Wednesday, May 7, 2008

A Needed Pullback And Everything's a Trade

If the market wants to go higher we need more days like this. It's healthy. A month ago the shorts would have kicked this market down 350. My morning chart of GSI was a stellar performer considering the market, and I made some loot, not a lot, but some. I did a rare mid day post around 2pm opining that the market seemed heavy and citing my long in SKF. I had just gone long SKF. The market tanked 100 points and I caught SKF for 3 points. I freaking love when that happens. As I've said before, I'll take it any way I can get it. It was another great day at headquarters.

Solar stocks are weird, and in my opinion- DONE. If they can't make hay when the sun is shining, then when? Do they need oil at $175 to find their stones or what? I know I missed a lot in that group but they never caught my interest. As a trader I guess that is my bad.

I thought financials were due for a pullback earlier in the week and today they decided to do a little giveback. They creamed them all afternoon. HCBK and USB are my stocks and I will be watching them for strong bounces when the sector feels ready for a rally. Keep SKF at your side, all the volatility is not over in this group, far from it. I think MBIA reports next week and I believe there will be some wonderful long/short opportunities in the future. You just have to stay light on your toes.

It truly is a traders market. Today my good trader buddy who has been trading for about six months got a bit hammered and he called me a few times asking me where I thought he went wrong. He was long Fannie and Fredie in the afternoon and kept the positions almost until the close. Both stocks went out at near the lows of the day. The financials were weak all day but especially weak starting around 2 pm. I told him to be conscious of what is happening in the market as it relates to SECTORS. I would rather own a weak stock in a strong group than a strong stock in a weak group any day of the week. Why? Because when the programs hit, they sell or buy anything and everything and they will pulverize that stock you thought was "strong." They shoot first and ask questions later. Never try to outwit the market and go against the grain, you will lose every time. Follow the money flow, short or long.
Done rambling. Catch you guys later.


About Me

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.