Friday, October 10, 2008

MON. OCT. 13- Interbank Loans? Yes, Please.

Posting this early in case anyone wants to do a little homework over this particular weekend. Will update Monday morning.

There are really no words. And that is the point of this blog entry. We witnessed the worst week in the history of the stock market last week for every major average. The credit crisis has reached a fever pitch. What needs to be done this weekend is that every major nation of the world must get together and agree to allow for interbank loaning to be supported by the backing of the governments. There is no more ‘free market’, no more ‘communist,’ no more ‘socialist’ in this new world order. This is an absolute clarion call to take action. Entities like Morgan Stanley and Goldman Sachs could simply fail because they will not have access to capital. And things can continue to spiral out of control after that; will it happen? Who knows? And that is scary. What if Pepsi cannot fund its operations? Or Exxon cannot get access money from its banks to send oil to suppliers? Or grocery stores cannot get shipments of food because there is no funding for delivery? It is literally possible that this can happen. Not likely, but possible. Thus, the stock market should follow this- the instant that the credit markets free up, we’ll be OK. Treasury Secretary Paulson announced late Friday that the U.S. government may nationalize on a minority basis some banks by taking minority stakes. This means next to nothing because the stocks can still go down, but it shows how desperate the world’s governments are to do something to fix this…but equity stakes won’t do the jobs; telling the world that the government will back interbank loans will do the trick in all likelihood as is occurring in Britain. We will not be off to the races per se as a lot of damage has been done, but the worst will be behind us as the stock market is wagging the tail of the credit markets. Already, there are some good signs; LIBOR eased on Friday and the dollar strengthened against the yen. But oil continues a monumental decline and MS approaches dangerous levels. With this all in mind, the Dow rallied over 1000 points on Friday on the simple hopes that something will be done this weekend. So, again, listen to that ‘interbank loan’ extraordinary move because if it does not happen, it will get even more dicey in the next few days as the credit markets are pleading for this action. And again, it does not matter anymore what is ‘right’, what is ‘capitalist,’ what is ‘free market’ as long as the right thing is done because if it isn’t, there are going to be problems. Thus, take your cues as day traders from the action on the credit front.

Basically, the world's governments have agreed to do 'everything possible' to alleviate the situation. In Britiain, this means nationalizing the banks (which may be what every major government ends up doing). However, there were no specifics and the credit markets are still almost as tight as they were on Friday. So, even though the Asian and Euorpean bourses are up sharply, realize they are playing catch up to Friday's rally state-side and use extreme caution this morning. Look for selected pockets to short (i.e. the REIT's below), but if the market does not break, use a weak A-B-A2 to upside.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


JEF- closed on high…in decent tape, A-B-A2 thru new high

FR- a small REIT which closed on its high; same story as JEF.

VNO/SPG- closed near highs; looking for A-B-A2 to upside in good tape and a sell off in both if markets retreat

JPM, C, PNC, other big banks- led market higher on Friday; will continue higher in a good tape

CHK- announced CEO had to involuntarily sell all of his stock to meet margin calls, decreasing Capital expenditures, and looking to sell part of its operations.

UA- closed on its absolute high

FMER, CRBC, GRC, FVE- a myriad of smaller stocks closed on their exact highs; watching for A-B-A2 to upside if the open up or a buy thru unch if they open down

DDR, LXP, PNX, HCN, O, CUZ, NCT, VTR, FRT, LRY, BDN, LHO ,VNO, WRI, RYN, NHP, CFR, FR, CLI, RAS- Many many many REIT’s jumped on the close in finishing on their highs. If they open higher, look to short thru unch especially if market weakens. If they open down, buy thru unch as they should not trade a lot higher very fast due to the extraordinary movement at close else A-B-A2 to downside.


MS- still waiting on Mitsubishi deal as of this writing; will be nervewracking all day

GS- filed mixed securities shelf

PBCT- bank which defied the trend and closed near a low; would short below 14.75

OIS- particularly weak; if it opens higher, looking to short below 18

DISH- weak on Friday; would look to short 13.40



FAST .51/624M .45/590M 1.92/2.38B 2.17/2.71B



Good luck today.

