Friday, February 29, 2008

Traders getting the Sh!T kicked out of them

4 comments
I suspect TraderFeed is getting high traffic right now as I'm noticing most traders are getting there accounts beaten up from all the chop that's occurred over the last 6 weeks.

Traders facing frustration-

Trader Mike
Dinosaur Trader
Stewie
Retard Trader

In other news DT is taking a break from blogging. I checkout DT's blog everyday to see the performance of the Virtual Office Traders. These last 2 months have been very difficult to trade. After my big loss in January I went through a period of depression as I predicted, caught the nasty flu that was going around and was sick for 3 weeks.

Trading with a smaller account is much harder and it forces you to stick to your stops or else you will blowup quickly. Since the start of the year I've been learning how to code with the goal of being able to backtest and make an automated trading strategy. I've got some new ideas I've been researching involving Pair trading. The focus of my new trading ideas is not to make an ATS based on a candlestick formation or some variation of indicators that tell me when to buy or sell. My trading idea is based on statistical deviation between a pair of stocks/indices/bonds with a focus on scalping and short term holding periods of 2-10 days.

I know many professional traders base there trading decisions by comparing different indices/sectors/stocks. We look for divergences and deviations between stocks that have a high correlation with one another and try to correct any miss-pricing between stocks/indices.

Some traders use a market opening order method in there trading. Premarket these traders scan for stocks/sectors that are gapping up or down and look for accompanying stocks that should be affected by the gapping stock/sectors.

There are many trading strategies out there to choose from. One thing that I think many traders lack is confidence and friends that help them in their trading decisions. Wouldn't it be nice to hear the opinion of another trader before you make a trade in case they see something you don't and warn you of something you don't see? I remember Trading AAPL back in January and I was long when it was tanking hard. I was a deer in the headlights not wanting to take the huge loss that was mounting and Stewie asked me where my stop was and I said something cocky like "$0". At the end of the day I had my worst stock loss ever and had lost $10,000 on my AAPL long by being a dumbass that didn't listen to another trader trying to help me out. If you have someone that is trying to help you out, please listen to them, because it may help you and it can't hurt. Also trade with a plan before you make each trade. The #1 reason I've lost so much in trading is from trading without a plan.

I'm open to sharing ideas, working with other traders, and making new friends. My email- highprobabilitytrading@gmail.com

Thursday, February 28, 2008

Move the Markets

3 comments
Richard's gotta be pissed at this.

10 Reasons to Hate Richard / Move the Markets

Amazing the amount of work that went into "Richards" myspace account.

The Evening News

0 comments
I like Chamillionaire's music- (He's got meaningful lyrics)



This music video lyrics pretty much sums it up for today's news.

[CHORUS]
Gas prices raises, the money keeps burning,
Dropout rate rising, so what are they learning?,
Sending the troops in the war so I turn in,
To today's evening news.

Major Themes continue

3 comments
Gold and Oil continue up and weakness in Financials continue.



I think the trend in Gold will continue until the Fed reverses there position on interest rates. Maybe I'm missing something here, but I see inflation as a bigger problem right now than trying to maintain growth in the US by cutting interest rates. Bernanke said he cut rates to help restore confidence in the financial institutions. On January 21st, I probably would have done the same. However, I think the belief that the Fed is going to keep cutting rates and keep them down isn't going to play out for very long. Bernanke and company are smart guys, and the blame shouldn't be put on them. I agree with the senators complimenting Bernanke on being sincere in his statements and being straightforward in his remarks. It's interesting to note that one of the senators asked Bernanke today if he thought that reducing interest rates would help the economy and housing market. Mortgage rates are still high even though short term bond yields have come down. The idea of cutting interest rates to in effect lower mortgage rates and help boost buying in homes hasn't worked thus far.

