Trade is now in positive territory at 68.30 as Energy & Materials pull back today, the catalyst for my trade; a reversion in the financials has not exactly panned out as WB, BAC, C, and other banks have remained higher after the Naked Short Selling legislation...Will bump up my stop-limit order to 67.60 or so to lock in a profit...
Edited 8/4
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As the trade has once again moved in my favor I have decided to bump my stop limit up towards (-3%)or 65.15, no sense in losing money if you do not have to. I have learned to get away from a losing trade asap or within a certain margin for error.
Thoughts: Selling an entire index short is not an easy proposition because there are components of this economy/market that are working and right now Fiscal policy is doing everything they can to make sure this economy recovers in the short run.
Thursday, July 31, 2008
Wednesday, July 30, 2008
Stop Limit on the DOG
As you can see from the link for the DOW vs DOG chart in my previous post my trade has not moved in my favor in the last two days.
The DOW has rallied over 380 points over the past two days forcing me to put in a stop limit order at 64.15 for the DOG -(4.5)% from the initial 67.17 price. As it stands today at 66.40 my stop loss will be exectued in another 2-3% to the downside.
Trading this market certainly isnt easy, Tuesday Merril Lynch the Nations(Worlds) 2nd Largest Investment Bank had a firesale on mortgage related assets and an announced but unexpected 9 Billion Dollar additional quarterly loss. How did the DOW react? By rallying over 200 points.
In the next two trading days the only thing that will come as encouraging to my trade is a continuation in the rise of Oil...
Mood: Cautious
The DOW has rallied over 380 points over the past two days forcing me to put in a stop limit order at 64.15 for the DOG -(4.5)% from the initial 67.17 price. As it stands today at 66.40 my stop loss will be exectued in another 2-3% to the downside.
Trading this market certainly isnt easy, Tuesday Merril Lynch the Nations(Worlds) 2nd Largest Investment Bank had a firesale on mortgage related assets and an announced but unexpected 9 Billion Dollar additional quarterly loss. How did the DOW react? By rallying over 200 points.
In the next two trading days the only thing that will come as encouraging to my trade is a continuation in the rise of Oil...
Mood: Cautious
Tuesday, July 29, 2008
Back In the Market
Last Tuesday (7/22) I re-entered the Market for the first time since my last post describing the direction I thought the Markets were headed. I am still Bearish in the near term and I believed that the short covering rally we saw in Financial Stocks due to SEC Chairman Christopher Cox's testimony that new short selling techniques would be implemented in 4 business days. This Statement led to an artificial market rally because the targeted 'naked" short sellers were forced to close out their positions in a timely fashion. The S&P Financial Index gained nearly 15% in 3 trading days and large banks like Wachovia, WM, Citi, BAC, Fannie and Freddie saw their stocks rise well over 50%.
What was inherent in this rally was that it was largly artificial in nature, that the short sellers would regain the positions held prior to the announcement of the SEC, and that these new rules that were put in place in no way help these troubled balance sheets or add value to the percieved worth of these banks.
I initiated a position in the DOG at 67.17 on Tuesday (7/22) at 12:43pm as the DJIA traded at 11,492. The DOG invests 80% of assets in financial instruments with economic charachteristics that should be inverse to those of the index.
Here is a look at the chart of my trade since inception, comparing the rally of the DOG (blue) to the fall of the DOW (red). The percentages nearly identical.
"DOG vs DOW"
What was inherent in this rally was that it was largly artificial in nature, that the short sellers would regain the positions held prior to the announcement of the SEC, and that these new rules that were put in place in no way help these troubled balance sheets or add value to the percieved worth of these banks.
I initiated a position in the DOG at 67.17 on Tuesday (7/22) at 12:43pm as the DJIA traded at 11,492. The DOG invests 80% of assets in financial instruments with economic charachteristics that should be inverse to those of the index.
Here is a look at the chart of my trade since inception, comparing the rally of the DOG (blue) to the fall of the DOW (red). The percentages nearly identical.
"DOG vs DOW"
Thursday, July 3, 2008
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