Mondy 8-20-2007 - Afternoon

Operational Guide:
1. Test the market with your original expecting direction;
2. If it matches, carry on with 1/3 of the position;
3. If it doesn't match, wait and adjust;
4. If the position is good, add more 1/3; if the position is not good, reduce the position.

Here is my over all expectation for the market:
1. Going up to 13600 in Dow from now on.
2. Going down to re-test the low, generally expected to be hold.
3. If it does hold, add in money call position to AAPL and QQQQ.

Monday 8-20-2007 - Pre-Market

Last Friday, Asian and Europearn markets were down more than 3%, Fed cut discount rate by 50 points in the early morning, and the street rallied. Although the rally faded, the close was up around 2% on all major indices.

During this weekend, people are still talking about subprime problems. But I have noticed that the house prices didn't drop further in Montgomery.

This morning, Asian were up big, covered almost all the lost made last Friday. I see the US future going up. But cautions are still there. I don't expect it goes straight line but at this market low. Normally, you shouldn't sell. Even with sell, it should be short and swift.

What is the best time to trade during the day

it is my observation, there are 3 periods that is best to trade in a day. One could plot his move based on the anticipated move of the market.

8:30-9:00, This is emotion trading. a lot of swings. if you have a good trade overnight, it will brighten your day. if you have a wrong trade, this is also the good time to close your position. just do not panic, wait for the first wave of selling/buying subbued and then make your move.

11:00-1:00. This is when momentum players coming. if you have a stock going high, very likely it will even higher. so, if you are a day trader, this is the time to close and your are done for the day.

2:30-3:00. This is when index funds/ETFs to coming to adjust their position to reflect the market and also a good indication for tomorrow. In a normal market condition, you can short/long a momentum stock and be ready to take advantage of the emotion next day.

Thursday 8-16-2007 - Pre-Market

Last 2 days were brutal. The Dow dropped 200 points each day. Last Tuesday started with a flat session with very thin volume. But in the later session, sell off started. Yesterday, the morning session was lower open and went up higher. All indices were green before 2:30 pm. Right after 2:30 pm, a very strong sell off through closing. With each day 2% drop. People are fearful and scared.

I was buying during those 2 sessions and got buried in seconds. It was a very bad feeling. Anyway, the strong support at QQQQ should be at $45.5, SP at 1380. If both of those lines are broken, it would be very bad. We should see.

Some gurus in DQ are starting changing from short to long. If today is a reverse day, I will add position in the later session. If today continues, I will wait and see.

It proves that housing market should not be bottom yet. Guys in CNBC are talking about taking a few home builders and half of mortgage companies down.

Monday 8-13-2007 - Afternoon

Last weekend, in DQ, you could feel the bearish sentiments all over the place. But Carl Futia's blog pointed that this was the market bottom. Here is a quote from one of the comments:
"
Carl, we all agree with you this market is a screaming buy around current levels.Investor angst is at levels normally associated with meaningful market bottoms. The NYSE Arms hit a very elevated 2.97 Friday morning. The VIX is at the highest level since early 2003. The ISE Sentiment Index 10-day moving average is at the second lowest reading on record. The CBOE total put/call 10-day moving average is also at the second highest reading on record. Money market funds, this week, saw $36 billion in inflows, the most since 2005. As well, the average 30-year mortgage rate fell nine basis points this week to 6.59%. This is down from 6.73% three weeks ago. Trading had a panicky feel again on friday even as global central banks inject further liquidity into the system. Insider buying in general has soared recently, but especially so in financial equities even as investors stampede out the door, according to InsiderScore.com. In fact, this round of insider buying is led by the troubled financial industry, particularly among real estate investment trusts and other companies exposed to the subprime mortgage fallout. Bottom line > BUY
"

This morning, markets jumped open. But it drafted down even since. I expect the market will up from this level, and close higher.

Meanwhile, the home builders are lower due to HOV's earning report. It expects more down trend in the residential housing segment.

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Option常识：Call的价格低于什么价位的时候，意味着可以套利？

假设某个股票目前价位是S, Call的Strike Price 是K，到期日离今天还有三个月，目前市场上三个月的短期利率是r。则Call 现在的价格: C >= S - K*exp(-r)如果发现Call的价格小于这个数，那就意味着有无风险套利的机会。

Friday 8-10-2007 - After Market

Market has opened -100 lower, dropped to more than -200 points. Then Fed came out pumping lots of money. The market started recovering. At noon, and before the closing, Dow went up to positive. It closed at -32 points. Overall, it is a very volatile day.

