What a relief we've had the past few sessions. Markets took off with a vengeance as oversold conditions setup the perfect scenario to initiate short squeezes to give buyers waiting the incentive to buy.
I am looking for the markets to continue now on a temporary upswing. The financial sector might have gone up too much too fast, but the thing is when there's doubt in the air it probably means it has more room to go up.
I bought a new position in Nucor (NUE). I've been waiting on the sidelines for a very long time and now it looks like a nice chance to get in since it is right on the 200DMA now. It even broke down a little bit but looks like all the weak hands are being flushed out. I have been wrong a lot before about picking bottoms but that's why I don't even try to. I'm just going to buy a position now and continue building on it. This is at least a $70 dollar stock imo. If there are some quick rips up due to short covering then I'll consider just trading it.
If oil continues to fall out of flavor we could see a nice sustained move up. It broke below $129 so let's see if we can get a meaningful downmove.
- DL
Long ATI, RIO, NUE, JCG, SOLF, GOOG
Saturday, July 19, 2008
Wednesday, July 16, 2008
Could Today be our Long Awaited Turnaround?
What a fantastic up move today in the markets. News that Wells Fargo beating earnings expectation sent shorts scrambling to cover. I want to point to something very interesting in the SKF, which is a 2x short financial ETF.
Talk about getting destroyed today it is down $45 dollars, or 22% on MASSIVE VOLUME. If financial companies that report this week can continue to post in line earnings showing analyst have been overly pessimistic, mark my words we will see this flush out of shorts to lock in profits and we will see this ETF driven to the floor. Because as I have posted yesterday, longs have been severely overkilled. And sentiment in the markets have gotten so negative that all it takes is something positive to happen and bam, we get a massive short squeeze.
Some of the financial stocks during today's rally were just unbelievable. We are talking 20%-30% moves in ONE DAY. Granted, they have been destroyed this past year. But buying stocks are all about entry points. If caught correctly it can be very profitable. Keep an eye on financial as they seem to have the capability to go higher if theres continual following through on short squeezes.
Ebay posting up some good numbers but the stock is selling off. I think it is just partly because the stock ran up into earnings. Tomorrow I'm looking for a pause day. Meaning either small move up or down or stay flat. What we DON'T want to see is a selloff back down to the lows of the day. Because that'll completely negate the move today. We need to see confirmation.
Oil coming down hard the past few days. We have seen this happen before, but we need confirmation too. But everything that needed to work today worked. Financials caught a mega bid, Oil came down hard, the dollar firmed. Let's see if the momentum will continue.
Hang tough longs, perhaps this time around, the calvary is coming.
- DL
Talk about getting destroyed today it is down $45 dollars, or 22% on MASSIVE VOLUME. If financial companies that report this week can continue to post in line earnings showing analyst have been overly pessimistic, mark my words we will see this flush out of shorts to lock in profits and we will see this ETF driven to the floor. Because as I have posted yesterday, longs have been severely overkilled. And sentiment in the markets have gotten so negative that all it takes is something positive to happen and bam, we get a massive short squeeze.
Some of the financial stocks during today's rally were just unbelievable. We are talking 20%-30% moves in ONE DAY. Granted, they have been destroyed this past year. But buying stocks are all about entry points. If caught correctly it can be very profitable. Keep an eye on financial as they seem to have the capability to go higher if theres continual following through on short squeezes.
Ebay posting up some good numbers but the stock is selling off. I think it is just partly because the stock ran up into earnings. Tomorrow I'm looking for a pause day. Meaning either small move up or down or stay flat. What we DON'T want to see is a selloff back down to the lows of the day. Because that'll completely negate the move today. We need to see confirmation.
Oil coming down hard the past few days. We have seen this happen before, but we need confirmation too. But everything that needed to work today worked. Financials caught a mega bid, Oil came down hard, the dollar firmed. Let's see if the momentum will continue.
Hang tough longs, perhaps this time around, the calvary is coming.
- DL
Where the F*** you been Xman?!?
