In these chaotic market times, TheStreet.com has been seeking your tales from the trading front. Here's a sampling of entries we've gotten in the past day or so. We ran another installment earlier this week. If you'd like to share your experiences, send them to firstname.lastname@example.org, along with your full name.
To Short, or Not to Short
Woke up to a wonderful stock market with the
down 60 and my No. 1 holding,
, taking gas, down to 12 5/8 from 14. Visions of returning to work to pay for the vacations, the golf and the beer.
Decided to take the walk from hell, 30 minutes down the hill with the dog sniffing everything in sight. wondering whether to short Amkor so there would be no further downside risk for the year. After all, I am only 90 days away from achieving tax nirvana on this stock of holding it one year. Unfortunately, my wife does not take pity on me, so I have to drag the dog back up the hill.
The Nasdaq only down about 30.
Took Mom to town to buy my wife medicine and go for a walk by the ocean, so Mom can get her exercise. Dog is still in sniff heaven. she doesn't know that I bet the dog food money on Amkor.
Arrive home around 12:30 Pacific time. Amkor is up 1/4. To short or not to short. Keep watching 12 3/8, 12 5/16, 12 1/2, 12 5/16. I am definitely getting neurotic. Close at 14 7/8, up 7/8.
Now the earnings report due out at 1:15, which doesn't come out until 1:52 Pacific time. They made the analyst estimate.
The conference call is a love-in. Strong third and fourth quarter predicted. No questions that appear to have any animosity behind them. One guy praises the investor relations person.
Tonight burgers on the grill and a six pack.
Tomorrow the market will probably crash and Amkor will go down with it, but what the hell. I could always go get a broker's license.
Looking to Buy
This morning, I'm looking to buy stock. My fear is that with the market oversold, I will wake up to find a lot of other people want to do the same thing. I'm thinking maybe I should have bought yesterday. Sure enough, it looks like the market wants to open higher. Not what I want to see. Not to worry though, as the market gets ugly in a hurry. I rush a bit though, and buy
RF Micro Devices
at 68 1/2. It drops 3 points about 5 minutes after I buy it. I want to start a position in
while it's hated, so I buy at 80. Figured I'd build a position every 10 points down. Bought
at 68 1/2,
at 72 5/8,
at 66. I look at
, which is a stock I want to own, at 99, but pass because I think it has further to fall. I recently sold my holdings of at 108.
Then I sit back and hope for a bottom. Or a bounce. For a while, it looks like the market only wants to go lower. Then, well, the planets finally line up and the market heads higher. Closes up nicely, with all my buys making good gains. Wish it was like that all the time. EXDS was a knife in the gut though. Hard to watch a stock you used to hold fly without you.
Knowing When to Trade
The mood on the Street was different today than it was the past three days. I watched these markets take off in the morning, settle into a range midday, and then get pummeled by the end of the day. This morning, the mood seemed different. And for me, I predicted (falsely) that I would really lighten up on volume today, and just watch because I just was not sure what to do. So I sat on my hands.
I watched the Internet stocks open slightly up, and I saw them get hammered. And there I was, sitting on my hands. I didn't want to short anything because I was afraid of a bounce -- these stocks have been getting licked over the past week. I didn't want to go long because I didn't know how long the carnage was going to last. So I sat, had coffee, and talked to some fellow traders. I walked away.
And then when I came back, I saw that the markets were turning around after a steep selloff. I didn't know what to make of it. I didn't want to short because it might be the wake-up after capitulation. I didn't want to go long because there could have been residue carnage. So I waited. I didn't execute my first trade until 10:10 this morning -- that must be a record. Usually, I am in some kind of position premarket, or right at the open. And then my next series of trades began at 10:58 -- partway into that rally.
The rally that was heard around the world when the
rebounded 66 points into positive territory. I didn't go long until we were partly up. And then I looked back, and I felt that the steep selloff was probably a result of some last-minute margin selling (when all the big-cap Internet stocks went right through that critical support level) and some opportunistic and aggressive short-selling. So I started to buy and I was trading in and out of some pretty good positions. In hindsight, I wished I held longer, but I was still uncertain of the sentiment and I just had to take my profits more quickly than I otherwise would have liked to.
