I started this blog last year as insights and innuendos because I liked the alliteration (sue me!) and the song 'innuendo' by Queen is awesome (actually the whole album) and it mostly meant what I wanted it to. However, I have to admit it did bother me a bit that the name wasn't entirely accurate. An innuendo is a subtle, oft difficult to detect, hint. This is what I wanted to say. However it often tends to be regarding a person with a somewhat negative connotation. This is not exactly what I want and as I am always trying to improve I am changing the name of the blog to Insights and Intimations which is more accurate...
I was also playing with Insights and Niceties... Your market 'IN'.... which does not have alliteration but is a nice play on words... and also completely accurate. At any rate maybe I'll change my mind and go with that at some point. Ok... you can see that it is important for me to be as precise and accurate as possible... while also appreciating intelligent diction... for what that's worth...
Anyway... a couple of other things:
1. I changed the archive list to by day rather than month to make it easier to navigate
2. Oft overlooked is a search bar in the upper left hand corner of the blog. This enables you to search for key words in the entire blog archive. For example if you were looking for all the posts that include SDTH just type this into the box... it's very efficient...
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Now for the pulp of the post...
On the last post (Haight) I noted that the 'ideal' time to go short today was if/when the rebound in certain short ETFs failed on a retest of the broken SMAs on Friday. Does ideal happen? Sometimes it does... especially when so many computers are running the market. What do I mean?
Let's take a look at today's SRS chart...
The stock went back precisely to the 50 day SMA (see the little black line) before bouncing off... a position taken in there with a stop let's say 1% or even less below support would have yielded top results with limited (1%) risk! That's what I'm talkin' about,,,!!!
As expected based on probability SRS bounced off support and continued up for a very nice gain... If you played this it would not have been a bad idea to sell at least some before close on the large move... although after a temporary potential reversal down I think SRS likely goes all the way near the 100 and 200 SMAs region (which happens to be around 100$)... the target price... for a very nice little trade...
Note... with any short it is beneficial to look at the underlying index as well since a lot of the moves first and foremost act off of this (esp with more widely followed indexes like Naz) .All of these indexes can be found by going to stockcharts dot com and typing in dj or ixic (for the naz) etc... it will find you a the underlying index charts. Here is the DJ real estate index...
The other shorts didn't retreat as nicely to the SMAs. Many never made their way back that far. They turned around far short. This again would be the time to get in... though it's not as nice because:
1. the short doesn't have as far to bounce up since it didn't retrace all the way to the MA or support (less profit potential).
2. without the strong support right there it is more likely that the stop will be hit (the stock doesn't have to go through the tough support area to hit your stop... or you have to set the stop further down from where you got in (2 or 3% or more... higher risk).
Still... even though not ideal it can still work well. See how SKF started down and then shot back up for a nice gain. (LEH probably had something to do with this too... but that I believe is trading at its core... combine a strong signal with another strong signal and like a see-saw with 300lb football player on it the position oft goes one way). With trades like this I almost always recommend a trailing stop so that if some news event suddenly shifts the tide profits or at least break even is maintained...
One other note...
QID was a great buy (I didn't pick up on this yesterday) because the break of the 200MA is usually a big big deal and as we saw recently with the SP it often will shoot directly to the next major support of the 50 SMA. Here is where it really would have made sense to look at the chart for COMPQ (Naz) not just QID because the moves in QID really appear to have corresponded to bounces in the underlying index.
Some also points:
POT stayed strong again. I think this stock is going to 300 but it won't do it in a line in this market and though it is in a breakout mode at some point I expect it to slow... I'll be watching it and probably raise my stops... but I dunno... I'm willing to give this stock more latitude than most.
CMED- I bought the Jan 10 35 call at 1,070. I did my own risk/reward analysis and like the long-term prospects here... before this market hit the Jan 09 40 calls were trading as high as 2,000 (20 per contract)! at their peak... I think the market is going to suck on the long side in 09 but... once the risk/reward looks good and the probabilities are in favor the rest is just calculated risk...
PLEASE don't jump on this because I bought it! Look into it if you like but you have to make your own calculation and trust yourself entirely on this and all decisions.
I imagine that those who read this blog are much smarter and more judicious then the average herd that jumps on recommendations without pausing and doing their own investigation. That's why you're here!... but man when I watch Cramer... who does have some really educational points especially in core segments he does specials on... when I watch him (I would more if I could to learn from him and to see where the herd is going) it makes me cringe to just hear people jump at the sound of Buy! Don't Buy!... without looking at the picks backwards and forwards to make up their own minds...
Ouch... he recommended BSC before its collapse.
I find in general that blogs often provide the best REAL, unbiased, story out there. Still, each blog is but a lonesome shard of glass in the MOSAIC that is investing... (man time for me to do something else for a while).
Here's an ode to "Innuendo" as only Freddie could sing it... Be sure to stick around for the Spanish guitars near the end. Enjoy...
This blog is for informational purposes only. It does not give investment advice.
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