Thoughts on the direction of this blog

While I enjoy writing this blog, I feel increasingly difficult to allocate the time and efforts needed to maintain the current pace. This is mostly due to my work demand, which will put a lot pressure on me throughout this year.

I have thought about lighten up the blog a little bit for weeks now, but have not done so because I feel there are many folks reading this. However, now I think more about this, I really don't know if/how much my blog benefit the readers. After all, I have only had less of 10 folks in last several months who have posted comments here, which represents not even 5% of the regular readership. In other words, I am really not sure if it is worth the efforts and time to keep it up if the regular readership is less than 500/day, and discussion participants are less than 5% of the readership.

I feel lucky to get to know folks like Razor and PCAGUY in the blog, whose regular comments/discussions benefit me a lot in both thinking and trading. They are really what I have got out of my efforts so far. One thing I am considering about for the future direction is maybe transforming this blog into some kind of forum where folks like them can post their comments and trades in real time. I myself feel that such format will help me a great deal, however, I am not sure if majority of the current readers will feel the same.

Before I make any decision on this subject, I would like to first hear your views. If you value and care about this blog, please take a minute to complete this very short survey. Obviously, a low response rate on the survey indicates most of the readers don't care much about this blog or whatever I want to do with it.

Thanks a lot!

Click Here to take survey

What a week!

Hog wild, no? Just 24 hrs ago, tech bulls were triumphant but by the end of the week, it is the bears who are on the top of the world! There is little doubt that both bears and bulls got hurt badly this week, I feel lucky as it turns out to be one of the best trading week I have ever had. Unfortunately, the week is littered with the same old mistakes: fear when I should be hopeful! I exited early in both FSLR and SOHU, capturing less than 50% of the entire move. Something has to be done to snap me out of this misery groundhog day!!!

Position update:

** SOHU: exited before I left for work when it was near 86 for a 0.9 point gain in puts, had I hold it, I would've been gained 2.2 points by close!!!

** AAPL: bought July 185 calls around 12.55 when it hit 186 in the closing minutes. I figure it will at least run up a bit on next Monday before Steve Job's presentation, who knows, AAPL might hit 200, but rest assured, I will once again have an early exit.

Got cures?

Tech bulls rule! More to come?

Well, tech bulls answered my last night's question, at least for today as it powered the entire market up. Looks like everyone is betting on a good job report tomorrow, I hope it will be, and if that triggers a big gap up, I might consider fade the gap on some stocks (AKS, CF, FSLR, GS, MOS) for quick DT using recent highs as stop. If the break-out remains intact into the close, the better SW short setups will come next Tues/Weds. Will also keep an eye on AAPL, and may go long if tomorrow's job report comes in worse than expected and it gaps down in the open.

Today was a very weird day in which both oil and market went up big, and both gold and dollar went down. Tomorrow could be even more hogwild, I think some bears and bulls are losing their mind in the heat of the battle.

Stay cool!

Tech bulls keeps running, but for how much longer?

You got to be impressed by the tech bulls' tenacity as of late, without which the market would have rolled over by now. With financial sector breaking down, recent leaders from the energy and solar reversing, and both DOW and SP500 are completing the 1-2-3 reversal, I wonder how much longer the tech bulls can march on alone.

Stalking list:

Below are the names I am monitoring for next two days, especially after the Friday's May employment report. Most long side plays are for technical rebound, which means you should not be greedy when it comes to taking profits.

1. CME: getting oversold on all time frames, L2, EZ=340-361, IDS just below 340, CS just below 350 on bearish candle, IT=395.

2. DRYS: L1 if it spikes towards 80/82, IDS just below 80, CS just below the MA50/MA200 area on bearish candle.

3. EWZ: L2, ez=86-90.3, IDS just below 86, CS below MA50 on bearish candle, IT=95

4. FCX: L2, ez=100-106, IDS <100, CS < MA200, IT=115

5. FSLR: L2, ez=220-231, IDS <220, CS <225, IT=248.

6. GS: S2 if it spikes towards 180, IDS >182, CS > 180, IT=172.

7. RIG: L2, ez=130-138, IDS <130, CS
8. WLT: L2, ez=80-85.2, IDS <80, IT=92

9. X: S1, ez=176-180, IDS >180, IT=170/166.

10. MON: unlike PCAGUY's decisive action, I pondered over 1 freaking hour yesterday when it was around 136, and chicken out in the end. I am now looking for re-entry.

