Wow, 1 Trillion loss in market

Thanks to our congress, we had more than 1 trillion loss in the market today. 133 GOP voted against it, 65 GOP voted for it. 140 DEM voted for it and 95 DEM voted against it.

I overestimated the intelligence of our Congress. Our politicians said they wanted others to vote yes to pass the bill, just not themselves! Is this how they get elected in the first place? They don't care if you lost money in your 401K, in your investments! They only care about their election and most people, who hate wall street in nature, will find out what they had lost today! I hope these who wrote to their congressman and congresswoman to vote against the bill, will be happy with their investment in the stock market today!

People are misled by media and most people don't know how financial market works. In this sense, we the people, deserve what we got today: selfish lawmakers, and selfish public. Now let's suffer together!

Historic week=Bottom out?

This is a historic week, with Fed bailed out AIG and then the whole financial system. Dow has two of the largest falls (504 and 450 points) in the last 6 years and two of the best gains (410 and 368), all in one week!

1. I did OK, and didn't make any serious mistakes. TSO and WNR kept most of their value for the week, and I sold most WNR today to switch to financials.
2. I added some MS and XLF yesterday, which are great winners.
3. Today I added more MS,WM and XLF. I was lucky, didn't add at the open and waited for the market to fade before I jumped in.
4. In the next few weeks, unless something big happens(which is the case every day this week!), with VIX's 42 mark yesterday, I expect the general market to have a decent rally, like 5% or more. But the last two days already jumped 7%!
5. Several things are on bull's side: stocks are oversold in the weekly chart and made a V shape bottom; short selling ban in financials;government bail out eases the credit stress.
6. I chose MS, since they were in the 40s just last week, and now at 27, and they had a great quarter, the 52 week high is 69. Since BSC and LEH are gone and MER is bought, I expect MS to benefit from this and gain more market shares, by comparison, GS is at 130, high was 250.
7. WM is another story. It's up for sales, and even with last two days sharp rally, it's 88% off the high. If BAC could pay MER 70% premium in the dark market 5 days ago, I expect WM can get some premium (even though it's a fire sale, to be sure) from C or JPM or someone else.
8. These strong companies, like BAC, in a few years, will make huge profit because of the assets they got at fire sale price now.
9. Long term, I expect the US government's move will weaken the dollar, and strengthen commodities in general, so keep and eye on gold, oil, natural gas, Ag, etc and add on weakness.

What's next:

1. Because we had an extreme week in market action and market rallied in the last one and half days, I think we have a short term bottom, to say the least. We'll have a decent rally when all are said and done.
2. The facts that CNN and CNBC, local news are broadcasting news like "Are your money safe?", including Barrons, that tells me, it's precisely the market bottom, when public are panic. Let's see if this indicator holds true this time.

Add some financials

Last few days, lot of things happened in the market! VIX hit 42 today before closed down at 33.

1. I sold some WNR and bought some XLF close to the low of the day.
2. I bought some MS, just bet they'd survive, and when it dived to 11.7, I almost wanted to take the money back. When it quickly bounced, I added a little more. Then, when the news came out, it's a 4% jump in general market and MS finished in green! Now, I wish I would be a little brave and buy more. But, what do I know, I could get killed like LEH holder. It's purely speculative play, small is good!
3. And looks like SEC will ban short sellers for some time, maybe until election? I think that's good for the market, since we're on the verge of total collapse. But I prefer "up tick" rule over banning short selling, and naked short should be banned. But short should be legal and shorts keep companies honest!
4. On the other hand, last time I checked, WNR has 31% short and TSO has 20%. These heavily shorted stocks should do well in this environment. Since TSO and WNR are more than 70% off high, they may have a strong bounce.
5. I hope this rally will last, but be careful out there and don't be greedy.

