Fuck You, I’m On Fire

Yesterday I authored a couple of posts throughout the day, urging people to remain in control, objectively assess the market, and sell longs. The day prior I called the market going higher, in a rather veiled way though so as not to reveal The PPT‘s magnificence. Yesterday I hopped into TZA/SKF and initiated three other shorts in EPM, FRPT and JNS. Today, those positions got the clawhammer, resulting in overnight, unrealized gains of 4%, 4.5% and 8%. I even added to my short of EPM into strength.  TZA & SKF were better, obviously being levered, and I took 1/3 profits in each, of 10% and 5.5%. Do you know why I added to my shorts, rather than covering for losses into today’s strength? Because I knew we would reverse, as destiny would have it, since I predicted it in my blog yesterday. This all after refusing to short or sell the majority of longs into the meltdown just last week.

DO YOU NOT SEE WHAT’S GOING ON HERE?

Sure, I’m trapped in some longs from the beginning of the month, having been all excited and shit to hop back into the markets after a summer of traveling and overtrading (LOLitis) myself into some holes. I’m working my way out of these horrible positions, though. More importantly, my more recent action has been spot on, as the Brits would say. I’m hitting my stride again, just a couple weeks after reopening the book.

Into today’s massacre, I was fairly balanced. As stated, I shorted more into strength and thus at the end of the day actually turned a small profit.

51% cash, 17% short, 32% long

Small caps are down, banks are down and commodities are down.

Guess what comes next?

While you were picking your nose, the stock market melted over 50% from its highs. You sat there in your chair, in ignorance of my mid-day post warning to stay in control of your emotions. You cruised down Happy Blvd., forgetting what it was like to fear of economic collapse just last week. You were dreaming of gorillas and coke and you stuck that pinky finger way up your nose in search of a glorious booger. But just as you reached gold (a golden booger), the real market hopped out of incognito, holding a video camera and punched you in your fucking nose, making it bleed a river of punishment while filming the entire exchange.

That’s what you get, n00bs!

To be honest, it caught me a little off guard. I was assuming we had a full-on trend day, and would be closing near the highs. I sold out of MT, FFIV for wins and tossed a loser aside, SCHN. I sold a portion of SLB for a win. I raised my cash to 60% prior to the meltdown. But the market melted before I could fully add my short exposure. I got off starters in EPM, JNS and FRPT, 2% each. And by the end of the day, sans a quick rubber band snap back, I got starters in TZA/SKF, 20% and 33% respectively. I’ll detail my shorts tomorrow, with charts and data and shit like that.

I sit at 45% cash, 40% long, 15% short.

If the market opens up tomorrow, expect a reversal. I think we’re headed back towards 1120, to do battle again, at a level where my arch nemesis Chess and good friend NWine have made accurate posts about.

I know what you n00bs are doing right now: salivating over higher equity prices, as if they’re guaranteed to come. But as you switch from bull to bear as quickly as the market, remember that Chivo is a man, in control of his emotions. The market does not give a fuck about a 300 point up day, as it will gladly rip your head off, -500 the next. Don’t sashay from elation to fear and back to elation like a fucking woman, acting all illogical and shit.

I’m selling longs into this rally, now at 55% cash. At the same time, I understand how most managers feel about missing out on such a rally, so I will not short until the time is right. Until the time is EXACTLY RIGHT, in fact. It’s also end of quarter, so be prepared to see this rally go further than anyone expects.

Sell here, short 1200-1220 and higher.

I haven’t been engaged much in this name since selecting it in iBC’s stock picking contest, AND WINNING. Tonight on the stocktwits stream, though, I saw the ticker and recalled that I had a fantastic chart that lead to much profit making.

Here it is:

A few things about the chart:
— I had to stretch these lines out from where I had them set previously (last time I charted it) and I enjoyed seeing the latest candle, a hammer. It’s a weekly chart, so the hammer needs to maintain or turn into a stronger reversal candle. However, the hammer is there, suggesting that at least today, the bulls showed up in defense.
— The lines actually stretch back to the beginning of ’09, so this is over 2.5 years of channel trading.
— Support was found by the bulls stepping in to defend the 50MA and take it back up to this trendline

I wouldn’t pay much attention to the top of the trendline, as it’s been violated a few times. Though you could favor ChessNWine’s “mattress” theory in terms of taking profits, etc. Better, I’d love to see the market permit adding longs here and this candle stick (yes, pun intended), suggesting WYNN may trade back up towards $160/shr, providing beautiful risk/return, with a stop on entry < trendline at about $135, give or take.

Lastly, I'd like to say that Chess has denied my invitation to 1v1 poker play at the beautiful WYNN, dinner for the wynner at SW Steakhouse. He's cited his "sore shoulder" as reasoning, though I told him I'd buy him a massage for the match.

http://chivotrades.com @chivotrader facebook.com/chivotrader

For three weeks now, I’ve been watching melt up days that just will not span the extent of my book. The disassociation between sectors is aggravating. On days where the Dow and S&P skyrocket 2.5%, I’d love to see the Nas up more than fucking 1.3%. Sure, I was able to grab some gains recently in stocks like ARUN, MT and a shortsale in CRM. But today I was thrilled to perhaps have the opportunity to lighten up on two stocks I’ve yet to sell any of: GSVC and MU. Both are trading very close to my average cost, and I want to raise more cash by selling some off. Unfortunately, these fuckers were both down 1% on an otherwise green day. Noteworthy gains, though unrealized, were had today in FFIV, CENX, SCHN, SLB and what remains of MT. I even saw GDX trade up, a noteworthy item, seeing it trade opposite to GLD. I made add’s in both today, sitting at 50% and 40% positions respectively. I intend to build them up, accompanied by SLW/RGLD and a smaller GDXJ than GDX. On the inflation note, I intend to author a small piece regarding why oil may be a better hedge than gold. Fuck it, I may just spill the beans now: practicality. That said, I intend to build some positions to accompany SLB, all centered around oooooooooool. On the topic of silver, however, AGQ now accounts for a larger position than I’m comfortable with, and my average price sits at a Mt. Everest like $152/share, despicably higher than today’s close. It’s a problem and I’m working on it.

I do find solace in the fact that I had the propensity not to short, at least. I’ve had some important dealings to take care of, and with them pending on my agenda, I’ve been unable to really sit down and focus. So, I’m still building my short list. And my oil list. And I’m trying to author that post I just mentioned.

Today’s trades include: +AGQ, +GDX, +GLD. I cannot wait to gtfo (portions) of MU, GSVC and AGQ.

Last bit of relevant market information: I hope that The PPT‘s reaction in score to today’s events is telling as to what’s forthcoming in the markets. Take that as you will.