New Trade: Shorting 10 Year Bond Futures

I have the sense that is going to be the best trade of this year. Or at least one of the best trades as I already have 2 or 3 great ones under my belt in 2010.

I think the time is now, Yields crossed below 3% recently in what I sense to be a fake move. Yields are obviously going much higher in the medium to long run. But even for a short term, high leveraged trade I think the price is right. In speculation, timing is everything. You need to read the market well and place your bets at the right time.

I am also going to sell some The AES Corporation (Public, NYSE:AES), Wal-Mart Stores, Inc. (Public, NYSE:WMT) and SPDR S&P 500 ETF (Public, NYSE:SPY) puts.

Goldman Sachs Still Sees The S&P 500 Going To 1300

"Our framework for evaluating the US equity market incorporates four pillars – the economy, earnings, valuation, and money flow – and suggests the S & P 500 will rise approximately 14% to reach 1250 by year-end 2010.”

Goldman Sachs

I bought eMini S&P Futures and some selected stocks like Petrobras (PBR), WalMart (WMT) and Google (GOOG). I am short term bullish and playing the rebound.

Have a great trading day.

Buying The Down Gap

I will buy the down gap on the US stock market via eMini S&P Futures and start building a meaningful long position.

I am expecting some consolidation and a possible retest of 1050 and then a recovery rally. Of course this is a risky trade in a violent market but I have a good record of buying extremes, especially on the long side of the market.

I am also looking into some individual names like Petroleo brasileiro (PBR), Google (GOOG) and the not so sexy Wal Mart (WMT). My plan is to buy on a down scale starting today.

Its been a while since I shared my music preferences with you. I will recommend The National again for those that weren`t around a few months ago.

Momentum Works as U.S. Stock-Picking Strategy

Momentum works as a stock-picking strategy according to this great piece of research from Kenneth French, a professor of finance at Dartmouth College. The research`s conclusion is that past performance looks like a forerunner of future performance in US stocks through history.

Stocks that have done well, on average, continue to do well. That`s a provocative thought, but this research is pretty resolute.

Read the full story here: http://www.bloomberg.com/news/2010-06-23/momentum-works-as-u-s-stock-picking-strategy-history-shows-chart-of-day.html

I have a small long position on the S&P 500 Futures. I am only playing a bounce so I am looking forward to close this trade on the first sign of weakness.

Have a great trading day.

Buying BP Is The Pure Contrarian Play.

I am making an effort not to buy BP plc (ADR) (NYSE:BP). Its going to open about 5% lower, its trading at 27.26 dollars per share in pre-market.

Its the pure contrarian play. Nobody wants to hold BP plc (ADR) (NYSE:BP), fund managers are embarassed to show to their clients any BP holdings in their monthly statements so they are hitting sell, sell, sell no matter the price.

I have the sense that this is it. Its time to go in. Pure trading, no fundamental considerations on this one.

Make a Mistake, Then Another One. Then Double Your Money.

"Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money."

Bruce Kovner, hedge fund manager

I totally agree with this quote. Making mistakes is not only unavoidable but even mandatory to trading sucess.

I am sitting on the sidelines waiting for the next trading opportunity. I will test the long side if the market becomes a bit more oversold.

Have a great trading day.

Closing My Short. Good Bear Raid.

I have just closed my eMini S&P 500 Futures shorts. It was a great bear raid.

I am having the best trading sequence in a long time.

Have a great day.

PS: read my article about daytrading on Seeking Alpha: Daytrading Is Getting Out Of Fashion

Richard Russell: This Will Be The Most Disastrous Bear Market Since The ‘30s

Richard Russell is more bearish than ever:

“We’re now in the process of building one of the largest tops in stock market history. The result, I think, will be the most disastrous bear market since the ‘30s, and maybe worse."

Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS) and ProShares UltraShort QQQ (ETF) (Public, NYSE:QID)

George Soros On The Euro Crisis

Fantastic video interview from George Soros on the european debt crisis: "Soros Says Germany ‘Main Protagonist’ in Euro’s Crisis"

I am still short eMini S&P Futures and I should double up my already leveraged position after listening to this video presentation from Soros.

The World Cup is finally gaining some life. Great tension in the last games of the group phase. Germany was half way home last night. But I think they will beat England in the Last 16.

Terrible New Home Sales Data.

The New Home Sales data came in at 300k versus an expected 400k.

I am now looking forward to the 2.15 pm ET Fed Statement. My bias is negative, I am expecting the resume of the sell-off.

It`s FED Day. Futures Will Trade Up Till 2.00 pm ET.