Open Position

I took an initial put position in SOHU today when it was near 91, the decision was based on bearish momentum divergence, overbought condition, and recent parabolic bull run, I will add to the position if it gaps/spikes up, with stops just above 100. IT around MA10.

Who are scared? Who will blink first?

Well, the answer to the first question is that both bulls and bears are scared as seen in the last two hours of trading today when panic selling followed by panic buying. The answer to the second question is yet to come.

On trading

Was too busy to write something during the day, but I bought some AAPL calls in the last hour of yesterday, and exited in the early going today for a small gain. Then I bought some put just before the big drop, but exited a bit too early for yet another small gain.

Random thoughts

1. Following DOW's step, SP500 became the second major indice to break its May low and closed below MA50. Bulls better hope that NASDAQ won't follow the suite or things could get very dice in a dime for bulls. On the other hand, if oil pulls back to 100/110, bulls might get some temporary relief, however, a much steeper drop of oil or the failure of another major bank could place bears in the driving seat. The battle for the supremacy is white-hot!

2. The Lehman mess reminds me a widely circulated report SP just weeks ago saying that because of the aggressive write-offs by all the banks/brokerage, not only the worst is over, but there might be some upside in the coming months. Sometimes you have wonder if those well-informed analysts are not as sharp as we thought, or they were just playing games on retailer stock speculators.

3. Speaking of Lehman, though it might not follow BSC's path, the chart just looking gravely hopeless, I start to think maybe I should buy a small puts just in case....

4. AAPL has been weaker than I expected so far as if it has already priced in the new iPhone release. I still might consider buying calls as close to 180 as possible with a stop just below, but will reduce the size.

Almost back now...

On the trip
Had a very nice trip and really enjoyed the California coast line from SF to Santa Barbara, lots of incredible scenic views. Too bad that I did not have much time, otherwise would definitely do some hiking as there are many great trails, especially in/around the Big Sur.

On trading
Did not get chance to trade much, except got lucky last Friday when my FSLR JUNE 260 put order ($8.1) got hit when it spiked towards 275, and even luckies when it gapped down this morning. Again, I got out too early (at $14.4), but it was a nice gain, which finally pushed my option trading account over the doubling mark, six weeks after I started playing options on a regular basis.

On the market
Looks like the battle is really heating up between the bulls and bears. So far the market is in a well-define trading range, but the momentum is clearly shifting to the bearish side.

Stalking list
AAPL: L2, ez=180-185, stop just below 180, IT=190. I have been very patient so far today.
FLSR: speculative L3, ez=220-242, stop just below 220, IT=260.
CME: L3, ez=380-401, stop just below 380, IT=440.
BIDU: L3 if it spikes towards 320, stop just below 310, IT=350.

Patience is needed for any long side entry.

I am going to be pretty busy with my work for the rest of the week, will try my best to write something here.

Weekend notes -- May 24, 2008

I will be leaving this weekend for a business/leisure trip to San Francisco (Stanford Univ.) and won't be back until next the end of next weekend. As the result, I mostly likely won't be able to trade or blog, though I will try to monitor the market.

Position Update:

I decided to close all the positions mostly because of the trip.
AAPL calls: the second half was closed today near 181.
DRYS calls: took a small losses on the remaining position when it was around 89.
EXM calls: exited the remaining position at even.

I also bought GS June 170 calls near 173 around the noon when it rebounded, but stopped out after it broke 172. I probably would have held the position if I would not be around next week.

