Cute is for babies

10:38 am (Hawaii) That's right. There's no point in tiptoe action when you're in an outdoor arena surrounded by 99 pissed-off bulls, defending yourself with one measly fencing stick and a little red blankie. This market is best handled as a spectator, far up in the rafters, sipping hot chocolate, dipping in some Spanish rolls. (That stuff is great together.)

The market is a hellish place unless you've timed your hopscotch-during-an-earthquake moves perfectly. Even Le Fly is frustrated beyond end.

I got some badly needed exercise late last night, got to bed after the opening bell and had no regrets. The market wasn't going anywhere. Did Geitner or Bernanke have a little rabbit up their sleeves? Did Greece "discover" a hidden vault filled with ancient gold and space alien rubies? It would be swell, but that shit ain't happening and it will take a long, long time to undo all this evildoing. Sure, even with QE3* down the road, things won't get fixed entirely. In fact, any rally will be temporary, whether it's two days or two weeks or two months.

Funny. Guest on Closing Bell just said the move is to "cash and canned goods under your mattress ... don't watch the news." And with that, they cut his ass off. Hilarious. His name is Richard Ross.

"Clearly, we've seen a bearish divergence, in my opinion, where crude oil prices have fallen off sharly. We now have a confirmed head-and-shoulders breakdown (in crude oil) on yesterday's move below $97. There's projected downside to $81. Lower crude prices are good for everyone; that should be a tail wind for the market and the consumer, but transports are selling off, the market is selling off. So we think that divergences suggests a slowdown in the global growth story, worries ahead, lower prices ahead.

"The buying opportunities right now are in cash and canned goods, putting them underneath your mattress, getting defensive. Clearly, we see those sectors that are leading the market: health care, energy, staples, utilities. They're working for a reason, because they're defensive. You want to stick with those sectors. It's a clear sign of a market top, and downside remains.

"The markets are going to do what they're going to do on a day-to-day basis. I implore your viewers to focus on the internal structure. There's a litany of evidence that suggests we're heading lower. Don't follow the news. Don't follow the headlines. Waiting for a headline is not an investment strategy. Due for a bounce is not a strategy. Oversold is not a strategy."

They let him talk for a pretty long time. Ross is a technician, but he's definitely persuaded by the evidence.

Before him, they had a young lady named Jennifer Fan, a rising star (CNBC says) in the hedge fund world. From Arrowhawk Capital. Easy on the eyes, for sure.

I normally don't note a lot from TV, but there's not much to say about this anemic market. AAPL went from 326 to 318 in almost flash-crash pattern between 1:49 and 2:52 pm (Eastern). Then, right back up to 325 by the closing bell. Thin volume equals more pronounced domination by the high-frequency machines. Another reason to stay the fuck out of this gory mess.

My Regular watch list is 33% green, 67% red. TVIX is up 10.5$. OWW, one of my losers recently, was up 6.5% to 2.45. SWY (+3.4%), EDZ (+2.8%) and RLOC (+2.5%) are among the leaders. So is PSUN and MSFT. OWW and SWY were up on big volume. RLOC, not so much.

The Metals list is abysmal to no surprise: 21% green, 77% red, 2% neutral. DUST (+4.6%), ZSL (+1.5%) among the leaders. A day when the leaders, bearish or bullish, are mostly below +1.5% is just apathetic. No real conviction here either way. XG managed to push higher by almost 1%, but they were the only miner in the green.

REE, NUGT, MCP, SVM, EXK, SIL, GPL, GG, GOLD, COPX, AG, GDXJ, NGD, PSAU, GDX, EGO, PAAS, PALL, SLW were all at least 2% down. Fugly indeed.

AGQ is -1.26% (173.86). It's summer and the doldrums can make anyone queasy.

GDXJ (Junior God Mines ETF) is at a crucial level, 32.83. It has not been this low since Oct 2010 and Jan 2011. Next level of support is 30.81, and that's not on solid ground. 28.37 has firmer support. It's summer and that's what gold does.

Speaking of canned goods, here's my initial strategy: I'll get a little exercise walking the big-box stores late night and buy only what's on sale. Didn't see much on sale at Wal-Mart yesterday, but I'll keep going almost every night when there's almost zero traffic and it's not so hot (85 degrees yesterday). Stacking for a downturn is a necessity in this economic environment.

And RIMM is down 13% on disappointing numbers and guidance. How long until Microsoft swoops in?

I'm still 90% cash with a very small position in DGP (-0.2%).

The indices: Dow +64 (-0.5%), Nas -7.76 (-0.3%), S&P +2.22 (+0.2%).

For the love of God

12:06 pm (Hawaii) As much as it may seem right to hold through any correction, any further dip in stocks and precious metals and other commodities, if you aren't bullish short term — if you don't have the gumption to hang on through a downswing — and you have severe doubts of a rally later, please do yourself a favor and cut losses. A lot of traders and investors don't care about what happens this week or next. They expect a return to highs this summer or fall or winter. But if you are relying on technical analysis to get through this puppeteer's market (and we are not the people pulling strings), then respond to your gut feeling and get out. You can always get back in with the click of your mouse.

I say this because so many traders are banking on technicals through this completely manipulated market. You know, I could stand at a nearby intersection. Two streets and a major boulevard intersect there. Four main crosswalks, plus the little ones on the corners. PLENTY OF POTENTIAL FOR TROUBLE. But the traffic lights are functional, and if I kept a graph or chart of all the activity by drivers and pedestrians, it would come out with very obvious patterns according to the time of day, the weather, etc.

