The last days I’ve been staring with disbelief at the  market indices (like the DAX, FTSE in European market index and Dow, S&P in the US)  seeing that they’ve been climbing up 100+ points  even with the raging problem in Greece and Italy where the Euro region is struggling with their debt issues and leadership changes thrown in.    I mean it is just so laughable to be buying anything amidst the uncertainty.  However,  the markets still rose “celebrating” the resignation of  Italian PM etc, then there is the  fact that my “covered call” is rising in value when I wanted it to go down so I can buy it back cheaper is no laughing matter.  I have $378 “floating loss” as of yesterday on that covered call.

Last Friday, I was in two minds of whether putting a trade to buy back the call or put a new trade, seeing a confirmation for a move up,  however, I was measuring the risk and the 3R reward potential is just not there looking at the charts  (support and resistance levels) and with Greek drama still  unfolding, so in my mind, it was not worth the risk.  I did squirm when the price still went up higher 100+ points the next day and the next.

Nevertheless, I believe the Big Picture and market type will lead to a downward move in the market in a few days, and  I am looking for an opportunity where  I can do another trade with  a 3R reward.  I said, if the stock finish higher than 13.50 I will put in a short position (to ride the move down) which has 3R profit potential.

Anyway, this morning, as the US Market ended nearly 4% at 389 points, apparently, Italy will not get  the same rescue as what Greek is getting (er, hope to get) — and again, I am laughing, in relief this time for my covered call. Read on the market results here.

Today (at least) the real picture is mirrored in the market.  This EU debt issue is not yet finished and it will continue to move the market sideways.  Enjoy the slide!

Ouch! Covered Call has risen in price

Covered Call at less than selling price

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I’ve written in “Market Fashions” post that there is a “new trend” in the global economy and consequently affecting the financial markets —  “the transfer of wealth”.    Where before, Western countries are the models of advancement in health, technology, business efficiency,  and many areas of achievement, in the here and now, it is getting common to “research” the success of Asian economies,  most notably, China.

Just look at the world-wide conversation (controversy?)  stirred up by the article  “Why Chinese Mothers Are Superior” in the Wall Street Journal”  — on the book “Battle Hymn of the Tiger Mother”  about raising certifiably A-grade children. (Author Amy Chua’s parents are both Chinese who first emigrated to the Philippines, then to the US, where Amy was born and brought up).

Anything with a whiff of the “The Asian Way” gets snatched up… (maybe I should add that  in my book title hehehe)

Anyway,  weeks of distressing news about Europe and US (paling in comparison to EU at the moment)  has definitely ushered in the new Supermodels.  Where Asia is growing causing rise of  prices of goods (inflation),  European countries  is teetering in default (this means governments not being able to pay its debts and if that happens, no body would lend to them, and no money to pay government workers etc).   Europe’s  is in fact, asking China for money. 

So I guess it’s official.  China and its neighbors  like Indonesia and South Korea are the new Supermodels.

That is such a big change in so short number of years (I mean you know, from centuries of Western dominance).

Read about “Why the West is losing out to the rest”

http://edition.cnn.com/2011/11/03/opinion/ferguson-west-economic-decline/index.html?iref=obnetwork#

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Last week I told you about my very (ehem) impressive 800% or 8R Trade.  How would you like to learn from a 100R Trader?   That’s if  I risked $1 and got $8 back, he risked $1 and $100 back… or a  phenomenal 10,000%  return (count the zeros carefully!)   Meet Ken Long – the  ‘100R Trader’.   I had a short and sweet workshop with him in New Zealand (the only time he had been to do a workshop this side of the Pacific), and certainly looking forward to attend his Core Systems workshop in the near future!

Check out the interview with Ken Long by R.J.  Hixson from Van Tharp Institute  here .

