Rollover Tuesday

Things were moving along splendidly until about 2PM when the bottom seemed to fall out. I was trying to be patriotic and buy stocks, giving the bulls respect for their recent display of power, I was long BAC and UYM on several different occasions until BAC just could not move another penny--it was exhausted. It was about the third or fourth time it tried to get through $8 and failed. I got pissed and shorted it-it closed at $7.22. I also went long SRS which exploded as IYR folded.

I won't read into the pullback today as anything more than profit taking, and a pullback is always healthy and constructive after a big move up, but the bulls would have loved to have closed in positive territory with more sideways type action (although it was ugly-lol). Meredith Whitney has started her own firm as we all know, and I sent her a congratulatory e-mail last week. She still thinks the financials are far from a bottom. Still a traders market.

Follow Through or Failure?

There is Larry Summers literally falling asleep at Obama's economic summit. About 130 lawmakers and think-tankers were in attendance. Go get em' tiger. He must be working 27/7 because I haven't seen him since his appointment.

Fourth quarter losses at Merrill were about $15.8 billion, about $500 million higher than expected, "forcing" BAC to take an additional $20 billion in U.S. aid, bringing the total to $45 billion. Funny, Ken Lewis said last week that " I don''t believe we'll need any more in the future."

Central and Eastern Europe (CEE) are really getting ready to implode and I will be writing more on this in the near future and it will have a ripple affect all over Europe and even here. Stay tuned.

Let's see if the bulls can muster a follow through day today, I'm always the skeptic.

Watch List Shorts

Bank Of America Deal Was Just Priced

It was priced at $22 a few minutes ago. I don't know, but if there was one name the shorts may want to crucify Thursday morning, this could be it.

What We Know So Far

Bank of America is in talks to by Merrill Lynch at $25-30 and could be announced as early as tonight according to the N.Y Times and the Wall ST. journal.

Barclays and Bank of America have walked away from Lehman and liquidation/ chapter 7 is next. (this could change but I doubt it)

Wamu is still in hot water- will JPM be a white knight?

AIG will be talking about a massive restructuring in the morning.

The market will be off the hook tomorrow---capitulation anyone? Sold to you...

Bank Of Lehamericawide

If Bank of America buys all or part of Lehman, while still digesting the toxic waste of Counrtywide, it will certainly be interesting to see how the street will view the stock going forward. The common stock currently yields almost 8%, a tempting carrot for many institutional investors. I would have to believe that the dividend would have to be cut to pull this one off. Interesting times for sure. It seems like the street has accepted the fate of many of these names, no one seems shocked or surprised anymore as they just "let them go." Merrill and AIG both look like they could go another 30 to 40% lower, yet the only thing the media seemed to focus on was LEH last week. The complacency to me is unreal. This really has been a slow motion train wreck and will definitly be one for the history books.

Who Says I Can't Get Long Financials?

Trade what you see, not what you think, right? It took me the first four hours to lose money today and about 45 minutes to make it all back and then some. I was screwing around trying to short some coal and an isolated financial. I know much better than to fight the tape but one of the reasons I make fairly consistent money doing this is because there is a fair amount of anticipation on my part.I just anticipated the wrong way as the financials were for real today. It just took me a bit to figure it out. One of the trading strategies I use every day is buying gentle dips (or shorts on the rallies) on the 20 ema on the 5 minute chart as I have presented here. The yellow arrows are my buy points. I sold both near the close as they were top ticking there. I would have kept them overnight but I still have trust issues with the financials. The yellow charts indicate what I call the soft landings, it works most of the time and it involves a certain amount of "reading" it. My boy Stewie has mastered this strategy. I don't know if this financial rally will stick, but all the charts I have looked at so far look interesting AND the volume on almost all of them show 30 to 50% increases.

Solar did well, steel and coal rocked, mostly steel, and guess what? The financials lead!!! "Well blow me down Olive Oil" as Popeye used to say. More in a bit, I don't trust anything.

Rotation Baby

They don't want commodities anymore. Hard ones, soft ones or any other one you can think off. Oddly, I didn't participate in the continued rally in the financials as I was so caught up being short the commodity sector. If I have more than three stocks on my screen I just can't focus. I did sell my overnight long on UYG on the gap up and I went long a little BAC and WB with profits, but it was all about commodities becoming unhinged for me. When the nat. gas # came out I went short and stayed short. When I noticed weakness in coal and steel I teed up a bunch of XME short and stayed there for what seemed like a lifetime. It was a staircase strait down and it was the best short I had all year. I also threw in some JRCC short for good measure. I also blasted XLE and OIH. I had IPP and MOS short. Too bad I ran out of money. It's rare when I press hard on position/positions, because I'm always looking over my shoulder, but I had it right and went all in short. I would have stayed overnight but they were catching bounces the last half hour. I have to run but I have some good ideas for tomorrow. Back soon.