HOWEVER, it does not mean, even in the most predictable of scenarios at the intersection, that I would stand in the middle of the six lanes of the boulevard at 4 am just assuming that I'll be completely safe because the chart said so. Hell no! I'm not protected there. And in this market, there's no telling when completely-altering news will break about QE3 or no QE3 or anything global. Then it would be like jaywalking, not running, across the intersection during peak traffic. You be dead, suckah. (Unless you protect yourself via puts.)

So please, mind the technicals for the short term. Turd Ferguson is brilliant at that when it comes to Spot Gold, Spot Silver and the Dollar (aka POSX). But longer term, say beyond two days, this is not your ordinary intersection. The puppeteers are looking to hit and run your ass and mine.

EXTREME CAUTION is mandatory, friends. 100% cash here.

Turd Ferguson: Hourly July Silver chart (May 17 2011)
WSJ: China sold treasurys again in March (May 16 2011)

Mumbly Monday: A sea of red

9:58 am (Hawaii) Busy, busy, busy with work and other activities, so I finally got a look at the market for the first time today in the past few minutes. Red, red, red. 20% of my wish list was green, the lowest I've seen in weeks, maybe months. Was there a winning trade today? Yes. But I'm not going to go high risk and gamble on fickle momentum. With the market down, QID was not much of a winner, surprisingly, up just 0.4%.

TVIX and VXX were useless. MCP continued its insane rise, moving up 7.2%, but it was one of the lone stars. Only CHGS (dangerous), EDZ, TZA, BIDU, CSTR gained more than 1% of the listings on my list.

Silver plays got demolished today, which is not a total surprise given last week's nonstop rise. EXK lost 7.8% (11.40). UCO lost 7.2%. Those two are at the bottom of my list today.

AAPL was at 335+, but is now at 330.80. It should test the near-term floor (326) soon.

I remain 100% in cash, thankfully so.

Dressing up

12 pm (Hawaii) So is this it? Has the end-of-month/end-of-quarter window dressing begun? When I hit the sack around 5 or 6 am Hawaii time (noonish Eastern), it seemed the market was going to drift in small currents forever. Of course, nothing stays the same in the market for long. The market went bozo bullish as I slept, sending 75% of my watch list to the green side after being inept earlier.

DJIA 12,279 (+0.67%), Nasdaq 2,756 (+0.96%), S&P 500 1,319 (+0.71%). Again, volume wasn't impressive, but it was about 20% higher in the "axis" of stocks, AAPL. Monday was a low in volume for the year. Tuesday saw more action. Wednesday is the 30th of March and Thursday is the end of the month. I'd say odds are 70% that window dressing has begun. By that math, the edge is 40% (70 vs. 30), but am I willing to indulge myself with 40% of my roll in play? Or to be risk-addicted about it, place some bets that allow for 40% swing down? Yes to the former and no the latter. We're still somewhat toppy here and the chances of a) a selloff after window dressing and b) negative news about QE3 would easily send the market down the mountain like a wild eagle pushing goats off the ledge.

For now, however, just about everything finished green today, and big on the win side. WNR gained 1.9% to 17.10 after being in red early. Le Fly wins again on his call for oil refiners to slice through any market turmoil. He's right.

AAPL, which sold off to a hair above 346 early, is at 351.30 in afterhours trading. My position in AAPL at the end of last week was opened at 346.75 and I sold at 350.65, which clearly is a range within the larger range (326 to 365). There are too many AAPL bulls who want this stock to lift, for the PE to hit 25 or 27 or 30, and that would be fair. But with the slowdown due to Japan's tragedy, I really don't see any eye-popping sales numbers in the near term. Demand huge, but customers will have to wait. AAPL will be fine long term, but it just won't hit 400 as soon as I or anyone else had expected.

This is not a bad thing. I could buy at 345 (mid-point of the larger range) and sell at 350 over and over again without extreme concern over risk. I didn't do it today, but it's there. What other stock are you going to ride as comfortably? CHGS? LULU?

CHGS 3.54 (+20.4%), MCP 60.10 (+8.3%), CLNE 15.20 (+4.8%), LULU 89.37 (4.8%), CMG 268.00 (+3.9%), RLOC 20.55 (+3.2%), VLO 30.50 (+3.2%), AMZN 174.62 (+3.1%), EXK 9.28 (+3.1%), YZC 34.50 (+2.9%). It goes on and on. Huge gains for momo stocks. Silver plays. Even coal (YZC). China is in heat. US stocks hot, and that's with crude oil up. UCO is at 54.78 (+1.7%).

It almost didn't matter what people bought today. The bull gored every bear in sight. Big losers on my watch list were TVIX 37.49 (-5.5%), EDZ 19.12 (-3.3%), DG 30.52 (-3.1%), TZA 36.84 (-3%), VXX 29.95 (2.7%), QID 51.65 (-1.9%). Also OPEN 102.90 (-1.3%). OPEN's huge run had to stop for a breather at some point.

I wouldn't be shocked if the market reverses before tomorrow's opening bell. There's still time for hedgies to take it down fast and still re-enter before the end of the month. Unlikely, but entirely possible. I'll be waiting for a unlikely discount on my favorite plays with 100% loaded gunpowder.

Back in orbit?

12:38 am (Hawaii). New day, new post. Will silver (and gold) continue to pull back after last week's parabolic move up? Was yesterday's action in silver futures — a wild surge above 34 and a drastic pullback below 33 — enough to prompt concern for holders of SLV? Escalator up, elevator down action, indeed, as Turd Ferguson says.

