Tuesday, October 19, 2010

10/19/10 50 Ways To Leave A Rally



The Giants are flying high (next game against Bull Hunter's beloved Phillies 1 pm today at SBC Park). SPX 1200 is starting to hit the (blog) waves, and bullish sentiment is running high(er). Both ports near YTD highs. Heck, California has Prop 19 on the ballot, which would make it legal to get high. Make no mistake (where have I heard that before)- we will hit new highs before the year is out. However, right the Market has 'lost that lovin' feeling,' and I'm going to-

Slip out the back, Jack
Make a new plan, Stan
You don't need to be coy, Roy
You just listen to me
Hop on (maybe it's off) the bus, Gus
You don't need to discuss much
Just drop off the key, Lee
And get yourself free


INTC closed premarket @ 19.08. Not much I can do about SMH until the open, but the loss should be minor.

102 comments:

  1. Re: 50 Ways To Leave A Rally/ Discipline Over Conviction newSubmitted by 2nd_ave (4789 comments) on Tue, 10/19/2010 - 09:11 #72053 (in reply to #72051)
    I'll take discipline (aka 'luck') over conviction (aka 'greed') any day. In the time it took me to compose the above post, INTC bids dropped from 19.08 to 18.89. 'Take losses quickly-' the one rule that can never be overemphasized.

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  2. Honestly, did any of you see this shit coming?

    There is a very strong element of guessing in this business.

    I dumped the ANO pre-market for a nickles loss...

    Couldn't figure out of it was d deal of not but figured Id just get out.

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  3. INTC- back on the '(Bay)Watch list newSubmitted by 2nd_ave (4790 comments) on Tue, 10/19/2010 - 09:18 #72056
    On the other hand, now that INTC has gotten uglier, I'm finding her more attractive.

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  4. Guys - before we right it all off, let's see how she trades today. My GS is up on blowout earnings...that might be the canary.

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  5. let me clarify...blowoff relative to estimates. otherwise the earnings werent blowout.

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  6. SMH off @ 27.80> Back in Cash newSubmitted by 2nd_ave (4792 comments) on Tue, 10/19/2010 - 09:41 #72065
    I think it pays to walk away for a couple of days. A rip tide either way can strip away gains in no time...

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  7. I listened to several of the earnings calls last night and I cannot see why the nasdaq s/b getting hammered. classic buy the rumor sell the news. just bought 2.5X position in TYH 37.18

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  8. sh*t, I'm already getting smacked down, will let this one run for a bit, has to be panic selling

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  9. Minor league losses?
    Well, Shanghai started off weak but closed far into the green.

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  10. Too bad I didn't wake up earlier, I may have been able to panic out at better prices but I have the flu.

    This has something to do with China raising rates, no? Kid of like them firing a shot in the trade war?

    Oh well....Don't expect CNBC's braintrust to hip you to the details........Their paychecks are written in China!

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  11. Long a few SPY $116 October calls at $1.5

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  12. looking back at my trading log makes one thing so very clear - every time I go to an "out-sized" position I take a loss. Position size is a clear indicator for me for when I cross the line from trader to gambler.......CRAAAAAAAAAAAAAAAAP

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  13. China rates - Yes, I expect that's the excuse for some. Others are "taking profits".

    I'm gonna wait a bit and see who's right.

    MEE - Moving up on possible asset sale.

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  14. I might sneak out to the Giants game today :)

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  15. WHEWWWWW, somehow TYH came all the way back to 37.55 and I'm out. going to need to triple my BP meds after a ride like that.

    I don't care what rebekah says....COCKTAILS!

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  16. You guys seeing a weird print in JPM?

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  17. Bears better not drop this ball or its lights out. I see IBM being bought up, AAPL near break even, GS up

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  18. jb - You just got in a tad too early. Glad you exited with all your feathers intact though.

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  19. CADC - The more I buy, the higher the price moves...

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  20. CP - I sure did, but since I messed up my position size I was glad to get out when I did....another reason to size trades right, I should have been able to ride the way up.

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  21. "China ACM Announces Two HSR Contracts Valued at $8.4 Million"

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  22. China raises rates - This gives them room to further devalue the Yuan against other currencies should they choose.

    I would think if they're really concerned about inflation, they would allow the Yuan to gain.

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  23. JB- I wanted to get in QLD but couldn't find a good spot.

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  24. TNA - Sold at $53.5 that I bought after hours yesterday at $53.28.

    David - hope you're reaping your rewards on your short positions. FCX has had a nice drop from $100. I suspect it stops around $90 then makes another rally toward $100.

