Tuesday, August 26, 2008

Time off...

I'll be taking some time off, life, and death, happen. My mother passed yesterday and I need to deal with my family. The market has done a lot for me and I am grateful for it and for you all. I try to share what's going on with me because #1 I have a ridiculous life that is laughable at times, and hopefully inspiring or insightful at others, to some. So, I am sharing that.

As soon as I am able to, I will post again. I suspect I'll be posting some next week, until then please trade smart and plan your trade and trade your plan! There are things, we all know, that are indeed more important than whether or not the market goes up, or down, or in fact, whether or not we make or lose money.

Warmest, and be safe,

Michael "waxie" Parness

*thank you all for your well wishes. My moms just turned 65, no need to send me anything, just say a prayer for her if you would like.

Thursday, August 21, 2008

Point 1 finger, 3 point back at yourself!

I read an interesting article today about LEH and CFC. Some of the info I knew, some I hadn't broken down quite as succinctly. In Feb. or 2007 LEH announced that they were buying back 20% of their stock. Over the next few months to a year insiders sold over 60,000,000 of their own shares. Basically, they sold their own shares back to the company. The stock price? Over $80 a share! Now, here we are and the insiders are the only ones who got out and made a boatload. Investors and even employees who kept hearing that the company is fine, got crushed. Country Wide (CFC) had similar actions by their top level management, and similar results. These companies continue to tell the public that everything is fine, that the media and short sellers are overplaying the situation and that in the long run they will work things out. Even today the market rallied on Dick Bove's comments that LEH is a buy here at $13s. And, Bove has been one of the better market callers on the sector, so the financials popped, though not with a lot of heart frankly. LEH is a buy like I have a full head of hair. It's the same thing. If I were to go on TV and tell the audience that I really have a full head of hair, I'm no bald. THAT is the same thing these companies are and have been doing. And, yet NOTHING is done about it. How does LEH buy back 20% of their stock and then less than 18 months later be on the verge of bankruptcy? And, better question - how do they get away with it? Insider trading means trading on knowledge that only an insider knows, thus creating an unfair advantage that you capitalize on. What do you call this? It doesn't take a brain surgeon to figure out that LEH bought back their shares to keep the stock price up long enough for insiders to sell 60,000,000 shares! 20% of LEH that they bought back? 100,000,000 shares. Congress can talk about short sellers and market manipulators all they want, the real problem is internal, its an inside job. Until that is dealt with then the rest is meaningless. LEH isn't a buy, that's hysterical. Maybe it'll bounce again to back over $15, but that whole sector is a mess and its only going to get worse. Someone should be held accountable, but looking outside is a big mistake. Had LEH used that money to shore up their financial situation they probably would be a viable company. 100,000,000 shares at $80 a share is 8 BIL. Give LEH $8 BIL more in liquidity and even I would give them a solid shot to survive. Instead, that money went to executives who had to know what the future held. Why else would their be that many insider sales. Was it a coincidence? Be real. It's a travesty, and unfortunately it will more than likely go unpunished. Keep shorting these things on every rally, I just don't see any shot they will get more than dead cat bounces. As far as the market goes, we look really beat here. Tech is starting to roll over and once that happens all hell is gonna break loose. is that time now? Hmm, probably .not just yet, but that time is coming soon. You know things are bad when even GS can't hold up. I like AAPL short here around $175, and I still like GOOG crash and burn. FNM staged a mild rally on hopes that the FED will come up with a plan to buy stock back. If they do that then they are possibly the dumbest Fed ever. I find it hard to believe they will be that ridiculous, but stranger things have happened, lets hope not. I have another options call tomorrow I'm looking at for Options Trader, time to sign up folks and time for you all to take the BEAR HUNTING class on the 26th and 27th that I and Tiny are hosting. We're going to give several stock and option plays and a spread trade or two to boot! In the meantime, I think we could get a real washout here. I think we bounce before the holiday because the Fed will probably do something post Labor day and shorts will rush to cover before then, so trade with your stops on both ways,. its gonna be a bumpy ride! We're shooting our new infomercial in a few weeks, if you have a good story to tell and would like to be on TV and come to NYC, email me at - waxie@trendfund.com! Thanks! Waxie

Wednesday, August 20, 2008

Biding our time, biting lips and watching the market trade like a crazy dude!