While short term bond yields are lower, the long term bond yields haven't come down very far in comparison. It has been noted that any further interest rate cuts would in effect put the real rate negative when adjusted for the the current inflation rate. Bernanke is hoping inflation will stabilize and come down in the future and I think that as soon as inflation indicators (Oil,commodities) come down that the Fed may increase interest rates again, which would hopefully help the US dollar. The next FOMC meeting is going to be huge IMO, and I think there is potential for a sharp reversal in all markets shortly there after on what further actions the Fed takes after the next meeting.

5yr vs 30yr

Wednesday, February 27, 2008

Bear Hunting

0 comments
This guy is hunting you bears down today.





In other news-
Michael Jackson faces forced sale of Neverland
LOS ANGELES (Reuters) - Michael Jackson's famed Neverland Valley Ranch in California will be foreclosed and sold on March 19 unless the pop star pays a balance of nearly $25 million, property records showed on Tuesday.

Tuesday, February 26, 2008

American Idol

0 comments
I'm trying to decide who's hotter right now.

Paula Abdul



or singer Danny Noriega

Commodity inflation, Dollar new all time LOWS

3 comments
Todays top performing sectors. (Trailer park homes and Toys & Hobbies? I guess the funds think since everyone is foreclosing that we are all going to have to move into trailer parks and buy manufactured homes, also since no one is buying new cars, money is flowing into auto part stores, because people will have to fix there own beaten up cars )


Great, now Yahoo finance is adding momentum to commodities.



With the US dollar at ALL TIME LOWS, Gold went straight up from open to close today. (20+pts)

THE US Dollar, now worth 66 cents in Europe. Good Heavens.......



Closing position (Bullish on ZF and ES, bearish on ZB and ER2 as usual)



Morning position


POT,,,,If you shorted this stock you don't have a POT to Pee in.


DBA, new Highs, Ride the Ags to $50


EWZ getting ready to make new highs. Brazil says, What bear market ?


India's market looks F$%Ked

Monday, February 25, 2008

ES video

4 comments


No commentary. Just a video of ES chopping around.

Match.com

1 comments
I'm lonely and looking for a hottie. Match.com may be the answer.



This guys funny

Stock Chop & CRB Index Momo

0 comments
I really see a lack of buying on these up days. It seems like the only up moves we get are from surprise news events, such as the Ambac news. Treasury Yields seem range bound until Bernanke speaks Wednesday. It would be nice to see interest rates cut again and see an attempt in the treasuries at retesting January 22nd lows and then at that time going short ZB with a long term bullish outlook on 30yr treasury yields.



My Hedge position looks like it maxed out its loses at -$800 earlier today.
Interesting to note both bond futures positions are back to break even.



The CRB index has been on a tear and looks to be going exponential.
This leads me to question the inflation outlook in the US. With the CRB index looking like it does, we could very well see a reversal which would be hugely bullish for all economies around the world as commodity prices deflate.








Ag's have been on a momentum bull run for months now.
Oats


Wheat

Slow Choppy Day and CNBC is annoying

0 comments
It looks like the indices are narrowing even more as everyone waits for the real breakout. I feel todays CNBC show is the most annoying I've experienced in quite some time. The market just popped 20pts off Charlie Gasparino coming on. Nothing but arguing on CNBC, absolutely annoying.

Feb 25th Recession FLU

0 comments
The word Recession is going around infecting people like the Flu has been lately.
I've felt sick for over 3 weeks it seems like now. There's numerous economic reports out this week which are surely to create some volatile moves in the market. Volatility normally means downside action. Although the bulls did some BS rally at the close on Friday, I wouldn't be surprised to see another BS rally up 600pts on the Dow. All it will take is some freak news report to send this market into a crash. And with talk like mine you can be sure the market is going to rally in the bulls favor. How much more bad news can come out that we haven't seen for the last 9 months. Remember Murphy's law, the worst can always happen, whether the market goes up, down, or continues to chop around for months to come.

Yahoo Finance front page-


What's with CBOT's quotes? YM is up 26pts right now?


This position continues to sink as planned.

