Wednesday, February 27, 2008

It's time to get REAL!

I wish I could stop being a trader for a little while and just take a deep breath and just buy $1.000,000 worth of puts on the brokers, the banks, and tech for like Sept. of ghis year. There's simply no shot that by then the market isn't making new lows, and it could get beyond ugly if/when a few banks go under, which they unfortunately will. Citi is trading like they could be in trouble. Could Citi go under? I don't think so, but I wouldn't be shocked by it either. These banks are so loaned to the hilt, I read that Student loan defaults are through the roof. If people can't pay their student loans, they certainly can't pay their mortgages. I had a dream, GS is below $100 this year. I think $75 is realistic on GS in 2008. GOOG has already started to crack, it'll be less than $200 by year end. #1 rule of investors? They always underestimate the problems and potential downside and they always overshoot the upside. I can't believe that Bernanke is still preaching that we'll avoid a recession. If we're not in a recession already, then what do you call it? There are now BLOCKS and BLOCKS of empty retail space on BROADWAY on the Upper West side. Not just a few, but literally whole blocks. The notion that this could possibly be a short lived thing is so preposterous it's simply outrageous.

This from the WSJ tonight -

Dealers having difficulty selling variable-rate demand notes - WSJ
The Wall Street Journal reports a new round of higher debt costs confronts some states and cities as another part of the credit markets runs into trouble. This time, the culprits are variable-rate demand notes. And banks that guarantee they will act as buyers of last resort face something they never expected -- having to purchase many of them at once. Variable-rate demand notes let issuers borrow for long periods -- but at short-term interest rates. Like auction-rate securities, interest payments adjust on a weekly or even daily basis. The difference is that for variable-rate demand notes, securities firms sell the debt at whatever interest rate meets the market's demand. The problem: Just like many issuers of auction-rate securities whose interest costs soared after auctions for some of their debt failed, an increasing number of municipalities are being hit with sharply higher interest on their variable-rate demand notes because dealers of the debt are having trouble selling it. Last week, rates on $300 mln of California's variable-rate demand notes rose to 8.25% from 2% the previous week. "This is an amazing confluence of problems that no one expected to happen," California Deputy Treasurer Paul Rosenstiel said. "The entire floating-rate [municipal bond] market is in disarray," said Michael J. Marz, vice chairman at First Southwest Co., a Dallas financial adviser to governments and municipalities. With variable-rate demand notes, securities firms unable to sell the debt -- as has been happening for the past couple of months -- have the right to essentially turn the bonds over to a bank that has guaranteed to buy them. When the backstop banks buy the bonds, the debt turns into so-called bank bonds. The interest payment rises to the prime rate - or an amount even higher than the prime rate, now 6%.

LOOK people, it's time to get REAL. Wishful thinking is not going to protect you, or make you money in the market. This crisis, and it is indeed a crisis, is going to get a LOT worse. Cutting rates, giving $600 checks out is NOT the answer. We are going to washout in a big way and then at some point in the next 2 - 4 years find a real bottom. The notion that we have "bottomed" is, and I am repeating myself because it is so completely ludicrous, well, it is - LUDICROUS! And, for those of you who watch the Fed speak and say it'll be fine and believe it, let me ask you something - do you think the Fed would #1 know if that was true. #2 say the truth in an election year when the incumbant party surely will get crushed if things completely fall apart and they hired you in the first place #3 - the saying "don't shoot the messenger" applies here. NO Fed Chief wants to be on the hook for the impending financial market crisis. Housing stocks have rien nicely lately, if you own them I'd suggest selling or at least protecting yourself with puts to avoid a cracking when they get crushed.

In the meantimee, the GAPS have been AWESOME, today was another day the market gapped down and then rocked before settling back late day to be virtually flat.

Let's rock on Thursday!

Michael "Waxie" Parness

Michael Parness

Thursday, February 21, 2008

Down da drainnnnnn!

Well, once again, like a broken profitable record I can safely say that fading the open in this market is the best strategy ever. We opened higher and then quickly sold off and closed near the lows of the day! The RUT was over 24 points lower from High of the day! That's a HUGE reversal and one we caught nicely!

I'm beat, but I expect us to get the same fade off the open today. I thnk any really big move up will have to be on a gap down or intraday reversal. It seems unlikely that they'd buy the open and keep piling in.

In the meantime, keep TrADING and keep RULING111

Rock on.

Michael "Waxie" Parness


Once again fading da gaps proved to be a HUGELY profitable trade on Wednesday!
The market gapped down and then reversed and mounted a very nice rally which we caught. SWEEEEETTTT!

