Video Summary: The Limits of Power (2 of 3)

Bacevich The Limits of Power 2 of 3

Market Outlook and Today's Action

Stopped out of SIGM today w/ a 3 percent trailing stop, and held onto OPXS for a little bit of a loss. The market went lower, and possibly broke down through its most recent up-trend. Once it breaks down through a key level at 885, we'll have confirmation of a better chance of a downturn:

SIGM stopped out, and then jumped back up. It's down 2.5% in after hours:

OXPS is about to get killed. It has not confirmed itself as a good breakout. I'm up, and don't have much more tolerance for downside (especially in this market right now):

In summary, the Market looks like its about to fall over. These stocks probably won't do well if that happens. I'm just holding one small, profitable position, and will probably be getting out of it soon. No need to trade until the market shows its true colors.

Daily Stock Checkup

The S&P 500 is still in an upward channel. It's important to note, that there has not been a secondary down-trend for some time. I predict the S&P re-touches the recent previous high around 935, and then has a correction. 200 DMA is close overhead as well. We don't have much, if any, time:

OXPS - Hit strong supply after a strong move up today, and gave up most of the gains. This is OK, but unacceptable if it goes below the lower range of its flag:

SIGM has met supply as well, but isn't acting out of the ordinary for a triangle breakout:

The Limits of Power: Video

The Limits of Power (1 of 3)

Hammy Trade: OPLK

In at 11.42 on the bull flag. Check image for technical pattern info:

Another 2.8 move will put us at 14.22. If we look at it percentage wise, a 32% move up would put us at 15.04. Chart resistance is at levels shown:

UPDATE 5/19: Sold out of this because it was never really a "breakout". It certainly is a potential future breakout, but I'd rather wait for confirmation before holding it for another full swing down then up.

Hamy Trade: THQI

Awesome bull flag setup. 3% above buy point, confirming strength with price and volume:

"Mets - Look at RC's PPT blog post with a target. Also, refer to the rule of thumb about flag patterns: "the explosion in price then practically duplicates the original price movement of the “mast” formation." RC puts a target around 6.75, and the rule of thumb would duplicate the move from 3.86 to 5.19, a $1.33 move, to a breakout target of 6.58 "

Here's why i'm going to sell THQI at 6.45:

UPDATE 5/19: SOLD at 6.16. I think this has some room to run, but I don't have a real idea of what to expect for the overall market. I got cold feet and decided to walk away with 8.5%

Hammy Trade: SIGM

SIGM showed its volume in a run-up by the end of the day. It showed a solid triangle break-out formation, with volume confirmation.

UPDATE 5/21: Got in at 14.54, out at 15.56.

Why I sold: the market is getting a little dicey. I wasn't going to be watching the screen for a while, and decided to put a 3% stop on the stock as an insurance policy. later today i might get back, check it out, and reevaluate.

Possible trade set-ups

Some Triangles, and some bull flags. My goal this week is to make one disciplined, well thought out trade.

These are some prospects:

FLAGS:

"Usually forms after a rapid and fairly extensive advance which produces a nearly verticle, or at least quite steep price track on the charts. On such moves, volume normally shows a progressive increase until it reaches a high rate. Eventually profit-taking halts the markup. Then follows a series of minor fluctuations, sloping down somewhat, with volume shrinking markedly. and constantly as the pattern develops. The pattern might go on for five days, or three weeks. The explosion in price then practically duplicates the original price movement of the "mast" formation."

Wait until the example is clear - a nearly vertical, almost unbelievable rise, followed by several days of congestion with practically no volume.

Triangles:

Letter between me and one of my plebes

Sir...Hope everything is going well for you and that you're having fun in the Marines. I can't believe you have been in for a year.

I just wanted to let you know that I'm going to be

bringing the SPEED and INTENSITY come next year because I'm 1st semester Training Sergeant. It's going to be quite strange being a 2/C and if you have any tips about training and what to keep in mind/how it compares to the"real" miliary, I would be very appreciative.

Thanks and talk to you later.

