livinincali
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Post by livinincali on Feb 8, 2011 19:20:11 GMT -5
Looks like there's potential for a major breakout in treasury yields (i.e. long TBT) that we should keep an eye on. If this materializes it has the potential of creating major issues for the housing market and the US government's ever increasing deficits. Might want to keep an eye on this. There have been some thoughts that if the fed really is controlling action in the market that they may decide to try to tank the market to get people back into bonds and lower the yields. I don't have a whole lot of faith in conspiracy theories but there is something to be said if the fed loses control of the bond yields. Probably nothing to worry about in the short term but it's an interesting development from a technical basis.
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rovo
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Post by rovo on Feb 8, 2011 19:35:52 GMT -5
re: Long Term Bond Yields
Significantly higher yields could cause a problem but is 4.7ish% a realistic return for 20+ years? I don't think it is. Short term yields are not important in my opinion as money from all over the world is being parked in the short term bonds for safety.
Even at the current lofty equity prices many solid stocks are paying 3+% dividends with the high probability of stock price appreciation to boot. If I ran the treasury I would be selling 20 and 30 year bonds at 4.7% out the wazoo in order to lock in these low rates for an extended period of time.
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Post by yclept on Feb 8, 2011 20:35:01 GMT -5
I've been well compensated by TBT since my earlier buys (10/15/10, and 12/13/10). The 10/15/10 buy was sparked in part by the cross of the 5 sma over the 50 (the 5 had crossed the 15 a few days earlier). Encouraged by the early results I doubled the position after the brief fall-back in December.
Daily Treasury Yield Curve Rates Date 1 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 01/03/11 0.11 0.15 0.19 0.29 0.61 1.03 2.02 2.74 3.36 4.18 4.39 01/04/11 0.12 0.14 0.19 0.28 0.63 1.04 2.01 2.72 3.36 4.21 4.44 01/05/11 0.13 0.14 0.19 0.31 0.71 1.16 2.14 2.86 3.50 4.34 4.55 01/06/11 0.13 0.15 0.18 0.30 0.68 1.11 2.09 2.80 3.44 4.31 4.53 01/07/11 0.13 0.14 0.18 0.29 0.60 1.02 1.96 2.69 3.34 4.25 4.48 01/10/11 0.14 0.15 0.18 0.29 0.59 0.99 1.93 2.65 3.32 4.23 4.47 01/11/11 0.15 0.15 0.19 0.28 0.60 1.03 1.98 2.70 3.37 4.26 4.49 01/12/11 0.15 0.15 0.18 0.26 0.61 1.03 1.99 2.71 3.40 4.28 4.52 01/13/11 0.15 0.15 0.18 0.26 0.59 1.00 1.93 2.65 3.34 4.24 4.50 01/14/11 0.14 0.15 0.18 0.27 0.59 1.00 1.95 2.66 3.35 4.27 4.53 01/18/11 0.15 0.16 0.19 0.26 0.60 1.00 1.97 2.70 3.39 4.31 4.56 01/19/11 0.16 0.16 0.19 0.27 0.60 0.98 1.95 2.69 3.37 4.27 4.53 01/20/11 0.15 0.16 0.19 0.27 0.65 1.07 2.06 2.81 3.47 4.36 4.60 01/21/11 0.15 0.16 0.19 0.27 0.63 1.05 2.04 2.77 3.44 4.33 4.57 01/24/11 0.15 0.16 0.18 0.28 0.65 1.05 2.03 2.76 3.43 4.31 4.55 01/25/11 0.15 0.16 0.18 0.27 0.62 1.00 1.96 2.68 3.35 4.23 4.48 01/26/11 0.15 0.16 0.18 0.27 0.62 1.05 2.03 2.76 3.45 4.34 4.59 01/27/11 0.13 0.15 0.17 0.25 0.59 1.00 1.98 2.75 3.42 4.31 4.57 01/28/11 0.13 0.15 0.15 0.24 0.54 0.96 1.92 2.66 3.36 4.26 4.53 01/31/11 0.15 0.15 0.17 0.26 0.58 0.98 1.95 2.71 3.42 4.33 4.58 02/01/11 0.16 0.15 0.18 0.27 0.61 1.04 2.02 2.79 3.48 4.37 4.62 02/02/11 0.15 0.16 0.18 0.28 0.67 1.12 2.10 2.84 3.52 4.39 4.64 02/03/11 0.14 0.14 0.18 0.29 0.71 1.19 2.18 2.92 3.58 4.43 4.67 02/04/11 0.13 0.15 0.18 0.31 0.77 1.25 2.27 3.01 3.68 4.51 4.73 02/07/11 0.13 0.16 0.18 0.31 0.78 1.28 2.29 3.03 3.68 4.50 4.71 02/08/11 0.14 0.15 0.18 0.31 0.86 1.40 2.39 3.12 3.75 4.56 4.76
As I see it, the direction is right (rate increasing almost daily) and the return on treasuries is still much too low. I don't see the return being even equal to the real inflation rate. With inflation only now beginning to build up a head of steam, I should probably buy more, but am caught in the eggs/basket conundrum. Both above buys were multiple positions. It now represents 15% of my invested portfolio (10% of total port), which is about all I can stomach. I reckon I'm in the position of the tom cat who had a wild night with the lady skunk, where he might not have gotten all he wanted, but he got about as much as he could stand.