Today we look set to open up. It'll be an interesting day because I would expect us to fade the gap a bit, but then we get actually get a nice two day rally. We shall see soon enough. I'm hoping we get the S & P's to remount 1400s because I think that'll set up a really nice short in the not to distant future that will have us retesting the yearly lows, and probably busting through them to the downside. In the meantime we'll just keep tracking the volatility and relying on the market to give us our daily Ka-chingos!

Rock on! Watch the solar sector today for some trades. Use 10 am rules on that sector in particular as I think if we do get some further upside here they may play catch up. FSLR, SPWR, etc.


Michael "Waxie" Parness

Tuesday, February 19, 2008


OK, so Tuesday was a nice way to return from Presidents Day (should we even celebrate that holidays given the state of our current, well, ah, current President "dilemma"?

Market had a HUGE gap up, over 1% all around and yet once again the selling intensified and all around we finished RED, with volume to the downside CRUSHING volume to the upside by a HUGE margin. Folks, this market is a traders dream and you really need to be taking advantage of it by trading it and fading it. We couldn't get a better setup then gapping up on NO NEWS in a big way! We shorted BIDU for over $11. We shorted FNM for $1. We shorted the hell out of the open and we ROCKED it!

SO, where does that leave us for Wednesday? Well, I think we get a really nice move and trend day Wednesday. It looks like we'll gap down and so hopefully we get a nice selloff and then can launch a super rally that may have some legs here. It might be wishful thinking however. If we can't reverse a nice gap down and we close near our lows then I think the market may head right back to the recent lows before trying to form a double bottom.

Brokers are still cracking and I think its important to heed the fact that GS in particular could not remotely hold its gap up, even after posting an impressive gain on Friday which seemed that it might be a reversal for a move higher. I think GS sees $120s or lower at some pt this year. I think anyone calling for a real bottom, not a trading bottom, is just a snake oil salesman. There is no shot we have anywhere near a bottom, its going to get MUCH MUCH worse in the long run. DOW will be under 10,000 in the next 12 - 18 months with my guess it happens THIS YEAR! That would mark one of the worst years in market history.

Watch BIDU for further downside, this thing looks headed for sub-$200 near term. I'd also watch the $RUT.X. I think it'll be below $600 within 90 days. Yes, I am bearish, but I do see us getting a nice trading rally here shortly as well. That will then set up a VERY easy shorting opp. I hope I'm right so we can catch it both ways.

In the meantime, keep shorting FNM on any non-news related gap up, its pretty easy money at this point it appears if you play that. That stock is headed for sub-$10 this year. There's just no reason to own the financials here, folks, don't get fooled into the notion that the bottom is in. It ain't, even if we do get a relief rally here this week.

See ya tomorrow night, make sure you sign up for a 2 week free trial @


Michael "Waxie" Parness

Sunday, February 17, 2008


OK, I hate to sound like a cliche, but due to popular demand, I'm BADK!
I'll hopefully be able to keep up a daily blog here. Please feel free to comment. Though I'm often the only one talking to me, myself and I, its nice to once in a while have someone else in the universe to hear from.

This coming week should be very volatile. I think we're likely to stay in a range here. While I am longer term VERY VERY bearish, short and intermediate term I think we chop around and trade within ga range of let's say 11,400 to 12,800. I do think we should hit 13,000 on the DOW before we crash and burn so I'm not shorting with abandon - YET! I am putting together a new "Grinch" type list with 10 stocks that I believe will fall at least 50 - 75% in the next 12 - 18 months (probably sooner). While I am sure there will be oogles of money made on the LONG side, I think ultimately in 2008 being SHORT is where you will make the bulk of your money. Sorry I'm such a bummer, but I call it as I see it!
We're gearing up for the WORLD SERIES OF TRADING Las Vegas seminar March 9th to 20th. I urge you all to attend, period. Two weeks of live trading, while there is no guarentee of it, we've never had a Live trading seminar where most prople didn't completely kick butt and even cover the seminar costs PLUS a bundle! The last two seminars I made $121,000 in 2 days with a portfolio of roughly $75,000 in buying power and I made 40% on a $50,000 port in Sept. at our NJ seminar in two weeks of live trading. No joke, we rock live!
Meanwhile, around the globe, shocking as it is Clemens appears to have been caught with his hand in the lying cookie jar! They should strip the Yankees of the 2000 World Series, clearly my Mets would have won if all the Yanks we're abusing those things! Right? OK, maybe not, but still we should get it!

Whichever way we open Monday, if its decent gap up or down I suspec it'll make a very nice fade. We'll see. More later. Happy Presidents Day! Prepare to rock this week, I know I am!!!


Michael "Waxie" Parness