Wells Hamilton

Today at 3:59am

Dear Elle,



Thanks for checking in! Everything has been going very well. I'm almost a year out of the Naval Academy and I'm still waiting around to start flight school. TBS was excellent training, and I'm excited to begin flying whenever they have a spot for me (mid-august is the estimate right now).



WIll you be in Texas anytime soon? I'm on PTAD at UT in Austin, probably until the end of June or so. Perhaps even longer, if they need me.



The "Speed & Intensity" was direction taken from MCDP-1, a Marine Corps publication called "Warfighting". I found it in Nimitz Hall when I was training you guys and decided it had some good stuff to teach during the "grey" time of plebe summer. I later learned that it is foundational to modern Marine Corps tactics, which is referred to as "maneuver warfare."



I also remember reading "Message to Garcia" by Elbert Hubbard to you plebes during the summer time. That was a lesson we were supposed to teach you. In case they forget that this summer, I'd recommend that book for some training. Also, remember myself and Rob Epstein reading you passages from "Starship Troopers"? A few of you guys fell asleep those days. The author, Robert Heinlen, was a Naval Academy grad before WW I and wrote many books. Check that out and take some lessons to pass on to your plebes.



Looking back, I feel as though my experience as a second class was a lesson of trial and error. As a youngster going into my second-class year, I was critical of the leniency of the class of '07 and '06 toward my plebes ('09) and I decided that I'd certainly give my plebes some of the hard time I found beneficial from my firsties, the class of '05.



Choosing to be "hard" on plebes can be a great thing under certain conditions, but destructive under a few misconceptions. The misconception is that being a hard trainer is, in itself, good for their development as officers. The benefit of hard training comes from the confidence they'll gain and the camaraderie which they'll grow into through training.



I considered "easy" second class as simply lazy. Since they didn't rate hard, or ask many questions, I figured they didn't care. This mindset was true to an extent, but became a source of arrogance on my part as a second class. I certainly cared about my plebes and challenged them to become better midshipmen, but my pride and ignorance took me to rate and punish them beyond their benefit. I'm sure you could ask anyone of your soon-to-be Firsties if this was so and they'll agree with me.



Compared to the upperclass who do nothing, the fact is, it's easy to swing to the opposite, and equally irrational side of the spectrum, into being too demanding and challenging. Both sides are equally reprehensible. In the middle ground is the leader who loves his or her plebes and puts in the effort to help them become better people.



First of all, I was "mean". This doesn't equate to irrational abusiveness to plebes, but merely being an asshole. The only real benefit that kind of "leadership" gives is to teach people to learn to deal with asshole leaders. I really doubt that even the sensitive, weak-hearted people who join the military really benefit from experience with assholes. Rather, it is unrelenting insistence on meeting standards, a quality found in few leaders, that actually creates results in their people. You can be encouraging while being unrelenting. Consider your plebes as babies who haven't learned how to walk yet, or have just begun to take a few steps. Would a loving mother berate or abandon her baby for stumbling after trying a few steps? Each of your plebes will have a goal and reason for being at the Naval Academy. Appeal to that goal in them as you show them the correct way to do things. As they're falling short of the standard, make sure they know and acknowledge they're wrong as you correct them. If they don't have a higher purpose and standard they're trying to obtain, they've been failed by their leadership, or they are mistakenly in the wrong place. The latter is a very small minority.



Think about the few things that stand out about the leaders you've had and respected over your *lifetime*, not just at the Naval Academy. You're training plebes to be leaders, not just good, idealistic midshipmen. They need to be taught real skills for leading people. They need to be taught that life will give them NOTHING that they have not earned, even if they've made it to the sparkling Naval Academy (which, by the way, gives literally NO ADDITIONAL BENEFIT WHATSOEVER towards being a good Marine Officer). It is THEIR responsibility, not the Naval Academy's, to develop themselves into leaders and officers.



You're going to have to get up early and miss time with friends because you'll be at blue & gold. Don't let them ever see you look tired or worn out. Let them see a smile on your face when you can, and a look of concern otherwise. Your disappointment will be their greatest fear, because their ultimate goal will be to live up to the standard you set for them. Set it high enough to challenge and transform them, but realistic enough that they can reach it.