Greetings my fellow online readers,
I have been away for quite some time. And my apologies for not even saying anything and just took off. The reason being was simply I needed some time away from the stock market. The market's inconsistency coupled with fire-selling on stocks that have already been beat up severely defies logic and frankly frustrated me to a point where I needed to step back and regroup. And that was exactly what I did. For a few weeks I just held my positions, checked them once daily and that was it.
But running is not the solution. So I am back now. I don't know how many of you still check the blogs but I will try to pick up the pieces where I've left off. We've had a few sizable moves up but all were greeted by hard sells. We even hit below 11k today...sad times for the stock market.
The Vix meter is nearing the 30+ mark again, put/call ratio is extremely skewed towards the put side, the sentiment is severely negative.
The government has been doing absolutely nothing productive to induce investor confidence. Add all of this to the unbelieveable drop the financial sector have experienced and we have on our hands a tumultuous period in time that will most likely go down in history books as one of the worst in the 21st century.
As for my positions...ya I have been taking beatings pretty hard. Still have JCG, V, RIO, GOOG, Sold my PWRD. And I've also initiated a position on Alleghany technologies (ATI) with a cost average of $55.
As for an outlook, lets see what the technicals of the chart tells us:
The massive downdraft we have experienced the past 2 months is simply UNBELIEVABLE. I don't dare to try to call a bottom but if I were to look care carefully it is obvious that yesterday 7/15 the selling was at its HIGHEST dating all the way back to the beginning of the year.
-Indicators are just severely oversold
- Sentiment is extremely negative
- Short levels HIGHEST since Bear Stearns
We have broken the lows and gone down significantly. So there's no denying now, this market is an official bear. However, it doesn't mean the markets can't bounce hard 5-10% in the near future just simply because of how ugly the tape has gotten. We have to acknowledge the fact that this market is going to take a long time to repair. And to fight a trend is to just ask for pain. But my inclination for now is we're so far below oversold that the market just needs a slight excuse or something positive to come out to give shorts the incentives to say "it's time to take profits".
OIL needs to come down. And I continue to believe that a significant correction will be coming. The key right now is in Oil, Financials, and our dollar. If Oil comes down, Financials get a bid, and the dollar firms up, we will see this market rally hard. If not, we will continue to see this dripping death.
Well that's all I have for now folks. It's been a long while, I have read all you guys comments and I appreciate you guys conversations and ideas. It makes me realize why I ought to keep up with this blog. Because together we can help one another to navigate through these historic and unusual periods.
God Bless, and God speed to all of us.
- David Lok (DL) aka the Xman
Disclosure:
Long V, GOOG, JCG, RIO, ATI
I have been away for quite some time. And my apologies for not even saying anything and just took off. The reason being was simply I needed some time away from the stock market. The market's inconsistency coupled with fire-selling on stocks that have already been beat up severely defies logic and frankly frustrated me to a point where I needed to step back and regroup. And that was exactly what I did. For a few weeks I just held my positions, checked them once daily and that was it.
But running is not the solution. So I am back now. I don't know how many of you still check the blogs but I will try to pick up the pieces where I've left off. We've had a few sizable moves up but all were greeted by hard sells. We even hit below 11k today...sad times for the stock market.
The Vix meter is nearing the 30+ mark again, put/call ratio is extremely skewed towards the put side, the sentiment is severely negative.
The government has been doing absolutely nothing productive to induce investor confidence. Add all of this to the unbelieveable drop the financial sector have experienced and we have on our hands a tumultuous period in time that will most likely go down in history books as one of the worst in the 21st century.
As for my positions...ya I have been taking beatings pretty hard. Still have JCG, V, RIO, GOOG, Sold my PWRD. And I've also initiated a position on Alleghany technologies (ATI) with a cost average of $55.
As for an outlook, lets see what the technicals of the chart tells us:
The massive downdraft we have experienced the past 2 months is simply UNBELIEVABLE. I don't dare to try to call a bottom but if I were to look care carefully it is obvious that yesterday 7/15 the selling was at its HIGHEST dating all the way back to the beginning of the year.
