De-Balled

Coming into yesterday's Fed day celebration net short was a very effective strategy for losing copious amounts of capital. I sensed as much ahead of time but decided to honor my stops rather than immediately running for cover. To be honest I don't think I've ever been so unemotional while losing such large sums of money. There's my silver lining insofar as I consider it to be an important signpost in my evolution as a trader.

Only a few of my stops have been hit. I expected a bounce. Maybe not 420 pts in one day but I'm not surprised that I have to play some defense. That's fine. Ultimately the longer the bulls remain in denial about the magnitude of the problems we face the better entry points I'll get. I have plenty of dry powder to put to work at higher prices if need be.

Party Time

Futures up strong this morning. Fed announces latest cut at 2:15PM/EST. Time for a party. Our financial companies are technically insolvent but Ben's gonna cut so fuck it let's buy. All the pundits are calling a bottom already. Based on a test of the lows this week I can see the case for that I'm just not buying it.

Coming in ahead of the Fed net short my neck is placed firmly on the chopping block. Trading involves risk. I wish they'd just cut the FFT to zero so we could move beyond this fallacy that the Fed is going to save us.

Sell the Rally

So we opened down hard and traded as low as 11,750. Then snapped back to 12K (green on the day). That's 250 pts in an hour and a half. Now we're slowly working our way back down.

I used the big bounce to get even more net short. Now positioned perhaps the most aggressively net short I've ever been. We may bounce around here some more, in fact I'd expect it which is why I still have some dry powder, but I don't think there is anyway these lows hold.

Just A Couple Thoughts

1. Slashing rates will do nothing to save us. Bernanke has been cutting for months- how has that worked so far? The only thing he has succeeded in doing is destroying the dollar.

2. If BSC is only worth $2 I can think of a whole list of financials that are virtually worthless. Expect all financial companies to be re-priced. Many firms will eventually go to zero.

3. If BSC CEO comes on CNBC as he did the middle of last week and says everything is fine with his firm and they have not been significantly impacted and two days later they are broke then the guy is a fucking liar! Period. You don't go from just fine to broke in two days. Where are the handcuffs? Where are the regulators? WTF?!

The Gates of Hell Have Opened

That's right folks. Allow me to again reiterate that we are completely fucking doomed. News over the weekend is that BSC is getting taken under for two bucks a share. That's right- $2. WOW. Also the Fed cut the discount rate on Sunday night despite their meeting scheduled for Tuesday. Can you say panic? You can't wait two days?!

So we're fucked. No surprise here.

This month has been extremely volatile. Last week I took some hits. Tuesday when the Fed orchestrated it's bailout and Thursday when I shorted into the hole were both painful days. However, I stuck to my convictions and come in this morning aggressively net short. My only wish is that I was more aggressively net short. I see opportunities everywhere.

Expect this holiday shortened week to be nothing short of absolutely insane. Fed meets on Tuesday, we have several economic numbers slated for release, and option expiration in addition to the elevated possibility of an outright crash here and now. Fasten your seatbelts- the ride is about to get bumpy.

We Remain Doomed

Could this rally be over already? Seems very possible to me. Yesterday I dipped my toe back in on the short side and today I plan to get more aggressive.

The Fed is running out of ammunition. I'm wary of getting too excited ahead of the next rate cut (Tuesday) but they are starting to lose their grip. Every action they have taken seems to be less and less convincing to market participants. At some point the Fed loses all credibility. We are nearing that point.

I have more short ideas than I care to count with only a small handful of potential longs. At the end of the day I have to trade what the market gives me.

Last night after viewing just a portion of my watchlist I decided it was time to get short again. This morning the futures are down hard making things a bit tricky. I'll play it by ear but my intention is to put money to work.

Bailing Out the Reckless at the Expense of the Prudent

Market (So Far) Failing to Hold 12K

I'm just sayin'...

UPDATE: 12K held decisively. The tired old bulls are in control again. I'm back to the waiting game.

Can We Please Just Go Higher?

Might as well take out 12K. I've already taken the hit so I'd like to see a sustained rally thereby allowing me to short the market into oblivion from higher levels.

My exposure is now minimal. I intend to sit on my ass for the rest of the day. I think I'll give my DVR a work-out.

I'm far from sold on the idea that we will trade higher but it would be nice. Who knows?

Good Morning Vietnam! You've Just Been Bombed

Up until about 4:30 last night working, I awoke later than usual at about 9 and what a surprise. The Fed is out to knee-cap me again. Those fuckers. Down 2.5% as I write.

What do you know? Right to 12K on the DOW. That's my line in the sand. I've taken down a few shorts to control risk and am tightly monitoring my stops on all positions. Most have yet to be hit and we're going to have to hold 12K to send me scurrying for cover. Until that happens I will remain unimpressed.

Matter of fact this is probably a gift to the bears. Especially those looking for better entry points. I don't plan to do much today besides play defense. I'm not looking to immediately short into this since it doesn't fit my risk profile. I'll protect my equity first and foremost then re-evaluate when the dust clears a bit.

Back in the Saddle

On the first trading day of March I said it wasn't too late to sell. That was 500 DOW points ago. Whew! That was a quick 500. Now the consensus seems to be that we are oversold and due for a bounce. Fuck the consensus. Though, I suppose I could see 12K on the DOW one more time. Test those levels from below and see some names rally back to broken trendlines.

More than likely we continue to bleed. Everything is broken. Even the last of the bull markets are breaking. I see almost nowhere to hide. We are in a bear.

You can be certain violent rallies will surprise us out of nowhere but the trend is down. Rallies are selling opportunities.

So there you go. Both sides of the coin. The idea is not to hedge myself (clearly I remain a bear) but to remain flexible to what the market offers. Always remain flexible and never proclaim yourself smarter than the markets.

As for my personal trading, it's been difficult insofar as I withdrew from the markets at the end of last week and as a result ended up poorly positioned to take advantage of the recent swoon. I predicted as much Wednesday afternoon. Murphy's Law.

This morning I came back hungry. Shorted a handful of names and bulked up my exposure (which remains smallish). That worked and I was back to outperforming today. My inclination is to get really aggressive to make up for lost time but I don't make those mistakes anymore. I'm easing back in and letting go of the many attractive opportunities I missed.

Missing opportunities is difficult but new ones will arise. You just have to keep telling yourself that. I finally reached the level where I have the necessary skills to make money consistently over time. That alone is worth more than anything else. Therefore I know for certain new opportunities will present themselves. They were there this morning even after the two important days of action I missed last week.

Hiatus

I want to throw the kitchen sink at this market and short it to zero. Normally I would be aggressively re-positioning here but I can't focus. There are too many distractions in my personal life and I need some time to get things straightened out.

I will not be initiating any new positions for now. In the meantime I have a small handful of positions (mostly shorts) that I'm willing to let run for now. I'm up nicely on the day. Once I get my shit together (hopefully soon) I'll be back with a vengeance. Mark my word.

March Blues

Yesterday was interesting. At one point we were down something like 220 pts on the DOW. Initially I was up 2% or so until commodity names rolled over. As the market knifed lower throughout the morning though I found myself up just 1%. Frankly I found it frustrating that I wasn't up more amidst substantial weakness. Just sort of had an uneasy feeling about the day.

