FLASH!  Supreme Court Health Care Decision Imminent

This is a big one.  The market has been watching this for a long time.  It will affect a lot of people and it will happen any minute…

A lot of people think that part or all of the law will be overturned.  Lots of players have big positions.  Many more are ready to execute their trades.  The decision will make a splash.  It could go one way or the other…

So what do we do?  Myself, I am just watching.  Could be a non event.  Then again if the result is unexpected lots of players will reposition.

Should we play the “Game of Random Predictions” that they make you play on TV?  You know the one, where they ask all the experts they interview to predict the future and when the future comes, the lucky guy with the best guess gets invited back to try again.

I will play that game once in a while.  We are here to learn and have fun.  But for now, I have to get back to my day job.  So just assume I guessed and got it wrong…  😉

So watch this event.  See how the market trades when it hits.  Then keep watching.  In a few days, how much will things be changed as a result of this?  There will be an affect to be sure but it will fade.  How much and how fast?  You always have to ask…

When we move on the new new thing, how much can you attribute to this event and how much to the next thing or the next or the next…

This may cause a big splash today but don’t get fixated on this one thing.  There are many cross currents out there.  Don’t forget the tides and waves…  Remember the EuroCrisis?  That will be next.  Again…  Unless it is something different.  Be ready for it!

Predicting the unpredictable.  Impossible.  That is the problem.  We can’t predict the future in the market and we can’t predict the future in general.  So we can choose to do nothing or we can choose to watch, learn, make educated guesses and adapt.

I am here to show you my methods and guesses.  You and I will learn from my mistakes here in public.  I may mention my trades, but what is just as important is what I watch.  There are thousands of stocks out there, trading every day.  I am watching more than I am trading, everybody is.  I learn a great deal by watching others make and lose money.

One stock that I have been watching for a few months is ARNA.  Art DeSale over at the Art of The Sale blog has been in this stock for a while.  Since he mentioned it to me in conversation, I have watched it periodically.  If you look at the one year chart, he has done pretty well.  He knows that industry so he trades in that industry.  I don’t.  In the past I have tried trading the Biotechs and I usually lost money.  So I watch to learn, maybe to trade another day…

So ARNA ran up to over $11 per share!  Look at the 1 year or 6 month chart.  You can see “low tide with that wave coming in”.  Zoom in to the 1 month chart and you see it roll in and actually pull back.  Then look at that 5 day to see the splash!  They had some drug approved or something…  The news hit and the splash took them up!  Yay!  So now what?  You never know.

The charts we just looked at tell us the trend is  up.  The news tells us the trend is up.  Market wisdom tells us buy the rumor and sell the news.  What am I going to do?  Nothing.  Watch and learn.  That is what you need to do most of the time especially in a sector where you have a record of loss.

So I missed making money on this one but I am having fun watching it and learning.  The stock market technician in me, tells me that the trend is up.  The stock market fundamentalist in me says, FORGET IT!  The engineer in me sees the long wave, low frequency stuff but also the high frequency noise.  But it is the street wise country boy in me that says look at the big picture and be careful.

Be careful and zoom out.  Zoom out to a 5 year chart.  Look at the price chart in 2010.  The stock had a run up and lost over 75% of its value!  Yikes!

So will this time be different?  If so why?  Or will this time be the same?  Why?  I don’t know.  You never know. You can’t predict the future but you can have fun watching things play out.  I am not trading this one but I am watching it to see what I can learn from it for the next time I do trade…  I am guessing it will go lower, at some point but that’s a guess.  It always is…

The start of a new week.  To look at the financial news, you would think it was the end of the world.  Sort of like last week.  And the week before that…

Last week it was the EuroCrisis.  Again…  This weekend, that was the big talk too.  Then the news became more about the Supreme Court decision on health care in the US.  Another biggie.  It will effect about 18% of the US Economy for years to come.  So the TV Talkers are moving on from the EuroCrisis to the Health Care Crisis.  That is until the news breaks.  Then  they will move back to the EuroCrisis, until the next “crisis of the day”.

I enjoy this stuff, so much so, I am watching, listening and learning from it every day.  The world has its lessons to teach.  But you can get caught up in watching each stock market tick and miss the trends.  Don’t miss the trends while you are fixated on the ticks.   Zoom out.  Take a step back.  Don’t miss the forest for the trees.  They say that for a reason.