-Indicators are just severely oversold
- Sentiment is extremely negative
- Short levels HIGHEST since Bear Stearns
We have broken the lows and gone down significantly. So there's no denying now, this market is an official bear. However, it doesn't mean the markets can't bounce hard 5-10% in the near future just simply because of how ugly the tape has gotten. We have to acknowledge the fact that this market is going to take a long time to repair. And to fight a trend is to just ask for pain. But my inclination for now is we're so far below oversold that the market just needs a slight excuse or something positive to come out to give shorts the incentives to say "it's time to take profits".
OIL needs to come down. And I continue to believe that a significant correction will be coming. The key right now is in Oil, Financials, and our dollar. If Oil comes down, Financials get a bid, and the dollar firms up, we will see this market rally hard. If not, we will continue to see this dripping death.
Well that's all I have for now folks. It's been a long while, I have read all you guys comments and I appreciate you guys conversations and ideas. It makes me realize why I ought to keep up with this blog. Because together we can help one another to navigate through these historic and unusual periods.
God Bless, and God speed to all of us.
- David Lok (DL) aka the Xman
Disclosure:
Long V, GOOG, JCG, RIO, ATI
Friday, June 6, 2008
Market Update Friday 6/7/08 - Freefall
Market indices are getting annihilated today on a big reversal from yesterday's fortune. Jobs report is the supposed culprit - 5.5% unemployment...thanks Bush.
Not much to say today besides yes, sucks to be in this position and sucks that every single equity position I have is working against me today. I have to be honest I did not expect the markets to whipsaw like this and I did not set myself up correctly for it. Usually I have a sixth sense about the moves to come. But today, just like yesterday, completely blindsided me. Nevertheless, during times of fire selling and negativity in news headline, we just have to remain discipline and trust what the charts show us. That way, we don't panic sell ourselves and do something stupid.
PWRD taking a big hit today, it is near the double bottom it formed a couple weeks back. The RSI/Stochasics are still well below average and are still very oversold. Therefore, I am buying the remaining 25% position now @ 24.00 . This is going to be a longer term hold for me until I see it showing signs of overbought on the charts. I am convicted.
Same with JCG. Not very nice to see all my nice gains from yesterday evaporate again. But I am going to stay disciplined and let this ride out. I believe the downside is way overdone on these stocks. And yes, even though today it may not feel like it, I am still going to hold on to the shares. This has been pretty much a bottom fished play. So I am confident 1 month down the line the price will be significantly higher than where it is now.
USO...this chart has been unbelievable. Although I believe the ultimate direction of oil will be down the next month or so, it's not very nice to see my short go from being positive to down 10% in 2 sessions. It hit my cover today as it reached $110. Half my position has been sold as a result. Well, I stuck with it through thick and thin. But there still comes a time when I have to keep my losses in check. I didn't have a very large position in it so hey, live and learn. I still think the chart is extremely overextended on USO, but I can't fade the strength it exudes. Good luck to people chasing this long, and congrats if you had the courage to buy it during its monster dips.
I'm not paying attention to the indices today. Rather, I'm spending my time to review and study charts. I already know today is going to be ugly, so need to turn a bad situation into a good one. I'm interested in hearing you guys opinion on how you feel about the markets. And how you are positioning yourselves for the days to come.
Live to fight another day
- DL
Disclosure
Long GOOG, 75%V, 100%PWRD, 166% JCG
Short 50% USO
Update 1
- Recognize this chart pattern? Green line is where I project the stock will be headed in the near future. This could be the W pattern forming with all the indicators at extremely oversold status. Note the light volume selloff, double bottom holding in, and where the stock has sold off from to here.
Hurts now, but trust that discipline and technicals will lead us back to the green. Don't act on impulse and emotions. Stay true to facts and numbers.
- DL
Not much to say today besides yes, sucks to be in this position and sucks that every single equity position I have is working against me today. I have to be honest I did not expect the markets to whipsaw like this and I did not set myself up correctly for it. Usually I have a sixth sense about the moves to come. But today, just like yesterday, completely blindsided me. Nevertheless, during times of fire selling and negativity in news headline, we just have to remain discipline and trust what the charts show us. That way, we don't panic sell ourselves and do something stupid.
