Tuesday, July 22, 2008


Dudes and Dudesses, we need to talk!

Yes, that's right, YOU and me, we need to have a little chit chat, ok?

Today I got a couple of emails from people who read the blog. They were upset because the market is rallying and WAXIE said that LONG TERM the market is headed south!

In fact, one dude said that he read the blog and and he had taken SKF long and is wondering why it's not $250. In fact, he tried to sell it at $147 and just missed by 10 cents and is now "stuck" with it at $121s!

OY VEY. Double OY VEY.

1st off, let me set the record straight. I would not suggest you trade off longer term ideas without a trading plan no matter what.

2nd off, we SOLD SKF right near the open for better than a 50% gain on 3/4 of the calls that were called for OPTIONS TRADER clients yesterday, with the PLAN to stop out of the rest at plus $2 on the calls, which we did stop out of that last 1/4 share lot. So, overall the profit % was roughlly 45%! IN ONE DAY!

We are TRADERS, folks. We don't buy SKF and go "gee, let me ride it for $125" Does that and could it happen? Yeah, it could, but at some point you have to SELL and BOOK PROFITS - OR - sell (or cover) and eat a SMALL loss!

3rd off, I am not sure trading off the blog here is a great idea, particularly if you don't have a real hard and fast PLAN! I'll repeat - we do NOT INVEST!

That means we don't invest LONG, and we don't invest SHORT! Yes, I think we are headed lower and this is nothing more than another Bear market rally that will end ugly.

BUT, along the way we will get MANY MANY MANY rallies, and falls, falls and rallies. We're TRADERS, not investors! Riding a stock from $147 to $121 and saying "now I"m stuck with it" will get you one thing and one thing only - DEAD BROKE!

Hopefully that clears things up.

Now, as far as tomorrow; we will probably chop around a bit. I would fade the open either way, we're overbought here and if we gap up decently it should make a good short, at least for a trade. I would be surprised, but not shocked, if we got much traction either way unless there is some news that moves us. Oil looks shot here, Thursday is the expiration of this month's oil contract and Oil MIGHT get hammered to $125, which would be a nice pin job for them. We'll see.

Someone asked why the airlines moved so much % wise. Ah, the beauty of catching a short squeeze. The market moves mostly on PERCEPTION. Anyone notice that a few days ago the sky was falling and now those same stocks are all rallying like crazy and funds are panic buying them, despite the ridiculous moves they've all had so fast? I mean, GS was $152 and closed today nearly $190! That's a SICK move. Many of the financials have DOUBLED in a short period of time. No, that can not be sustained and won't be. PERCEPTION is that we're still on track to have an economic rebound. I'm sorry, but that's really ridiculous and not based on anything other than wishful thinking. This rally may get a wee bit more, but we're setting up for a very nice short, and yeah, we'll get back into the SKF shortly here. In fact, its looking MIGHTY yummy right about now. If it dips to around $115 to $117 I think its time to stick toes back in the water for a TRADE, but we shall see what shapes up. SKF was $100 about 6 weeks ago, went to over $200 last week and is now down roughly 40% in a few days! That's absurd! Absurd, but thats what happens when you get a big short squeeze and the government restricts, even if its just PERCEPTION, some shorts way of doing things. So, its unlikly without news that we give this up right away. It may be a stair case down this time. We are now back in that denial phase. It's funny, I walk around New York and EVERY DAY more and more stores shut down, but Wall Street and reality take a while to meet and right now, for today, we are all giddy that the bottom is in! If I hear that one more time, I'm going to puke. There is no such thing, its fiction. It's a meaningless word in the markets. It has to be defined. In the meantime, watch for oil to continue to pull back and if so the PERCEPTION may just take us to 1300 on the S & P's. I doubt we got more than that best case in the tank, but we'll see soon enough! RULE! Waxie


IdahoMike said...

Thanks for setting the record straight. As I recall, a few days ago you did say there would be a bounce and that skf would be 130 (it was closer to 190 or 200 at the time). But the longer term trend is down.
Thanks for your insite.

howsweet5 said...

Hey Waxie,

In your opinion,

1. what the heck happened to aapl...neg guidance and stock is back at same level prior to earnings 2 days ago. usually after neg guidance a stock gaps down and stays down awhile.

2. what the heck happened to goog...misses 4 days ago and stock went down and is now climbing back up rather steadily.

3. will the financials keep climbing considering the gov't backing them. i'm an options trader w/ short postions and i would like to hedge the losses in my short positions on the fin. but i don't know if they will cont to climb or at some pt. SOON they will start heading south.


Waxie said...

Thats idaho mike.

Howsweet, remember - TRADE 'EM, don't marry 'em! BOTH long and short!

Sounds like your bias is biting you. AAPL is doing what AAPL does while it remains a cult stock. Funds jump in on any dips. It'll be up again tomorrow more than likely. It's better to catch these are key resistences, or on the way down when they break support. We recalled the SKF at $111 today for chat room clients and for Option Trader and got better than $10 in an hour! How sweet?? VERY!