OK, sometimes I watch the market and I think that it's enough to make anyone skizoid (yes, that's a real word in my universe!).
Today we went down early, rallied, then went down again, and then closed for a nice flourish off the days bottom of the trading range. What we're witnesses here is very light volume, much lighter than normal even for this time of year. Why? Because very few this instant want to step in and buy, but no one is in a rush to rush in and buy either, so funds aren't selling and no one is buying. Hence = standstill! Or, Mexican standoff! Of course FNM and FRE continue their march to zero. I am hoping we get some news that bumps us higher. I'm not sure what it'll be, or if it will happen. Monday and Tuesday I was VERY clear that we would move lower and said so here. That was a very strong call and they don't always turn out to be right, but they did this time. That gives you as a trader a very nice edge cause you are looking to fade any bounce. Today I thought we'd get a down start and potentially a nice rally. We got an eh move both ways, nothing really exciting and I was out most of the day with my girls getting them ready for school honestly. A dad's gotta shop at some point! It's amazing how much you can spend on clothes for kids. I buy a new outfit for myself once every bluemoon these days, if anything I have too many shoes. I'm the guy equivalent of Amelda Marcos I think. A 5 and 7 year old outgrow things like wild flowers. They also both got shots today and they were not very happy about that. I doubt the doctors office was happy either since they were screaming in unison my poor darlins! I wonder if investors scream in unison when the market tanks day after day. Here is my newest financial sector prediction, take it with a grain of WAX! LEH = under $3 (or $1) within 90 days. MER = under $5 (or $1) by year end. WM is a def under $1 shortly. WB is a potential failure and the stock should see under $3 by year end as well. I know, I know, get off the financials back, its MY fault that they are all tanking. Sorry, homey mosconis, but I can't help it, I am the grim reaper, what can ya do! Actually, today I also met with a new agent so I'm not being repped to do some public speaking and such. I'm pitching a new book to my publisher next week so hopefully that will get picked up. For those of you that haven't picked up my movie at Blockbuster to rent, shame on you! If ya read this and get ANYTHING out of it, go rent my film, its CRAZY FOR LOVE and its at every Blockbuster in the land, or you can order a copy from me for $20, just email me and I'll have it shipped out. I only have 30 copies, though. waxie@trendfund.com. Trust me, I don't make money on the movie. I could write a book about that experience called "How to Turn MILLIONS into Thousands!". A very expensive lesson indeed and one day I'll write the pretty hilarious story, though it wasn't very funny to me, hehe! Hey, I like my movie, and you can't make money at everything you do, right? And, you guys don't pay me to give you movie producing advice, though now I do a much better job of it. Sometimes the best lessons are the most expensive ones. Actually, usually that's the case. In the meantime, Thursday should be interesting. I don't have a clear idea. I am hoping we get a nice bounce. 1300 on the S & P and 750 on the Russell remain seemingly inpenetrable fotresses, and I think we are going to get a HUGE down move here shortly. It might happen post Labor day and post Fed one more attempt to save the financial world. PICK YOUR SPOTS, its such a key and its something that every trader must do to succeed. If you are patient you get clear signals. Remember, investors and the market usually over shoot the upside and underestimate the downside, so if you are patient you can get very very VERY good risk/reward situations. Next rally should be one of those. I would lose SKF to get back to the 110 area cause the next meltdown here should be quite the doosey! Let's see what shakes and play tomorrow and Friday close to the vest. When I am unsure I try to make less calls and do 1/2 size ones when given. It'll set up a bigger move either way so be PATIENT! Live and learn, babies, live and learn! Waxie

Monday, August 18, 2008


Guys and dolls, you ALL need to attend the BEAR HUNTING class we are giving, period. I get so many emails from you guys and gals saying that you just don't know how to trade or invest in a Bear market. This class will show you how to do so and it's the only way to get yourself in a position where you can not only protect yourself but also set yourself up to make the BIG Ka-chingos potentially! I think if you are going to take one class the rest of the year this HAS TO BE IT! Do yourself a favor and get signed up IMMEDIATELY! The class is going to be well worth it and I just don't see how you can figure this market out without a game plan, and this class will help you design one that fits your financial needs! Go here to signup IMMEDIATELY - www.trendfund.com/banners/bannerthru.asp?bannerid=980 See ya there - WAXIE