Last of all, you have to know yourself. Don't try to fool anyone. Be the leader God made you to be, and strive for THAT fullest potential.



Semper Fidelis



Wells

Non-linear Reading Experiment: 1st Book Finished

The notes took much longer than I thought they would. It got easier toward the end to take notes, since my PTML was much better as time went on. I think this is definitely a skill to work on, and something that will get better and easier with time.

Definitely learned a ton from this book, and I have a much better memory of the main details from reading it in this method.

Next on my list is "What's so great about America." That should be a little lighter and easier to read.

The Limits of Power - Full Notes

Notes, Quotes, and Synopsis of Andrew Bacevich’s

The Limits of Power

by J. Wells Hamilton

One sentence summary:

Background information:Bacevich is a retired army Colonel and a current instructor at Boston University. This book is a part of “The American Empire Project”, an effort by authors such as Noam Chomsky to expose the de-facto empire instated around the world by the United States. Bacevich has published books and articles for at least the last ten years on foreign policy and diplomacy.

Notes & Framework:

Economic & Cultural Crisis

The “pursuit of happiness” has become for Americans a personal quest to acquire, consume, to indulge, and to shed whatever constraints might interfere with those endeavors. Efforts to satisfy this consumer demand on a national level have driven the U.S. to a condition of profound dependency. Ultimately, this self-gratification threatens the wellbeing of the United States. (16)

o      American success has depended on expansion and abundance since its inception.

o      From expansion came abundance. From abundance comes substantive freedom. (22)

§       “Not the Constitution, but free land and an abundance of natural resources open to a fit people” makes American democracy possible. (23)

o      The “tradition of freedom” is a farce. Once the US faced a limit on its resources (land, natural resources) did it begin to exert itself in order to “liberate” others. (19)

o      The additional freedom created in the 1960s is a result of our emergence from WW2 as the most powerful and rich nation on Earth. More power abroad meant greater abundance at home, which paved the way for greater freedom—gay rights, racial equality, etc.

o      Economic success once enhanced and supported military success. Now, it is our military that is being used to keep our economy on life support.

o      The shift occurred after the Vietnam War. The costs of the war destabilized the economy. (29)

§       We can see evidence of this in resulting devaluation of the dollar and suspension of its convertibility to gold. (29)

§       This is also evident in increased reliance on imports – goods and resources. Also, the ’73 Oil Shock. (30)

o      Americans were faced with a fateful choice: live within their means or start using military force to perpetuate expansion and in turn, abundance. They chose the latter. Addressing the nation, Carter proposed Americans to conserve, and to get off foreign oil. (35) Carter’s message failed, and Reagan took his place.

o      Reagan gave moral sanction to the empire of consumption.

§       Drove for more power, more prosperity. “Don’t cut back, fight back”. “We must decide that ‘less’ is not enough.”(37) The Middle East suddenly starts becoming an important region for U.S. economic wellbeing.

§       Government grew under Reagan by 5 percent. Reagan demanded an invulnerable US, and established the mind-set that military power can assure the essential American lifestyle of gaudy excess.

§       The US ceased to be a creditor nation. Federal and individual citizen’s budgets slid into debt.

o      The Persian Gulf- The spend-without-limit peacefully ended the cold war, but was also the reason the US got embroiled in the Persian Gulf. Reagan put in efforts to secure US domination over the gulf in order to prevent recurrence of the oil shocks of ’73 and ’79. (49)

§       Military presence is in the Persian Gulf to maintain the flow of oil, mitigating the implications of American energy dependence.

§       Operation Desert Storm was a derivative of Reagan’s policy, and really only led to new complications. One is a permanent, problematic US military presence.

·       Few Americans stood up against the military presence, the bombing, and the sanctions.

·       Rumsfeld echoes Reagan: “We have two choices. Either we change the way we live, or we must change the way they live. We choose the latter.”

·       Bush added a twisted moral base to it our presence there. We were now “fighting evil.”

§       American lifestyle didn’t change during the wars.

