mysidetrades: November 2008

Monday, November 24, 2008

SHORT CBE (Profit Warning)

Profit Warning ! Music to my ears Cooper Industries (CBE) is breaking a support and hitting its 52 weeks low. Late on Friday, after the stock market closed, the company said fourth-quarter results would be below the 83 cents to 92 cents profit per share the company had forecast in October. It did not provide a new range.

Friday, November 14, 2008

Getting Ready To Short BBY or JOSB

The verdict is out, we are either in recession and/or fearful of it. The holiday season will not have any hopes for retailers. I am looking into BUYING puts on Best Buy (BBY) hoping it crosses past 25.

Saturday, November 1, 2008

Week of November 3rd (Trading Gaps)

UPDATE (Nov 6th): Bought Puts on Costco (COST) and looking into buying calls on TAP (great earnings reported yesterday and outlook is good as well). Buying Puts on USM 11% drop in price on 315% average volume. There was an extremely bearish news for Steel Industry, I am looking into buying PUTS on X. Cramer called it a SELL when it was a $30 stock, it rallied since then and past $40, Now its heading south again.

Started to look into the trade candidates for this week. I am looking into Omnicare (OCR -- Retail (Drug)) for Pull-back and then Buy some Calls (Gap Up). Also following ERTS (Looking for a bounce to get a better entry price and buy some Puts -- Gap Down)

OXPS, BCSI Waiting for a little pull-back to Buy Calls. (Filled the Gap)

My trading rules:

Here are a few trading rules that I found working for me over the past 15 years.
A. Try to follow the steps of the elephants (i.e. big mutual funds and institutions).
B. Its not my goal to predict the bottom for a falling stock or hoping to sell at the top.
C. I will be happy to pick the right stock, make a trade in the right direction, and take profit.
D. Always look for shorting opportunities in the market. Fear is a powerful emotion which can drive the stock price to lower levels.
E. Do not see how one can survive without buying puts to protect against bad market. (well If you have short positions a falling market is a good market).
F. Try to allocate not more than 20% of my trading budget for each trade. Always have 15-20% cash and survive my bad decisions and losing trades.
G. Not in love with particular stock or industry group.
H. Always on the hunt for opportunities in the entire equity market.
I. Step away from battle field. Avoid trading one week before and after earning announcement. Digest earning calls and company announcement before getting into it. When you gamble , the house always wins and you lose.
J. Rapid fire moment, does not lend itself to smart thinking.
K. Pressure is mother-of-all bad decisions, don't pressure yourself.
L. Never kick yourself for taking profit.
M. A money management tip: You get out, when getting is good, before you blow yourself up.
N. Its Ok to take a pass on a trade, listen to your inner Clint Eastwood, "Man got to know his limitations."
O. Assess your down-side before entering a trade, not your upside.
P. Always have 10% of your portfolio in cash, and consider yourself fully vested, if you are below 10%. Need to sell some positions to raise cash.
Q. Have a list of good stocks to buy from, look for pullback and be patient. Not having a list to pick from, is a good indication that you have not done your homework.
R. Refrain from trading on a volatile day, let the dust settle, and let the amateurs play. Enter a position when more odds in your favor. Playing earnings is a dangerous way to gamble.

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