Silver futures are now bouncing off the 32.40 level, now at 32.74. How long will this last? I have my doubts. Futures could not stay above 34 or 33 after hitting 34.40 or so yesterday. I'm not looking for an instant grand slam or even an extra-base hit. I just don't want to be left holding the bag if silver and SLV crash.

Never trust the banksters and diabolical shorts, especially those who manipulate silver prices. NEVER.

As for crude oil, Turd Ferguson (see link below) insists that a break through resistance at 94 is bullish. However, do we agree that the Fed would allow that? $4 gas in February or March? I have my doubts. After all, there is no logical reason why silver isn't already at 35 considering the demand and shortage of the physical stuff. Yet, there it is, sitting at 33 (32.89 now) as it continues to be manipulated, even as it gains ground day by day, its bulls crawling forward and the shorts retreating.

I see no reason to hold SLV or any paper silver for the long term in these conditions, positive as they may be compared to years past. In fact, the volatility, higher lows and higher highs convince me that trading in and out is sensible and reduces risk significantly. Same deal I had with AAPL recently, and I sure am glad I wasn't stubborn about holding AAPL down to 350 and below. Not when I can get back in sooner or later.

Update, 1:50 am (Hawaii): Jeff Nielson explains the folly of silver ETF SLV (link below). Can't say I'm surprised, considering the massive global demand and the dwindling supply held (supposedly) by Comex. Detractors and unbelievers. The numbers don't add up. Numbers don't lie. Again, SLV is simply a trade. I am married to nothing.

Update, 3:33 am (Hawaii). Sold all SLV at 32.40. Not the most gratifying trade, but it'll do. Locked in profit of 93¢/share for a 24-hour* hold. Why sell now? This is my first trade in a precious metal-related vehicle, so it's a plus psychologically no matter how I may try to intellectualize anything. Also, I don't trust anything about Comex, JP Morgan and the Fed when it comes to backing paper silver with the mirage of silver supposedly in those vaults. I missed a chance to sell at the premarket HOD (so far) at 32.63 and at first, the MACD (1-min) looked promising. Once it turned negative, I was ready to sell at 32.28, but my own error prevented a sell (forgot to sell at extended hours). SLV rallied to a new high (32.63) quickly, but sold off quickly, too. The large lot sizes told the direction on either side going up and down. Then the MACD failed to get positive. Divergence down (double bottom?) and I got out as a precaution to a possible breakdown. In the face of a flat open, the profit was a nice 1.6% gain for my modest bankroll. If the environment remains constant this week — Middle East/oil stress, overbought stock market, rotation to precious metals ... I'll use silver again. Weapon of choice, however, will be SLW, not SLV.

Update, 4:12 am (Hawaii). Kooky behavior in SLV, which sold off to 32.33 (still way up from Friday's 31.79 close), then ran to 32.50 within 4 minutes. Yeah, a WTF moment, indeed. The kooky part is that bid sizes were moderate, which tells me that though volume in that 4-minute span was rather high, there was a shortage of sellers as it bid up higher. Same thing on the way down; shortage of buyers. If I had to guess, I'd say the big boys are trading to each other just to manipulate the price. How shocking.

SLV now at 32.55. It's not so much seller's remorse for me. It's more my desire to understand the ebb and flow of this new (to me) vehicle. Not for the faint of heart. Though SLW is fundamentally superior, dealing in real silver as opposed to propped-up, probably non-existent silver for SLV, it is SLV that has the volatility that makes for a more frequent trade. While SLV has rolled up and down in 20 to 40¢ swings, SLW stayed within 5-15¢ of its high of the day before busting higher to 40.94 (premarket). SLW is up 4.5%; SLV is up 2.2%. Both nice, but SLW traders/investors are resting much better. After all, who wants to be holding SLV if and when JP Morgan is on the hook without the bullions to back up the paper?

Update, 5:01 am (Hawaii). SLW still unwilling to retrace 50% (40.54) of today's gain, fell to the 40.80 area and bounced. SLV, on the other hand, was on cue and sank to 32.20, right about at 50% retrace (32.24). I stayed out, though, with the MACD deep underwater. Economic numbers released on CNBC a couple of minutes after the SLV bounce and the market rallied, carrying SLV to 32.46.

UCO, which topped my watch list most of the morning, is still up nicely (8.8%). Nice bullish play on oil, but it's too hot to touch here (11.80) with the MACD underwater. Hard to gauge how oil and metals will respond to the new consumer numbers. An unusual thing here: on the daily chart, UCO's gap up today is enormous, but the candle today (so far) is red. On the 1-year chart, all of UCO's gap-ups have been green candles. Either today's candle turns green or we have a real oddity in the midst of geopolitical strife.

Update, 5:23 am (Hawaii). Silver selling off en masse in the past 5 minutes. SLW. PAAS. EXK. SLV. Looks like big boys are in play, unloading by the truckload. 50% retrace levels are moot here. SLW dipped to 40.34, well below the 40.54 (50%) level. SLV dragged to 31.90, far below the 32.24 halfway retrace. The silvers are bouncing a bit here, but the coast is far from clear. Need to see a little consolidation before I dip in. UCO holding on at 11.75, just above the day low, still up 8.6%. Market rally stalled out; DJ down 63 (-0.5%), NAS back to 30 points down (-1.1%).

Update, 5:37 am (Hawaii). Still 100% cash since the premarket sale of SLV. As SLW, arguably the most potent of the physical silver plays, dips to its low of the day (40.12), I'm reminded of the wisdom of StockGuy22. Traders are human, and psychology kicks in often. Round numbers do more to kick-start buys and sells than we might think. If SLW can't hold 40, it could get real ugly. A lot of stop-loss orders are likely at that level or just below. I want a position in SLW, but only if the price is right.