Well, even the anti-Barron's curse couldn't bounce FNM and FRE Monday as the markets sold with both fists, albeit on very light volume. FNM and FRE, I will keep repeating myself til I'm blue in the face, are worth NOTHING. They are worthless and anyone buying them will be very sorry they did so. I have one regret for today, I had my finger on the button to buy FNM $5 Sept puts at .35 cents and wanted to get a bounce that never came. They closed at $1.25 on the bid! Oouch! LEH should see under $10 shortly, I just don't see any reason for it not to. I guess they could have some news that helps them, but it'll be a short bump on the road to the $2 LEH is worth at most. OK< so I am a complete Bear, right? Not exactly. As you readers know, Tuesday is....TURNAROUND TUESDAY! It'll be interesting to see how we shake out, but Tuesday has been a reversal for the last couple of months and if we get some selling early on Tuesday on light volume there's a good chance we get a decent bounce. Of course, if we get a gap up and early strength I'd be shorting it for almost certain. Either way it should be a nice trading day. I think that we're about to see the Tech-turn when some of these high flyers start to break down pretty steeply. Remember, when the market, or stocks themselves start selling it can happen in a jiff. I'm still liking the usual suspects to see substancial downside. And, I do mean SUBSTANCIAL. There is a very big problem here, and it's kinda like the Elephant in the room, even though people notice it in this case. Anyone buying the financials for more than a trade is an absolute idiot, delusional FREAK! How's that for speaking my mind!? We are going to see that sector get airholed at some point in the not too distant future on MONSTER bad news I believe. Now, as a trader we can't worry about that, but for those of you reluctant to short or do anything more than invest, you really need to take a long hard look at your finances and decide if you want to lose a lot of your hard earned money, or MAKE THE BIG Ka-chingos! Cause the only way to do that in this market, in my opinion, is by being on the short side if you are not trading intraday. You MUST be insane to buy stock here in ANY sector. Yes, we will get dead cats, but that's about it, folks. Sorry. Now, ok, I've gotten it off my chest, I think it prudent to watch the early action tomorrow, I think good shot we fade it either way. Also, remember, I said that the oil going down and market going up trade was DEAD and wha-la Monday oil was down again and the market was CRUSHED. I think you can now start watching oil and the market in a different way, you can see if we get short term bounces or failures based on oil, and then fade that move. Oil will probably see below $100 near term. We talked about different levels and 750 on the Russell was and is HUGE. It's a good pivot to look at in terms of a move to that level is shoartable until it breaks it cleanly and holds. In that case then we look at 760 and then 775. But, I really don't see us going higher than that and again, the risk/reward favors the short side. Also watch this AMED, I think it can easily see $25 within 60 days. Turnaround Tuesday? We'll see soon enough! RULE Waxie

Sunday, August 17, 2008

I think it's almost time...

OK, so I've said I was gonna come up with a stronger call this week. I think the upside here is pretty limited. While its possible we get that 1325 to 1350 mark here, I think thats MAX, and I think the downside is significant. So, I'm going to be legging my peeps into some shorts this week, particularly if we get some early upside tomorrow. So, there ya go, this is a decent spot to start legging into those short positions if you wish to do so. Again, there certainly could be some upside, but I don't see any tremendous risk to shorts here, particularly if you take some puts Sept. and forward from there. IF there is some news event that was percieved as special, then perhaps we get ane extension, baring that the risk is to the upside and the risk/reward here is to the downside I believe. For those of you who asked about PIN ACTION, you can look at the S & P (ES in futures) and see the ES closed at EXACTLY 1300. The ER (Russell) closed right at 755. Even though the market was pretty strong or no worse than flat most of the day, you'll notice AAPL fell all day and closed around $175. Also, once again GOOG was pinned EXACTLY at a strike price ($510). These types of trends give you a CLEAR edge if you watch for them and act on them. That's why I love trading Options Expiration. I have a couple of plays I like here near term. We're going to unveil a new TRENDFUND.COM SHORTS service shortly, I will be setting up a MODEL PORTFOLIO where you will be able to view the positions LIVE, in real time, so you can decide if you want to take a trade I like in real time. The service will have equities short and puts (or call if its an ETF that is inverse). This won't be a TRADING SERVICE, it'll be more of a swing service, with many positions held for a while. There may be some trades, but mostly it'll be that type of service, more of a longer term service so that you don't have to watch daily. I think there are some really nice short opps here and will be for the long haul, so I think this should be a very popular service. Pricing will be $699 for 6 months, and $999 for a year, more than likely. Ninja's and other members will get a discount. Pricing is not set in stone, but that's how I'm looking at it. If I am right it'll be a steal. Guess we'll see soon enough. If you are interested in learning more and being one of the first on board, email me at - waxie@trendfund.com and I'll send you info as I get it set up. In the meantime, let's see if we can rock the markets this week. Oil should have a tough time going up here much, and in fact may very well test $100 short term. I still say while the market might get that bump, ultimately it has to fail because oil has VERY little to do with what's wrong with the economy. The powers that be can blame it all they want, its simply not true, sorry. Oil can go to $10 a barrell the economy is still in the crapper folks. Mrs. freakin' Fields declared bankruptcy for G-ds sake! Holy moly! People can't even afford to eat COOKIES!Pizzeria Uno! I don't know, when I'm worried and down, I eat more cookies! Their business shouldn't been booming! Guess not. Let's rock either way! Watch GS this week. Stock is trading like it wants my $125 or lower target sooner rather than later. I would love to get it back to the $175 area for a nice short from here if you aren't short it already (one of my Top 10 Shorts and doing VERY well). RULE! Waxie