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Post by yclept on Feb 8, 2011 20:47:30 GMT -5
One other note. I see inflation rates as lying flat on the floor. You can't fall off the floor. I think they have only one way to go over the long term.
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rovo
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Post by rovo on Feb 8, 2011 22:01:33 GMT -5
It has been a while since I listed the current holdings in the portfolio so here is the current list by value within the port.
F, Cash, HI, TBT, MSFT, WHX, GLL, SIRI, PSTR.
In addition to the above there are also some Call options in the port but the value is very low, basically in the noise.
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IPAfan
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Post by IPAfan on Feb 9, 2011 0:18:02 GMT -5
I'll list my main holdings (there might be a few positions worth only a couple hundred at most that I don't mention and aren't worth selling).
TTT, ENH, FRFHF.PK, BUD, JNJ, LUK, BAM, VSTOW.OB, MO, PM, CHCG.OB.
The vast majority of my investments are in TTT, ENH, and FRFHF.PK.
EDIT:
Oops, should have put KHDHF in there near the top of the list. Either before or after BUD, not sure without looking.
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livinincali
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Post by livinincali on Feb 9, 2011 10:53:22 GMT -5
4.7% isn't that bad of a rate by itself. I'm more worried about the potential long term trend change and the fact that we're running 2 trillion dollar deficits. Currently a 1% increase in the rate we pay on US debt amounts to $140 billion dollars and if we raise the debt ceiling and run a 2 trillion deficit this year then that number goes up to $160 billion. We collect about 2 trillion per year so a 1% rise in US government interest rates takes 7% of the tax revenues. At 6.5% and a total deficit of 16 trillion we'd consume half of the tax revenues just to pay debt service.
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Post by yclept on Feb 9, 2011 12:23:28 GMT -5
For me, a list of holdings is a moving target, and everything is subject to sale at the right price. That said, other than cash, my largest holding is TBT and I do not have a limit sell order in place for it. Biggest position right now is cash. As of this moment, my present tickers are: AGNC, CADC, CCCL, CNIT, DLA, DROOY, EGMIQ, GILT, GME, HRBN, JADE, LINC, RSH, TBT, TSN, VSH, WATG, XIN, XRTX. Except for EGMIQ, which is worth virtually nothing, most of the above are single positions. Of those, VSH and CADC were bought this morning. This morning I also sold out of positions in KAZ, COP, SAFM. That's fairly common recently, screens are bringing up more sells than buys, and my cash position keeps getting bigger. I've already increased my position size by a few thousand bucks on new buys. There's nothing else I can do about it that seems prudent. If the cash grows, it grows. I'm tempted to throw some of into a few big dividend payers for awhile. The liars (oops, "lawyers" is correct spelling) are coming hot and heavy against LPHI and have driven it to multi-year lows. I might throw some of the cash into it, but it's not the type of play that can soak up a bunch of it. On all of these shareholder class actions, the liars are going to get paid in a settlement, and if there's any merit to the case (this one doesn't look meritorious to me) the "harmed" shareholders may get a little money too. So, the question becomes one of how much will the company have to pay for a run through the sheep dip to get rid of all these parasites. Then, of course, there's always a small chance the company will drown in the sheep dip. Still, they seem to be just carrying on, paying the dividends, doing their 5 for 4 splits that seem to be establishing as a pattern. Might be worth a spin of the wheel. For me, Monday is buy day, Wednesday is sell day, which isn't to say that stuff doesn't go on every day, but general emphasis to clean the port is today, so several of the tickers that have dropped from screens (and thus for which my primary reason to own has evaporated) will stop waiting for a market tip up and just get the boot. This afternoon I expect to sell a few more that are currently attempting to sell on limits a bit higher than current price (though the way the market looks right now, the higher price looks not likely to happen). So this afternoon they'll just get the boot -- fortunately most of them are showing profits.
