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.