The Times I Almost Lost a Finger

I think last night Friday night blog was the most viewed of all time! Thanks to all for stopping in.

The Times I Almost Lost a Finger
Back when I was 20 I had to have all four of my wisdom teeth out. I was always getting sore throats and they got infected, it was nasty. They put me under for the procedure so I don't remember much, but the pain afterwards was terrible. The dentist prescribed the pain killer percocet for me and the day after I was glad to take one. It was great.

I had this piece of crap Hyundai Excel and the oil pan had been leaking. I had a new gasket ready so I figured I would change it. Two days after the dentist and armed with another percocet I went ahead with the job. There were about 12 bolts around the oil pan, it looked just like this one:

Two of the bolts were really stuck. I was giving it my all on the first one when it finally gave way. When it did my right hand smashed into the underside of the car, hard. It didn't really hurt. I saw a bit of blood but I figured if it did not hurt, what's the big deal? I just didn't care really, due to the pills. Just no feeling at all. The second bolt gave way very quickly, it must have known how serious I was. The whole thing took about two hours and I was glad when it was not leaking after I changed the oil.

I went inside to wash up, my hands were a oily mess. As I was washing them I turned my right hand up and looked.

My middle knuckle of my right hand index finger was almost totally exposed.

I sort of had a panic attack. I will not gross you out with all the details, but lets say seeing your knuckle work under the skin is not recommended. I did the best I could to disinfect it and get the flap of skin to go back in place. I went to the doctor but he was not willing to stitch it up due to how much time had passed, and he was concerned about infection. He said to me if it got infected, it would be deep and would be "an issue". I was terrified.

Long story short, it healed up well with no issues except a really bad scar. I also have never taken any pain killers of any sorts since then. Alcohol does not count!

The second time I almost lost a finger was not in the literal sense, but a trading sense. It happened last April.

I had been doing very well since the new year started when I began really trading shorter term again. Gains were good and things were going well. I got caught leaning very long when the Fukushima Disaster happened and that trimmed gains quite a bit. Later March and into April were not good times as my ideas and picks hit a cold streak. I was going on vacation the last week in April and I was in a state of not really caring. I had almost no positions and was re-thinking the whole thing.

All year I had been in and out of the stock KCG (Knight Capital Group). They had earnings coming up on April 20 and I had a gut feeling they were going to have good numbers after all the volatility of the spring. I was going to grab a usual sized spot the Monday before the 20th, but at that point even if my idea panned out (this was not chart based at all) what was the upside? I was in a state of ambivalence. To this day I cannot believe what I did.

I put 60% of my trading account in KCG before earnings.

And again, I was ambivalent. If it worked I would get ahead again. If it did not then I would take a break for a while after losing a finger on a trade. I did not even write about it (I mentioned a gamble way after) because I knew how stupid it was. Yes, your level headed, patient writer had a moment of crazy. It happens.

Long story short, KCG looked like it would collapse into earnings on Tuesday (yikes) but came out with a good report Wednesday and I cashed out for 6% gain. Not huge, but with that position size it was a big winner compared to usual 5%-8% part of account.

I went on vacation and I have been executing all my trades with the utmost discipline since that one trade. Looking at how the summer into fall went, maybe my lapse was a good thing because sticking to sound fundamental trading has saved my behind during the doldrums of credit crisis part 10 or which ever part we are on now.

I had not really thought about this again until I read this post by author BCLund:
Avoiding The Suicide Trade At All Costs
All three rules he went over brought the whole episode back into my mind. I won't do that ever again.

Have a good night.

Running Room

I am probably taking Friday off to De-Hurricane my yard. Total mess. At least the Comcast cable is back on though.

Running Room
You may or not know but it was a true FACE-RIPPER rally today. Last night I was thinking all the ingredients where in place; low volume this week due to power outages and the coming vacation weekend, a market that has been sold very hard for some time, and a new short interest high for the NYSE. Perfect set up for a real squeeze higher.

Here is my clumsy graph for the S&P 500 after today (click for larger):

Please note:
-I have been stressing a close OVER 1180 would get me more interested in the market as a buy
-1200 is another important level
-Market is above both now
The volume today was about as bad as it gets, but you cannot have everything. If trading was easy we would all be rich. And bored.

So is it all honey and sugar from here on? Do markets crash again? How would I know, I just work here!

Seriously, what I think we have now is the best long trade environment in some time. What makes it so good? The trades are backed by some key levels and the exits are clear as can be. All the "bottoms" and all the "important candles" of the last month or so never had everything working for them. Now they do.

I have been on the sidelines for a while because the market did not support my trading style. I cannot be on top of things all day long, I have to work. With a bit of support now and clear areas that signal trouble, stop losses might even be in place again! Amazing! For weeks if you were playing a spot a stop loss or cover was sure to get you executed during the wild swings that have been happening. Consider that if the general market can trend to the marked area of S&P 500 1250-1260, or even if it starts to roll over again:
-There is support at 1200 now
-Cut all trades at 1180, no wishful holding
Simplified trading. No emotion, just numbers. Like chips in poker.

I would point you to my "Go To" guy for these things, Mr. ChessNwine. Back on August 17th I noted a great post by Chess which set out the following scenario going forward:

"..one scenario that I am seriously considering is that we actually start to roll over for a few days and see shorts scramble into those bear flags proving true. At that point, we make a higher low on the S&P and then stabilize and turn higher. Since the market will usually do that which frustrates the majority, I think this scenario will frustrate those who have committed substantial capital looking for a market bottom as well as those bears looking for confirmation of bear flags in order to short. Here is what it would look like.."

I did not include the chart, but now I have secured permission, here it is:

That's messed up! That's why you need to read this guy. Thanks Chess.

To sum up, this is a supportive environment right now for long trades. The best in a while. Discipline on the last few drops really broke down, but now is a good time to make some moves but be ready to stick to your targets. Both to the upside AND downside.

I am so behind, and would like to do some screening tonight so that is all.

Added: Not all! Check out the only thing worth seeing from last night's MTV's VMA award show. Adele with "Someone Like You":

Wow!

Have a good night.