Tuesday, November 9, 2010

11/10/10 A Cool Hand

Another lazy cut-and-paste.

Re: Art Cashin Concerns/ A Cool Hand newSubmitted by 2nd_ave (4936 comments) on Tue, 11/09/2010 - 19:32 #73873 (in reply to #73869)
Rather than try to time the market, though, I'm just sticking with my longs. I mean, how many of us are going to get out at the top, wait the 5% pullback, and then buy back in? Even Saut was calling for a pullback 30-40 points ago in the S&P. It might just pull back to there, at which point if you got out at 1,180 would you be buying back in?

tof- Personally, I can no longer tolerate a 4-5% pullback in the broad market without taking action- those days are long gone. My mental stops these days limit losses in the neighborhood of a tenth of that. I'm tired of trading- no doubt about that. But for me to trade with the kind of 'tude I need to succeed (to be 'in the zone,' if you will), means only allowing hits I'm able to shrug off overnight.

Your risk tolerance is much higher, and there's nothing wrong with that. In response to your question- were I to exit the market near YTD highs (which I have- currently >95% cash with starter positions in GE and BAC), I would have no problem buying back in after a 30-40 point drop in the SPX. It may require more agililty or more 'work,' but that Taoist state of mind (where I'm able to approach trading with confidence) more than makes up for it. And we all have individual risk thresholds below which we're able to 'play cool.'

110 comments:

  1. I actually said "Holly shit" out loud when I checked 'discreetly' during a meeting today the close for SLW. Dang. That would have been $1,200 more. Oh well, I pocketed $1,722. Good enough.

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  2. "David - I can't believe how awesome yours and Mark's trade was."

    TOF, all kudos go to Mark for this one. I did the easy thing -- shorted SLW *after* an obvious mid day reversal. Mark, however, started shorting it *before* the reversal and even added to his initial position at an even higher price -- what a conviction! What an amazing intuition to do it on such a reversal day!!! Great job, Mark. I am proud to be in the same trading room with you, pal.

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  3. Sorry guys and gals but I got tied up after hours (Don't ask, mr. 2nd!) and couldn't do much research until now.

    Have you guys discovered any new deep phantasms we should be aware of prior to tomorrow?

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  4. Mark - I think your $1700 was moved indirectly from my account to yours! ;)

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  5. 2nd - couldn't have said it better myself. you're a master of words. it definitely comes down to one's own risk tolerance.

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  6. Never mind, I found one without even trying very hard. This one's deeply "seeded", too:

    http://www.inflation.us/foodpriceprojections.html

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  7. I'm proud to be here with all of you guys, but thanks David. Your play and conviction with ECU far out does my SLW scalp. FWIW, I still think we go higher into years end.

    CP- So we had a no net change today with TT! Works for me :). Let's go get them tomorrow! You probably didn't see it, but about 14:00 a dude on CNBC was talking about GMO/TIE/TC. Look at the volume spike then on all three.

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  8. Ha, Nikkei is green, this shoots a gaping hole in the theory they just follow the NY market!

    Well, in all honesty I can't say that yet b/c it has yet to close in the green...

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  9. It's also far to say that my gains in XCO have allowed me to not hold on too tight with my port, which helps.

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  10. And my UNG position is now green by 6.33%.

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  11. 14:00 - Ah, so the brokerages had their salesman at the helm today. I was wondering where the heck that spike came from and started to question whether it was a buy signal.

    But there's no way I'm fast enough to act on something like that, it takes at least a few minutes just to enter an order.

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  12. UNG - Wonder if there's a chance it could run to $7.25???

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  13. I was gonna try selling some CADC tomorrow but I might just wait and see if Beijing revalues before I let it go.

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  14. Actually, considerably more than $1.7k disappeared from my account today but it would have been even worse had I not shed some weight yesterday.

    It's nice having not as much hair removed.

