two days in a row

Late day swoon two days in a row - as a bear I like to see that. - Im not gonna lie to you this month has beaten me up pretty bad - the losses were actually pretty small considering how hard I fought this up move. The hard part is the market telling you that you are wrong and an idiot 24 hours a day - I mean think about it when you have a position and it goes against you for 2 or 3 weeks straight it is the equivalent of being told that you are a dummy for 2 or 3 weeks. Tuff to stomach. I mean men are walking egos right?
On a positive note HOV and HOVNP performed nicely today and all week for that matter.
I covered most of the nasdaq futures I sold this morning at the end of the day and go home short a few and am still way short the market through all kinds of option spreads etc...Glutton for punishment.
Has anybody read any of this stuff besides me and TBIZ , my Dad and the wife?? Let me know.

Have a restful weekend - cuz G-D knows next week the curve balls will keep coming.

JB

AAPLE

Looks to me like AAPL is coming for sale here - watch it as a clue for the broader mkt and certainly the nasdaq

JB

Perception vs Reality

http://www.google.com/hostednews/ap/article/ALeqM5gcx_rrnXtNhA3-kFt3MlVdCg3o-wD99OHAD00

Read that article that I have pasted a link to . Is that really happening while the stock market surges inexorably higher? State governments have no money - jobless benefits are being exhausted, the dollar is being trashed. What gives? Anyone know? The market is partying like its 1999 when the it feels like 1929.

JB

randoms

The S&P is tired - yawn. Tech is being bought like cell phones, ipods, and laptops are new inventions. So a certain bald commentator whose 15 minutes of fame seem to last forever said yesterday that tons of money is flowing into stock funds - hmm is it possible to use that as a contraindicator...remember in March when the market was seeing massive outflows?
I (when i say I I mean my fund) owns a stock and warrants in a company that has made .82 cents a share in the last 6 months and is trading at $4 - SHIP. Its a drybulk shipper - if you believed there was a recovery in the economy wouldnt you buy a shipper that on 6 months earnings that has a PE of 4.87 and on full year a PE of under 3?? Nah people would rather buy AAPL, GS, SPG you know things that the boobtube crowd love to crow about. Oh well I digress - back to the news paper

JB

"All through time, people have basically acted and reacted the same way in the market as a result of greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis."

-Jess Livermore

Greed, Fear, Ignorance and Hope seem to be themes we have seen in the stock market over the last six months. The dominating component in these four items is always hope whether you are a bull or bear. Hope that the market will move your way and you will make money on your positions. Greed is easy...everyone is greedy and the name of the game is how much dough can I make. How long can I ride this winner and how big are my balls. I am pretty sure when my 76 year old mother in law called me and asked me if she should yank her life savings out of the market in early December of 08 she had fear in her heart. Even the Mrs. was admitting we were in crisis mode and that sent Nordstroms stock plummeting as house wives hunkered down and started going to the likes of Old Navy and economy grocery stores over the favored Whole Foods. Ignorance is what gets me the most. We are coming of the biggest stock market crisis of the decade. Age old financial institutions like Lehman were going out of business overnight. Bear Stearns was bought for $2 and it shook Americans into believing no investment was safe. Most of all our homes that were rising at incredible rates were now pluimmeting in value. For the last several months the stock market has seen incredible gains yet we are at extremely low volumes. Stock have doubled and tripled with nary a down tick. It is time for people to stop being ignorant by getting rid of the greed and showing a little fear while having hope that we can all make money in these markets.

Maximum frustration

Im at the point of maximum frustration on my shorts this morning - its the kind of day where I stop looking at the screens and start reading the paper, if you can still call the Tribune a paper.
Let the computer programs battle for the rest of the day - human interaction seems to have left the market place. The good news its a beautiful day outside, the cubs are pounding the ball and there opponents, and maybe just maybe I might get to put my iceskates and get to play some hockey with my son this afternoon.

JB

and now for something totally new

there was a whisper of weakness after the GDP numbers this AM - and shock of shocks the weakness was met with huge S&P buyers reversing the losses to gains almost immediately - traders are creatures of habit they do what works till it doesn't. I watch some obscure stocks as related to my arbitrage positions - when these buying waves come in these things just leap - there is very limited liquidity in the market from my vantage point. Eventually that will cut both ways - when guys go to sell there wont be bids but for now - stocks are where its at but every dip - even the smallest of one.