FRi. OCT. 10 - Short Selling Ban Hurt Markets

General Motors (GM) yesterday closed at yet another multi-year low, but this one drew even more interest- it turns out that the market capitalization of that once fabled company was higher just before the outset of the Great Crash of 1929 than it was on Thursday October 9, 2008. It is now the 20th largest automobile company by capitalization among the world’s automobile entities. Adding to the fright of not knowing what will happen next is the frenetic action around the stock in recent days; due to the fact that shorting was not allowed on so many companies, one could not hedge anything which ironically made the situation at GM that much more precarious. Here’s another factoid: in the three weeks that the short selling ban was in effect, the S&P 500 plunged a stunning 18%. Yet the stocks in the basket that could not be shorted fell almost 25%! This fishbowl experiment seemed to indicate that although individual stocks can certainly become victims of short selling raids, stocks are going to go to where they are going to go. The fact that the large pool of stocks in the grouping (most of which were financials) fell much more than the relative market over an extended time period shows that the ban really did not have the effect intended. More so, what it did was ironically make things more illiquid. We as day traders simply lightened up on our overall volumes while worrying about whatever rules could be randomly created next. So, watch for volumes to increase over the next few days and weeks no matter the moves as more participants have more action with intra-day moves in many stocks actually MORE volatile because of the uptick in overall pool of players which increases the herds in these moves.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


DECK- preannounced to upside


PL- among the insurance companies destroyed yesterday; looking to short thru 9.25 and/or an A-B-A2 to upside in time

UNM- if market weak, looking to short thru 14 if it opens above there

CHK- if natural gas bounces, would like to buy the thing if it opens down

PTP- closed on its low

LFG- looking to short thru 12.22 if it opens above there and market sells off

BKD- shares of the senior living center company cracked as well…if market stabilizes, would like to buy this A-B-A2 at some point

BX- stunningly breathtaking that this thing is this low…looking to buy this if market bounces…premier name in private equity management

XL- down 50% yesterday; worries over company’s survival

HNT- if market opens higher, looking to short weakness

GGP- if market strong, looking to short thru yesterday’s low

ALL, ACE, PRU- among big insurers very weak yesterday

JEF- if market opens higher and this weakens, short thru 15

MON- was strong all day yesterday until end of day; looking to buy on weakness if market rallies

WFC, JPM, STI, USB, BAC- high quality banks that have been thrashed this week; look for them to show strength if market opens down and rallies

VNO, SPG- among big REIT’s which closed on or near lows

IBM – earnings were good Wednesday night; if market opens down and rallies, looking to buy this as it was strong much of day yesterday


GE .45/47.71B .56/51.29B 2.00/188.01B 1.97/193.17B

HST .28/1.16B .60/1.75B 1.77/5.38B 1.63/5.27B

INFY .55/1.21B .59/1.28B 2.32/5.00B 2.61/5.99B

Good luck today.

Good luck today.

Thursday, October 9, 2008

THURS. OCT. 9 - The Ever-Changing Market

Yesterday morning, Citicorp announced it was almost finally out of the mortgage business. On Tuesday, a commercial for Interactive Brokers came on which appealed not to making money for the average investor, but to the fact that one’s deposits at the firm are safe if one actually wants to trade. Then, also yesterday, Monsanto (MON) issued poor guidance; the stock opened down 6 to 68, but traded up to nearly 88, a gain of 29% or so! Now, we are not going to write a whole synopsis as to whether a bottom is in for the market (which it may well be). Nor are we going to go into the technical market parameters which signal a bottom (heavy volume, breath, reversal, et al). Nor are we going to prognosticate whether this is even a short-term halt to the decline. But, what is VERY important here is that anything from a tone change to a mere two-sided war is now in effect. With the signs that were shown yesterday combined with the market action, it indicates that a few entities are willing to step in and play from the long side – even if they got vaporized in the late afternoon on the close. For day traders, this changes the game entirely in the immediate-term. Just because we are able to push the short button on financials today does not mean it’ll make it easier to trade. Be aware of all the signs around you and certainly be aware that the market is very suggestive to violent moves on both sides of the market for the next spate of time as opposed to just the downside.

