Tuesday, July 22, 2008

Melt up!

Oh, boy, can it get more bullish than this? Almost every piece of crappy ER turned out to be a good buying opportunities. The funny thing is, believe it or not, Big Ben is probably the most bearish person walking around. With now concrete evidences of worsening consumer spending and no signs of housing bottom whatsoever, I have no doubt that the beatings the bears have been taken in the past few days will be returned soon.

I will keep my eyes on:
RKH (S1, ez=112-120, stop just above MA200, IT=95).
SKF(L1, ez=100-110, stop just below 100, IT=135).
BAC (S1, ez=34-38, stop just above MA200, IT=28).

Got different views, share with me!

11 comments:

pcaguy said...

Hey Fellas,
I was gone for 2 weeks ona waterski vacation and am just catching up on cleaning the rv and boat.
Been trading since Monday though and already booked some good profits.
Booked good money on WYNN, VMI, FLS, and BIIB puts. Also booked good profits on OIH, POT, X calls last 2 days by buying the extreme dips and selling each rally. I had to be really quick on these 3 but all were winners. I will only buy OIH, POT, and X when it drops to the recent lows and lower as it has rebounded each time for a few hours or so.
I only have one position on now. It is AZO puts. Was 52 week high for an hour on Wednesday. I expect AZO to go back to $120 within 2 weeks, I.M.O.
Going waterskiing tomorrow at 9 am Oregon time, then to grandma's over the weekend.
"Sell every rally" has been working for me.
PCA GUY

flyingwabbit said...

pcaguy:

let me see here: you took 2 weeks vacation when everyone was getting sick on the roller-coasting market market action, then you came rested and grabbed lots green, and now you will go waterskiing again followed by a trip to grandma"s, boy, how I wish I were you!
speaking of selling rally, my puts order on RGH and SKF did not get hit, and my puts order on LVS only got filled 3 contracts (on July 23 when it was spiking towards 57), which were sold for nearly 200% gain, in other words, I have had some tough luck this week, oh well....

pcaguy said...

Wabbit,
I think you should know that I am trading better since reading/posting on your blog.
AZO closed at 127.87 down $1.13 today. Added to Sep $125 strike puts today at $5.80 cost. Closing bid was $6.6 and ask was $6.9, last trade was $6.8.
These puts trades have really been winners for the last 2 months.
Waterskiing was good today, I made 23 yellow buoys out of 24 possible. I've improved there too since hanging with Wabbit & Razor.
If you watch the top gainers each day and buy a small position on puts you'll find an 80% success rate.
PCA GUY

Doug said...

pcgay: Just how did you book some good profits on VMI?

flyingwabbit said...

pcaguy:
thanks for your kind words, man, that certainly made my day! I am getting really interested in your highly successful sell-the-top-gainer strategy, before I get time to send you a long list of questions, allow me to ask a few right now:

1. how do you further choose which top gainer you will sell? The percentage of the gain on that day ? Other indicators?

2. how do you set a stop-loss on those plays?

3. have you tried the same approach on the long side, that is, buy the top losers? if yes, what is the success rate? if not, why? because it is a bear market?

thanks,
wabbit.

Doug said...

pcaguy: I second what FW said. A friend of mine who produces www.bobsadviceforstocks.com system through the years has been to choose long positions from the top gainers list. After observing his results through the years on the surface I don't see the charm of your opposite approach but I'm totally open minded and really desire to hear more. Thanks? In fact if you send something substantive to Bob I bet he'd publish it on his site!

Doug said...

Should be: bobsadviceforstocks.tripod.com/bobsadviceforstocks/

Doug said...

Sorry: just Google: Bob's Advice For Stocks (Not the Stock Picks ones)

pcaguy said...

Checking Fidelity history I bought -vmitb on 7/21 for $5.20 and sold it on 7/23 for $6.60
Here is the program:
On 7/18 VMI was on the top gainer list, which I make a list of each day for the subsequent day's possible trades. I visited yahoo finance message board after hours. The trade looked favorable so on Monday 7/21 I placed a buy order to buy the AUGUST $110 put at $5.20 which may have been a dime less than it was trading. I only executed on 5 contracts even though I placed BUY orders at $5, and $4.80, and $4.60 etc, each for 5 contracts.
On 7/22 I placed a sell order at $6.60 which was probably a dime above the ask. It did not execute until the following day.
The PUTS trades on the top gainers have been good trades because we are in a bear market. When the market turns up there will be less successes and bigger losers.
A few months ago I was sure to trade the top gainers for puts and the top losers for calls on the following day. Because the bias has been down I have weighted my trades to more PUTS. This will change agin when the market turns up.
Call trades:
Last week I bot calls on OIH, POT, and X, sold them quick, bot them again and sold them again. The first time the X trades was good for a buck on 20 contracts but the second time I was lucky to get out at a 3 cent profit.
So if a trade turns against me I will place my sell order at a break even and hope to live for another day.
The key is to get as close to 100% cash as possible so that I can average my cost down if I still believe in the trade. On the puts trades averaging down appears to be 95% winners.
PCA GUY

Doug said...

Thanks PCA. I don't trade options. Would the concept work with shares?

pcaguy said...

No.
The concept I am using is trying to time the current top of stocks that rise dramatically. By using the prior day's top gainers list you already get to see the big runup. Plus on the day of the runup the put options will often be overpriced relative to the stock price. By waiting till the next day the put options may actually cost less even though the stock price went down.
My strategy is:
Accumulate as much cash as you can.
Be Patient, wait a day.
Make your intial position small, say 2 contracts = 200 shares. I am using 5 contracts as my standard trade volume.
Put your buy order in at the ask or above.
Put in backup buy orders for more contacts at 20 cents less, 40 cents less and so on.
Keep averaging your cost down. Sooner or later the stock tops out and by having so much cash you are able to buy puts at the top.
Take profits early.
Look for some call option trades to balance so you have some long positions but favor the puts trades.
This has been working the last 2-3 months. It probably will not work in an up market.
PCA GUY