Coals, Minerals, Natural Gas, Oil Drillers and Commodities remind us why they are the leading sectors. Crude Bounces Hard and Financials Add to gains

The Bulls took the market indexes higher with the S&P 500 gaining 22 pts to close at 1284, the Dow up another 200 points even to 11,569 and The NASDAQ reversing earlier losses to close at 1856. The rally was led the Coals, Miners, Agriculture, and Oil Drillers. The "Good Stuff" went up strong, along with the beaten down financials stocks holding their own and adding slightly to gains from yesterday.

The only trade I am sitting on is the USO August 99 calls, which are now trading at $5.60, 64% higher than my open price of $3.60. With Crude Retreating and breaking the trend line everyone (including myself) was calling for $100 a Barrel oil, and lower in the near future.

Ask yourself: Does my vehicle run on gasoline? I'm going to answer that one for your with a "Yes". I don't think the trend of decreased US Demand over the past few weeks is going to have that much of an impact on global prices. Many countries have no incentive to conserve Gas because it is dirt cheap and subsidized by their governments. With Gas in Venezuela at 12 cents per gallon, they have probably not cut back.

Here is a link from CNN to Global Gas Prices: http://money.cnn.com/pf/features/lists/global_gasprices/


RIDE YOUR WINNERS: I was tempted to cash these calls with the quick profit literally burning a hole in my pocket. However, I believe that Oil has more to rally, with crude closing strong at $127 a Barrel in Electronic Trading. I kept telling myself to be patient and let the market tell me when to exit. It takes courage to be a pig to ride your winners. Oink Oink. Happy Trading.

Long USO (United States Oil ETF) August 99 Calls, Open at $3.60

I Went Long USO (United States Oil ETF) August 99 Calls after today's oil inventory data. Government data showed that crude and gasoline supplies fell and gasoline demand improved from last week. This bit of Bullish news was enough for Crude to Bounce from $120.80 all the way up to $126.12 in NYMEX Trading, as of 1:43 pm EST.

Goldman Sachs came out today with a note to clients saying they expect crude to march towards $150 a barrel sooner than later.

As usual I will post a full update and entry at the end of the days trading.

I appreciate all of the feedback from people who have been reading my blog.

The Bulls Charge back with Fury. Who will win? We don't know, What we can say for sure is the Volatiltiy is Back.

The Fight continues between the Bulls and the Bears. With The Market still officially in "Bear" Territory. No winner has been declared yet, but we know for sure the Volatility is back. If you take a look at 2 day chart on any broad index, it looks like a letter V. Down all day yesterday, then back up just as fast. The Volatility is back. The S&P Ripped up 28 points, The Dow popped 263 points, and The Nasdaq soared 55 points. Erasing Yesterdays losses and putting the Averages into the Black for the Week.


I did not have any open trades coming into today, nor did I put on any new trades. I did missed the opportunity to get long the Financials early in the day, so I just sat on my hands. The shoulda, coulda, woulda's can't get to me any longer, because I know they always end with the words "But you Didn't". With my Trading Philosophy I do not enter the markets unless I have a conviction. I missed the boat today, and it is tempting to cry on the shore. I would rather preserve my capital that try to jump in chasing every market move. You can't get them all.

The Markets rallied strongly on the back of Merrill Lynch raising 8.55 Billion Dollars as CEO John Thain unloaded a batch of money losing CDO's. we are seeing some signs that people are buying up the once unsalable CDO's. This is huge. As you have known I have been Bearish on the Markets for a long time (Since October 2007). While I have traded many bounces long, I still maintained a strict short bias. Now I am forced to reexamine my outlook. Commodities are clearly breaking down, the dollar is rallying, and stocks as an asset class look more attractive. The Hedge Fund King John Paulson who made $3.7 Billion Dollars in 2007 with his bets against the CDO's is starting up a new fund to offer capital to some of these distressed financial companies. If Paulson is covering his short bets and fishing around to get long by offering up money to the very industry he made a fortune betting against, any intelligent investor must take notice.

The US Dollar gained about 2 cents or 200 pips against the Euro. Oil Prices shed over $3 Dollars a Barrel to around $122.5 in the Floor Trading Session.

In M&A activity Teck Comico agreed to acquire Fording Canadian Coal for $14.1 Billion dollars. Coal Prices have doubled in the past year and many companies are out shopping to pick up coals on the lows.