Friday, February 22, 2008

A Wild Week and the Chop continues

3 comments
This market must be tough for swing traders. Are people surprised to see the market chop around for a month. Perhaps another month of chop is to come. I imagine there were a ton of Puts bought and Strangle strategies put on in the last few weeks. One thing is for sure, it looks like Option sellers have been making bank on the high premiums and increased Vol.

ER2


ZF


In order for this market to grow some BULL legs, C and XLF need to show some buying.


EWZ, Go Brazil!


ZB 30yr


ES- Option Sellers are making Bank. Not sure how Option buyers are making out.


My simulator hedge trade is now negative $600. I'm looking to see if it will go to $-2k or $-4k before reversing back. The market is behaving as I expected now that this trade is negative; moreover; ER2 and ZB are more bearish and ES and ZF are more Bullish. The reason this trade was in the green by $2k a few days back had to do with the steeping yield curve.

BondTalk.com is a great website for learning

Checkout Daily Treasury Yield Curve Rates for historical data on interest rates.

Also Checkout The Living Yield Curve



30yr swap bond futures

Feb 22nd another Down Day on the Dow

0 comments
The Trend continues down in stocks. Short term bonds are in favor over long term bonds.(ZF more bullish than ZN and ZB).



Good Correlation between Swiss Franc and Gold.

Thursday, February 21, 2008

Bond and Crude Oil volatility

0 comments
This Position was up over 2k this morning, then ZF grew stronger and ZB hit resistance. The small gain in ER2 turned into a loss. This position was put on 2 days ago. Interesting to note the Yield spread in correlation with the performance of stock index sectors.



ES selling off


Crude Oil selling off on T Boone Pickens comments?


Afternoon strength in the 2yr bonds (ZF)


10yr Swap futures bouncing off lows


Trading the TUT Spread: Capitalizing on Changes in Yield Curve

Yield Curve Steepening Means No Recession?

The Yield Curve as a Predictor of a US Recession

Wednesday, February 20, 2008

Feb 20 Crude over $101

0 comments
The run up in Crude Oil came unexpected, as many momentum rallies do. Now that Crude Oil is hitting all time highs we are hearing as many reports (good and bad) that fuel the attention and momentum to this move.



ES makes a surprise move up intraday before the FOMC minutes are released.
The stock indices are consolidating into a bear wedge pattern.




It seems to me that the bond traders already knew of the potential quick rate increases the FED was thinking of in the future. The FED said they were planning on cutting rates, and the emergency cut on Jan 22nd wasn't done to save the stock market. I think that's BS.

Tuesday, February 19, 2008

Feb 19 Choppy Light Volume Trading

0 comments
Scalping index futures is difficult on light volume choppy trading days like today.



Crude oil and the Oil related stock sector have been making big gains.



Gold seems to be stuck in a trading range.


Since DT and iBankcoin came out bashing Dennis Kneale, CNBC have been airing him more than ever. Perhaps even bad PR is good PR.

What if the market doesn't retest the lows?
Think of all the PUTS that were bought last month. It would be a shame for all those traders to see there PUTS expire worthless from seeing the market Chop around for the next month or two.

I was thinking about the terrible storm China experienced last month and the correlation that this natural disaster has on the stock market. One article I found looked at Hurricanes the US experienced with the corresponding price action in the stock market afterwards. Check out
How Is the Stock Market Affected by Natural Disasters? (by D.R.Barton Jr.)

Friday, February 15, 2008

Trading Strengths

1 comments
A Good post from Dr. Steenbarger Trading Logic and Trading Edge: Accuracy, Execution, and Position Sizing

I would say my greatest strength is picking trades correctly in the short term and my biggest weakness is position sizing.

Since the Fed cut interest rates on Jan 22, the market has been going sideways and things have been choppy. Hopefully next week we can get some direction.

It's interesting to note the trend in bond futures. The spread on the 2 and 30 yr bond was widening quite a bit, but there was some narrowing of that spread today, with the 30 yr bond moving up a little.

ZB vs ZF (30yr vs 2yr)


30yr bond ZB


2yr note ZF


30yr Bond

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