EDGE TRADER

Tuesday, August 30, 2005

Nada, zip, zero, zilch

No reason to get my money committed at this point. Not with month end window dressing in process tomorrow. I am a little bored by this, but not much to do right now. Wasting good money is not worth alleviating my boredom with the market at the present time. I may try to buy if there is a sell-off tomorrow. But don't count on it!

Missed the blog

It's a cloudy day at the beach. Looks like the market staged an encouraging rally. I found an internet station at the library at the beach - in the premarket I was worried about a flat out crash on Monday. We know now that that did not happen, which is a solid sign of either strength or insanity by the market.

Today's open was predictably downwards. I am glad I am in cash for the most part today. The bulk of my long investments consists of Oil, AAPL, and GLW, which are all faring well today. I am not going to try to mess that up by trying some half baked trade.

I will buy at close today and sell at open tomorrow in all likelihood, however. Too much panic out there today to not buy some of it.

Then it will be back to the beach for a great forecast from Thursday through Sunday.

Friday, August 26, 2005

Unexciting open

Looking at a relatively boring open with oils up and everything else mixed. Although it appears there is a downward bias to the S&P this AM.

Nothing jumping out right now as a good play. And my focus will be getting out, not in today.

Thursday, August 25, 2005

Cashing out


I am going to be cashing out on some positions tomorrow. Spending a long week at the beach where I will loosely monitor the market but not do much trading. Which appears to be fine the way the past two weeks have gone on Wall Street. My rule is that if I have to worry about it while lounging in the sand, then I shouldn't own it.

HP is now being called the "Tech Bellwether" by CBS Marketwatch. Loosely translated, in media-speak, the phrase is attached to whichever large tech firm (DELL, INTC, MSFT, HP?, AAPL?) happens to have enough of a news tidbit to actually make a headline. In all likelihood, the stock buyback increased from 3 billion to 4 billion in order to counteract the dilution created by Mark Hurd's stock based compensation package and Carly Fiorina's golden parachute, but who am I to quibble? It is positive news that might gap the tech sector up tormorrow, which is enough to make me happy.

Plumber gone now...



Plumber is gone. Unfortunately Mr. Plumber's presence did not have a positive effect on my net worth. And the relative peace of my home office terminal really did not do anything for me thanks to equities not being able to pull themselves out of the proverbial P-Trap either.

TICK stonger now

Will a rising tide lift some boats???

What do you do when nothing looks good and you are home all morning?


I am not seeing anything of enough interest to risk money on unfortunately. TICK is negative as we speak. Right now I am sitting at my trading terminal listening to a plumber work in my bathroom. I would very much like to trade to earn his fee before he walks out the door. But without a solid setup I would be better off opening a lemonade stand on the corner.

Exit

Wow - I am feeling incredibly conservative this morning. Out of SONC +.51% and out of TXRH +.35%. These were trades in sectors the street doesn't like right now, so I am more than happy to exit clean and quick even if it means reducing potential profits.

SONC TXRH

SONC appears poised for a gap up this morning. TXRH looks pointed at a gap down. S&P futures are looking good this morning. I will look for a nice setup to roll this trading capital into after selling. Depending on how TXRH opens, I may only sell half and ride the other half.

Today looks so far like a good day in the summer doldrums, but this smells of the "up" days we had last week where the tape nose dived in the afternoon. It is unlikely that I will trade tomorrow so I am hoping to make the most of things today.

Good luck.

Wednesday, August 24, 2005

She's getting ready to blow!!!


I'm not talking about the housing bubble, I'm talking about the goopy stuff between my ears, which was escaping in the form of steam today as I listened to various media outlets giving air time to any poorly informed real estate malcontent they could scrape up to say how we are going to see the next housing crash.

One I heard today on Bloomberg radio had me thinking I could perform a wonderful public service and begin educating the public the truth about the drivel being spouted about evil mortgages, adjustable rates, tulips, yadda yadda yadda.

I am thinking about doing a series of educational blogs about the truth behind these fictions. If I hear one more pundit get trotted out to spout incorrect, unfounded gloom I may just do that. (My day job is very much tied up in the housing market - I know what I am talking about).

Gas hurting restaurants?

Applebee's blames poor earnings on gas prices! Hmm; somehow this didn't reduce the 2 hour wait at our local Cheesecake Factory (CAKE) last Saturday. I will admit to visiting Applebee's for the occaisional lunch or even dinner if we are desperate and there's no where else to go, but generally we are talking last resort.

It couldn't be the fact that people are tired of eating sizzling chicken at a place with assorted junk and old photos hanging on the wall, could it? Couldn't have anything to do with the competition or the unusually warm summer we are having, could it? Couldn't be the lack of a solid promotion or advertising effort this summer... NO OF COURSE NOT!

There are so many Applebees in my area that they are a gas saving choice - they are generally closest or among the closest to pretty much anyone.

Which brings me to Cracker Barrel. My first experience with Cracker Barrel occurred when driving my family from Orlando to Atlanta. It worked something like this: got on highway, approached first exit, saw sign for Cracker Barrel, approached second exit, saw sign for Cracker Barrel. Approximately 25 Cracker Barrels later, we finally caved in and ate. Couldn't be overbuilding of restaurants? Couldn't be the fact that no one has to get in the car to drive to hot summer weather? Let's be serious: how many times can one human really eat dumplings? Note to Cracker Barrel execs: to combat earnings woes, please consider building restaurants on both the North bound AND South bound sides of each exit - perhaps that will increase traffic!

Ugh...

SONC and TXRH


Two hurt badly by APLB and the surrounding downgrades. I bought both at close and will sell at open. TXRH hopefully will give me a bit of dead cat bounce to profit from. SONC I believe was down unfairly. Although a consumer may eat out less, they still will consume fast food. Hopefully a little bit of bounce there tomorrow too.

Belated Recap

Was away from a bloggable terminal for most of the day. So lots of catching up to do. NFLX worked out fine - love that guy Reed Hastings - at least when his company is making me money, which was today.