PWRD taking a big hit today, it is near the double bottom it formed a couple weeks back. The RSI/Stochasics are still well below average and are still very oversold. Therefore, I am buying the remaining 25% position now @ 24.00 . This is going to be a longer term hold for me until I see it showing signs of overbought on the charts. I am convicted.
Same with JCG. Not very nice to see all my nice gains from yesterday evaporate again. But I am going to stay disciplined and let this ride out. I believe the downside is way overdone on these stocks. And yes, even though today it may not feel like it, I am still going to hold on to the shares. This has been pretty much a bottom fished play. So I am confident 1 month down the line the price will be significantly higher than where it is now.
USO...this chart has been unbelievable. Although I believe the ultimate direction of oil will be down the next month or so, it's not very nice to see my short go from being positive to down 10% in 2 sessions. It hit my cover today as it reached $110. Half my position has been sold as a result. Well, I stuck with it through thick and thin. But there still comes a time when I have to keep my losses in check. I didn't have a very large position in it so hey, live and learn. I still think the chart is extremely overextended on USO, but I can't fade the strength it exudes. Good luck to people chasing this long, and congrats if you had the courage to buy it during its monster dips.
I'm not paying attention to the indices today. Rather, I'm spending my time to review and study charts. I already know today is going to be ugly, so need to turn a bad situation into a good one. I'm interested in hearing you guys opinion on how you feel about the markets. And how you are positioning yourselves for the days to come.
Live to fight another day
- DL
Disclosure
Long GOOG, 75%V, 100%PWRD, 166% JCG
Short 50% USO
Update 1
- Recognize this chart pattern? Green line is where I project the stock will be headed in the near future. This could be the W pattern forming with all the indicators at extremely oversold status. Note the light volume selloff, double bottom holding in, and where the stock has sold off from to here.
Hurts now, but trust that discipline and technicals will lead us back to the green. Don't act on impulse and emotions. Stay true to facts and numbers.
- DL
Thursday, June 5, 2008
Market Update - Thursday 6/5
On the run today so I won't get to post until probably this evening. But just updating some of you with my plays.
I am out of UAUA at 10.35 on a sell trigger. Boom baby, now that's some fast money. 15% in two days doesn't get any better than that.
Sitting tight on the rest of my positions though. Great day in the markets. Hope you guys get to take full advantage of it.
Talk to yall soon
- DL
Disclosure
Long GOOG, 75%v, 75%PWRD, 166% JCG
Short USO
I am out of UAUA at 10.35 on a sell trigger. Boom baby, now that's some fast money. 15% in two days doesn't get any better than that.
Sitting tight on the rest of my positions though. Great day in the markets. Hope you guys get to take full advantage of it.
Talk to yall soon
- DL
Disclosure
Long GOOG, 75%v, 75%PWRD, 166% JCG
Short USO
Wednesday, June 4, 2008
Market Update 6/4/2008
Well today the big headline is Lehman has buyers for its debt...anytime when a banking firm has to come out and say it is making progress to eliminate its debt probably means theres a lot more hiding in its closet. Nevertheless, the stock climbed from the abyss from the morning plunge at 27 and is now in the green. For those of you speculating around Lehman and playing the moves, stay quick and nimble.
Also in the spotlight are MBI and ABK - aka the bond insurers, that they are getting downgraded by Moodys. Because of this their stocks are getting annihilated...again...
I have lost all my respect for the rating agencies already. How many times have they downgraded and upgraded their stocks? Same with the S&P. These guys are clowns. And for MBI and ABK to tank "because of the downgrade." Why is the media is acting so suprised!? As if it's the first time we've seen this happening? Ha
JCG after its morning plunge once again is hovering near flatline. The price action is starting to look encouraging because a necktie support is now forming underneath at the $35.50 level. Should JCG close in the green today technicians will be all over this IMO and it will be an indicator for shorts to cover positions. That's when we could finally see that POP. Hang tough!
