Risk/Reward Ratios

CIT :   LONG      DEATH (-∞%) - (+220%) $600

C:       SHORT    25.00(50) - (50) 23.00 - then long - (3-5%) - 100%

Thoughts:

Citigroup: 

The Good

1)I have a good feeling about this one. SImilar to the way i felt about NFLX, FSLR, IBM, BAIDU, and WFC (the stocks that helped me realize a 100% annual return last year)

2)a leader in innovation. popularized the atm. hired the former CEO of travelocity, which is credited with revolutionizing the consumer flight booking process. They are downsizing their middle class consumer-oriented operations and focusing on innovation and international cities. There are things on the horizon. They can't compete in the retail-banking sector (deposits in a string of local branches), so they will have to innovate in order to stay competitive. 

3)recognizable name. named best of the bad banks ("the cleanest piece of shit in the toilet")

4)technicals look good. I understand the chart. short on the way down to resistance, go long into earnings (maybe after, depends on research).

Bad

1)they have exorbitant fees for a checking account. 

2)balance sheet is a wreck still. lots of landmines

CIT

The Bad

1)Initial Reason for buying is gone.

2)even if they don't declare bankruptcy, my shares will be significantly diluted by the share offer to the bondholders.

3)bankruptcy will cancel the value of my shares. since i have all but five dollars of my portfolio invested, the amount of loss (100%) will be so great that I will be unable to continue trading.

The good

1)from my (very humble, one time) experience with a less drastic (15%) case of stock sale, the numbers on dilutions don't always add up between the balance sheet and the stock price. This means that if bankruptcy is not filed then i could see over a 200% return on my portfolio in a matter of hours. This would get me closer to my mid-term goal of once again having sufficient capital to leverage.

2) I don't want to realize a loss on my IRS record (effectively my professional scorecard)

Considered shorting C today on the way down and covering at lower resistance. Decided not to realize a loss early in CIT to free up money to short it. i'll see if the volatility will give me an opportunity to sell CIT at a higher price.  By the time the price is up a little more the price of C should be at a good place to go long.

Things I told myself today

start trading fucking options you douche! risk/reward is better on risky plays like cit: risk $100 for the possibility of obtaining 13,000 worth of stock or risk 50-400 dollars to gain 300%?

stop being mentally lazy! or you're no better than those idiots on yahoo board

usually we open our mouths as a way to escape from the task at hand

if you are afraid to admit your loss to the whole world, then you shouldn't even let it become a possibility.

Divergence point between S&P P/E ratio and Stock Price was the '09 crash's bottom???

"All along, I've been saying to myself, "Yes, this is all very interesting, but what good is it? This isn't going to change anything!'"

"And now?"

"This is what we need. Not just stopping things. Not just less of things. People need something postitive to work for. They need a vision of something that... I don't know. Something that. . ."

"I think what you're groping for is that people need more than to be scolded, more than to be made to feel stupid and guilty. They need more than a vision of doom. They need a vision of the world and of themselves that inspires them."

"Yes. Definately. Stopping pollution is not inspiring. Sorting your trash is not inspiring. Cutting down on fluorocarbons is not inspiring. But this. . . thinking of ourselves in a new way, thinking of the world in a new way. . . This . . ."

Some advice when you don't feel like trading that day

1)Take advantage of the flexability of this job: work only whenever you feel like it. Contrary almost any other job (save certain jobs in the creative field), you'll be better rewarded for NOT showing up.  It's better to go home without a profit than to go home without a trading account. Having a 0 profit day does not mean that you are going home empty handed. 

Fallout

Today's picks: 

AGO (Pure Technicals/above imporant moving average) *(way up may be too late)*

still long ael

SHORT: 

SPY (Bet that the downtrend continues)

Watchlist: 

Long/Short ABK

Yesterday's Winners: 

AEL (Pure Technicals)

FSLR, YGE, LDK  (solar bounce)

Yesterday's Losers: 

CIT (bet on bailout) got my ass kicked here.

Update: Living in Brazil right now! This is the reason that I haven't posted in a while. I'll be in NM in the beginning of july for the rainbow gathering. 

I was right in my prediction. Looks like we've got a perfectly formed rectangle top on the SP.  This rally has continued longer than I anticipated. Now the bad news is starting to come in. Factory production in New York alone dropped from 9.5 on the index to 5.4. This is almost a 50% drop. Usually economic indexes never move like this. Oil has hit it's peak because the dollar is strong, but the economy is not. The treasury surge is raising the interest rates to get a home mortgage, which is making housing bounce stumble. Though the proposed 15k (!!!) tax credit for homebuyers will help. We've still got staggering unemployment. Which means that consumerism, which the only good thing about america's economy, isn't fucntioning properly. 

