Dollar Getting Crushed Causing Oil To Spike. Do Not Touch WLT Here

June 26, 2008 9:08 AM

Do not short WLT here. The chart says it should go lower before higher, but the dollar is getting crushed and causing the spike in oil this morning. I am concerned about this and it is difficult to say where we are going here on energy and commodity stocks because of the dollar. As i have mentioned, news can and will change the dynamics of supply and demand and if the dollar collapses i am not exactly sure what will happen, but oil will likely skyrocket.

The easy money on WLT has already been made. I personally would NOT hold a short position on an energy stock overnight anyhow. The dollar and oil is simply too volatile. They are trades and exit, IMO.

10:53 Update: It spiked down and reversed as I thought was possible. Like I said before the market opened do NOT short WLT here - LEAVE IT ALONE unless you are a VERY good trader, IMO. I would personally have covered any short on any weakness here because of oil and I am not certain where it will close today. It could go either way, IMO. .

Written by Tom@StockBlade.com · Filed Under WLT | 2 Comments

Morning Call: Skepticism Warranted, Futures Down Big

June 26, 2008 8:39 AM

The futures are currently down at about 1308. Therefore, we will test Monday’s low immediately. Other than the Dow, Monday’s low has no real meaning. I want to see a REAL rejection of a low as I have been saying over and over and we have not seen one. We would have to get a severe selloff today AND a strong comeback today to convince me we have seen at least an intermediate low. We have Existing Home Sales at 10:00 EST. I wouldn’t count on that number to trigger the strong reversal needed, ha.

In addition Goldman added GM and C to sell list and cut estimates for the brokers. Then Wachovia cut Goldman. Tit for Tat, lol. Per usual, thanks for finally saying sell GM after it has dropped 60%. Genius. I said “wake me when GM hits $10″ a month ago. here are also rumors floating around that GM or F or both, may eventually have to file for bankruptcy protection. This would shock me like not at all.

Written by Tom@StockBlade.com · Filed Under Pre-Open | Leave a Comment

Economy Plunging, Dollar Falling, Bond Bubble, Commodity Bubble: What To Do

June 26, 2008 1:42 AM

This is the times we are in. We have a very, very weak economy with fundamentals that are in the toilet. We have “cost side” inflation that we cannot control. We have a dollar that will possibly near the value of toilet paper in Europe one day because of bad governance. The 10 YR Treasury is yielding 4.11% yet inflation is likely double that even though it isn’t reported as such. So, the big question is what to do.

The answer is the same as I have said for months. Take profit early and take profit often. Long term investing ONLY works when the fundamentals support it. Right now, they don’t. This will not change unless we make MAJOR policy changes regarding trade and government spending. Our trade policies are completely short sighted and idiotic, IMO and will lead to the complete destruction of our way of life. We are half way there, but still plodding along the same path. In addition, government spending is so completely out of control that it has become scary. Government hiring has grown at such a rapid pace that long term it has to be checked or the entire economy WILL implode. It isn’t a simple matter of payroll. This involves long term pension and health care benefits for all these so called “needed” workers. It is a complete mathematical impossibility that the government can pay these benefits long term if they continue to hire - unless we print money.

Anyhow, if these two severe imbalances do not correct - and soon - the economy will eventually collapse. Period. We can continue to print money, so it could be years and years away, but it will happen. We have to correct these two issues sooner rather than later.

People do not understand the danger of printing money. We have never had a “true” depression like Germany, regardless of what people here think. People that were wealthy in the U.S. in the 30’s were super rich when prices fell. People that were rich in Germany in the 30’s were dirt poor because their currency was worthless. Big difference. Do not underestimate the significance of the value of the currency.

As Warren Buffett said today “we cannot continue to ship $2 Billion a day overseas and expect the dollar to have value. Our daily accounts have to be fixed”. He also mentioned prior when asked about the $600 stimulas checks, “why $600, why not $6000, printing money has consequences”. Agreed.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary | Leave a Comment

WLT Short: Why Trade Call Took Guts

June 26, 2008 1:16 AM

My trade call on WLT took guts because it is not like a normal stock. It trades on a commodity and as we have seen, commodities can change rapidly. if this was a “normal” stock, it would be $90 already, but it isn’t. I just wanted to go out on a limb and make a call that nobody else will to prove a point. I watch this stock a great deal and feel “comfortable’ enough with it that it will do as it “should”. That is why I made the call. I also glance at the oil charts periodically to see where we are. I do not pretend to be a professional, nor an oil trader, but I do know enough to know where oil is “likely” to be, short term, unless news.

There is a reason oil has been sideways for a while now. It is the high and $130.75, I believe. Until one of them clears, I think we will see more of the same. But is what I see.

There are other stocks, like VLO for example, that repeatedly do not do as they should, and I generally avoid commenting on them, unless I see something.

Point being, I called the short at the all time high in an obvious bubble situation. Readers could have banked about 20% if in and out of the trade in a couple of days. Not bad for an amateur in probably the most riskiest sector - energy. Calling a trade on financials, for instance, would be FAR easier as it is less complex.