STLD gave me a bit of a spanking. When I think of that trade all I can think of is Kevin Bacon on all fours in Animal House saying "Thank you sir may I have another?". Luckily I got out quick before it continued to drop. I then redeployed the capital into a nice setup on EBAY and was able to even up the losses on STLD before the end of the trading day. I breathe a sigh of relief.

Tech


Tech stocks appear to be attempting to climb out of the gutter this morning. Hopefully this will last through the afternoon!

Where's my multiple


BIDU numbers came out today... aahhh to have a multiple like that. Based on the .47 projected current year earnings, BIDU is trading at a 179 multiple even after it's drop from the stratosphere.

Try this multiple on for size, US growth stocks!

NFLX: .30 x 179 = $53.70
AAPL: 1.19 x 179 = $213.01
RIMM 1.48 x 179 = $264.92
GOOG: 3.79 x 179 = $605.02

If only I could find a share to short!

Tuesday, August 23, 2005

Taking a plunge - the water looks fine ?!?


Recap - I am 0/2 in PSUN. Tried again today but got stopped out for a small loss ($50?). The market is just too negative for trend trades to work. I don't often short equities but I may later this week. Most of the movement is overnight. I entered into two overnight swing trades again today. It has been at least a week and a half since I held anything in my trading portfolio overnight.

NFLX is the first - it appears to be making a bull flag over the past few days. It's activity today also agrees with my trading rules. This stock has the potential to gap up slightly tomorrow. A sound business and trading at lows for several weeks right now. My shares were the last executed in today's regular trading session, which my trading rules would define as a slam dunk entry. Plan is to sell 50% at open and hold remainder intraday if the market is showing strength or oil opens down. Otherwise, sell 100% within 15 minutes of open.

STLD. A technical trade only. I typically don't hold commodity stocks overnight, but I am feeling good about this one (translation: I just hexed myself). Definitely a quick exit at the open.

Some rejects included JOSB (why? I picture a snappy looking dress suit being doused in gasoline and set on fire) and GKIS (I will leave Colonel Sanders alone tonight, thanks very much).

Good luck tomorrow AM - I will try to post at the open.

Monday, August 22, 2005

Aftermath


I am really starting to get tempted to start picking through the rubble left by the market over the past few trading days. Bargains abound. My only concern is whether the slide could continue. The market seems to be bound by Fed meetings and at the whim of oil prices. Lots of volatility leading up to and after the inevitable rate hike with no signal to an end in sight. The minutes from the Fed meeting next Tuesday would be an opportune time to do some signaling if one were Mr. Greenspan. Having that looming over the market's head makes me bit too nervous at this point to start picking through the rubble just yet.

I am finding few candidates for overnight swing trades. I have increasingly looked towards intraday trades to earn a little income, but this is not my specialty, so I am not having much success yet. I've been making good calls on which securities will provide a solid trade, but I'm having issues making a solid entry. Sometimes I've missed my window, other times, I've chased the market with my limit orders and ended up getting stopped out. I am basically doing my best to excercise restraint and not force trades, as well as hone my intraday trading techniques. (Of course the devil on my shoulder is telling me to trust my rules and go for it)

My wife and I have taken steps to fill my spare time by purchasing a new home and getting our current home ready to go on the market. I am in the process of buying into the so-called housing bubble. I will write about the housing bubble in a future post. I am an expert on the real estate market in my day job and have some intelligent thoughts on the subject. For now I don't want to get started...

Another Trading Day



Market taking a nose dive this afternoon. Thankfully it has bottomed and is now climbing back a little. I am searching among the rubble for an overnight trade now!

Earlier in the day I entered a bit too late into an uptrending PSUN and was stopped out at about the same time the market started declining. TICK was looking too ugly for me to re-enter, so I will instead preserve capital for tomorrow.

Oils could get ugly tomorrow crude bounced off resistance at $67. Should they decline further, energy stocks might take a major nose dive!

KSWS is a possible candidate... RL is another, but retail is too weak right now for me to seriously contemplate that one. TXRH looks good but is too thinly traded. KSWS did not gap today, so that is out also. OVEN is a possibility, but I don't care for that stock (all hype), also no gap.

Once you reject as many as I have today (there were more than the list above), you get the impression that you would be forcing any trades you make, so I am going to stay parked overnight toninght.

Sunday, August 21, 2005

PSUN




Pacific Sunwear. A very interesting Chart! Not because of the candlesticks, but because of the clear daily volatility. This stock has the potential to be "gamed" if played carefully with tight stops and never held overnight. I am definitely interested in it from this aspect if no other.

Website indicates locations in all 50 states, so the expansion potential seems minimal. They delivered a good upside surprise in the most recent quarter, but fell with other retailers over concerns regarding spending.

Not a stock that seems to be the best of its category, but this may be a good location for a trend trade.

Notes from conference call: PSUN is opening a new chain called 1000 steps to sell footwear to an older mix of clientele. Projections are for 600-800 locations, but the 1st 8-10 stores are not to open until 2006. Comp store numbers in the 3's, but expanded profits and margins. The new store sounds like an entry to compete against Skechers. Don't know if this will be successful. Pac Sun is capitalized well, and can afford to start a new enterprise like this. Clearly they've chosen to start from scratch rather than acquire.

I will add this one to my watchlist.

CACH



Cache stores. Recently expanded 300 additional stores within the past 12 months. It focuses on high end fashion and Jeans for teenage and 20-something girls. Same store sales up 8% in July. This was a difficult month for retailers, so it appears to be a good indication of the possibility of further upside surprises. This appears to be roughly in line or slightly above their expectations. Their most recent quarter was over 10% above analyst's earnings estimates, and they guided up, but the stock plummeted in response.

In the conference calls, execs pointed to stores beginning to get some traction that they didn't have previously in the marketplace since they were newer. My take is that this will be the first XMas season with a large set of stores nationwide. They also indicated that their fashion garments were the highes margin items. They recently had a shakeup where their marketing promotion exec was canned, and have shifted their focus away from jeans to high end items. It sounds like they took a drubbing from AEOS, etc. in the jeans arena. Now they want to get people in the door with jeans promos, but sell their higher markup items.