JB

Morning coffee

I will be drinking coffee in about 15 minutes - thats a good thing. Early morning line is futures up 4 bucks or so just enough to make anyone who thought that fall from grace on the close yesterday was the start of something feel kinda sheepish. baaaaa. Stocks have showed big returns this month - last day of the month - people rush to protect the gains? or just gun em a little higher?
I covered those nasdaq futures i shorted at 1616 yesterday at around 1606, I have reshorted a partial position at 1612.25 - so you know what I think.

Good luck today

JB

Not as bad as I had feared

Lost some ducats today but in what Im calling a ninth inning miracle the S&Ps dropped about 8 handles in the last 30 minutes. Plus when FSLR reported numbers and proceeded to jump 16 dollars in milliseconds I shorted some, it has since come back to earth I covered and made a few bucks - good for the P&L good for the confidence.

Heres an idea to chew on - CITI finished its preferred exchange, not every preferred was tendered so they are outthere trading in highly illiquid fashion. CITI would like to resume paying a dividend on its common stock (or at least thats what Im being told - oh and by the way does the government have to pay taxes on its CITI dividends - thats wierd) because there are lots of funds outthere that cant own stocks unless they pay a dividend - but they cant pay a common dividend without paying preferred dividends. My guess is they open up the exchange offer again to eliminate those remaining preferreds, the exchange offer was 7.3 shares of C for your preferred, so at todays prices
C=3.14*7.3=$22.92
So preferred value is $22.92 and C preferred series M closed today at $14.71. This is a risky trade but might be worth looking into.


as my 5 year old boy says peace out suckas

JB

destoyed

I feel destroyed - this market has ripped me to shreds - tuff to regroup form this ass whooping. Oh well - guess I should have been a DR.

JB

things that make you go hmmmm

A bunch of years back I used to trade with this guy who remains a very good buddy of mine and we used to say "bonds up, oil up, spuz up" everythings good. If you think about it how the heck can those three things move in the same direction? Oh well food for thought.

Back to the market - it has to be getting exhausted - it just has to be. I sold some Nasdaq mini futures at 1616 - the nazz is up 50% form the lows - take a breather - digest it - go spend some of that money you made longs.

I have mentioned HOV and HOVNP a few times - HOVNP is a preferred share class of HOV (a homebuilder that has not made money in a loooooong time) HOVNP is a $25 par preferred currently trading at $2.41, HOV common is trading at $3.15 - huh - why is the common trading at a premium? Who knows. HOV has been buying back debt in the market place at between 40 and 70% of par - this preferred is trading at 10% of par - thats just wrong. Im long HOVNP and short HOV - I want HOV to launch an exchange offer (kinda like what Citi did) and take me out of my preferred at 40% of par or $10 a share. But then again I want a lot of things.

JB

Am I crazy if I feel like the fix is in

The NEVER ending strength to this market has my mind twisting and turning. Who is buying the market everyday? If you bought the market 13 trading days ago you are up 14%? Isnt that enough? Wouldnt you take a few profits maybe go to the beach for the day? I am scared to say it but I believe the conspiracy guys out there that say well the government gave Goldman and JPM all of this cash they are under the gun to rally the stock market and hopefully get some consumer confidence back. Its not that far fetched, if Bernanke can buy MBS and the like why cant the government in guise buy SPUZ everyday all day. Who else has that much capital? Oh well im feeling pretty lousy - my longs are way underperfrming and the month ends tomorrow and as a hedgefund guy the monthly return is uber important.
BBY (bestbuy) as the ultimate consumer tell is up pennies today...kinda weak for a market up 1.2% - have a small short on in there - feeling lucky.

JB

cheeks are flushed

When Im taking heat in the market like I am today my cheeks get flushed - kinda the opposite of cool as a cucumber ...So here's the scorecard on last nights secondary issues - 2 we break even on 1 we make .15 cents a share - so basically nothing. When I posted that CITI piece before i went out and bought 900 Aug puts - sounds big but they were trading for .13 cents so really not a big cash utlay .... Im laying some back out slowly a small winner. It would be a herculean effort if today ends in the plus coloumn for us but it aint over till its over - gotta dig deep and see if my brain has any genius ideas - my wife would tell you not likely.