I am buying a new trading position into strength because the stock has simply been annihilated but is now showing signs of life. United Airlines (UAUA). Yes, highly speculative. But I am buying it for a few reasons: 1) It has been obliterated as we all know YTD. 2) OIL IS COMING DOWN. And the more oil pulls back, the bigger pressure it would be for shorts of airlines to cover. Causing massive short squeezes. And while I'm at it, how bout that USO Short?! My discipline is now paying off, I am in the money.
UAUA has already gone from 7.77 to where it is now at 9.36 in TWO DAYS. That's a big move! But I don't think its done yet it still has room for the upside. I bought @ $9.00 even on a breakout trade. Stop loss at exactly $9. My target to close position is @ 10.35-$10.50. $1.35 move on small stock like this is a pretty sizeable gain. I am going on record right now though and saying when this stock hits anywhere above $10.50 or if oil shows any signs of a firm rebound I WILL BE OUT COMPLETELY. So make no mistake I'm not going to be in it for long.
Good luck to us today
- DL
Disclosure
Long GOOG, 75%V, 35%PWRD, 166%JCG, UAUA
Short USO
UPDATE 1:
Buying my PWRD position back now @ $25.58. From the chart setup it looks like the downside is limited. Add that to the fact the major indices have already had a sizeable correction (near 700 points plunge from the highs at 13,000 and close to 300 points in the past 5 sessions), it is once again due for a short term bounce. Along with it PWRD should be heading back up toward the $27+ zone in the very near future.
Disclosure
Long 75% PWRD
Update 2:
USO effectively broke through its 20DMA today and failed to go back up. It will probably free fall now until $95 where it will find its next level of support.
Also in the spotlight are MBI and ABK - aka the bond insurers, that they are getting downgraded by Moodys. Because of this their stocks are getting annihilated...again...
I have lost all my respect for the rating agencies already. How many times have they downgraded and upgraded their stocks? Same with the S&P. These guys are clowns. And for MBI and ABK to tank "because of the downgrade." Why is the media is acting so suprised!? As if it's the first time we've seen this happening? Ha
JCG after its morning plunge once again is hovering near flatline. The price action is starting to look encouraging because a necktie support is now forming underneath at the $35.50 level. Should JCG close in the green today technicians will be all over this IMO and it will be an indicator for shorts to cover positions. That's when we could finally see that POP. Hang tough!
I am buying a new trading position into strength because the stock has simply been annihilated but is now showing signs of life. United Airlines (UAUA). Yes, highly speculative. But I am buying it for a few reasons: 1) It has been obliterated as we all know YTD. 2) OIL IS COMING DOWN. And the more oil pulls back, the bigger pressure it would be for shorts of airlines to cover. Causing massive short squeezes. And while I'm at it, how bout that USO Short?! My discipline is now paying off, I am in the money.
UAUA has already gone from 7.77 to where it is now at 9.36 in TWO DAYS. That's a big move! But I don't think its done yet it still has room for the upside. I bought @ $9.00 even on a breakout trade. Stop loss at exactly $9. My target to close position is @ 10.35-$10.50. $1.35 move on small stock like this is a pretty sizeable gain. I am going on record right now though and saying when this stock hits anywhere above $10.50 or if oil shows any signs of a firm rebound I WILL BE OUT COMPLETELY. So make no mistake I'm not going to be in it for long.
Good luck to us today
- DL
Disclosure
Long GOOG, 75%V, 35%PWRD, 166%JCG, UAUA
Short USO
UPDATE 1:
Buying my PWRD position back now @ $25.58. From the chart setup it looks like the downside is limited. Add that to the fact the major indices have already had a sizeable correction (near 700 points plunge from the highs at 13,000 and close to 300 points in the past 5 sessions), it is once again due for a short term bounce. Along with it PWRD should be heading back up toward the $27+ zone in the very near future.
Disclosure
Long 75% PWRD
Update 2:
USO effectively broke through its 20DMA today and failed to go back up. It will probably free fall now until $95 where it will find its next level of support.
Tuesday, June 3, 2008
Market Update 6/2/2008
Markets are selling off bigtime across all major indices. Major news hitting the headline today is Fed Chairman Bernanke coming out and for the first time in public announcing his concerns about inflation. He pretty much signaled the fed is done cutting rates. Now are we going to be seeing hikes anytime soon? My hunch is probably not because the economy is still very fragile. But the fact that Bernanke is coming out to say he is concerned about inflation anchored the dollar and will probably stop it from deteriorating any further.