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  15. I forgot to mention yesterday morning I received a call from a broker while Poncho and I were outside taking our morning leak. I'll have to replay it to see which brokerage, but he didn't mention a specific equity or the purpose of the call.

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  16. CP- You've got a bigger problem on your hands. Mr. Wizard is missing.

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  17. Yes, Mr. Wizard is missing b/c the system logs me out periodically and I have yet to log back in. I'll do it tomorrow though. ;)

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  18. California missile forecast?

    http://www.youtube.com/watch?v=7oA-1IUIegc

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  19. So I shorted 200 shares of SLW today at $34.20. What should be my exit strategy now?

    In addition to a buy stop limit on SLW at $34.50, I decided to place a buy limit order at $29.20, so as to exit this trade with a nice $1K gain. If SLW drops much lower than that, say to $26, then I will actually consider scaling into it on the long side, since I believe we are now having a simple bout of profit taking after the market became a bit too exuberant.

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  20. Since my HNUZF (and HNU.TO) are still not available for trading, I am placing a sell limit order at $6.30 for my remaining 500 shares of UNG. If this limit is hit, then together with my recent UNG sales, it would still reduce my exposure to NG at a somewhat slower rate than I was planning initially through sales of HNUZF. Which is to say that I am letting the profits from the large HNUZF purchases made at THE bottom of NG accumulate. The exponential compounding of 2X ultralongs works to my advantage during a rally, since they rise by more than 2X relative to UNG.

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  21. Mark/David - WOW, congrats on the super SLV trade.

    Switched over to a new ES, 6E methodology yesterday and got hammered (hit my loss limit), scratching back early this a.m., globex is a little thin, but the swings aren't wild, but now I'm out until the claims # comes out.

    GL today guys.

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  22. I sure do wish all trading platforms were created equal. Gee, wonder why they aren't?

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  23. Make that WATG. Dang, that filled quick. Let's see if support holds here.

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  24. GMO - This thing fell like a rock yesterday and so far is still falling today, I wonder where it turns back up, maybe $4.17?

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  25. Took my hit on REDF...Sold half my position at $3.43. That "arms-length" deal they did with their founder bothers me a lot.

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  26. happy morning ! it's snowing and the rooster is crowing. :)

    vgz is another one that swings 5 percent plus per day. I haven't been fast enough to play it

    do y'all really think slw is going lower?

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  27. SLW - I missed the move, went completely over my head.

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  28. Their ripping LVS on a down grade.

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  29. AONE - Kinda hemorrhaging money aren't they?

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  30. I wonder if anyone believes this:

    "China is accelerating the yuan’s appreciation as part of the “grand bargain” to win U.S. support for Beijing to gain a bigger say at the International Monetary Fund, says Goldman Sachs Asset Management’s Jim O’Neill.

    China’s yuan, known as the renminbi, reached the strongest level against the dollar since 1993 ahead of a Group of 20 leaders meeting this week in Seoul. The gain came after the IMF’s executive board approved a plan that would make China the third-strongest member in the organization, a position described by the fund’s chief Dominique Strauss-Kahn as allowing Beijing to take more “responsibility” in the global economy."

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  31. Up elevator? Doesn't look that way...

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  32. Man, a lot of the little guys are getting killed today.

    CP- Yeah, but 10% on no news I can find?

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  33. Happy morning vb, better go out there and collect those rooster eggs before they freeze and break!

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  34. AONE - Didn't they just release earnings?

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  35. GMO - Crap, it's stopped falling...

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  36. alright...I sold my all of my REDF...screw it. i'm not cool with that deal they announced. i moved all of it into BYD at $9.82. i also bought SPY $120 November calls at $1.8 average on the dip down to 1,204.

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  37. Decent pullback newSubmitted by 2nd_ave (4937 comments) on Wed, 11/10/2010 - 10:19 #73910
    Question is whether it 'sticks' going into the close, or if it gets bought up immediately.

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  38. PAL - Good, this one's finally falling. It hung in there for quite a while though.

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  39. I'd watch yesterdays low, 1206, and 1198 for support.