Sure enough around 3 o'clock CNBS pulled another bailout rumour out of it's ass and we quickly rallied 150+ pts. Such is life as a bear. My gains were erased. Minor losses ensued. My uneasy feeling combined with the reversal combined with support around 12K inspired me to sacrifice positions. Sometimes you just have to throw shit into the fire and clear your head. That's exactly what I did.

Truth is, I fucked up pretty good this last week or so. Presented with great entry points last week I twiddled my thumbs instead acting with conviction and putting capital to work. Sure I caught a couple of nice moves but missed many great opportunities. I've just generally felt uninspired and been distracted by my personal life.

Maybe I'm too comfortable. Maybe I'm distracted. Maybe I'm just full of excuses. Regardless, I've taken a step back and refuse to chase the trades I've missed. It's going to take a solid bounce for me to put money to work. Perhaps I'll be that lucky but my hunch is that I've missed a great opportunity.

As for today, I hardly have enough skin in the game to really give a shit. Hoping the market has found support around 12k for now. More than likely I'll spend my afternoon laying on the beach. Tough break, I know.

Message to the Bulls...

...it's not too late to sell.

Log It

Bulls got raped today. DOW down 2.5%. I did some raping, up 2%. Good not great . February saw the market down 3% or so. I logged a 9%+ gain.

Enjoy your weekend. I will be enjoying mine with rich man's whiskey.

Tough Day to be a Bull, Good Day to be a Bullfucker

The market is getting hammered this morning and I must say that my performance is less than stellar. Not because I'm losing money but because I'm not making more than I am.

I feel confident in saying that the market will not go to zero today, nor will the bear market end anytime soon. As a result I'm trying not to get too excited and start selling into the hole.

Take a deep breath.

I followed my plan and bulked up my BAC short, sold my MUR (gave back a point and kept the other nine that I made in the last three weeks), trimmed some AUY (to bank profits)...have a chunky short position in GM already in place so I'm comfortable if not happy with my exposure. Oh and I have copious amounts of dry powder. Trimmed my chunky NFX position yesterday and will look to buy on a pullback to support (impressive breakout by the way).

A bounce off the lows would be nice in order to get better entry points but we just keep knifing lower, down 240 pts. on the DOW now.

Here We Go Again, Grab Your Helmet

Here's what I see going through my watchlist: a list of potential short candidates longer than my arm. Noticed the same imbalance last night too. As a result I started putting more money to work this afternoon on the short side.

Looks to me as if the financials are getting ready to lead us lower once again. That has been the number one market tell since August of last year. When the financials start to swoon it gets ugly quick. I haven't done too much with this idea relative to how strongly I feel about it but I did buy back some SKF (yesterday) and shorted some BAC (today). I intend to aggressively short BAC (I'm an unsatisfied customer) but I'll wait until it cracks the 50-dma to double my position.

The last market swoon we had didn't hold and in fact rebounded quite violently due to the fact that the financials (and housing stocks) were bouncing. With the financials rolling over I'm much more confident betting against the market here. Mark my word (ad nauseum), pain lies directly ahead.

Tomorrow is month end. I'm up about 7.5% in February (not quite my best levels but God-like returns nonetheless). The market itself is basically flat during that time.

Time to go hunt some bulls. I've sharpened my bear claws.

Chairman's Testimony Redux

"I'm robbing your children and grandchildren."

Patience Pays

More Grid Problems

HOUSTON (Reuters) - A drop in wind generation late on Tuesday, coupled with colder weather, triggered an electric emergency that caused the Texas grid operator to cut service to some large customers, the grid agency said on Wednesday.

ClickHere

Is it just me, or is this becoming more common?

Hey Bulls I'm Waiting For You

Chairman's Testimony

"I don't have any fucking idea what I'm doing."

Scary Stuff

Our Grid is Antiquated

AP- A relatively minor glitch in Florida’s electrical grid somehow triggered a chain reaction Tuesday that caused a nuclear plant to shut down and briefly cut power in patches from Daytona Beach through the Florida Keys.
http://www.msnbc.msn.com/id/23355118/

Americans take many things for granted. Behind the scenes it's a precarious balance. In the years ahead it will get harder to keep our lights on and our plates full of food. Go ahead and scoff at your own risk.

Whew!

Glad to be out of my shorts. Caught the turn quite nicely. Market is rocketing higher and the one short I kept (FNM) is down 3%+. The longs are working nicely and NFX may finally be ready to reward my patience. Feeling good. It's better to be profitable than dogmatic.

We have a couple weeks before the profit warnings begin to roll in and the bulls are in control. Take the ball and run with it boys.

I'm 98% equity and have a lot of dry powder.

Long As Hell

This is probably the most long-side exposure I've had since August of last year. You too can believe in fairy tales. It's nice to not have to worry about some crazy 100 pt. intra-day spike taking a chunk out of my ass.

Hopefully the market can continue breaking the shorts although it's not a foregone conclusion as the major averages have yet to convincingly break out- but they are very close. Better entry points await. While awaiting those better entry points (from which to sell aggressively) I'll regroup from the long side and play some potential breakouts. Must say I'm very excited about my longs. Here is a taste of a few of my favorite longs.

Goldilocks Lives

Another day another big intra-day spike in the market. Today's bailout was of the monolines resulting in the DOW closing another 189 pts higher on top of Friday's anticipatory ramp-job. Rating agencies have reaffirmed the monolines fraudulent triple-A ratings on top of a large cash infusion into the black hole that is Ambac. More belief in fairy tales and happy endings by market participants.

Tell me this, how overwhelming is the exposure to toxic waste of these financial concerns (Citigroup, Wachovia, etc.) that they would be willing to throw a couple billion dollars at Ambac? It must be pretty scary.

This bailout is just another Wall Street shell game. It's all a matter of shifting some billions around in order to hide the losses. Problem is the losses remain and further obfuscation doesn't change that fact. You can get away with all this fraud because there is no regulation whatsoever. Actually, I'd go so far as to say that the regulators (and the Fed) are complicit in the fraud. They've certainly enabled it to go on and on.

So here we are with the indices right back where they started the month. I'm up 5%-ish. I've covered most of my shorts to preserve capital. Having done so may prove premature and I'm anxiously anticipating the opportunity to start selling again. Fact is I trade to put food on the table not to prove how right I am. Sometimes you have to err on the side of caution. Should the market continue to trade based on fairy tales I'll pack it in and go kayaking.

Monday Monday

Perhaps I was too hasty in calling out Gasparino on Friday. He's generally likable and (relative to the shallow talent pool on CNBS) competent enough. I just don't much appreciate getting knee-capped on a Friday afternoon. Fact is, some men feel the need to play the game and get in line. To do what they are told. Just so happens I'm not one of them. Been there, done that and it didn't take me long to figure out it wasn't for me.

Anyway, the market rallied because it was due to rally when it did. I should have taken profits. I knew that and failed to act. If anyone, I should be frustrated with myself. In totality, last week was profitable and this morning is so far so good. It's been a good month and I will react quickly to protect profits.

Today represents an epic struggle between bulls and bears. From a technical perspective, whoever takes control this week should be able to dominate the action for awhile. This is the bulls' big chance.

Should the bulls gain the upper hand my plan is to avoid getting pummelled. Preserve my hard earned profits and live to fight another day. Better entry points will await.

Pawn?

You decide. Here is the scenario...