Update, 5:51 am (Hawaii). The last bastion of positive momentum this morning, oil, is holding its ground. UCO retraced 50% to 11.49, then bounced and is now at 11.57. Strength. At 11.49, there was little selling pressure left and buyers are stacking big bids. A juiced-up ETF, always extra risky. Can UCO finish the day at its high (12.16)? Tempting to enter here as the MACD starts to push out of the bottom of the ocean here.


Update, 9:29 am (Hawaii). I have to let you know, the one or two of you who actually skimmed down this low in this post to see if there was anything worthwhile (and I'm not being falsely humble), that I don't know jack about precious metals, options, COMEX, deliveries and contracts ... but I do know this: When 'it' hits the fan, you better be able to smell it and run like the wind. Has 'it' already hit the fan?

All the scuttlebutt about silver deliveries being due in six days (February 28), how there's no possible way COMEX can deliver, how they are lying sacks of 'it' ... it makes me worry. And I don't even have a single share of SLV or mining stock or actual bullion. (Though having a few bars would make me feel quite kingly.) I've been watching the market since selling SLV in premarket, seeing SLV hang on above 32, which is a bit of a surprise considering the real deal(er), SLW, lost most of its gain and can't stay above 40 anymore. For today, at least.

But say COMEX doesn't deliver on delivery day. What happens then? Does the Fed bail out J.P. Morgan and COMEX? Why does that seem remotely possible? Yeah. It's actually possible. That's what is effed up about things nowadays. They could be lying their ass off. Silver deliveries could be a big whiff. Who would lose? Yeah, the average Joe, you and me, S.O.L. So that leaves only one commodity with a fair chance of rising tomorrow.

It's oil that still floats on water while the rest of the market is sinking. UCO was up 8.6% most of the day. Now it's +9.1%. I would love to have some UCO, but +9% is shark-infested territory. I had my chances, though. Twice, UCO dipped to the level I was watching: 11.50, or 50% retracement of today's gain. I failed to pull the trigger for various technical and having-no-forking-balls-of-steel reasons. I don't regret staying risk-free and profitable for today, though. But I am watching closely. Maybe UCO sells off into the close. Maybe UCO explodes again tomorrow in lieu of any selling pressure. One thing for sure: Gaddafi will not change his stance overnight. There will be convincing* phone call from the White House. His son says they'll blow up the refineries before they let go of power. I don't doubt these guys one bit.

So why isn't UCO up 25%? Or even 50%? It probably will take some time, but if things stay like this for days, weeks ... it'll happen. But once the correction is over and AAPL and MOS and BIDU rally — you really think the West and China will allow America to pay $5 for gasoline? — UCO will stall out and fall like a pigeon that flies into a glass window four storeys up. (I saw that once. It was bizarre. The pigeon didn't move for 5 minutes. Then it came to life!)

It comes down to advantage/disadvantage. Edge or no edge. No edge? Stay out. Edge? What are the percentages in my favor? 51-49? 60-40? 90-10? At this point in a scared market, it's about managing risk and calculating how much I can handle, which isn't much. A buy of UCO at my beloved 50% retracement would be at 11.50. From there, my guess is that UCO has a 75% chance of seeing 12 before it sees 11; a 25% chance of not doing so. So my confidence level equals a +50%. That's a healthy stake I'm willing to put on the table, whether that's 50% of my bankoll (on a tight stop) or a risk factor that allows up to 50% risk cost or any other strategy that equates to my risk allowance. It's different for every single person. For me, it's probably not actually 75-25 considering the climate of the market. I'd be 75% happy to stay neutral and in total cash. That's a factor I embrace. Things cancel out if I'm honest about today.

What if Gaddafi has a change of heart overnight, goes on Libyan state TV and says, "Well, I changed my mind. I'm out. Have fun managing this mess, y'all." That would fork up any UCO long. It's a 1% chance he walks away. But it's there. It's possible.

So there you have it. I want an edge. I had one with SLV, got a little lucky, managed to leave before the storm hit. But I am not going to surrender. I still want my edge. Fully loaded, hands on both weapons. It's the only way to win. The only alternative is to walk, or run, far away.

Post-presidential reading
Shan Saeed: Why you need to be bullish on silver (Feb 22 2011)
Turd Ferguson: You'll only be right once (Feb 21 2011)
James Turk via Run Red Hot: 'New buyers are willing to take on the silver shorts' (Jan 15 2011)
Run to Gold: Potential COMEX gold fail (June 18 2009)
Jeff Nielson: Your ETF-silver is for sale (Sept 14 2009)
Trace Mayer: A problem with GLD and SLV ETFs (Dec 13 2008)
Bill Haynes: 100-oz silver bar shortage developing in US (Jan 27 2011)
Eric King: Embry - Short squeeze in silver, manipulators getting overrun (Feb 22 2011)
Jason Hommel: Silver default looms?! (Feb 20 2011)

Homework is Good

There have been times I did little homework, then traded. Then I've done a good amount of homework, then did little or no trading, as I did with my Nat Gas numbers two weeks ago. I prefer the latter approach much better.

But I'll do some homework for the next hour or so. Those of you who have stayed out of trading for the past week or two, I'm there with you. Sure, we missed a run, but if you're in Hawaii like I am, we got a lot of good sleep. No complaints there.

This is another step, probably, into my acceptance of swing trading rather than short-term/day trading as a comfortable place to be. Getting up at 2 am for premarket is almost impossible; I've hit the snooze button far too many times and missed key sells. Staying up through the night and all the way into the closing bell is another challenge that I meet with mixed results.

