TMA, RDN, ABK, PMI, FNM, CORS, FRE, WB, FMD, MBI, RF, MS (if the deal goes through).

This list is either mortgage related other financially related POS stock.

Next will be a list of stocks with ridiculously LOW PE’s with excellent growth prospects that could equally have unreal 1 day returns if and when the market decides to pop. They will likely rise even in a declining second stage bear market. If due to anything other than valuation.

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One ray of light was my buy in QLD and UWM right on the opening lows. Have a 16% gain in UWM and a 5% gain in QLD. The bad news is that I’m down huge on the week in my leveraged funds. Minus being up about 22% for year as of Friday plus an avg loss of say 30%, makes me down probably 10-12% for the year because of one stupid trade and 5 days of the worst market the world has ever seen since the Great Depression. I was wrong and the trade didn’t go the way I thought it would. I put too much on the line at the wrong moment which is the real mistake, but its history now and have to make the right moves going forward.

There are some unique things I’m seeing that are virtually guaranteeing we see at least a 10% rally from these levels. Now next week could have gyrations, but ultimately its going higher. For how long is anyone’s guess. We either have an entire bull market off this low, or we have a 10%-25% rally off this low and then sell off again, make a new low, and eventually bottom sometime around the Spring of 2009.

Obviously there are MASSIVE buying opportunities in stocks right now and the new leaders will emerge now that the old leaders are DEAD; ie GM down to levels seen in 1929. New leaders will emerge in these next two years that will lead us into the next decade and beyond. Think about your favorite blue chips, but buying them at the earliest stages.

Later, I’ll post a list of some really cheap stocks that have low PE’s and high growth prospects. Post your own below.

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If I have to put my face on the line to save the free markets I will.

I’m not shaving until the market prints a green close.

See if you can deal with that market!

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QLD @ 31.73

UWM @ 21.47

and listening to Mad Season, “I Don’t Know Anything”

Lets Roll.

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I’m putting that trading account money to work on a gap down tomorrow and it looks like that is happening due to another slaughter in the Asian markets. I think the Lehman CDS auctions tomorrow are important and that uncertainty will be gone from the market around lunch time. Today was the washout and tomorrow will be the fakeout. This won’t be THE bottom-bottom, but a relief rally may come, starting tomorrow.

-We closed on the exact lows, outside the 20day bollinger band again.
-Volume was tipped towards the heavy side today. Its particularly heavy considering holiday trading + the dynamic of the short ban rule has kept that other side out of the market.
-VIX made another all time high.
-Relative strength indicators are now pinned.

This difference between this time and every other time in the last 40 or so years, is that the indicators have reached oversold levels only seen at the worst of times. The number is probably less than 8 or 9 times during that timeframe. However, we have either very very rarely to never seen this type of volatility. So if volatility is the difference between then and now, yet the indicators are the same. That tells me that the size of the moves are larger now. Well, we have only seen the down move on that side of volatility and not the up side yet. So when/if a relief rally occurs, it will be larger than the typical relief rally we have seen in the past. Lets face it, the VIX could drop 20 points down to 40 and still be HISTORICALLY ridiculously high. That would provide major fuel for the market to move higher considerably.

Now I’m not saying we are going back to the highs of the year. I’m only looking towards, LAST FRIDAY’S close of 1099 in the SPX; 1947 COMPX; 619 RUT; 10325 DOW. That is all I ever got into this trade for to begin with. I have a feeling its going to take 3 weeks to get there.

My plan tomorrow is to buy weakness. I’ll be doing with ITM calls in either indexes, SPY, QQQQ, as well as leveraged ETF’s. I might even go into options in the most beaten down financials, solars, dry shippers, or anything else that has been decimated. RIMM and AAPL will be interesting.

I don’t think we will close on the exact lows of the weekly bar, we will close higher and that will carry over into next week. That’s my plan for the money that went to cash two days ago.

And I’ll say this, I’ll never forget these times. In the last “real crash,” I was trading baseball cards, not stocks. I’ve lived through a true crash now and I’ll remember it well. I’ll remember the comments made on StockRake.com during these times and know we’ve been through something together.

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I’m getting rolled over today in my position. Going long at the exact wrong time, but I’m not done. I’ve just lost profits and with today’s down move I’m cutting into core money now. I feel terrible for anyone caught in this - including me.

If there are any stock bloggers that are quitting, it may be a good sign of capitulation.

*Note fixed title of post. I want to learn how to spell.

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What a week! I don’t mean good either. I went long heavily on Friday and what a bad time to do that. Since then my leveraged ETFs took losses of 17-19%. My QLD calls dropped by 75%. However, I sold out today of the leveraged ETFs and am in 100% cash in that portion of trading funds. However, and more depressing is that I still hold leveraged funds which are probably down now 20-21% since Friday! 3 days of trading! This has been an amazing moves. So far this swing trade is really bad. I think in the intermediate term though it will prove itself. In fact, I can’t remember a directional market that was this oversold, volatility this high, and making big profits for people who could short blindly. Eventually that trade will blow out, and I can’t imagine it going longer than tomorrow and Friday. It will be unprecedented to not see a rather large up move off the oversold levels in the “pick your indicator” rolodex.

I want to talk about some mistakes I made.

1. Mistake: I went heavy long. Fix: I should have laddered in.
- Laddering in would have prevented the large loss.
- A smaller position would have made getting out being down say 8% a lot easier. You can get trapped to a trade when heavy.

2. Mistake: Focused on the bigger time frame due to big intermediate oversold “once every 10 years” signals. Fix: I should have paid more attention to the shorter term time frames.
- Got caught in the big picture when the market was pricing at the shorter term time frame.