But to me, the real tell of the health of this particular rally is what happened in the markets between 3 p.m. and the close. It looked like both the
futures and the
futures were attempting another selloff, as they tried to break downwards out of a trading range. But this time, they found some hungry buyers that took these contracts right up and making them close at the high of the day. As soon as I realized that the futures would not fall apart, it was time to buy. I didn't. But that was my own inexperience talking.
What we need right now is for the market to put a string of a couple of positive days together to reinstill the confidence of the players in the market. Increase the conviction of the moves. Get some people long into the markets. Something that will make these markets move anywhere.
One thing that
said was bang-on -- when you sense the total despair in the markets -- the total negativity of all the players involved, it is probably coming to the best time to buy. With all the negativity, there must have been some more shorting taking place, and the weak holders were also getting flushed out of their positions during the rally that took the stocks far, far down. It's definitely a good thing, because it might be able to establish a base from which to operate. Let's see whether this rally can be maintained.
It is amazing how you can tell the change in sentiment of the markets by how these stocks are trading today. It felt a lot different today than it did when the markets were quite dead over the past couple of days. The Level II windows looked like the markets of old -- the markets that we were trading a couple of days ago and it sure feels good. The problem right now is figuring out when and when not to trade. I am glad that I did not trade early this morning, but I am not glad that I did not trade enough during the rally. With experience, I will learn when to trade and when to sit on my hands.
I did no trades whatsoever for the first part of this morning. I had a real lack of conviction about these markets, and about the stocks that I watch. I had to sit on the sidelines. But after the turnaround, I was a little more willing to trade. But the unfortunate thing is that I missed most of this rally. Why? When am I going to learn that the best time to strike is when there is the most fear? How many times have I seen a precipitous drop in the market followed by a steep recovery? True, I have resolved to stop myself from attempting to catch the proverbial knife -- how many people have been burned by that?
All I know is that I have to learn to capture a bigger portion of this rally. This type of rally that we experienced is the type we live for. You can just pick a stock out of the blue, buy, and close your eyes, come back 2 hours later, and find yourself up 10 points. Oh well.
One thing that I have to work on now (now that I have learned to take losses with no emotion) is to hold onto winners for far longer. It's amazing how it is easy for someone to do this when they first begin, but after taking some losses, you learn that you want to lock in some profits earlier. And so begins the absurd trend of taking profits early. And this is not the way that I want to make money. I decided to pick up
during the morning rally, after deciding that this is decidedly a strong stock. Well, I began offering a small piece out, and I got taken right away at more than a half-point above market. So what do I do? I do it again at the same price! How stupid is that? There are so many people desperate to buy that stock, and I just fed it to them. If anything, offer the damn thing out a point higher than my last one. So instead of taking 3 points out of this stock, I end up averaging a point.
Sometimes spreads get wide in certain stocks, and I am learning to take advantage of that. Like a true daytrader, I decided to work the spread of
Copper Mountain Networks
. I had decided to throw out a bid for the stock when I saw that the spread was just a little less than two points. I got whacked right away. Then immediately, I threw out an offer. And I got taken right away. That was the quickest 1 5/8 that I have ever made. These two trades took me a grand total of 6 seconds to do. I am the first to acknowledge that I was lucky in this trade, because I must have caught two people who were nervous about the stock at exactly the same time -- one who was long trying to get out, and one who was probably flat, and thinking that it was about to turn around.
I was going to take Friday off, but now I am not. The markets are really beginning to look interesting because this may be a turnaround point. The biggest tell for me was not necessarily that big "V" formation that the markets did this morning. It was actually the fact that the rally was not thwarted at 3 p.m. Instead of having the markets end the day weakly (as it has been over the past couple of days), the markets ended it extremely strong -- at the high of the day. This, I would interpret as good news.
