Thursday, May 7, 2009

Hedge Idea of the Week, May 11-15 (a) (CYN)




If TM sells off hard tomorrow, it's NOT on next week's ideas.

Ya know, it's really really hard to find a long for next week. Geez, I went through all my tickers (which is about 250 of em). Looked at who is reporting earnings next week, etc etc. I have a few, but I need to do some more homework, and I will put the best couple to me up this weekend. So for now, I just have 1 short and 1 conditional. (no long hedge yet)


CYN short: There is no need to "always" look for BAC and C. I mean there are "other" banks out there to trade. If you enjoy the MM jerkin and Washington puppet master over and over and over. CYN is not a tarp baby, it is not in in Govt Relief Index. (yes the govt relief index lol)

http://finance.yahoo.com/q/cp?s=%5EQGRI&alpha=C

I recall seeing CYN in a pretty good amount of headlines, mentioned at times along w/ bac, c, etc...bad assets, etc, etc. (what that means to trading it, nothing much)

I don't know this to be "exactly certain", as there is no meter for these kind of things. But in a nutshell, to me...CYN is not that healthy, but was juuuuuuust healthy enough to avoid becoming a "Tarp baby". Well that's my view. So this one pretty much avoids more of the govt gyrations more than some of the others, and the chart is very pretty to me.
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1st target: 38.50 (bottom of channel support)
2nd target: 33.00 (origination of channel)
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I would like to see this one gap up tommorow hopefully, and plan to enter tommorow (if it starts out green in the AM) as an early entry for next week.

WFMI (short-if)

This thing is almost comical. I almost was tempted to call it as a LONG going "into" it's earnings on May 13th as well, b/c of the short float. But not this one, short float + earnings up coming is a very strong trend, but no way I could trade this one long here. I mean when you look at the chart you will see. This is one of THE best performing stocks in the the ENTIRE market for 2009! I remember watching this one in 2008, I seriously thought it was going under. About 3 weeks ago, I went inside one to pick up a couple things, it was like a ghost town. (this was a weekend afternoon too). I think it's sickly overvalued, and should be trading 15pts less than this.

That opinion is just my opinion, and does not make it a short. It makes me "look" for an entry to short it, but that's about all.

This stock has 19% short right now, with 7.6 days to cover. 19%!!! And this is like "The stock of the year for 2009!" right?

This set up though is not common. I mean usually you see stocks that are either:

A) TM...no one is short, "everyone is bullish" and the stock has been in a serious uptrend, so much so it's probably TOO MANY people long.
-or-
B) MGM....everyone is is short, "everyone is bearish", and the stock is down so much YTD, that the hedge funds do not mind a few short squeezes, b/c they are still up 40% ytd

This one is silly, b/c its very short heavy, yet it's like one of the BEST performing stocks out there for 2009.

What does this "look" like to me. It looks like that the short float must be thinking "it will fall eventually, we are not worried about this short term loss we are taking, it will fail". As this is not typical, but surely stubborn lol. Yet it also does give me added conviction too, that "yes it will fall from these levels". The key, is timing.

At any rate, the play on WFMI is only a conditional, so it might never even present. But the best risk/reward is "if" A, then B. If that never comes that kindly, oh well...it's a pass.

If it happens to get a massive squeeze UP going here very soon, it's a short immediately AFTER that is out of it's system. (this would be like at least 2-3X avg volume with a huge pop in 1 day). Or a strong parabolic run up INTO earnings. One can play the RSI wedge developed on the daily chart. But this one is hilarious, and it's definitely a bubble to watch.
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So yea, the "ideal" set up would be an "so-so earnings", then a 15% pop in the A/H on monster volume, from nervous shorts capitulating, then the next day it's a swing short on the gap up.
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Unsure to call a target, b/c i don't know the entry price yet. But I think if that played out like such, it would be good for 10%.

4 comments:

  1. Any thoughts on hitting LVS short?

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  2. Do you still like cyn short after today? I picked up some june puts so not worried about timing but volume bothers me. Thanks for the awesome blog Erik

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  3. Anon,

    I like CYN 4.92% better short after today. :o)

    I like it ALOT for all of next week...

    The options volume is light, it's pretty much front month ran only for volume wise.

    It is not as "sexy" as bac,c...in trading attraction to some, but that is also why I like it even more.

    The June's will start to show some volume, as soon as the May's expire.

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  4. Anon,

    CYN traded 150 June 35 today.
    When the may's expire (this week) the Volume on the June's will jump immediatly after.

    Hope they are treating you well...

    ReplyDelete