Thursday, July 28, 2005

Bought PD August 105 cal @ 4.30

PD has been acting very well after that huge runup. Was thinking between PD, X and NUE. Chose PD because it fell down to support, as opposed to X and NUE which rose up to resistance.

Sold KBH August 80 call @ 3.80

Took advantage of a low volume gap up to sell it. Housing stocks look toppy at this point, esp. with insiders unloading as fast as they can. I would feel extremely nervous if I held onto this stock for any longer.

Wednesday, July 27, 2005

New link added

I have just added a new link to my list, and I want to invite you to check out the blog at:

This is an excellent blog and I check it almost every day. The author of this blog posts and analyzes high probability picks.

Tuesday, July 26, 2005

Bought KBH August 80 call @ 3.00

Hit the bottom trendline and bounced heavily off it.

Monday, July 25, 2005

Sold CCO August 56 Call @ 4.20

CCO double topped, and breaking out into new highs will be difficult without a pullback to test its strength.

Sold AAPL August 42.5 call @ 2.30

Which is essentially breakeven, because breakout failed to materialize.

Saturday, July 23, 2005

Expedia starts trading

Based on this chart, and based on my past experience with a new spinoff (norbord), I think Expedia is an excellent buy at this level, and it will probably move to about 29 over the next few days.

Report Card: June 2005 (Since June 18)

Stock/Option Quantity Price Paid Price Sold Profit/Loss
AAPL Jul 40 Put 10 2.50 3.00 415.89 US
KBH Jul 70 Call 8 4.70 7.00 1744.98 US
TOTAL --- --- --- 2593.04 CDN

*Note: The US/CDN conversion rate is 1.20
**Note: Profit/Loss includes all commissions paid

Bought August 42.5 AAPL Call @ 2.2

I really like the way Apple has been performing. Even when the markets went down, Apple managed to hold support and creep up slowly. Right now, it seems poised to break the ascending traingle because of its high relative strength. Plus, I think the markets are still bullish at this point, and we will probably see higher prices.

Sold August 85 DNA @ 4.00

Sold it at a loss. Looking back, buying DNA was a huge mistake. The reason was because when I bought it, my emotions affected my logical thinking because of my recent string of successes. Even at the time when I bought it, I knew it only had about a 50% chance of breaking into new highs over the next few days. 50% is not good enough, because to be a successful trader, you should aim for a 80% success rate.

Being able to control your emotions is very important for a trader. What this means is that you should avoid the high and low emotional states regardless of how your stocks are performing. If you feel emotional during the time you make the trade, you should walk away until you have control over yourself again.

Thursday, July 21, 2005

China revalues currency

With the revaluation of the Yuan today, I have become extremely bullish on gold and in commodoties in general. Without the support from the Yuan, the US dollar will have nothing to hold itself back from falling. The trade and budget deficits will now become more significant, and it should cause the US dollar to plunge. Because of this, I feel gold is ready to explode to the upside, possibly above $500 in the near future.

I also like the Canadian dollar a lot. I think, 5 years from now, the Canadian dollar will be worth more than the US dollar. Mark my words on it.

Wednesday, July 20, 2005

Bought August 85 DNA Call @ 5.3

I have to admit that Genetech (DNA) is very overvalued. The only reason why they have been such a strong performer is because they have 4 cancer drugs that are currently in development (I think). These four drugs are supposed to be the best in the business, and will therefore bring them lots of revenues.

I believe the current price already more than compensates for the future revenues. And it doesn't even take into account all the risks (ie. FDA not approving). Therefore, I do not understand why the stock price for DNA is so high.

However, the market loves this stock, and based on the market action, it seems like DNA will go a lot higher. That's why I bought it, because, if the market likes it, the stock will defy all logic and go up.

Cameco hits all time high!

Cameco by far has been my biggest money maker. I love this stock.