We find ourselves in a wedge with the market consolidating it's previous losses. As the week unfolds the market becomes increasingly weak. Friday now and we are down another 100 pts on the DOW- threatening to confirm a break of the wedge to the downside, thereby confirming the downtrend. With the market resting on it's lows at 3:20 in the afternoon market participants are closing up shop and calling it a day (it's Friday after all)...BUT WAIT...Gasparino here comes on CNBS and SPECULATES that there COULD MAYBE be a bailout of mortgage insurer Ambac this upcoming weekend. Nevermind the fact that for a couple of weeks now they've been going to bail this one out to no avail. But...the market rallies 250 pts(!) in the week's final half hour of trading.

Hmmm...make up your own mind but to me this smells very much like outright market manipulation. Regardless, I'm not pleased as my very green day turned slightly red.

When you're a bear the whole world is against you and you have to be prepared for these endless stick saves. Once again the bulls snatched victory from the jaws of defeat. The reality is that we are going lower. If not right now, soon enough. Maybe we bottom here so that everyone can get complacent again. If so I'll get out of the way... but at some point this game is going to end in tears and I'll be there selling everything that moves until the market is driven into the abyss.

It's not that I'm rooting against our nation's best interest. The fact is the trash needs to be taken out. The whole house stinks. Until we take out the trash, all of it...I will remain a bear.

Bizarro World- Home of the Bail-Out

Apparently, nationalizing banks is bullish. Who knew?

Told You To Watch This!

Lying In Wait

I've spent the last week or so swimming against the tide by remaining net short into a huge pump. Last time we got one of these big upward surges I panicked into it covering a number of shorts only to have my viewpoint validated shortly thereafter. This time I've stuck to my bearish convictions. I did however put on some longs last Friday which served as a hedge against my losing short positions and helped me to weather the storm.

My uncle point on the DOW is around 12,750 and I just don't see us getting there. At the moment it's still possible the banks are bottoming but I don't subscribe to that theory. More than likely the banks are setting up to lead us lower once again.

This morning I initiated more short sales. Trying to remain conservative but I feel like that "all in on the short side" moment is close. Hopefully the day's trend (down) continues since it feels nice to be back on the winning side.

All Our Problems Are Solved

Not really but that remains the argument of the bullish contingent. Nice rally so far this week- up almost 2% on the DOW. GM, a name I remain stubbornly short, announces the biggest loss ever by an automotive company and rallies hard. Such is the current mindset. GM is going to buyout something like 70,000 more workers. I can only deduce that when GM stops making vehicles it'll be a great stock!

We also have a foreclosure freeze by six major banks in the news. Another attempt to delay the inevitable. The difference between the dot com bubble and the housing bubble is the debt. After the Nasdaq bubble popped we didn't have consumers tied to debt they couldn't service as is now the case.

This is all setting up nicely for those of a bearish mindset. Better entry points await.

As for my trading: I remain ever-so-slightly net short after having added a number of longs on Friday. Good thing I did too as having some longs has made this week bearable. Although I'm getting a pretty good hammering right now. Haven't done much yet this morning though as my stops have yet to be hit. In the meantime I remain excited about some my longs.

Riddle Me This

At what point does the bond market say enough is enough and impose some discipline on the Fed?

Yesterday was strange insofar as yields shot higher, the dollar shot higher and gold was still strong. Any one day could be noise but we'd better keep an eye on this.

TGIF

Must admit that I see more potential longs than I have in some time. Banks appear as if they are trying to put in a short term bottom. Have a hard time believing that's gonna happen but...I'll trade the tape I'm given.

Coming into this week I intended to position myself market neutral (as opposed to net short up to my eyeballs) but I have yet to add any substantial longs. Maybe today is the day.

I remain conservatively positioned with the intent of escaping this week with some profits intact. Yesterday sucked but hopefully today will be better -thereby increasing my weekend revelry. After all that's what it's all about.

What A Joke We've Become

I just have to get this off my chest real quick.

Do you know why we are not trading at 10K on the DOW? FRAUD. Period.

Losses are intentionally being hidden from the marketplace. Every effort to clean up this mess has been an exercise in further obfuscation.

Where are the regulators? Where are the indictments?

This is all downright fucking disgusting. No effort whatsoever has been made to punish the wrongdoers.

My thesis is and has been that America, the greatest civilization in the history of the world, has PEAKED. This my friends is the beginning of a long slow painful decline and as sad as I find it personally we should probably get used to this sort of thing.

We now have corporatism, not democracy. According to various theorists, corporatism was an attempt to create a modern version of feudalism by merging the "corporate" interests with those of the state.

Or maybe it's neofeudalism- the concept is one in which government policies are instituted with the effect (deliberate or otherwise) of systematically increasing the wealth gap between the rich and the poor while increasing the power of the rich and decreasing the power of the poor. That might be more appropriate. Regardless of what you want to call it we are a country almost completely divorced from the ideals that made us great.

There will be no greater testament to our broken government than that of a choice between McCain and Hillary- if it comes to that and I'm cynical enough to assume that will be the case. Finally, belatedly 60-70% of our nation is against the war in Iraq yet we could end up with TWO PRO-WAR candidates as our only choices. Further, it seems painfully obvious that both candidates represent the same established interests (not those of the people).

Just A Reminder

We're not going to go down in a straight line. No one said it would be easy.

Getting More Expensive To Keep That A/C Buzzing

I've been a proponent of a shift to nuclear power as it's cheaper and cleaner than traditional coal-fired plants. In a post-peak-oil world we need to focus on keeping the lights on as opposed to keeping the cars running.

Here though is a problem I hadn't yet considered. A problem that lays at the nexus of our impending energy and water problems.

By MITCH WEISS Associated Press Writer

LAKE NORMAN, N.C. — Nuclear reactors across the Southeast could be forced to throttle back or temporarily shut down later this year because drought is drying up the rivers and lakes that supply power plants with the awesome amounts of cooling water they need to operate.
Utility officials say such shutdowns probably wouldn't result in blackouts. But they could lead to shockingly higher electric bills for millions of Southerners, because the region's utilities may be forced to buy expensive replacement power from other energy companies.

Already, there has been one brief, drought-related shutdown, at a reactor in Alabama over the summer.
"Water is the nuclear industry's Achilles' heel," said Jim Warren, executive director of N.C. Waste Awareness and Reduction Network, an environmental group critical of nuclear power. "You need a lot of water to operate nuclear plants." He added: "This is becoming a crisis."

ClickHere for full article.

This Guy is a Moron

Jim Cramer- you never cease to amaze. We are not even in recession yet (according to the faulty numbers we all follow) and he is saying on CNBS to buy "early cycle stocks" like banks, homebuilders and retailers. You gotta be fucking kidding me. Much like early 2000 when he told his sheep to buy high tech he's guiding you to the worst place to buy. Banks? Homebuilders? That's where the problem began (and still remains). Retail? That is the first place our problems are going to spread. This guy just pulls out his dusty playbook and reads it verbatim. "Let's see here....nuclear holocost...buy the banks!"

He is also calling for another inter-meeting Fed cut! Come on. How can anyone take this guy seriously? He is a fucking joke. Right here, right now I would take the other side of his trade. The worst part is that his lunacy is going to hurt many of the people that listen to him. He's made so many obviously bad calls that it's mind-numbing.

Market Doomed

Yesterday someone asked me if I knew what stocks to buy in light of all the recent selling. Any time over the last few years this would have been a smart question to ask as buying dips HAS BEEN a good strategy. No longer. We are now in a bear market but it's going to take time to change psychology.