Written by Tom@StockBlade.com · Filed Under WLT | Leave a Comment

American Express: Credit Continues To Worsen

June 26, 2008 12:52 AM

“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” said AmEx Chief Executive Kenneth Chenault in a statement.

Hmm…I have been harping on this issue almost daily for months. The problem in the economy is fundamental, not cyclical. it is very important to understand the difference. We have business cycles, and always have. This is not a business cycle, IMO. This is far, far, different. it is a matter of real incomes falling and debt levels rising. This cannot be compared to other cycles as this has never happened since the depression. Never.

This is why I keep harping on the fact that being a “long term holder” in this economy will not work. The ONLY reason that long term strategies worked in the past was that real incomes were rising. Therefore all market dips (or plunges) were buying opportunities. That is no longer a given, to say the least.

I hate to keep going “Peter Schiff” on everyone who has long warned of an economic collapse in the United States, but I just see nothing good on the horizon unless something dramatic is done. I believe I could fix the vast majority of our economic problems easily, but last I checked the leaders of our once great country were not asking for my opinion.

Written by Tom@StockBlade.com · Filed Under Stock Comments | Leave a Comment

Investing And Trading: Never Chase

June 26, 2008 12:38 AM

One of the biggest mistakes people make in investing/trading I believe is FAR too many people chase. Try and be the early bird (they do get the worm, so I hear). For instance, you have had multiple opportunities to short WLT in the last 3- 4 days with limited risk. What does the average investor do? They wait until it plunges and then they finally give up and sell or they short it. Then it reverses and they lose. This is wrong-headed. Have your number and have the discipline to pull the trigger. If you are wrong, exit. If you are right, you will bank it. But you limited your risk.

For instance, let’s say WLT spikes lower tomorrow. Is the trade short? I don’t know, it depends. It is possible it could reverse if that happens. If RIMM spikes lower tomorrow (well, it almost certainly will) is the trade short? I don’t know, it depends. In both cases i would need to see what is going on and the reaction to know for sure. The point being is if you were short WLT at $105, you wouldn’t have to chase the short at $95. Chasing the short at $95 you just increased your risk DRAMATICALLY for no reason. If you didn’t like the short at $105, then why do you like the short at $95 all of a sudden? I am not saying it wouldn’t be a short at $95 but know WHY you are short there and know when you are wrong, and why. Remove emotion and reduce risk.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary | Leave a Comment

UPS: Getting The Hammer As Warned

June 26, 2008 12:19 AM

I have long questioned the valuation of UPS. I also said to short it at $74.00. I have also questioned why would anyone buy it in a weak economy with soaring energy prices. I rarely comment on so called “fundamentals” but sometimes they are just to overwhelming to ignore. If I recall, I said something not long ago like “if you are long UPS you are a moron”. Well, maybe not exactly, but I certainly alluded to it. My call to short it at $74.00 was a “supply and demand” call (some people refer to this as charts)…but the rest of my commentary has been about valuation and fundamentals. I just saw ZERO reason to be long the stock.

Oddly enough, UPS set a 5 year low today. Boy, I could never have guessed that in a million years. Wait, I did guess that and have been harping on this issue repeatedly for 2 months. It is $61.40 currently and I see no sign of a low.

Written by Tom@StockBlade.com · Filed Under UPS | Leave a Comment

Trading And Investing: Reduce Risk By Swimming Downstream

June 26, 2008 12:04 AM

One of my main themes on here is to reduce your risk as low as possible while still giving you big upside. This seems a bit complicated to do, but if you use firm numbers and know when you are right and know when you are wrong, it makes the process less complicated. If you do not KNOW either number, you should not be in the trade, IMO.

There are two main reasons people lose trading. They do not understand when they are right and when they are wrong and are guessing and they take too much risk. Please limit your risk.

In addition, you should attempt to “swim downstream”. What I mean by this is you should only be in a trade if the direction of the market agrees with it. This will maximize profit while reducing risk. For example, if you believed the trade was long AAPL above $167, then you should be looking to see if the SP and Nasdaq was likely to go higher also. If you are correct, then the gain will be far greater. If the trade is long AAPL above $167 and the market is falling, even if you are correct, the gain will be limited.

So understand the stock and understand the market. Your gains will multiply in a huge way. Swim downstream.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary | Leave a Comment

Please Post Comments In Reader Interaction Section

June 25, 2008 11:41 PM

Please post comments in Reader Interaction section for now as I make so many posts that they get lost if I do not go back and read those posts. I have a forum that I am going to add to the site, but there is going to be some slight changes to the site in the next month or so and have been waiting for that to add the forum.

So, if I comment on WLT or C, or whatever, please post the comment in that section so i can easily find it. Thanks.

Written by Tom@StockBlade.com · Filed Under General Investing/Trading Commentary | Leave a Comment

Market View: Still Skeptical

June 25, 2008 11:10 PM

The market is a mixed bag here. We have the March lows on the Dow not far below. On the other hand I simply do not like the recent lows in the SP. I want a strong confirmation of a rejection of a low to have any confidence here, and we do not have that as I see it. We “could” go up and we ” could” go far lower. But as my readers know, I do not like to guess and hope.