Overnight, there was finally a bit of a bounce on the heels of IBM pre-announcing in-line earnings. Tokyo was down slightly again, but Hong Kong bounced 3% with the bounce extending to Europe as the bourses are up 2%-3% across the board. Off-hand, the rebound will likely extend to Wall Street. There are still immeasurable worries abounding so there likely will be another sell-off at some point, but if the early strength holds, we’ll probably have a mild short covering rally on much thinner volume than yesterday. However, if by mid-day the rally fails to hold, watch out in the afternoon.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


MET-share offering at 26.50...if it traes down pre-open, buy thru unch...liekly an A-B-A2 to upside

IBM- pre-announced earnings will be good this coming quarter

MOS/POT/MON- strong all day yesterday; in a short covering rally, looking to buy these if they open lower

SII, HES, NOV, RIG – all strong yesterday; will likely follow oil prices…if however, the two diverge with oil higher and the stocks open higher but go down a bit, short all thru unch

PCLN- closed strong; may rally with IBM


RT- poor earnings

MW- warned on earnings

AIV- weakest of the REIT’s all day yesterday; may be a short thru 23

FR- another weak REIT; looking to short thru 16.30

LNY- after failed takeover, rumors abound now over the firm’s very survival; looking to short thru 9

WFSL- regional bank; closed on its low

ASCA- this particular casino stock continues weak

ADVNB- small insurer which closed on its low

PTP, JEF, ALL, ACE, HIG- insurers and mid-tier financials had broad-based selling in last hour yesterday

EMN- notably weak yesterday

IVZ- continues to break down

SHO- tiny hotelier having problems

KEY- among bigger banks which closed weak yesterday

L- had horrible day yesterday



RPM .57/1.00B .45/966M 1.86/3.86B 2.05/4.09B


CVX 3.39/92.03B 3.06/96.81B 11.95/308.49B 12.24/297.95B

RBN .70/230M .51/188M 2.35/789M 2.52/846M

TSS .34/490M .35/499M 1.32/1.93B 1.45/2.05B

Good luck today.

Wednesday, October 8, 2008

See AIG's St.Regis Resort Invoice Online

ProTradingTrading has recently attained an authentic photocopy of the AIG Invoice from their recent spending spree at the "posh" St. Regis Resort in Monarch Beach California.

This invoice is in its original state and has not been altered in any way. View the AIG Resort Invoice below as it illustrates a detailed description of services rendered at the resort spa totaling $443.343.71 for AIG's one week vacation.

Please follow the link below to view AIG's St. Regis Resort Invoice from their recent spending spree.


WED. OCT. 8- When Numbers Don't Make Sense

Most people who day trade tend to be more fascinated with numbers than the general populace. The changing of all the numbers on a constant basis as well as the attempts to interpret the meanings behind said numbers is a challenge that appeals to most people reading this blog. The reason for this at its core is that people try to break down any piece of news into numbers so as to attempt to profit. For instance, the thought process behind the attempt to figure out the risk-reward ratio goes something like this: if stock XYZ goes through ‘30’, one can make “20” cents, but if XYZ fails to break the ‘figure,’ I’ll give it 5 cents if the 30 reloads with 100 shares showing.” A very numbercentric game. We want to know the amounts of the rescue plan. We measure the betas, deltas, gammas, volume totals, and Fibonacci points of stock prices. Getting to the point there- what happens when numbers no longer become reliable? This is now true from two vantage points. On a bit of a micro level, the earnings estimates provided on a daily basis to you have become highly unreliable. The information is the most recent available, however things seem to be deteriorating at such a rapid rate that nearly every company who reports misses estimates. Thus, depending on how this trend continues during this week, ProTrading may just provide a list of symbols next weeks for earnings season since the only thing that matters now is the margins by which the companies miss their estimates- with the corresponding stocks already beaten down in most cases. On a macro point, much of the trading done nowadays is done at hyperspeed with stock levels rendered ostensibly meaningless. Many people have stopped paying attention to numbers instead focusing upon broader momentum. For us day traders, these trends will likely only intensify throughout earnings season so you must trade even more nimbler than normal as there is little room for error.

Overnight was as stunning a night as one will ever see for the markets. The Nikkei literally crashed- its worst decline in 21 years in finishing down 10%. Indonesia and Russia are closed indefinitely. European bourses were down 5% plus…until there was an announcement of a worldwide interest rate cut. The Dow futures were down 400 at worst…and shot to up over 150. For today, the ideal scenario would be the penultimate A-B-A2. Open higher, sell off as people digest the expected interest rate cut, and then buy everything as investors clamor to find bargains. The other two scenarios are a horrible sell-off in which nothing matters or after a weak sell-off on the open, there is a massive short covering panic. No matter what, be cognizant of these three scenarios and trade accordingly.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


YUM- actually beat earnings slightly and reiterated guidance for the next two years. It should be relatively strong today…if market opens way down and YUM is trong, it is one of the first ones to buy in a rally.