Now, after so much negativity in these markets, I would like to think that a rally can last for more than one day. At least 2 or 3. So tomorrow is the second day. Unfortunately, the all-important employment number is coming out in the morning that could have a say in which way this market goes. The number is actually expected to come out strong, so that might have a negative effect in these markets (remember, strong numbers = inflation fears). The only good news is that so many people are positioned either out of the markets or still short that it may not really matter how strong these numbers are. Simply put, I am wondering aloud where the players are right now if everyone is still short, then a strong number may not drive these markets down because the pool of sellers is now small. So if it dives, it may end up being a good buying opportunity. Of course, if people are now long (which I doubt), the story may be different. Having said all of that, I will decide what to do (which stocks to buy or sell) after I see how people are positioned in this market -- this will become more clear as we watch where these markets go in the face of the economic number.
Stocks to Watch
Well, depending on what happens with the employment number, it seems that the stocks may in fact be forming a base. The longer it stays in this area, the better it is going to look. All that would mean is that the stocks have finally reached an equilibrium point where the buyers and sellers are becoming better balanced. Which, hopefully, means that the players will be more predictable when certain news come out. Because, quite frankly, stocks have not been reacting to news the way that I have been accustomed to.
The Net dot-coms may be safe right now. After being so bearish on this whole sector for the past little while, it sure as heck feels like we are oversold. This is not to say that the sector is no longer overvalued. But I am getting the sense that we have fallen too far too quickly. And now that we have found some semblance of support, the buyers may be re-emerging in these markets.
seems to be giving the green light to traders to start buying at these levels. Traders seem to feel that there was too much fear built into the markets. But then again, it is August.
was probably one of the most interesting stocks to watch to day. After watching it break that critical support level of 120, it was in perpetual free-fall until it hit 110 -- for a very brief point in time. It then snapped back, and rallied nonstop until it closed at 128 3/8. This feels like it is a good sign. The technical bounce seems to be finally happening, coincide that with what looks like an oversold condition, and this stock may be finding a base. But as with all things in trading, the next couple of days will be the tell.
Some of the stocks in this market have had phenomenal trading ranges --
had a $20 trading range -- it closed at 40ish yesterday. In other words, the trading range was half of its value.
had a $30 trading range; this stock closed at $70ish I think. Although this stock's rebound probably had something to do with the success of the
IPO today. Both of them are in the business-to-business e-commerce arena -- I think.
Just another form of proof that these new network stocks do not trade with the overall market
Copper Mountain Networks
just did not trade in any type of sympathy with these markets. They really do march to the beat of a different drum.
But the stocks that have been performing strongly during this rally that I will be keeping my eyes on today will be
-- all of these are familiar names. But all of them are the stocks to watch right now in the face of this rally. Perhaps this is what they mean by "flight to quality" -- when the market players are deciding which companies will survive in the new Internet generation and which ones will not.
And just to illustrate how the bad gets worst, it is quite unbelievable for me to see how
has fallen from grace -- from a high of 189 to ahem, 18. Likewise for
-- from a high of 108 to 13.
And in the kicking-myself department, I remember calling a short in
when I saw a very interesting article posted in
. That stock looked like a very compelling short, and I got my whole desk short in that stock. I didn't execute. The stock was trading at 77 at the time. Today, it opened down at 63, and closed at 67 and change. All I can do is shake my head because, simply speaking, I did not execute.
said there wasn't enough bars on this recent IPO, to analyze I thought I might toss out my play by play.
Lately, I have been suckered into way too many Internet IPOs, picking up shares at the IPO price with the potential for huge upside has been to tempting to pass up on. It's like being offered a dessert after you're already full. It looks so delicious you can't pass it up, even though that little voice in the back of your head that's trying to lose weight says you shouldn't.
Earlier this week I saw the writing on the wall and blew out all the Internet IPOs I foolishly picked up except one. I was fascinated by its price action. I had a small position in
. I jumped on this boat because the Internet health sector looked hot and I thought it might be the next
was the underwriter and heck,
said it had potential. Good enough.