JB

CITI

I just got my Citi shares from the exchange - watch the stock my bet is it gets reaaaaaaaaaaaaal
heavy real soon. AS far as the broader market is concerned - WTF?? Are things that good?

JB

Justice

If the SPUZ had opened down 10 points they would have clawed back to unchanged by now - but when they open up 10 they just sit there - no fear shown by any longs about locking in gains this morning.
Initial jobless claims came in worse than expected - yawn who cares. Who needs a job when your stocks keep flying higher everyday? Anyway luckily yesterday I pared a bit of my GOOG short exposure - unfortunately not all its up HUGE today ($12 and change).
Im feeling pretty rattled this morning the bid to the market is just nuts - nuts. Losing gobs of money right now. Oh well - deep breath.

JB

Ouch

Woke up and did my thing, SPUZ up 8 bucks overnight - ok thats not helpful. The market has now almost rallied 50% from the March 9th lows of 666. Take a breather would ya? I continue to believe that this is an incredible suckers rally - it feels so real, gotta get in...till they pull the rug out from under ya. Well my bearish bets will hurt today (at least if the market holds these gains) so heres hoping the arbitrage positions and my longs work. One last thought I think tomorrow the 6 month fiasco that is known as the Citi arb comes to an end, the shares will be distributed - this was one of the harderst stocks to borrow in the history of arbitrage- look for two things tomorrow - a worlds record in volume traded and perhaps a huge amount of Citi stock for sale and maybe just maybe lower prices.

Why do I feel like this market is being pushed higher by unatural forces?

JB

Tomorrow

SPUZ are decidedly unchanged after the rip in to the close. I know of 2 IPOS for tomorrow and 3 secondary offerings. I have indicated for shares in one of the IPOS and 2 of the secondary deals - so we'll see how we do. Last time I saw this many secondary offerings in a few nights time the S&P dropped from around 950 to 872 over a 5 day period or so. I dont know where all of the cash comes from to buy these deals we take small allocations 4 to 5k shares....but these offerings are millions of shares...where does all of the cash come from?? Anyways we are two trading days away from July being history, heres hoping my positions work well in the next two days (HOV short, HOVNP long Im talking to you) because I want to show my investors a decent monthly return. We are up just shy of 10% for the year...I would Love to get to 10.5% this month

Have a good night -

JB

wrong again dumbo

Well Oil finished the day on its lows (or really damn close) and stocks finished the day near there highs...go figure. My shorts in the market made small money I have the $20 strike buywrite on in SCO, some of my arbitrage positions made money and overall it was a slightly positive day for the home team. Heres the problem im still short the broader market and the underlying strength in the S&P and the relentless bid in the futures is undeniable...hmmm

Must be because the economy is humming along so nicely

JB

Good side

Trading is tough, sure you hear about guys with all of this money and power but in general small traders like me have good times and bad times and definitely need to work. Here are some of the plusses, Its almost entirely doable form anywhere, like this morning when I logged in to my trading platform in my undies, had a cup of coffee and turned on Tom and Jerry for my baby boy. And then I was able to trade from home until 910 am when I took my daughter to camp. I wear shorts, tshirts and flip flops in the summer, and can watch my beloved Cubbies (they play a lot of day baseball) on TV, all the while keeping a very mindful eye on the markets and my various positions. Anyways I have been doing it for so long I cant imagine not having this freedom - but remember freedom always comes with a price and the price here is instability, you never know where your next meal is coming from. Can you hack it?

JB

more of the frickin same

The last 10-12 days have been defined by an unwavering bid to the market - today is more of the same. With oil so weak and a handful of nasty moves in some big momo names GOOG, FCX, X i thought the futures market would just be a sea of red...its down fractionally - is it time to throw in the towel on the short side? I think not, Im gonna stay the course - there are tons of equity deals being priced tonight and a few priced last night - lots of supply of stock does not usually equate with much higher prices...getting hungry...one last thought I like shorting PSA and VNO here and buying there corresponding preferreds..