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  40. 2nd - i think it gets bought. but then again i'm betting that way.

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  41. Damn, pretty big draws in crude supplies.

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  42. XLF sure looks like a buy on that bounce off of $15.

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  43. TOF- I was looking at the same thing. (XLF)

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  44. Ok, looks like my buys were $9.84 on BYD and $1.85 average on SPY Calls. I might sell both on a bounce today, but I have a feeling we'll get a big bounce. We sold off about 25 points or 2% from the top.

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  45. Bidding SSO @ 43.40 for the IRA in case things get dicey while I'm gone.

    GL guys.

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  46. I've also got a feeling today's not going to materialize into a selloff.

    This could be where U$D and equities run up together?

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  47. UUP up, buying the dip?

    Took a chance on a huge pullback in URRE.
    Fricking amazing, wish I bought a LOT more.

    Using Landry's methodology. Now I can set a stop and do something less stressful.

    2nd, if you are tired of trading you need to really look at this method. It combines the best of what I read here daily from some of the best traders I know. You guys rock.
    CP, GMO is in a uptrend. The chart says UP, the methodology is to buy the pullback to support, take partial profits at resistance, and play with the houses money thereafter. The only thing that can hurt after that is a MASSIVE gap down and that can hurt anyone.
    FF

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  48. golden eggs

    smart trend this am

    There is talk about returning to the gold standard (or some variation) as a means of keeping governments from manipulating currency values. Critics of that idea are quick to point out that a return to a gold standard would lead to higher peaks and valleys in business cycles and would make coping with future inflation and deflationary pressures difficult, if not impossible, for governments. In reality the level of investment in the status quo is so high that a return to a gold standard is highly unlikely, but public debate about such is likely to lead to higher gold and commodity prices as the dollar value erodes.

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  49. Let's look at the econ reports of the past 2 days:

    Same Store Goldman Sales +1.3% W/W and +3.4% Y/Y
    Jobless Claims 435k vs 450k consensus; 4 week average tied with lowest since Lehman collapse.

    Could this have been the dip everyone was waiting for? Did they buy?

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  50. I read that in Smarttrends this AM and had to laugh....as if coping with deflation/inflation wasn't difficult with paper. One has to wonder why it's a necessity at all, except to cope with thieving, stealing, fraud and outright incompetence. How about we let those participating in the above FAIL and leave the currencies alone? What a concept.

    How is it we always "cope" by socializing losses with 'the people's' money and privatizing gains?
    Wouldn't it be wiser to keep both in the private realm?

    FF

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  51. Looks to me like they bought the dip.

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  52. whoops, got busy, natty storage was +19 injection, saw the initital pop and now a drop, cash started off strong then dropped pretty hard too compared to the last couple of days

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  53. The entire reason we have fiat is for this very purpose. If everyone decides they want to go to cash then government has no recourse under a gold standard, and no power to reverse a deflationary period.

    Death, famine, starvation, poverty follow?

    What pisses me off is how we got into the current downturn, what were they thinking?

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  54. Over the course of a year's daily trading data we have the daily market producing noise during 50% of those days. This is one of those days. No trend. Painful because I/we don't know if we are going up or down (index wise and for most but not all stocks). The index is what the financial media and the retail investors focus on and it wags the dog's tail. And most recently gold/silver (commodities) gets our attention.

    Sitting on my hands for now.

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  55. I'm not buying into today's instability considering the big red candlestick from yesterday, I have to let this one play out for a few more days at least.

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  56. Banks looking strong. I doubt this closes red.

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  57. Turned on CNBC to hear that the 30 year auction went poorly. Doesn't that create a higher sloped yield curve, which is good for banks? We know the FED is supporting the shorter end so a higher longer end would create this, right? Just trying to think outside the box...

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  58. Judging by the looks of things I doubt we close red today as well, which closely follows previous long red candlestick peeks, the enthusiasm appears to carry another few days. It's the third and subsequent sessions I'm currently contemplating.

