Tuesday, February 27, 2007

Ouch!!! Stock Market Pain

I must be getting wiser. Earlier in my career, I would have been killed on a day like today (Tuesday). Instead, I made some good money in this bludgeoning.

My three biggest long positions all got hammered:

GOOG down 16.16 (-3.48%)
CDE down .42 (-8.75%)
NEM down -2.76 (-5.86%)

But I was short a ton of the Nasdaq 100 futures and the QQQQ's (also PCCC down 1.80 or 10.06%)

The End-of-the-World trade did not fare well today. Though briefly positive, both oil and gold finished down and the long bond rallied. Thankfully, I didn't really have it on.

I did short the 30-year Treasury yesterday and significantly added to the position today so maybe I'll ease my way back into that fabled trade of mine.

Also, I covered most of my Nasdaq short today - way too soon of course. Today would have been an ideal day to be off golfing with no bids below the market. In violent panics like this, I have always gotten hurt. All it takes is a few innocent longs to bite you in the ass or in the case of option trading, a missed hedge or two.

Here's one example. Years ago, Dell dropped 2 points for seemingly no reason. So I bought an innocent 1,000 shares at $118. Well, between that purchase and the end of the trading day, the stock market decided to tank - much like it did today. Dell closed that day at $100. I lost 18k on 1,000 shares of Dell. That is probably the most points a trader has ever lost in a day in the history of that stock. Here's the scary part - I was proud of myself for not doubling up at any point.

I have pretty much stopped watching and reading financial news but today I had to hear the scuttlebutt - and was it depressing or what?

The Chinese market dropped 9% last night and is being named the chief market antagonist. But the thing is, it had just rallied 13% in the last week or so.

Also, the Nasdaq really just gave up its January gains. Why is everyone panicking?

I simply hate being the level-headed optimist!!!


If you enlarge that pic, you'll see Cramer insisted that the market would not bounce on Wednesday - at any point for that matter. Why would Cramer say something so stupid? It's stupid in the sense that there's a 50% chance he would be completely wrong.

As it stands, I went long the Nasdaq in my futures account just after the close yesterday. I woke up at 6am, saw all of the markets higher (Dow futures up 100pts) and sold my Nazzy futures twenty points higher and then went back to bed to snooze on my profits.

As I have said before, "Cramer Sucks".


The Owner said...

Cramer sounded like somebody's shill yesterday telling everyone not to worry. I couldn't tell if that was HIS position or the government spooks paying him.

CaptiousNut said...

The guy flatulates out of both ends. So long as his viewers understand that it's quite alright. And if they don't know it by now, then they are beyond help.

Tax Shelter said...

I simply hate being the level-headed optimist!!!

Are you saying that the world is not going to end tomorrow? :) Should we expect a "it's a wonderful world" post soon?

CaptiousNut said...

That will be my first post if I can escape Boston and move to a golf course community down in Charlotte, NC or Florida.

A 400-500 point drop in the Dow from all-time highs is nothing to worry about. It's when it drops like that after a prolonged downtrend that people will get hurt.

People got scared from that little dip - wait until the housing market plummets, corporate earnings decelerate, oil hits $80, or geopolitical tension comes to fore. Remember the 9/11 stock market plunge was just salt in the wound of the larger bull market demise.

Oh yeah, just wait until long term interest rates rise; that'll be the bane of every asset.

The Owner said...

No splattered brains here on Wall Street today so I figured it couldn't have been that bad.

Don Riley said...

Please keep up the Cramer bashing !! I can't stand that pompous nit wit.