Thursday, April 19, 2012
Dabbling and babbling
Took a ride on FAZ Wednesday, jumping in at 21.75, only to be stopped out at 21.65. Why use stops? If you're asking that question, you may not realize how dangerous FAZ (and FAS) can be. These 3x poltergeist monsters can make or break an account in minutes, even seconds. (There was a day years ago when I made 4k and lost 4k in premarket on FAS. That's what a quick trip to the toilet cost me on that wild morning, but it was a lesson well learned.)
Got back in today at 22.29 and placed a stop at 21.89 before I left home for a journey. FAZ eventually dropped to 21.95 before closing at 22.06, so my position is still in play. I don't feel any certainty about this trade. LaGarde is begging for more invisible fiat currency to be printed, and it could happen overnight. Or it could drag out through the France presidential elections later this month and in May. Bernanke has already said, at least for show, that the US will not save the Euro. I don't believe him, but that's what's on the table for now.
The low volume in Wednesday's rally was a convincing factor for me. And financials are not rallying even as they "beat" earnings estimates. Everything's baked in, and the retail trader has no interest in buying anything that's bloated or overbought, even at low 14x earnings levels (AAPL).
But when AAPL gets to my target of 546 (Fibonacci retrace from the 396 level late last year), I'll be itching to get in. While the rest of the planet earth crumbles, every last consumer will trade in whatever he or she can just to have an iPad and/or iPhone 5. By then, I'll be out of FAZ, long before (hopefully) the US and Europe are printing cyberbucks for nothing.