Before Monday, I was beating the performance of every mutual fund and nearly 80% of hedge funds out there, but 3 days of trading in leveraged funds erases all that time spent being smart and good. Its ok though because there are still 2 1/2 months left. Yes, I’m barely up for the year and haven’t gone negative like most people in the world right now down 30, 40, or 50% and got caught in 3 historical bad days. Again, position size at the wrong time is the culprit.

It would be unprecedented not to see a big rally off these oversold levels. It even happened in 1987. It happened in 1998. Is it not going to happen in 2008? If the market does not rally off these levels, then the market is pricing in a comet destroying Earth and in that case we’re all screwed anyways.

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If the market has one more big afternoon to the downside. Not only will true panic happen, but I think it will finally cause the capitulation. I’m looking at SPY and NDX calls here if that scenario materializes and the reason I sold my leveraged ETF’s, even after getting my nuts squashed by an elephant on the trade, so that I had cash to make this trade.

Now I’m just waiting for my pitch.

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I like seeing where visitors to StockRake have come from. I get a lot of visitors looking for double beta long etfs and inverse etfs. During this turmoil, I’ve had tremendous traffic spikes for people looking for the inverse etfs - naturally. A bottoming sign? Probably.

I particularly like looking at the map though. One recent visitor came from Lucknow, India. Its prophetic I think, because anyone trapped long right here, needs some luck now.

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I sold my leveraged ETFs into the pop this morning taking losses in the 16-21% variety. No more SSO, QLD, UWM. All cash there. However, I still hold leveraged mutual funds and I only do that because of the timing issues. I plan to buy back these leveraged ETF’s if we get a shit storm this afternoon.

Its been the worst 2 days in a long time for me, but its only two days. The rest of the year is in front of us, and there is opportunity once, today is over.

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In this bizarro world, there was a coordinated global rate cut of a 1/2 point this morning. The futures were up and have sold off. European markets went negative after the news. Nikkei dropped 9.4% overnight the worst selloff since 1987. If yesterday wasn’t capitulation, today is probably going to be. It flat out sucks to be stuck long here. 1 really bad decision over the course of 3 days can ruin your entire year. Very interesting times.

I’m considering covering now, which is fucked, because I’ve already taken the hits, and today is one more move to the downside. I know its the bottom or the final hours of this selloff, but the market is perfect with fucking over the most people most of the time and I’m going to get nailed here.

Its simply amazing that the Market “knows” what amount people can stand and what they can’t. Today is that day where everyone who hadn’t covered, will.

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I posted about my feelings and what I think has happened during these past two days here.

If anything I hope it brings some levity to the two day dismal disaster. Hey some of you may have been trading fast while I’ve been playing the swing trade. If so you are kicking my ass and congrats.

There is enough on the table for a big rally, but according to the top technical analyst, “Jeff deGraff,” and you can watch the video yourself, he agrees as long as the playbook is the same as other times going back in history. This is same shit I’m seeing, but on different indicators. If you could point at a historical chart and picked where you would have loved to have gone long, you would have blown a zebra to get a chance to be long at those points in time. This is where we are right now and its not just my crazy ass saying it.

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Panicked and apathetic yet?

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Fed buying commercial paper.

Its the Fed, the world, the PPT and they are about to rip the short’s face off.

If you didn’t cover yesterday, and you decided to go against me and these signals overnight because you thought BAC still matters to the markets. You are fatally flawed. Today’s move will likely make the Friday entry profitable.

Seriously, don’t be short here if you enjoy money. I have two open market orders to buy SSO.

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Lets start out with the Ugly.

- Dow down 800 points at the lows of the day.

- New lows vs New highs were extremely lopsided

- VIX, VXN both made new highs.

Now the Bad.

- We didn’t see capitulatory volume.

- Market rallied way off its lows.

- I had to eat 8% loss in the NDX and 7.4% loss in the RUT. Similar losses in the QLD and UWM.

Now the Good.

- We didn’t see capitulation volume. This is good too. The “about to happen” rally will be good, but we will revisit or break the lows we hit today after that rally. Then and only then should we see the capitulatory  volume. I don’t want to see that volume event here, not now - later is better.

- Market rallied way off its lows. This is good. Reverted to the mean, the exhaustion gap theory is working so far. We closed higher than the 10:45 Rydex price.

- We formed tails on the market indexes, and wicks on the volatility indexes. If you look back at previous drops, this will not happen if the market is going to continue to selloff.

- The market is moving according to my expectations.

- The loss in the NDX was 18% midday and the loss in the RUT was around 13% midday. We didn’t close there and recovered a significant amount back.

- People think we needed to close down hard to get a rally. This is good because if the market moves up they will be forced to chase. If you don’t think the market can rally here, then you didn’t think the Dow could rally 500 points in an hour either, but it did. Don’t get tied to the rhetoric.

- Not only has Carter Worth been riding my coat tails by being short all the way into Last Friday, but Carter Worth agrees with me about being long. I guess it depends on how aggressive one’s interpretation is.

- Two of my trading accounts should have funds available tomorrow so that I can buy more longs.

- Lopsided down volume and lopsided new highs/new lows.

Look, do I wish I waited one day and bought today at the close instead? You betcha (wink)! However, thats not what I was supposed to do according to my lights, lines, signals, values, and rules. This trade won’t be considered a loser unless its down on a week over week basis Friday at the close. If tomorrow is up and you’re short, don’t be surprised if a pride of lions bringing Taco Bell comes knocking on your door.

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