·       Personal savings rate continued to plummet.

·       “Americans subscribed to a limited-liability version of patriotism, one that emphasized the display of bumper stickers in preference to shouldering a rucksack.” (63)

o      Conclusion: Iraq came apart at the seams due to a generation of profligacy that had produced strategic insolvency.

o      U.S. was running out of soldiers and funds.

o      Americans have been complicit so long about the use of their country that they’ve lost command of its destiny. (65)

o      The reciprocal relationship between expansionism, abundance, and freedom—each reinforcing the other—no longer exists.

o      Rather than confront this reality, Americans since the early 80s have attempted to wish reality away.

Political Crisis:

False ideas on security and freedom lead to a swelling bureaucracy, and confidence misplaced with untrustworthy “wise men”. These problems have led to the Iraq and Afghan wars.

o      Successive “emergencies” have swelled federal power and responsibility beyond the scope ever intended by the framers, and beyond usefulness to the nation.

o      The Tradition of Freedom is a Myth -“Spreading Freedom” is an ideology that mainly serves to legitimize the exercise of executive power.

§       It in inconsistent- US does nothing in many enslaved countries. “Nothing in this ideology mandates action in support of the ideals it celebrates.” (77)

§       Conviction follows self-interest. This ideology has become hard-wired into the American psyche. It persists not because of its truth, but because it serves the interests of those who created the national security state. (81)

§       This has been used to excuse large military build-ups, government action, and foreign policy.

o      The U.S. is plagued with a secret, bloated, and ineffective national security apparatus.

o      “Secret” not because its really a matter of national security, but more to hide institutional incompetence and poor performance. The cloak of secrecy helps top brass evade all responsibility. The private on the ground who loses a rifle is punished more than a general who loses a war.

o      Institutions are ineffective because of ineptitude and/or disagreement with the president. Example: CIA in the Bay of Pigs – hapless schemes were promoted by the CIA. Joint Chiefs of Staff didn’t offer much help, convincing Kennedy that they were either stupid or untrustworthy. (91)

o      Higher-ups are not rewarded for candid thought but for political pandering. Second-guessing superiors is not allowed.

o      Tommy Franks to Bush: “Sir, I think exactly what my secretary thinks, what he’s ever thought, whatever he will ever think, or whatever he thought he might think.” (99)

o      Tommy Franks acted as the Bush Administration’s compliant enabler, allowing to country to proceed with impaling itself on Iraq.

o      George Tenet of the CIA told the president exactly what he wanted to hear.

o      Conclusion: we ought to consider dismantling an apparatus that demonstrably serves no useful purpose.

o      Wise Men– The president has come to rely upon a small circle of advisors rather than on a leaky, obstreperous bureaucracy. These men have been seduced by the idea that military and economic power will bring security.

o      Why wise men at all?– Presidents believe wise men are more likely to make good decisions. Shielded from the public, wise men can be relied upon for their candor instead of political, masses-influenced advice.

o      Why wise men aren’t a good thing

§       Example: Forrestal - constantly urged prompt action to forestall disaster. He succumbed to the “garrison” mentality, that military power is the optimum method of resolving international issues.

§       Paul Nitze – Facing Soviet atom bomb and Chinese communists, he faced three options: isolationism, preventative war, or “a more rapid build-up”. The third was chosen, and thus a permanent militarizationof US policy and economy was in effect.

§       Paul Wolfowitz – His phrase: “The risks of inaction outweigh the risks of action.” This man’s action led to the gulf war, and the “anticipatory self-defense” IE preventative war.

o      Conclusion– The security of power tempted Forrestal, Nitze, and Wolfowitz. In turn, it enshrined preventative war as core US policy after 9/11. The Iraq war is the result of all their work, along with the ideology of national security. Iraq teaches us the following lessons:

o      The ideology of national security poses an insurmountable obstacle to sound policy.

o      Americans can’t afford a government that doesn’t work.

o      Wise men have repeatedly misconstrued and exaggerated threats, with perverse effects. (123)

The Military Crisis:

America’s military has come up short in both Afghanistan and Iraq. They failed to eliminate the leadership of Al Qaeda and the Taliban movement, and did not provide the quick war expected in Iraq. Why didn’t things go as expected? We believed three false illusions about the US military. We’ve derived the wrong lessons from Iraq.