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  25. I'm moving my money back into BYD. Started a position at $7.89, which is probably bad timing on my part but I still think this sucker is getting bought out. Still hold a now worthless options position (November $11 calls that I bought at $0.05)

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  26. Mark - probably easy on your BP missing out on the first hour.

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  27. Sure hope the dollar doesn't begin an upward trend here, but maybe it has too...

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  28. Chicken - longer term the dollar hasn't acted as an inverse relationship with the markets. Check the facts. Short term that relationship has worked but I think people that short the market based on this fact will ultimately be disappointed.

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  29. Well, XLF is nicely green but my trading account indicators are telling me financials are 1% into the red.

    It looks to me like financials are green...

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  30. I don't know, it just seems so obvious that financial advice that's bought and paid for should be right more often than not.

    Sometimes the best things in life are free... Take air and sunshine, for instance, along with free thought.

    Too bad there's not more emphasis on education, status-quo is the union way.

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  31. Re: Back to the 1930's
    Submitted by 2nd_ave (4793 comments) on Tue, 10/19/2010 - 10:44 #72083 (in reply to #72074)
    Volatility was extreme then, as it is now, and fortunes were won and lost.

    Bill- In your opinion, has the character of the market (the collective psychology of all participants) markedly changed? Retail 'investors' have largely declined (based on what I read, anyway) to play this rally. Those who have lost fortunes are already out, of course. Are we now left with a more sophisticated crowd?

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  32. Re: Back to the 1930's newSubmitted by Bill Cara (1832 comments) on Tue, 10/19/2010 - 11:22 #72090 (in reply to #72083)
    2nd_ave,

    Trading volume is down, retail investors have been concerned that prices are being manufactured. Yes, I think that is the reason why many retail investors have taken their money out of the market. The remainder tend to be more sophisticated than say 25 years ago. Also, back then the retail stockbroker was able to sell any idea to the client, but today the industry's compliance rules have stopped that, forcing many individuals to do their own research, and in doing so there has been an upgrade in sophistication across the board.

    Looking at a bigger picture, I was not around in the 1930's to experience markets then, but my sense is that, while there has been a massive increase in financial sophistication by perhaps half the American people, there has been an even bigger resource developed by bankers and private equity and people close to them (e.g. computer systems) and a greater willingness to use those tools against society, out of personal greed. This change, in my opinion, has led directly to many of the problems we face today.

    Is it right, for instance, that bankers can earn $10 million a year, or 20, or 50, while the employees who do the work for them earn maybe $50,000, 100 or 200? If those executives were owners and took the same risk as other owners, I'd say terrific, all the more power to them; but they are only managers, career people, using other people's money.

    Where society has failed is to allow small groups of managers to gain control of the people's money to build at our cost sophisticated systems and networks that they use against us. This is all flat wrong.

    I am a firm believer in the capital market system, and believe that America has the best, but increasingly the managers have taken control, putting it in jeopardy, largely because these managers co-opted the politicians who control the regulators, and now society has lost control. As long as this situation goes on, there will be no end to the psychological games they can play with the average person because deep down we are dealing with human nature bounded by fear and greed.

    I don't know that I answered your question, but this stuff has been on my mind.

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  33. Today is turning into one of my more profitable days yet (excluding the crazy REDF runup). buying the dip has been hugely profitable, as has buying the parts that people are skeptic about (i.e., GS).

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  34. Sold some GS at $159. Sold some GS $155 October 22 Calls at $4.7 that I bought at $1.75. Still holding a few more. This has much more than made up for my gaffe on GOOG puts.

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  35. TOF - I believe dollar strength, in addition to poorly thought-out governmental policy, (reference Obama's concern pertaining to taxpayer-funded jobs-export incentives) have played a large part in the decline of domestic manufacturing.

    Based upon these observations, the dollar should be much weaker than it currently is.

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  36. Completely out of my GS long stock at $159.50 that I bought at $151.20 on Friday. Completely out of my calls at $5.2 that I bought at $1.75 on Friday. Moved more money into BYD.

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  37. Doing my best Doug Kass impression and bought a few $160 Oct 22 puts on GS to play the swing trade.

    Also bought more BYD at 7.87 and bought a few March 2011 $8 calls on BYD at $1.15

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  38. Added more GS puts...average is $2.53.

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  39. Coulda had (a) VXX, not newSubmitted by 2nd_ave (4794 comments) on Tue, 10/19/2010 - 12:50 #72108
    We all know the markets have been volatile. At least, I go to bed each night with a great deal of uncertainty about where the indexes will be in the morning. Why then (aside from the rumor that VXX basically doesn't track anything and goes its own way- which is downhill most of the time) can't VXX get anything going?