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rovo
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Post by rovo on Feb 9, 2011 15:35:21 GMT -5
Today's market is a real clash of the bulls and the bears. Wild swings taking hours to play out. New money coming in on little dips while old money is moving out on the rises. Looking at the Qs it appears the down volume is significantly higher than the up volume. Are we approaching an inflection point in the market? The dreaded and long awaited correction may be about to begin.
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Bluerobin
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Post by Bluerobin on Feb 10, 2011 8:28:22 GMT -5
Yclept, I am more like you, except, I have maybe 50 stocks. I will have to count someday. I recently pared down to that amount, and like you, I have little cash. I am debating whether to consolidate into a few stocks in "each" sector. I am getting tired of reading.
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rovo
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Post by rovo on Feb 10, 2011 9:40:14 GMT -5
I placed a couple of buy orders this morning but none are likely to fill. Buy 6K CSCO @ $18.50 and Buy 1K SOXL @ $56.00. Both of these look decent or better going forward and maybe they will have a spike downward.
CSCO reported last night and the results, while in-line with expectations, were not well received by the market. CSCO has an OK PE, of about 16 as of last night's close, and is currently trading at 19.40.
SOXL is a triple play on the sox semiconductor index. It is trading at 65.42 near the 52 week high of 71.50 and my buy price is at the 50 SMA line.
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IPAfan
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Post by IPAfan on Feb 10, 2011 10:29:16 GMT -5
bluerobin,
Here's an idea to consider if you want to keep diversified while investing in individual companies, but also want to reduce the company "headcount".
I like investing in well run conglomerates. Look for conglomerates that have net cash, good management, and trade at a discount to the sum of the parts valuation. The nice thing about these businesses is that they rely on multiple different operating businesses (wholly owned, or often controlling positions in publicly traded companies.) If one business or sector eats the dust, the business can still survive.
L is a perfect example. This company has been undervalued for quite some time. Some of that valuation gap has closed, but I think the company still trades for less than its fair value. There's a HUGE slug of cash at the corporate level, plus a few wholly owned private businesses, plus a 50% stake in DO, 90% stake in CNA, and 65% stake in BWP (+ the general partnership which could be very lucrative.)
Many conglomerates like Berkshire Hathaway, Brookfield Asset Management, or Leukadia have a lot more investments (and therefore more diversity) than L. However, L has the most fortress like balance sheet that I'm aware of.
The best thing with a well run conglomerate that trades at a perpetual discount is that management can buy back shares to increase value. Management at L has bought back 75% of the shares in the last 30 years.
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Post by yclept on Feb 10, 2011 10:57:32 GMT -5
It may be confirmational bias, but I'd swear I see evidence of "buy the dip" mentality in the market. I haven't believed that attitude was operative for several years. It would be a logical extension of my opinion that there are a lot of folks who have missed the rally the last two years and that money on the sidelines (there is evidence of a lot of money on the sidelines) is held by folks who are frustrated over having missed the whole rally and their fear is flipping to greed. I think too that there is a lot of money that's going to be forced out of bonds over the coming year or so as inflation picks up. As mentioned above, it may only be me believing what I want to be true, and one day certainly doesn't make a pattern, but this morning's recovery from after-hours and early trading drops looks a heck of a lot like "buy the dip" to me.
