What a Difference a Month Makes

I can't believe a whole month (almost) has gone by since my last post. That is not the way to keep a blog going. It's about time! Or lack thereof. Trading is a full time job the way I've been doing it. Problem is, I already or should say still have, another full time job selling real estate and this is the start of Season here in S. Florida so I am: busy.

Back to the subject at hand, my last post was about the best week I'd ever had in trading. This past week (Friday and Monday) were the worst 2 days I'd ever had in trading. In those 2 days I managed to wipe out an entire months worth of profits. These were not high risk trades in fly-by-night companies. We're talking IBD 100 stocks (MON and RIMM for example) with good entries.

To add insult to injury, the puts that I thought would balance out my position and had me almost delta neutral went UP!! WTF????

I know for a fact I am not alone in this upside down market. So many of us traders were in the same boat. Good seasoned traders got their clocks cleaned this week. I stopped out of all my bullish trades, took some (meager) profits in my bearish trades and decided to take a break until after Thanksgiving. I'll be out of town starting this week for a week anyway and do not want to babysit option trades.

It is really difficult for me to stay away from the market however. I tried to take myself shopping today and came running back by 2 PM to see if there were any compelling trades. There were lots of them! But I was good. I only took one. Bought a small position in Dec Put on STI. I've been watching this creep back up since I took some great profits in it last month and I think it's time to do it again. We'll see....

...And What a Week it Was!

Maybe I should have called this post Mr. Toad's Wild Ride for all the ups and downs, twists and turns.


MONDAY :

BIIB - I had noticed some strange activity on the stock price early in the day Friday where the bid was higher than the offer for about 20 minutes. And lots of volume so I figured I'd get me some too. At the end of Friday I already had a decent profit. And then they annouced a possible sale of the company after the market closed. On Monday morning I was doing the money dance when this happened:

TUESDAY:

Woke up to see my favorite stock TRAK was trading DOWN $3.50 in pre-market. This is a stock that had not had a down day in over 3 weeks and never traded pre-market. Some minor news was sending this into freefall and threatening to eat all my profits. I watched in horror as it continued to sell off in premarket, down over $6 before the opening. I realized I had a stop in and not only would I get stopped out but it would be at the worst possible price. I quickly cancelled the stop figuring it would rebound somewhat from what was obviously overkill and I could exit more gracefully. It opened and continued to fall, down about $8.50 before it ran into its 50-day MA and turned around. It rallied all the way back to -3.00 before backing off again, at which point I exited. Take a look at what it has done since then. Unbelievable!

WEDNESDAY & THURSDAY:

Spent most of the time hunting some new plays since I had been mostly in cash the week before when I was unable to trade. Loaded up on some good calls and puts which performed perfectly on Thursday, giving me my best single day in the market (except for the BIIB gift). A few trades had reached their targets or were close enough to pay myself and take some profits off the table. By Thursday afternoon I realized that I was really heavily bullish in one of my accounts, and couldn't find any bearish stock plays that weren't already over-extended. I quickly jumped into some IWM puts at the end of the day for 'insurance'.

FRIDAY:

Ugh! Thank goodness for my 'insurance'! As it is, it wasn't enough but it certainly cut the losses in that account by at least 60%. I was stopped out of almost every bullish position. I normally hate being stopped out but as I watched the market continue to fall, I was happy to be out with minor bruises.

The weird thing about Friday, at least the first half of the day, is that my put plays were actually UP on the day. One stock in particular, MDC, was particularly vexing. The stock, which was at the bottom of its channel anyway, was up almost a dollar in the face of the -300 point Dow until about the last half hour of the day. Earnings are coming up and I guess somebody must think they will be good. I exited with a nice profit:

At the end of the day, and the end of the week, it turned out to be the best week I've ever had trading.

Field Research

So this weekend I decided to check out two products of two very hot stocks that we've been discussing online . I've never traded CMG nor had I ever been in one of their eateries but happened to pass one right here in Boca yesterday. A quick U-turn (it was almost lunchtime anyway) and I was in front of my first CMG experience.

I walked in at 12:15 and there was a line almost to the door. Hmmm...maybe there is something to this company after all. I didn't really know what the menu was except for the burrito that Brett always talks about but got online and knew I'd figure it out by the time my turn came.

There was an olive-skinned young man in front of me sweating profusely and carrying a backpack with some kind of gizmo in it with a red blinking light. He was mumbling to himself (or possibly to me) but it was mostly gibberish or a very foreign language. At that point I was thinking that my little research experiment was not worth dying for and was inching my way backwards toward the door. Then I rationalized that if he was going to blow the place up he would have done it BEFORE waiting on line for 15 minutes. So I stayed and avoided eye contact.
I ordered the carnitas burrito. I didn't know what to expect but what I got was a football sized lump of dough packed with enough food to feed a small family for a week. And mighty tasty too!

My opinion on CMG - Maybe the stock IS worth $100/share. So, BUY BUY BUY!!

My second research project of the weekend was this Monster Java that Jeff has been touting. I went to my local stupor-market and searched high and low. No go. I even asked the manager if they have it since they do have other Hansen products. Never heard of it, he said, but he will order it for me. I was about to tell him that it's a "game changer" and to buy lots of it... but thought better of that idea. Next I tried the C-store at my gas station. No luck. There's another store or 2 I can try but I'm out of time. So the jury is still out on HANS. In any case, for reasons previously mentioned, unless that drink is liquid gold, I'll probably still not buy the stock. But YMMV.

Trading Parallels

TRADING PARALLELS

Since becoming immersed in the world of trading I am constantly finding parallels between other aspects of my life to the trading world. I have often thought that dancing is a lot like trading. So is art. Tennis. Real estate….the list goes on.

In the dojo where I learn and practice Taiko drumming, hang four framed Japanese characters with a sentence in English below each one. Although I look at these every week, I never related it to trading but for some reason last week something clicked in my mind. I realized that the way the dojo is run reminds me a lot of this wonderful trading community that many of us have come to call Home.

Here is what the four plaques say:

Manners, Harmony, Commitment,
Language and Unity of Spirit
How we conduct ourselves in the dojo and online in our trading rooms and blogs is basically the same. We are all here for the same reason. We are all committed to becoming the best traders (drummers) we can be. Respect for the dojo (blog); respect for each other.

Discipline of Body Strength,
Power & Stamina
If we do not take care of ourselves physically we will not have the mental energy and psychological fortitude necessary to be successful. Drumming is hard work. So is trading.

Musical skills, Artistic Expression & Rhythm
You’ve heard it said many times that technical analysis is an art. Creating the perfect trade is an expression of that art. Being in tune with the rhythm of the markets will allow that art to flourish and become the masterpiece you envision.

Discipline of Mind, Self Control and Spirit
This last one is for me the most important. Without the discipline and self control to plan your trades and trade your plan, you will not be successful. The spirit of the Taiko drummer is a warrior’s spirit. The spirit of a trader is much the same.

Attitude is everything.