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  40. VXX - This ETN holds Futures, right? So wouldn't it also be subject to the roll-forward decay that also gives UNG it's decay characteristics?

    The same phenomenon as holding cash (Federal Reserve Notes), which tends to lose value over a period of time, or at least that's how it's supposed to work....

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  41. I woke up, saw what looked like an intraday uptrend in the stock indices and a double bottom in IWM at $70.40 over the past couple of hours, and decided to close my IWM short at $70.51. However, immediately after that IWM broke collapsed to $70.38, and I decided to re-open my short, but there were no shares available to short! I guess this means that MANY everyone are hedging themselves today.

    So instead I bought 400 shares of TWM at $16.04 and placed a stop at $15.95.

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  42. Ignore thread Ignore user
    Re: Coulda had (a) VXX, not/ Flyer at 14.17 newSubmitted by 2nd_ave (4795 comments) on Tue, 10/19/2010 - 13:21 #72114 (in reply to #72108)
    Flyer in the every sense of the word...

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  43. "Honestly, did any of you see this shit coming?"

    Shark, for the last few days I've been clamoring about shit heading our way. :) I finished exiting from my CEF on Monday and also loaded up on some shorts.

    However, a thought then occurred to me -- IWM has been moving sideways for the past few days, counter to the rule of "parabolic moves never correcting sideways, but always sharply down." So I figured if IWM is able to hold its ground and then breaks out to new highs soon, then the market will have another decent leg up, and so closing all my shorts would be in order.

    So let's watch the market here, guys, and if it doesn't take a full advantage of this sell-off opportunity, then we have another BIG leg up coming...

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  44. "looking back at my trading log makes one thing so very clear - every time I go to an "out-sized" position I take a loss."

    Same thing with me, jb! I suppose we take big positions when a stock "looks" like it is heading in some way, but the way things look is usually a trap (and the black box algos pick up on that right away and move the stock in the opposite direction from crowd anticipation).

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  45. Gold and equities headed in same direction! Gosh, did anyone predict this would happen? Last I recall reading about was how equities would sell off and gold would continue rising.

    So much for that idea!

    China raises rates - So much for the theory of China's interest in gold? Or perhaps China hasn't finished buying gold and wanted lower prices? What's the story, the inside scoop?

    If you guys ever figure out this gold thing, please be sure and let me know, meanwhile it seems the gold bulls who were screaming buy signals just last week have some egg-roll on their faces.

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  46. Congratulations on your GS trade, TOF! Making money on the long side on a day like this is pretty impressive! And I think your switch from GS calls into GS puts was very timely. :)

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  47. I am glad that I raised my stop on XHB -- otherwise, I would have been stopped out today and then XHB would have returned back to the 0 line! Well, I may get stopped out tomorrow at my higher stop level for a bigger loss. :)

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  48. What else should be green on a day like this? UNG, of course! :)) Crazy stuff...

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  49. Alright...added my final position in BYD at $7.75. I am now reloaded on this position at about 9% lower than I was previously.

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  50. FD on BYD:
    The borgata deal comes to a head within 4 weeks b/c BYD is forced to either match the deal submitted to MGM or find a partner to buy the stake. i don't think they will let go of it because it's very profitable. my instinct is that they will ultimately be bought out but that's mere speculation. i am now long at around $7.81 and I have March $8 Calls based on resolution of this bid.

    My long position in this is not a take on the markets whatsoever. If it wasn't for this and GS earnings I would have been holding on to my short gold and in cash.

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  51. Re: Coulda had (a) VXX, not/ Flyer at 14.17/ Closed 14.20
    Submitted by 2nd_ave (4798 comments) on Tue, 10/19/2010 - 13:45 #72121 (in reply to #72114)
    Screw it.

    edit reply Bookmark this Ignore thread
    FAZ @ 12.50
    Submitted by 2nd_ave (4798 comments) on Tue, 10/19/2010 - 13:56 #72122
    ...

    reply Bookmark this Ignore thread
    Re: FAZ @ 12.50/ Closed 12.62 newSubmitted by 2nd_ave (4798 comments) on Tue, 10/19/2010 - 13:58 #72123 (in reply to #72122)
    Too fast to rationalize, too fast to explain.

    Call it the 'Tao' of trading...

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  52. wow. craziness going on in the markets right now.

    is it rude to root for a crash in REDF?

    i suspect we bottom at 1,150 and bounce. today's action takes a lot of air out of the rally.

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  53. This is ridiculous...
    Adding to XCO @ 14.62
    BYD @ 7.62.
    SSO @ 40.80.