ZZ- great earnings

YRCW- very weak yesterday but issued statement after close that they are adequately capitalized. Looking for A-B-A2 to upside and/or downside depending on market direction

WMT- in-line guidance

LDK- boosted guidance


AA – in line with this morning’s blog theme, they missed estimates by 17 cents. If it opens lower yet close to unch and goes positive, buy it because it indicates the bad news is in the stock. If this happens, look to buy stock in other metal companies as well. If not, A-B-A2 to downside

BAC- stock priced well below Monday’s close; if it is truly oversubscribed, it should rally at some point today

AAPL, AMZN, other big cap tech – closed on low

CHK, APC, SII, HES, NOV, PXP, RIG, BHI- if oil shows any strength, all of these major energies are due for a bounce

XTXI, HERO, MGG, REXX- among others, 3rd tier energies down again…will have aggressive short covering bounce at some point perhaps today

STP, SPWRA, FSLR, TSL, YGE- same story as oils; solars have been destroyed

X, AKS, NUE – steels weak and down pre-open; look to buy all of them through unchanged if market rallies otherwise A-B-A2 to downside

STT- following contract to become lead MBS manager for Feds, stock has fallen; look to buy if market is strong

DRYS, EXM, GNK- drybulk shippers ravaged. Same story; A-B-A2 to downside but looking for relative strength anywhere

CBL, HPT, FR, AIV, VNO, SPG- REIT’s have been crushed; looking for A-B-A2 to downside in weak market

C, WFC, JPM, USB- bludgeoned in last few days- looking to buy in relative strength

LVS, MGM, ASCA, PENN- casinos destroyed…LVS now down 50% plus in a week. Same story; looking for relative strength if market turns

TELOZ- its main two oil platforms were destroyed by Hurricane Ike

STEI- deal off with Service Int’l

MET- warned badly on earnings and will be issuing 75 million shares. Stock should open lower; if it does and inches toward unch, phenomenal buy thru unch

LM- debt ratings cut after-hours

COST- bad earnings



ACGY .42/820M .39/838M 1.32/3.04B 1.71/3.48B

COST .93/22.95B .64/17.29B 2.92/72.12B 3.27/78.77B

LNN .70/112M .53/98M 3.02/440M 3.94/536M

MON -.13/1.90B .64/2.40B 3.55/11.36B 4.60/13.29B


RT .11/330M .00/312M .54/1.31B .68/1.32B

Good luck today.

Tuesday, October 7, 2008

TUES. OCT. 7- Psychology And The Markets

Quick trivia question: on what date did the Dow Jones Industrial Average closed at its all-time high? Cue “Jeopardy” music. No, really…think about it. Hopefully, by the time you got to this sentence you have a guess- ready? October 9, 2007. That is right. The DJIA closed at 14164.53 less than one year ago today. Since then, the benchmark average has fallen almost 30% to a level first hit almost 10 years ago. When one takes a step back, these facts are simply stunning. First, the destruction of wealth in the American capital markets has declined at a near unprecedented rate at the margins in the last year and nominally at numbers that total literally in the trillions of dollars. Second, on a deeper and even more introspective level, the stock market (the DJIA anyway) has officially gone nowhere in nine years. Many of the kids who graduated doe-eyed from college in 1998 and were given the mantra ‘buy and hold’ now find themselves underwater in their 401-K plans with many of their pension plans (particularly in major financial companies) nearly wiped out. One cannot begin to measure the psychological impact of the financial losses many people are suffering- however, one already sees the implication of this in the fact that the government is now on the verge of taking control of the entire financial system. For day traders, we can expect more volatility in knowing that all of these quick fixes don’t solve the problem- it is psychological. The money at this point is there- it is a matter of getting people to spend it and banks to lend it.

Overnight, markets in Asia were mixed with Tokyo down again in breaching the Nikkei 10000 level, but Australia was up following a surprise bold interest rate cut. European bourses were generally higher. Futures have been all over the place overnight, but indicate a bit of a stronger open. With stocks having closed in the middle of a range yesterday, it makes day trading a very hard venture this morning as there no significant momentum to either side. Notable is LIBOR which continued to move higher; this indicates credit markets are tightening more. If this trend continues, the markets will likely sell off as the day progresses but the early strength following the BAC warning is notable.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


FCX- closed near a high; looking to buy thru unch if it opens down

ENER- closed near a high; looking to buy thru unch if it opens down

CHTT- on Cramer; if it opens weak, would buy in any market strength


BAC- warned and is issuing shares

XTXI, HERO/other tertiary energy stocks- many small cap oils are due for a bounce…if oil bounces, these type plays will likely bounce hard on short covering

ASCA, MGM, LVS- among other casino stocks, they’ve suffered non-stop selling as well for days- particularly after the LVS news from a couple days ago. Due for a bounce in any rally.

