- I am not sure about coal, if oil continue to drop, it will drop with it.
- DBA and MOO are both down a lot, and I think it may decouple from oil, therefore, today I added MOS, AGU and DBA. It's a starting position, and I may add more when it continue to drop.
- I sold all MF. Can't wait for it to bounce back, and after I sold it, it dropped more.
- I reduced UYG. Should sell it two days ago at 24, now it's only at 20.5. Still think there is a decent chance it will bounce again next few weeks.
- Now I will shift back to commodities, coal and fertilizer stocks. I will add Ag and fertilizer first, and watch coal.
Friday, July 25, 2008
Adjust positions
Monday, July 21, 2008
Adjust positions
- MOO. Sold at 65, now 56.
- KOL. Sold at 58, now 47.
- POT. Sold at 238. Now 217.
- MOS. Sold at 160. Now 136.
- PCX. Sold at 150. Now 113.
- DBA. Sold at 37 and 40. Now 36.
I think if the market continue to recover, these stocks may perform better than general markets, therefore, I need to take a look and add these instead of financials. Today, except DBA, PCX, POT, MOS, MOO and KOL all go up sharply today. Since these are again long term play, I will add them on weakness.
Now I feel more comfortable of my positions than yesterday, this is good. I am not on edge any more and may hold my last UYG positions longer, as result of the reduction of the size of my financial holdings.
Sunday, July 20, 2008
On edge
I am still on edge, since I entered financial stocks too early, yes, I averaged down, but almost ran out of cash on July 15th, and I didn't add, I wanted to have some cash. And financials are almost 23% off the intra-day low now. There are few things to consider before I reduce my financial holdings:
- SEC's naked short selling rule take effect on Monday, July 21st. No one knows for sure how much is the impact, but considering the strength in financials recent swing, I think this may help bulls since bears are handicapped. FNM, FRE, C, MER, LEH and WFC, these stocks all showed at least 30% move this week, and most were late of the week on the up side. This is sign of a bottom.
- And oil crashed, since consumers are cutting back drivings. I think this will put a top on oil for the short term, further help bulls case. One of the indicator of oil correction can be seen in airline stocks, UAUA touched low of 3s and now in 5s. That's 60% move from the low in 4 days!
- Learned from last year, I think this rally has some legs and I won't be surprised to see another 5-10% up movement in S&P500 in the next few months. But I will let market tells me what's next and reduce my positions accordingly.
- For XLF, I think first resistance is around 22-23, then the next one is around 26-27. I'll watch market closely and see if this rally is sold off again, or it's bought on dips.
- XLF and UYG, two financial ETFs, had huge volumes on July 15th, 16th and 17th. I mean huge, 3 times of the standard deviation above mean average. One of the indicator that the bottom in financials is in, for the time being, like two to three months.
- For now, even though I am on edge, I'll enjoy the rally if it can last for a few days or weeks.
Monday, July 14, 2008
Another round of selling
- I will not add any new positions. Since I was wrong on this down trend. To be sure, I only added since June 24th, and added gradually, but still it cost me big time. UYG was down from 23 to 15 today!
- I may sell some existing positions to raise cash. Like DDM.
- It's very easy to have courage and humor when you're only down 5%, it's hard to have courage and humor when you're down 20%! Now I am scared and will let go some of my positions. 5 years from now, yes, I may double my funds if I hold on. But what if it goes down another 10%, 20%, 50%?
- Yes, it's way oversold, but Black Monday happened on a very oversold market. I need to have cash to buy when that happens.
Sunday, July 13, 2008
Tomorrow's action
- Market should have a positive day, a rally.
- Financials should lead the market rally, at least double the percentage of the general market gain.
- If these two don't happen, then we'll have more trouble ahead. It's been so long and so depressed in the financials, it's about time to have a decent rally, once the rally holds, shorts will cover and we'll have a lasting short term bounce, like a few weeks.
Friday, July 11, 2008
Bloody day
- FNM and FRD were both down like 50% at one point of the day, and FRE only down 3% at the close. This tells me something will happen this weekend.
- Financials were down for more than one month straight, a bounce is almost certain, just don't know if it's from here, or it's another 5-10% dive before it bounces. But I felt it's cheap enough, so I added more UYG, and some DDM.
- I really hope we'll not have a bloody Monday, but if that's the case, I'll add more.
- It's very painful and tough.
- And I sold GDX today, my only winner today. I'll use the cash to add beaten down ETFs. If oil and gold continue to go up, too bad for me. But I think now owning commodities is riskier than owning DIA, SPY and XLF.
- Yes, everyone is shorting financials and think LEH,FNM and FRE will go under, but I think government won't let that happen, therefore, it's rewarding to own these beaten down stocks in this very bearish market.
- When people are selling, it's time to be brave. So I bought more today.
Wednesday, July 9, 2008
Tough
Tuesday, July 8, 2008
Reversal day?
- Oil spikes again.
- Financials sell off again.
- Bad news in earnings.
I think since people just started to unwind the oil long positions, it's unlikely it will spike again. And we had FNM and FRE news yesterday, so financials are not out of woods yet, but another 10% bounce in XLF is reasonable, that will bring XLF back to 22.5 and UYG back to 25.
Still need market to confirm this. Don't use my target to guide my trade, use market's price action to guide me.
Monday, July 7, 2008
Trapped
- I am trapped. And I added DDM end of last week.
- I was right to exit commodities and related stocks like POT, MOO, KOL, MOS early and took great profit early in June.
- But I was wrong and too early to jump in UYG.
- Now I think it still can go either way, but the most likely case is for a bounce to release the energy: it's been pressed into 45 selling days for UYG since it touches 37.2 on May 2nd, without a meaningful bounce. I am following my gut here.
- Today, oil dropped, and airlines bounced. The only thing prevents the rally is financial news from FNM and FRE.
- I'll keep adding until I am running out of cash.
Saturday, July 5, 2008
Sign of a bottom
- Oil touches $150.
- Financial stocks refuse to drop, even with bad news.
- Airline stocks refuse to drop, even with bad news.
- Coal stocks continue to drop, even with new record high oil.
- Fertilizer stocks continue to drop, even with record high agriculture commodities.
We already see 4 and 5. We need 2 and 3, specially, we need 1, we have to have oil at a new record in order to see a short term bottom in the market. I think we're near that point, maybe as early as next week.
Wednesday, July 2, 2008
Wait to add three sectors
- Financials. It's very oversold, and they're not going away. XLF and UYG are the ETF plays. All big names like MER, BAC, MS, C, LEH, WFC are way oversold. Any one of them can have a 10% bounce in a day.
- Sold off Ag and coal stocks. KOL was off 10% today, and MEE of close to 20% and PCX 15%. POT and MOS were sharply down as well. I was fortunate to make money in KOL, POT, MOS and MOO early this year, and my sell of POT and MOS were close to the top. Now, it's time to watch them consolidate before jump in. If oil tanks, they have further decline to go.
- Airlines. There is no better plays in UAUA and AMR when oil tanks. I think oil is the last one holding up, when it crashes, airlines will bounce sharply. Again this is the most risky one, since it can go down another 10-20% before the bounce. This is really a best way to short oil. Not a long term play, obviously.
- Overall, I think I'll use financials and general market ETFs like SSO and DDM to play the bounce. And added selected stocks in Ag and coal. Maybe one in airline.