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
10 comments:
Xman, I think the market is pulling JCG down as well today. I hope it won't get under 35 which my stop loss will kick in. :(
I bought 100 shares of JCG this a.m. - wish that I would have waited til this afternoon but such is timing. I will wait it out with xman as well - I think that it will go up in coming few weeks too based on the charts. Plus the fundamentals are good and Jcrew ain't going anywhere. Just head over to gtown and see all the popped collars
Vincent,
you were right about JCG having the potential to drop off more after a big plunge as the selling momentum just continued to carry through. Another big lesson learned for me. Thanks for your insight and I wish us the best on this trade. This started off as a trade for me too but I am going to allow it to run. I refuse to believe 1 month down the line this stock will not retrace at least back to $40. Only time will tell, stay true to the charts and be disciplined.
anonymous,
I wish us the best. Even though it may be painful for now, stick with the charts, not the wall street jibberish.
I am just waiting for the day someone (preferably a Cramerican) calls Cramer's show and ask what's his take on JCG. Because he's going to be saying "OH NO THIS STOCK IS UNTOUCHABLE SELL SELL SELL" And that's exactly the moment we are going to see capitulation and the stock reverse.
My stop loss kicked in at $34.90 while I was away, this sucks because it's now back to $35.74. :(
Well, I guess I was being disciplined.
Hey X,
How about LEH ? They're getting beaten real bad, is it another BSC (which can't really happen otherwise it'd be the beginning of financial chaos wouldn't it ?) or just some good share to have.
From what I've learnt from you indicators looks good no ? I couldn't get any of that JCG from my bank (they're worthless).
maiike,
LEH is too hard for me man. Not that because its overvalued or anything, but because theres simply too much speculation and news going on around it. When a stock has the spotlight in the financial news media, it will defy all technicals/fundamental logic.
look at the june and july put options. Big money are placing bets that LEH could tank to $10 dollars or less!! Those puts are way out of the money right now but look at the open interest!
Don't buy LEH long because the technicals are saying so. You could get crushed. At the same time, I can't say shorting it would be a good idea either, because any good news it may get could cause it to have a big short squeeze.
I say just observe on the sidelines. Or if you want to trade the volatilty, you need to be really quick on the trigger to lock gains IMO.
vincent,
Sorry to hear the trade didn't work out for you. I will try harder next time to be better at identifying entry points. I am still in it right now though because I don't believe this decline can continue without the stock getting at least a temporary bounce. It has just been sold too hard.
X, good luck with J. Crew if my cash wasn't tied up I would have jumped in. That was such a large gap down that it will have to fill the gap sometime in the future.
GRMN has been on my watch list for a while and recently saw it jumped up to 52, it would have been nice if you held it.
Regarding Lehman I set a limit cover for the rest of my short at 30 and it got filled under that, I waited for the RSI to go under 30 to go under 30 (thanks for the tip). After reading last night that Lehman was buying up shares, I would have gone long but only for a quick trade. Otherwise it's smarter to sit on the sideline.
mr. jeanius,
I saw GRMN ya it has broken out of its trading range. It may have a few points left to move up but the technicals are starting to get overstretched from a short term perspective. I'm watching it on the sidelines though.
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