·       False Illusions. Estimates of U.S. military capabilities have been wildly overstated. The global war on terror illustrates this point.

1)     The illusion that the U.S. had succeeded in reinventing armed conflict through technology that allows precise, surgical application of extreme force. This illusion led the U.S. to believe it could take the easy way out of targeting a regime, instead of a nation, with full spectrum dominance. Reality: The last twenty years shows that US forces only win decisively if the enemy fights on American terms.

2)     The illusion that civilian and military leaders had a common set of principles for application of said dominant force. Namely, we’d fight only when vital interests are at stake and there are clear, attainable objectives. Reality: The restraint learned in Vietnam did not survive the 90s.

3)     The illusion that Americans could be counted on to “support our troops.” Reality: 9/11 reaffirmed the popular preference for hiring someone else’s kid to chase terrorists.

4)     Conclusion: The gap between what Bush called America’s soldiers to do and what they actually could do defines the military crisis experienced today.

·       The lessons currently drawn from America’s post-9/11 experience are the wrong ones. They seek to reconfigure the armed forces to fight “small wars”, to give more power to the generals, and to reconnect soldiering to citizenship:

o      Small Wars

§       First wrong “lesson”: Sustained presence will now be the norm. Frequent, protracted, and perpetual presence is reality now. Hard Power and soft power will merge. The officer corps now sees more Iraqs and Afghanistan in the future. Pursuit of global dominance needs both advanced weaponry AND boots on the ground.The facts are:

§       Small Wars always have an imperial context.

§       It is a fallacy that the present foretells the future. This is true from Vietnam, Desert Storm, and probably for GWOT.

§       Solution: Why not pursue more realistic and affordable objectives, abandoning plans to “liberate” the Islamic world, and then configure US forces accordingly? We need to devise a non-imperial foreign policy.

o      Giving Power back to the Generals. Second wrong “lesson” is: that civilian meddling back in Washington is the problem, not military performance. We need to tilt balance back to the generals and untie the hands of senior commanders. The facts are:

§       Franks’ American Soldier makes it quite clear that General Franks was in complete control of US involvement in Iraq and Afghanistan, from start to finish.

§       Civilian meddling wasn’t a problem because Franks wouldn’t allow civilians to meddle. Unless American Soldier is a lie, the Wise Men like Rumsfeld aren’t to blame.

§       The quality of American generalship since the end of the cold war has seldom risen above mediocre. It has been consistently disappointing. Civilian meddling, however objectionable, cannot fully explain the disappointing results achieved by U.S. forces since the cold war ended.

·       Desert Storm – Schwarzkopf left the Repulican Guard standing and the cease-fire he made assured Saddam’s continued power. (148)

·       Somalia – Commanders ignored basic principles of security, and the requirement for unity of command. (148)

·       Operation Allied Force – Wesley Clark made idle threats, and Milosevik called his bluffs. His concept of “using fores, not force” didn’t work. (149)

o      Why The Draft is a bad, unrealistic Idea. Third wrong “lesson” is: There is a poor relationship between army and society in America. People are removed from the conduct of war. People have little say in its use. Reliance on professional soldiers eviscerates the concept of civic duty. We ought to reinstate the draft, to get people out of the mall and into the streets. It would restore the governmental system of checks and balances. The facts are:     

§       A large draftee army is unaffordable. To train, equip, and sustain a military twice as large would cost much more money. (153)

§       The military doesn’t want draftees. Generals and admirals view citizen-soldiers as more trouble than they’re worth. (153)

§       Being against the draft is the easiest stance to take politically. (154)

§       Parents, realistically, will not support this. They are not going to put their kids in danger to support some political ideal. (154)

§       The law would be unenforceable.