I have been reading many posts on the internet, and felt that mine buying into the market might be a little bit earlier. But I believe my instict. During the market open, I felt the market was bottoming out.

Good news, CMTL and AVCI are both coming back strong. I believe those are strong stocks, and should hold for a while.

Friday 8-10-2007 - Morning

The market has been on the tear. Yesterday 380 points down, and today 200 points down at this moment. I believe that it is just half way there. So far, I am right. I have sold out almost all the stocks I could sell, and this morning, I am long QID (in a small position).

The wall street is asking for the Fed to cut the interest rate. I am not sure if they will get it. But in order to place the market this close, I have to make sure the trades are good. And make sure once I am right, I need to sure that I can lock the profit.

Wednesday 8-8-2007 - Afternoon

Market up, Russell 2000 up 3%, and NAZ up 1.7%. A very good day with good breaths.

But my CMTL went down with the segment, they are down 4%, which sucks.

Wednesday 8/8/2007 - Afternoon

Today is a very good day, especially for the NAZ. It jumped 1.8% led by CSCO's good earning. But some reasons, the defence and telecommunication segment has been beat down. CMTL down 4% and AVCI down 10%. I will hold those position for a while to their next earning.



Lesson learned here is that never buy stocks less than 2B market cap, except it has a great market momentum.



Home builders are obviously bottoming. The whole segment has been up 8%.

Wednesday 8/8/2007 - Afternoon

Seven states are defined in my model:

TP1 : Turing Point, the stock maybe begin a uptrend from its bottom. If volume is heavy then buy only 10% to test the water. If it's right, then keep it. You will catch the fish tail( hope to eat all the way up to the head). If fails then sell it right way, you have minimum loss.

FTDW2: Follow Through Day One, the trend is a little bit clear so add 20% more.

FTDT0: Follow Through Day Two, stock continues going up but the risk of going down also picking up so do nothing at this time.

RS2: Stock approaches major resistance but still could not break out. You could add 20% more if it looks like it will break out from here some day.

BK5: This is the time to build your position if the stock finally breaks out with heavy volume. Don't hesitate to get in.Otherwise you will miss a fast moving train. But if it is a fake breakout you must sell it right way.

PB2: After breakout, some stock will have a light volume pull back. This is the best time to add more to your positionBKFS: Breakout Failure Sell All. If the stock could not follow through in the following days and it break down with very heavy volume then sell them all at once.

BS0: Basing Zero. The stock is trading flat between the support and resistant zone. No action should be taken during this state. Otherwise you'll lose money. I have developed my own system to track stocks in the above movement and it proves working very good so far. All the stocks are divided automatically by my system and I only focus TP1 and BK5 to buy stocks and BKFS to sell stocks. This saves me a lot of time and I could focus on Buy and Sell. The above mentioned reverse pyramid method to build up position is copied from an Econ professor in Berkley University who quit his job and trading full time later.

Tuesday 8/7/2008 - Evening

It is a wide-ride. Right after Fed's annoucement, the market went down 100 points then up 100 points. Then it settled in the original trend. Reference my previous post for my original thought.

Again, I think the home builders should be in accumulation. Today, I got a little bit of HOV. Here is a list of builders with ranks:
1. NVR
2. CTX
3. PHM, DHI, KBH, RYL, TOL
4. BZH, HOV

Here is the portfolio for my home builder bottom fish:
HOV, CTX, and PHM. Each will be evenly weighted. The goal is to accumulate it from now to next 3 months, with $100k.

Tuesday 8/7/2008 Noon

Yesterday, it had a good day. The DOW went up more than 280 points, which covered Friday's lost. S&P was strong too. But NAZ was a little bit weak.



This morning, it gave some back. It was down more than 100 points at early. But around noon, all the indice came up with green again. The market is waiting for Fed's statement around 2:15 pm. Basically, it is in a stall mode. From what I observed, I incline to believe that the market is ready to pop up. Mainly based on a few things:



1. TA: Last Wednesday 8/1/2007 was the first rally with Dow's volume over 5B. Yesterday was a follow up, the volume was over 5B again which was larger than the most volume in any down days.

2. FA: The sub-prime issue has some impact some loan companies but not in a wide-spread mode. A few lender such as WFC and CFC are very healthy. Big investment banks stocks are rebouncing very strongly. US market returns are among the lowest of the world. With its current devaluation, S&P gain barely covered its lost for the US dollar. So it is a very cheap market.