PS. GOOG down $40 in after hours

Getting Real Hot In Here

Did you hear that? Oh, that was just the sound of me patting myself on the back again. Almost like I had today's paper over the weekend. But I digress. Last nights charts were what it was all about today. STI-2.66 C-.97, UYG-2.15, ZION-5.96, WB-1.70, STT-3.66,BAC-1.52. Today was huge and tomorrow should be even better. I'll be back soon.
, ,

Tug Of War

The morning squeeze appears over for now. The financials flexed a bit but as I thought, pulled in. I caught UYG and BAC for two great shorts and I am trying my best this morning to twitter my moves. I am using any rallies in the financials to short. These companies are a mess and don't even have a valid revenue model absent their sub prime products. This could end badly today as the market looks very heavy to me. Tight stops always.

Financial Crash?

These are the names that have been so good to me over the last six months on the short side. If the financials react poorly to this Freddie/ Fannie drama, I will continue to short them, hopefully to drill bits.

Cash Is A Position Too

I am at the point where I really don't know if we crash here, or go up 700 points. As a result of my confusion I am playing light until I can get comfortable with a direction. Oil is off slightly, the dollar is up a bit and futures are flat. Bridgewater reports that bank losses could be four times greater than originally thought and if all of this junk gets marked to market the losses could exceed $1.6 trillion. Another Swiss paper reports that UBS and Credit Suisse may need to raise an additional $68 billion in the form of stock. I personally think banks are in the 7th inning and there is more bad news to come. I am hearing a major bulge bracket will implode soon. Some banks to watch for lower prices are: WB(my calls are taking a dirt nap) KEY,BAC,ZION,C

A Stock Pickers Day

I did well today with my own four horseman that I mentioned in the morning blog. FCX and PCU gapped a bit but I caught some entries mid morning. POT was a monster even though the rest of the group chopped and USO was in a nice upward trend until about 2 pm. Has anyone checked out BLK? It's down about 30 points from my original short two weeks ago. Wish I held that one longer.

AAPL and RIMM got knocked around and the chips got spanked because of the TXN report yesterday. BRCM is up a buck in the after market on a decent number. The financials dragged all day and I may take a look at BAC over the next few days for a trade. The stock yields about 7% here and I think that should give some decent protection on the downside, even for a day or short term trade.

If this dollar of ours can catch any king of sustained rally it will be party time shorting oil, gold and all the other fun stuff, In the meantime, shippers exploded with DRYS and EXM cayching some major short covering.

Morning Check

Bank of America posts a 77 cent loss and adds $3 billion to loan loss reserves. Oil is about flat but looks like it wants to tag $120 at least. Futures are off slightly. I will be posting day trade thoughts on twitter but they also appear on the upper right section of the blog. Good luck today folks.

Crisis of Confidence

I don't think anyone wants to be Christopher Columbus in here, meaning lets be the first ship that tries to go see if the world is flat or round. Flat would have been bad for Chris. My meaning is, who wants to be the first to jump in the pool next week? I said on Wednesday that there was a substantial amount of Morgan Stanley puts bought and Lehman showed huge out of the money put purchases yesterday. The put buying in Bear Stearns proved spot on in the last two weeks. Tells me the Street thinks more shoes may drop, maybe not, but they are certainly backing it up with big money here. Most of these situations don't just end in writedowns, they end in mass liquidations and flat out bankrupcies. If something goes wrong next week with Lehman or Morgan and they face the same issues as BSC (which I doubt by the way) who will the Fed turn to as a back stop this time? Bank of America, Wachovia?

In the STUPID MOVE OF THE WEEK category, Mr Lewis,considered smart money by many, who is about a 10% owner of BSC at prices about 300% higher than Fridays close financed a big part of his purchases by SELLING PUTS in BSC. This is considered a bullish trade that produces income. In other words the puts go lower if the stock goes up. If the trade works it's basically free money and you keep the premium, if it doesn't you are a dead man. This makes buying a 700k home on a $30,000 income with no money down look conservative