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  59. Yes, higher long end rates boosts banking industry bottom line based upon my understanding of MREIT dividend performance.

    They gain the spread * leverage, which can go a long way towards mitigating their other losses.

    The FED is basically performing the same operation with their MBS's?

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  60. I suppose this could be where sidelined money starts coming in?

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  61. See, this entire conversation about the yield curve spread and it's effect is never addressed over on CC, so the conversation is always a deep and subjective phantasm.

    As if natural resources are infinite in comparison to the human population growth rate and so rising prices wouldn't be justified under a gold standard, give me a freakin' break!

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  62. DUBLIN, Nov 10 (Reuters) - Ireland's central bank governor conceded on Wednesday a huge bank recapitalisation programme had failed to reassure investors, as borrowing costs mounted along with concerns its new fiscal plan would not avert a bailout.
    Ireland's fragile government is battling to prove it does not need a Greek-style rescue to help it reduce the worst budget deficit in Europe, with markets worried it will struggle to pass the first of four austerity budgets next month.
    The European Union's top monetary official said Ireland had not requested any financial aid, but the premium investors demand to hold 10-year Irish bonds rather than German benchmarks has widened at the same breakneck speed as Greece's spread did shortly before it sought its bailout in May. [ID:nLDE6A91SB]
    Finance minister Brian Lenihan said late on Tuesday he believed action the government was taking would ensure it could repay its debts, and Central Bank Governor Patrick Honohan said the austerity measures would be unlikely to change even if external help was sought.
    "My take would be the sort of policy package the IMF would want to see Ireland doing is very much the sort of policy package that the government is putting together on the fiscal side," Honohan told a conference on Wednesday.
    The governor was replying to a question but said nothing about whether he thought Ireland would need outside help.

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  63. "Ireland's fragile government is battling to prove it does not need a Greek-style rescue to help it reduce the worst budget deficit in Europe, with markets worried it will struggle to pass the first of four austerity budgets next month."

    This sounds a lot like what Ford Motor Company said a couple years ago.

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  64. OINK - Let one rip yesterday I see...

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  65. Cashing Out> Closing BAC/CSCO/GE @ 12.54/24.43/16.54 newSubmitted by 2nd_ave (4938 comments) on Wed, 11/10/2010 - 14:34 #73936
    Minor loss overall on the trades, but up nicely from last night (mainly due to adding a little BAC). Back to 100% cash. Stepping aside just feels like a breath of fresh air right now- like walking out of the casino into a warm, sunny day

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  66. Morgan Stanley says equities are "crazy cheap" newSubmitted by teamonfuego (2296 comments) on Wed, 11/10/2010 - 15:00 #73941
    * Says global stocks in midst of multi-year bull market
    * Stock rise began March 2009, to last at least 2 more yrs
    * Companies in emerging markets particularly attractive
    * Deficit reduction seen more likely, not priced in
    (Adds comments on conditions needed to end bull market; comment from Chief Investment Strategist)

    By Helen Kearney
    NEW YORK, Nov 10 (Reuters) - Global stocks are in the middle of a multi-year bull market that began in March 2009 and will last for at least two more years, Morgan Stanley Smith Barney's investment strategists said on Wednesday.
    "One of the great investment decisions someone could make today is to be invested in the equity markets, especially in the emerging markets," said Charles Reinhard, Morgan Stanley Smith Barney's global investment strategist at a press briefing on the the firm's 2011 outlook.

    The S&P 500 Index <.SPX> of large U.S. stocks has gained 79 percent since bottoming in March 2009, but Reinhard said there are still plenty of opportunities for investors. Company profits have grown by about 30 percent this year, and stock prices are "crazy cheap" relative to bonds and cash, he said.

    "There are great big companies trading like Rembrandts lying on the driveway in a tag sale," added David Darst, Morgan Stanley Smith Barney's Chief Investment Strategist.