Not only are we in a bear market but it's now in the very early innings. We have a long, long way to go. For me that means containing my excitement in the short term and remaining conservative. I feel so strongly that we are going much lower (and have been waiting for this moment for a long time) that it is hard not to bet the farm.

It's important to keep in perspective that I'm trying to earn a living, not win the lottery. I've been winning consistently by hitting singles and doubles. There is no need to swing for the fences. There will be plenty of opportunities down the road. My best trades are yet to come.

This week I'm printing money with the market getting killed. The only negative is that a lot of money has been left on the table due to lack of aggressiveness. I've scaled back after the beating I took last week. The worst part is that as the market overshot to the upside at the end of last week I was forced to cover several positions that would have made me a rich man this week. I literally bet the farm a couple days too early. Stupid regardless.

The mistakes of last week are behind me. I still have to pay for my market education from time to time (but I learned a lot). Overall I'd say the market makes perfect sense to me about 80% of the time. I know what is going to happen before it does but it's not always so easy to capitalize.

I Own You

Not as in "I'm long you" but rather as in "You're my bitch."

Focused

Given the opportunity in the near term I will short more GM and go long more SKF. Banks appear likely to lead us lower again.

Let the Record Show

About the only smart thing I did last week was to cover my YHOO short. Thank goodness- I might have jumped out the window.

More Dead Bodies

http://www.bloomberg.com/apps/news?pid=20601109&sid=anvgqhQbacc4&refer=home

Back to Earth

It would have been almost impossible for me to be any more wrong last week. Looking for more downside I got ran over by Bernanke and the bulls. That bearded hack cut 125 bps in like eight days. The S&P was up almost 5% which is huge in the span of a week. Needless to say I did some serious damage to my accounts.

Turning points are always obvious in retrospect. This one I actually expected but failed to respect. The idea that after the waterfall sell-off we've had the market would bounce for only a few days is just as silly as the idea that after several years of a bull run the bear is over in a couple months.

This personal correction was necessary to check my growing arrogance. When you spend the greater part of seven months being right you start to get a bit too cocky. Consider me sufficently humbled. Going forward the object is start winning again. For now that means a market neutral approach.

Short-term we could trade higher and I do see stocks to be long. However, over the intermediate-term the path of least resistance is likely to be down. This bear market is not even close to over in my opinion but I have learned my lesson about getting too dogmatic. Nonetheless here is what I expect.

The government will continue to attempt to bail everyone out and encourage more consumption. The Fed will continue to attempt to inflate it's way out of our problems. Bulls will continue to reflexively buy the dips. Executives and regulators will continue to collude to hide the dead bodies. Regulation is completely non-existant.

The housing-ATM is broken. Most people will not be able to refinance. Credit will continue to tighten as sane lending practices slowly return. The economy will continue to deteriorate. Eventually more dead bodies will float to the surface.

Something like that- although I'm over-simplifying and leaving a lot out. Big picture I intend to profit one of two ways (hopefully both). Either the Fed succeeds in re-inflating and I win with precious metals (or commodities generally) or the Fed fails and I win by shorting everything that moves (and probably still win with gold).

The new year is still young. It's likely to get even more interesting. Fasten your seatbelts.

A Recent Idea Revisited

You may recall my recent BKS call in which I caught the breakdown. It was a beautiful trade, I must say. Covered my short near the lows. Now this dog has rallied right back to the break point. It doesn't get much better than this: major top, breakdown and (now) rally back to point of prior break. I re-entered BKS on the short side yesterday and will be increasing my position here.

One other idea, real quick. GM. I'm licking my chops. I feel like GM is way, way overvalued. Or another way to say it is that I think GM is doomed. I caught a good part of it's recent breakdown but closed it out way too early. Now with a rally back to $28 I'm very excited to get another crack at it. GM is going much, much lower from here.

A Quick Dose of Reality

Just a quick word on reported Q4 GDP which came in at 0.6%...if we were using a realistic (as opposed to completely fucking bogus) inflation rate GDP would already be a negative number. Contraction currently underway- that's the reality.

The consensus in the marketplace appears to be that we've had a bear market for a couple months and now banks, retailers and homebuilders are a buy. The bulls are so arrogant and they'll be proven wrong. There is no way this all over. No way. We are in the early innings and have a long, long way to go before this plays out.

I came into this week extremely negative on the market. I put my money where my mouth is in a big way. Took too much risk and paid the price. Now we may be about to get hammered, just as I said, but early equals wrong. I accept that. It's hard to put your hand back into the fire after having been burned but that is exactly what I'm going to do. I feel very strongly that we have another leg down coming very shortly.

Holy Whipsaw

Wow. Often the first reaction on Fed day is the wrong reaction. Sure enough on today's crack distribution we rallied 200 pts then turned around and gave it all back (and then some). These markets are nuts. The volatility is insane.

I'm net short again (after getting whipsawed). My line in the sand is 12,500. We'll see what we get now. I feel much better about shorting this market with the crack dealer out of the picture. If we can't go higher from here it is about to get ugly. Potentially really ugly...but I'm not getting ahead of myself this time.

Bernanke Packs the Pipe

Well there you go. 50 bps more. There should no longer be any doubt about Bernanke's willingness to bail out the markets. Do you realize we've slashed 125 bps in a week? Insanity. Obviously you can't be short this market here. It's not the first time Bernanke has de-balled the shorts.

In three days I have given back half of my spectacular profits for the month. Needless to say I'm a bit hostile. Easy come, easy go. I was wrong to lean on the short side. Lesson learned. Time to move on.

This is not over though. The bulls are now in control but those who think that our problems have been solved by the Fed don't understand our problems. There is a whole closet full of shoes left to drop and the bearded one is blowing through his ammo awfully fast.

Bernanke won this round (for now) but I will have my revenge (sometime this year). Mark my word.

Boom!

It's been great while it lasted but my hot streak has come to an end in spectacular fashion. Yes, I blew myself yesterday- losing a mind-numbing amount of money. It always hurts no matter how great the hot streak that proceeds it.

Now it's time to pick up the pieces. I still have a substantial profit for the month and a handful of positions. I'm wrong, I'm gone. It hurts to be wrong (even in the short term) but I'd rather admit it and get out of the way of the Fed than sacrifice more gains at the alter of my own arrogance.

Nothing more dangerous than a wounded bull. Make no mistake, she is wounded and eventually going down for the count...but that's not the business of the day. We're still in rally mode and I'm still not buying it but am forced to respect it. My intention is to protect my remaining equity and live to fight another day.

Trying to Calm Down a Touch

This week is going to be nuts and despite my urge to do so it's not time to do anything crazy. You can bet I'm big seller coming into the week but I'm not willing to blow myself up. The market is going to be there presenting opportunities next week and the week after.

Plenty of time. (I think) We are still in the early innings of an extended bear market.

Stay in the game.

Not Calling For A Crash...

...Only because it's a sucker's game.

BUT...I think we are going to get hammered right here and now. Looks like we might have one more wave down which would likely be more violent than the last. If that is the case it is going to be incredibly UGLY...soon. Honestly, I think we could trade to 11K on the DOW- which is 10% lower from here. Consider the implications.