Sold August 100 PD Call @ 7.70

What a roller coaster ride! These options actually fell below 3.00 before making a surge to 7.70 (and beyond?) Wow. I'm so glad I didn't panic and sell it while PD was falling. But PD looks pretty toppy at this point. It may rise more, but I'm satisfied with the profits.

Tuesday, July 19, 2005

GOOG a good short going into earnings?

Google reports earnings on Thursday, July 21. Yahoo reported earnings today, and they disappointed the street with their outlook. As a result, Yahoo plummeted in after hours trading. Personally, I think Yahoo's outlook was quite good, but it didn't meet the hype that was pumped into the stock.

Google has been pumped even more than Yahoo. And last quarter, Yahoo actually gained market share. Did they gain market share against Google? If they did, there is very little chance that GOOG will please investors with their earnings report, because the street is expecting something beyond spectacular.

I think Google might be a good short going into earnings. I am contemplating about buying PUT options.

Bought August 56 CCO Call @ 3.75

The momentum is back, and I can feel that the entire uranium sector will explode upwards.

Monday, July 18, 2005

Wrote a covered call on FDG.UN (August 120) @ 3.55

With the Ontario teacher's pension fund set to lower their overall holding on fording coal from 27% to 5%, there is a good chance that they will supress the price for some time. Therefore, I see fording coal trading in a range of 100-120 Canadian until the situation is cleared up.

Sold GLG @ 19.75

Gold has been super disappointing, so I am quite happy to part with this stock.

Sunday, July 17, 2005

Watch List

Note: All the targets listed below are short term targets

Best Buys (BBY): Buy target - 76, Sell target - 80
Sociedad Qufmica y Minera de Chile (SQM): Buy target - 105, Sell target - 115
Toll Brothers (TOL): Buy target - 55, Sell target - 61
D.R. Horton (DHI): Buy target - 40, Sell target - 45
Kos Pharmaceuticals (KOSP): Buy target - 72, Sell target - 79
Pharmaceutical Product (PPDI): Buy target - 58, Sell target - 62

Wednesday, July 13, 2005

Bought August 100 PD Call @ 4.5

Reason why I bought it was because it broke the triangle in the middle of the day. If this pattern follows through, it should hit its target of 105.

Sold August 54 CCO Call @ 4.5

I'm betting that Cameco will go into the ascending triangle pattern for a while. The reason is because the american version of Cameco (CCJ), hit the top trendline. This was followed by massive selling.

Monday, July 11, 2005

Bought August 54 CCO Call @ 2.80

Everytime Cameco drops, it usually presents an opportunity to buy. One thing I've noticed during my 3+ years of experience is that stocks follow thier own patterns. For Cameco, if it drops for more than 3 days straight, it usually rallies. I don't think this situation is any different.

Sunday, July 10, 2005

Watch List

Cameco (CCO): Target buy: 54, Target sell: 60
Phelps Dodge (PD): Target buy: 97, Target sell: 110
Nasdaq: Target buy: ? Target sell: 2200
Chicago Mercentile Exchange (CME): Target buy: 275, Target sell: 330
Genetech (DNA): Target buy: 81, Target sell: 90
Whole Foods (WFMI): Target buy: 120, Target sell: 135

Friday, July 08, 2005

Sold August 40 APPL Put @ 3.10

Sold it at a loss. Everytime there is a terrorist attack, investors buy the markets up to "show up" the terrorists. I should have taken this as a hint and sold it yesterday morning at a profit. But overall, I was pretty satisfied with this trade even though it was a loss, because I thought I made a rational decision when I exited (usually, I make irrational decisions when I sell at a loss, and that costs me a lot more).

I'll comment on the markets over the weekend.

Thursday, July 07, 2005

Bought FDG.UN @ 115.5

Bought it as a long term investment. I want to hold this stock for a long time, because of its high dividend and because of its excellent growth potential. Also, this stock gives me the flexibility of writing covered calls, if I think the stock may trade in a range.