§       To anyone with a conscience, sending soldiers back to Iraq or Afghanistan for multiple tours while the rest of the country chills out can hardly seem an acceptable arrangement. It is unfair, unjust, and morally corrosive.(155)

·       The Right Lessons from the wars. What is the point of using this superb army of ours if the result is Iraq and Afghanistan? Why has post-cold-war military supremacy not enhanced security, but produced the prospect of open-ended conflict?

1)     The Nature of War is fixed: Any notion that innovative techniques and new technologies will subject war to definitive human direction is simply whimsical.

§       The IED and homemade bombs proves that no matter what your amount of technology, war’s nature is fixed as ugly and grindingly tough.

§       The pentagon had believed that technologically enhanced speed yielding both operational and political certainty was a formula for ultimate success. The IED ruined this view.

§       The IED had strategic as well as tactical implications. The US could not attend to other looming threats while tied down to IED-equipped insurgents.

2)     The Utility of Force Remains finite:

§       Whether the US has been attempting to liberate or dominate, events in Iraq and Afghanistan suggest that the effort is not working. (161)

§       After four years, Iraqi electrical generation still met barely half of the nation’s requirements. Oil production still has not returned to pre-invasion levels. Fraud, waste, etc are rapant.

§       Afghan drug trade is appalling. (162)

§       Conclusion: As a problem solver, war leaves much to be desired. (162)

3)     The Folly of Preventative War

§       Bush thought that 9/11 discredited the cold war concepts of containment and deterrence. The result, preventative war, failed both normatively and pragmatically.

§       So long as war has not broken out, we still have the possibility of avoiding it.

§       A military operation expected to demonstrate the efficacy of preventative war accomplished just the reverse. WMDs proved to be non-existent.

§       Conclusion: Preemptive war is irrational. The country should conform to the Just War tradition.

4)     Military officers confuse Strategy with Operations

§       Tommy Franks’ template for victory did not even remotely approximate a strategy. It paid no attention to the aftermath. It had no moral dimension.

§       This naivete leads generals and civilians to assume that quick battlefied victories will make everything else fall into place.

·       Conclusion on the Military Crisis: Events have exposed as illusory American pretensions to having mastered war.

o      Even more money, technology, or smart leadership will not change the fact that war is out of our control.

o      US military performance has been unimpressive.

o      America doesn’t need a bigger army. It needs a smaller and more modest foreign policy, that assigns soldiers missions that are consistent with their capabilities.

Conclusion: We must acknowledge the limits of American power. We must accept our limits and work within them.

• United States will cease to lead the west if it abuses the privileges of leadership.



• An open-ended global war is not a strategy. We should instead pursue a strategy of containment. The goal of containment could be to prevent the sponsors of radical Islam from extending their influence.



• We must allow the inadequacies of Islamic extremism to manifest itself.



• Reduce dependency on fossil fuels.



• Abolishing nuclear weapons should be an urgent national security policy.



• 
  
  
  
  • They are unusable.
  
  
  
  • They do not play a legitimate role in international politics.
  
  
  
  



• People for whom freedom has become synonymous with consumption and self-actualization will have to sacrifice.

End Synopsis

Key Terms & Concepts

·       Ideology of national security

·       Niebuhr

·       National Security & state, and the apparatus thereof

o      The "system"

o      Unweildy

o      build-up of institutions

• President choice of who to rely upon



• Civil-military mistrust



• Members of the national security elite

o      Presidential reliance upon them

• Soviet union

o      Containment

o      Nuclear weapons

• Nitze doctrine



• NSC 68



• Wise Men



• Paul Wolfowitz



• Forrestal



• The Bush doctrine



• Weinberger-Powell doctrine



• “Doctrine of the Big Enchillada”



• Volunteer military and draft



• Small wars



• Douglas Feith



• Office of Special Planning



• Degrading quality of generalship after the cold war.



• Great illusions



• Donald Rumsfeld



• Tommy Franks



• Nature of War



• IEDs



• Afghanistan



• Preemptive war



• Tommy Franks’ American Soldier



• Performance & size of the military



• Freedom, abundance, and dependence.

Hammy Trade: FSIN

Need to research this position a little more.