Same store data releases on 9/8. Potential risks: the glut of denim hypothesis, getting slammed by the competition, and the whole higher crude, hence less spending on retail thing.

I've never visited a Cache, so I can't invest money in the company yet. But this is an interesting and a little off the beaten path candidate.

From a technical standpoint, too many concerns at this point. Looks like a current period of consolidation and a possible head and shoulders move in process.

Institutional ownership is high. Short interest is low. Insider transactions offer no clue, with some stock options exercised and a few open market sales. No recent buys. Small float and very low daily volume.

This will go on my watchlist as a wait and see until I can get confirmation on the technical trend.

Saturday, August 20, 2005

Week's Data


Portfolio data for week beginning 8/16:

Overall performance -1.3%.

Trading Data 50% of trades were profitable, 50% of trades were breakeven (between +$20 - $20 loss). 0 losing trades.

Losses came from my long positions.

Historically, I know that the last 2 weeks in August are difficult, but these numbers are still a downer. I really don't like giving money back.

Friday, August 19, 2005

Not a good week.


Not a good week overall. Thursday was my worst single day loss since June30th, and that came on top of Wednesday which was also a down day. Today was a solid gainer, but I've been without the consistent returns from my trading activities for most of this week, since my trading capital has essentially been parked. As a result, I've been unable to make up for the loss in my long positions.

I have confidence regardless of the doomsayers they trot out on CNBC that the 4th quarter will be a solid one for equities, but in all reality, I will make money regardless of the market's direction. With the fed meeting and earnings behind us, with some luck the market will settle into a little greater normalcy.

I've been using oil positions to hedge my portfolio against swings in crude price, but that blew up in my face a little this week. Not to say I lost money overall on those positions, I didn't, but it sure is painful to give up profits. My strategy going forward will be more trading oriented where I buy oil on pullbacks, and sell at peaks. I've been holding energy which worked against me this week.

This weekend I will try to research the retail sector to see if I can find some plays. I will post any candidates I find. Everyone else's trash is my opportunity!

Changing the oil



Lightened the load in oil today. Took profits in one, and bruises in the other holding (which is better than the amputation I would have taken if I had sold yesterday).

Couldn't resist a small day trade in AAPL, which bottomed out, but never took off as I was hoping and sold before close to avoid a weekend position.

Have to leave the terminal for a few. I will post later tonight.

Thursday, August 18, 2005

Diversions, Diversions


Working on finding myself some diversions while I patiently sit on the sidelines waiting for the tape to improve. I may day trade tomorrow if I have an attractive opportunity, but that is unlikely given it is options expiration day. I am most likely not going to enter into any overnight positions either. The odds of an article by Chicken Little about how the market is falling in the Sunday Times business section is unusually high this weekend.

So the weather forecast is looking good - maybe golf? There are plenty of projects around the house I can work on... (my wife talking through my fingers). I just don't want to end up getting into something and doing more damage this week than already has occurred.

Shuffleboard, anyone?

Seeing Red

Wow, the level of panic is immense out there today. I made myself hold steady until TICK was positive. It just went green at about 9:52. Oils are heading towards positive territory after an ugly looking open. I still believe in this sector but will take some profits between now and next Friday.

With such a solid down day, opportunities for trades should abound. I have to think that Greenspan will signal to the markets to calm down in some way. But we will see...

Wednesday, August 17, 2005

Fryolator or Lube Job?

Waiting with baited breath to see what happens to crude futures tomorrow. Some fundamental news that should have pushed futures higher did the reverse, slamming my energy holdings. This could be a momentary pullback, or the beginning of a major retracement that would send my energy stocks into the fryolator.

Of course if it ends up being a momentary pullback, and crude ticks up again tomorrow, my other holdings might end up taking that dip in the fryolator instead. It will take some discipline and careful trading to end up in the black this week. So far, I am eke-ing out a small gain on the week (which I should be immensely pleased with, but of course I'm not). For the moment, I've resisted the urge to sell into the weakness in energy today; instead selling my retail and some tech. I would very much like to sell into some energy strength tomorrow but we will see what happens. A certain CNBC personality was hitting the panic button on national TV tonight which may make things difficult for everyone. I'm not saying I disagree with the guy, but I am not looking forward to having dumb money get in the way of my objectives. I was already on the way to safety; with each sale I've made this week I've re-invested less and less, brining my portfolio to a greater cash position. But I refuse to jump with everyone else. If there is a major pullback tomorrow my cash position is good enough that I should be able to make purchases that will allow me to recover.

Lately I am of the feeling that we will enter a phase of at least 2-4 weeks where trading will be the simplest and most risk-free source of gains, so that's where I'm going.

Tradeless

No overnight trades for me tonight. Nothing met my criteria. Two notable throwaways were PERY and ANF. I would gladly have bought ANF at $57, but I was not at my terminal this morning, so that is a missed opportunity. Like ANF, most of the retail players that would have been good candidates had retraced at least 50% of their declines intraday, which rules them out. Plenty of energy stocks were available to trade, but I do not want to increase my exposure in that sector until I see it breathing again.

I will need to be alert tomorrow morning to see if any opportunities present themselves.

Bye, Bye, Retail

Made an exit from AEOS +2.47% overnight. Had to reach for a "Tums" as I listened the A&F numbers this morning, but thankfully, the eagle made the expected reversal throughout the day, and I was able to exit for a solid profit. Thought about holding half my position long, but retail looks too choppy to risk it.

I also had bought AAPL yesterday which I flipped for a +1.95% profit also.

Today looks loaded with opportunities in the energy sector. But I already own plenty of energy, so it seems a bit nerve wracking to pile more cash in - looks like a potential technical reversal in crude today. Of course, A&F looks tempting too, and no more numbers to report, so Wall Street's attention will hopefully be elsewhere the next few days?!!

Tuesday, August 16, 2005

Maverick? Maverick? Where are you Maverick?