Why the crazy bearish sentiment on my part? Simple. My watchlist. Going through the list (of like 500 stocks- haven't counted lately) almost EVERY chart looks the same. Broken support/trendline, rally back to previous support/trendline- which is now resistance stopping the advance! I swear it's uncanny how many charts look EXACTLY the same. I have NEVER seen anything like it. I ran through about 80% of my list Saturday and I've had a nauseous feeling ever since.

If the market opens anything but down big on Monday I am going to sell the hell out of it. I'm scared of the risk but I have to do it because the potential opportunity is so huge. Worst case, I'm wrong and get hammered. Getting aggressive with any idea is particularly frightening ahead of the Fed on Wednesday. The risk is much higher than I'm usually willing to take but my intention is to go all in this upcoming week.

The problem is there are so many opportunities that my head is swimming. I want to short chemicals, commercial real estate, financials, transports and oil stocks. I'd short tech too. You could just about throw a dart at the stock tables and hit a good short candidate. They are EVERYWHERE. The key though is financials which have been my market tell ever since last summer. Last week they were strong, hence the general market rebound. Now that they've all rallied back to support (now resistance), well, you can guess what happens next.

It's also worth pointing out that my upside target was hit- 12,500 on the Dow Friday morning and we've been down ever since. I was hoping for 13K but no such luck. Unless I'm wrong and we rally through 12,500 next week as Bernanke's helicopter buzzes overhead, in which case I'm gone.

Not Hard to Believe

Lennar's $1.25 billion fourth-quarter net loss contributed to a full-year loss that topped $1.94 billion and wiped out earnings from the two previous years combined.

ReadMoreHere

Funny. I rent a Lennar mini-mansion. They make a shitty product. We like to walk through the community and count the for sale signs. Speculation was rampant here and the speculators have a hard time selling when the builder is still selling new units- slashing prices and running full page ads in the local newspaper.

New Rules

One great thing about trading markets is that you are always learning and refining your technique. Even the greatest traders feel that they could improve. I learned a lot this week via sub-par performance. Rather than discourage me it serves as motivation to improve my skill set. Along those lines I wanted to list a couple rules that will help me in the future.

These apply to stocks, that's what I trade.

1. When the opening bell rings and you are up 3,4,5% instantly- get the fuck out. Now! Don't sit there thinking how right you are. Don't sit there thinking "wow, maybe I'm going to be up 10% today" because that shit ain't gonna happen.
2. When you are standing on the train tracks and you start to feel a vibration (even if it's barely discernible)- move! Take on foot off, get ready to run- trim positions or hedge.
3. Don't love your positions. Instead love your equity and don't ever let anyone take her away from you.
4. You don't need big positions to make big profits. It's tempting to think that with a big enough position you could make hundreds or thousands of (worthless) dollars in minutes or hours but you could lose it just as quickly. Therein lies the problem. Your plan must allow for you to be wrong because you are not always going to be right.

That's all for now. Eventually I want to compose a comprehensive list which is task I've never completed.

Sending Out A Test Balloon

Initiated five fresh short positions into this morning's strength. Trying to ease back in ever so gently. We'll see how it goes but if I'm wrong, I'm gone.

Let's see who wants to be long going into the weekend.

UPDATE: Damn I'm good. Took a little nap and woke up richer.

Hibernation Waning

Seeing an awful lot of opportunity again. Despite my plan to stay on the sidelines I'm starting to like the set-up here. My watchlist, nearly empty yesterday, is again teeming with shorts.

Futures trading higher tonight. We get a higher open and I'll likely start selling a bit- especially if it fades. If we open and stay strong all day I may continue to wait. Feel like waiting is the smart play (and we should run higher) but when that nice set-up happens I have to take it.

I went to bed last night with no risk. Took none today. Nice break and now I'm ready to start cracking some skulls.

Don't love the idea of putting too much on the line ahead of the Fed. Although it seems disappointment is a distinct possibility.

Broken Routine

On my seven month winning streak I have settled into a now familiar routine. Lately at least that partially consists of finding stocks to sell and cursing bulls.

Now I sit on the sidelines feeling like I have no purpose or utility. Spent the morning watching cartoons and "The Cosby Show" and "A Different World" with my infant son. Always liked Dwayne Wayne. Sinbad is cool. Had some leftover pasta for lunch.

Keeping an eye on the market as it yo-yos back and forth wildly and without any direction. Trying not to watch too much. As much as I want to be out, looking at it makes me want to trade it.

Historically I'm not too good at sitting on the sidelines. No matter what my instincts tell me. Couldn't resist entirely and shorted some LAZ- low risk with a stop just above $35. See.

One parting observation: Jon Stewart desperately needs his writers back.

UPDATE: Closed LAZ short for quick lunch money profit. Bet it goes lower from here but I'm not putting any money on it.

The Gameplan

After closing it down and going flat yesterday afternoon the market proceeded to completely and utterly de-ball the bears. We ended up a couple hundred points on the DOW. The range for the day was something like 630 pts (or 5%-ish)! That's ridiculous. If you can trade this market, you can trade any market.

I was laying on the beach with my profits safely on the sidelines. Life is good.

You would think as a bear I would be rooting for the market to go down hard immediately. You'd be wrong. I don't want to see this thing crash or go down all at once. I can't trade that. We need this rally (bulls and bears both) to calm things down a bit. Frankly this last week or so has been very stressful and we need to take the edge off.

12,500 on the DOW seems like a good short-term target but I'd really like to see 13K. Think of how many bulls we could sucker back in on a rally of that magnitude. For us to see 13K Bernanke is going to have to give the market another hit off the pipe (50Bps is what they want). Not sure that will happen but he is the market's bitch so anything is possible. I'll probably try to sit tight until the Fed announcement on Wednesday, then re-evaluate. I could see a scenario in which the bearded one disappoints the market and we go down from there but hope to see something more sustained to the upside.

Worth noting: the metals have held up nicely.

Sweet Jesus

We've lifted a good 200 pts off the lows now. The volatility is insane! I have cut my largest positions back to a more manageable size and put on a hedge. I still remain net short- 10 shorts, 2 longs (added one this morning) and a hedge which will come off by day's end.

UPDATE: Make that 300 pts. Unreal! Back to flat on the day. I took off my hedge too early (for a nice profit) and covered a couple other things. Still net short, but to a lesser degree. Stops are in place. Today could have gone better for me as too many profits have been returned to the market gods- like yesterday. But I'm up. A bounce would be just fine with me. Let's all just calm down a bit.

UPDATE II: 400 pts now. I'm gone. Basically flat. Not pleased with today's P/L considering where I was this morning but I'm still up (some). Now that I'm off the train tracks I hope we rally 500 pts from here. Go Bulls! Sometimes the hardest thing to do is admit when you are wrong and at least for this very moment it's wrong to be short just about anything. Hopefully we rally big thereby offering better entry points from which I can further emasculate these bulls.

Off to the beach. Have a nice day.

Now What?

We've tested the lows- trading just now to 11,644 on the DOW. The dip buyers are out, calling a bottom I'm sure. I want to get out of the way but I love my positions and I've decided to sit tight.

Only thing I did was to take off my long position in REW which is a 2x short technology ETF (up 16% this week). Considered covering my DECK short- seeing as it's down $16 today- but I think it's a trend line break and likely to trade much lower eventually. See if I can stick with it.

Bulls better hope these lows hold.

Goddamn It...

...I hate this fucking stock. I short it and it goes against me. I cover and it reverses.

