The Next Capitulation

First of all, the guys you will want to watch and listen to are the ones who were right on the way down, because they are probably going to be the guys who will right on the way up. And we will go up someday, if only for the reason that nothing ever goes strait down. Ironic how the people that had the courage and analytical foresight (the shorts)to ride this 3000 point ride from the top are the same folks being penalized for its perceived causation.

There is a great piece in Barrons with Richard Bernstein, chief investment officer at Merrill where he discusses his views on the market. In a nutshell, he says that inflation has never been at 5.5% with the S&P trading at 25 trailing earnings and that the global economy will be much weaker than we think. I agree, he also states that most of the analyst community will come to this consensus at one point soon. Not good for stocks of any color. We all know by now that the analyst community has a run with the pack mentality so the reductions should be fast and furious. We also know how dreadfully inept and pathetic they have been. See my Friday morning post as it validates what I am saying. He makes the logical point that if we haven't reduced estimates yet, the argument that we may only be trading at 13 or 14 times forward eps is meaningless.

Additionally,this bailout does nothing for housing or the rising unemployment rate. I think we will see more bank and hedge fund failures in the coming weeks and bank buyers have all learned how to play the game from Barclay. Wait for max pain and a drill bit share price before you make your move. Bank of America should have followed that line of thinking before they pissed away shareholder money on Merill.

Tomorrow should be a kick, I'm also curious to see what they do with the "no short rule" this week. Will they extend it, modify it, or terminate it? Maybe they will protect General Mills or Johnson and Johnson. Don't laugh.

I'm a bit long with some DDS,SSO,XLE,XME,UYG for bounce purposes only. I'm taking the rising tide approach here but I am leaving the party early.

I've Seen This Movie More Than The Godfather

So, our great country is in the midst of the greatest bailout in history, and CNBC has a " breaking news" alert to report on Tom Brady's injury report. You honestly can't make this stuff up. I made a concerted effort to "twitter" some plays today and they all worked, a few to a lesser degree but some, to a very nice degree. I'm new to all this and am the first one to admit that am technically challenged but I hope it helps give some colour as to how I see this market. Over the next few months the site will change to a phenomenally awesome site, but in the meantime this is " all I got."

I thought I would spend the day watching the financials, but then the commodity sector rolled over again, and I just stayed short there all day. SMN long was a huge winner from the open, and I shorted UYG at $25 at the open, about twenty cents off the high of the day. Yahoo shows a 25.03 high print but I think I saw 25.20 on my platform.

So, what do you think? I think this is all bull doody. The financials opened with strength and then for a while, looked like they would totally roll over until they gathered strength the last 45 minutes. Will the Fed be there for Ford and GM when there time comes. How about POT when it goes back to $10? I should find all the bad financials, buy the preferred and short the common. Hey, not a bad idea.

As we neared the close I noticed some gut wrenching action and some charts that look pitiful I will try to post them in a little while. I'm actually proud of myself for making a lot of money today being short the strongest sector in the market. Really, UYG opened up 13%- you have to short that. Gotta love what we do.

P.S My "UPSIDE READS" ( book list) over to the right is now approaching laughable levels. It works with Firefox, but I guess nothing else. Although Al Gore called, the guy who invented the internet, and wanted know why I didn't have any global warming books posted.

Updates and Shorts

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.

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.

I Need A Nap

I posted earlier, that this was the first financial rally that impressed me. Why? Because they had every imaginable reason to rollover this morning, but they didn't. The 50% retracement that I mentioned a day or two ago for the XLF is around $22.75, so that will be resistance. This move in my opinion though is becoming slightly, if not very parabolic. I did get real long UYG though in the last hour as they were taking out offers like it was their last day on earth. Other than UYG I made a some nice loot in the biotech patch. I wish I was more focused on the financials but I need to focus only on the group I'm trading. There was some beautiful loot to be made there though. I also traded SYNA for a nice trade and GENZ as well. I twittered my long on GENZ (and SYNA) real early today and it was a classic breakout through $80, I took it for a point and then it failed miserably. Nat. gas is rolling over and I will show a chart or two later highlighting the group. I hope you guys killed em today. I have to coach hoops now. I'll check in later.

P.S. I'm looking for shorts, NOT longs in the financials. Too much to soon.

Not Again

First off, all the names on the board this weekend were phenomenal successes, the longs and the shorts, and yes, the financials were way short term overbought. I hope everyone did well. I returned home late today as I shorted a bunch of stocks in the after market. I killed AAPL for about seven points. I'm never long or short through an actual earnings reports, but I have no problem shooting them when they are crawling across the floor trying to catch their last breath, as AAPL, AXP, MRK, COF and UYG did. I kept UYG overnight. I was short STI and UYG most of the day and just shorted the rallies and bounces in most of the financials when I could grab one. Steel and coal were very strong today and and the fertilizer/agri. plays were strong as well. The AXP conference call was dreary and depressing and I think the financials will give some more back as well as the market in general. We still have problems and they haven't been resolved because a three day bounce. Everyone was way to giddy.