I am feeling like a little bit of a Maverick by buying AEOS today. This could prove very profitable or I could get a big black eye over this. Sorry, Mr. Market I don't agree with you that forecasting earnings in the range of .45-.46 for next quarter instead of saying .46-.47 means that AEOS is worth 1/2 billion less than it was yesterday. I just don't buy it. (Let me rephrase that, I did buy it, the stock that is). After the slamming year AEOS has had, that punishment seems a bit undeserved, especially with it trading at a PE of 15.

But who knows? The lunatics may see higher crude again tomorrow and take this baby down further and I will have egg on my face.

We'll see...

A search for a tech bellwether?

Once upon a time, the tech bellwether was IBM. Here's my recap for what they need to do to put their anchor on the title of 2005 tech bellwether.

Microsoft: Sorry - softie needs to move outside the trading range it's in or B.G. needs to do something wild like challenge Steve Jobs to a cage match or something.
Intel: Moore's law: processing speed doubles every two years. Moore to publish new law about the price of Intel stock.
Dell: The market got a spanking yesterday as Michael's company made an attempt at being this year's bellwether. Ouch, thank you sir may I have another. Michael: cancel plans to sell Dell laptops through K-Tel with 3 easy payments of $39.95.
HP: Keep doing what you did yesterday! (like the tuna fish said: Sorry, Carly)
AAPL: Steve Jobs to undergo sensitivity training and write new autobiography. Embed hidden code in new Tiger OS to convert all negative "Apple Insider" blogs to haikus.

Monday, August 15, 2005

Trading and Icahn wrap up

Ended the BBBY trade +.59%. I don't day trade often, but I will take an opportunity when one presents itself. I rummaged through Wall Street's trash today but didn't see anything I wanted to salvage. A few banana peels, a few oil stocks. There were plenty of oils presenting themselves for an overnight swing trade, but I am too overweight right now to pick one up at this time. So I go into tomorrow with my trading portfolio in cash. I may day trade again if another opportunity presents. It is a thinly traded market these days, and mid day reversals have become commonplace recently.

I bought a few shares of TWX at the absolute bottom of the PM trough today, which should make me happy. I read after hours that the conglomerate of hedge fund money has pledged not to sell unless Icahn tells them so or 2/07, whichever comes first.

Now to look at this analytically; at first glance a hedge fund manager would be crazy to commit to this given their need to ensure that all capital performs for the partners. The allowed exit is after year end, so if there is a loss, there will be no way to get this capital out to perform and make back any deficits created from a drawn out battle, especially with mark to market accounting and year end #'s. So why was so much money committed? Well, there will be lots of guessing by the "outsiders" such as you and I. I can think of three possibilities. 1) Hedge funds are not actually committing that high a % of assets to this play - this is just roulette wheel money contributed by very large funds who can spare a little on a bet like this. 2) Ichan knows things that no one else does either about the businesses or the personalities and was able to present this info to his co-conspirators in such a way that it looks like a "sure thing" to them. 3) Icahn has given assurances that he will allow hedge funds to exit after this first meeting if it seems like TWX execs won't play ball, selling at a profit at the expense of individual investors like me who still think something will come out of this. So my strategy with this is also to bet only a few roulette chips on this play. If I do that, # 1 and #2 are in my favor. #3 I will just have to watch for very closely.

Icahn?

Carl Icahn is leading me - I am momentarily biting on the hook of today's big headline regarding Time Warner. This is a stock I've watched for a while. I am going to buy a small position in it gradually over the next few weeks. Just enough so that if he gets lucky, I can profit from it. And when I say lucky, I mean get the board to concede (which I think is unlikely). However, the more stir this creates, the more likely it is in the next 6 months that TWX does actually perform at least some token profitable gesture to the shareholders, whether it be buyback, dividend, or spin-off. I think that the stock is more likely to see $17.50 in the next few weeks than the Icahn bid see immediate results, but this is too big a deal to risk not being at least a small part of it. This could be the catalyst of a big move in TWX going forward for the next 12 months.

Back on the attack

Looking forward to this week - day job is looking light for the week, so my trading opportunities look heavy. Entered a day trade this AM in BBBY. Probably will be successful if the market bottoms some point and goes up towards the end of the day.

I'd like to welcome all the trend traders to AAPL this morning (and belatedly welcome them on Friday). They appear to have liked the candlesticks charts on this one. I unloaded some of my AAPL today to them, and may drop a little more if it hits $48. Wall street loves to slam that stock. There will be something bad posted in one of the Apple insider blogs or some excuse to bring it down for a while. Which makes me sure that I can safely exit some of my holdings and re-enter at a lower price a few days or weeks down the road.

I now go to watch the PGA Championship final & will be back at 2:30 to monitor BBBY and enter into an overnight trade at the closing bell.

Friday, August 12, 2005

Figured it out

It was about 12:30 and I was in my car returning from my work chores. I had a choice, go home and monitor my positions, or get off the highway in Springfield and spend the afternoon at the PGA championship. I actually hemmed and hawed for a few minutes until I passed a guy at the local Dunkin Donuts holding up a sign "Cheap PGA tickets". That was enough for me.

The radio said that there was a "broad based sell off in equities based on Dell's poor earnings and the rise in crude oil futures".

Now some people will even believe that. My oils all closed down, so I am not buying it.

As I wandered Baltusrol delirious from heat and thirst (the course was sunny, 105 degrees and sweltering) I started overhearing conversations of my fellow spectators. One guy talking about "hedging his position". Another about how something was "already built in to the margins in that model". Then I noticed a "Bear Stearns" camera strap next to me on the 4th as Tiger hit into the water. Around 3 I wandered past the corporate tents in a desperate search for air conditioning. Who did I see? Goldman Sachs, Bear, several hedge funds. On Monday these guys and gals will be back at the trading turret, but for today they were wandering around a very hot golf course trying to jockey for position to see Tiger Woods and swilling Gatorade, Water, Beer, and any other liquid handy.

So if you want to know the real reason, it should have said "equities lower today thanks to the Dell earnings report, higher oil, and spurred lower by the PGA tour, and a forecast for heavy traffic to the NJ shore and Hamptons this weekend".

Now that's a line I buy.

Black Friday?

