Update: FAS

The markets are fluctuating and we think financials will benefit from the improved earnings of other companies as lending begins to soften. We continue to be in the camp that does not believe in the double-dip recession. The price of 14.50 continues to be our support on the XLF (which the FAS trades off). We hold.

New Purchase FAS

We decided to purchase FAS at the XLF level of around 14.50. This was our computer's first buy point as we believe the markets will not go back below the 200-day moving average. We purchased a large stake at 21.98. Check emails and we will speak soon. I am out for the rest of the day.

Market Update

The market averages finally came back up to the 200-day moving averages. The market has been strong in July due to surprisingly good earnings from most of the sectors. There is considerable fear of the economy as jobs have not been improving (at least in the numbers reports). Technically the market is at the top of the channel and should face some resistance in here. We continue to wait for a buy signal. We favor the long.

A New Week

We are still on hold and running the numbers.

A case for trading: Did you know?

The S&P500 index first crossed the 1100 mark on March 3rd, 1998 to close that day at 1105.65. Today on July 22 , 2010 the S&P500 closed at 1093.67. We have gone nowhere. I remember it was around that time the big push was for index funds. I wonder how many billions and billions of dollars Vanguard and others have made during this period vs. their investors. The answer is clear. Just a thought.

Alert: WSR Computers take over!

BLACK OUT: Our computer systems have been out trading us. The conflicting news and opinions have basically stalled our "human analysis" and our computers have been out-performing our opinions for the last 30 days-unfortunately we did not follow their advice. This is nothing new. You would think we have learned our lessons by now after 16 years of being defeated by them. I guess it is human emotions that hinder performance (no matter how long you have been playing this game). Our version of "HAL" has been spot on. They are in control for now. It seems appropriate since all of Wall Street have been using trading system almost exclusively the last 6 months.

Economics vs. Earnings

The battle continues. The "Top-Up" money is buying earnings and the "Top-Down" money is selling the economics. This is why we are getting these see-saw market days. The market has not gone anywhere in the last 30 days. We started at 1100 on the S&P500 and we are near there today. The financial media changes their opinion daily with the markets ( nothing new there). So what do you do in this market? We have a pretty good strategy that has worked in the past. Check emails for report.

Market Update

Whew! Good thing we cleaned house at the open this morning. You have to be quick in this market. It looks like we will stay on the sidelines for now. The market has no direction and you have to get lucky on your trades (like we did yesterday and today). Not our ideal environment. The market is churning and profits are very hard to eek out right now. We will stay in cash until further notice. Check emails for strategy and updates. Patience will be key in here.

Trade: Out at open

We got 21.75 at open with a 19.64 cost basis (FAS). It was a great 1-day trade. Check emails for next move. We are out for the rest of the day.

Update

Wow! It worked perfectly! We immediately bought FAS (3X-long financials) and are up almost 11% in the pre-market. That's 11% in a 24-hour time frame. It wasn't scientific. Check emails to see what we do now.

"HHH2" Update

We got stopped out on 80% of our trade last Friday for a 6% loss. We continue to hold a 20% position for now so the trade is not fully closed out. Check emails for details.

Doom and Gloom: Out come the coolers!

The market is drifting lower and the bears ore coming out of the woodwork. The earnings have been solid. The belief is that earnings will go down in the coming quarters. I admit the news from the media is very frightening. This is to be expected. Our experience tells us that the news gets worse just before a turn around. We continue to look for buys. Our "Cooler Indicator" is at an all-time high.

Market Update

The market is doing as expected. It hit major resistance yesterday and the bears are confident we are heading down from here. Our view is that this may be a bear trap. We continue to hold for now. If it looks like a break down, we will act accordingly. The news is not good, the earnings are better than I expected. In the end, an old Wall Street adage comes to mind: Stocks follow earnings. let's see how it plays out.

P.S. I was very surprised the FED said it may take 5 to 6 years to get out of this. They don't normally yell fire in a movie theater. Strange.

Market Update

The indexes have had a nice run the last 6 days. In fact, the bounce has been about 7% or 70 points on the S&P500. There was no real news. It appears everything has changed concerning the U.S. economy in 1 week. Talk about a quick recovery! Obviously that is not the case. So what happened? As we discussed on our conference call and in recent reports, the plain fact is that the investment community has been under-invested in equities. This is more evident in the hedge fund community. They were holding about 24% cash in June. This is a huge number. The debate on the economy and double-dip recession is fodder for the media outlets and a mute point as far as we are concerned. What concerns us is -when is more capital going to be deployed into the markets? We saw a "tell" the past 7 days when it appears most managers are more concerned about missing a market upturn then they are with why it is moving. Managers have to move their portfolios around in advance of good news. We think a shift is beginning to occur. Our strategy is to play stocks that we are comfortable with the intrinsic value we think "The Street" will notice. This is not value investing. We think of it as accumulating shares in companies we think have to be bought by managers because they are under invested in a certain sector. We believe "HHH2" is currently very under-owned and will be bought in large quantities soon. Of course we keep our hand on the "trigger" if it does not pan out.