BXP- one day you will break support and I will be waiting. It might actually be done bouncing higher here but I'm a little bit gun shy considering my recent experience.

Courage in the Face of Uncertainty

I could probably count on one hand the number of times I've been as lopsidedly short as I am right now. After the action yesterday morning (potentially a key reversal), to stand in there in the afternoon and be a major seller was perhaps one of the ballsiest moves I've ever made. Sure I was uncertain (even taking down some exposure into the close out of fear) but I stuck to what has been working. Stuck to my discipline.

Now, I intend to be paid for my foresight.

Must say- I've talked a lot about the potential for the "shorting opportunity of a lifetime" and (not looking at the indexes but just individual issues) I'd have to say it is more or less right here right now. Technically yesterday afternoon, and I nailed it.

Whiplash!

Well we opened today as the futures indicated- down about 460 pts five minutes after the bell. How much worse would it have been without the panic 75 Bps emergency inter-meeting Fed cut? Anyway, from the lows we then proceeded to rally 430 pts- virtually in a straight line- erasing most of the losses.

As a bear this is a gift. Not only does the market now present you with better entry points but in the process Bernanke used some heavy artillery. That shady bearded bastard only has so much ammunition. Now the inter-meeting cut is out of the way. We know the addict will get even more crack when they meet next week.

Today the dip buyers were out in full force in the belief that we have been saved by the Fed. Oh and the "second half is going to be really great." I tend to disagree. We are in the early innings of this unwinding. There is a whole closet full of shoes waiting to drop.

I sucked today. Really did. First bad day of the new year. I KNEW LAST NIGHT EXACTLY WHAT WOULD HAPPEN and still botched it somehow. Didn't cover (as I intended to) my shorts into the weakness this morning. Looking a gift horse in the eye. My broker's website (those dirty hatfuckers) CRASHED (which I actually had considered also ahead of time) and was down for two hours as the market shot straight up. After that I generated a bunch of commissions as I had no idea what the fuck I was doing- changing my mind every 10 minutes.

Bottom line. Once I settled down and ran through the charts on my watchlist I saw a bunch of appealing opportunities on the short side. Started selling and by the time I stopped had an awful lot of exposure- risk. Problem is, I could see the DOW rallying a good 500 points higher from here. Scary. Perhaps ill-advised. I'm willing to risk it because I feel it's the disciplined move to make. I have been successful by making low risk trades and cutting my losers. The charts I see are beautiful. There are a bunch of near-perfect set-ups. If I'm wrong I'm gone.

Either I am wrong- in which case I go flat-ish into the Fed meeting securing a great month based on what I did early on. Or I'm right and win big. I should know real soon.

AAPL disappointment should help.

Dislocation!

Today is going to be nuts. DOW futures down 500 overnight, S&P futures down 60. Bernanke cuts 75 Bps in an attempt to delay the inevitable. Paulson out banging the table on a stimulus plan.

Usually avoid watching CNBS but I couldn't resist this morning. Funny shit- I really think Jim Cramer's head might spin right off his shoulders. Gotta get back to work. Much much more to say on all this later. Good luck out there.

What Did I Say?

I love it when a plan comes together.

At it's worst levels on Friday YHOO was down 15% or so for the week.

Earnings: Pain In My Ass

Saturday morning of a three day weekend and I'm at the computer trying to read the tea leaves. Going through earnings reports for next week and damn there is a TON of them. No less than 33 companies I follow report on Tuesday. I'll be spending a good long time going through the week's list. This exercise isn't going to make me any money. The idea is to keep from getting blown-up unexpectedly.

Funny. Friday afternoon (after the close) I'm in the shower and I think to myself- "you know I probably should be doing my earnings (to report) list on Friday because if an issue held reports on a Monday morning I'm screwed." Sure enough. I go through this excruciatingly long list of reports for Tuesday and get all the way to the U's and there it is, the one that's going to get me- UAUA. That thing will move 10% in the blink of an eye. Truly it's a beast. My 200 share short position could impair me to the tune of a G-note, no problem. Nice. Vegas style. Have that to look forward to when we return on Tuesday.

Come On Now

Damn it this bounce better hold. We need it to suck in more losers (bulls).

UPDATE: These bulls really suck. Bounce has been completely erased. I managed to find some ideas to take advantage. Maybe I'm not going to get trimmed today after all. (?) Also, watching BXP closely- I know that puppy wants to break.

UPDATE II: Scratch all that nonsense about my first real losing day of the year- just turned green. HAHAHA... Unreal.

It's About Time!

This is the first trading day of 2008 that I've had real losses. Sure I think there have been a couple days where I dropped maybe a couple hundred bucks but nothing significant. Losing is never fun but frankly I'm real glad to see a bounce and even if I have to run for cover I hope this bounce continues. It's been getting real hard to find good entry points with the market so oversold. Hopefully the bulls can remain in control for awhile.

The unfortunate part is that it's Friday. I hate losing money on a Friday because I'm a loser all weekend long- and it's a long weekend. I remain modestly green for the week but overall am disappointed in my performance this week. Better believe I bring it next week.

Sweet Anticipation

Pssst. BXP. I'm still waiting. When (if) you finally break I'll be there.

Last Mention of Missed Opportunities

Covered it yesterday on my way out the door. Down 8% today. Feel my pain. Although I suppose it's less acute than the pain of the longs. HA.

Shut Up and Take the Money

The market was eviscerated today. No surprise here as it's exactly what I've been looking for. To my dismay I had a solidly profitable day instead of the obscenely profitable day it should have been. Shut up and take the money.

If we bounce? Shut up and take the money. Get out of the way. We are oversold and aren't likely to go straight down. Unless we crash. Ha. Also I'm seeing a lot of broken support and broken trendlines and we could bounce to test the underside of these confirmations.

The VIX broke out which augurs for more downside but I'm not convinced it means anything.

So here we are. I still see a variety of bearish trade ideas but the best (and my favorites) have been missed. Insurance stocks look vulnerable.

One thing that surprised me today was the severity of the sell-off in commodity names. This weekend I noticed ominous looking patterns in steel stocks. Other basic material names looked ripe for a fall as the week went on. I sort of missed the fall in the oil stocks altogether. This again goes to show that when in a bear market there is no where to hide. Oil will come down with slowing demand. Of course the long-term bullish supply/demand story with oil is still intact but over the course of several weeks or months it may not matter.

Friday (tom.) is OP-EX. I just want to survive. Get out of the week intact best I can.

Sitting here tonight at my all-time highs. Best month ever (so far). One quarter of the way to my profit goal FOR THE YEAR. Damn I'm due for a reversal of fortune. Not that I plan to give too much back. I will protect gains. Rest assured -this is my year.

Bulls Win in a Blowout

The Bulls won. 126-96 over the Heat. How can Miami be so awful with DWade?

I think it's fitting my two favorite sports teams are the Bulls and the Bears.

Had fun last night. Perhaps too much. Now back to work.

The downside is that I closed out a bunch of shorts yesterday mid-day simply because I was leaving my office and didn't want so much risk. It was nice not having to worry about it while I was on the road but from a trading perspective it was not my best move. Oh well. Easy come, easy go. To compound the situation I didn't get my homework done last night, woke up late in a fog after sleeping through my alarm and was a deer in the headlights when the market opened today.

It's been a good week but I can't be taking days off. Opportunities were missed as a result. Also closed out some very nice trades that had room to run. That's two days off in two weeks and really it takes me another day to catch up after taking one off.