Today was the first day in about a month that my day job pulled me a way from the market open. I did not even see a stock quote all day long. As I left my driveway this morning at 5am, of course I had this very vivid nightmare about murphy's law and this of course being 2005's black friday, and with my luck I will be in a car on Long Island all day.

Funny how the imagination can twist the market indicators to fit your greatest fear. By 7 am, after hearing about the Dell fiasco, I of course was predicting a large sell off and would be miles from a friendly trading terminal until at least 12:30.

Now we all by now know that although today was ugly, it was not the sell off that my horribly vivid imagination created.

Thursday, August 11, 2005

Trades for the day

My portfolio is still overweight in oil without a foreseeable end in sight to that. All positions are in the black, so I am sitting pretty. (Wait - scratch that - don't want to tempt the revenge of the market gods - let's just say I am pleased with the way my portolio is hedged against rising oil prices). I still need to take some oil off the table, but not enough strength yet in the two I want to partially unload. I heard on the radio an advertisement for a book about the Saudi oil production from an insider's standpoint. I will have to read that book. I wonder how much this is playing into the current run-up in oils? I don't, however, know if this book is well known or not yet. I don't even remember the title, although that should be easy enough to find. Based on the ad, the premise seems to be that Saudi Oil is not as limitless as one would first think, and there are real problems extracting that oil. This book ad has been running all week on the NY City Bloomberg radio station (which is probably listened to by many a trader on Wall Street). Of course that book could be presenting a distorted view of the situation - who knows.

I picked up some more shares of GLW for a quick swing trade thanks to after-hours weakness. Once or twice a week I will put a low ball bid out there for a stock on my watch list in the after hours session if it showed weakness during the regular trading session. On the occasional lucky day I do get execution, and today looks like one of those days (check back with me tomorrow). I am so used to these orders not getting filled, that I didn't even bother checking until 30 minutes ago. What a nice surprise!

Still plenty of cash to set up a potential gap down purchase at close tomorrow if I'd like. I am leaving the house tomorrow at 5am for my day job, but thanks to this I will be back around noon. I will either come back in to trade or stop by Baltusrol to watch the afternoon session of the PGA Championship. Hmm... tough call. Plans to go to the beach this weekend - it would be nice to end this trading week on a high and profitable note!

Stock Manipulation A Thing of the Past?

If you think so, just check NGPS, its 2 day tape, and all the message boards on the internet. You will see a concerted effort to slam a stock by people short it, cover, buy it, pump it, then dump it. I for my part am out with no damage done other than an education that this world exists outside the penny stocks.

A possible investment strategy that I am researching now is to find people involved, follow them and play the other way when I feel there is a compelling situation, provided I can do so in securities $10 and above. I will paper trade this for a while to see how it works before risking any hard-earned.

A recent good beach read for me was "Scam dogs and mo-mo mamas". Check it out if you are a serious investor and haven't read it. It covers the whole pump and dump thing from the pumper and dumper's point of view. Very informative read and it will definitely make you a better trader, just from the knowledge of what this particular group of people does. Warning: I do not read message boards and don't follow these so called "gurus". I personally find I trade better when I am making entries and exits with my own brain rather than being influenced by those knuckleheads. My contact with this crew is generally accidental. But I do admit to sometimes throwing the victim stocks on my watch list to watch the carnage, just as I sometimes find my head involuntarily turning to inspect the roadkill as I drive past.

If you really would like an informative site, check out this blog, titled "Alchemy of Trading".

http://stephenvita.typepad.com/alchemy/

This is the blog of the thoughts of a pro money manager. I read it daily.

Wednesday, August 10, 2005

Floating on Oil

Thank goodness for my recent investment in the oil sector, since that kept me from my portfolio putting on the cement shoes and jumping into the Hudson today. Some signs that the bullishness in Crude is unfounded thanks to the much greater than expected inventories. I'm don't understand the market's reaction to the inventory reports, though. I would have been better off leaving my trading capital in my account yesterday. I had to go bragging about my trading stats and talking bullishly in my post yesterday about NGPS. What a mistake. It's about as smart as being on the 10th hole of a golf course and bragging to your foursome about how well you are playing. Ok, I admit it I was humbled by the market today. I am proud of myself for resisting the temptation to double down at about 5 different points yesterday; each one would have only made the trade bloodier. I kept waiting for the reversal that never came. The day traders saw the reversal and parked their money. Since NGPS is a heavily day traded stock it took a deep plunge. The honesty factor should point out that I did not make a quick and graceful exit earlier in the day (there was a profitable exit too @9:40), I still don't understand the metrics underneath that reversal. Hopefully a surge at the open tomorrow will allow me to sell and lessen the cost of today's lesson. Still overall, my day performance will most likely be in line with the S&P thanks to my heavy exposure in oils.

I am now getting more concerned about lightening my load in oils. Although they saved me today, I feel that there is the potential for a crude reversal or at least a dip, and I don't want to be invested like I am right now when that happens.

Itchy Trigger Finger

What is it with that maddening urge to trade even when your brain tells you no. Yesterday, I would have liked so badly to get involved, but thanks to prior commitments, I did not. Today I made myself sit the sidelines until 3:50 for an overnight swing trade. I was up later last night than I was in weeks, researching stocks, crunching numbers, looking for potential plays, you name it. I sleep better when I have an overnight position, as crazy as that sounds. I watched a nice run up on the QQQQ, saw some wide intraday swings in my watchlist, all for the sake of "prudence".

I will start feeling a lot more like myself starting tomorrow. Of course I go on vacation in 2 weeks. I am already trying to figure out how to snag a broadband connection at the beach so that I can remain productive. Oh well, what's this business about if not to find something to worry about?

By the way I just noticed my last two posts have had gun related titles. I'm sure there's some Psych blogger out there drawing conclusions....