Though I prefer watching the market, every minute of it, my body clock has its own way and the more I fight it, the deeper I crash (physically) when I'm up 40 hours in a row. It is what it is and I'm fine doing more homework than before. It's satisfying, no question.

Mundane Monday

Dow Jones 9,816.49 -115.48 -1.16%
NASDAQ 2,173.90 -45.27 -2.04%
S&P 500 1,050.47 -14.41 -1.35%

Market kept hopping the fence between positive and negative for a long stretch today before bears took control. AAPL held up the bulls as long as it could before selling off after Steve Jobs' presentation of the iPhone G4. After hitting an early high of 259.15, AAPL closed at 250.94. It was probably sell-on-the-news movement, but there really is no catalyst in sight to aid the bulls, and the S&P closing below 1,060 is going to make technicians tremble if they're still long this market.

Nine of the 39 nat gas plays I follow finished positive, somewhat disappointing after a large majority of them were up most of the day. UNG finished with the biggest gain at 2.69% (32.27) and is trading at 32.50 after hours. GDP, REXX, ROSE, SWN, KWK, NFX and STR finished green.

Since Obama's clean energy speech on Thursday, 25 of the 39 natty gassers on my list are up. Most have gained 3 to 13%. Even WPRT, which was down 5.4% today, is still up 10.96% since Obama's speech.

FAZ was a winner today with a gain of 5.08% despite opening to the downside. VXX closed up 3.13% to 32.27.

GLD closed up 1.93% to 121.49 and SLV finished strong, up 4.46% to 17.81. It was mostly the inverse ETNs that had strong moves today. TZA finished up 7.82% to 8.13 on huge volume (59.3 million shares).

TLT held up fairly well at +0.77%.

DNDN took a big hit of -10.14% and closed at 36.70. A lot of traders had big profits and closed out their trades, not too different from traders and funds selling AAPL off to cover losing trades and/or margin calls. (Margin is evil, but that's just my point of view.)

GS down 2.51% to 138.68 on more Fed investigation news. C down 3.96% to 3.64 and NBG -5.6% to 2.19. IRE held on to its gain (+2.91%), but was a far cry from its intraday high when it was up more than 10%.

BP closed near its low at 36.76 (-2.44%) despite reports that it's capturing more of the leaking oil in the Gulf. SCO (+0.42%) and DTO (+0.43%) didn't move big despite BP's drop because other oil plays like Haliburton scored pretty nice today.

IMAX lost its early gains and finished down 1.3% (15.91). Just about every high-flying stock of a few months ago got knocked down for a second day in a row. BIDU lost 4.63% to 69.81. NFLX not too bad a loss, just 0.56% to 109.16. 


FXE down fractionally and UUP up a bit. Stronger dollar each day. Weaker Euro each day. It's probably by design on the part of the EU, which is crappy for the US market. In turn, more people go long the dollar. 

If the market does, indeed, fall through thin ice, there's so little support in terms of willing buyers. The outflows have been significant, and the psyche of traders and investors who left in May will take a long time to heal. Nothing's really changed in the past few weeks. Europe is still in the midst of financial rehab. US banks are going to take a hit because of their relationships with French and German banks, who in turn are going to eat some of the debts of EU laggards like Greece. 

As summer beckons, there are going to be more and more traders who drop everything and escape to their long-awaited vacations, possibly earlier than planned. It would make plenty of sense to get away from this market and its wretched addiction to debt and subsequent withdrawl symptoms. 

I entered small positions in UNG and VXX before the close. I'll probably exit within the next hour. Currently 75% cash. 

No gas here

Out of UNG at 8.02 for a very small loss. Not worth waiting this one out if the pullback in the Nat Gas sector continues from Friday's selloff. Most natty gassers are still up huge since Thursday afternoon when Obama pumped up clean energy. I'll be interested in the natty gassers at a lower level. For now, retreat mode.

AAPL back up over 258. Moved well during a generic report about WWDC and the new iPhone G4 on Bloomberg TV.

Futures still positive.

Now 77% cash.

[Update 2:28 am Hawaii: WPRT down to 16.81, but CHK up to 24.41.]

Photo: War & Game

VXX: Protector, not fetale

Is it really possible to trade VXX as a stand-alone issue? Sure. I just haven't figured out how. My only success with VXX came when I used it to hedge my shares in AAPL. That day, the Flash Crash, VXX was in nice, fat profit territory, but I never sold it until more than half the profit was gone. In hindsight, that was all right since it protected me from a dismal (paper) loss in AAPL. As VXX declined, AAPL rallied. Turned out to be a good pairing and a good deal.

I don't really view VXX as something that can be gauged well by charts. It's far too beastly, like trying to cage a lion with paper mache bars. But this chart below (weekly) shows something interesting of late. VXX has touched the top of its Bollinger bands, only to retreat. I realize there are always profit takers at the close of a huge runup day for VXX, so how much of it really correlates to the VIX at that point of selling?

VXX 2-year chart (weekly bars)

As bullish as the market was since March of 2009, if it turns equally bearish from this point, wouldn't it be logical for VXX to return to the 100-plus level? Is that reasonable? Or does the design and nature of this ETN prevent that from happening? Whatever the case, VXX has proven to be a must sell above 31 since May began. It has also proven to be a buy below 28 in that time frame.

VXX 2-year (weekly)

As for my VXX/AAPL pairing, I normally use a small position in VXX versus a larger position in AAPL, a 1:3 or 1:4 ratio lately. The volatility in VXX can be extreme, as the chart shows. The price gaps up, down, all over the place from one minute to the next, even on a voraciously up day.

