GDP # Takes Away The Punch Bowel

Running late so this is quick. I'm long some QID and SDS for now going into the open Watching for a possible short in XME as coal and steel could give some back. IBB could be a long trade off the IMCL buyout. I'll be twittering all day and will be back if I see anything real hot.

Update

I mentioned last night that the "XME's" of the world were do for a bounce. So far the call was right on, as XME is up $4 and the coal and steel stocks are having a nice recovery bounce. The market looked ready to implode early, then we got some good news from durables,housing and consumer confidence. If the market can't rally off these nice pieces of data, then we have problems. Lets see if the bulls can take the hill.

Looking at the financials for a late rollover?

Better Look Over Your Shoulder...............

because their gaining on us. Those V patterns rarely fail I have to say. What goes up fast has a tendency to come down fast. The usual suspects worked again today, XME,CLF,UYG all showed weakness. They really picked on the financials though. I posted IBM today and it showed phenomenal relative strength all day. Keep it on your radar for when the market starts to rally again. There could be a $150 number on the horizon for that one. WYNN and LVS had a combined $15 point giveback today, that thought was posted this morning as one to watch. I covered the last portion of WM this morning and it was another phenomenal day in my pit.

I will be watching for some long trades if we open lower, I think the XME'S of the world are overdone on the downside and could be ready for some short term rallies. Their charts are horribly broken, and I think they go lower, but they could be good for a bounce.

XME

I'm short and I would love to see them break it today. A break of 75,37 would be sweet. Anything can happen so close stops.

Nasty Givebacks

Kinda how the financials started

Financial Socialism

Bail em out and shut down the shorts. Of the three geniuses I think Cox is the biggest phony of them all. Next to the DMV the SEC is probably the worst organization on planet earth. Just inept, completely. But I digress. My trading nightmare mentioned earlier turned out fine. I ended slightly down but well above earlier levels when my trading platform melted down. And I owe the comeback to who? XLF and UYG of course.I tried many unsuccessful short side entries on those two today but I caught the one that counted, that nice melt down, strait down, that started around 3pm. I really don't need any convincing that all the financials are going lower after today. The group is truly the gift that keeps on giving. Oil caught a really nice rollover and although I did short a little XME and OIH when the downside was gathering momentum, I really just stayed with the financials. The VIX almost tagged 31 this morning and that is good in my opinion. I mentioned this morning that we need a 500 point flush out, and we were on our way until they started handing out microphones. Oh by the way, we managed to close below 11,000.

Steel and Coal

Down $8 bucks as I write and I'm not short a share. What a miss. My bad.

Lower Prices Ahead

I posted on Friday that capitulation was close, we are still not there yet. When they raid the cat house they take the piano player and he's still knocking out some show tiunes on the ivories.The fat lady isn't singing yet either. She's gargling with salt water, but she isn't ready yet. I think we need the VIX around 36-37, which is where it was during the January lows. I posted a couple of days ago that we would hit the January lows by Friday, we did it today on the DOW. GM hit a 50 year low and C hit a 20 year low. The next pundit that says he thinks we will avoid a recession, I swear I'll shoot. I also said yesterday that oil would have a $15 move quick either way based on Ben. I think I will be dead right on that call.

I kept MER and C short overnight as well as UYG again. I got banged around early because I thought oil stocks would rally with oil. As a result I got slapped with XME and ATW early and I had to re-group. I took the path of least resistance and shorted some more MER and UYG. I tried bottom fishing some POT and MOS, but they weren't ready to come out and play and slapped me across the face. I should have known better. It was a good day but on days like today it should be much better than good. My overnights are working beautifully, I'm talking about some of my day trades. The gal at Oppenheimer, who has been right as rain on the financials, put an $11 target on C. Very bold call call, but so were her other calls and she was the only one who had the guts to jump off the party line and make the call on financials. If I still had my hedge fund I would buy her dinner and put a blank check on the table. That's an analyst, the rest are non value added, overpaid charlatans that really are totally clueless about what makes markets work. I could go on and on. Boy, do I have the itch to start another long/short fund in this environment. But I digress.

Steel took a day off, but how about those coal stocks? What a nice reversal. NCOC is a smaller play there, and I posted a chart yesterday, so keep an eye on it. On the steel front I am watching NUE,and X for bounces, but I'm not rushing in. The coal dip was the one to buy today, not the ferts.

In my opinion the market really needs to implode with fear, puking and blood, otherwise we'll never move forward in a meaningful fashion. Watch the VIX and lets get it up into the high 30's. A 400 point down day tomorrow should do the trick, I can only hope.

Be Ready and Be Careful

What has been strong is very weak and what has been weak is strong. Commodities, soft and hard ,are getting spanked and the red headed step children are getting gobbled up. In my opinion, a very interesting dynamic is setting up. If Bernanke comes out less than hawkish on inflation, everything that we have seen happen this morning could quickly go the other way, and in a hurry. It may just happen anyway. I've been short some XLE and OIH. If things change I will get very long those two. If the market buys into Bernankes plan to curb inflation, I will stay where I am.

P.S. DTO that I posted a few days ago is having a good day.