Its the usual FED day trade. The market will dress up for the meeting, trading higher through out the session till the FED statement. Then, anything can happen as usual.

I am long and I will close the trade around 1.30 pm ET. I will be looking to the short side after the FED rate decision because the market is acting very soft again and there is probably more downside to come over the next couple of weeks. I won`t rule out a retest of the recent lows on the S&P 500 Index around 1050.

Messi & Co. are already through to the last 16. Can Maradona add another World Cup to his curriculum?

Take care.

Happy Trading.

I am sure you have a couple of friends that could use this chart as their own guideline.

Have a great trading day.

Roubini Says US Budget Deficit Is Nearing Greece`s.

"The US today is having a budget deficit of $0.5 trillion this year, that’s 11 percent of US GDP, that’s not very far from the 13 percent of Greece. And the US is much bigger than Greece."

Nouriel Roubini

I am not a fan of Roubini, he is much more of an economist than a trader. But the point that I want to make is that sooner or later the shorting of long term US Treasuries will be a great trade.

Related ETF`s: iShares Lehman 20+ Year Treas.Bond (ETF) (Public, NYSE:TLT), ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT)

Got This One Right.

Earlier today I wrote, "At first glance the market seems a bit overbought now and set for a correction. We may get an opening gap reversal and I will play it on the short side if it acts soft after the opening."

Its always nice to get back from a one week trading vacation and start on the plus cplumn. I am having a great trading sequence.

No bias for tomorrow.

Meredith Whitney: Housing Market Will Double Dip

"People doubt there's a double-dip in housing. It's amazing."

Meredith Whitney in CNBC, June 21

Related Stocks: Lennar Corporation (Public, NYSE:LEN), D.R. Horton, Inc. (Public, NYSE:DHI), KB Home (Public, NYSE:KBH)

There is also a good related article about these stocks on Ritholtz`s Big Picture.

Finally...we got some action in South Africa. Portugal scored seven goals against North Korea today. They are much better at sinking ships. :)

Back On My Trading Desk. Futures Are Up.

Futures are trading up substancially on Globex on the chinese currency policy move. I am back from a one week vacation and getting back to market terms. I left with no trading positions after a very good ride on the long side of the market.

At first glance the market seems a bit overbought now and set for a correction. We may get an opening gap reversal and I will play it on the short side if it acts soft after the opening.

I will keep you posted. Have a great trading day.

PS: I am quite disappointed with the World Cup so far. Poor play, no commitment from the players... Most games end with draws. It has been a pure waste of time.

Railroads Traffic Continues To increase YOY

"The Association of American Railroads today reported that for the week ended June 12, 2010, U.S. freight railroads continue to post traffic gains over 2009 levels. U.S. railroads originated 288,973 carloads last week, up 10.5 percent from the comparable week in 2009."

in AAR

(Posted from my IPhone)

Marc Faber: I Am Not Interested In Buying Anything At These Levels

Very interesting comments from Dr. Faber on CNBC earlier today:

"At this level I'm not particularly interested in buying anything. I buy gold, I don't know what else to buy."

The inflation / deflation debate is getting more and more interesting. Half of the world is predicting big inflation ahead and the other half fears a protracted deflationary period ahead. Very interesting indeed.

I will be back on my trading desk on Monday.

Felix Zulauf Says The Market Will Go Below The March 2009 Low. He Has Been Right All The Way...

Felix Zulauf has made some great calls over the last few years and now he is terribly bearish and believes the debt deflation environment is far from running its course. He believes we are currently at a major turning point in the markets where investors are beginning to realize that government spending is not the solution to all our problems:

“The world is at a major crossroads. Some countries are at the end of a dead-end street. Greece has hit the wall. Spain and Hungary probably will be next. The Greek debt crisis was the beginning of markets refusing to finance irresponsible public-sector indebtedness. It will travel from the periphery to the center in coming years. The common denominator in the housing crisis, the euro crisis and the banking crisis is that industrialized economies carry too much debt. These crises show that we have to rewrite our system. We have been living a fiction for the past 20 years in order to enjoy a greater standard of living. Hard times are ahead, and the steps that Europe has announced to contain its crisis are only the beginning. Governments must cut spending and promises, such as entitlement programs, and raise taxes. At best this means stagnation for some years, but it could be much worse. Deflationary pressures will increase.”

Felix Zulauf adds,

“The market is naïve in assuming the earnings models of the past 20 or 30 years can be extrapolated out to the next five years. The market will hit a lower low than it did in March 2009. What was missing last year was the complete desperation and turning away from equities as an asset class that marks the end of a secular bear market. That will come. European and U.S. policymakers believe China eventually will bail us out, but China is tightening. Its real-estate sector will get hit badly. All the leading indicators are topping around the world.”