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Bluerobin
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Post by Bluerobin on Feb 10, 2011 11:41:39 GMT -5
Beerfan, I am mostly in it for dividends, although I do have small positions in some growth stocks. Someday, I will make a list and post it. The number is 50 plus a few bonds. I just counted today..
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Deleted
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Post by Deleted on Feb 10, 2011 13:49:44 GMT -5
Yclept wrote: For me, Monday is buy day, Wednesday is sell day, which isn't to say that stuff doesn't go on every day, but general emphasis to clean the port is today, so several of the tickers that have dropped from screens (and thus for which my primary reason to own has evaporated) will stop waiting for a market tip up and just get the boot. i frequently play around with auto execute e-mini future trading programs.... the one i recently leased and currently trading does not allow any trades to be made on Mondays or Tuesdays..... this program shows back testing results going back 13 years (about the beginning of the e-mini).... i have heard of auto execute programs not trading on Fridays but never Monday & Tuesday..... sorry this info may be insignificant but just had to share it....
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rovo
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Post by rovo on Feb 10, 2011 15:30:03 GMT -5
CSCO appears to be in uncharted territory as the decline continues with a current price of 18.83. This represents a decline of more than 14% from yesterday's close. My low-ball order of 18.50 is now looking doable. So much so, I'm having second thoughts about the order and the price. The 52 week low has been breached and I can't find anything on the charts to act as support.
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Post by yclept on Feb 10, 2011 15:39:10 GMT -5
My buy/sell bias with respect to days of the week was established by looking at articles like this www.crossingwallstreet.com/archives/2009/02/market-returns-by-days-of-the-week.htmlI have in the past done spread sheets with a lot of downloaded data from Yahoo on indices that have shown similar results. My interpretation is that if Wednesday has the greatest gains, Wednesday just before close is probably a logical time to sell. Likewise, if Monday has the greatest losses, Monday just before close is probably a logical time to buy. I don't follow this very rigorously. I usually buy and sell things on any day when my screens indicate I should do so. However, sometimes the screen that picked a stock will drop it (indicating that it should be sold), but my reading of charts, or special news events (things outside of the screen's selection criteria) will make me think that the stock is likely to be higher in the near future. When that happens, I'll often place an above-market GTC limit order to sell the stock instead of just accepting whatever the current market price is. On the other side of the coin, there are times that a screen pulls a new ticker (indicating I should buy it), but investigation shows that there was a news event that may have given an exaggerated rise. Or just looking at the chart gives me the "too-far, too-fast" heebie jeebies so I'll place a limit buy order below the current price GTC. As a result, I end up with a smattering of GTC orders on the books that need to be reviewed. I review the "sells" on Wednesday. If my hopeful scenario hasn't panned out, it's probably time to bite the bullet and just take what the market is willing to give me. I review the "buys" on Monday and make similar decisions -- maybe it's time to just pay-up and give Mr. Market what he's asking for. Like I say, it's not a hard and fast rule that I follow, but it does make me review orders I have on the books, check my notes and original logic, and make decisions. Even if I decide to leave the order as it is, that's a decision. Doing nothing is an action.
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livinincali
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Post by livinincali on Feb 10, 2011 15:44:07 GMT -5
As we can see from many stocks before CSCO there isn't any reason to catch this falling knife unless you're going to be really nimble and hope to sell into a dead cat bounce. There's much better options on the table at this point. I still don't think F is bottomed and you'd be better off buying there than buying CSCO here. Actually a couple of Beer's plays are looking really good from a technical perspective. I'd chase TTT or even ENH before playing with CSCO. TSYS is looking pretty good also from a technical perspective. I don't know what the market is going to do from here but if it decides to correct playing in the really small caps and ultra large caps are the best spots.
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livinincali
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Post by livinincali on Feb 10, 2011 15:46:32 GMT -5
I'd agree that the small retail investor is now in buy the dip mode. They'll likely end up being bagholders once again when the institutions start liquidating into them. They always have to be the bagholders because there is nobody after them to sell too.