The day it IPO'ed it peaked at 21.5, not bad except my broker wants me to hold onto this for 10 weeks which is forever and a day in Internet time. I blew out some other Internet stocks and I was afraid of ruining my rep, so I resisted my urge to purge and didn't flip it on the open. Now here's the interest part and it's probably too late to profit from it. The stock promptly sank to its IPO price of 16 bucks and stuck. For four days straight it closed at 16 even. The
fell more than 16% and here is an Internet stock holding its ground. Hypnotized, I took a closer look.
After the second day of a straight 16 close, I put my stop at 15.875 -- heck, the way this held, it seem like holding cash with any upside surprise. I inspected the situation closer and would you believe it,
was sitting on the bid for the entire time like a brick wall (check out the time and sales on this one, four days straight!).
banged away all day and no avail, Goldman wasn't budging. They were like
Cuba Gooding Jr.
. The helicopter was in the bomber's trajectory and Goldman was screaming "We're not moving!" I had to keep level 2 on in the background. Over four days 729,000 shares went at $16 print. I figured Goldman was going to buy the company back and re-IPO it at some later date.
Sadly, my patriot and friend Goldman pulled out with just 15 minutes left in the ugliest DOT trading day on Wednesday. At 3:45, they folded up the tents, at 3:46, I got an email with my fill and resisted the temptation to bang the next uptick.
That Queasy Feeling
Same as yesterday, got up early and my stomach was killing me. Not a good thing. The whole family has diarrhea. Great, just what I need. They are sensing Dad's pain. Now they are sharing it with frequent trips to the can. Does not seem fair.
As I watched "Squawk Box" I saw the futures up and I started hoping they would get trashed. They were holding up just fine. I did not want a repeat. Even though I knew I could not watch it, I wanted a big down open. Something huge to scare the heebie-jeebies out of everybody sitting on the fence. I got off the fence yesterday when I decided to ride it out and just quit trading until we get a better trading environment. I just can't mix it up with the big boys in here. This is where they have the edge. They can check with each other. They can get through to the companies. They can tell when we have real buying or not. Right now they have the edge. It seems like every time I put something on for a trade it is down 2 before I get back from the can. I end up selling down and feeling like a complete idiot. If we get a bad day, we may get our bottom. It will be painful, but if we end the day up after a horrible open that could be it for a while.
Well, the plan was to play golf and let the market do its thing. I found myself mystified staring at my two screens, TV and PC. Good ole
, leave it up to 'ole
right in the crotch, right when they are down. Going for the throat. You talk about a well-placed bomb. Look out, I may have gotten what I asked for. Everything I own, and I mean everything, is just getting trashed. Down 60 on the
, I grab my clubs and head for the driving range. I missed my tee time.
On the way out the door one of my buddies calls and wants to know if it is time to get into
at 28 -- down 6 -- yikes! "You are asking me? AOL just hit its 52-week low, WGAT has 7 more points to go." "Pick your poison." On the way to the range, I cannot help but get some quotes. We got a rally going, Nasdaq only off 25. Wow, it's bad when you are excited when the Comp is down 25. WGAT is at 32. I hope he waits until it hits 60.
I call my dad who is long some Nets and he is in there buying. The old man has stones. I told him I had picked up my toys and was not playing anymore. I am keeping the toys I have and I am not buying or selling for a while. He got a chuckle out of that.
Made it to the range, practiced my chipping and putting (I suck), ate some lunch, saw a disturbing movie,
, and then came home to see everyone kept their rally hats on.
I have been here before. It has been much worse than this. Remember 10/98. Just sit tight. Let the macro crap play out. Long term, rates are headed lower. It is supply and demand, remember. We have surpluses, remember. He wants to be remembered as the guy who paid off our big mortgage. The only way to do that is to preserve this thing and get our "real rates" down where they belong.
Yep, I am deciding not to play. I decided yesterday not to play. Get in the bunker and close the door. Peak out occasionally to see if there is fall out, but hunker down. In a few weeks or months, the stocks I own will be up. They are all great stocks. Great stocks come back. I used to sell puts. This is much better. Time to go to the can.