So if you like watching the day to day ticks, as I do, enjoy!  But don’t forget to look at the bigger picture.  “Zoom out” from that daily chart to that weekly chart, then keep going out to the monthly, quarterly, yearly and long term multi years.  Use a big index to look at the big picture, I use the S&P500 because it makes sense for me.  What will you use?  What applies to your life and your trades?  Maybe the S&P500 or The Dow or maybe the NASDAQ has the clues for you. Keep things in perspective.  Zoom in and zoom out.  Watch the reaction when the news hits and then watch the crowd move on to another news cycle and another crisis.  Then repeat the process.  Then you will see that that big market move on that one big day, really didn’t make all that much difference when you start looking at weeks and months.  Keep it in perspective.

Keep watching and listen to what the market is telling you, not what the TV Talkers tell you that the market is telling you.  The world works in a certain way, no matter what they say… Have fun learning.  I will be watching too.  Right now, I have to get back to work!

The funny thing about moonlighting, that is working a second job, that is “moonlighting” can consume so much time.   I moonlight in the market and at the firehouse and part of the cost of doing business is time.  Recently the firehouse and the website technical design has come first, so I have not posted as much as I would have liked.  At this point I would like to catch up on my Moonlighting In The Market positions as we go into Friday.

First, where do I stand in the trading account that we will be watching here?  Four stocks positions that I entered recently.  DRYS, HERO, MGM and TQNT, all are up a percent or two.  And I have some Ford Call Options.  I added a January 2013 Call at $12.50 to the other Calls at $13, that expire in September and December.  That is what I am holding in my trading account.  Now.  Today.

My trades are the subject of this blog, my investments are not the subject of this blog but I will again point out, in those investment accounts, I am indexed and playing it conservatively, long term, no trading there.  No market timing there.  Just conservative indexes, with some small cap, emerging markets and technology plays.

So for the year I am down around 10% in the trading and I am around 25% invested in the trading account with the balance in cash ready to deploy.

The subject here, that we will use to study the market and the world as we know it, is the trading.  So what can we see?  A trend maybe?  What are the long term trends?  Shorter term?  What are the events?  Like watching the ocean.  Any place your boat sits will be effected by tides, waves, ripples and splashes and so to will the market be effected by long term trends, shorter term trends, news and events.  That added to psychology and sentiment and of course the fundamentals of a company will all add up to the market price of the next tick.  The one where we can buy or sell or just watch…

It is all about timing, timing the trends…

Look at my three F option positions.  The two earlier positions that I took, are way down and may eventually expire worthless!  The other position is only down about 10%.  That level of loss is due to timing.  Better timing gets better results (or in this case, not as bad).

Lose and learn.  Profit and protect.

There is so much I want to discuss.  To help you learn about your world but, I need to learn about my business and even if it is a  sideline, it still costs time.  So in order to get more posts in more frequently, I will make shorter posts…

So I am watching the market today.  I like to buy on Fridays because the market often goes down a bit, as the short term traders get out for the weekend.  I tend to hold longer than they do, so when they sell, I buy the stocks that go on sale.  So maybe today I will buy or maybe just watch and learn.  Since yesterday was down big, maybe today will snap back.  Or maybe the longer term trend will rule and it will be down bigger today.  If that is indeed the trend.  Who knows?  No one.  No matter how confidently people tell you that they can predict the future, they can’t.  We can’t, I can’t.  But we have to evaluate and participate.  And I have to get to work!  Thanks for coming by…

Just wanted to post a notice of system upgrade for you.

The posts before this date, June 18, 2012, have been manually ported to the new web page structure and the dates are accurate, although the times of the post may not be accurate.

So if you look at one of  my previous posts and you see that I predicted an event before it happened…  I did not.

It would be very nice to have the gift of prophecy but I do not.  I can’t predict the future.  Others may claim that they can predict what the stock market will do.  I can’t.

I was planning to take a little time last Friday to start buying into the market.  I was lucky to be in cash as it went down but at this point it has gone down a while, market sentiment is terrible and everybody wants to stay defensive.  The new “end of the world news” from Europe isn’t all that new.  So I figured there may be a turn soon and wanted to start to buy in.  Problem…  This is a sideline and my day job didn’t allow it.   Neither did my other sideline as a volunteer firefighter.