TSO, WNR and UNG, refiners

1. Since I sold UYG and switched to UNG and TSO, UYG was up a little, even considering recent sell off in financials. We had FNM and FRE bail out and now it's LEH's turn. UNG was down, even after Gustav. And TSO was higher than the price I paid. Overall, it's a wrong move! I should wait more and should not bet too heavy on UNG.
2. I also switched from AGU and MOS to TSO. This is a good move, since AGU and MOS got crashed recently, even with yesterday's 7% jump.
3. And I sold APC and replaced it with TSO and WNR yesterday.
4. The more research I did,the more I am convinced that, for whatever reason, many players want to push oil and natural gas price down. Therefore, it explained why oil and NG got crashed after hurricane Gustav, and now with Ike just made landfall, it's very possible oil and NG will be sold off again at special Sunday session to manipulate the price.
5. I chose TSO and WNR, because both of them don't have refineries in gulf coast; they're both more than 70% off high; crack spread is improving; we have a gasoline shortage, the lowest inventory since 2000. Even with these bullish factors, I am not sure what happens next week, big players can sell off gasoline too to push price down.
6. But I think the margin of safety in TSO and WNR is higher than APC, AGU, UNG and USO. But they're risky too, since it's a company, anything can happen. ETF is relatively safe.
7. UNG is better than USO, in my opinion. We have low inventory as well, and a cold winter, we're off to a race. NG at $7 is a strong floor, back to $10 in the winter is reasonable. But another sell off after hurricane Ike to push it to $6 is also possible.

About TSO and WNR and other refiners:

1. TSO was off 71% off recent high and WNR 78% off its recent high, I think both highs were set late last year.
2. TSO has about 658,000 bpd capability, market cap is 2.6B.
3. WNR has 235,000 bpd capability, market cap is 825M.
4. In comparison, VLO has 3.1M bpd capability, market cap is 18.7B. VLO has three refineries shut down during Ike landfall.
5. FTO has 162,000 bpd capability and market cap is 2.4B.
6. I think VLO and FTO have better earnings, but still, I think TSO and WNR offer the best value if crack spread continues to improve, they shall do better than VLO and FTO.

UNG and TSO

I sold MOS and AGU at a loss and bought TSO and UNG. This is really a hurricane play and bottom fishing as well.

Both TSO and UNG are way off high (72% and 42%) respectively. If gulf oil and natural gas productions are shut down ahead of hurricane, and refineries near the coast are shut down ahead of hurricane, these two will benefit from the supply cut.

1. TSO doesn't have refineries in gulf coast, therefore should benefit more if gas price spikes. Also, the crack spread seems bottomed, so TSO should do well in the near term, like a few months.
2. UNG has the similar spike pattern during the 2005 hurricane season.
3. However, this week, UNG and TSO actually went down yesterday and pretty much flat today, ahead of hurricane Gustav. This speaks loud and clear of the demand destruction, that is, people don't care and keep pushing oil and NG down.
4. Or, a few big players tried to keep the price down, for whatever (political?)reason. This is a mystery to me. Maybe smart money already knows something we don't know.
5. If Gustav is a no event, I can see UNG to 34 and TSO back to 15. I am nervous to say the least. Have to cut losses at some point. And I won't hold these for too long. Learned lessons in UYG.
6. Speaking of UYG, after I sold, it spiked about 8% and the UNG I bought was down about 6%. Talking about bad timing and bad skill. But I still think UNG is better holding now than UYG, time will tell.
7. My mistake in UYG, I could sell at 24, twice, and I didn't and took a loss and switched to UNG, one day early. If I switched yesterday, I am a genius.
8. It's wrong and not profitable to time and bet on certain event, it's better to use charts and choose none event time to trade on fundamentals or technicals. Be sure to stick to this rule in the future.

UNG

I sold UYG and bought more UNG today. It's a big change based on following:

1. Oil and natural gas has come down hard recently and this is the first up thrust. It has the potential to be a strong rally.
2. Oil to natural gas ratio is 6 to 1 to be normal, now it's 13 to 1. NG is cheaper and cleaner than oil.
3. If hurricane hits gulf, it has bigger impact on NG than oil, since all US NG supply is from US; just like 2005, NG doubled in the wake of Katrina and Rita, before it came down in Feb. 2006.
4. After labor day to winter, these are usually strong months for natural gas, maybe due to the fact that most of US use natural gas for heating.
5. Of course, downside risk is the destruction of demand in oil, therefore it maybe a short lived rally.

Added APC and UNG

Considering the recent drop in NG, and hurricane is on the corner, I decided to add back NG stocks in APC and added UNG today. I may sell XTO and CHK too early. Yesterday if I bought XTO and CHK, then I am a genius.

But get a chart of 2005, I found natural gas moved up (compared to oil) the most during the busy hurricane year, therefore, it's relatively cheaper to add NG related stocks now.

I chose APC over XTO and CHK for the reason that it has more reserves and it announced a $5B buyback (that's almost 18% of the stocks). APC is 25% off high, vs 31% and 33% for XTO and CHK respectively, this, actually, indicates the strength of APC over XTO and CHK. UNG is almost 40% off high.