Briefly on the market:

Today's drop capped a miserable week for bulls, and not only the 2-month rally came to a screaming halt, but the scenario of testing the March bottom becomes a real possibility.
On the weekly chart: the bears fought back by posting yet another counter bearish engulfing candle, and the volumes rose noticeably; positive momentum decreased for the first time in 6 weeks; stochastic turned down from overbought; other indicators are mixed for the near term direction.
On the daily chart: DOW led the market down with a breaking down through both May low and MA50; SP500 also decisively broke the May low and barely closed above MA50; NASDAQ is the strongest as it managed to close above the May low and enjoyed a comfortable distance from its MA50; for all major indices, momentum finally crossed down to the negative side and rising; both stochastic and RSI2 are approaching oversold.

My feeling is that more and more people start to realize that while the acute stage of the credit mess might be over, the hope of a speedy recovery might simply be a wishful thinking, which is now wilting as oil advances relentlessly and inflation signs can no longer ignored. Technically, the market might have a oversold rebound early next week, but the burden is now on bulls to prove that the primarily trend is no longer down. Personally, I will take next week's rebound as opportunity to close long positions and set up some initial short positions. I will definitely keep an eye on the long side, but probably have to be patient to let the decline run its course.

Have a great holiday weekend, folks, good luck!

The Wisdom Forum: Option tradings according to PCA Guy

Thanks a lot to PCA Guy for kindly sharing his playbook! I sure hope others will do the same instead of just taking in my gibberish :)

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As WABBIT pointed out I am crazy for a 62 year old guy.

I had about 7 stocks represented in 11 different strikes going this morning plus actually on PLCE puts I had a total of 55 puts at 3 different strike prices (not normal). It's hard to keep them straight.

Yesterday I had decided to use a blanket approach on my trades figuring that one or two might be big winners and the rest not so good. That turned out to be the case. AAPL good, RIMM bad. POT good, MOS bad. The AAPL trade was the best overall trade, followed by LDG, SAFM, and POT. RIMM is the worst trade followed by MOS. PLCE and CRM each made a small profit.

BUYING OPTIONS

When I buy my position I place an order to buy 5 contracts at a lower price than it is trading. If it is something I like say POT then I place an order to buy at 20 cents less, and 40 cents less, and 6o cents less and so forth. This is how I got to 45 contracts today on POT because it dropped so much. My highest cost was $13.10 and my lowest cost was $11.0 for PYPFV today.

SELLING OPTIONS;

Normally I fish around for the best price when I only have a few trades going using a limit order. This morning I had been holding 2 different calls on AAPL,& RIMM, and one position each on POT and MOS.

Because the market opened down and AAPL and RIMM opened up in the first half hour I did use market orders to sell my 4 different call strikes on RIMM & AAPL but I knew the stock price was good. I also used a market order to sell my 20 POT calls and it's a good thing because POT never got back to that price today. I just had a feeling it was going to drop more and was lucky. I picked up a total of $4258 on my AAPL, RIMM, and POT call trade closeouts. Lost money on RIMM but made real good money on AAPL. Still holding 5 MOS calls at a loss right now.
I used limit orders to sell my PLCE, LDG, SAFM, and CRM puts.
I picked up $2840 profit on those 4 positions when I closed them out. Fast Money guys seemed to say that people should buy CRM and PLCE last night so I was willing to let them go with thin margins.

I found nothing I was willing to short today in this down market and I realize I am gambling against the current trend on POT, DRYS, and OIH. But these are stocks the Fast Money boys will gloat over so I took a risk that they will get behind them again.

Dang near bot puts on FLS but Karen Finerman really touts this baby on Fast Money.
Next Tuesday's earnings reports don't look favorable for a straddle that I could find.

I hope I'm not too windy but I wanted to answer your question.

PCA GUY

Hang in the balance?

Despite of the breaking down of quite a few high flyers, the bulls not only defended yesterday's lows, but even managed some small gains. If they can accomplish the same tomorrow, things make look a bit brighter next week. However, if the major indices break yesterday/today's lows with decent volumes, watch out below!

Position update:
AAPL: still holding the remaining half calls and did not catch that quick drop to 172 (well, I do have a day job). I might exit the position if it fails to break today's high or breaking 172 on volumes. On the daily chart, it is still a couple of days away from real oversold condition.

