Well that sucked.......

Well the bailout plan fizzled today in Congress and didn't muster enough votes to pass. In the end I am glad because I thought it was a horrible idea to begin with. But, like with any kind of trading, I am going to try and trade off of what is profitable, not necessarily off what I would like to see happen. This is the reason that I was long 1,000 shares of FNM going into the trading day. It actually gapped up from $1.83 to $2.23 this morning which I thought was the sign of a good day to be had, but unfortunately I was very, very wrong. As soon as it was announced that Congress was voting the stock started getting a bit shaky, as I think many stocks did, and as soon as it was evident that the bill wasn't going to be passed the stock hit the floor. I was on a conference call at the time with a client and couldn't watch the stock as much as I would have liked. I set a stop limit order at $1.60, not thinking that it would get exercised but just wanting to be cautious. I'm glad that I did. I had a chance to check the stock on my PDA during the conference call and noticed that the trade had been executed that that the stock was, for the moment, hovering around $1.40. That was the lowest that I had seen it in a while so I jumped back in and purchased $1,200 shares at $1.45. The stock rattled around for the rest of the day and ended at around $1.56. I'm still out for the day but I have more shares at a lower cost, so if the stock goes where I'm hoping that it will I stand to make a decent profit. If something productive hasn't happened by Wednesday, however, then I need to get out. Hopefully tomorrow will be more promising.

Bailout Looks Like a Go

Well, judging from what the talking heads on TV are saying it looks like the $700 BILLION bailout is a "go". I'm expecting this to have quite an impact on both the market in general and my current holding, FNM. I bought in with an average price of $1.93 (1,000 shares) so let's see this puppy go! I don't plan on holding this stock past Tuesday or Wednesday (at the latest) though because I think the market will shit the bed again later in the week. The bailout, even thought it is huge, is what I consider the equivalent of putting a band-aid on a shotgun wound, and I think that people will realize this once it becomes widely perceived that the huge amount of money that we spent isn't going to provide an immediate fix.

FNM Thoughts

Well, at least Fannie Mae didn't shit the bed yesterday. As I mentioned in my previous post I am currently long 1,000 shares awaiting the bailout news and began getting a little nervous when news came out that the talks were stalling. I think that this stock will move once a proposal is agreed on, even if it hasn't been passed by Congress yet, but until then it's gonna be one volatile SOB (and will continue to be after the bill as well). I had a feeling that it would rattle around the $1.50 - $2.00 price channel on Friday and it ended up staying between $1.60 - $1.90 for most of the day. There are rumors that there may be an agreement by tomorrow which I think would make for a very bullish open for the market on Monday. The short-selling moratorium is set to expire on Thursday though (unless the SEC extends it) which will add another variable into the markets for the week. Ideally, though, FNM will have popped by then and I'll be in something else and with extra cash in my pockets.

Risky!

Well, the past few days have been pretty interesting here in trading land. I took a step back, looked at my trading strategy, and finally realized that I have gotten away from the trading strategies that had brought me solid returns over the past few months. My goal is to trade with more of a swing-trader mentality, buying stocks and look like they would move over the next few days and sell with a decent profit. What I have been doing, however, is holding stocks too long. I have limited capital that I am trying to build with so holding on to stocks that are doing nothing is putting a serious damper on my gains, and I've watched a lot of opportunities pass me by because I have been tied up in non-performing positions. Yesterday I finally decided that enough is enough. I liquidated all positions and started looking. I've been learning a ton from YngvaiMalmsteve, noobtrader08, Muddy, Tim Sykes, and some other in the GOTM chatroom and this is what I really need to concentrate on. Unfortunately learning in this industry costs cold hard bucks because mistakes result in lost capital.

Anyway, on to my trade for today. For some reason FNM has caught my eye the past few days, but I've tried to stay away because of the volatility associated with 1.) a financial stock in this market, 2.) the fact that they were recently taken over by the government, and 3.) the bailout talks that have been going on. I woke up this morning and made a conscious decision, after much thinking the past few days, that the stock still has a lot higher to go because once the bailout gets annouced (which I think that it will soon) then investors will come flocking back. I purchased 500 shares at $1.99 pre-market. The stock shot up to $2.75 over the course of the day and I would have sold but I was with a client in Iowa and had limited access to the market and only had a few chances to check the price. This is always risky in case it starts to tank, especially after so many days on the rise. It did end up tanking, all the way down to $1.09 in fact (SCARY!!!) and I decided to buy more at the discounted rate. I was hoping to get back in around $1.40 or so but it shot up so fast that by the time I submitted the trade for another 500 shares on my PDA it didn't fill until $1.87! Not because of a slow fill, but simply because in the amount of time it took me to type in the trade it had jumped $0.40! Now that is some volatility. So now I'm sitting on 1000 shares of FNM with an average price of around $1.94 or so. It rattled around for a bit for the rest of the day and finished at around my average fill price. This is fine with me because I'm counting on the fact that when the bailout finally gets announced it will restore faith in the company and the price will rise. Now my rationale here could be really smart or REALLLLLY dumb. I have almost my entire account riding on a highly volatile financial stock whose future price is highly dependent on this hugely unpopular bailout. This doesn't sound very smart to me. However I don't think that the government will shy away from the bailout no matter how unpopular it is (think Iraq?) and that it is going to come, and once this happens FNM should do just fine. There also seemed to be a lot of activity in the options market today for FNM with long calls ranging from $2.50 all the way to $7.00 for October. This is telling me that people are reasonably bullish on the stock in the near term. After-market trading, however, took the price down to $1.60, which hurts and gets me a bit worried. I know that after-market trading losses could be turned around in minutes once the market opens the next morning but it's just a bit discomforting to see the stock tank 15% with so much on the line. I do feel strongly that the stock will hit $5 in the near term but if the stock starts to tank tomorrow morning it's going to put me in a nasty position. I'm definitely going out on a limb with this one but on risk = no reward, right? I'll post again tomorrow and let's hope that it's a happy one!

In the Beginning.....

After following the blogs of numerous other people over the past few weeks and months in regards to the financial markets I have decided to start my own as well. The idea behind this endeavor is simply to capture my thoughts, opinions, and trades on a daily ( or semi-daily ) basis. This will allow me to look back, see if I was thinking along the right lines or completely off track, and hopefully learn a thing or two from my own mistakes. Hell, maybe some other people might learn from my mistakes as well! In addition to blogging about individual stocks I will also be sharing my thoughts and opinions about things that are happening in the overall market as well. Thanks for reading!