DVA- closed near a low; looking for more weakness in shorting below 48.50

XL- closed near a low; if it is locatable with no bounce yesterday, would short thru 13.55.

LNY- closed weak; would short thru yesterday’s low around 13.05

HPT- closed weak would short thru yesterday’s low around 15.10



ARA 1.03/575M 1.27/599M 3.28/2.19B 4.37/2.21B

AYI 1.08/539M .97/499M 3.76/2.04B 3.88/2.05B

CYCL .10/258M .09/258M .37/1.04B .48/1.07B

PAR .01/41M .02/42M .09/170M .27/224M

SWY .47/10.08B .81/14.39B 2.25/44.70B 2.41/45.53B


AA .61/7.38B .74/7.48B 2.43/29.74B 3.35/31.26B

YUM .54/2.78B .49/3.49B 1.90/11.36B 2.11/11.61B

ZZ .08/390M .08/382M .39/1.54B .45/1.54B

Good luck today.

Monday, October 6, 2008

MON. OCT. 6- Bill Passage Didn't Help

So, on Friday, the House passed the Senate bill giving power to the $700 billion rescue for the banking system, subprime mortgages, and of course provisions set aside for such entities as manufacturers of wooden arrows. And what was the market’s reaction? An evaporation of a 300 point Dow rally following the Wachovia-Wells Fargo tie-up. The reason? Because nobody knows exactly what will happen now. The reality of the situation is that the world’s economies are in rather dire shape. We do have a deal in place via Congress, but what is the framework for said deal? What is the value for everything? How long will it take to disburse the money? The problem now in this deepening crisis is one of confidence. While it is great that people like Warren Buffett are willing to close his eyes and have confidence in America, everyone else needs to do so in order for things to get going again. People with credit scores of 675-700 are routinely getting turned down for car loans. This is not a Wall Street problem. It is a Main Street problem. The fact that the equities markets closed on their absolute lows on Friday with no major catalyst to spark it higher simply is not good to put it mildly. What occurred politically on Friday is akin to buying a house which needs a lot of work; sometimes, it can take upwards of a year to get that house. When you get the house, you are relieved that you finally have a residence. Then now that you have that house, you realize you need a new kitchen, a new bathroom, that air conditioner needs replacing, and so forth. And oh, you have only a few days to get all of the work done because your mother-in-law is moving in so the house needs to be perfect. This is where we are now. And if there are no immediate-term answers, it is going to get very scary very fast.

Overnight, markets were drilled throughout the world. European and Asian markets were down anywhere between 4% and 6% across the board. Anything can happen at anytime today. Trading will be rumor-driven and very emotional today so be careful and be very nimble.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


WFC- stunningly closed lower on Friday after its WB announcement; in a decent market, should be one of the first big banks to rally on short covering

NUE- mentioned on Cramer’s show; should be good for short covering if market rallies

STT_ got contract from government to handle MBS’s in bailout; should be stronger than most financials all day

DRYS- announced it is actually expanding its operations. Shocking in a market like this and simply shows company has confidence in itself; if it opens lower and goes positive, looking to buy thru unch.

HIG- received capital infusion


CBL, FR, CBG- among other property stocks down on Friday; rallied into close, but may see more follow-through selling today

MHH- drubbed; wonder if it inches toward zero today

ARA- down hard on Friday; looking to short thru unch if market opens higher

X, AKS- tried to rally and failed; in a good environment, these will snap right back after at least holding positive ground Friday

CSIQ, FSLR, SPWRA- among other solars, this group got crushed last week with falling oil; if they open lower today and market rallies, buy them…buy also on an A-B-A2 off of the open if market opens up

YRCW- major trucker suddenly in danger of collapse; in market weakness, looking to short thru Friday’s low of 7.42 if not a tad before

PLD- extremely weak on Friday; looking for follow through to downside if market weak

NYX/MAC- bizarrely weak on Friday; looking for a bounce in market strength off of open
Good luck today.