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

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

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.

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

New week starts off with a plunge

Last Thursday I mentioned to start taking long positions off if you're swing trading because the market technicals told us so. And sure enough, today we are seeing the continuation to the market fall.

JCG is taking another hit today. I am buying another 33% position at $36. I will keep buying it until this rebounds. From a technicals perspective JCG has just been overkilled way too much, way too fast. Even if the retail "outlook" may be looking bad in the year to come, I pay much more attention to technicals over fundamentals and outlooks. And right now, the technicals are pointing to this stock as a screaming buy. There's a time to be cautious and there's a time to be greedy. JCG in my opinion is now a stock I'm willing to buy hand over fist. I'll be the first one to double and triple slap myself to oblivion if JCG doesn't see $40 within a month. Be patient with this trade, this is now the time when everyone is jumping off the cliff. And discipline tells us to buy stocks when they are getting obliterated. This is still a profitable company, it has no debt, and just because it lowered guidance doesn't mean the stock will never see another green day in its life. BUY ON FEAR.

PWRD position taking a beating again today. Good thing I lightened up last Friday. I hope you did too. If PWRD takes another hit tomorrow I am going to buy my position back.

The key now to trading in a market downdraft if you're long stocks is to pick your spots and stay disciplined. Don't let the gyrations shake you out of stocks you own if the technicals are present to support the price action.

Markets are about to close in 15 minutes but rebounding a good amount from its lowest levels of the day (I think from nearly 200 points plunge?) Invest wisely and stay sharp.

- DL

Disclosure
Long GOOG, 75% V, 35% PWRD, 133% JCG
Short USO

UPDATE 1:

NOTICE JCG rebounded off from its lowest point at $35.85 and CLOSED ABOVE THE JANUARY BOTTOM of $36.40. The floor is still in tact.

JCG closed Monday @$36.47

Watch this trade very carefully, it could turn profitable in the very near future.