Yet I did make money yesterday (not near what I could have) and I'm making more money today (despite my aimlessness and general confusion). Breaking the routine is bad. I think I'll recover. It's still the best month I've ever had despite my lapses. I'll have more to say on this later.

That Was Quick

Just covered half of my YHOO short down over a buck. Nice-nice. The remaining position is still of significant size as I believe this stock trades much lower in the near future. So why cover half? Simply because when things work so beautifully it's best to take some profits. Besides it was a big position and I tend to get jittery with large positions. Better to cover some on my terms. I'll be travelling and away from my desk this afternoon and don't want to be wondering/worried about whether or not I'm getting run over.

Verge of a Breakdown?

That's my bet on YHOO. I hope to be getting some help from a weak Nasdaq today. By my standards, the bet I've placed here is an aggressive one. Let the games begin.

Impending Market Meltdown?

Today was huge. The DOW sold all they way down to the August swing low (12,500). After the close, INTC disappointed and the futures are down to where we would open convincingly below the major swing lows on several indices. This is it folks. Wouldn't be the least bit surprised to see 500 more points come off the DOW. In short order.

Also wouldn't be surprised to see some sort of intervention in an attempt to prop the market up. Bernanke and Paulson are pure evil and they've pulled shady exercises repeatedly.

Barring unforeseen intervention, tomorrow should be a rich day for the bears. But we'll see. I'm anxious with anticipation and I have a lot of skin in the game. I'm certain Wednesday will be very interesting.

Unfortunately (from a trading perspective) my day will be cut short as I will be out of the office @ 2:30 due to travel arrangements. Looking forward to my trip but it will be a hectic day.

Prepared to Pillage

There will be no more rooting for a bounce around here. I am now officially up to my eyeballs in short sales. Still have some longs on my books so I'm not entirely lopsided but I'm solidly net short.

To reflect the considerable opportunity that I believe awaits us directly ahead I have even broken my own rule. I religiously remove substantial profits from my trading account in order to keep from getting too aggressive or unbalanced. Recently I did just that, removing a fat wad of cash. Well, it just went back in. Every penny.

If the opportunity to aggressively attack this market from the short side does in fact present itself I will be ready. Bulls you have been warned. I will burn your huts to the ground. I will rape and pillage. I will slaughter all your livestock and pollute your well.

OK. Maybe I'm premature. We'll soon find out.

I leave you with my best trade of the day: came into today short 200 RCI. Doubled my position after it tasted resistance @ $40.50. Got it @ $40.25, covered 100 @ $38.40 and it trades now @ $38.60.

Churning and Flagging?

Is that all we are doing right here? Starting to feel that way. I have been hoping for a sustained rally but it hasn't happened yet and I feel like the clock is ticking. As a result I'm getting more aggressive on the short side.

Covered...

...the aforementioned BKS short. Could it trade much lower still? Sure. Do I care? No.

Give me some props for this one.

On the Important Matter of Being Wrong

Watching NFX for a breakout. I've been waiting for this one for quite awhile. Added to my (long) position this morning.

As for IBM, well sometimes you're wrong. When that is the case, you close the trade. Period. You don't give it more rope. You don't try to justify it. You don't make it an investment. You close it. Get out. If your thesis is proven wrong you exit.

In today's example I got a bit lucky. IBM traded $107 and change pre-market then has traded down since. I covered at $102 and change. The total hit wasn't too bad considering. I still feel that IBM goes much lower and will revisit the idea shortly.

IBM Pulls a Fast One

We are just tipping off earnings season and already I've gotten burned. According to Earnings.com IBM was due to report Thursday after the bell. Well, to my surprise, they announced this morning and I'm getting run over by the strength in the name (which I come into the week short). Not happy.

The upside is that we are looking to bounce again, which I did expect. As a result I will not be looking to initiate new positions into this strength today. Ideally we can carry this bounce through the bulk of this week's trading and I can get more aggressive on the short side towards week's end.

Good luck out there.

Weekend Review

This market is mortally wounded. Frankly I'm somewhat surprised we got hammered the way we did on Friday. Obviously, I had been anticipating a more extended bounce. It may still play out that way but, on the other hand, if we take out 12,500 on the DOW it's incredibly ominous.

Speaking of Friday, mine sucked. We dropped 246 pts on the DOW and I was flat on the day. Awful. I have consistently made money on these big downdrafts and feel as if I missed out. To be honest, I have to admit to losing focus last week. Wednesday afternoon I was up 3% for the day when we rallied hard off the 12,500 level -completely erasing those gains. Anticipating follow through on the bounce I took down a lot of my short exposure. For the rest of the week I basically sat on the sidelines instead of putting my cash to work.

Too much defense being played on my part. Time to be a man and claim my stake.

Going forward, we are heading into earnings season. Next week we have economic news in the form of CPI, PPI and jobless claims. A handful of financials report, including C, JPM, MER and WM among others. I'll be watching for IBM, a name I'm currently short, to report on Thursday.

The watchlist is ripe with (primarily short) candidates. As I went through the list this weekend the opportunities were just jumping off the page at me. I expect the upcoming week to be a good one. I'm a terrible trader really but my substantial predictive powers seem to be at their peak.

If I had to guess, I'd say we bounce higher early next week. Should that be a poor guess I will look to get aggressively short on a break of the lows. Hoping for a bounce that sets up the shorting opportunity of a lifetime. Could happen or could just be wishful thinking but I'm relatively certain of the end game.

These Things Happen

For the most part, my defensive action in the face of yesterday's rally was the right move (everything covered trades higher this morning). The exception? BKS. Must say I was not pleased to see it open down 9%, having covered it. After the big gap lower it traded back up and tested support from below ($32)- which is where I re-entered the trade. That's working nicely but I still missed the bulk of the move (2 pts. on 400 sh.= $800 left on the table).

Bears Sacked, Fumble, Bulls Recover

We rallied (on the DOW) from 12,500 to 12,735. In under two hours. Closed up 146 pts. Damn. Now that's the kind of rally I've been expecting. This is it, the big set-up. My expectation (and projecting the indexes is not my game) is that the DOW trades to 13K. Bottom to top- 500 pts. Point is: we go higher.

It doesn't really make much difference to me how high it trades. I got out of the way. To be specific, I was 3%+ (for the second day in a row) this afternoon when the rally began. Two hours later I had given every single cent back. As bad a taste as that leaves, the important thing is that I gave back TODAY'S profit not yesterday's profit or last year's profit. Really should have went long an index right away to hedge but did not do so.

Still expect that my account will be under attack just because I have a bearish bias, but I have no intention of standing on the train tracks net short just to get ran over. Just because I'm stubborn or something. Nope. I closed my beloved, recently doubled down BKS position (and a bunch of other shorts). My broker makes a bunch of money off of me and I should get better service.

The idea is flexibility. Especially on the short side where I'm quicker to take a profit. The longer you sit there telling yourself you're right while losing money the bigger the mistake becomes. When you go to cash you can think clearly. Maybe you were rightly positioned to begin with, in which case you can always re-enter.

Those who do not have the possibility (inevitability) of being wrong built in to their plan are losers.

I've been a loser before. It sucks.

My emotion is indignation. Don't fuck with me Mister Market. I'm keeping my profits.