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I’m not sure you know this but my  “day job” is in IT –  Information Technology.   Despite what I’ve been writing about here which is the subject of money and wealth, girlie adventures in  shopping, fashion and shoes, I do have a  nerdy side,  analyzing and solving problems to do with business systems and data.   Say you have a problem with your phone bill or credit card bill, I help the person who help sort out your problems.  (Well,  if all else fails, I pass the buck to someone else hehehe).

So with great interest, I read an article about Bill Gates and Steve Jobs  (featured in and Harvard Business Review), which reminded me why I started my career in this field in the first place, and  alongside it, why I have a trading business which helps to EXPAND what I can do in my life.    The article talks about the recently departed Steve Jobs and Bill Gates  “the titans of tech”.   We all heaped praises on Steve Jobs,   which is well-deserved for creating beautiful products for our modern life.  However, Bill Gates, becoming less and less talked about should really be the one we should idolize – the article says.    (Gates left his company in 2006 to turn to the work of eradicating malaria and poverty).     Gates sent a note out one time to the Harvard community —

“I hope you will reflect on what you’ve done with your talent and energy. I hope you will judge yourselves not on your professional accomplishments alone, but also on how well you work to address the world’s deepest inequities, on how well you treat people a world away who have nothing in common with you but their humanity.”

Don’t you feel inspired doing what you do, to help others,  to live life to the fullest?

(article : http://www.businessweek.com/management/idolize-bill-gates-not-steve-jobs-11012011.html )

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Lazy Beach - Boracay, Philippines photo by Fr. Noel Azupardo

Want to learn to trade?  Let’s go to the beach!   Trading is like being one with nature, following the rhythm of the waves.  Last week there was a big surge in the markets, coming from build-up in positivity about European debt.  I took 800%  profit in one of my trades (7.5c became 60c), however, there was a position that was also in danger (my Covered Call — I sold a call at 85c  that went to 1.22c).   But then I thought, after the “party” over the EU deal, as what had happened before in the markets, there is usually a pullback, some say due to profit-taking, or further scrutiny over whether the deal is actually going to work!   Anyway, I told myself to stay calm, follow the plan.

Now the tide is turning.  Market is flat the next day after the 340 points surge.  Now, we have stocks falling as much as 150 points — why?  The EU deal required banks to take a 50% writedown – this means Greece used to owe them $100, they are “forgiven”  the $50 so that means those who they owe money to are going to lose money.   And for one particular company, MF Global  are going bankrupt.

US Market will definitely lead Australian market — and monitor my STOFY7 to buyback at cheaper price.

Today I will be watching the market with great pleasure …. er, guilty pleasure.

Read about my original trade on the covered call here.

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Here’s the statement sent by my broker for the “legendary” 800% Profit trade for STOJQ7.  You would note that the fees are not factored in for that trade.  In real life, I spent nearly 10c to get in and out of the trade,  37.11 to open and 37.11 to close, so a total of  74.22.  Herein lies the challenge.   My total fees – 9.27c is bigger than my “position size” which is 7.5c per trade.    Now I feel a little sheepish  hehehe   To be fair  (to me hehehe) I really just wanted to hedge / protect my other position (Covered Call) which is 600 shares.

It’s kind of like the song —   “Don’t you wish your girlfriend is hot like me?”  — “Don’t you”.  Yes, I wish I could have done better in this trade!

1.  I wish I had gotten more shares / contracts – to lower my cost per trade.

2. I wish I had only spent 5c  rather than 7.5c — I was actually in a hurry that Friday, and I thought I’d get in as fast as I can, but if I had controlled myself and focused more, I could have gotten it for 5c.

With a 5c per share trade and 2000 shares = my total cost would be 100 for the shares and 37.11 to open, which is still within my position sizing!   So, profits would be, $ 1110 paycheck for the same time and effort!

Oh well,,,, next time!  Here’s the liquidation advice. Look  Ma, no tricks!

STOJQ7 Liquidation

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FRIDAY –  US rallied  340 points following  EU Debt deal, however, Australian market already rallied on the “DEAL” reached yesterday. So today, there might be celebration rally in the morning followed by profit-taking. Or not.