UPDATE: out at 7.07

I put down an arbitrary stop before leaving the house, and behold- it stopped out at a low open then jumped back up.

I would like to get back into this stock, as it's set to run up, but I'm tired of chasing stocks right now. It feels like I'm chasing my own tail.

No.. some money is going to sit on the sidelines for now. I'm going to cool the jets for the time being.

Update: FSIN about a week later:

The lesson learned on triangle breakouts is to allow them to move back down to their previous uptrend. Don't get jerked around by volatility. If need be, scale back a little bit.

Hammy Trade: PLLL

Bought PLLL at 2.21. It's currently at 2.08, down 6%:

It's not a horrible pattern, but also just not a great one. It's just about failed, and I'll probably sell soon for a 8% loss.

Update: Out at 2.05 due to stopping out.

Update 5/18:

I don't really think this was ever a "triangle pattern." Also, notice the price action around the 100 DMA

Hammy Trade: ELN

ELN: in at 7.31

Insert pictures here.

Sloppy chart work driven by impatience. This is pretty disappointing.

Update: OUT at 6.67. The stock got stopped out, but the pattern is broken, anyway:

Hammy Trade: NFP

NFP had a nice triangle, breakout, and bull flag. Trying to anticipate the break-out, I chomped on the bait:

Dumbass moves:

1) Didn't wait for an actual breakout.

2) Didn't put in a stop.

Now, had I actually done a little bit of journalling and planning with this stock, I might have realized that I should have put a safety net in place. My impatience and greed got the best of me, and I'm out big time on this stock. I got in @ 9.13, and out at 6.95 for about -35%.

Alpha Quote

"It may be stating the obvious, but it doesn’t pay to be a super smart bear in a dumb, stupid garbagio stock rally."

Hammy Trade: ABK

This is another penny-stock breakout, pointed out by Chart Addict.

Again, I would classify this as a "price breakout", one that busts up through prior highs after some consolidation. This also might be considered a bull flag, based on the recent run-up. I expect it to repeat the last move.

I will sell for a loss at 3% below the breakout point (breakout-1.56, -3% - 1.513)

I will sell for a gain at 1.70. I would like to be out, regardless, at the end of the day.

UPDATE: sold at 1.54 at the end of day. This is classified as a "dumbass" trade.

Hammy Trade: SPRD

Bought SPRD at 1.919...

This is a little bit extended from the breakout point around 1.80, but still not a bad intra-day trade. This is a pure breakout play on a penny stock, and I don't intend to hold it too long:

My assumption is that we're seeing another typical penny stock breakout. This will be proven wrong if the stock goes down below the break-out price.

I will sell for a loss at that point. I will sell for profit at a 7% gain.

UPDATE:

Sold at 1.93 at end of day. This was a pretty stupid trade, now that I think about it.

Second Trip to Texas

Vodcast Entry:

http://www.youtube.com/watch?v=qcOm2IuNZ0I

Hammy Trade: SDS

bought at 58.09 on 5/7/09

This is dangerous, I know. However, it's a small position and I'm using it as a slight hedge for the time being. I'm just really not sure what's happening in the market right now, but believe we'll see a little bit of a correction:

This is a leveraged Moving Average buy. The index moved down through the 20 and 50 (10 minute) moving averages. I'm holding this as a hedge in case the market makes a major move down, and my other two positions break down. I haven't made money on this type of trade in the past, and I don't think I'm doing much differently, so it's probably a stupid trade. I'll get back to this later.

Update: sold at 59.37 on 5/7/09

Why I sold: It hit the day high. SPY hit a low. I didn't want to hold SDS for more than intraday, and I had no conviction that we'd see move either way. Since I held a profit, I decided to get out. Minor success (1.85%) on a small move, but not bad for an intraday play.

Why NXG still looks good

update here

Blogging money made

I made $10 in april from blogging revenue on ibankcoin.com

WNR Ascending Triangle

WNR still looking good

If the market bursts up again after some consolidation, this might just break out:

Intraday Chart Comments

Some comments on intra-day activity.