After tomorrow the SEC's Temporary Ban and enhanced enforcement of Naked Short Selling is removed. It is going to be interesting to see how markets react. Happy Trading.

Mark Up another Victory for the Bears

Today was another painful day for the Bulls or anyone holding stocks "Long and Wrong". It was another great victory for the Bears (I am unapologetic and a proud member of the camp) A Truly Awesome day with the S&P 500 Losing 23 points and the Dow dropping 239. What a great day! How would you like to say that after a day like today? I am warning you its not for everyone.

The International Monetary Fund got things back to reality with their comments on the worsening housing market situation, Treasury Secretary Henry Paulson issued guidelines to create a covered Bond Market in the US, which decimated the Equity Shares of Government Sponsored darlings Fannie Mae and Freddie Mac. The US announced a record Budget Deficit of $482 Billion Dollars, Damn I guess the war on Terror and Invasion of Iraq is expensive. All this is great news for my investors, as it confirms our short bias, and puts money into our pockets.

Financial stocks led the declines with AIG plummeting over 12%. Merrill Lynch (MER) Fell over 11%, Lehman Brothers (LEH) over 10%. Please refer to my previous post entitled "The Equity of Many Banks are worthless" for more color as to why this is all happening. Amgen (AMGN)was one bright spot after hours beating analyst forecasts. However it is going to take much more that one Biotech company beating numbers to rally this market. Its going to take the US Housing market (the Cause of the problems) turning around.

The Financial Advisors and Long Only Money managers are crying. I guess Hope still Springs eternal, even in the face of repeated evidence to the contrary. I am heartily laughing at them all the way to the bank.

However, I still feel bad for the people who I have pleaded with to manage their funds who refuse to see the situation as it is. I understand Change is uncomfortable. I also understand that I sometimes come off as a crude, fast talking, insensitive, know-it-all ass hole. I get that. But I truly have your best interests in mind. My only intention to speak frankly and be objective.

I have tried as hard as I could. And I give up. They say you can take a Horse to water but you can't make him drink, I see many thirsty malnourished horses, who are in need of water, but stubbornly refuse to sip. This Cowboy has no choice but to leave them to fend for themselves, and ride off into the sunset.

Objectivity is a tough pill to swallow, but once you get her down you will have an uncommon insight and more clarity into market operations, and much more money in your retirement accounts. Happy Trading.

Covering Shorts-Going to Work on My golf Swing

I opened WFC puts at 1.5, Closed at 2.3. This was over 2 days and it was the only trade that I made. I did good. The Market is offering a good time to cover shorts here and then reevaluate. I can't gauge the Markets direction right now. Perhaps I will jump in before the days end, if I am alerted.

The Market has suffered a large drop yesterday on New Homes Inventories, and Today got a bit of optimism from a better than expected Durable Goods Report.

However my golf game is still not where I would like it to be.

Your Financial Advisor is a F&*#^ing Idiot-Tell them to Stop Smoking Hopium

In the Last Bear Market the S&P 500 lost about 50% of its value. Yes this can happen again. Your Financial Advisor will probably say things like "we are invested for the long term", "The Market over time always goes up", "It's not timing the market, it is time in the market", and he will throw around terms like "Dollar Cost Averaging".

Ask yourself this one question: Do you feel comfortable watching your Stock Portfolio decline by another 25-30%? If so, then stop reading this, pour yourself a cocktail and just relax. You may also want to avoid opening up those monthly statements.

Anyone who holds too many stocks during a Bear Market has only one thing to cling to: Hope. They hope the market goes up. They hope everything is going to be alright. The reason for this eternal hope is because their portfolios are only positioned to increase in value if the Market rises. 99.9% of Investors can only make money when Markets rise. The Dirty little secret is that Markets don't always rise, they move up, down and sideways. Uh oh.

I personally don't care what the market does. It could go up to the Heavens or drop straight to Hell, the Dow could go to 20,000 or to 2,000, and I would not lose a wink of sleep. On the Wall Street there is saying that goes "The Unsuccessful Investor is Best Friends with Hope". Rest Assured that Hope is not part of my equation.

I have endured massive pain and frustration through my own trading, this eventually created a "Moment of Clarity" where I could no longer afford to hope for what I wanted to happen. I was forced to look into the mirror and admit exactly what I saw, even if it was ugly.