    Investors in the wake of the 2008 financial crisis have poured into the safety of bonds and cash, driving yields to paper thin levels. Meanwhile, economic worries and the May 6 "flash crash" has prompted investors to abandon U.S. stock funds.

    Morgan Stanley has been positive about stocks since April 2009 and continues to recommend greater exposure to these "risk assets."

    Reinhard advised investors to look at U.S. companies with exposure to emerging markets such as China. He pointed to the huge projected growth in the middle class in emerging markets and, as a consequence, rapid growth in demand for goods and services such as travel, fashion and food.

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  67. There have historically been two "friendly" periods to invest in equities, and investors are currently experiencing both, said Reinhard.

    One is the period between when the stocks bottom out and when the Federal Reserve begins to tighten monetary policy.

    The second is the period after U.S. mid-term elections. For the past 15 mid-term elections, the stock market has risen an average of 25 percent between the Sept. 30 before voting and Sept. 30 one year afterward, said Reinhard.
    "Markets don't like uncertainty and (after elections) some of the bad scenarios fall by the wayside," he said.

    Reinhard also does not see evidence of any of the conditions that usually kill off bull markets, such as a clear and immediate danger of inflation, irrational exuberance among investors, a looming recession that would hurt profits or overpriced stocks.

    "Bull markets don't die of old age, they die of assassins," said Reinhard.
    Morgan Stanley Chief Investment Officer Jeff Applegate, who kicked off the outlook session, said there is a greater likelihood of a shrinking U.S. federal budget deficit following Republican party gains in last week's mid-term elections.

    A U.S. presidential commission on Dec. 1 is expected to issue a report on reducing the federal budget deficit. Applegate said the report could provide President Barack Obama ammunition for some unpopular moves, such as raising the retirement age and paring back entitlements.

    That's important, he said, because public equity valuations tend to rise when public sector debt falls relative to economic output.

    "I don't think the market has factored that in yet," Applegate said.
    The next Congress also is more likely to promote free trade and extend the Bush tax cuts, both positive for the U.S. economy, he said.

    (Reporting by Helen Kearney; Additional reporting by Edward Krudy and Joe Giannone; Editing by Tim Dobbyn, Dave Zimmerman and Bernard Orr) ((helen.kearney@thomsonreuters; +1 646 223-6124; Reuters Messaging: helen.kearney.reuters.com@reuters.net))
    Keywords: MORGANSTANLEY/INVESTING

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  68. TOF - Good research there, makes a pretty compelling case and I'll bet there have rarely ever been so many bears lurking.

    Thanks!

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  69. There's someone buying SLW in 25K share blocks @ 34.60, 34.55, 34.50. All three just got eaten up. Let's see.

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  70. Another 10K share block @ 34.48 just got hit.

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  71. SLW - What's the thesis there (just wonderin')?

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  72. CP- Just looked toppy for the day. I had to pick up my daughter so I missed the close. I'll cover AH.

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  73. I swear I can't figure out what goes on in people's minds to make prices swing the way they do.

    Must be some sort of reaction to global gravitational settling forces that I can't pinpoint.

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  74. Long CSCO at $21.90 after hours.

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  75. I spent the small overlap between my waking hours and the market hours at a dentist's office today, so I missed all the action.

    Now I see that the NG injection was smaller than expected but traders stilled dumped NG. However, since UNG futures made a higher low and a higher high recently, there is a good chance that it is in a multi-week uptrend, and so I just reloaded after hours at $5.86 the 500 shares of UNG I sold yesterday at $6.07.

    Also, I see that oil had a nice run today and hit my sell limit order at $3 for one November $35 call. So now I sold two calls total, one at $2 and one at $3, and the proceeds covered the purchasing costs of all 4 calls I am holding. That is, I now have 2 "free" November $35 calls with sell limit orders at $4 and $5 for them.

    SLW did hit my buy stop order today at $34.50, so I am exiting my short flat. That's OK with me, however -- this short was meant only as a hedge on my ECU.TO, which is up 8% today. Needless to say, this propels my account to yet another all-time high.