Today the enemy brought significant reinforcements to a battle I was winning convincingly. My portfolio is a small force of like 50 insurgents, half of which have guns, mostly small sidearms. The shoes on our feet are worn through or made of leather. Our uniforms are disheveled and we're sleeping bivouacked in the mountains. We run when overwhelmed because we want to live to fight another day. Not die in a last stand.

Tonight I've got a ton of cash. Net long. Within a sneeze of my best month ever. Time to trim the account and pay myself a bonus. No time for a vacation though, I'm plotting my next attack.

One Idea a Long Time in Coming

Here is one I'm watching: BKS.

In a recession who the hell is going to be spending money on books?

Whatever. The fundamental analysis is totally inconsequential to me. What I see here is a ton of support just below where this issue is currently trading. I'm anticipating a breakdown. Along those lines I just doubled my short position (one which is already nicely profitable).

To be clear, should support hold I'll be long gone. In the meantime I'm willing to risk the profits I already have on an idea I've been waiting a long time to develop.

Late Christmas Present

The day after Christmas I shorted ATI @ $88.98.

Covered it this morning @ $73.98.

That's 15 points in 10 trading sessions! Whether it trades lower from here (likely) or not is now irrelevant to me. I have declared victory.

Early Mornin' Stoned Pimp

Net short. Market averages higher across the board (up a hundy at one point as measured by the DOW). Yet I'm up again. Odd, no?

Believe it or not my longs are doing the heavy lifting today. GENZ is breaking out- as I said it would. My small RAI position is up 3% and the metals are looking to turn positive after spending the morning in the red.

My shorts are also contributing despite the green hue. YHOO which I aggressively shorted within a half hour of claiming to respect the bounce (as I said here yesterday) is down another 3%. YHOO is making new lows and remains on borrowed time as far as I'm concerned.

My expectation is for a choppy market here as the bears become increasing emboldened and the bulls try harder to deny reality (recession, bear market). Additionally earnings season is just kicking off and the market will react to the vagaries of earnings season. No time to be a hero. Took down a few insanely profitable shorts just to bank some profits and remain flexible.

If I were to be a hero, which I already stated will not be the case, I would short the living hell out of the dog they call YHOO.

'Subprime' Named Word of the Year

Forgot to mention yesterday that linguists as represented by the American Dialect Society have named 'subprime' as the word of the year for 2007. Link.

In 2008 the word of the year will be 'litigation'. Ha.
Runner-Up: 'change'. But we hear that every four years.

Welcome to Your 2008 Bear Market

So much for the bounce. That lasted all of a day and a half before the bulls were utterly annihilated.

It's safe to assume that every index has broken convincingly through key support. Welcome to your 2008 bear market. For anyone not paying attention, we are already in a recession. Not technically, but if you were to use real inflation numbers instead of the government's bullshit numbers we have been in a recession for awhile now.

Ofcourse, having made so much so fast on the short side I'm wracked with anxiety. The bounce I allowed for off of the lows can now be expected to take place from a lower level. My expectation is that at some point probably soon we will test the key support levels from below. A failure at that point (should it play out that way) could present the shorting opportunity of a lifetime. No exaggeration.

My advice to you (again). Take cover.

Treading Water

Not afraid of this bounce (nor a believer in it) but I'm going to respect it. I have exited a couple short positions just to be safe. Frankly, this bounce seems weak but these are key levels we are flirting with and there is nothing more dangerous than a wounded bull. Live to fight another day. I've had an incredible run and don't plan on giving anything back.

Today is another profitable day (thus far). Closed out my CROX position this morning at $28 and change. Somewhat disappointed initially as it had traded lower but now with it bouncing back over $30, well, I'm OK with it. I'd like to short that dog again but have other ideas more appealing for now. Hope to revisit it.

There are opportunities to be had now. However I will play it a bit safe. I'm not going into bunker mentality as in December after a fast start but I will operate primarily to preserve profits in the short run. If January does not continue my winning streak I will have done something drastically wrong.

Countrywide on Thin Ice

Apparently CFC was halted shortly after 1pm est so they could deny rumors of impending bankruptcy.

A Short I Should Have Stuck with Longer

CFC is down almost 18% today and now has a six handle. Ouch. Pull up a chart of that one.

Under Attack

Big picture: we are literally perched on the precipice. This market has no margin for error here. A couple bad news items and we are going over the edge. With earnings season coming up we'll have no lack of news. The outlook for the upcoming year will be what market participants are listening for. How good can the outlook really be?

In the meantime this is the bulls last chance to turn this thing around. We are now bouncing for the second day in a row. Today is a bit more convincing than yesterday.

I am net short again. Haven't done much this morning other than give some profits back. I've trimmed a bit but I'm trying to hang in there. Although if this market is going higher short term I will be forced to take cover. Hesitating to do so is a mistake I cannot afford. The profits I've made are mine and I will not give them back.

Let's see what the bulls can muster.

Damn Those Shoes Are UGLY

Sticking with my CROX short despite the fact it closed down a hefty five bucks on Friday has worked out pretty good. I covered half of my smallish position this morning at $30/share- for a profit of ten plus points. The other half has traded as low as $27 and change this morning. At the lowest point down another five bucks on the day. It has bounced some since. At this point a bounce would be nice. Thereby allowing me too short this dog again.

The market as a whole opened strong this morning- and I was up. The market coughed up it's gains- and I was up even more. Really hoping for a bounce since I'm now underexposed to the short side but I do have dry powder.

Longest Watchlist Ever

My watchlist for this week is 264 stocks. Jeez. That's a lot. If there are opportunities to be found I'm going to dig them up.

Going through the master list I noticed many opportunities missed owed to the fact that I didn't quite have enough capital to short 150 different stocks. That's alright. There are new opportunities every week and I will get mine.

Overall I'm pleased to see many opportunities still exist here and now. Just not near as many as before the mauling of last week. Still plenty of names yet to break support.

One to watch? YHOO. Looking for this perennial dog to take out support so I can get involved with an old name which has been good to me in the past.

Tech generally has just started to work on the short side. Many tech names are just now breaking down as the market realizes the idea that you can hide out in tech during a recession is pure fantasy.

Late Night Musings

To quickly recap Friday: the bulls got mauled.

As a bear I'm figuring that the eventual bounce will be extremely violent in nature. Worthwhile to keep that in mind to prevent yourself from getting too aggressive on the short side. Ultimately this market is headed lower. No surprise on my part.

The first three days of 08 have almost been too good to me. Huh? Well I have that sinking feeling that I'm about to be severely corrected. Call it a conditioned response. Make a bunch and give a bunch back. Growing in fits and starts is my trading history. But I've had the sinking nervous feeling over and over for months yet have not crashed.

Halfway through my weekend homework I see fewer opportunities than in previous weeks. Serious damage has been done and many names no longer offer favorable entry points. Naturally every idea I didn't play last week worked beautifully. Fully invested there was not much I could do to initiate new positions. Close something just to move it to something else is a matter of getting too cute.

Profits have been booked. Capital has been raised.

Again I left money on the table by downsizing my commercial real estate shorts modestly towards the end of last week. It's instructive to point out mistakes and such as the purpose of this blog is to continue to grow as a trader.

Back to work. Carry on.

NOTE: CROX closed Friday down five bucks.

Just for the Record

I'm short CROX...and loving it. They make what have to be considered some of the ugliest shoes ever made. I'm clearing out some positions but not this one.