3. Policy: Fed is definitely ready to save the market.

Tuesday 8/7/2007 - Early Afternoon

Yesterday, DOW went up over 280 points. This early morning, it gave up more than 100 points. But now, it turns green. From 12:00 to now, it is on the side way and waiting for the fed meeting statement out around 2:15 pm.

I recall it is the similar action in March after the sell-out. From Technical point of view, I believe yesterday's rally was the follow through of 8/1/07 first rally in the downward channel. Both of yesterday and 8/1/07 rally's Dow volume were around 5B, more than any down daily volume. I think that the market is on the uptrend channel. Fed meeting statement announcement will just interrupt the trend a little bit. After the statement out around 2:15 pm, it will be a brief down and a brief up (in no real order), then continues on its original course.

I unloaded CSCO this morning as I think it might be a repeat of INTC, which was not a good quarter. I am trying to dip buy a little bit of home builder (HOV). I think that BZH and HOV are good buy at current price.

Here was my operation from 2:10 - 2:30 pm.
1. Entered buy order for HOV at the current day low $11.30;
2. Sold 300 QLD at current market price $95.60;
After the news out,
1. Bought back 200 QLD at $94.57
2. Bought 200 VSEA at $50.21

Here are some issues:
0. First, the market move. It went up a little bit right after the news, then dropped 100 points in Dow, went back on to -20 points level, then dropped again over 100 points. Now it is climbing back on.
1. The QLD moved higher right after I sold, but within 1 minute, it dropped like crazy.
2. The waiting period for re-entery should be longer. It did re-test its low.
3. QLD order should be in smaller slot.

Monday 8/6/2007 - Morning

The market dropped 281 point on Friday. People were panic and it happened in the last 2 hours. I was out and didn't monitor it. But it would be better if stops were set. Overall, the sentiment wasn't too bad.

After the weekend, this morning, the market gapped up at open, though I don't feel it was strong. I think the market will go a little lower from here in the morning. But it might go up today.

For this bottoming stage, it might be good for a trade, but don't leave the market. The upward might be very strong.

Friday 8/2/2007 - Morning

People are talking about the Fed easing and the bond market has already priced it in by Pimco. According to Pimco, the market will be down on the day for Fed easing. But all over, it is a good time to buy the stocks. Also, watch the real estate stocks, if Fed easing, they will jump.

This morning, the unemployment number was up. Apperantly, the market doesn't like it. The pre-market indice are down. I will sell some partition of my holding.

Thursday 8/2/2007 - Morning

The market opened positive for the first half an hour and now is almost flat during 10:00 - 10:30 am. It is expected. I feel the market will consolidate for a while. Tomorrow's unemployment might give it a lift to a medium term top, then it will go down to test the low.

This morning, TASR has a bad PR which pressed the stock down 10%. It was about the law suites it has. To me, it is a noise. But it will be pressed for a couple of days. It might re-test its low.

Now the market is closed. Again, last 1 hour buy drove the market up higher. TASR is just amazing. It closed up with more than 12% swim. It looks to me that the real estate related industries might be bottoming right now. Keep an eye on, and accumulate some from now on.

Wednesday 8/1/2007 - Evening

The early pre-market in the morning 6 am was dramatically low. The dow was down over 100 points. But it moved up to almost break even at the open. The market drafted up and down, it was all over the place, but mostly stayed under water. But when qqqq dropped close to $47. I bottom fished again, got QLD in. The market tested the NAS at 2519 for 2 times. The 2nd time was close to 3 pm. After that, the market moved up. Dow was up strong, but NAS was lagged.

Overall, DaQuan's comments were all over the place too. Some are bull and some are bear. But DaoLan corrected marked the NAS 2519 as the strong support point. Although, NAS broke 2519 one time, it was not fierce at all.

The game for August is playing in the range. The market will be more volatile, and more trading fits for the style.

Tuesday 7/31/2007 - Afternoon

The market dropped again. It happened right after the AHM declared bankruptcy at the noon time. Somebody said it might be caused by some hedge funds were liquidating. But anyway, it is definitely a hard-time, in top of just loading up with a bottom fish mentality.

Now, Carl stated that the bottom was just a few points away. The CNBC's fastmoney guys are scared, and they said that if the market lower at open tomorrow, they would sell SPY and QQQQ.

Let's see.