When the leaders in the market like GOOG and AAPL, which NEVER disappoint, start disappointing it makes me think the jig is up

CELG,CEPH and IBB performed very well today and these can be good names to hide out.

Up and Away-So Far

JP Morgan reported and even though profits fell over 50% the stock and the finacials are indicating higher.Oil is off a buck and the $SPX is up about 15 handles. I have some UYG that I kept overnight and I will dump most or all of it on strength early on. I think the very easy money has been made in the financials, you just don't get 20% moves everyday. You can still make money here, you just have to be more skillful. I will be watching the short term charts today for entries and sales, shorts and longs, as usual. I still have my eye on the energy patch today as potential short term shorting ideas. You know the names. I will be back with ideas and of course I will do my best to twitter some of my moves. Good luck guys.

Stay Smart

State Street (STT) was a beat yesterday and WFC beat today and raised the dividend. It was up about 30%. In my last post I said that I wanted to see a close at or very near the high on the financials. It was a good close and it makes me a little more confident we can resume things in the morning. I actually kept a little UYG long overnight. A good number from JPM should instill some more confidence tomorrow. This a two xanax, double shot moment at the bar for the shorts. Right now they are panicked and are praying we don't gap up in the morning. I am not all all convinced this is the bottom but I will trade what I see, and right now I see green for the financials. Keep in mind the last two big rallies we gave ALL back the next day. However, it does feel real this time. I made most of my money short energy right after the inventory number. Bids imploded and I killed them. I was short APA,CHK,OIH and XLE. I covered about 30 minutes later with nice gains. It wasn't until after lunch that I started getting long the financials, mainly UYG. All of these names were on the blog last night and this morning and twittered throughout the day.

Don't forget about GOOG after the close, a good number in a better market could make this one get silly again. Amnesia can be a killer, so don't forget how bad things were yesterday, the day before and the day before that. These rallies will lull you then rip your esophagus out if you get complacent. Right now though, it's all about emotion and sentiment and NOT the charts or the fundamentals and short squeezes take more than one day to get resolved. The key for me tomorrow will be the ability to sustain this move. If the longs don't use this financial rally to unload, which they've done every time in the past, then this rally will have legs.

As far as oil goes, I think we get lower prices for he rest f the week. After that it could be onward again. This move down is because of the thinking that China is slowing. We've heard that before and it always turns around and bites us. I worry more about Israel, Iran and the Straits of Hormuz more than a 1% perceived decline in China's growth rate. Right now though the momo is down and I still like the names that I posted last night and this morning.

The sad and ironic thing about today is that that Bernanke and Paulson and Cox will take the credit and they had NOTHING to do with it. A beautiful testament to how free markets actually fix themselves ON THEIR OWN!!!!!!!!!!!!!!!!!! and they always will. Go America.

For What It's Worth

Today is the first time I actually "BOUGHT" UYG and wasn't "SHORT" the name. Tonight you will hear many folks calling today the bottom in the financials. I can't "go there" yet, but I will tell you that if we close strong, meaning at the highs, we will get follow through tomorrow. Just trade, don't think.

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.

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.
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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.

Choppy

Sorry for the last post, it didn't align at all, thanks Vic in Texas for the heads up. It looked fine on my computer but not to the masses. I hate when that happens. I'll try to tighten it up later. This whole Internet thing is a fad anyway. I traded about 60,000 shares today. My best days seem to be when I trade a much ,much reduced number. That's when I know I'm "on" and my entries are near perfect. When I trade more it's because I'm correcting bad entries and getting out of jams. I never get tattooed to badly because my stops are always tight, it took me time to figure that one out. I can be wrong 6 out 10 trades and still print huge loot because of that discipline. Let the winners run and kill the losses immediately. I'll get into detail on risk and money management soon. It will save your ass 100% of the time.
I was short some Fannie and Freddy early on for small gains and then they gave the microphone to Ben and Paulson and the financials picked it up a bit. I really don't know what I'll do when this group does bottom because being short the sector has been an annuity for me. I still believe I have more time though. The fact that the government wants to regulate it, is probably going to be even worse for the financials near term. The government can't manage a bowel movement let alone the financial sector. I can speak from first hand experience what a travesty the SEC is, when it comes to oversight. Look what its done to ICE the last few days(of course I was short and you heard it here first, sorry for the shameless self love). I did well with LEH short and I was lucky on UYG short on one thrust down. I did get hacked up a bit trying to get too cute with X and CLF short. What worked yesterday didn't necessarily work today. LEH really does look like the shorts know something, just a feeling. I will try to be back later.

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.