JB

Big Tell

Oil is getting whacked today, 5% or so...big build in inventories - duh 10% unemployment (and thats the government number not the real one) will lead to less traffic on the road and less gas being bought. I for one like to see oil get whacked for two reasons 1)not a big fan of the middle east oil guys 2)cheaper to drive my car but stock market players view weak oil as a weak economy so oil goes down they sell stocks....the S&P should follow today , I could see the S&P closing down 1.5 to 2%

JB

the buyers are there always there

SPUZ were starting to get ugly down 9 handles or so...then the futures buyers showed up...I think they will fail today but I have thought that for the last ten days. The secondarys were all winners, 2 were decent winners one was pennies, but ill take 3/3 anyday. GOOG is taking it on the chin here in the early goings, as is YHOO, MSFT is up fractionally, so the market has voted GOOG, YHOO bad MSFT good. Go figure.

JB

Up and at em.....................

Busy morning, crackberry alarm went off at 6AM, checked the futures markets SPUZ down 3.5 (SPUZ=S&P 500 futures contract) a step in the right direction but they had traded down 10 points last night - so the dip buyers are allready doing there thing this morning. GOOG (mentioned last night) trading down 5 bucks on the MSFT and YHOO news - will see if this holds. Two secondary trades we indicated for this morning - a secondary is when a company comes to market with stock for sale - they are led by your favorite guys on Wall Street, Morgan Stanley, Credit Suisses, Merril Lynch, etc... this morning we are playing in two deals offered to us by our sales guys at credit suisse, HGSI and TSL - we said we'd buy some shares they usually get priced at a discount and you can make a few bucks on em...There was a third deal we were shown but it looked redicuolous to us so we passed and actually shorted some shares in that name - we'll see how that one works out as well. Kinda hopeful the market cracks today- hong Kong was down 2.4% but the European and UK markets are all firm - in England the swine flu must be causing delerium which makes people bullish....

JB

A little shnooggle before snooze time

So I have a bearish position on in GOOGLE and tonight the financial newsights are putting out stories that MSFT and YAHOO are going to finally do that search deal that they have been talking about since W was president. Is that going to cause some selling in GOOG tomorrow?? I dont know does anyone use anything other than GOOG for search (why am i short this thing again??)?
Oh yeah beacause no one is spending money on advertising because the consumer is not spending.....oh well food for thought as bedtime beckons

JB

Here goes nothing

Im not sure why Im doing this. I mean who really cares about my trading or my thoughts on equity markets? Oh well there are plenty of people who opine regularly so Im gonna give it shot.
I run a VERY SMALL hedgefund, I traded on the CBOE for 6 years and have traded "off the floor" ever since. I dont really know how to do anything but trade and there are lots of days Im pretty sure I dont know how to do that either. I trade long and short, up and down and all around. I trade convertibles (not cars, though I drive one), futures, stocks, bonds you name it anything in the equity world.

I come to write this blog after one of the toughest ten day stretches in my career. My partner said the S&P would traded down to 872 a few weeks ago and it did, we were off to a huge start for July, we covered a bunch of our shorts and felt like kings...My partner is a technician - he reads charts - I say every shipwreck on the bottom of the ocean had a chart on board..oh well - he'spretty good at it. We figured the market would rally to 915-920 or so and then it would sell off again...errr well lets just say that didnt happen, the market ripped higher everyday for the last 10 days all the way up to 977 or so. I have fought a trend before but this one was tough - relentless buying in the S&P futures nearly constant upside, selloffs so small if you blinked or went to take a piss ( i try not to do that to often) you would miss em. So all that money we made at the beginning of July was gone - we took on the market and got our butts handed to us..its happend before and it will happen again. What made this one particularly tuff was that our long positions didnt work either - we were getting beaten on both sides of the market - not good. So anyways we are still short the broader market up here at S&P 972 (after hours the futures are down 4 bucks - yipeeeeeee) and we still have our longs, and arbs (arbitrage positions) etc....

Trading is a self absorbed business I dont have any grand allusions that Im doing society a service the only people Im helping ( on the good months that is ) are me (and the familia), my
investors, and the brokers who make commissions servicing our accounts. Beats being a lawyer though - those guys think they actually provide value - ok a few do but not the freaking army of lawyers that this nutty country has.

Anyways on this blog im gonna try and offer my thinking (my apologies in advance) on the broader market and interesting arbitrage positions im working..


more to come

JB