Friday, July 29, 2011

Look, Bid Volume Is Really Strong...

I know I've been wrong all year, but what's the heavy bid volume all about? I'm seeing 5 figure bid sizes on MS and BAC - and 6 figure bid sizes on LEHMQ of all stocks.

Who's backing up the truck?

BFF Forex Broker's stock - GCAP - was down -3.66% as their earnings announcement failed to please the market, garnering 3 figure bids. Market buddies, don't beat up BFF Forex Broker's stock... they've got a tonne of cash on the balance sheet, but very little Internet forex growth followthrough. It doesn't mean they can't be an acquisition target. I'm going to study their balance sheet and check out whether they're a worthwhile investment.

-0.48% SBA
-0.84% Roth IRA
-0.79% DJIA
-0.36% Nasdaq
-0.65% S&P

I just got a call from my BFF business banker saying that Treasuries will most likely skyrocket if the US debt impasse continues. Yes, I have a business banker! So excited... [A note of clarification: he said Treasury bond prices will skyrocket...] I wonder if 9 Figure Man is already in Treasuries? I've been thinking about him day and night, desperately seeking ideas to turn him on so he can fill my wallet again over the next few months. I'm brainstorming on an 8 Figure Way to satisfy him.

Happy Weekend...

Thursday, July 28, 2011

Professor, Why Aren't Treasuries Plummeting?

I don't get it. Shouldn't we be seeing 8% 10-year Treasury yields if the US debt crisis is so serious? If I were paying attention during the Eurozone crisis, I would probably know the answer to that, but I was too busy riding Harry Winston.

I had another bright idea today and it was along the lines of my Lehman bankruptcy play. I wanted to catch some falling Treasury bonds and buy Bernanke at maybe 50 cents on the dollar. It hasn't happened yet, but if it does, people all over the world would be crying conspiracy theory.

So what about Obama's semi-threat to plead the 14th amendment?

MS seems to be on life support and I'm not sure there's even a pulse. Let Nurse ForexDiva examine you, MS...

-1.28% SBA
+0.15% Roth IRA
-0.51% DJIA
+0.05% Nasdaq
-0.32% S&P

I'm secretly praying that the Nikkei will turn out to be the winner as the US joins Europe in a woeful debt defying symphony. Or should I turn east and set my sights on the market named after 9 Figure Man? Yes, he has a bourse named after him... and even an oil company...

If only I had pleased him more...

Wednesday, July 27, 2011

President of the ForexDiva Hate Club

Both of my portfolios were battered in today's unfortunate market conditions with HWD as leader of the ForexDiva Hate Club, sticking a knife in my portfolio with a -5.59% cut. I didn't even have a chance to catch it as it came sideways, but the market sure is getting dramatic with the US debt ceiling negotiations turned full-fueled run-for-your-lives rumours of a potential US debt default whilst Wall Street is left in the dark. Since I had the experience of trading the UK Hung Parliament last year, I am going to apply what I learned from that incident and not trade until a resolution is finally reached. Even then, it may take some time for the recovery to take effect, which means that I most likely won't be able to implement my bright idea to go long just yet.

Will prices on stocks with strong balance sheets now break below their 52WLs? And will that be a major buy signal?

If weaker stocks are any indicator, then I'm going to wait until the weaker players basically have no more downside before I take further action.

As if my action helps:

-2.36% SBA
-3.17% Roth IRA
-1.59% DJIA
-2.65% Nasdaq
-2.03% S&P

Tuesday, July 26, 2011

Good Buy...

Today's market action started tilting the balance in favour of the bulls even though I was sounding pretty fearful myself yesterday. Whilst the world is supposed be teetering on fear of the US trade ceiling negotiations and a potential European default, prices on certain European stocks are still trading above last year's lows and bluechip retailers like AMZN are posting strong profits against the backdrop of job cut announcements just days ago from companies like GS and RIMM.

Let's look at Deutsche Bank for instance. I've mentioned DB as a good buy last year and I'm wondering if prices on DB could be taken as a measure of just how risk averse the market is rather than only looking at major currency movements. In a truly fearful environment, even the strong will get sold and DB share price appears to be holding its own. And although I almost always use forex as a key indicator in my trading, I think in this case, the BFF Forex Traders may actually cause my perception to be skewed. Of course currency markets would move whilst potential defaults are the centre of attention. When else would they move? So if I look only at the currency markets as the sole market driver now, my trading decisions will be similarly biased.