DRYS: Took a small profit on half of the call position because of razor's bearish view, will keep the remaining half with IDS just below 88, CS just below 70 on bearish candle. Technically, while it is quite possible that DRYS will rebound above 100 in no time, the huge volume sell-off and extremely bearish candle pattern in the past 4-5 days could signal another inter-mediate term top or at least a trading top. I suppose Razor might sense the same thing as he bought the 70 puts to hedge against his remaining long position.

EXM: Exit half position in the closing moments with a decent gain, which now I regret, will keep the remaining half with IDS just below 46, CS just below 47.8 on bearish candle. EXM acted much better than DRYS, but then again, DRYS is the leader of the pack, if it goes, EXM will have a tough time to stay afloat.

Some random thoughts:

1. On PCA Guy: some nice plays, but you are a crazy dude with too much ammunitions for sure and too much time on hand :) I have never seen anyone who trades options with such rapid fire, just insane.... BTW, liked your post ER puts on CRM as it seems often to jump post ER, then drifting back to where it was shortly.

2. On ESLR: I tend to agree with razor's second thought, today's action appears to be a textbook big-boy dumping case, IMHO. I would not take the long side unless either it drops to 9-10 or it breaks today's high or closes above 12 on bullish candle.

3. On AAPL: I am reconsidering my original rationale of long AAPL for its upcoming new 3G phones release. I looked at what happened to RIMM since its release of a seemingly killer new phone, and I also noticed that RIMM even made a new high before that. Somehow I start to feel that AAPL may be nearly as bullish as I thought, who knows, maybe it will backfill the gap around 156 like Razor said.

4. On MXC, fate and destiny: I remembered I looked at MXC yesterday and I was so bummed out that it does not have options because I was ready to go all in on the puts and I had such a strong conviction that a sizable pullback is inevitable. Well, it dropped over 15 points today, I would've been crushed under the weight of all the gold coins I would've won, instead, oh well, guess it is my fate to make the money the hard way.

Position update

DRYS: Bought June105 calls at 3.1 when it spiked down through 92, stop at 88/90.

EXM: Bought June 50 calls at 3.1, stop 45/46.

Not out of the woods yet by any means, but I like the r/r ratios at this level.

On the second thought, may stop out all long positions if all major indices break yesterday's lows on large volumes late in the session.

Position update

AAPL calls: exited half position when it spiked towards 181 in the early going as planned, will keep the remaining half, which I might consider stop-out if it breaks 176 late in the session.

Stalking list:
DRYS: hoping to get in (with calls) as close to 90 as possible, may act near 92.
EXM: looking for calls near 46
RIMM: looking for calls near 125/128
GS: looking for calls near 172
LUK: looking for calls near 51/52

Bulls are trying hard to defend yesterday's lows, I would be very careful on the long side if those lows are taken out in the last hour of the trading session.

Got patience? need direction?

Bulls were probably a bit shaken up by the end of the second big sell-off session, after all, it was pretty much smooth sailing since the the March bottom over 2 month ago.

Technically, the multi-week rally is still intact as long as the major indices close above their May lows or MA50s (SP500 around 1380 with MA50 near 1370; NASDAQ around 2410 with MA50 near 2380). Unfortunately, DOW has just broken both May low around 12700 and MA50 around 12600, following two failed attempt at reclaiming MA200, and that could be ominous for the other indices. A solid break down at these key levels could lead the market to retest the March bottom eventually, but it is premature to consider that at this stage.

Some random thoughts and ideas

1. On AAPL: I got in it (June 185 call at $6.05) primarily because of the pending release of new 3G phones in about 2 weeks. The way it is going now, there is a real possibility that it might test 170 in next few sessions. So to PCAGUY: I might consider stop out the current position if it breaks 176 tomorrow, and may take partial profits if it spikes towards 181 in the early going tomorrow and let the remaining run. I definitely look for more long position with ez=168-172, stop just below 168.

2. On DRYS: Razor is one the best trader I have seen in last several years who give a lot of focus on one stock, cumulatively, I think he has made well over 70 points on DRYS in the last 6 months or so, just some razor sharp executions. I will keep an eye on DRYS with ez=88-95. In the meantime, razor, could you kindly share your strategy on DRYS for the next several days?

