Veritas - Market Thoughts, Opinions, and Trades

What a Day!

2008-10-23T00:40:00.001-07:00

Wow. This has been quite a rally on my end for the day. The stock that I have been sitting on while I've been re-vamping my investment techniques (DTG) absolutely EXPLODED this morning. I woke up, checked the stock, and it was already up 53%!! I couldn't believe it. Before I headed to work I decided to put in a trailing stop of 3% (in hindsight I probably should have made it larger because of the huge price movement going on) for about half of the shares that I had (per my new rules: take the profits while you have them!!) and it trailed up and finally sold at $1.25/share (it closed yesterday at $0.77). And the stock continued to SOAR! I ended up hitting $2.16 or so at one point before closing at $1.92, only to hit $2.10 again in AH trading. Not bad at all! $0.77 to $2.10 in one day is about 160% or so I believe. I've felt pretty good about the stock, even though it hasn't done jack in the past few weeks, because it looks to be a pretty solid company that was WAY oversold. It was trading around the $12 mark in mid-June, so for it to be down to $0.77 seems a bit off. Yeah, the company has a lot of debt but it'd because they finance all of the cars that they have to rent! I ended up buying two options contracts on DTG today (Dec 2.50 Calls) at $0.75, so I'm hoping this pays off. My break-even is only $3.25 which I feel confident that the stock can reach in the short-term, even though the options don't expire until December. I also purchased a few options contracts for WAG and TBSI yesterday, which will be outlined below. I have a pre-market order placed to purchase a few contracts of AA as well, as I see this heading back up over the next few months. Hopefully tomorrow will bring more profits! My account is up, but is being suppressed by some losses I've taken on options hits from the market being rocky. I want to wait some of the volatility out and see how those fare. I may just sell the ones for CIEN and TBSI though as I don't have as much confidence in them.

Starting Account Value: $1,524.92

Trades:
Sold 450 shares of DTG
Bought 2 WAGLE @ $1.60/contract (yesterday)
Bought 1 TQFKB @ $1.40/contract (yesterday)
Bought 2 DTGAZ @ $0.75/contract

Ending Account Value: $1,696.91

Change: +$171.99 (11.3%)

Current Holdings:
Qty. Symbol Purch. Price Current Price Profit/Loss
325 DTG $1.38 (avg) $2.10 +$0.72 (+52.2%)
5 EUQKB $0.65 $0.30 -$0.35 (-53.8%)
2 WAGLE $1.60 $1.26 -$0.34 (-21.3%)
1 TQFKB $0.75 $0.85 +$0.10 (+13.3%)

Rejuvenated

2008-10-20T22:33:00.000-07:00

Well, it's been quite a while since my last post. After making a few misguided and, quite honestly, SHITTY trades in a row I decided that I need to step back and evaluate what I was doing. Mainly, what I HAD been doing right when I first started and what I was now doing wrong. As I write this my account is down about 50% from when I started, most of it from my failed FNM trade and most recently from making a piss-poor trade with DTG. I had watched DTG for a bit and thought that it was about to bounce up so I got in at 1.75. This trade was so fraught with mistakes I'm actually sort of glad that it happend (I know it sounds weird to say, but the most expensive mistakes sometimes turn out to be the most meaningful......a lot of times you won't learn much/pay much attention if you only lose $40-50). The first mistake was the rationale: at this point I can't even remember what it was. Next, I didn't place protective stops. This has burned me before and I kept telling myself that I needed them, but in this case they weren't there. I was long 1,125 shares @ $1.75 and it plummeted to around a buck, which is where it is right now. So I didn't place the stops, and once I realized what has happening I didn't get out. When the stock didn't rebound like I anticipated is when I realized that I seriously needed to do some researching because I definitely wasn't trading the way that I know that I should be. Over the course of the past month I have been reading every investing/trading/technical book that I could get my hands on and have been expanding the realm of websites that I check out. I have been reading more and more about options trading and finally ventured out today and purchased my first options contract (5 of them actually). I purchased 5 Nov 10 Calls for CIEN at $0.65/per contract so we will see how that turns out. So enough babbling, let me outline my rules:

- Before I enter any trade, make sure that I know the rationale for getting into the trade in the first place and know what I will do if the trade doesn't go my way.

- If a trade ends up moving the other way, GET OUT!!! All major losses start out small at one point and could have been easily prevented.

- For short term trading, be aware of nearby support/resistance points that may hinder breakouts or crashes.

- Successful traders trade for CONSISTENT profits, not huge gains.

- Make sure the indicators that I am using are fitting for the trade. If I am looking to hold a position for a few days then why would I use a 1-minute chart?

- Everybody goes through the Success-Failure-Success-Failure routine. The main difference between strong traders and washed out traders is usually just that strong traders have traded through that last failure while the washed out ones let it get the best of them.

- Take profits as they come. Once the trade is profit to a pre-set degree start scaling out, probably in 25% increments.

- The purpose of trading is to add to the quality of my life, not to take away from it.

So with this being said, it's time for me to start anew. My covestor account will remain unchanged as I don't want to "erase" my bad decisions that have been made in the past. The way I see it it's just motivation to do even better! I'm going to start posting my monetary gains/losses as well so I can track it here on the site.

Starting Account Value: $1,524.92

Trades: NONE

Ending Account Value: $1,524.92

Current Holdings:
Symbol Qty. Purch. Price
DTG 775 $1.38 (avg)
EUQKB 5 $0.65/per contract (OPTION)

Well that sucked.......

2008-09-29T21:57:00.001-07:00

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

2008-09-28T20:50:00.000-07:00

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

2008-09-27T15:14:00.000-07:00

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!

2008-09-25T18:06:00.000-07:00

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.....

2008-09-20T11:04:00.000-07:00

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!