There are a few different ideas I'm playing with, but most of them have to do with going long. Would that surprise anyone?

I'm going to think about this a little more, but the most unlikely thing occurred with my SBA today with a boost from a penny stock of all investments:

+1.23% SBA
-0.57% Roth IRA
-0.73% DJIA
-0.10% Nasdaq
-0.41% S&P
+0.47% Nikkei

Notice Nikkei was up today and has been floating above 10,000 for a few days now, which makes me think out loud: are my NMR and MFG buys from the Japanese Earthquake era finally going to get a day in the sun?

Monday, July 25, 2011

Halloween In July?

It seems the bearish angle has not run its course just yet and my MS partial sell on Friday proved temporarily correct, although I have to mention my typo on Friday. For the record, I sold at $23.88 and my original buy-in was at $21.18 and not $21.88.

A major currency market move also occurred today by way of Franc strengthening. USD/CHF moved from Friday's market close of 0.8185 all the way to 0.802 today, which leads me to wonder if we're going to get Halloween in July - or August?

When I first started trading forex, I got hit with a stop-running incident in August. This time around, is this an opportunity for me to be on the right side of the trade in a really big way for a change? I haven't been engaging in any extracurricular forex with any Professors of Finance lately, but one with dark framed glasses must be somewhere if I look closely enough. Although I know the JPY pairs are often the first to move during a risk adverse environment, I have a nagging feeling to substantiate this claim with USD/CHF, which could be a bit of a lagging currency. But taken together with my portfolio's lacklustre performance today, this could certainly point to a sizzling hot wok...

-0.84% SBA
-1.34% Roth IRA
-0.70% DJIA
-0.56% Nasdaq
-0.56% S&P

Notice the uncannily close correlation between Nasdaq and S&P... something is up and I want to find out what it is!

Friday, July 22, 2011

Sold Partial MS Position...

... at $23.88. Not sure if it was the right thing to do as from bid volume alone, it appears that there's still support at this area moving into $24 during the final minutes of trading.

Still, I've banked some profits and will continue to monitor MS whilst keeping an eye on other financial sector stocks. One potential course with my new moola is to buy MS again at my original entry of $21.88 with an option to trigger the execution of another stock at my preferred price level.

Another European bailout has been launched, potentially paving the way for future default possibilities, which means that in the very near future, any such rumours could prove to be good buying opportunities of European stocks. If the bailout amount were any higher, this could have appeased the market. However, given the circumstances, no one really knows what to expect, which means I'm going to be looking for distressed sales opportunities. Just following in the footsteps of 9 Figure Man...

-0.69% SBA
+0.55% Roth IRA
-0.34% DJIA
+0.86% Nasdaq
+0.09% S&P

Trying To Sell Partial MS At $23.88

But kind of wishing I didn't have to...

Still, it would be a good exercise in developing trading discipline and learning how to bank some profits... I think that's how they do it at 1585 Broadway, no?

Pure Blissful Insanity...

I have to admit today's +11.42% increase on MS is pure blissful insanity based on the fact that they reported a loss of -$0.38 per share rather than a profit, but earnings still beat consensus by about $0.27, translating to major stop-running action that broke past $24 - almost touching $24.50, but failing.

Bids were still heavy on the close and $24 is markedly an inflection point on the 1-year MS chart. This level was horizontal support all throughout Q4 last year from September through to the Santa Clause Rally, breaking way above for a climax at around $31.04 in March 2011. After prices began declining downwards again, a break below $24 caused market mayhem, leading to $20.18 just several days ago. I caught MS on its move down at $21.18 and suffered a $1 per share decline before having the quote unquote luck to experience this amazing run back up well past $24.

MS closed at $24.20 today. We're at a critical point. Is that a sharp W double bottom in the making? The UK Telegraph went so far as to report some guy from Rochdale Securities as saying: "Morgan Stanley is the new Goldman Sachs." I certainly agree, but we're definitely not at that point where investors from Morgan Stanley could well be forgiven for thinking that they've picked up the earnings results for Goldman Sachs just yet. However, this could perhaps bring competitors to notice MS as a potential acquisition target just a bit more.