VXX 1-day (1-minute bars) vs. AAPL

VXX 5-day (15-minute) vs. AAPL

If you jumped on the VXX wagon early in the day, even after that ugly long candlestick down, it was easy money up. That takes some balls of steel, imho.

VXX 3-month (daily) vs. AAPL

The incline since late April has been stupendous for the geniuses among us like Le Fly at iBankCoin. There was no real need to process that minute-to-minute action. Just buy VXX in the low 20s and let her rip.

VXX 6-month (daily) vs. AAPL

VXX 2-year (weekly) vs. AAPL

For most of VXX's young life, it has looked like shit compared to AAPL or even SPY. If the global economy is, indeed, headed for the crapper, VXX has insanely huge overhead space to fill. I'm not a proponent of all-in craziness for inverse ETNs like VXX, FAZ, SCO or anything else. But using them as hedges can make a huge difference to the trading account and the confidence account.

Cash right now is still best move in many ways.

Aloha Friday: 1:09 am

Game plan for today is simple. Memorial Day weekend ahead. Substantial number of traders are gone already for the weekend. Volume today will be lower than yesterday, and yesterday's volume was fairly low. No big reports or news expected today. In addition, most traders are probably exhausted after one of the craziest Mays in market history.

Futures are positive, but all in single digits. Expecting a flat day and no trades in my account. Still 100% cash and happy to be there.

Tornado Thursday

Dow Jones 10,068.01 -376.26 -3.6%

NASDAQ 2,204.01 -94.36 -4.11%

S&P 500 1,071.59 -43.46 -3.9%

Not-so-good jobs report. Financial reform all but signed, sealed and delivered. Higher taxes for the wealthy. Euro Crisis. China slowdown (meltdown?) and real estate bubble.

Nobody has the one great solution, an antidote that goes down easy for all takers and sufferers. Nobody wants more pain. But there's no pain-free formula. The answers are mostly simple. The will is not quite there wherever we look, whether it's risk on Wall Street or risk at the bottom of the Gulf.

It's beyond control for most of us. So we play the market. My day was sucky until the last hour, when I finally got it right on VXX and entered a position on FAZ. Obama's talk didn't shoot down either. If anything, these levels may become a short-term support level, if that can be said of ETFs and ETNs.

For someone who may be generally optimistic in nature, shorting stocks or even buying an inverse ETF/ETN is a jolt to he mind. I'm somewhat optimistic, but after being beat down over the years by sudden turns in the market and certain stocks, I have no qualms about recognizing the direction of a market and hedging along with it.

I just wish I'd added more VXX and FAZ before Obama's speech. I'm 55% cash, ready to buy AAPL long if there's a magical turnaround in the morning and we all get a happy bounce off Flash Crash 1065.

Will we bounce? Maybe a skosh. Technically, the market is due. But after any kind of bounce, the fundies will unload and unleash their positions. Nobody trusts this market right now. Nobody.

Melting

Still 100% cash, but my sleep cycle/body clock are totally out of whack. I couldn't stay up through premarket, fell asleep and got up around 6 am (noon Eastern) to find the market down big.

This isn't a shock, even though futures were up in premarket. Head fake, whatever. I've missed the ride on FAZ (14.63, +6.4%) again. Twice in the past few sessions, my timing on it has been completely off. Sold at 12.51 and 13.86 for small losses. Missed the upside by some incredibly bad timing.

VXX is up 7.1% to 28.87. All the inverse ETFs/ETNs on my list are up. GLD is down fractionally, but AAPL is own 1.9% to 249.00. This is no place to try and time anything.

As for the euro, FXE is down only 0.54% (122.80), but it hasn't moved up in ages, it seems. EUO (short euro) is up 0.93% to 24.83.

Think I'll go back to sleep.

Bloody Red Friday morning

Long night of work Thursday left me short on sleep, but waking up to a market in red is bittersweet. Yeah, emotion has no place in trading, but even though I'm 100% in cash, I'd rather study the moment than move too quickly 90 minutes into the session.

Dow -179 (-2.16%)

Nas -52 (-1.56%)

S&P -23 (-2.04%)

• HAUP and it's tiny 8-million share float have become a lottery ticket of sorts. Shares opened at 8 am Eastern higher at 3.50, and opened at 4.32. HAUP hit a high of 4.85, then sold off to the 4.00 level twice since the opening bell. Currently at 4.25 (+1.20, +39.60%). How long can HAUP stay up in a negative market?

Never returned to the Fibonacci levels I posted yesterday. Hard to believe people still shorted HAUP after the press release about Apple. Then again, I didn't buy any shares like I intuitively wanted to. Trying to be disciplined here...

• FAZ, which I sold at a tiny loss at 12.51 before the close yesterday, is at 13.77 (+1.10, +8.68%) now, near its high of the day. In fact, all the short ETFs are in happy town this morning. VXX (27.42, +2.67, +10.56%) is tearing it up big, which is interesting. It was quiet yesterday, actually in negative territory, while most of the market was slightly down. More true to its normal behavior today. I was starting to believe VXX moved more when there was violence on financial TV, i.e. Greek riots.

• GLD and SLV are in the red, proving that even hot precious metals have their topping points, and boy, were they topped out. Barf city, finally, but a great run for cautious traders. GLD (119.71, -0.85, -0.71%) isn't doing badly compared to the rest of the market.

• TMT, the 30-year treasuries ETF, is up 6.10% to 37.05. How nice is that? And how weird. Treasuries? I'm following this first the first time. This is Grandma speeding down the road in a Camaro. Vroom Vroom!