He sees an intermediate low in the summer or fall and then a total market meltdown,

“Commodity prices are heading lower. The stock market probably will make its low for the year in late summer or fall. The upside is probably 5%, the downside 20%. If there is a big break in the fall and the Federal Reserve starts printing money again, stocks could rally. I would be willing to buy if the markets are oversold enough and my indicators turn bullish medium-term. That likely would mean stocks go up through year end, though they could rise more if the crisis triggers another major stimulus by the authorities. The market’s move would be temporary, however. Secular bear markets usually bottom slightly below book value. Book value on the S&P 500 is around $500, a far cry from last week’s $1,064. In the 1930s, the market was trading at half of book.”

Related: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

(Posted from my IPhone as I am taking a one week vacation)

Jesse Livermore`s Stock Market Quote

"Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul. "

in Reminiscences Of A Stock Operator

(Posted from my IPhone, as I am taking a one week vacation)

Sold All My Stock Holdings. Sitting On My Hard Earned Cash Again.

I sold all of my stock holdings in AK Steel (AKS), Alcoa (AA), Transocean (RIG), Noble Corp. (NE), Boston Scientific (BSX) and Western Refining (WNR). I am sitting on the sidelines for now because I fear that this mini rally is probably over.

The Retail Sales data was not very inspiring and I am seeing the possibility of another leg down. I am not shorting, I am just sitting on the sidelines and waiting for another opportunity to buy some stocks.

I will take a week off to rest a bit and to re-energize after a magnificent trading raid. I will watch a few World Cup matches in South Africa and post from my IPhone if I decide to get back into the market.

Take care.

I Had The Second Best Trading Day Of The Year

I had a great trading session as all my stocks rallied sharply. AK Steel (AKS) rallied 5% on top of yesterday`s rise and Alcoa (AA) also rallied 4%. But my best performer came from an unexpected 10% rally on Western Refining (WNR).

The drillers, Transocean (RIG) and Noble Energy (NE) also did quite well and I am riding them to even higher prices. I did not sell any stocks today and I will keep on dancing till the music stops. Then, there won`t be chairs for everybody but I will move fast.

Of all my stock holdings, I am most bullish on AK Steel (AKS). As I bought most of my holdings at the lows, I have no trouble at all in riding them higher. Timing is everything in this business and this time I caught this upmove "just in time".

There is no better feeling them winning both ways, first by shorting and making a killing on the downside and then watch, wait and buy for a turn.

I am hot.

Risky Trade. Bought Transocean (RIG) And Noble Corp. (NE).

So far, so good. Ak Steel (AKS) and Alcoa (AA) rebounded somewhat in yesterday`s session and Boston Scientific (BSX) was down 1 percent. I took advantage of that and bought a few more shares of BSX (read yesterday`s post, as I wrote about some of the reasons why I am bullish on that stock).

But my great manouver on yesterday`s trading session was the midday long entry on Transocean (RIG) and Noble Corporation (NE). Traders were panicking on these stocks and selling the drillers as fast as they could. They were fearful, panicked and I bought. There were some capitulation signs and stocks reversed to end the day way above its intraday lows. They can surely retest the lows again or even make a false downside breakout but as Jim Rogers often says, if you buy panic and can sit through the volatility you will come out ahead. That is what I did.

Today my music suggestion is De Phazz, a german band. De Phazz is a downtempo jazz ensemble integrating modern turntablism and elements of soul, Latin, trip hop and drum and bass into a lounge music sound.

Have a great trading day.

Positioning For A Rebound In Some Selected Names

I bought stocks of AK Steel (AKS), Alcoa (AA) and Boston Scientific (BSX) just before yesterday`s close. I am starting to buy stocks and I will add on the downside if I have the chance because I am expecting a bounce, a reflex rally.

Some top dogs like Paulson and Soros have been quietly adding to Boston Scientific (BSX). That is a medium term , strategic play for me. I remember last December when both got involved in Citigroup (C) and how C reacted (big rally from 3.50 to 5.00).

AK Steel (AKS) and Alcoa (AA) are pure rebound plays.

The World Cup is just around the corner. I hope we will get some decent football.

Have a great trading day.

Byron Wien: It`s Time To Buy Stocks

“People are trying to protect themselves and they are willing to overpay for it. Bearishness is high. The best time to buy stocks is when the level of bearishness is at a peak.”