Wednesday, August 13, 2008


Financials once again led us down, though the selling was abated late day and tech, led by AAPL, stayed strong throughout.

GOOG announced they will ship their Android phones shortly. What an Android phone is you will hve to let me know, and why anyone would want one, you'll also have to let me know. I guess one could own an I-Phone, Blackberry and an Android!

I've been hearing more and more analysts say that now is a good time to buy the financials, that they are close to the ever elusive bottom. It's funny, cause maybe time will prove them right, you all know how I feel about that, though. Regardless, one guy said that he likes WM here. Why? Becuase its got like 13,000 branches (I have no idea the # but its a lot) and therefore he think its a steal at $4.00. And that's why I abuse the hell out of analysts, because they say dumb things like that. That's like saying that you should buy my Ice Cream stand business, which has 300 branches for $1,000,000 because I have so many stands! Problem is that I own these stands in the part of Antarctica that hasn't been melted by Global Warming! (I don't really own ice cream stands, though I do like ice cream!). I mean, what does it matter if a bank has 3 branches or 300,000 if they are losing money! It's an absurd notion that WM is a buy here for ANY price. WM is like FNM and FRE, I will be shocked if WM exists in a year. And, if it does, it'll be in a merger, or the stock will be under $1 and it'll be about to go under more than likely. But, hey, what do I know? People keep trying to pick bottoms in these stocks and keep getting burned. One day they will be right, they will be sold off enough to call them worth owning. I doubt it'll be in the next 2 years, but so what you're a wee bit early! I guess! It's funny, I went back and looked at You Tube. Booyahhead saying that BSC is FINE, totally FINE when it was mid $60s. That it was going to get bought out when it was even higher, and yes, he was right! BSC did get bought out! At $2, then $10, but it got bought out! So what you lost $50+ a share on it, no biggie! OK, so now what? As I stated yesterday, watch the strike prices. Keep an eye on LEH ($15 or $17.50 very likely). GS usually closes at a strik and right now its hugging $165. GOod thing about GS is its volatile, so watch it, if it starts to take off or break down you can often catch a few dollars going with it the way its leaning into the end of the quarter. AAPL same, RIMM ditto and GOOG always closes (almost always) at a strike and right now is hugging $500. Unfortunately they will probably close WM right at our $4 put price, but maybe we get lucky. One that is ready to bust down, particularly on the next big selloff is COF. This thing is so ripe to see $20s its yummy as a short. We may get a bounce in financials here shortly, so if you are interested you might want to wait for that, or do 1/2 now and add if it pops to $45 area. I think longer term this thing is teens at best. Our ZION puts for Option Trader totally DOUBLE now. Nice play. I called two things today, one winner, one loser. GOOG long late day was a $2 loser, but for Options Trader I called LEH $17.50 puts at $1.50 and they went all the way to about $2.55. We sold some and then got out the rest b/e. VERY nice intraday play! LEH, again, looks under $10 very shortly. GS even ready to fall to $125 area as I feel it should have already. Thursday should be decently volatile, so lets TRADE 'EM, don't marry 'em! RULE Waxie!