•As expected, there's action in the FXI and FXP. I didn't want to touch either even as China's market is at a -21% correction. FXP is up 5.3% this morning to 44.68. JJC, the copper ETF and second cousin of FXI, is predictably down 2.35% to 42.36. Not sure how much lower China can go, but it's pretty scary from the long side.

The gutsy traders are picking up shares there pretty cheap.

• FXE is down 1.18% to 123.46. If the euro were to make a comeback, this would've been the day after a week of dips. Euro bulls are hating this, but printing out a trillion dollars of new bills doesn't add value, so FXE is stagnant for some time, most likely. Meanwhile, EUO (short euro) is up 2.33% to 24.59.

I'm still 100% cash. I missed the early morning run on the hedge side, but I'm not drowning in a sea of red on the long side either. ChessnWine at iBankCoin is a genius, of course. He called the downturn two days ago while the market was revving up on the long side. He and The Fly, with their time machine, a.k.a. The PPT, are kicking royal ass.

The Dow is now down -211. It's early Friday... can it get worse before the close? Or do we get a pre-weekend rally?

Bathroom buy

First Commandment of Trading

Break the rules. The rules break you.

All day I enjoy watching charts and indicators on a bunch of stocks, ETFs ... then I finally have to use the bathroom and take the laptop with me. No charts, which are on my main screen on the desk. There, in the bathroom, I decide to buy FAZ at 12.61, near its high of the day, and hit the buy button.

FAZ drops slowly to 12.51 and I get out with a tiny loss. Back at the desk, I realize that 12.61 was near the top of its stochastics (1-minute chart). MACD wasn't looking that good at the time, too.

Of course, once I sold, FAZ ran to 12.65. The two minutes I'm away from my live charts, I make a poorly planned buy and pay the price. FAZ closed at 12.67 and went to 12.72 in afterhours trading. The chart would've told me to wait for the right levels via indicators and I might have bought at 12.51 or 12.52 instead of 12.61.

Small position. Tiny loss. The trade was stupid. The lesson is good.

Back to 100% cash.

Balance and recognition

I am fairly prepared to trade from a position of balance in this bipolar (tripolar?) market. It's the recognition that I am lacking in. I approached today with almost extreme caution, overdoing it with the hedge position. That cost me.

Now that we're practically in overbought condition again, where will the market open tomorrow? I'll pass on an overnight position in BIDU. It's a snapper of a stock in both directions. Tough to handle here at 79ish.

Positions: 43% short-term long, 57% cash.

How long until gold finally capsizes a little? That massive ship can only hold so many passengers. What a spectacle. Now that I've lost interest in hedging (a typical crowd follower), VXX, SKF, SDS and TZA will probably run in the morning.

Running in place

What a weird day. It had a little of this and a little of that. Sure, at least one eff-up by me, too.

• After taking two tiny losses on VXX trades yesterday, I gave it another shot this morning right after the opening bell. (I usually don't mess with anything that close to the open.) The trade fizzled and I got out with a small loss. The market wasn't quite rebounding just yet, but VXX offered an omen, dipping from a gap up to minus territory. I got in at 26.35 and out at 25.95. I left it alone then, realizing that it works far better as a pure hedge than a pure trade.

• I bought more AAPL at mid-day, but I didn't enter at 255. My intuition said get in, but the market was still negative (slightly) and I saw no indicators that worked at that price and time. Sure enough, AAPL went up and up. I didn't chase. Yet.

Later, I got shares at 259.65, close to the top. [Note: Horrible to an extent; had I relied on my usual Fibonacci retrace levels (based on today's gain), I would've waited until the price returned to 256.29 (38%), 255.18 (50%) or 254.06 (62%). AAPL later traded at 255 in after hours.]

I decided to get out with a $1 loss (per), but it wasn't a hard stop-loss. The plumbers arrived to fix the broken stuff in my place, I left the computers and AAPL dropped to a $1.50 loss almost instantly. So I decided to hold out at a $2-loss range, which would still be a small loss. There were buyers, but they couldn't overcome the selling pressure; AAPL was 225 just two trading sessions ago.

So I sold at 257.70, or so I thought. A minute later, I was in stunned silence. Instead of registering a small loss, my account showed a sizable profit. Yep. I accidentally sold my long shares that were bought at 214.40 in January instead of the new shares. I planned to hold those January shares for at least a year mainly to prove to myself that I can mix things up. (And to see how effective buy-and-hold can be in doses.) It had been my best decision so far this year, to hold those shares.

Mixed feelings, for sure. I had to adjust and realize that my new shares were now underwater. I held out, but AAPL kept sliding slowly. I decided to hold them, just as I'd held the previous shares. It was time to use the strategy I employed on Friday: use VXX as a hedge.

I had opportunities to get shares at 25.50, but I didn't pull the trigger. VXX went quickly to 25.75 as the market (and AAPL) sold off. Impressive. Then the directions changed and VXX returned to 25.50.

I decided to wait until afterhours or maybe tomorrow morning, when VXX sometimes is much cheaper. In AH, VXX slowly creeped higher and I put in a limit buy at 25.40. Long shot, but worth the try. By the close, VXX was in the 25.80-25.90 range. I wanted it cheaper, but I realized by then that the price on VXX has less to do with anything than just having it as a hedge. It will (normally) run opposite of AAPL in such an efficient way, like they were born for each other. I opened a position in VXX at 25.83, well off today's high of 26.60 and the low of 24.58.

