange part was that it was unbelievable predictable. As usual, had I more trades, perhaps I would be up more. I hope nonetheless that I would have done the o/n night hold I am currently with. My shares were shorted after noon at 3.98 and market close was a nice 3.90. If you checkout after market you can see the slide off of 3.88 to the upper 3.80's. We might be up for a gapdown tommorrow, but news will send this struggling spaceship flying if Barack decides to share his plans about TARP and additional funds that have been mentioned.

Overall, I have nice unrealized gains. C will make them up in no time since it is so liquid. Profit taking at the right moment tomorrow will be the challenge. For the first time in a while, I will be on top of general market news. It will destroy my confidence to end up red on this trade. So the real question is... should I put a buy stop at 3.96 to break even on commissions?

A decent trade

I had a sudden urge to begin trading again today after my recent breaks yesterday. I think it is because of my recent luck with a poker game, and since I haven't been able to gamble with chips, I've been wanting to play the market. I couldn't get myself to do any serious research though because I had various engagements beginning at 9:15 this morning. Nonetheless, as I finished up and had breakfast at around 10:20 I decided to open up ye ol' dodecaon of charts I keep to see how the market was doing. 

Behold the dodeca!

First, a gap down on the DOW! This made me smile. The funny thing is, the media doesn't even care anymore. Below 8k? What else is new? All the headline

s were about job cuts and decreasing expectations for corporate profits. I don't really keep up with general market sqawk in terms of trading, just out of interest. There are those panic days when financials and baskets move with DJI. Those are generally profitable, and thats why I do it.

Second, I loaded up the usual interests: ABK, FMD,PMI,DSL, BKUNA, FIG, and the Citi's. I remembered the latter two because of Ramta's tipoff of C's recent volatility. Nice hint. I began watching C closely. My immediate impulse was to short at the 3.20's. It was easy to borrow, there was sideways action and this was my hunch. Good as hell thing I didn't. When I saw the spread go to 0, I knew shit was going down. By now I had left the bottom of lenoir and was waiting for my class to begin. It moved a 3 cents, but thats all I was looking for. I pulled the trigger at 3.23, and sat back as 381 lecture began. Today was Quantifiers and Predicates. Also the first homework was not due today, as most of the class expected. While they breathed a sigh of relief, my heart beat grew faster. C was now holding steady 9 cents higher than I bought. I don't gamble less then 1000 share positions. Do the math. Then, it really took off. I could only imagine giving the alert of the GOTS boys, but I'm sure someone else caught the 3.20/ask bid equivalence just as I had. My thoughts on this are that a huge increase in volume set the dealers momentarily back on where to price. But, I honestly have no idea.

Well, it hit a high around the 3.50's. My experience told me now was the time to sell, but I held on the hopes of making this a weekend hold. I used trailing stops and thought that 3.39 would be enough breathing room for the inevitable selloff after this 10% breakout. WRONG. You win some you lose some. C is currently holding steady in the upper 3.40's. 

But hindsight is 20/20. Today I made money, that is all that matters. I'll save my remaining trades for next week, but I really want a weekend hold. Perhaps something else will catch my attention before days end.

On trading algorithms.

No new trades. Sitting on FIG instead of overtrading my gains. New semester, new classes, and I would like the have the morning free before I commit the time to researching some risers for my new strategy, commented on by MUDDY in my last post.

I lately had two interesting conversations regarding the only studies I use while trading. My indicators for entering a trade have almost always been a combinations of experience enriched price movement and the trusty 10/60 day moving average. I will note to look into bollinger bands, per Muddy's note, as an attempt to diversify my technical indicators. Most people also find despair, yes despair, in the fact that I hardly allow myself to find out what exactly a company does before entering a trade. When a known riser takes off premarket, all you need are those 3-5 ticker letters and quick fingers to get the trade in.

Anyway, I always describe the 10/60 day moving average study set to people as a set of ploted lines, with the 10 day moving average being sinusoidal WRT the 60 day moving average. Now recently I explained this to two people Amit and Steve, who both happen to be engineers. Despite different specialties they both immediately responded wanting to call the 10 day line a Fourier transform of price/time. Interesting. Amit went further to ask what I thought the number of cycles was. Great question. AS I pointed out after I talked with Steve, I think that answer maybe 3. That right there, is easily exploitable. Forget scans, complex algorithims, what if funds were distributed across a number of tickers and bought or sold(to go long or short) depending on real time 10/60 crosses and then bought/sold on the anticipated nodes for the ticker. According to my theory this would be about 5 solid trades per day/ticker. WOW. Worth looking into for its mere simplicity. Who knows, maybe this will all turn out to be a commonplace fact about how 10/60 really works, but I haven't ever heard anyone talk about it.