Tuesday, August 12, 2008


It's so interesting, this market. It really marches to a very different drummer than many I have lived through and traded through for you guys, or on my own. We have the most important sector, the financials, just completely unraveling. Everytime they seem to have found a base, they get hammered again. Today was one of those days as GS estimates were cut in a big way. Yet, the market didn't really give too much care to it as the rest of the market held up fairly well. It was, however, the first time in a few sessions where oil was down and the market was down as well decently. It's very choppy trading. To say the least. We are now Wednesday in an Options Expiration week. So, we will now start to look at what I call "PIN ACTION". I've talked about this extensively, and I think its very important to now keep track of. From here on out market makers and fund managers will be looking at their positions and the underlying options and seeing where and how to "pin" stocks to certain strike prices to capture both sides of the strike price. I'm putting together a class for this topic shortly, it's more than I can write on tonight, but if you sift through the blog here you'll see several mentions of it. Keep an eye on the indexes for clues as we get closer to Friday. Watch the ES and ER (futures of S & P and Russell) USUALLY they will close at or near or right off of a major milestone. For example, S & P at 1300, or 1275 or 1325. Those are major. Minor, which happens, 1310, 1290, etc. Rusell 750 is key level here. then you're at 740 or 760 or in extremes higher or lower (725 or 775). Tomorrow/Wednesday I am calling an Options trade I really like. If you haven't signed up for Options Trader yet, you might want to consider this a good time to do so. No guarantees but I really like this trade and I will play it myself with my own hard earned cashola! We should get a decent trading day, and I would lean lower, but tough call here so I won't make a strong one. Financials are broken, if I hear one more fund manager say how they are buying financials I will puke. People keep actually buyign FNM and FRE! I mean, I've said it 5000 times, they are both going to ZERO. Yes, ZERO. They have no worth, anyone buying them is beyond insane in my opinion. Take it for what its worth, thats all I ahve to say, see ya in the am! RULE! The laws of gravity mean the financials go DOWN, no matter what.


OK, so to make life easier, here is the link to the BEAR MARKET class Tiny and I are doing on the 26th and 27th. You need to sign up TODAY in order to get the discount we're offering. This is the MOTHER OF ALL BEAR MARKET CLASSES! Which makes sense since if we're right this will be the mother of all bear markets!

I suggest you ALL take this class! Feel free to email me with any questions, but here is the link to sign up. After today the price goes up, so sign up now! www.trendfund.com/banners/bannerthru.asp?bannerid=980


OK, so to make life easier, here is the link to the BEAR MARKET class Tiny and I are doing on the 26th and 27th. You need to sign up TODAY in order to get the discount we're offering. This is the MOTHER OF ALL BEAR MARKET CLASSES! Which makes sense since if we're right this will be the mother of all bear markets!

I suggest you ALL take this class! Feel free to email me with any questions, but here is the link to sign up. After today the price goes up, so sign up now! www.trendfund.com/banners/bannerthru.asp?bannerid=980

Monday, August 11, 2008


Love them...and love this rally! market is FLYING here, baby! ER hit 750, went as high as 758 and then ended day right at that key market of 750! ES went to 1312s. Still thinking 1325 to 1350 is a nice target. I called AAPL puts when it was about $176, so we'll see if I was too soon or dead on today for Options Trader. This is very typical of a Bear Market. What's always amazing to me is this, think about it logically, let's say for arguement sake that this is truly THE Bottom! OK, fine, hey, maybe it is, ya never know, but then if you are a fund manager, why are you rushing in to buy everything you were just selling at a cheaper price all at once? It's illogical and indicative of bear markets. Unless one thinks that the next stop is 15,000 on the DOW, or even 14,000, there's no reason to be in such a rush, you buy on DIPS. In a Bull market you buy on dips, in a bear market you sell on rallies. The S & P is up now roughly 100 pts in a very short time frame. We are WAY overbought. I still think we can get that push I've spoken about to that 1325 to 1350 area. And, the way ER is trading perhaps that'll get to 775. BUT, I also think that later this week we will get a pretty steep decline. And, now I think the AG and energy stocks will get a bounce tomorrow on turnaround Tuesday for them! I just don't trust that no one is interested in that group all at once. I said it yesterday, I wish I caught some of that move down, I missed a lot of it. We had FSLR, which I spoke about here a few time and today that hit $243s from when I mentioned it last week around $270s, so a really nice gain if you caught it, but this is rotation out of energy and into technology and that space is getting mighty crowded might fast. We'll see what shakes, I think a gap up Tuesday is very shortable. It'll be interesting to see what Oil does here, does it crater all the way down to $100 or less right away, or does it bob and weave its way there? We'll find out soon enough I would suspect. In the meantime, Tiny and I are preparing the mother of all BEAR MARKET classes, I suggest you all attend, if you want more info just email me - waxie@trendfund.com and I'll reply directly. RULE! Waxie *Oh, we are about to shoot a new infomercial, so if you have any interest in being a testimonial and get on TV email me your story as well!

Sunday, August 10, 2008

How far will we go?

I've been saying that we should get to 1325 and 735 area on Russell. We hit that on the ER (Russell) Friday and S & P is fast approaching 1300 here. I'm hoping we get a bounce up early in the week as I do think that 750 on ER would be perfect short spot and 1350 on S & P would be sweet short spot.