3. On agriculture/fertilizers: I kicked myself for not taking short positions yesterday on AGU, POT, MON. PCAGUY: I will not go long on them until they are close to their MA50.

4. On oil/natural gas stocks: I spit on myself for not acting on APA and DVN today despite of the action plan! I will continue to look for initial short positions in this sector. Personally, look at the way the oil and many oil-related stocks have been shooting straight up lately, I feel energy/oil is approaching a mini-crash.

5. On the airline stocks: speaking of possible sizable pullback of oil, I start to look at the airline sectors, especially AMR, UAUA, CAL, for some long plays. But I have not figured out what is the best strategy here, right now I am seriously considering writing puts. Say, any folks here who can recommend the best airline stock for the bottom fishing play based on FA? Thanks!

Position update

Just bought AAPL June 185 calls when it spiked down near 178, hopefully it will close above 180 today, a bit risky right now, but risk is well defined here.
I am also eying on DRYS, may consider calls if it could spike towards 98 today.

Market is dropping like rock, but bulls still got some lives left at this stage.

Sell in May and Go Away?

Today we had the second intra-day last session high volume dump in last four days, and this time, they started at 2 pm instead of 2:30 pm (last Weds). There were some intriguing similarities between the two sell-off: market was steadily making new highs despite of some negative news, bulls were not only buying dips but methodically cornering the seemingly out-of-breath bears, and then all the sudden, some sell programs kick in....

Is it me or some big boys are becoming anxious as May winds down? So far the sell-offs have been done in a orderly manner, which are likely perceived by retailer bulls as yet another buy the dip opportunity, and if you look at just the daily charts, you might not even tell there have been such sell-off. But something smells here, and I wonder if there will be some blood on the street when the third sell-off hits.

Tighten up the stop-loss on your long positions and refrain from initiating new SW longs.

Weekend notes on the market -- May 18 ,2008

Something got to give?

Too busy this weekend so I am going to be brief here:

On the market:
Bulls have been clearly running the show in the past few weeks, and it is impressive how they shrug off any negative news and buy all the dips. However, the consequences the rocketing oil price, which just broke out, just cannot be overlooked for long. Either oil will experience a mini-crash shortly and the market marches higher, or the oil continues the advance and the market pulls back. In other words, I just don't see the scenario in which both keep rising for extended period, no way.

On the major indices:
1. They are either in or near overbought on all major time frames (weekly, daily, 60 min).
2. The weekly charts still favor more upside movement in next couple of weeks as the positive momentum continues to rise overall.
3. The daily charts show ongoing bearish divergence in momentum. The major indices are either yet to claim or set solid footing on their MA200.

On the overall trading strategy for the coming week:
While there are not a lot of serious warnings signaling the end for the ongoing 2 month long light volume rally, initiating new SW long positions at this stage may not be wise unless you believe that the market will test or even make new highs by this November. On the other hand, trading from the short side must be nimble when it taking profits and stops must be honored.

Weekly Trading calls:

1. AAPL: either S2 using 192/193 as reference, or S2 when it closes below MA10 on bearish candle, IT=170.

2. Natural Gas plays: looking for small SW-S3 initial positions on DVN (near 130) and APA (near 150).

3. Steel plays: looking for small SW-S3 initial positions on AKS (near 80) and X(near 200).

4. CTRP: SW-L2, ez=48-MA200, IT=63

5. MON: SW-S2, ez=128.8-132, stop just above 133, IT=MA50.

6. WFR: SW-S2, ez=78-82, stop 84/86, IT=70/65

7. SOHU: looking for speculative SW-S3, ez=90-100, IT=75.

ER Plays:

MON: LOW, NCTY, DRYS, EXM
TUE: TGT, MDT, INTU, HD, CSUN,ADI
WED: LTD,PETM,NTAP,NTES,CRM,SOL,SNPS
THUR: ZUMZ, STP, GPS, ARO, ANN.