Why hedge? It's insurance. Great insurance. I don't expect a turbulent day tomorrow, but if anything should hit the fan, I'll be ready. I'll also have a better understanding; last Friday, VXX peaked a couple of times and I didn't get out with a good profit either time. It's simple, but not easy to execute: AAPL dips, VXX rises; AAPL reverses, sell VXX for a tidy profit; AAPL tops out, VXX is cheap again, buy back in. Rinse and repeat. Easier said than done, no question.

If the market remains range-bound, this is not the worst plan in the world. I could've stay away from both and just bought gold, but at this point, it may be getting toppy and overbought. As several analysts have mentioned, gold may get sold off as hedge funds start to deleverage out of losing positions by selling their profitable lots of gold.

So, for now, I'm 44% short-term trading (AAPL), 18% hedged (VXX) and the rest (38%) is cash. Might add more VXX (or AAPL, or sell both) depending on what transpires in the morning. By tomorrow afternoon, I'll have a conclusion (maybe) about whether to step away for the rest of the week or not. For all my trying, I'm just running in place. Trying too hard, typical guy behavior, as opposed to being content to really pick and choose my spots as I did in February.

Wednesday wonders

Some premarket thoughts and ramblings from the middle of the Pacific Ocean...

• Is it just me, or is there a correlation between National Bank of Greece stock (NBG) and the number of riotous footage shown on CNBC and Bloomberg? NBG down to 2.71 premarket with three dead after a fire was set on a Greek bank.

• AAPL down to 253.33 in the face of Fed antitrust scrutiny regarding apps. I don't think a company stipulating certain limitations to app makers constitutes a monopoly, but what I think matters squat. AAPL is about 18 bucks below its high. 256 was its immediate support level. If it its 250 or 249, a hell of a lot of stop-loss sells will kick in. Or it bounces. I have no idea. I like AAPL long term, but I can only bend over and get kicked so many times. If this is a one-week correction, I can bear it. Any longer, and I might add a few more shares way down below...

• IMAX deathly silent in premarket. Not a single share has traded, but the bid and ask are both below yesterday's closing price (19.10).

• BIDU dipping to 686.37 on very limited volume.

• Probably safe to say that FAZ and VXX will leap into green pastures when the bell rings. For one minute, one week ... who knows? FAZ booming to 13.20 premarket (12.52 close) on decent volume (2.9 million shares) and VXX up to 22.58 on minimal volume.

According to Cramer, the market will stop selling off at mid-day, the coast will clear and buying shall commence. Love him or hate him, he went on a limb saying that yesterday.

Being out of dry powder at the wrong time really sucks. I miss the flexibility of cash. There are two reasons to liquidate: 1. prevent further losses and 2. load up ammo for the coming bounce.

I approve of these

Vehicles for short-term trading

• AAPL. The next catalyst, 3G iPad, is near. Anticipation is there, though this is probably baked into the stock price. Nothing, though, would've indicated a month or two ago that the iPad absolutely would have the Apple store filled to the gills like it is — at least when I'm there.

So that's in a week or two. After that, nothing, really, until the new iPhone is launched this summer. So, any breakout above 271 has to be handled carefully. Maybe a move to 280, and then 271 would become a new support level. Maybe.

Would it come with the 3G iPad? Probably. If not, AAPL will likely continue trading in this 256-271 range.

• C. Definitely ranges between 4.30 and 5.05, give or take a few cents. Discard emotion and trade this vehicle like a machine.

• DNDN. Great day for all supporters of Dendreon and prostate cancer patients. But emotion has no stake in these new levels, 51-52. I first bought DNDN at 7, saw it sink to 4 with the FDA's rejection of Provenge in 2007. There must be some folks who had the same experience, but let their shares sit still for the past three years. Hat's off to them. Not touching DNDN here, though it could start moving again with any kind of partnership or takeover talk.

• F. Ford moved nicely today (2.5%) to 13.60. It's stabilized at 13 plus and worth exploring again as a swing trade.

• GS. Closed at 160 today, up from 152 earlier in the week during the public flogging by Congress. With interest rates still basically zero, GS and the banks are printing money, making easy profits. So why am I not in GS or C?

• IMAX. Not happy about this morning's blunder, but I am expecting a run to 23 or 24 as Iron Man 2 premiere day nears (May 7). This is not a long-ter hold for me. It's strictly in and out, maybe even from week to week. Buy Thursday or Friday; sell Monday. Rinse and repeat all of May and June.

• NFLX. Up to 103 today, but smells too much like Blue Nile to me in price action. Too much competition coming soon. A day trade at best.

• PCLN. Have never studied this.

• SBUX. Howard Schultz is king of all coffee. Missed this comeback.

Specs like JMBA and NBG are on the backburner. I'd love to toy with them, but I've got to make some solid profits first.

Allocation comfort zone

I'm almost 100% in equities right now. My game plan was to be out of IMAX and BIDU by the opening bell this morning. Fail.

I'd rather be in 60% cash (and still 40% long AAPL). I'm leaning toward short-term trades in stuff I can rely on, like AAPL. Speaking of which ...

Reliability ranking

Stocks that have both good growth and relative stability.

1. AAPL. New stores to open in Europe and China. Coolest products on Earth.
2. C. Pandit has cleaned house, cut toxic assets and plays the PR game astoundingly well.
3. F. On a roll. Earnings were superb. Mullaly is king.
4. GS. The worst is over. Higher-percentage move more likely in C, however.
5. BIDU. No real competition and serious China penetration is still in the early stage.

There are a ton of good stocks I don't mention. That's fine. I'm interested in narrowing down to a group of vehicles that I can get comfortable with and understand well. I don't need a list of 100 stocks to make a good profit every day. And when I'm interested in going outside the box, there are great traders with great ideas I can glance at.