In the meantime, I definitely enjoyed this very, very much:

+7.90% SBA
+0.74% Roth IRA
+1.21% DJIA
+0.72% Nasdaq
+1.25% S&P

Now it looks like the Roth IRA is the portfolio needing a little more ooommpph, but I'm going to stick with my plan to build a countercyclical capital buffer type third portfolio to prepare for any potential downturn comprising high dividend low beta low debt types of stocks. It'll be like my very own high yield savings account...

Wednesday, July 20, 2011

What's With the Second Runner Up Jokes on MS, WSJ?

The Goldman Sachs guys in my neighbourhood are hot, but the MS reference was totally uncalled for...

Granted, after hours activity on MS doesn't exactly paint a very rosy picture. But we'll see tomorrow on real earnings results.

Just because it's Goldman doesn't mean it's gold, but it does guarantee gold-diggin'...

To set the record straight, I'm doing a GS vs MS debate when I have more time! My personal bias, again, is in favour of MS. Just on price/book alone, MS is 0.67 and GS is already 0.96.

Oh, My...

What a ride! I had a temporary victory today and if events of the past year taught me anything, trends - albeit beautiful - are transitory, transient, and fleeting, so it's important to be a fast mover and take advantage of them whilst it's still possible to do so. On my next trend, I'm going to play it right once and for all.

I'm still figuring out what went up and what went down with the Roth IRA, but it's easy to see that MS had a knockout performance today with a +3.53% ascent! I'm targeting a +46.55% increase at the 52WH, but if risk is indeed on again, I have a personal bias for MS prices to reach epic proportions - possibly surpassing $100 a share based on its balance sheet alone. However, until JPM sets the trend upwards, that's clearly a long shot - for now.

+2.33% SBA
+0.91% Roth IRA
-0.12% DJIA
-0.43% Nasdaq
-0.07% S&P

What is really interesting to me was Nikkei's break and close above 10,000 and FTSE's strong followthrough, nearing 6000.

No refund possible on the stock market, so tread carefully and don't just ride anything... my ZZ buy was quite possibly the worst this year, but let's see if I can do my part and turn that around a bit with a new Sealy mattress purchase?

Tuesday, July 19, 2011

Subcrime Prices...

What's worse than waking up with one eye bigger than the other after falling and hurting your elbow then missing two trains in a row because someone dearly beloved called and held you back by a mere three minutes? These three minutes led to a total time impact of over 20 minutes for me today.

And although the market's unexpected bounce-back boosted my portfolio, in the greater scheme of things, it could have pushed back my profit potential significantly. We haven't seen such a drastic pullback in some time and whilst the bears certainly made money, this environment is perfect for acquiring great buys at subcrime prices for the true bulls out there. This has the potential of being another Lehman-style meltdown - if not worse.

If I learned anything from working with 9 Figure Man, it's that mentally unbuttoning other people's prices could be a lot of fun when you're the one doing it. And last night, I was thinking about it all night.

Now that Obama stepped up to the plate, is this a short-term market bottom signaling that the light is about to turn green? I'm not going to change my story every day and if anything, I need a little more conviction, which can only occur by looking at the entire market. I missed out on a critical signal by not turning to the smiling but beguiling forex market to gauge real market sentiment.

How funny is it that nothing drastic really occurred with the currency markets these past few days? USD/JPY didn't even plummet, right? Until and unless there's a jittery currency market, I'm not going to take further action, although it seems this 79 level on USD/JPY appears very significant indeed. USD/JPY touched this around the Japanese Earthquake.

+1.15% SBA
+0.41% Roth IRA

+1.63% DJIA
+2.22% Nasdaq
+1.63% S&P

My portfolio must change... I might just start a new portfolio to trade risk-off types of plays...

Monday, July 18, 2011

Net Worse...

... I put myself at the scene of the crime as policymakers failed to summon up any leadership (on potential US debt default) and my MS buy apparently is not paying off... failing to properly read market sentiment really got to me, although I don't see why MS had to be the one to take one of the greatest declines today in the financial sector. How ironic is it that the Ones Who Pled the First are now holding the power on potentially downgrading US debt when they had something to do with not downgrading certain banks when they should have when the subcrime crisis broke out (a deliberate typo)?