Covered Some Stuff

I shut down my screens around 2:30 as things were just perfect for me and I covered some shorts. I covered USO GLD and XME and covered half of my PCU position. My average on PCU is around $105 so I have a small cushion. I'm cautious because I don't know what Mr. Market will pull out of his hat in the next couple of days, as today was the end of the month. I'll watch in here and see how it plays out. The USO was a beautiful short as it totally reversed the opening move up, and just collapsed. When oil got near $100 per barrel, which is my trading target on the commodity, i took the profit. 5 points in a couple of trading days is a gift. I think $97-98-110 will be the trading range going forward. XME was good for a short term trade and the volume wasn't there for me to hold overnight. My target on GLD was around $88.50-89 anyway so I was close. I believe all this stuff is going lower but when I am given volatility that goes my way I have to take it. I posted recently that the main catalyst for my "short the commodity space" thinking was the upcoming G-7 meeting in a couple of weeks. The story there, is a bilateral effort to somehow strengthen the dollar. The talk gained a little traction today with Paulson, and I think that will help the oil/commodity sector continue to sell off in coming weeks. Still a traders market in the space I think. I'm all cash and short PCU small.

In conclusion,this is a weird market. The sellers aren't defending their space and the longs don't want to take the hill. Unimpressive at best.

Morning Look

Commodities are lower again into the open. USO just broke $80 in pre market trading. I believe my short was put on around $85.90, it is currently indicating around $79.40. I have a shorter term time horizon than most so I will probably start scaling out as the day progresses. I will have to judge the action. Will there be fear, will they be rushing to get out? I am short some PCU pre market here at $98.50 and am watching RIG for a short entry. Things change by the minute around here. XME was held from last night and the same thinking applies there too.

Staying Very Short The Following

XME,GLD,USO

With "DELEVERAGING" fast becoming the new buzzword it looks like it's time to piggyback the trend. What does that mean? Stay short commodities, in my opinion the move down has just started. There was talk today that Lehman picked up a bunch of Bear Stearns business and some prime brokerage was a part of it. Prime brokerage is the part of the business that for a big part, services hedge funds. Hedge funds crave leverage ( Carlyle Group received $35 for every dollar they had under management) That ended in bankrupcy this week. The conversation that Lehman had with hedge funds today, only guessing,went something like this, "we'll do business with you but in this environment the leverage we will give you is going to be much less than what your used to." When your prime broker has this conversation with you, one of the options is to start selling and reducing exposure, especially your winners, you know the positions you owned on 8 to leverage. That is one of the reasons for the unwinding in commodities today and I really feel it has only just begun. Just look at PCU and FCX today.

Unwinding of sectors can be very profitable if you are short. Just look at the dry shippers and the solar space in the last 2 months

Shorts From This Morning

XME- DOWN $6

USO- DOWN $3.50

GLD- DOWN $3.46

TLT- UP $1.58

They sold them down today which actually surprised me a bit. Maybe triple witching tomorrow had something to do with it. I still will not fight the Fed in here. If this continues though, I would start to worry a bit more. The financials need to digest recent gains and the folks that own commodities started taking gains very aggressively today. The whole complex got crushed from oil,gold,silver and soft commodities. I still think the dollar will continue firming which in the short and long run will be great for financials and stocks in general. Choppy times ahead no doubt but I think we made the turn.

Stronger U.S. Dollar Plays on Shortside

I think the next "event" for the market will be increased noise on the G7 and the meeting in a couple of weeks to firm the Dollar. I have 4 shorts that play this. I think the inability of the dollar to go lower with yesterdays Fed cut will result in the already crowded commodity complex to decline.

GLD- short
TLT- short
XME- short
USO- already short

Dow and S&P

Everything closed very close to session lows and ALL the indexes closed below the lows made on Friday. The DJIA is now about 100 pts from Jan lows and the S&P held by 4 points. No need for me to go through sectors as pretty much got murdered.
Alcoa, posted last night acted well as a short and the MOO short has just been spectacular, I only regret covering CMG,DECK and XME. Second time I mentioned that so you know it's like a dagger in my larynx. Let it go, just let it go. I will be back later.

Buyers Remorse

It looks like I covered CMG, DECK, and XME a little to soon. Shoot. I guess better to be safe than sorry in this market. MOO working well though. A possible turnaround Tuesday plays big here in the back of my mind so I am watching closely in here. Unless of course we take out Fridays lows.

Covering Some Shorts

DECK- 8 point profit from Monday
XME-4 points profit from Wed.
CMG- 8 point profit- about 2 week hold

We are getting close to bounce time and don't want to be a pig. Still like em short, but they will raise the dead when this pup turns.

Food For Thought

As you folks may remember i shorted MOO last week as I thought the agriculture sector was getting frothy. I'm up 4 points in the short and I see another group that looks like a mirror image. As I said in the post on MOO I don't short strength but don't have a problem shorting for short term profits in the frothy stuff. One that has caught my eye is the XME which is the SPDR metals and mining etf. I think it's a very crowded trade and there has been substantial put buying. I will consider a short entry after a little more homework on the group. Just saying...