Notable: The flat-bottom action in CPE and DELL. The flat period signifies either complete inaction in equilibrium, or continuous selling met with a large limit buy order. Which one will win? It looks like in DELL, the buyers won, exhausting supply (though on light volume). In CPE, however, the results are yet to be seen. Hopefully it takes the DELL route.

Hammy Trade: CPE

Bought 475 CPE at 2.00.

The limit order was for 750, but it only executed for 475. The rest might come in, or it might not. Here's the chart:

It made about a 60% price move from the base of the last consolidation to the base of this triangle. I see price action going up another 60 percent to about 3.20. Significant supply at 2.40 and 3.50

My assumptions are that CPE just broke out of a bullish triangle/flag continuation pattern and will repeat its prior price movement. This assumption will be proven wrong if it breaks down below the ascending triangle line, currently at about 1.78

UPDATE: Sold at 2.46. Here's the chart and reasoning why:

To measure price implications of triangles, from the text book:

“Draw from the Top of the first rally that initiated the pattern (in other words, from its upper left-hand corner) a line parallel to the Bottom boundary. This line will slope up away from the pattern to the right.Prices may be expected to climb until they reach this line. Also, as a rule, they will climb, following their breakout from the pattern, at about the same angle or rate as characterized their trend prior to their entering the pattern. “

Hammy Trade: NXG

Bought 1000 NXG at 1.52:

This is a decent ascending triangle break-out and a commodity play.

My assumption is that NXG just broke out of a bullish ascending triangle. It made about a 90% up move prior to forming the continuation pattern. I expect it to repeat the move, with a price target of around 3.03. Areas of resistance will be around 1.65, 1.81, and 2.85.

My assumptions will be proven wrong if the stock breaks down below the ascending trend line. Currently this is at about 1.41.

UPDATE 5/7/09:

Chart Addict just sold his NXG, claiming exhaustion. I think he's wrong, at least according to my price-target metrics. I'll hold until it breaks down.

UPDATE 5/12/09:

NXG is still looking pretty good to me!

Considering Buys

unbelievable picks by Chart Addict and Ragin' Cajun

CPE triangle Breakout:

i put in a limit order to buy on a pullback @ 1.98. Might have executed by now. Decent triangle formation after a run-up. Also, jumped up off 20 day MA

JASO channel breakout:

NXG Gold play. Nice consolidation and breakout of triangle:

Update: put in limit orders for JASO and CPE on pullbacks after the start run-up. CPE @ 2.00, JASO at 3.71.

Update: bought 1000 NXG at 152

moving averages

from here.

The MA’s for the long-term are the 200-day (primary) and the 100-day (secondary). The intermediate-term MA is the 50-day. Short-term MA’s are the 15 and 20-day, and the most important for swing trading.

The most ideal situation is when the 15 and 20-day both provide underlying support. What’s even better is if the 50 and 100-day MA’s also provide underlying support. Right now, in the majority of stocks, the 200-day acts as an initial price target for exit. The 200-day MA is the strongest MA out of the ones mentioned. It defines the long-term trend.

The MA’s also gets rid of headaches and panic attacks. If you know where one of these significant MA’s are located, then you know there will be a bounce, at a minimum (in most cases). Conversely, if a stock is approaching a major MA, you know there will likely be a pullback or failure. Besides price, volume, and the basic chart patterns, I’ve relied primarily on the moving averages to make my trading decisions. I let the MA’s make the call. Stop panicking and impulse trading for no good reason. Let the charts make the decision for you.

hammy PT

the last 2 weeks I've done the P90X weight sessions on schedule, and substituted the yoga, plyometrics, and kenpo with running and sprint/hill work.

non-linear reading experiment: Day 6

Today I did the first section of note-taking from Bacevich's The Limits of Power. It definitely went slow, and it took a while to get to a point where I was able to start building a framework of arguments which accurately reflect those of the book. I spent an hour, and made about one page of notes, getting through 30 pages. I'm hoping this speeds up; I need to get better at figuring out what's important and what's not. As I get better in the second read-through, my note-taking will be made easier as well.

So far, so good!