During breakfast with one of my friends and a Chief officer in the fire company, the pagers went off for a house fire.  It was a house fire alright.  You could see it burning for miles.  So much for taking a little time to invest.  My day was shot with putting out a house fire along with my fellow firefighters.  I figured I might make it in for the last hour of trading.

It was looking good for an opportunity, the market was going down big and it was Friday, so the folks who where liquidating positions into the weekend were helping the down trend.  Time to buy, then the tones went off again.  Accident this time…  So instead of buying stocks at the “Friday Afternoon Stock Sale”, I was the Incident Commander at the accident scene.  Rewarding yes, but volunteering doesn’t make money it costs money…  So I felt like I missed the buy on Friday.  Then I sat back and looked at it.  A few percent.  A daily move that looks big when you are zoomed in on the daily chart, but zoom out to a quarterly or a yearly chart.  One day is just a blip.  Even when the news tells you it is the end of the world.  It isn’t…

So yesterday.  I expected a bounce.  Didn’t get it.  Everything was still on sale.  Maybe a bottom?  Or not…  Trying to get out of the habit of trying to pick the perfect entry point, shooting for the bottom tick of a market bottom.  Just want to be somewhere near the bottoming range.  This is more realistic.  So I decided to make a buy to get back in the groove.  Just in case we are bottoming.

Bought a few Ford $12.50 Calls set to expire in January of 2013.  Bought in at $0.32.  Up almost 10% this morning!  Brilliant.  If I sell now.  I am not selling now.  So weather this was a smart move or not remains to be seen.  For now it served the purpose.  To help me get back in the game…

Originally Posted on June 5, 2012  (Before System Upgrade)

Checking in and the market is still fretting about the end of the world.  It always is…

They say the market moves based on its prediction of events six months out.  How can you tell that?  You can’t.  Just have to take it for what it is worth and see how it applies to the stocks you watch,during the life you live…  Also be a skeptic, look for where and when it doesn’t work.  Always look ahead and look back at what you have done in the market.  Learn from your mistakes and play to your strengths.  This blog is not about stock picking.  It is about learning how the world works and how to handle change in the dynamic world we live in…

So we watch for change.  To that end, the other night, I heard a report on the radio that the upcoming Greek election may not result in Greece leaving the Euro Zone.  So that would mean that it isn’t the end of the world!  So that is a few weeks out.  Is that a signal of change or just a blip on the radar?  Who knows?  No one…  But we have to make our decisions on knowledge, information, the scientific method and a best guess.  Then we have to hedge our bets, for when we are wrong…

Looking to deploy some cash here.  Do I buy recovery stocks or defensive plays?  At this point.  Maybe a little of both.  Take a position and adapt…

Originally Posted on May 31, 2012  (Before System Upgrade)

Panic!  Panic!  Everybody PANIC!!!

Ok…  Now that we have that out of our system, lets put things in perspective.

It isn’t the end of the world.  It never is.  Not yet anyway…

When the end of the world does come, we probably won’t worry too much about trading the market.  Life lessons will be important.  So every time things get bad out there, lets watch the market and learn the life lessons of how things work.  From these lessons we will learn how to make the best of things during the worst of times…

So as the European Union appears to crumble and markets around the world fall, we want to look for opportunities.  No need to rush in but as stock prices fall but we want to watch, listen and look for opportunities.

In my case, I am lucky to be in cash as the markets fall.  This is the point where the marketer in me should point out to you that I am a genius to be in cash as stock prices fall.  That is the point where you look for the other side of the story.  You want to remember that I missed the last rally.  I was in cash then too.  Prices go up and down and no one can predict the future.  So we have to learn to play the trends in a given time frame and protect ourselves when we are wrong…  I have been too protective 100% in cash (except for a few cents worth of the F Options, remember them?).

So what to do?  In my retirement accounts, that are not the subject of this blog, but I mention for perspective, I leave them alone.  Let them ride.  Mostly in safe long term stock funds, some small cap stuff and some international.  No trading there.  Only long term dollar cost averaging into the equity markets in good times and bad…

In my trading account, the one that is the subject of this blog, the one that is my “play money”.  Pay to play?  Pay for an education?  Here I am 100% defensive.  100% cash.  This has been a good thing.  Temporarily.  In this down market.  But the market will change, so we must adjust accordingly.