P.S. By the time the pessimists figure this out, the markets will be trading much higher. I've never seen so many "armchair" economists who are so bearish. We may be wrong; however, we have seen this many times before. As in Casablanca- Play it again,Sam.

Added more "HHH2" Today

We doubled our position today.

"HHH2" Update

Good thing we came back in yesterday. The stock is breaking out with the market. We continue to hold.

Reminder: Conference call at 9:30 today

Don't forget to call in at 9:30am EST today. We will go over strategy and update. if you can not attend, I will send out a brief recap to your emails.

Rebuy: "HHH2"

We decided after the weekend to repurchase our "HHH2". After re-assessing the prospects, we concluded the price was just too compelling and we renewed our position. The technicals slightly favor long, the valuation is very attractive, and we like this stock.

Strategy going forward

Most indicators are 50-50. Our computers are systematically flat now after making a great bullish call at S&P500 1010- as we are at Resistance. The odds are now back to flat. We are back to 100% cash. We have not totally abandoned "HHH2" as it might be a delayed fuse. We will watch it. We will run on "instruments" in here. The news is too conflicting and our systems seem to be on the right path. It is a very difficult period to make money right now as demonstrated by the top talent's losses and lack of progress. We will probably trade through this period as we prefer to stay in top notch "conditioning" during hard times. I would not recommend this at home. Check weekend emails for updates. Have a great weekend everybody! Again- don't be discouraged as sometimes "bad beats" happen....we should have made a lot this week...oh well...the markets move on- so should we.

Why we went long this week

It turned out to be a great call; unfortunately, we did not get paid for it. The stock we picked did nothing. The stock up until this point was a great high-alpha play on the market. This time it did not work. Unreal. It happens in the market. The reason we went long in the face of all our associates (and all of media) screaming short and the bad news is- RSI hit decade lows,hedge funds were not invested, and the S&P500 hit close to our 1000 computer strong bounce level. While most were asking why- we were enjoying our stealth call. Hard to take that we made the call of the year and did not get paid. As the movie says "A low down dirty shame". Oh well......

Decision Made: "HHH2" Dumped

We dumped our hand in "HHH2" at a 1% profit. Our rule is simple: If it's not acting right or as you think it should be acting-dump it. Back to the drawing board.

Trade Update: "HHH2"

We remain long. Although the news does not sound good, our scenario computers continue to favor the longs to this point (resistence). We continue to hold "HHH2" although it is having a difficult time breaking through resistence. The disconcerting news is "HHH2" has not participated in this huge 1 week rally. The long-term prospects look good on a risk/reward basis; however, as a short-term trade it appears it has not worked. It worked in the past when the market went up-not this time. It may mean that the stock has specific problems that are not market related. We may bail on this trade. We should have made 10-15% off this trade this week. It did not happen....something is not right.

Market Update: Hedge Funds

Hedge Funds had their worst quarter in Q2 in over a decade. They are holding 24% of their assets in cash as of the end of June and are only holding 2.5x leverage. The volume in June on the NYSE was the lowest in 13 years. Do they sound nervous? You bet! Check emails to find out what that means to the markets and our strategies.

Looking good in the Pree's

The Pre-Market (Pree's) is looking good. Let's see if it sticks. Check emails.

BP and FAS Update

Trades never hit our targets. We will watch them; however, we will be focusing on "HHH2" for now.

"HHH2" Update

We doubled our position in "HHH2" today and are now fully in our position with an cost basis currently about 2% below the current close. Our strategy is to see if it can break through the resistance point by the end of the week. If it does not- we will sell some of the newly added positions and try to get a lower price. We might be able to get a nice 20% run going into earnings. Check emails for targets.

Nice Bounce!

As we discussed in our strategy email update yesterday, the RSI (Relative Strength Index) on the market hit an incredible low yesterday. We did not see that low even in March 2009. It meant the market was sold well beyond it's range and was due for a huge bounce. Check emails for next strategy.

The Big "Fade Away"

The rally again .....fades awaaaaaaaaaaayyyyyyyyy. Our computers are spot on this train wreck. We continue to wait an snipe our stocks. Check emails for strategy...we wait on BP and FAS....we are ok with HHH2.

Picked up more "HHH2" /BP Update

We doubled our position in "HHH2" this morning. The computers are puting out very favorable signals on this stock. The BP trade has not hit our buy target yet. We will be patient and play other positions until it does. FAS- still avoiding until it hits our target price. Check emails for update and strategy.

We got some good prices today!

Wish we bought more. We will keep with the "Sniper Mode" and "Flash Traps". Check emails for targets. Sharks Patrol These Waters.........Munch!

Market and trade Update

Looks good-everything is happening according to our forecast and strategy. The markets are coming down to our targets. We couldn't help ourselves today. We bought a little more of "HHH2". I can't believe the prices we are getting. The BP trade is still on hold. We do not chase stocks. We will continue to wait for our flash target price on FAS. Check emails for FAS purchase target level. Let the markets fall....sharks patrol these waters! Check for target stocks and prices. Gotta love it!