Think about that for a minute.

The thing that has propelled growth in the U.S. since the turn of the millenium has been the financial sector, the housing market, and the debt of our consumers.

And what three things were the hardest hit?

Don't let the pundits and the indicators lie. Increased manufacturing, decreased wholesaler inventories, and higher consumer confidence mean that everyone still thinks we're in a "recession" and not in a global meltdown depression.

This is a common tendency for stocks that used to be valuable that suddenly go into freefall. As soon as the downward slide stops accelerating-- the masses think we've hit a bottom, so it shoots up one last good time before dropping off a cliff again (but this time much shorter and less intense) while the suckers slowly start to walk away from their losses. In the industry we call this shoot up a "dead cat bounce."

I was studying a chart today and found an example of a dead cat bounce.

Example: Check it out after the big drop.. it goes back up again on May 11th on relatively high volume but it cannot sustain itself. 

 I bought in this stock at 1.5k shares of this stock 2.12 a couple of days ago. It finally hit my target of 2.23, testing the 144/169 60min EMAS, but I didn't sell. If I had remembered that I told myself to sell at 2.24ish yesterday, I would have sold. So it wasn't a matter of discipline per se, just regular ole scatterbrained me. I'm not too worried, it will retest the 144/1691hrEMA major resistance again. 

I also bought GNVC today at .91 they have a good product if they can find the funding.

I also had the perfect setup for DSCO on a pullback. But my broker will only let me buy through the phone. So i missed a nice 8% gain there.

another hot stock to watch is ALTI

Nite nite time for me. I

I have been active for over a week. Dang Blasted PTD (pattern day trader) got me. It's quite frustrating, as you can imagine. I missed a 53% bounce on CT (Capital Trust), 2 quick aftermarket 15% jumps in BAC (bank of america) after the Stress Test, and FSLR (First Solar's) last test of 200. Worst of all, though, is that I can't short this market:

(DJI 15 min candles approx 2 days period)

1 or 2 candles before the big bleed that you see on the last candle, i said "i wish i could short right now."

Explanation: All of the potential buyers have become holders. Considering that this whole rise has been contrary to the mass of economic data being released... the holders will wake up and realize.. Then they will become the sellers.

We should have ALOT more volume than this, considering that we are day 2 into testing a MAJOR resistance point for the market.

Weekly Chart DJI

However, as you can clearly see, the volume quite simply isn't there. On the short term, we're seeing a slow crawling rise on low volume.

This is a bearish sign. Because no one wants to hold a stock that isn't going to rise. And it may sound crazy, but no one wants to buy a stock that doesn't rise either, even though common sense says, that if they bought it, it would rise. It may rise later, but not without a little of a fall first. The reason for this has to do with the the seller sentiment, the methods of approaching the market employed by the huge monies, and then it has to do with the reactionary methods of stock traders to these principles. Most of all, though, it's a matter of simple probability. The higher it goes, the less probable it will continue to rise and the more probable it becomes for it to fall. When you hear about a market testing, or consolidating, or slumping a bit, it could very well mean a resetting of the probability ratio---

....but don't bet the farm on it. This is just one of the things it could be.



Personally, it will definately go back and test a previous support, and the success of the of the subsequent rise and retest of the resistance will depend primarily on the speed of this process.

Why?

A precipitous drop followed by a frenzied climb back up to resistance = good sign. It means there is still a healthy apetite for stocks at this valuation.

If the retest process is much slower, it may give the overall economy some time to recover and show tangible signs of improvement.. this would be ideal. The market goes down to a realistic valuation and rises in rhythm with the economy.

If the rhythm is somewhere in the middle it = bad.


Possibility 2: could this be the second candle consolidation period?

This is me:

I'm 22 years old. I trade stocks. I live in my car because I don't give a shit about having a house. I dropped out of college and started teaching myself about economics and the stock market through wikipedia and have been trading on an almost daily basis since October. I don't want a house, I don't want a better car, or the prettier girl that comes when I have these things. I don't want to be successful, or admired. I don't want nice clothes.  I don't want power or influence. I don't want to be comfortable. I don't want adventure, I don't want friends, or even to be happy. 

I just want to make a difference.

This is my story.