Sunday, November 27, 2011

European Collapse on the Way?

Hope you all have been well these past few weeks, been going through a rough patch with this foot injury and grades not so stellar, so the trading has been limited but they all have been not so good. Let’s review what has brought us to this point:

Last time I posted on here, we were looking at 1,260 on the SPX. Basically what we have seen from the lows on October 3rd 1,068 ish to the highs around 1,290 on October 27th is a short covering rally. I marked below 1,140 a key level to watch. Since August when the selloff began, we have breached it 5 different times, the first two on a large volume down day then bounce back up. The third we closed below for 2 days, the fourth, same story and the fifth time we saw the shot down breach of 1,100 then shot up. We traded below 1,140 for 3 trading days. My gut tells me that there will probably be some sell stops under 1,140, but if we can sustain more than 3 closes under 1,140, there is more downside to come. I mentioned at the beginning of last week on Twitter we would be 1,150 end of week. Intraday Friday ES low was 1147.5. Last week was the worst for Thanksgiving in over 60 years.

Above S&P 500, key level 1,140

As far as Europe, the situation there is not getting any better and something tells me that the Euro will be gone soon, if not by the end of the year. Italian yields are out of control, Spain and Portugal are both getting there and Germany cannot support the EU by itself. The European Union will not print more, leading to an all-out debt crisis that would affect not only EU countries, but whoever bought their debt. More haircuts anyone? Doubt it.

Spain and Italy now have to pay more to borrow in two years than a decade. Spain’s 2 and 10yr spread have been cut in half in a month. How much more borrowing can continue? As of now, Italian 3yr notes are above 8%.

I am still long-term bearish because after the EU satiation gets resolved (will it ever) our debt problem is next. Like playing a game of ping-pong, though when the ball is in the air, (unknown) buy the market; seems to be the theses we are following. We will probably end the year lower.

Trades I have made in the last 3 weeks have not been so good. My first was Delta Petroleum on November 11th. I had a buy trigger set for .58 at an open of .71. If it did happen to fall that much (which it surprisingly fell to .52) I owned at .58; I got out at .54 for a small loss, since then it has flat-lined around .56, was looking for a short-covering bounce, but missed it by a day.

Above $DPTR on the buy+sell

I made another losing trade (could have been much more) on CVR Energy. WTI spiked to $103 2 weeks ago and the refiners got slammed hard on the contracting Brent/WTI spread which at one point was just above $9 dollars (Was $25+ at the height). I bought and sold the next day for a 20 dollar loss. So far, down 45 bucks. It was good to get out there seeing as it traded below $17 briefly.

Above $CVI

Last trade I had to make to support my 4th, which was my American Airlines sell. I bot $AMR at $1.9 on the initial slam back on October 3rd. Did not have the brains to pull the trigger on the 13th when it could have been $100 profit. Sold out at $1.80 for a $30 loss. As of now, it is trading below 1.60, so it was good to get out now. Company looks dead, losing $$ due to pensions to retired employees and low profits from high fuel costs.

Above $AMR

My last trade of the week was right after the $AMR sell. I bought $FTWR at .30, so far I have been flat this one, dipped below there to .28 and above to .38 which was the end of day ramp on Friday I missed due to being at the gym lol. Looking for another possible week in this name before I pull the trigger, it is a small amount compared to other trades I have recently made. The reason for the huge selloff from the 1.00-.80 range was a 40% cut in their workforce and a missed interest payment on 9.00% convertible senior Secured notes due in 2012, resignation of directors, continued delay in 10Q filing and continued issues concerning listing on NASDAQ exchange.

Above $FTWR

Going to be very limited trading this week, back into work mode for me for the next 2.5 weeks then semester is over, can’t believe it. I’m eyeballing one name though if I can get it for a good price. Talbots surprised me last week trading below $2 for the 1st time since 2009 lows. Below are some stats on the company for a potential trade; looking for possibly under $1.8 before the report comes out Thursday.

That's all this week guys, catch me on twitter @peter_eller10 I'll let you all know if I do any other trades.

No comments:

Post a Comment