Thursday, May 10, 2012

Turning point Thursday (updated)

Or maybe it's no turning point at all. The market's been down for so many days. It hardly even matters if it's decidedly bearish for awhile. Technically, it's due for a bounce. That's why I was hesitant about going long FAZ (in other words, short financials) after hours yesterday.

It worked nice in a tiny way, jumping from 23.17 to 23.40 or so, but this morning, FAZ is at 22.64 and I got out. I'm not stubborn enough anymore to ride out something like this (3x ETF) in this kind of skittish, fickle environment. If the market rallies in the near term, maybe FAZ will be available below 22 or 21 at some point (again).

AAPL, which I bought at 567+ and sold at 561+ earlier in the week, is now at 574+ premarket. When it moves with massive volume, I'll be convinced (maybe) that it's going somewhere. For now, just flopping on the table.

FAZ as a hedge of sorts when long AAPL works fairly well. FAZ as a stand-alone, not so good.

Update 10:46 am The pros and cons of stop loss orders. I got a handful of FAZ before the bell at 22.88. It ran to 23.07. Tried to sell before the bell, didn't sell. After hours, I put in a stop-loss limit sell order at 22.93, but it sank to 22.55. I decided to wait it out since the selling (and previous buying) looked like big money was just playing the weak hands.

Then a few minutes ago, news got out that JPM possibly has $4.2 billion in legal losses. FAZ jumped to 23.20 and kept going (to 23.70). Totally forgot about that sell order. So in reality, instead of a nice, quick profit, I was out just barely above break even.

The thing with stop losses and limit orders is that it should be maneuvered before price action gets to that level, not at the same general time. Otherwise, it's time to cancel it and set a new order, or change it. Being distracted by work doesn't help, of course.

FAZ now at 23.68, not really interested in chasing here, but this is huge news.

Update 11:07 am Back in FAZ at 23.66, watching closely. CNBC says JPM will talk at 5:30 Eastern. Fast Money boys not mincing words, tomorrow will likely be a rough day for financials. Adami believes it's not just JPMorgan that has a "whale" or prop trading disaster on hand.

FAZ now at 23.96.

Update 11:19 am Willing to see how this shakes out tomorrow. JPM's not saying anything that can reverse the bad momentum. FAZ now at 24.25 and gaining a new wave of momo.

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