So the stuff on my shopping list, that looked cheap last week, looks cheaper this week…  So buy, Buy, BUY!  Right?  Not so fast.  It looks like the trend in the market is down and the mood of the market is bad.  So I am guessing the trend will continue down.  I look at charts for big indices for a few years, a year, a quarter, a couple weeks, a couple days and then intraday.  So I start from a big picture and zoom in.  Look at the tides, the waves and the ripples…

At this point, my guess is that the trend will take the markets lower but soon there may be a reversion to the mean.  Most traders watch a move and then look for the retrace. That is the trick.  Will it come?  When?  How strong?  How long?  You never know but you have to make an educated guess about the market and how it applies to your life and your stock picks.

So right now, today, this minute, it looks like this to me.  The long term trend is up and pretty strong.  The medium term trend, is up and down, no trend there, just flat.  Short term the trend is down, pretty strong.

The market mood is bad…

I am guessing the trend will continue down but I am ready for it to turn up, in the short to medium term.

So since most of the stocks I look at are held by a good percentage of institutional investors, they will track the overall market pretty well.   Others I follow track the market but swing up and down more than the market.  That “swing” is measured in beta.   So if I am looking for stocks to hit bottom, I want to pick the exact bottom and buy the highest beta stocks to maximize the price appreciation as they bounce off the bottom.

Since you can’t predict the future you never know when the bottom will be.  So you have to hedge your bets.  Diversify the stocks you trade and ease in with different trades over time.

So I will be watching.  Might buy a few stocks here and there just to get back in.  It might be a little early to get in but it is probably better to get in and be in early and ride through some bottoming, rather than be too cautious, wait too long and totally miss another rally.

So will Euro Zone strife bring the market down more or will a Facebook IPO rally take us to a new bull market rally.  There is so much to consider and so little time.  Time.  It is time for me to get back to work!

Originally Posted on May 18, 2012  (Before System Upgrade)

Since our previous time together I have sold my positions.  All sold at a loss…

On 5/4/12, I sold HOV, BYD and VXX.  Sold the HOV and BYD because they were down and I wanted to limit my losses.  Sold the VXX because I bought it betting it was near a bottom and it was not holding its price…  That is the bad news.  The news that is even worse is that my Ford $13 Call Options for Sep and Dec 2012 are down big.  Really big! One down over 70% the other down almost 90%.  Almost worthless…

So I am effectively in 100% cash again and the market keeps going lower…

What a terrible time to start a blog on the market!  Not really.  This isn’t about the stocks, it is about the world.  This is the way the world works…  This is the market we have to trade.  That is reality.  If I was trying to sell you on my stock picking prowess, I would not mention these losses.  I would call your attention to my next great stock pick.  Not me.  I am not here to pick stocks for you.  I am here to make my mistakes, out in the open, for you to see.  I am here to show you one man’s trades and how learning from those trades help me learn about the market and the world.  You can watch and learn from my mistakes and hopefully understand your world a bit better…

So now you know how bad it is (in my trading portfolio anyway).

The good news is we are caught up to where I am today and we have cash to deploy in a down market.  A down market means stocks are on sale.  The bad news is that this moonlighting thing is my second job, a sideline.  So I have to get back to work.  I will work to post shorter articles for you more often.  It is all about finding balance in out lives.  Balance between work and play…

Originally Posted on May 14, 2012  (Before System Upgrade)

It is Friday.  The end of the day and the end of the trading week.   Lots of traders will close out their positions and sell into the close, so that their money is not at risk in the market, over the weekend.  Sometimes this creates a Friday afternoon “sale price” for those of us with a longer time horizon.  Doesn’t always happen but when it does you can sometimes get a better entry point.  Watching for that today.  Doesn’t look like it will happen today.  So we watch and learn.

Still holding all previously mentioned positions.   The F Calls in Sep and Dec are down big but this week if I had bought at the low when I was looking at buying more, I could have doubled my money off the low.  I didn’t do that because I didn’t want to “double down” into a losing position.  I have done it before but with options, they eventually expire worthless.  So if you are not “right” and “right at the right time”, then you lose it all…  So I will be happy if  my current losing positions come back to profitability.  They are pretty volatile and there is plenty of time for them to come back…  Speaking of time, wish I had more but I have to get back to work, my day job.  More moonlighting with you later…

Originally Posted on April 27, 2012   (Before System Upgrade)