Also another big headline that grabbed my attention today is investing legend George Soros coming out and warning the possibility of a "1987 market crash" due to the potential commodity bubble exploding. He explains in the article here
Long story short, he is saying since the trade has been piled on so excessively by hedge funds they have the power to unwind it and cause a seismic shift in the market's stability. I actually can't disagree with him here because the commodity trade has been over-extended. I can't say when this will happen and for now I will still not short these names. But I would not chase them at this point either. This is why however I still have my USO short. I truly believe oil will have a massive correction that will cause create gaping holes in many people's portfolios should they continue to chase it long.
JCG is taking ANOTHER big hit today. I am going to buy it again right now @ $35.30 and like how I have said before I am going to keep buying it until it goes up. Look at this chart:
Yes, I got in a little too early and I own it. I have been on the wrong side of the deal. This started off as a quick scalp trade for me but looks like it's going to be turning into an investment. But looking at this chart tells it all. This stock is SEVERELY OVERKILLED. It has gone from its high of $50.35 roughly 2 weeks ago to $35 - Almost 30% plunge in a straight line. When RSI is below 30 for ANY stock, and for stochastics to fall below the 20 line, it is severely overkilled. A lot of longs who have lost a ton of money are ejecting from the company to stop losses. I may have picked up their shares a little too early but still, I am staying disciplined to this trade. Would I have wanted it to turn out better? You better believe it. But if you're in this trade too, know that I'm right there also having to sack the pain. For anyone wanting to short at these levels...God speed because on the slightest uptick this stock will have a massive short squeeze and will annihilate bears. (28% short interest according to Shortsqueeze )
I am not backing away from this. This will be a true test of discipline and technical analysis. It has paid off handsomely for me in the past time after time. And I believe it will once again lead me back into the money in the very near future.
Let's see what happens at the end of the day.
- DL
Disclosure
Long GOOG, 75%V, 35% PWRD, 166% JCG
Short USO
Also another big headline that grabbed my attention today is investing legend George Soros coming out and warning the possibility of a "1987 market crash" due to the potential commodity bubble exploding. He explains in the article here
Long story short, he is saying since the trade has been piled on so excessively by hedge funds they have the power to unwind it and cause a seismic shift in the market's stability. I actually can't disagree with him here because the commodity trade has been over-extended. I can't say when this will happen and for now I will still not short these names. But I would not chase them at this point either. This is why however I still have my USO short. I truly believe oil will have a massive correction that will cause create gaping holes in many people's portfolios should they continue to chase it long.
JCG is taking ANOTHER big hit today. I am going to buy it again right now @ $35.30 and like how I have said before I am going to keep buying it until it goes up. Look at this chart:
Yes, I got in a little too early and I own it. I have been on the wrong side of the deal. This started off as a quick scalp trade for me but looks like it's going to be turning into an investment. But looking at this chart tells it all. This stock is SEVERELY OVERKILLED. It has gone from its high of $50.35 roughly 2 weeks ago to $35 - Almost 30% plunge in a straight line. When RSI is below 30 for ANY stock, and for stochastics to fall below the 20 line, it is severely overkilled. A lot of longs who have lost a ton of money are ejecting from the company to stop losses. I may have picked up their shares a little too early but still, I am staying disciplined to this trade. Would I have wanted it to turn out better? You better believe it. But if you're in this trade too, know that I'm right there also having to sack the pain. For anyone wanting to short at these levels...God speed because on the slightest uptick this stock will have a massive short squeeze and will annihilate bears. (28% short interest according to Shortsqueeze )
I am not backing away from this. This will be a true test of discipline and technical analysis. It has paid off handsomely for me in the past time after time. And I believe it will once again lead me back into the money in the very near future.
Let's see what happens at the end of the day.
- DL
Disclosure
Long GOOG, 75%V, 35% PWRD, 166% JCG
Short USO
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