Wednesday, July 06, 2005

Bought August 40 AAPL Put @ 3.50

Apple has become my favorite shorting stock.

Sold July 52 CCO @ 6.00

Although I still like this stock long term, I think it has peaked in the short term as it hit its top trendline. The pattern it is making now is very similar to the pattern it made in January, just before it shot up 50% in a month. I will be looking to re-enter.

Tuesday, July 05, 2005

Sold Aeroplan at 11.82

The reason why I sold it is because I find this trust very expensive. With just 400 M in revenues, 100 M in profits with little or no growth, I do not see why the market values it at over 2 billion dollars. Although it has a 7% dividend, 7% annually is still below historical standards. I would rather buy something with more upside.

Fording Coal

After my GLG gets called out (about 2 months ago, I wrote a July 20 covered call on GLG when it was trading at 18.68), I will be looking for a replacement "long term" investment.

Fording coal (fdg.un) catches my eye, because of its high dividend (>9%), its market strength and its good potential for growth. The coal mined by Fording is used to create steel, meaning Fording is a play on the steel market.

I am a strong believer in commodities, given that China and India are growing at astounding rates. Recently, commodities have gone through a consolidation, which is a resting period. However, I believe commodities are ready to start booming again.

Steel demand has been really strong over the past 2 years, and I think this demand will continue to increase. However, steel prices have softened recently, mainly because of China's claim to open more steel producing plants. That's the reason why I don't like steel (anymore), because the supply is not constrained. Also, even if steel prices rise, it doesn't mean the profits will rise, because the cost of buying the base materials (iron and coal) will rise as well.

Therefore, if you were planning to play the steel market, coal would be a better choice than steel.

Random Thoughts: The American Markets

One of the key reasons why the American markets are not going down is because of foreign investments. Billions of dollars from foreign countries pours into America each week. Despite this, American stocks still have a hard time getting off the ground.

I find this situation very alarming, because as foreign investors gain control of the stock market, they start to gain control of America. The reason for this is because America will have to please these countries, because if they don't, the foreign countries could instantaneously destroy the American economy simply by pulling money out.

On another note, the average American has more debt than cash. This is a very precarious situation, because if anything goes wrong (such as the housing bubble popping), many Americans will lose a lot of money and will be unable to pay off their debt. As a result, they will be forced to liquidate whatever they have, causing all the different types of markets to crash and sending America into a recession.

For these reasons, I find it very difficult to invest in American stocks, and I haven't even mentioned the fact that interest rates are rising, that the American stocks are overvalued compared to historical standards and that America has very unsustanable trade and budget deficits.

That's why I have a hard time finding long term investments right now, and I will continue to trade the markets. I prefer going long instead of going short, but if the opportunity arises, I would love to short the American markets.

Random Thoughts: Cameco/Uranium

One of the keys to successful investing is to buy and hold strong stocks in strong sectors. The main characteristic of strong stocks is that they go up regardless of whether the market goes up or down. The reason why they do this is because they are so solid fundamentally, their story is so compelling and their future is so bright that they find excuses to go up. One example of a strong stock is Cameco. If you know the story behind uranium, you will absolutely fall in love with this stock.

Which brings me to another point. Last week, some analyst from Citibank said uranium will trade in a range between 20-30 dollars over the next few years. Right now, uranium is at $29/pound. I don't really understand the argument behind this analysis, because the demand for uranium is far greater than the supply, even when new mines come into production. As long as the demand is larger than the supply, uranium will go up. Just look at crude oil.

Which brings me to a question: Why did the Citibank analyst say that uranium will trade between 20 and 30 dollars, even though all signs points towards the sky? It could be 1 of 2 reasons: (1) The analyst wants the public to sell, so Citibank could buy, or (2) The analyst, and the public in general, are still overwhelmingly bearish on uranium even though everything is in place for it to move higher. Whatever the reason is, it means uranium is still in the very early stages of its bull market, as it is still disliked/unknown to the public.