BCS was far worse, having a very precipitous decline with a -7.1% drop, but even worse was LYG with a -7.42% fall.


-1.81% SBA
-1.06% Roth IRA

Recently rebalanced SBA, which I added MS to, is performing even more poorly than the Roth IRA. It seems my ability to engineer financial nightmares out of trading fantasies and economic daydreams is temporarily back - particularly the part about being able to uncannily buy intermediate market tops.

Still, I've got more darts and I won't throw them until later on in the year. I shall keep my trading legs closed till then, although I'm dying to open them for another trade with 9 Figure Man... He brings me such financial plaisir.

Friday, July 15, 2011

Right Or Wrong, I Like It Long...

Today, it was ascertained: I am living proof that fools rush in where angels fear to tread!

... MS broke yesterday's low, which means I overpaid, but that shouldn't be anything new. MS reached a daily low of $20.79. I did have solid, credible reasons for getting into MS. It's been on my watch list for over a year and last year, I traded it quite frequently with some degree of success compared to my other trading adventures.

So here are the reasons I decided to get so into MS, crystallised by the following chart and analysis:

1. I had a choice between 9 Figure Man's initials' stock (not his actual company, just his initials) and MS and although 9FMI's stock had a lot more cash than debt, MS had a much better risk:reward ratio.
2. Options expiry tomorrow... I thought the July puts below $21 were basically useless, although open interest to sell at $20 was strong. I further looked at August options chains, which showed support for pricing at $21 and above.
3. Beautiful balance sheet on MS shows great upwards price potential with tonnes of room for market cap growth. I used JPM as potential market cap resistance gauge for second-tier stocks in the sector. In a risk-on environment, second-tier financial sector stocks should follow the same market cap valuation ratios.
4. Finally, biggest, hugest reason I chose MS: potential acquisition target. With so much cash on the balance sheet and such a low market cap, MS could and should become an acquisition target! Theoretically, successfully acquiring MS at today's market cap means that the company doing the acquiring effectively gains $220 billion in cash net debt based on Yahoo Finance statistics.
5. C earnings announcement pointed to potential for bullish followthrough, but instead led to disappointing price action

Report Card for the Day:

-0.24% SBA (finally a respectable account once again after placing MS here)
0.0% Roth IRA

Happy Shiny Weekend to all...

Into MS Again...

... at $21.18. It's a long time favourite of mine. Should I have waited?

Will let you know why a bit later...

Thursday, July 14, 2011

Negative Correlation...

... on US stock markets and 10-year US Treasury Yields, so who's right? If you believe the unwritten Don't Fight the Fed Rule, then US Treasury Yields would take precedence. It seems this correlation has been going on all year - and not to my advantage.

There's a tiny voice inside of me telling me not to buy yet, but prices are really, truly, beautifully tempting. JPM came out with +13% earnings today and Bernanke has a tendency to follow the banks too. If the banks are consistently posting strong earnings, then it would be difficult for Bernanke to actually launch a QE3 offensive. Perhaps another month or two of a declining stock market would change the story. And the summer months are traditionally bearish. So come September or October, could we get a Grand Home Run Surprise from the Bernankes - even if their batting average is generally poor?

Something is not adding up with my strategy though. If the strategy I've been trading yielded results during the financial crisis, does it imply that I shouldn't trade in the face of a very apparent recovery? I've admittedly changed my strategy since the start of the recovery and most of my risk-on trades led to my portfolio's demise earlier this year. So I might have to go back to basics here a bit more.

The IMF has already started mentioning in almost definitive terms that this is a recovery with a somewhat disappointing undertone.

In the words of 9 Figure Man, perhaps people had expectations that were too high? I know for a fact that had my expectations been lower, I would have most likely had two six figure projects going rather than one that was a high five.

Lessons to be learned... money to be earned!

For now, I'm almost certain that prices after earnings announcement will be similar to prices before earnings announcement. So should I trade it? I think I'm going to half in half out.

C 15 July 2011
BAC 19 July 2011
A string of other banks from 21-28 July 2011 (do your own homework)

-0.39% Roth IRA
-0.29% SBA (influx of cash led to lower decline... I'm most likely trading tomorrow oh oh)

Wednesday, July 13, 2011

Bernanke Always Talks At the Wrong Time!