My ultimate aim in Trading is to be objective. Specifically to be realistic with the circumstances that are actually happening in the Markets. Happy Trading.

Please Don't Everybody Line Up at once to Give me Money

Greetings Friends,

As you probably know I have been soliciting funds for my Investment Fund: Modad Derivatives LLC. The Fund is still not capitalized with the amount of money I would like. I feel that with my continuous successful calls on the Direction of the General Market, Specific Sectors, and Trade Recommendations, I would be doing a fantastic job running an adequately capitalized fund. During my 1 year of trading I have learned much. I continue learning more about myself everyday and how I react to the events of the market. I am open to any suggestions and inputs from my friends and investors to better run the fund. With the accountability of my non-managing members, I know that I will be better than I could ever be alone.

This is what I do. I have taken a serious study to the markets, and I feel that I deserve the chance to really show what I can do.

People have still been reluctant to take me seriously and transfer funds to my custody. While It may seem like I enjoy being right on the calls I make on this blog, or in phone conversations to everyone, I really am in this game for one reason: To Make Money.

I look forward to speaking with you all soon. Happy Trading.

Time to Take Profits on the Long Side. And Short.

Yes I Did call getting Long about 1 week ago. For any who listened to me they made money. Now I am saying it is time to sell into this rally. I have recently purchased puts on WFC. Time to Start Shorting again.

Wow What a Rally!-This is NOT the Bottom

We knew the rally was coming. We covered up our short positions yesterday. But who could have predicted the magnitude of this bounce? Wells Fargo Corporation with better than expected earnings sent a jolt of rocket fuel to the market. The Market should enjoy a nice rally here over the coming weeks. This is totally normal in the context of a longer term Bear Market. The Testimony from the Senate Banking Committee laid out some new proposals for regulating naked short selling, Oil Drops on a much larger than expected build in inventories, and Financials stocks rallied very hard. The Bottom of the Market will be called by many market pundits here. We are by no means out of the woods, as fundamental economic conditions have not changed. However with the government talk of surveying short sellers, possibly eliminating the uptick rule and the Massive amount of short positions, this was a great time to take profits. Commodities, Oil, Coal, and Natural Gas stocks sold off hard, and people moved money into the Financial Stocks that have been so beaten down. I am switching my short term bias to being long for now. I trade what the market gives me, not what I want to happen.

All I really have to say about today is "Wow-What a Rally! But This is Not the Bottom." For Nimble Traders the market is providing a good opportunity to get long here, just do not get married to your positions. For Long Term Investors this is the time to hold and then sell some stocks off into the next rally. The Bulls won the most recent battle but the War is Far from over.

The Equity of many Banks are Worthless

Today the FDIC issued a list of Banks it believes are going to fail. This is not suprising to me. First let us examine what a these "Banks" have become. The Banking model of the typical commercial bank makes money by the spread of deposits taken in, versus the money it Lends out. The Bank Burrows money at a lower rate and lends it out a higher rate. However if we examine what these banks loan money for, and what they lend the money against it is one asset, Real Estate. These Banks are ultra over leveraged to the exposure of Homes amd House Prices. They lend money based on The value of Homes in the Form of Mortages and made more loans based on the value of these homes with home equity loans. The Balance Sheets of these Banks is a joke. When the Shareholders find out their equity is worthless they are suprised. Should they be suprised? Not in the slightest bit. If they took the time to look at the Balance Sheets of these Banks they could easily see the amount of debt the Bank has taken on, and the small amount of equity capital they keep on hand.

The Market seems to be telling us that the Banking System of The United States is going to Change as we know it. The equity of most of The Banks are worth nothing. They are not even going to be able to meet their debt obligations. As you know the Debt Holders, and Creditors of the Banks are going to be the ones who are first in line in the event of a Bankruptcy. The equity holders are basically giving up their money to feed the hungry debt holders.

In the Last Bear Market the S and P 500 Lost about half of it's value, in this Bear Market I see it losing no less than 50%, in most cases the market will lose much more of its value due to the Housing Bubble that has been built up over years and years of Lending ontop of increased prices. History has shown that in times of increased credit, and additional lending based on incresing asset values (house prices) will create both substantial booms, and subsequent busts. Once the Real Economy in Main Street feels the effects of this bust the market will only fall further. Happy Trading.