You Can't Bring A Knife To A Gunfight

Bernanke doesn't have any juice. The commodity bears were praying he would talk tough on inflation(everyone knew he wouldn't raise), but instead it was the same canned BS, much like the canned BS that the G-8 pulled a week ago about strengthening the dollar. Nonsense, useless, a complete waste of time and jet fuel. I tried to test all levels of human obnoxiousness with my last post and it was done very tongue and cheek, God forbid you folks think I'm a complete ass, but when you make a perfect call you have to give yourself props, God knows I don't get enough love from the blog comments and I have made enough money from this blog to maybe buy a great steak and a good bottle of wine-once- and alone. But I digress.

I was long OIH,XLE, and QCOM in the morning. The world at that point in time thought Uncle Ben would "fix" things. Oil was fading and the financials were on fire. I was up big and covered everything. Then I saw the oils starting to act better and I thought if the Fed didn't cut, which they weren't going to do anyway, then the commodity bulls would have there way again anyway. What's the catalyst to stop them? The G-8 meeting didn't do a damn thing to strengthen the greenback, and it's business as usual with the Fed. I was right, and it feels good to anticipate and be so right. As I said in that last post, if this scenario played out I would switch gears, and I did. I went "long" OIH and XLE and shorted the breath out of the UYG and MER. As I said last night they caught a dead cat bounce (the financials) and that's all they caught.

The OIH rallied eight points off the lows (of course I didn't catch all that move) and XLE rallied beautifully off the lows. I went long and made some nice loot, but the real impact for me was getting short UYG and MER. UYG closed about 10 cents off the day low and gave back EVERYTHING!! MER closed a little off the lows and if it had more time I think was ready to implode. So much for falling oil solving the markets problems, we now know Bernanke can't. The commodity bulls got a free pass for now and I personally think they continue higher. Show me a catalyst for lower oil,and I'll listen. It sure won't be Israel lobbing some missiles into Iran. MOS rallied about 8 points off its low and IPI rallied about 6 points off its low, amazing reversals.

After the close, RIMM,NKE and ORCL are all lower. The open should be lower. I am going to stay with the girls I brought to this dance, energy long and financials short. I like the ferts for a bounce too. Watch the steels, especially NUE. I wanted to buy IPI down 6 but never pulled the trigger. My bad. Catch you later and don't buy the pundits.

Wicked Volatile

I covered some financial shorts early before they rallied. I was lucky. I shorted MS pre open and covered for a point and a half within the first half hour. UYG, WB and LEH were covered from yesterday basically at the lows of the day. FDX started the day off with a bad number and a gloomy outlook. This is a company that is quite a tell for how the economy is doing. I caught CHK for a beautiful trade before it decided to roll over with the rest of the sector until it strengthened later in the day. I caught a little name, ABAT, from $5 to 5.50. The chart was amazing until it gave up the ghost in the afternoon. I will be watching this one in the days to come. If it can get through $5.70 with volume it should explode. It' s a China name that makes batteries. I know, the hair is up on your neck from the excitement. Oil went away near the high of the day and the financials tried their best to rally. The only reason I covered the financials was because I caught the gift of a bad open. I still think they go lower. The XLF breached the March low that I have been watching for weeks but quickly recovered. The DOW also broke 12000 for a short period. All in, it's hard to be bullish right here. It really is all about the oil bubble popping, and when it does we will see a rally of enormous strength. The question is when? Stay liquid so you can play when it does.

PS The steel stocks came on strong at the end and I caught AKS for 2 pts. I forgot about that one. I almost took it home but it's not the take home market for longs yet. Keep an eye on it though.

The Worst Over?

What I meant to say in my last confusing post, is that it seems like yesterday that I posted the chart of the XLF(see June 1 post). The intra day low in XLF occurred on June 11 at around $22.33, the prior low was the March low of $22.29 which has not been broken yet. My bet is that this time it will get cracked and where she finds support I have no idea. Goldman Sachs was out with a report that they think the banks will need to raise an additional $65 billion. What's 6.5% of a trillion between friends. I'm short UYG since the mid morning and WB. I am also short LEH for a retest of the lows. I think some investors were looking for GS to save the day but it didn't, which goes to my practice and theory that owning a weak stock in a "strong" group is far superior to owning a strong stock in a weak group.

I traded some SOLF early on and made some loot with NIHD. Keep and eye on the latter as the chart looks good but it needs more volume.

We have triple witching on Friday and I don't trust the eps from MS that will be coming out tomorrow before the open

Feels Like Yesterday

The financials are back in the wood chipper again. Keep it simple-stay AWAY!!!! I'm short my best pal UYG again

How About Those Financials?

The financials were horrible today and I finally covered my UYG short, I don't want to stay around for the scraps. If they go any lower the whole market is screwed anyway. I was long some USX and POT and did well there. Keep an eye on AKS as it looks like it wants to break out big time as it came on very strong towards the end of the day. Interesting how LEH traded to the deal price to the penny.

Oil dropped about $4 and the greenback caught a rally. What's up with solar? The group didn't impress me after about 10 am on Friday. If they can't make hay when the sun is shining, then when?