Tuesday, August 09, 2005

Locked and Loaded

Topped off the tank with NGPS at the closing bell today. The stock today announced a record quarter, over double the previous year. Result today? Market took the stock down by 19%. The catalyst? They were conservative and stuck to their original annual earnings estimate of 15-20% earnings growth year over year. Now the street might not be happy with that. Ok, I agree; I would expect a little guide up after this phenomenal quarter too, but it is not often that you have the wonderful opportunity to load up on a 19% markdown for a company with a blowout quarter. I think the downside risk is minimal based on that over-reaction, and I feel that the likelihood that I can turn 2%+ overnight is pretty good. Thanks to Greenspan's meeting out of the way, I am back in business trading until vacation sets me free. (Who am I kidding, I'll be trading on vacation too).

Monday, August 08, 2005

Preservation of Capital?


Right now I have such a large percentage of my portfolio in oils I am getting nervous. If I were to buy GKIS now, I might end up with Kentucky Fried Chicken by the end of the day. My two oils reporting (XEC and FST) today were unimpressive given the street's high expectations. Still though, XEC held pretty close to the prior day's close. FST will react tomorrow since the announcement was after hours.

No trades today as the market was a little too unsettled for my taste. I did sell 40% of my stake in BHI since it surged for a 1.37% overnight gain. I will stay long the rest, and unload some of my drillers at the next sign of strength. I think that oil services will continue to strengthen and the near-monopoly of BHI in this area is a huge advantage and a guarantee of future earnings success.

Not sure yet how to play tomorrow. I feel as if there will be a bit of a rally in the last hour of trading. I would like to sell if there is a morning surge tomorrow. I would have sold more today, but there was too much weakness in the securities I want to lighten my exposure in.

Crunched my numbers in terms of successful day trades. I came to a very helpful discovery. It turns out my NYSE listed trades were 3 times as likely to be unsucessful as Nasdaq securities. And all of my large losers were NYSE listed securities. I am very excited by this - it is an easy fix that should have immensely positive results in my future profitablility. Factoring out my NYSE trades, my success ratio is 78% successful trades with an average of +.74% return. As I've used this particular trade strategy, my success ratio has consistently improved. Over the last 30 days, it is 80% successful with average return of .99%. Those numbers are fantastic. I just need to resist the temptation to try to apply my trading rules to NYSE stocks. Seems simple enough.

Tomorrow will be a crucial day to the upcoming weeks, and how the market performs will dictate what my strategy will be for the upcoming 2-3 weeks.

Sunday, August 07, 2005

Plan for the week

Liquidate oils if necessary.

High state of alert, especially Monday and Tuesday.

Be at least 25% cash on each trading day to capitalize on intraday opportunities.

Safe exits from my 3 largest trade positions on Monday at open if possible.

Found a way to download conference calls and burn them to CD so I can listen to them while driving. Who needs music when you can listen to analysts grilling CEO's

Friday, August 05, 2005

How do you feel before getting a shot?

Nobody likes getting a shot. One of the most heartbreaking things is to take your kid to get a shot. I remember going with my sister one time. This was especially difficult for my mom because for some reason my sister knew upfront that she was getting the shot that day. First she didn't want to go, then she didn't want to get in the car (she didn't buckle her seat belt because nobody did in 1980), then she started whining in the doctor's office, a look of pain on her face, as if someone was jabbing a red hot poker on her backside. Well, I had to go in the doctor's office. I was too young to wait outside. The whining, crying and general chaos continued until the doctor came and delivered the goods. Instantaneously, it was as if someone turned my sister off like flipping a light switch. Today the market is on its way to the doctor's office knowing it is about to get a shot. Monday it will be whining and whimpering a little bit. How crazy Monday gets will depend on how well our parents (media, brokers, and advisors) do to calm us down. Then on Tuesday, Dr. Greenspan will walk in to the office and give us the shot. Then all will be better, and we can resume business as usual with a smile on our faces.

How did I fare today? I Woke up this morning with the trading portfolio in cash and stayed that way almost all day. Due to the weakness in the market I couldn't resist buying in to some oils at the close today. Sorry Greenspan, you've got nothing to do with crude futures so you can't hurt me. Na na na na na na! Here's my picks: Bought BHI today - it has been on my watchlist ever since my intensive research in the oil industry. Only today did it finally drop enough for me to get in. Also bought FST today. I was contemplating expanding my position in XEC due to some weakness today, but in the end ran out of time. Thanks to the cleanout yesterday, I survived the down day with only a modest decline. Tomorrow I will run week numbers and am hoping I beat S&P at -.6%. My mistake du jour would be continuing to hold a few certificates showing I am an incredibly small owner of a mining concern in Peru. I will do what my parents (see above) recommend on Monday with the stock. The nearest profitable exit is probably Wednesday morning now. With some luck I XEC and FST will guide up on Monday, and I will be able to provide my FST shares to some intrepid investor who wants to buy a company with improving prospects.

Thursday, August 04, 2005

Who needs the toasters???

I remember the day when my dad told me about saving money in the bank and how you earn interest on it. Interest earns interest too, he told me. That's why you need to save money in the bank he told me. After getting my first paper route, he correctly convinced me to open a bank account so I could save it. I opened a passbook savings account. Guess what I earned? Well your guess is as good as mine - I can't remember, but I do remember getting a little angry with him - I looked at the interest rate (maybe 2%?) and thought to myself, big deal - my $100 will become $102 a year from now? This is nuts! And my $100 didn't even get me the proverbial toaster from the bank.

Why did they come up with a toaster as a gift? I can just picture it - bank execs sitting in a room - what kind of freebie should we give to new account holders - let's see - giving us their money for safe keeping. Maybe they can go home and make some toast to celebrate while we make money on their money and give the sap 1/2 a penny a day for every $100 they gave us. You're thinking this guy is so 60's, they don't do that anymore, right? Wrong! The company I work for in my day job has bank branches - one of the gifts they give out to a new account opener is????? You got it - a toaster.

I am writing this post in memory of my dad's little speech about interest. Why? Because an hour or two yesterday researching oil service stocks caused me to make 5.4% on my money OVERNIGHT! Yes, dad, that's right. 5.4% - to get my $100 to $105.40. In that first lousy bank account, it would have taken 2 years and 7 months in to get there. And like they wouldn't have slammed me with some fee to take it all back anyway. Come on!