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  54. So instead of going to the Giants game, I'm going to do the next best thing. As a parent who's highest concern is my children's education, I'm going to surprise Kendra and take her out of school so she can watch the game :)

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  55. Looking for a spot to re-enter V.

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  56. TOF- Any interest in MGM? 10.77 fills a gap.

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  57. I am raising a stop on my TWM to $16.30, just below the pullback it had about an hour ago. If that level is broken, TWM may have a big drop, since an EOD rally seems to be the order of things recently...

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  58. Do ya' think maybe global markets suddenly became concerned about the uncertainty we face going forward and today's action reveals/confirms where the safe havens really are?

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  59. RBY - Whatever happened to the GG buyout rumors?

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  60. Mark - no interest in MGM primarily because they are selling off assets to pay down debt. That's not a growth strategy.

    re: BYD:
    http://www.mysmartrend.com/news-briefs/technical-analysis/boyd-gaming-byd-new-analyst-coverage-credit-suisse

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  61. GMO - Well, I had $3.90 as a potential low but really didn't think they'd push it down that far.

    Chalk one up for the day traders...

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  62. PMI looks like a great buy on this foreclosure nonsense, no?

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  63. BAC - Announces they want to get closer to their customers! Yea, they're gonna stick their hands directly in your pockets b/c their CEO's pay scale and company survival are contrary factors!!!

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  64. PMI - Yes, I would think it's a good way to play the foreclosure train wreck.

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  65. USO had a major dump today, which may mean that its runup is over. However, I just purchased a couple of November $35 calls on it for $1.06, just in case today is a simple pullback.

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  66. As the market is getting redder, UNG is getting greener! It is one screwed up ETF...

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  67. GMO - Actually, the 20SMA is $3.75... Could be going to test for support?

    I guess all the momentum traders who took the price to $4.35 had their fun today. Wonder if they've planned another 52wk trip with the public release of the environmental impact statement?

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  68. As I wrote earlier, if today's sell-off does not get a follow through, then it was just a shakeout of weak hands before a move to new highs on S&P. So I am placing stop limits for all my short positions (but not for my put options):

    - At $95/$96 (a little above today's high) for the 100 shares of FCX I shorted at $97
    - At $16.04/$16 for the 400 shares of TWM I purchased today at $16.04 (after I closed my IWM short for a minor gain).
    - At $15.85/$15.87 (a little above today's spike high) for the 1000 shares of XHB I shorted at $15.48.

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  69. I wonder how well autistic savant people do as day traders?

    I feel like volunteering for a labotomy as a good way to wrap up a day like today...

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  70. Sold my GS puts in a bit of a panic at $3.2 because I thought there were higher highs and higher lows being formed. oh well, still made a nice profit on those from when I bought them earlier.

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  71. Added to my BYD at $7.60. Now have a way too heavy position on.

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  72. CREE missed top and bottom line...here comes the low 40's.

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  73. Long YHOO after hours at $15.32. Buyout bid is going to put a floor under the stock.

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  74. CREE - LED technology is one of the simplest ways to conserve energy I can imagine aside from old-school adiabatic technologies. Can't compete with fluorescent technologies in a meaningful way?

    Still a money loser?

    Isn't California planning to remove the incandescent bulb from public access?

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  75. Ah, so the mortgage mess is actually a Countrywide problem!

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  76. Chicken - I've been thinking for a little while now that CREE is going to sink to the low 40's at which point it should be a good entry on a long term hold. CREE is going to be in large growth market as long as Obama is in office

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  77. YHOO off at $15.52. That was the easiest 1.5% I've ever made!

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  78. Uh oh, today wasn't a POMO day, was it? How can we expect equities prices to rise if the FED won't buy?

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  79. CREE - I'm downloading the BACML report now. There's an entire raft of them.

    I see CREE is profitable, just overpriced for their current performance level.

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  80. BACML spew on CREE:

