Thursday, July 16, 2009

High Octane

I don't do it as often as I used to but I must confess that I played hookey yesterday. I golfed with a good friend who has a very smooth swing. A very enjoyable day for sure which coincidently spared me from watching the carnage that yesterday was first hand.

What can one say about the last couple of days of trading but "WOW" and stand in awe of the power of the move. I would counsel the SEC to remember the last 2 days the next time the perma bulls complain about the short sellers. There are few things that can move a market like shorts on the run and the last 2 days was prima facie evidence of this. There is no higher octane fuel for the market like scared short sellers.

That said, I am not here to complain or whine or blame anyone but you had better be prepared for the the flip side of this. If you really believe that Intel's numbers were that rosy, and they weren't, if you continue to believe the shills talking on CNBC about the recession being over, if you really believe unemployment has peaked, well then this is precisely the market for you. Just make sure you have a seat when the music stops because I assure you it will not be a pretty sight.

Nothing at the root of the problem has been fixed, absolutely nothing. Delay and pray, nothing more. I am not here to be your morning downer but everyone supposedly knew how overvalued the Nasdaq was back in 1999-2000 yet everyone got caught in it. Just keep that in mind when the bought and paid for, commission dependent shills tout this market as a buy.

Here is some required reading I thought you might find interesting, or in the least fair and balanced.

Sprott June Report

By the way I don't know how many of you noticed the VIX moving higher lockstep with the S&P. For those not familiar with the VIX, the VIX, which is a volatility index 'usually' rises as the S&P fall and vice versa. This is a red light warning signal on the dashboard, its up to you to decide if it's worth paying attention to.

Full disclosure.... I sure as hell am.

I also want to point out that you should be very careful about disregarding the head and shoulders that all were talking about of recent as a failed pattern as I recall the admonition of a wisened old trader friend who used to counsel me the following; "the market always, always does what it is supposed to.... just never when."

Housekeeping notes;

On Tuesday I was stopped out of my long AZO position at $158.15 for a loss of about 1/4pt on 1 unit short.

I was stopped out of the following smorgasbord of positions yesterday;

SRS at $18.94 for a flat trade leaving me with 1 unit long.
SDS at $53.35 for a loss of about 1.5 pts on 1 unit.
FAZ at $44.60 for a gain of 1 pt on 1 unit.
BLK at $178.55 for a loss of about 1.5 pts on 1 unit short.
GS at $ 152.75 for a loss of about 2.5 pts on 1 unit short.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84
Long 1 unit Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41


Mike Masland said...

If an investor is a speculator who made a mistake and will not admit it, than what does that make you? You consistently jump into short positions time after time when the market is clearly telling us the direction is UP.

I think you have a bearish bias and that bias is going to cost you alot of money.

Harleydog said...


thx for reading and taking time to send me a note. I consitently jump into shorts because fundamentals and technicals tell me to be bearish ohterwise Iwould be bullish.

This is a bear market rally and being stopped out of shorts only tells me 'not yet'.

Just as in a bull market, rallies are to be bought, the opposite is true in a bear, hence my bearish bias.

All the best with your trading.

Harleydog said...


re: my last line, I meant to say in a bull mkt pullbacks are to be bought, the opposite is true, in a bear mkt rallies are to be sold.