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  76. Doubled up on CSCO at $21.83.

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  77. Added final third of CSCO afterhours at $21.57. average is $21.7

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  78. yikes...no bounce back in this stock (CSCO) whatsoever. yeesh. not good for the market tomorrow. 12% drop for CSCO is a HUGE move.

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  79. alright...last buy i swear. bought more CSCO at $21.01. avg now $21.48. i don't plan on holding more than just after hours.

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  80. CSCO - Had the same moves in Jan, May & Aug. Same Deal. Looking to short some puts @ 20 level or so...

    REDF - so it's just another POShit stock like all the rest Hey... :-)

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  81. sorry...average is $21.68. let's see if i can get back to even with this.

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  82. bought CSCO at 21.10 to 21.20, what a dice roll.

    so what is so terrible about them?

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  83. cheapy - Nothing is all that bad about them. It's just the John Chambers is typically VERY honest about his forward outlook & that typically forces a sell-off.

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  84. JNPR - Anybody heard who's supposedly buying this one?

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  85. NG - I heard a couple weeks ago that a license to export had been granted some facility in the gulf, but haven't investigated the detail. Maybe this subject's helping or will help put some wind in the sails of natty in addition to the recent acquisition interests?

    My shot in the dark...

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  86. yeah, i figured.

    i'm very bearish on the country and economy, but sometimes these beatings get overdone on companies that make decent profit.

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  87. cheapy - Agree. We have a very dysfunctional and unraveling nation...

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  88. All right, guys -- I'll follow you into CSCO. Looking at the 1-year chart, $21 is a pretty good deal. So I just opened a small "starter" position (200 shares) at $21.30. If CSCO drops below $21 tomorrow, then I'll sell a bunch of $20 puts on it, which should give me an entry below the 1-year low.

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  89. David - Do you have a Russian background???

    I was drawn to this site from a google search for JL's book 'How to Trade in Stocks'....

    http://www.stockvision.org/books.php

    JFYI

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  90. Yes, Kyle, I do have a Russian background. Did I give it away by rushing to buy liquor after every successful trade? :))

    Thank you for the link...

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  91. I'll pass on CSCO. I thought I had a good deal in INTC, only to get pounded for about a month on it.

    David- I have the same take on Natty. I think today was just a little profit taking. Besides, it looked strange being green in my account :)

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  92. Covered SLW @ 34.55. Wish I had been here earlier.

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  93. I remember receiving a call from a broker in the late 90's trying to sell me some KMT shares, I told him I'd rather buy WMT and he hung up pronto.

    "DETROIT (AP) -- The former chief executive of Kmart will drop his appeal of a $10 million-plus penalty and pay $5.5 million to settle years of litigation over the retailer's fragile health before it filed for bankruptcy in 2002, court documents show.

    A jury found Charles Conaway liable last year for misleading the company's investors, and a federal judge subsequently ordered him to pay millions."

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  94. I looked at the 5-day intraday chart of SLV and it looks like it got some pretty strong support at $26 and some resistance at $27.15. In case it decides to go up tomorrow, I placed a buy stop limit order for 300 shares at $27.20/$27.25. On the other hand, it can just as well decide to go down to $24, and so I also placed a sell short stop limit order on it for 300 shares at $25.95/$25.90.

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  95. Sold CSCO at $21.44. Oh well. On to better pastures. I listened to the call and it definitely sounds like a CSCO thing more than anything else. The majority of the miss came from the public sector which makes up 20% of revenues, according to Chambers.

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  96. I am placing a sell limit order at $22.29 for the 200 shares of CSCO I picked up today at $21.29. I think there is a 90% chance that the limit gets hit tomorrow.

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  97. BA - A little birdy told me to sell this one a couple of days ago, but since I don't trade it and don't know someone who does, I simply filed the info.

    vb - did you remember to collect those rooster eggs today???

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