Where I take this realization about 10/60 to is the efficient market hypothesis. I now feel I have the necessary proof to battle this idea I always thought was a bit immature. It was developed before the internet, so for it to still be vigorously debated today shows just how applicable it still maybe. For me, early one stocks were not about news, and price of a stock was not as good of an indicator as a 5 minute plotted chart. News is said to be something unknowable in present but to affect fture price. In behavioral and technical trading indicators are known to those who choose to note them, and definitely affect future price. My belief is that read if you dare "news" has been created due to development in communications that allowed real time quotes and the online day trader to be birthed. Information spreads quick nowadays. Plus with the influx of traders trading securities today behavioral analysis is alive and well as fundamental. It is in my opinoin a separate field from techincal analysis too. There is no luck involved with patterned observations. I have yet to find the long run to prove my committment to how dead EMH may be, but I'm working on it. 

I find great problem in the assumptions EMH takes too. It is because a great number of unskilled traders will over react and under react that profits will be made. The decisions of these many people cannot be admitted to the "noise" category. I take the opposite view. 

Who knows. As I pointed in my last post. Maybe market makers take those observant folks and allow them the same profit potential as they themselves in an attempt to fool the foolhardy into losses. If this is the case, we are talking about a different type of stock market then many ever expected. But hey if the collapse of our economy can be traced back to the buying and selling of a single security, mortgages, who is to say I am wrong.

I am curious to hear the EMH view.

FORTRESS INVESTMENT GROUP

Ticker- FIG.

I recently hit a century on the trading pitch. I entered FIG at 1.20, had a weekend hold after an incredibly friday. Held Monday, and sold on the Tuesday morning breakout. My exit was perfect. I saw the percentage gains, knew a sell off was inevitable after the near 35 cent breakout in just 2-3 minutes, and got a full fill at 2.38. This was a near 100% return. I'm really proud of the way I handled the movements of the stock between the point I bought at and the point I sold. The path was not direct. As always buying and selling during panic breakouts or sellouts is not a good idea. You can significantly add to your loss if you close during a panic. Mostly this applies to sell off's, I will explain why.

When I began trading around JUNE. The hot strategy was "green to red" and short. Playing a stock long seemed inexplicably complex. "Red to green" didn't always hold up, so I wasn't sure how to tell if a stock was ready to rise. The "green to red" strategy was made popular by timothy sykes, and it was transparent that many of his minions had infiltrated GOTS and were trying to spread this gospel. Muddy, being the brilliant trader her is, stuck to his key phrase which is simply waiting for confirmation on a stocks predicted path. I had not made up my mind back in August, but I was certainly only playing shorts for the most part. It has become clear to me that the nature of many day traders too, was that shorting was the best way to some quick gains.  Market makers, more experienced by definition, can easily respond to the way the masses are thinking. After all, this is their job. It seems like the pump and dump is losing it's strength. Stocks like SIL and FEED and COIN aren't dumping as easily as they have in the past. This is expected. Any profitable strategy in the market will become apparent, be exploited till the point where it becomes common knowledge and thus harder to succeed in. I'm not saying pump and dump is dead, but if you've been around watching pennystocks as long as I have, you'll know there is emerging a strategy to respond to pumps and sell offs that is PRIMED for profit. 

There has been a huge increase of pennystockers courtesy of Timothy Sykes. Most don't know what they are doing. When they short, you can gain. Enough said.

If you wish to discuss this strategy further, and are noticing things as well. I'd love to talk. lakhani.nirav@gmail.com

try try again

So after a sucessfull trade. My last friday with FIG and ABD were off the mark. Both positions ended in losses. ABD, was a good excited considering it ran quite a bit that day. FIG could have been held longer but after seeing multiple failed attempts at resistance I closed it out. If you saw FIG today, you have no idea what the regret feels like. However the regret is easily balanced by the sense of pride I have for exciting that ABD run.

Perhaps the real lesson from this is just being able to flip my position or read stocks to begin with better. A nice read on FIG today when it was "falling" and shorts were entering turned out to be a fakeout with a quick .20 rebound. Its things like this only expereince will help with.

On to the list

IFX- 1.10 watch for a quick morning fade. it might be worth it, whats sure is it will be very volatile.

GMO-1.38. had a morning fakeout, might be a riser.

ABD- 3.92, who cares if i can't get 1k shares, i can watch ABD with some experience under my belt and try for it again.

PWER- 1.35- a multi day riser.

OCNF- 3.89 a shipper in the higher range, but I know these low floats have a tendency of falling.

VTSS- .45 just going to put my opinion on this pennystock. Looks like a valid rise. i'd long.

IVN- 3.27. long at open. looks legit. sideways is my call.

URRE- .92. same as IVN

MEG- watch at 3 break. tested and failed, but thats always a good sign with these risers.

Enough for now. Patience and good rationing will make this prep worthwhile tomorrow.