UPSIDE

1. volatility breakout – jump of  83 points yesterday  could usher in more buyers

2. momentum is there

DOWNSIDE

– already had  the rally on the Deal yesterday, could lead to profit taking

– details of the deal and analysis could follow on the next days leading to pullback

ACTION PLAN

– wait out what the market will do or pullback and buyback STOFY7

– Hedge on the upside risk with increased ratio

NOTE TO SELF : Calm down

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Lunchtime update:

I checked the market when it opened and saw that STO did touch 13.50 but went down steadily thereafter.

As of lunchtime, the share price is down by -25.  So I’m cool with my Covered Call option – I’m all smiles of course and will just monitor this as usual.  This stock tends to go down end of the week.  So I’m keeping cool.

After all, it’s Friday. Enjoy your weekend!

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Earlier, I said, today is like a “holiday” since the ASX had a technical glitch.   Tried not to get too anxious — (because today is the expiration day of my STOJQ7 option, and with the strong  lead from Wall Street, and as the night wore on in Europe, they’ve announced “the deal of a lifetime of  $1.4 Trillion rescue package) you can say I am a little bit excited about the market today).   I did get to spend the morning playing in the park, had a chat with my sister on the phone and lunched with my son over spaghetti.

Then I saw the  ASX update that by 2pm, it’s showtime.  The drama unfolds. I knew  there would be a mad rush, I got in 20minutes after opening. I tried to close my trade at what I thought was a “great” profit of 45c,  since my 3R profit target is 32.5c.  Wonder of wonders,  the share still kept moving up so I was feverishly amending my order.  Up to 50cents, 52, 55… I was expecting for the orders to get executed as the share price kept moving up, and actually overtook my price.  Sitting there glued for 20 minutes, I began to wonder what is happening to the orders that didn’t seem to get reflected in the market.  I called up the broker, was on queue for 15 minutes when finally I got to speak to a Customer Service Representative and  learned that there was a flood of  amendments which has to be processed manually, so it seems, my order never got picked up (since I kept amending it too) or is still sitting under the mountain of amendments.  I was advised to cancel the existing order and put a new one to kind of jump the queue  hehehe.

With peace in my heart, I went to get my daughter from school at the end of our street.   All I can think of  and  prayed was to get the order completed.  After a good 20 minutes  when I got back home, I checked that my order didn’t seem to have been placed so I just  placed another order for the buyer’s price which was around 60cents.

Opened with Initial Risk (1R)  of   7.5 cents

Closing with 60.5 cents

= .605 / .075

= 8.06R

STO gained 83cents so I didn’t get the “fullest” profit, but, this, I think, is my highest profit by % or  (R-Multiple) I ever got from trading in the last  9 years!  I guess, from here on it will be a good idea to tell you what I am trading (pressured to follow my own advise hehehe). Check the performance monitoring and liquidation advice in this other post.

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Houston we have a problem. Or make that, Australia, we have a problem.  The Australian Securities Exchange (ASX), the heart of the whole financial market in Australia suffered some sort of cardiac arrest it seems.  I was out in the park with the little ones and was checking the online broker with my smartphone but I didn’t get any price reported back.   I thought it might just be a temporary halt in the trading for STO when they have news coming out to the market —  which kept me on my toes because it could potentially move  the market strongly.

Found that the whole Australian All Ordinaries Index is flat lining too.  Then I saw the updagte  “The equity market has been halted due to a technical issue with the ASX Trade system this morning. ASX is currently investigating and will seek to resolve the issue as soon as possible. Further updates will be provided as information becomes available.”

Couldn’t do anything but wish that it gets sorted before the market closes at 4pm!    My STOJQ7 options are supposed to expire today, and not sure about the effect on those series with this kind of technical problem.  I wish they’d extend the life of that option to tomorrow — although nobody can tell what the market reaction will be.  hehehe  Better check what it says, thought this could be treated like a “holiday” –when  nobody cares whatever is happening elsewhere.

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