Byron Wien, 77, Market Strategist, Blackstone Group

I agree with Byron. Markets became so oversold that a rally is probably around the corner. But I expect lots of false rallies and false breakdowns. Market will be on a volatile trading range for months to come. So, I am buying weakness and selling short strength.

Have a great trading day.

Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), The Blackstone Group L.P. (Public, NYSE:BX) and SPDR S&P 500 ETF (Public, NYSE:SPY)

Market Update: Volatility Is Here To Stay

Stocks fell sharply on Friday following a disappointing jobs report and worries about a hungarian sovreign debt default:

"Stocks got rocked on Friday after worrisome commentary out of Hungary and a job’s report that missed expectations by a wide margin. The Euro concerns are clearly spreading and the U.S. private sector appears far weaker than it should be at this point in a “recovery”. Markets resumed their deflationary trends as U.S. bonds and dollars soared and commodities and equities moved lower. Volume was very heavy on the day and breadth was negative at 8:1. U.S. stocks lost 2.2% on the week. It’s becoming increasingly difficult to see any positive trends unfolding over the next few months as housing woes mount, the U.S. economy flounders and the Euro problems appear far from contained…."

by The TPC

Markets will certainly remain volatile and there will be plenty of opportunities to profit both ways, long and short. Markets are probably a bit oversold, and I would not be surprised to see an upday on Monday. I just love these fast moving markets. It is certainly a market for the pros.

Have a great trading day.

Employment Report: Is 500,000 A Good Estimate?

The Employment Report will come out at 8.30 am ET. The consensus estimate is for a gain of 540,000 jobs but the consensus range goes from 225,000 to 635,000. I do not remember of such a wide consensus range, over 400,000 jobs.

The market has been pretty volatile and is in no men land at the moment. The momentum looks positive for now, but the market may turn on a dime.

I have no trading positions at the moment but I am going to play it, after the number comes out.

I did a nice trade on SandRidge Energy (SD) over the last couple of days. I wrote about SandRidge Energy (SD) earlier this week. It was finally acting right, and the big rally on Natural Gas was a good catalyst for the stock to move even higher.

I have also been watching Delta Petroleum (DPTR) again. I am very concerned about the OPON deal. They mentioned recently that they were extending the time period for that deal due to financing issues. I would avoid that stock for now.

Oil Spill: The Whole Thing Is A Mess

I want to share with you this interesting thought about the recent oil spill from a prominent, widely and popularly known financial blogger:

“The whole thing is a mess. Environmentally it’s obviously a disaster. Economically, it’s a mess because the U.S. can’t afford to keep relying solely on foreigners for energy sources. Politically it’s a mess because the Republicans look silly after years of “drill baby drill” while Obama’s leadership skills pale in comparison to Bush’s Katrina response. There’s nothing good that comes of this. Absolutely nothing.”

Related ETF`s: BP plc (ADR) (Public, NYSE:BP), Halliburton Company (Public, NYSE:HAL) and Transocean LTD (Public, NYSE:RIG)

Using ECRI`s Leading Indicators As A Market Timing Tool

I do not have much time to write today, so I will leave you with a new tool. Can the ECRI`s leading indicators index be a useful market timing tool?

Read the article: USING THE ECRI AS AN INVESTMENT TOOL

Have you watched yesterday`s match between Federer and Soderling? I was very impressed with Soderling. What a forehand...

SandRidge Energy (SD) May Be One Of The Land Drillers To Benefit From The Spill

Land drillers will benefit from the fund managers low risk appetite for off-shore drillers and may see a good flow of funds over the next few days/weeks. SandRidge Energy (SD) has been ralliying over the last few trading sessions and there is some more upside to it.

Remember that we play it a few months ago when it was trading around 8 dollars a share. Its CEO, Tom Ward, has been trying to balance the company between oil and natural gas and they recently acquired Arena Resources (ARD) (click the link to watch Tom Ward`s latest video interview). Maybe SandRidge Energy (SD) will have its day in the sun after this disaster.

BP And Energy Stocks Are Racing To The Bottom

"BP Plc fell the most in 18 years in London after abandoning an attempt to plug a leaking oil well in the Gulf of Mexico, the worst spill in U.S. history."

in Business Week

As I mentioned yesterday BP Plc, and energy related stocks will race to the bottom, accelarating their declines for a couple of days and than finally making a bottom. (read yesterday`s article)

Related: BP plc (ADR) (Public, NYSE:BP), Diamond Offshore Drilling, Inc. (Public, NYSE:DO), Transocean LTD (Public, NYSE:RIG), Noble Corporation (Public, NYSE:NE)