Thats right, GLBL. Who needs a toaster when you can make that kind of money overnight. There's probably someone out there thinking if this is such a great company Mitty should keep it. NO WAY. GLBL is a distant memory for me now. I am so confident in the tools in my pocket protector that I think I can find more ideas to make me money overnight. True, it won't happen every time. Some will be +.75%. Some will scare the crap out of me (PCU). Some I will even get wrong, but there is no way I would even think about giving up that jackpot by holding too long (5.4% per day compounded for 200 trading days in a year would turn $1 into $3,590 by day 200).

I've listened to so many oil sector conference calls over the last two days, I'm talking with a twang and using the word "jackup" in casual conversation. So my next attempt is FST. They release Monday. It was down yesterday so it in effect has hovered through strong oil for at least the last 48 hours. I must admit I was less confident in my research on this one, though, I scaled down the investment, but I am now an owner for at least the evening. Mr. Mitty thinks that the sector is so strong, the odds are heavily in my favor of at least a nominal bump off of earnings. It is hard to enter into an oil these days, which is the reason for buying today rather than tomorrow. If FST gaps up tomorrow, I will just let my small stake ride until Monday. If it shows weakness, I may double down tomorrow.

I have to follow up on my Poker post. Yes, I did indeed find myself sitting at the poker table with hedge fund managers and the specialist this morning. I will also admit that it was a little scary. I took a risk and held relatively firm to my convictions. I still say the logic is clear. But I'm not a total psycho. So what I did was enter a day limit sell order at the amount of my entry point on 40% of my PCU holdings. Then I left my house. I did not look at the screen until 3:30. If I had stayed I would have went insane as long as I owned PCU. I would have sold 50 different times throughout the day. What I found when I got back is that my order got executed. So for 40% of my trade I am at breakeven not including commissions. I can live with that. I still think this one has to go up. In his show, Cramer professed that he agrees with me and PCU is a buy now. So things are looking very bright that I will sell into some dumb money tomorrow (no offense) and make a healthy profit. Bottom line, I sat at the poker table, bluffed and it looks like this pencil necked geek will win tomorrow, although with some of the chips taken back off the table.

The other thing I did today was review all my long positions. There was some dead wood there. I clear cut some of the dead wood and only have healthy stuff remaining. I am very nervous about next week's tightening on Tuesday. On a very low volume vacation week, things could be ugly. We all know they will go +25bp. And unless Greenspan is going senile he will not signal an end to the measured pace thing. But every meeting, CNBC and Bloomberg talk ad nauseum (translation: until it makes me want to vomit) about whether an end to tightening will be signaled, of course it isn't and each time the markets still go nuts. The second week in August, every fund manager is thinking about what to pack and how many days to take off for that long weekend at the beachfront mansion, so I am thinking the market will be short buyers to engineer a recovery. My personal plan for Tuesday is to listen to Alan on Bloomberg 1130 ON the beach, with my trading portfolio in cash. I may miss a good entry opportunity after the meeting depending on how scared people get, but I guarnantee you that I will live to fight another day.

With my garbage picking expedition today, I looked at DGX. I cannot for the life of me understand why this stock was down 2 points today. It seems obvious that a big player unloaded their stake fast today. The real question is why. An optimist would say they are on vacation tomorrow and wanted to cash in, or were profit taking to roll the money into another idea. A pessimist would say that DGX is about to hit the presses with something very negative. So it may be a good thing that I didn't get execution on DGX. But I will watch closely tomorrow.

I will sleep with a smile tonight. But not before listening to at least one conference call!

Wednesday, August 03, 2005

Copper and Poker

As a college kid trying to make a few extra bucks to pay for my weekend activities, I used to play poker a lot. A fun game - those days I gambled money like I actually had it to lose, but luckily I won more often than I lost, unless I was quietly letting a friend win whose money I did not want to take. Everyone has heard the saying "if you don't know who the sucker is then it's you".

Well I will spend the night wondering. I happened to see on CNBC a story about copper hitting a new high at $1.73. On my decliner screen, I happened to notice PCU down over $2. Call me a simpleton, but that doesn't make sense to me at all, especially with no news or releases on PCU. A little digging revealed that 8/3 is the dividend date, despite my online trading firm's mediocre research pages, I was able to determine that the dividend goes to today's seller, not me as today's buyer. That makes the drop make some more sense, but what doesn't is the stock going down almost double the $1.04 dividend on a day where copper breaks through to a new high. So I bought in. I will now spend the night wondering "can it really be this simple?"

Well, either it is, or I am going to be the mark sitting at the table with a few Hedge Fund managers and the specialist tomorrow.

Today's recap:

Listened to the archived conference calls of half a dozen riggers today (work was slow). Bought Global Industries - they report tomorrow. Global's earnings are tied to day rates for their jackup rigs - in the May call they suggested that they might re-activate some idle rigs if rates went up substantially. Based on the recent calls, it sounds like day rates are up 50% or more. If management did what they should do, they've re-activated and contracted those rigs and will tell us that tomorrow. The stock was up on RIG's numbers, but that doesn't seem like enough to capture the big increase in day rates. We'll see if my call was right.

Completed a solid trade in CUTR this morning. Should be happy but I'm not - this thing continued to skyrocket after my exit. A winner is a winner, though - nothing to complain about. Does this sound convincing?????

Exit YHOO at $34.58 for a nice and relatively low risk gain also.

Have to research my tapes - my brokerage is telling me I own 600 shares of MFE that I don't. Need to get my ducks in a row for the phone call tomorrow morning.

Tuesday, August 02, 2005

Chess Club

It's a miracle a stock picking geek like me hasn't talked about Chess Club yet. I can play chess. I am actually pretty good (except for my downfall - I'll get to that later). There weren't many people out there that could beat me consistently. As a matter of fact I still remember with pride smoking my Physics teacher on a summer day in class in high school just because he bragged about how good he is. I pretty much dropped this game from my life in 7th grade. This occurred when I took a peek inside the chess club and saw who was there, or rather who wasn't. I did a complete 180 tout suite and didn't let the library door hit me on the tail as I made my exit. That was the end of my chess career, with the exception of my little bit of fun showing up Mr. card carrying chess federation physics teacher. In return, I recieved a social life and a date or two during high school. But why talk about chess in an investment blog?

