Wednesday, February 25, 2009

Just the GAPS maam!

Once again fading the GAP turned out to be hugely profitable. We caught STI for a very SICK move (again!) of over $2 by days end, on an $8s stock intraday!

Have I said that I LOVE THIS MARKET? OK, now you know, if you forgot!
I dropped my kids off at school, had to run an errand that took a lot longer then I expected and came back home to a pretty hefty loss based on me holding some banks overnight. Sucked! But, I merely added to my positions on the fade and wha-la, rockin'! Banks went way green midday and then tanked into the close, and I was LONG gone by then!

We also caught OIH for about $4.00 intraday. Plus Tiny caught the SPY short nicely. We are truly kicking butt in the chat room. I mean seriously.

I'm going to lay out how you trade this market, its very easy, its basically called "Hit and Run" trading. You can't get attached to any trade or idea, and you can't hold much overnight, there's really no point, other than some swing option positions. I mean, what's the point of holding stuff here for more than short time horizons? Intraday we still get these moves that you can catch, and then fade. Nothing sticks. We get those big Bear market pops, and then we sell them off the next day or two, but we get intraday countertrend moves all the while.

This is the problem I have watching pundits and the trading shows that litter the airwaves, most so-called traders really have no clue. That's not me being egotistical, I have my limitations as well. Hubris will kill any trader, or anyone in life. I talk large, but I know my achilles heels. I just find it amusing watching the same guys trek out and say the same wrong things time and time again. It's great on Fast Money tonight they had a new chart guy I never saw and he called the bottom. Any chart guy worth his salt isn't making that call, that's foolhardy. How many times have we heard about this ever elusive bottom? So much for Hogan's bottom, that was a joke. Enough already, there's no such thing as a "bottom". Please, traders don't think in terms of bottoms, we think in terms of how much money can I make on my next trade. Bottoms? I could care less. Of course this isn't the "bottom", duh. Any idiot knows that the market goes up and down and that over time the market is going to go lower, and higher, and then lower and higher again. It's peaks and valleys, its not like digging a ditch where you reach a bottom because you can't cut through the rock that you're hitting far down all of a sudden.

It's also funny hearing people call things like Gold long after they are $1000 and they've missed all the easy money. I called the banks yesterday and today for major money, I'm not always right, but to me I'm proud of that kind of call because everyone is against it and it feels "wrong" to everyone and yet I "know" its right as a trader. I know that they are running the banks into Guithner's magic plan! That's the nature of the beast of this market - NEWS RULES.

And, knock on wood, thats what makes this a pretty easy market to trade. It follows almost every rule we have laid out over the years.

GAPS work phenomenally here
News rules
Targets TA wise are hit
Round #s are hit and act as support and resistence. Did you notice that GOLD hit $1000 as I said it would and then dropped like a ROCK, like I said it would?

It's now $950, I had it short today and made nice money.

As I write this the futures are flying HIGHER...again. Does anyone with a brain think its not 85 to 95% chance that if we open up 100 points that it'll fade and go red at some point? Yes, it is possible we Gap Up and keep going, it does happen, but 9 out of 10 times in this market Gap Ups are the easiest money ever.

The Fed is now going to try to "FIX" the markets, again! They will reinstall the uptick rule because Bernanke, the dolt that he is, said that it might have helped the markets if we had it. So, they will reinstall it. It'll get another pop, and then it'll fade again. Then, you know what they will do? OK, I'll tell ya, they will eventually make it illegal to short stocks. Remember how well that worked for the financials? They fell apart.

Guithner's plan will be nonsense, the banks are insolvent. There is no plan to fix that. They have no earnings power, they are big bloated money losing beasts that need to be torn down so stronger and better businesses can be built. That's what would work and what should be done.

Unless he pulls a rabbit out of his hat, we are setting up for one of the best shorts of the year when he unveils his master plan. WFC, BAC, C, and many others are worthless. In the end that's where they will trade. What do you think C is worth if the government owns 40% of the common stock, and they still have all those toxic assets on their books? Doesn't anyone recall AIG, FRE, FNM? These are all partly owned by the government, folks. Did the uptick rule, or lack thereof make these stocks penny stocks? Did SKF as booyahhead keeps saying?

Oh, before they say no shorting they will probably step in to try to support the markets and maybe even buy stocks. They will use the same BS line that "taxpayers will make money on these deals" and its the same lie they said about AIG.

Who thinks Guithner can possibly come up with a plan that will have a lasting and meaningful effect on the banking sector? I hope I'm wrong, but chances are I'll be shorting, uptick rule or not, and I'll be buying the SKF or FAZ. I hope we get back to 7500 or 7700, that would be a nice place to put back on some shorts I've covered at much better entries then where I exited. I am almost all CASH and very happy about it.

If anything is really meaningful, just look at the action into the close, no one really wants to own stocks here, and rightfully so. Traders are willing to trade them intraday but by days end they mostly want to dump them so they can buy them cheaper soon thereafter. Mark to market, uptick rules and time travel to fix things all may have a temporary impact, but ultimately the market, like water, seeks its own level, and that level is, unfortunately MUCH MUCH MUCH further down!




In Debt We Trust said...

Waxie, you are rocking again. I am impressed w/these calls. How much to become a member?

Btw, you should make an Ultrashort Booyahead ETF. It would be an index of the top 10 stocks that he is pumping at any time. I bet the ETF would outperform SKF or FAZ in terms of efficiency.

Erik28 said...

look at AEM, pumped on friday by Booyahead.

bought the puts on monday, rang the friggin register today.

JP, i think u might be onto something.

Waxie calls are uncanny, actually freakishy good....but "maybe" he has met his match, well at least a contender...."INVERSE BOOYAHEAD CALLS" lol