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I found myself fighting the market early on today.  I gave back roughly $300 dollars by noon and even found myself down a little over a $100.  I began yelling at my monitors as if they would yell back, but I made up my mind at that point I was not going to lose on the day.  Now, $70 bucks is nothing to get all worked up about, but what I am proud of is my ability to bounce back.  Stay tuned, I have the feeling the next two days are going to be big.

Total Gains for the day: $70.60

Day Trading Video for 8-20-2008

Today ended up a positive $5 dollars.  Again all of the volatility in the market was reserved for the morning traders.  After being up $21 dollars in two days, I am getting that day trader itch to change my system.  But, I have been doing this long enough to know you must embrace the uncertainty in order to be a successful trader. 

Day Trades for 8-19-2008

IVZ .04%  -$4 (Commissions)

UNH .16% +$9

Total Gains for the day: $5

Day Trading Lesson for the Day

If a stock fails at a whole number three times, it is probably a good time to sell.

Good Luck Trading,

Al Hill

Barrons is portraying a "curtain call" in store for shares of Fannie Mae and Freddie Mac, which fell over 20% each today on concerns of insolvency.  Barrons suggested that the government would be likely to bailout the two government sponsored entities (GSE's), wiping out its equity holders, preferred and common and even subordinated debt holders.  Both of these stocks are near multi decade lows and have dropped over 90% since 2007.

There is a concern over Fannie Mae's ability to withstand further losses in their sub-prime, Alt-A, and interest only loans.   

From my perspective, as a technical analyst, here are my thoughts.  I have seen a handful of stocks over the past 10 years exhibit the strength and speed of deterioration that has been seen in Freddie Mac and Fannie Mae.  Most of them are now 0.  There has been relentless selling pressure, couple with volume all the way down from 80 to 6 today.  There have been short squeezes along the way, which have clearly allowed larger traders to unload their shares.

Today I made a $16 bucks and I am proud of it.  The market went flat the last 2 hours of the day, so I took a defensive trading approach and took what the market gave me.  Check out the trading video below, where I review my trades.

Day Trades for 8-18-2008

NRG .16%  +$10

BAC .14% +$6

Total Gains for the day: $16

Day Trading Lesson for the Day

When the market is in a tight trading range, take the money at your first target.

Good Luck Trading,

Al Hill

I just received an email from the owners of INO informing us of a promotion they are running.  There is currently a special for 2 free months of service when you buy a yearly membership.  For those of you on the fence, I think this is a good deal.  Anyhow, I am in no way trying to sell their service to you, I just wanted to make those of you who are interested aware of this deal.

Click HERE to sign up for INO.

I have been watching a lot of the Olympics over the past week and I have to admit it has motivated me a bit.  Not the fact that the top athletes in the world put there neck on the line to compete, but rather the fact the great ones find a way to win.  I feel that trading is an extension of sports and requires one to be able to tap into that winning spirit we all possess in order to pull out a victory against all odds.  So, with all of this in mind I have decided to create a blog.  I believe this is my fourth attempt at creating a blog.  Each time I would start one, I would quickly lose interest, due to the time required to maintain it and also the fact I was not connecting with the readers on a level that would benefit their trading.  This is largely a fault of my own, as I was holding back on discussing my trading strategies from fear of either I would give poor advice, or someone would take my ideas and I would lose my edge.  Needless to say I am over these fears and am ready to connect with our readers here at mysmp.com.

There are plenty of ways to put on option trades that have a neutral outlook: straddles, strangles, condors, etc.  Whereas stock and futures traders are limited to whatever price action the market gives you, options let you take a view on implied volatility (vega), the passage of time (theta), and the rate of change of the rate of change of the option per unit move in the underlying (gamma).  Okay, that last one isn’t so obvious, but the idea is to enter various spreads that can profit from changes in the non-delta greeks, such that success doesn’t depend solely, or even primarily, on what happens directionally in the underlying.

Since our last update, the markets have moved nowhere.  The Dow still stands near the 11700 resistance level we mentioned.  Today, concerns amid the banking sector shot the Dow Jones down 140 points to close near 11640.  JP Morgan reported wider than expected losses.  Again, a failure at that critical 38.2% retracement level on this index.  Support continues to remain at 11300ish and resistance at 11700 and then 12000. 

One interesting note to make here is that the Nasdaq is strongly outperforming the rest of the market and this is what you want to see when the market is trying to hammer a bottom in.  For those of you who remember, the bottom in 2003 did just this.

The banking sector is still on shaky ground but holding firmly above the July lows and this is bullish as well.  Let's keep an eye on a break of either of these boundaries defined above