It's what Chess is really all about it for those who haven't tried the game before. Chess is about anticipating what's coming next and being able to think a few moves ahead. The stock market is a lot like playing chess. If you haven't thought ahead about what comes next from your opponent and gotten there first, well simple - you'll be cleaning up the pieces while Anatoly walks away with a smile. So in this blog I must send some props to my opponent, Jim Cramer, who has beaten me to the oil sands play I'd just begun researching after reading an article about Canadian shale oil somewhere - I think last week's NY Times. It is easy to beat the masses to stories like this but this guy is a lot more formidable competition. Some dislike the man, but I for one tip my hat. Not for the stock tips - once he mentions a stock, the money is made and the entry is destroyed (at least in the short term anyway) - it's the competition and thought that his presence forces on me - I've got to be smarter and faster than the guy and that's not easy.

Business of the day:

I did beat Cramer to the punch on Lasers as I purchased CUTR at the close for $20.50. I will have to send a thank you card to everyone who made that possible; Nasdaq, a premature profit taker somewhere on the other end of cyberspace, and the camp counselors watching my kids so I can press the buttons to name a few. Nothing is real until the exit is made, but I have a feeling I will soon be saying score one for Mitty on this one.

My family is asleep, and here I sit at 12:05am, feeding my addiction (restrain yourselves ladies, I know I am a wild man) by listening to the earnings webcast from EFJI. Liking what I am hearing so far I gotta tell you. They are smoking estimates, guiding up, and increasing margins. I sold a little this morning to reduce risk prior to earnings announcement, but I will be buying back at the earliest opportunity based on this.

How else did I do today? My trading day could have been better (also a lot worse). My overnight trade in MFE netted me +.74% after commissions. Today was the technicians day in this stock - it made a point of first filling the previous gap before marching up my way until my exit at $30.42. Had I more trading liquidity I would have been able to do better than .74% - I was only able to add an additional 20% to my position at $29.85. If I was more liquid at 12:30, believe me I would have doubled down.

But the real pesos came from my long portfolio, which increased by 1.01% today. It is difficult to get into cash - there are too many stocks with solid upside potential. I may revise my previous goal of 50% - that is going to be really tough, and today at least, my long portfolio outperformed my trading capital.

I am once again doing a 180% and in the hunt again for a short term swing in a driller - the problem is that I may have to watch like a hawk just to find a temporary flat moment in one of these stocks. Crude dipped today and by all rights, the drillers should have followed. The fact that they didn't just increases my conviction that they are the place for some of my trading capital too. My entry may now look like buy on a pause rather than buy on a dip for one of these stocks.

Screeeeech - more on EFJI - just got to the part hemming and hawing about "if and when we decide to do a potential future equity offering" - just slammed the brakes so hard I'll have to pull my head out of this blog text on the screen with both hands. I still like the stock, but that does put a damper on the party. Sorry - back to the action.

I think I will forward this post to MadMoney as my thank you - I appreciate the competition Mr. Cramer - you are not as easy to show up as my physics teacher, but count on a little unseen stock geek like me racing you to the next idea!

Monday, August 01, 2005

A dead rich guy and a moth drawn to a flame

This was the synopsis of my day today. When I say rich guy, I'm not talking just any rich guy, I'm talking a rich guy with a lot of money and the last name of Fahd. My entry to my oil swing trade was most likely going to be today. "Was" being the key word. But thanks to the death of King Fahd, oil closed above $62, ruining any sane person's attempt at a short term swing trade in any oil related stock. Now explain this logic to me - a guy who's had a stroke that doesn't even have a hand in running the oil business kicks the bucket (no disrespect meant - I have the utmost respect for this man as a capitalist), and oil tests its resistance yet again. The commodity traders on the floor have some seriously itchy trigger fingers if an event with this little market relevance pushes crude to a new high. Triple top be damned, if this is all it takes, oil will be in the 70's faster than Cramer can say booyah. Cramer did his part tonight to prevent a cheap entry into a drilling stock tomorrow for a short term swing trade, although his show will most likely help my GLW at tomorrow's open. The real question is what to do with my XEC and CHK with earnings reporting soon and the inevitable boost at the open tomorrow? Too good to sell, but too much profit already not to take some off... hmm... that's why this business is fun, and calls like this seperate the men from the boys!

Moving right along. The moth would be me. The flame would be NGPS. A stock with a spread so wide you could drive a Hummer through it. Intraday, this stock's price gyrates more than a belly dancer on crack. So I had to have a little fun trying to scalp the market maker just to see if I could. I entered a limit order .01 above current bid just to see if I would get lucky and catch a market sell order. Fat chance - I held the bid for about 30 seconds, and my unseen adversary (market maker or trader) upped the ask by .01 in response. I upped my bid 3 times only to watch the bid-ask spread ladder upwards as someone stepped in front of me each time. No narrowing of the spread at all during this little game. If I was indeed fortunate enough to get execution, it would be a relatively certain moneymaker. If I want an exercise in futility around lunchtime tomorrow I may try again, but I have a feeling that it isn't worth the calories spent in typing in the keystrokes. There is no way a market maker in NGPS will let a little guy like me get execution of a market sell unless they are tipping a few at their lunchtime trading desk party. I would like to see the tape of the poor sap trading in NGPS buying at the ask using a trailing stop-loss. When that stop loss gets hit, you would really pay the piper. Ouch - sounds about as fun as ripping the crusty band-aid off my kid's day old scraped knee.

My day consisted of relieving myself of 50% of my stake in EFJI prior to earnings (discipline is what this is game is all about), my sadomasochistic fun with NGPS, reducing my position in LGF to provide capital for this week's activities, and buying a profit-taker's MFE shares on the cheap at the close for a short term gap trade.

Sleep well - if you want to really help me out (and thus part with some of your hard earned money) , make sure you enter a market buy on MFE at the open!