Always! He couldn't wait till Friday, after I decided which stocks to get into, before telling us the ways he wants to stimulate our economy further - maybe, sort of - with a potential dose of QE3?

Confoundedly, I've been noticing larger ask sizes than bid sizes on the stocks I'm eyeing, so I'm thinking the market is getting a little bit ahead of itself and I'm going to have to do multiple entries - especially since the summer isn't even half over.

I was totally going to get into some low beta + high dividend yield plays. A bear market is the best time to do so. Last year, I was looking at AEE and AEP during a sell-off and those stocks have since skyrocketed, but I always tend to shoot myself in the financial foot by choosing the worst possible ROI stocks to actually put my money in, don't I?

Yet, although my MFG and NMR buys were clearly overpriced in hindsight, the dividends I received from my MFG and NMR holdings were welcome additions to my income stream. So, I'm going to devote a part of my portfolio to these types of stocks as I develop my business.

Am I totally leaving behind high beta plays? I haven't yet decided. But I have been pondering whether C will hit the twenties once again? And if it does, would it make it a good buy? I'd personally like to see it lose about $55 billion in market cap before I would think about touching C again, but that would take a decline of about $18 per share - putting my target price at $21 and somewhat of a far fetch.

What are my other options? In the twenties, there are a whole bunch of other plays I could get into and I'll perhaps let you know after I finally build up my positions so I won't get to beat a dead horse and accuse you of arbitraging me.

Today's Beautiful Happy Shiny ForexDiva Report Card:

+1.81% Roth IRA (on my way to recovery yee...)
-0.14% SBA (will add some fresh capital here only thanks to 9 Figure Man's sexy capital injection)

Take away my penny stock pain, Sultan...

Tuesday, July 12, 2011

I Nominate...

... 9 Figure Man for Minister of Finance in the Indian Ministry Cabinet Reshuffle! He got me, and he got me good. My project with him is officially complete and it was quite the experience. I was supposed to travel, but ended up not going because he had the audacity to call me on my birthday and make me cry. He threatened not to pay and it was a good thing I was legal and ethical by including a very interesting clause in the agreement in addition to the non-refund clause. I listened to my intuition and it worked in my favour.

That, plus I was lucky enough to get a call from an industry insider who decided to check up on me. It was perfect timing and I asked him for advice and he told me the best thing anyone could have told me at the time. Although I have to say, I don't know if there'll be future opportunities for 9 Figure Man to fill my wallet again. I thought I did an excellent job and this was one of my best works yet.

I admit I liked the way he went about filling my wallet. And if you leave out the bit about him making me cry, I like the guy. He's got trading style. He unbuttoned my prices below my bid all the way below the 50% retracement, then wouldn't touch my pips for a few days, leaving me burning for price action. When he decided to fill my wallet, he wanted agreements with a few of his companies. I had to be on high alert in order to successfully navigate his stop-running land mines.

I'm not one day too late to be back it seems. The market definitely went on without me and with my newfound cash, I'm going to do some research and take my trading to a higher level. Earnings announcement season is already here and tomorrow, we get JPM. We are experiencing record two year lows on many stocks, so it makes it seem like a good buying opportunity. The keyword here is seem. I'm going to have to look into this more since my portfolio is still in a dire state due to some mishaps earlier on in the year - selling CENX way too early, buying ZZ, buying BAC, buying NMR and MFG instead of PQ and that coal company, can't remember its name during the Japanese Earthquake.

This time around, I'm going to practice responsible trading and I'm going to try to make it a point not to trade any more catastrophic calamities. It definitely is bad karma.

Had I not traded the Japanese Earthquake, I could definitely have had a lot more moola in the bank. Right now, I'm barely skirting six figures gross. I had two 9 Figure Men wanting to work with me, but I played it wrong! Next time this happens, I know what to do. I'll play it like a forex market maker and bid them both up.

I'm also taking the rest of the year to develop my business. There's so much to do - so much potential. And if I'm blogging less, that's a small price to pay for greater financial satisfaction. What counts is what's in the bank account...

I'll be back with some research - maybe tomorrow, sort of.

Till then, I leave you with a terrifyingly mediocre report card:

+0.18% Roth IRA (-13.37% overall on this account)
-0.67% SBA (you don't want to know my overall performance on this account, nor do I wish to tell you)