In the meantime, I think its best to wait for a true direction. I think the oil down/stock up trade is about to expire in a big way. IF, and its a big IF, but if SKF hits $100 I would be looking for a long entry.

Here's the dealio, I do not suggest trying to catch tops or bottoms. We've been trading stuff long and short intraday the last few weeks. I think the best strategy here is that daily and then look for spots to catch stuff. If you noture FSLR has been weak as hell. This is options expiration week, so look for some LARGE moves here. This week should be particularly volatile, the market is running higher on fumes and the belief that Oil is what has made the economy weak. It's a lie preached by the media. Having said that, we need to respect the market and the market right now has been saying that it wanted to get a higher move.

There is a very strong trend that would say that this week we go DOWN. We almost always reverse the FOMC week's move, and since that move was HIGHER, we should go LOWER on the week, that's why I want to see some early week strength as I think we should then get a reversal move. As I write the futures are SLIGHTLY down, I thnk Monday is a fade either way, so lets see what shakes.

STAY NIMBLE! There's no rush to get long or short here, relax and pick your spots! That's what I want to do here.

Thanks to all that sent me Birthday cheer, always nice to get well wishes! I'm a Leo, who woulda thought? :)


Thursday, August 07, 2008

Market is like my dating life...

They all say they love me, but leave me nonetheless! WHEEEEEE!!!

C got more bad news as they need to write down many billions more and the stock got cracked. People are so nuts to keep trying to pick the bottom in this group. I just can't take it. If I wasn't bald I would be pulling my hair out! I guess I could pull my nose hairs out, that might work. I want to scream - PLEASE STOP KILLING YOUR CLIENTS! I saw a well known tout service call LEH long today saying it was a good risk/reward! Yeah, ok, sure it is, LEH is going to $1 and it was $20.25 when they said this today, so its got $19.25 downside and ZERO upside. yes, its a good risk/reward! It's unreal, people can not get out of the idea that the market isn't going to go up for more than dead cat bounces for quite a while. Of course its not a straight line, but it is a one way ticket to oblivion. OK, so I decided I will NEVER go to Disney again. It's not where dreams come true, its where you wait on line for 2 hours a pop and your kids cry and throw tantrums due to the 100 degree heat that makes you want to jump in the cesspool water just to cool down. I will never go to Disney again - never. You heard it here first. I did go to Aquatica today and that was awesome. I love those beautiful Dolpins and my kids had great time. Lines were like 5 to 10 minutes, as opposed to hour plus at Disney. Did I say I hate Disney? I do, I really do. And, I once dated Mulan and Arielle, and of course Tinkerbell. Even with that personal connection, I hate the place. When was the last time they updated the place? Fixed anything? It's dirty, and the lines are insane. OK, enough Disney bashing, the market Friday is a guess. It really is. I think down is path of least resistence, but as you know, this market is insane and unstable, so we could fly up for no reason. So, I'm done picking a direction day to day unless I REALLY feel strongly and right now, on a Friday my GUESS is lower, but I am flat most days these days other than some swing options. You see FNM and FRE? Fast track to ZERO, folks. Fast track to ZERO. See ya for Monday's open. We should have a solid idea where we're headed, or at least a MORE solid idea next week, post FOMC week. It's usually a trend week, so we'll see if that Trend-trend holds! RULE - WAXIE

Wednesday, August 06, 2008

Tactics, trading and the meaning of life...sort of!

OK, so I got several emails today regarding the difficulty in trading this current market. I've read a ton of other traders lately and most are struggling. It's funny, 99% of the time we want volatility, its a traders best friend. Having said that, there are times when a trader must make adjustments. I've done it many times, and when I've gotten stubborn I've gotten slammed myself. It happens. What's the saying? Pain is a great motivator, probably the best. When you get in enough pain, you make changes, or you keep suffering.

So, ok, how does that relate to trading this market? My favorite service, Option Trader has been basically RED HOT smoking since inception. Having said that, I made a couple of bad calls recently. I think they will play out ok, but they were bad calls nonetheless in retrospect.

Usually the best lessons in life come from mistakes, you learn more from them then you do from success I've found.

Here are the two trades;

AAPL $160 August PUTS

Right now these are well under water and in danger of being a total zero. I still think there's a shot AAPL gets pinned at $150 next Friday when they expire, BUT clearly we're not in great shape on this play.

WM $4 August Puts

This was stated as a HIGHLY speculative play, one to use 1/4 share normal lot at most. They didn't cost much, but still they will probably expire worthless and again, just a bad call.

