Scuba Diving, Snowboarding, and Daytrading. Life is Good!

Well pythagoruz is taking some time for vacation and I just got back from mine, so I'll put up a couple of trade ideas, and hopefully we'll get a few ideas in the comments section too.

I'm all cash at the moment and looking for a couple of small positions, taking note of the fact that options expiry is this Friday. Looking at the upcoming earnings, I see KO reporting Wednesday and as the stock is trading off its highs I am tempted to go long this one. KO is one company that benefited from the weakening of the US dollar in 4th quarter of 2007. I'm also impressed by last weeks strength in PEP, on similar reasoning.

Analysts from various firms are dueling it out with upgrades and downgrades on beverage sector stocks, but I prefer short term trades for good reason, and never mind the long term.

I'm looking to buy the KO Feb $57.50 call, probably some time early Tuesday.

I see the housing stocks popped while I was gone. Emergency rate cuts can do that of course, but the recent earnings reports in that sector still supports the bear position. As positions go though, it's a crowded short. Covering of short positions probably explains much of the recent move in stocks like MDC.

The MDC Sept08 $35 put priced at $3.20/$3.50 has caught my eye. There is plenty of time for bad news to develop in the housing sector between now and then. But as I don't see a catalyst for a downside move in the near future, I'm keeping my powder dry for now.

That's one long, one short from me. So what are you trading, or looking at? Let's hear your ideas in the comments section, and maybe we'll see you in our daily chat.

Update: I bought the Feb KO $60 calls at the open, on good results from CCE.

All Short Here

In our daily chat sessions I sometimes often give Pythagoruz the gears about his bearish tendencies. As a matter of fact a couple of times recently I have actually traded directly against him, although with a different time-frame in mind. In my opinion this is all a part of how the markets work. It keeps our chat lively and no disrespect is ever intended. The truth is, we work quite well together.

Now having said that, I'm having fun reading his most recent post on Mixed Indicators. That post makes the writer in me cringe, because it lacks focus. That lack of focus makes the trader in me cringe, because there is no evident trade in that post. I must add my 2 euro-cents worth.

Today was a strong day for the Dow, and IBM led the way. That warms my heart, because it goes back to a conversation that Pythagoruz and I have had a couple of times, concerning the value of the dollar and export earnings. At one time he was concerned that the falling value of the dollar would hurt corporate earnings, and therefore stock valuations (silly bear...).

Companies that can export their products often see dramatic bottom line profits on the fall of their home currency. My example to Pythagoruz was KO, but IBM as a hardware and software and servicing company also clearly fits the example. They proved it today, and they carried the Dow today.

Tomorrow will be another day, and I suspect it will be a very different day. For starters, Citigroup will announce their earnings tomorrow, before the bell. The rumors are all over the place with that company, and nobody really knows what the bottom line is going to be. But it's well known that Citigroup is overly exposed to the SubPrime Lending problem and if I were a new CEO, such as they now have, I would be tempted to write off everything I could, so that nothing could come back to haunt me. This is the so-called "kitchen sink quarter" for the Citigroup.

Throw it all out, including the kitchen sink!

In this case, the kitchen sink will probably be the dividend. Bank stocks trade in direct comparison to their dividend rates because if the dividend is low, investors will deposit (with insurance guarantees) their capital instead. Most American banks these days are in need of capital, so cutting dividends will conserve capital and perversely, attract deposits.

So where's the trade? Today I bought a small position of C Jan $30 puts, symbol CMF. But I also bought a few DIA Jan $126 puts, symbol DAWMV because I think that C will lead the Dow down tomorrow, just as IBM led the Dow higher today.

I also have a few out-of-the-money January IWM puts, just in case that index happens to lead the way. It often does lately, as somebody in chat pointed out. In other words, I'm all short here....

So, who's the silly bear now?

There is a chat room

The people who write these blog posts are all members of a real-time chat group who meet during the trading day. The chat room is generally by invitation, but for the 24th, after the market hours we'll have an open house chat. We'll have the trivia-bot up and running too. Everyone is welcome, but be advised, trouble makers won't last long.

We're on the IRC system, or Internet Relay Chat, using the Othernet. The room name is #postoftheday. That should be enough information for many of you to find us. The URL is; irc://othernet.org/postoftheday.

For those of you not familiar with the IRC, you'll need a bit of software in order to connect with us. The most common program is mIRC and can be downloaded from http://www.mirc.com/get.html. Once you've installed that you can find your way to us by going to Tools/Options/Connect/Servers, and select "random othernet server" from the list of servers. Connection time can take up to a minute, but once connected type in "/join #postoftheday", and you're there!

Firefox users can use the Chatzilla add-on. With that installed you'll have to issue the command "/attach othernet.org", and again once connected to the othernet type in "/join #postoftheday".

I hope to see you there.