Did this backwards I guess

Never did an opening to this blog. So here it is. This blog is more for me to flesh out my own thoughts on the market than to share - writing out my ideas helps me think through and evaluate them. I needed a trading journal really. Blog seemed an easy way to do this. And why not share it. Maybe I'll get some followers and fresh ideas.

Friday was rough day. I was very short and very wrong. Stopped out of my QQQQ and JPM shorts (bearish ascending wedge patterns with reversal candle at breakeven point for the year on QQQQ...but didn't work!). Still short via short vertical call spreads on DIA and EWZ (I set my risk so I can hold to expiration and either be right or wrong, not get whipped out). March has more intermediate turning points than any other month, so still looking out for another short entry. But there a few good looking longs out there (GS for example, if entered on a pullback). Here's an interesting calendar of important highs and lows by month, from Cobra's Market View (http://cobrasmarketview.blogspot.com/2010/02/important-highs-and-lows-calendar.html)

Current positions

Short VXX - this piece of shit $VIX ETF does nothing but bleed money due the contango in VIX futures. Entered around $33 when the VIX popped a few weeks back. Took 1/4 of profits already. Gonna ride the rest for a while. Even if VIX has a huge rally I think my position will be fine - the last VIX rally was 70%, and this POS only rallied 27%. Now it's more than 10% below the prior low, and the VIX still hasn't made a new low. It doesn't get better than that! This is a short and hold (with an exit plan as always but giving it a lot of room), because in the long run, it's going down!

Short TBT (basically long TLT) - Why short the leveraged. My bias is flat to long to choppy for bonds - I don't really see a massive rally coming, though I'd like to be in place to profit if it does. I don't think bonds break a new low anytime soon, so being short the 2x ETF means I make money if bonds just chop around or slowly drift higher. And I get interest payments, not as dividends, but TBT loses money in proportion to the dividends paid on the underlying treasuries (the same way options lose value as dividends are paid). Why long bonds? Everyone says rates are going higher. And they probably will...eventually. As a result treasuries are one of the most hated asset classes right now - buy when everyone is bearish right? But in the mean time I think rates stay lower for longer than most people think. But more importantly, the charts:

Here's 30 year treasury rates, with 10 year downtrend line still intact (remember, lower yields = higher bond prices).

Now here's 10 year treasury yield chart

Looks like 10 year rates have more upside before hitting downtrendline, which is partly why I'm long 20 - 30 years instead of 10 years.

Here's TLT chart weekly

and Daily:

Yes, there's also a giant head and shoulders on all these weekly charts that would be very bad for my position. But I think the long term trend line trumps that. My entry was about TLT = $89, based on the 3 week long descending wedge on the daily - one of my favorite patterns. Stop is if TLT gets below $88 - that would be a break of the head and shoulders. I already sold 1/4 into this rally so if I'm stopped out I'll be close to break even - its a free trade now! I might even consider reversing the position if bonds break lower...depends on other factors though. We still need to break the intermediate downtrend line. Next profit target is TLT = 93.50.

Short EWZ (on top of the credit call spread) - Not feeling so hot about this one, but underperforming the market and pattern is still intact (ascending wedge and bearish hammer at the high). Will stop out if breaks new highs. Was tempted to exit Friday...looks like I'm probably gonna get stopped out, but trying to be true to my stops. I said before my view on dollar was short to neutral. A major fall in the dollar will definitely stop me out. If dollar holds up I should be OK.

Long NBG PRA (preferred stock on NBG - National Bank of Greece). Why long a greek bank? Am I fucking nuts?! I'm not a macro economist, and Greek's situation looks pretty ugly. But take a look at this chart of NBG (common stock) first:

First off, it seems that, for this bank, fear was much higher during the global crisis in 08 - 09 than for the current crisis in Greece, by the fact that every single headline right is Greece, Greece, Greece! but NBG is not even close to its low from the credit crisis. Second, volume on this weekly chart at the low is MASSIVE. Looks like capitulation to me! Or at least a lot of big boys buying this thing. It's trading WAY below book value, but I wouldn't trust that too much because equity holders could easily take a major haircut if the gov intervenes or they issue more shares. That's why I like the preferred better - they could stay in business but still screw the common stock. So I'd rather be higher up the equity chain. And at my price the yield is just over 10%, and though its not super liquid, I do think it's liquid enough that I can defend a stop loss.

Here's the weekly chart for the preferred:

They adjust for dividends so prices shown are a little funky (par value is $25, and that should be the where the 09 highs are, but it gives the same big picture as the chart that doesn't adjust (was just harder for me to post). You can get the picture. Again, nowhere near the lows it saw during the credit crisis, and especially with all that volume - is that all the damage the sellers could do? Not to mention huge reversal candle on the weekly with huge volume.

Now the daily:

Great head and shoulders. I bought the break out with a stop at the red line. Also notice that, on balance, there were more volume spike up days than down days. If it works out I'll make two sales of 1/4 of the position - one part of the way up, another if it gets close to par. Then try to sit on the last 1/4 to half my original position and collect the dividend. Next week I already get my first 52 cent dividend. Even if it is flat in 3 months but didn't stop me out, I'm still making 10% annualized with the dividend. I have 16% of upside to par value from where I bought, so if it takes a year to play out that's a 26% return. If I'm stopped out I lose between 5 - 6% (if I defend the stop well), though maybe more if it gaps down on me (a risk, but recent volume averaging about 100,000 a day, so I think liquid enough that I'll take the risk)