    "Expect solid quarter
    Interest in Cree is high on both the long and short sides. When Cree provided
    guidance following the last earnings call of $270-280 million in revenue and
    $0.56-0.59 in non-GAAP EPS, it already was half way into the quarter given that
    the company reported later following its fiscal year end. Consequently, we do not
    expect substantial variation and do not think competition is having much effect on
    Cree. We are slightly above consensus at revenue of $280 million vs. $278
    million consensus and EPS of $0.60 vs. $0.58. The option market indicates a
    likely 12% move post-report, which is about average in recent quarters.
    Positives may offset negatives
    Potential positives include: (1) the gross margin could surprise to the upside—the
    company guided the gross margin down to 48%, below recent experience.
    Although prices have come down, it is hard to tell if it was unusual, and there is a
    continued mix shift toward the high-margin XLamp line; (2) demand in China
    appears strong based on our visit there, with power LEDs maintaining their price
    premium; and (3) expected sequential revenue growth of 6% assumes a sharp
    slowdown in XLamp growth from 20-30% to 9%. Potential negatives include: (1)
    backlighting weakness, reflected in our 4% sequential decline in chip sales, (2)
    uncertainty regarding the capacity additions and gross margin impact, and (3) the
    risk that competitive entry and pricing is having a greater impact than we think.
    Philips a positive data point
    Philips (PHGFF; EUR23.9; B-1-7) reported its 3Q and made these points about its
    Lumileds business: (1) LED sales increased 68% year over year and now
    represent 14% of total lighting; (2) growth was led by China, and (3) pricing
    remained firm; according to the company: “You have to realize that Lumiled is
    positioning high-end LEDs and there pricing stays and sticks.”"

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  81. More:

    "Price objective basis & risk
    Cree, Inc. (CREE)
    Our price objective of $90 per share is based on a DCF that reflects Cree's solid
    free cash flow and the potential growth of the LED market. Our DCF incorporates
    a weighted average cost of capital of 9.7% and a terminal EBITDA multiple of
    9.0x, which is in line with similar high-growth category leaders. The stock now
    looks quite reasonable on our 2011 estimate at 17x or 14x ex-cash, a 30%
    premium to comps despite twice the growth and margins.
    Risks are (1) increasing competition, (2) the gross margin peaking, (3) customer
    hesitancy due to the high upfront bulb cost, and (4) manufacturing glitches as
    capacity ramps up."

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  82. BAC - what do ya'll think? chart looks rough, on strong vol? S2 = 11.64?

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  83. China's move - Will the profit taking continue?

    So for my clarification, I would think that tightening of Yuan would tend to put a floor on downside of Yuan and so I guess if Yuan remains pegged to U$D, that would tend to cause U$D to rise and euro weakness.

    So will Europe begin buying PM's tonight?

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  84. BAC - Are there any other opportunities available? The price looks low, but certainly will get lower if the broad market continues to sell off.

    I would have to wait a bit and see what happens, but that's just me. Obviously there are other considerations to take into account and numerous ways to play it, such as taking losses early, etc....

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  85. What if pimco, blackrock et al are successful in challenging the legality of MBS' and banks like BAC need to take all that bad paper back, couldn't the equity holders get wiped out?

    just wondering

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  86. ooh, just found a story on ZH discussing the MBS situation

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  87. jb -- can you please post a link to that story?

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  88. TOF -- I am glad that your TNA trade worked out between yesterday and today. I don't think I have EVER seen a case when after a sharp after hours drop the market wouldn't rise above that drop level at some point during the next day. So those who are willing to wake up at the open should ALWAYS buy the market after sharp after hours drops. :)

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  89. David - Thanks and congrats on your trades! You were right to be bearish as it seems. However, I think we ultimately go higher. A day like today provides great entry points for people that are bullish like I am and are sitting with cash. I think we should be taking this as an opportunity to go long. I suspect there is a chance we get a spike down to 1,150 but it would probably be bought up so quickly that I would rather just start buying now and if it spikes down then it will be a chance to get some more stuff on the cheap. I have a huge position in BYD and will be buying up some SPY, STT, GS, PIR and a few others over the next few days.

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  90. TOF, I wouldn't be surprised even a little bit if the market gaps up tomorrow and heads higher. The overbought condition in IWM and FCX, which was pulling me into the "dark side" (aka short side) as a magnet, has been worked off in the past few days, and so they have all the rights now to make another leg up and I wouldn't object to it. :) So I set reasonably tight stops for all my short positions, so as to exit them with just a minor profit in case the market decides to go up.

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  91. Trend is your friend.

    Thanks to "port" for the excellent reports on Natural Gas. You helped to confirm my negative conviction on NG.

    Towards the end of August I became bearish on NG. On Thursday September 16th there was a candle of doom, so the following day I decided to go short UNG by buying HND.to, the 2x inverse. I got a fill at $7.85. Fast forward to today and the failure of UNG to follow the market, I sold at $10.81. For a 37.7% gain. I had 20% of my porfolios in this trade.

    TOF: Thanks for the heads up on your call on gold. I decided to short via HGD.to last Wednesday. Bought the open at $10.15 and sold today at $10.99 for a 8.3% gain.

    Hey, where is cheapybob?

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  92. I've got a bad feeling about the remainder of this week...

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