Now, I will preface this by saying that I don't believe that a bad call is one that loses. Contrary, most trades called I would justify and defend, even if they are losers. There is a reason behind each of them that I have reason to believe has 100+% potential. In fact, if you look at our track record you'll see a TON of 100,200,500% winners in the Option Trader service.

BUT, the reason these were putrid calls, even if they end up winning is because I didn't adjust fast enough to the last two weeks market trading.

Why? Well, two recent AWESOME calls in that service NAILED the market and how we need to play it with options.

LM November $45 puts were called at $2.40 and sold at roughly $18 recently, basically right at our target and right at the recent "bottom" before it bounced.

WFMI August $22.50 puts were called at about $1.25 over a month ago

So, why besides the fact that they were amazing % winners, were they so good?
Because this market is all about timing. It is a very difficult market to trade day to day. Intraday = awesome, but day to day its psychotic, much more than usual. So, playing AAPL puts that expire in a week and WM same was a bad idea. Now, I think AAPL sees under $100 in the next 12 months, but that doesn't mean it can't go to $180 before that happens. I don't see it getting that far, but it certainly could, there are enough nuts out there that think AAPL rules the world. And WM? Well, I will be shocked if WM is not bankrupt or less than $1 in a year from now (or sooner), but again, that doesn't mean it won't go to $7 before that happens.

So, whats the answer? Well, like LM and WFMI, I am looking now to play NON-front month options for many plays. Yes, we'll still trade short term front month calls and puts, but I think the swings need to have some time to work out. The moves both ways are so sharp that playing stuff that way means you are all or nothing. I prefer to have a bigger edge than that. And, I think if I had called AAPL let's say NOV. Puts, even though they have a heftier premium, I think we'd be well in the money at some point between now and then. So, if AAPL moves against us using that theory then yes, we will be down, but there is time for it to work itself out. That doesn't guarantee success, but it gives us the chance to get there, and if we get the move soon, then we're giving up some premium, but its worth it in this market.

I love AAPL lower, but again, I thought we'd rally here, so there's no excuse for me being that aggressive in calling the puts before letting the bounce pan out.

And, WM? Well, that was simply too aggressive, they aren't looking to bury the financials just yet. they will be totally buried in my opinion, but the Fed is trying to hold them up and succeeding for the short term, so again, its better to call the January WM puts, pay more premium but give ourselves a better shot of success.

Swinging for singles sometimes truly is the best policy. In this market, its a great intraday traders market, and swing trader, but the day to day trades are tougher and we need to respect that or suffer the pain of loss.

One analogy. Today my cab driver didn't have his seat belt on. I was with my daughters going to Disney (I really think this place is horrible for kids under 8 or 9, the lines are just abysmal and my 5 and 7 year olds go nutso waiting an hour+++ for a single ride! It's brutal!) and the cab driver didn't put on his seat belt. And, the cab kept making that horrid sound - ding-ding-ding, but still he didn't put it on. My kids noticed it, it bothered them. After about 5 minutes I asked him to put his seatbelt on. I kept thinking, surely he will put it on on his own, who the hell wants to hear that stupid ding-ding-ding when its so easy to just put on the damn seat belt!

And, the seat belt could save his life!

And, there ya have it, sometimes in life we all don't think about the consequences until its too late. If he gets into an accident (when) hopefully it won't do a ton of damage, cause then it might be too late to stop the ding-ding-ding.

Don't let YOUR trading go ding-ding-ding, put your seat belt on and learn to earn, and certainly learn from my, and your own mistakes!

I love the solars short here, fyi. I think that is the next sector to crack. Watch FSLR, SPWR and CSIQ for potential nice shorts here short term. We are getting/got the move on the Russell I said I thought we would. It went to nearly 730s today, so we're very close to my upside target. Yes, its possibly it goes to 750 even, but I think the risk/reward is certainly getting dangerous on the upside. ANd, its on very light volume, not a good sign it has much more to go. We shall see either way, but be careful if you are long, it might be a good time to scale out of stuff. Every 300 pointish move we've gotten so far has been sold HARD, I prefer to wait for that trend to be broken before holding for more than a short term trade on the long side.


Tuesday, August 05, 2008


I tell ya, if Monday's down these days then Tuesday has been GOLDEN to follow that rule! We gapped up HEAVY and then pulled in a bit after FOMC, but then just went hog wild and closed at HOD.

I suspect we now get those targets I discussed recently and thought we'd see - Russell 735 range and S & P 1325 area.

