SOLD -10 SKF @131.74

I’ve been stopped out of my -2.0 trailing stop placed just minutes ago this morning. $135 seems like a strong resistance for SKF. We barely broke it this morning on decent volume. Furthermore, $138 is a 50 day MA and $140 is a good round number resistance. In other words, there are a few resistances to be broken going up from here.

Having entered SKF at $104 in the new year, I am content with the gain for this trade. It has exceeded my original short term target of 120.

However, I would watch SKF and see if it breaks below 130. If it can stay above 130 today, then that’s a very good sign.

UltraShort Financials

Sold -34 DUG @23.44 and Bought +10 SKF @104.125

DUG broke my $25 stop yesterday. I gave it some room because of the recent $6 / share distribution on Dec 22. So that effectively shifted the chart by 6 points. However, the Crude Oil broke above it’s 20-day MA and is showing signs of strength, Figure 2. So I decided to get out of DUG as my short hedge and move into SKF.

My DUG shares were bought for $30. Distribution was $6.06. So my net lost per share on this trade is [($23.44 + $6.06) - $30] = -$0.5. Which is a total loss of $0.5 * 34 = $17 + $10 commission. It’s basically a breakeven trade.

UltraShort Oil & Gas

US Oil ETF

As I was saying, I replaced DUG with SKF as my short hedge. We are testing the Oct support on SKF. Furthermore, despite the S&P breaking above the down channel this week and along with SKF’s distribution, SKF is still above the psychological 100 level.

UltraShort Financials

Stop: $96, the October support.

Target: $120, a congestion zone.

Bottom line: This is merely a short hedge play so I actualy don’t hope for big gains on this.

Auto bailout shakeout December 13, 2008

To bail. Not to bail. To bail. Not to bail. Friday’s market gapped down big time on news the bailout failed to pass the senate on Thursday night. Then just hours later, rumours were surfacing about the White House stepping in with the TARP money. As of Saturday, FP headline reads White House holds off on auto bailout.

Since I’m no economist, I am not going to discuss about the auto bailout here. What matters to me is the market. As I was saying, the market gapped down Friday morning and even touched 851 in the first few minutes. However, it hacked its way back up to close positive at 879.73.

We managed to hold this critical 850 support level as I noted in Thursday’s post-market analysis. However, I wouldn’t want to add to the longs at this point because both of my uptrend channels have been broken. I feel that at this point, it is safer to watch and be more late into a trend than usual.

Specifically, I would like to see the S&P 500′s behaviour around 860 or 900 (Figure 2), which ever comes first, before adding to my existing positions.

S&P 500 ETF

e-mini S&P 500

On a more personal note, my stops for DRYS and SKF were triggered on Friday.

On December 12, 2008 8:30:32 AM, my -$1.0 trailing stop for DRYS were triggered (stop at $7.90) and my last 100 shares were sold for a basement price of $7.34. I have definitely been a victim by the market makers gunning for stops. As DRYS pushed higher throughout the day and closed at $9.37 on Friday.

As I’m actually away on a trip for these few weeks, I don’t think I’ll re-enter DRYS until it clears the resistance at $12. I simply cannot watch it as close as I would like.

In any case, I already unloaded half my position previously at $11.11. So although I feel I’ve been ripped off with my stop, I believe this is overall still a good trade because I unloaded on strength and have set a reasonable (using my channel) stop just in case it turns back down on me while I’m away.

DryShips Inc.

My Ultrashort Financials (SKF) stop was triggered on Friday too. This one I am a little dumbfounded. I have set my trailing stop at -$17 on the mark for SKF. The stop price of $124 was triggered and my 7 shares were sold for $124.09. Having bought at $128.83 the previous day, this is a small loss.

Notice that giant opening spike in the chart below? This is yet another example of the market makers gunning for the stops. I believe I should have set a hard stop instead for this one since I’m using it as a hedge.

Ultrashort Financials (SKF)

This is still a trader’s market. Since I’m away oversea, I can’t manage my account as effective as I would have liked. Setting the trailing stops was a safety measure. Although they worked against me this time, I still think it was a good decision given my circumstances.

Anyway, I am at 50% longs now with no hedge (not good). My other 50% is in cash. My primary short term goal now is to seek out a good short entry to hedge my longs. I don’t think I have the guts to add anymore longs until I see more strength in this rally.

BOUGHT +7 SKF @128.83

I intended to take on a short to hedge my position after I unloaded my DRYS shares yesterday. The main reason is that I’ll be away for a couple of weeks and will have limited access to the market. So it’s only prudent to hedge my long positions in this volatile market.

The 115 level was an obvious resistance yesterday for the Ultrashort Financials (SKF). I thought of entering at about the 110 back then, but resisted the temptation to catch a bottom and waited until it can break through 115. We didn’t stay below 115 for long today. And as you can see, I’m in at 129.

Ultrashort Financials

Ultrashort Financials

Upside: Market is still in a downtrend. SKF broke above 115 resistance level. High volume test of $130 resistance ($129 is 200 day MA) at end-of-day today. CO and Stochastic are both bullish on the daily.

Resistance: $130.

Downside: Still within downtrend channel. Heavy resistance at 130 level.

Support: $115.

Bottom line: This doesn’t look like a good trade. That’s why I’m only entering a small position as a hedge for my longs. Frankly, I hope this doesn’t work out. Since I’ll be away, I have set a loose trailing stop.

Bought +7 SKF @149.65 And Stopped out @ 144.58

I bought some SKF today after being stopped out of DUG to hedge my longs. The low volume in the market made me believe this rally would not follow through. In addition, the difficulty of S&P to test 870 looked like a good entry point at the time, Figure 1. Citigroup was also struggling to break $7.00 even though S&P made a slightly higher high. So I was worried about taking a hit for my longs if we’re to go down from here. That’s why I made a position in the ultrashort. SKF looked good because $150 seemed like a good support and the financials are the banes of this crash so far.

In hindsight, even the channel on SKF, Figure 2, shows we are in a downtrend for SKF, so up for the market.

I picked up SKF at 14:28 and was stopped out at 14:54. The reason for my exit was C breaking above $7 and then kept on making new highs. My mental stop was at $145 too. I kept myself out for the last hour promising that I would not enter short again unless C can stay below $7. That never happened and C closed at $7.05.

NYSE/S&P internals

Ultrashort Financials