We'll see, but as you all know, either way we will head lower. It's interesting, we have this COMPLETELY psychotic market now. This isnt volatility, this is insanity. No ryhme, no reason, we just get this NUT market! I mean, Monday they selling financials with both fists, then on no news we gap up BIG in that group and never look back. NO NEWS!

Yes, we've had a volatile market for quite a while, which as a trader is great, but jeez louise, this is beyond volatile, this is downright looney bin material!

Wednesday maybe we'll get a simple day, some follow through to the huge rally. I think that would promote the move we're discussing pretty quickly, and it makes sense in terms of Bear Market rallies. They keep happening all in a day or two or three period. That's normal behavior for a bear market. Normal behavior for a Bull market would be a slower more push and pull move higher.

BUT< as always, its all good and all tradeable! I just refuse to make strong day to day calls, cause no shot to do that most days here. We defy all logic, so better to trade it intraday and swinging stuff for a few days or a week or two at a time. Overnight? CSCO was up nearly 7% after hours and you would expect he market to rally again Wednesday, but since this is a looney market, who the hell knows at this point.

WFMI nice, got cracked as we knew it would! Down $4 after hours! Ka-chingo for Option Traders!

I think WFMI is $3 to $4 by years end. For Options Traders I would take some money off the table and keep a few puts with a stop at $21 on the stock and we'll reenter if need be. I doubt it gets that much of a bounce, but we shall see!




Monday, August 04, 2008


OK, so today proved hands down what I've been saying for a very long time. Oil and the stock market aren't connected anymore in a major way. Yes, years ago that was the case, but there is a disconnect now, has been for a long time. You can watch CNBC and Bloomberg all day and pundit after pundit drags on saying that the reason the stock market is struggling is the high price of oil, the reason the economy is struggling is the high price of oil.

Let me make one thing clear, if oil were to drop $75 a barrel, we would still go DOWN. I hate harping on the same theme but once again the market is proving that if you want to be long it, you better trade it, cause this is not the kind of market you want to get stuck holding ANYTHING.

Today we saw what I knew was gonna happen, the AG stocks got SLAMMED. I think solar is gonna get hit HARD. VERY VERY HARD. FSLR look out below! GOOG and AAPL ready to crack here. GRMN from the TOP TEN TECH SHORTS list already destroyed. Again, I wish I was wrong but it ain't gonna happen, this market is BYE BYE and anyone standing in its way is gonna get run over.

We will get a tradeable bounce shortly here. Maybe even today with turnaround Tuesday and the FOMC, though its gonna be hard if the Fed doesn't do anything, which is probably the case. Upside here remains maybe 75 pts on the S & P and downside remains roughly 500 points on the S & P (yes, 500 pts). My target for the Russell (my favorite short beyond the financials) is 350 longer term. Watch 700 here, if we lose that with abandon next stop should be a retest of the yearly lows around 650. We lose that and look out below dudes and dudesses!

In the meantime, the AG stocks should get cracked even more. Next bounce they get I think they will make one helluva a short. I get emailed from you guys and gals all the time asking about longs mentioned here. I want to be perfectly clear - ANY LONG mentioned is a SHORT TERM TRADE ONLY! If you are riding it looking for a month trade forget it basically. Think about this, the Fed is doing everything they can to keep us from collapsing pre-election and yet we keep going down. What does that say about the underlying strength of this market? It says we are shot, folks. Someone killed this beast and didn't let us know.

This is the new movie - MARKET AT BERNIE'S. It's dead but they keep carrying it around on their shoulders trying to prop it up.

FORGETABOUTIT! We are fini, stick a fork in us.

And, beware ye shorts for turnaround Tuesday! I'm not so sure we get it, I'd rather be short than long here, but I still think we should get a bounce soon, at least short term bounce. Watch $150 on AAPL and $450 on GOOG, they both look like locks to hit those marks. They are KEY supports, loses there and see ya way down below!

CASH IS KING folks, make sure you have a lot of cash hanging around.

Oh, yeah, anyone watch booyahhead last week call the BOTTOM? Market only down like 400+ points since. So much for that idea. Why are people so fascinated with the idea of a bottom. There is NO SUCH THING! Just like there is no such thing as a top. There are only - TRADES - my friends! Only trades!

Keep tradin'!

And, get ready for our BEAR HUNTING class that Tiny and I are teaching in 3 weeks. I think it might be our best class yet and we are accepting signups, so email me at waxie@trendfund.com if you want more info! See ya there!