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rovo
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Post by rovo on Feb 10, 2011 15:57:20 GMT -5
I canceled my order for CSCO shares per Cali's thoughts. Rather than playing with a significant sum of money I have placed an order to buy some calls on CSCO. I'm looking at the April $20 Call and placed an order for 100 contracts at $0.36. This limits my exposure to $3,600 if it fills rather than $18.50 times 6K shares. The option order has not filled but the low for today is $0.34.
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rovo
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Post by rovo on Feb 10, 2011 16:30:32 GMT -5
Just after the close Ford announced they will pay down another $3.0 Billion in debt by redeeming a bunch of Trust Preferred Securities before the official redemption date. The stock spiked upward on the news from the $15.95 close to $16.20 in after hours.
Ford buys back $3 bln in debt 4:16p ET February 10, 2011 (MarketWatch) SAN FRANCISCO (MarketWatch) -- Ford Motor Co. announced late Thursday that it will reduce its debt load by another $3 billion by redeeming all of its outstanding 6.5% cumulative convertible trust preferred securities on March 15. The conversion, which will result in a first-quarter charge of up to $60 million, will cut annualized debt costs by about $190 million. Ford reduced its debt by $14.5 billion in 2010. "We are committed to continuing to improve our balance sheet to lay a solid foundation for a strong and profitably growing business in years to come," CFO Lewis Booth said.
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livinincali
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Post by livinincali on Feb 10, 2011 19:07:19 GMT -5
Personally I don't think Ford's bounce is over. Still hasn't really reached the targets for the bounce (high 16's low 17's) but considering it hasn't been an impressive rally so far, it further confirms that it's very likely to experience another leg down.
The market continues to be fractured as the indexes make new highs on the back of the momentum stocks. For every BIDU, AAPL, CMG there is a CSCO, FFIV, CREE, etc. It will be interesting when the momentum wears off and people try to lock in profits. With all of the computer algorithms out there you're going to see many mini flash crashes. Even AAPL experienced a bit of a flash crash in the intraday today.
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IPAfan
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Post by IPAfan on Feb 10, 2011 23:32:29 GMT -5
Per ENH conference call, the company has repurchased 30% of shares over the last 13 months. Trades right around diluted common shareholder equity, but I think such a big repurchase should leverage the upside from profitable insurance operations (and Endurance is very profitable with combined ratios in the 80s across the whole.)
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Post by danshirley on Feb 11, 2011 1:51:45 GMT -5
ENH has single stock futures which sell with the dividend discounted. You can form a potentially very profitable covered call by buying the SSF (requires only 20% margin) and selling the 50 call.
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rovo
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Post by rovo on Feb 11, 2011 10:16:22 GMT -5
I still think CSCO is being beat up more than the earnings report warrants. I picked up 100 contracts of CSCO April 16 2011 $20.00 Call for $0.36 this morning for a total of $3,684.99. CSCO dropped about $3 per share over the last two days and is currently trading at $18.84. I expect CSCO to gain about a dollar per share by the end of next week and the option should roughly double. Not exactly big money but a little "fun" play. I may add another 100 contracts shortly.
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IPAfan
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Post by IPAfan on Feb 11, 2011 10:18:37 GMT -5
Very interesting danshirley. I still haven't managed to get set up for SSFs, but it's definitely on the agenda once I can grow my account values a little more.
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rovo
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Post by rovo on Feb 11, 2011 10:46:17 GMT -5
OK. Another 100 contracts picked up and now it is just a waiting game, kind of like fishing. 200 contracts at an average price of $0.3636. By fooling around with this option I managed to miss a trade on the Qs. Oh well, there is always tomorrow.
Ford is up $0.28 as of now for today, about 1.8% and this gives me a little gain in the port this morning.
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livinincali
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Post by livinincali on Feb 11, 2011 10:59:07 GMT -5
Good luck, I'll be pleasantly surprised if this one works for you.
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livinincali
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Post by livinincali on Feb 11, 2011 11:20:17 GMT -5
Based on some recent history CSCO should bottom around the first week of March. Let's see how accurate this is although it's not much more than a wild guess based on extrapolating recent events and figuring how the technicals should bottom out.
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rovo
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Post by rovo on Feb 11, 2011 11:30:49 GMT -5
Good luck, I'll be pleasantly surprised if this one works for you. What would you consider as working out for me? I have the sell order in for 200 contracts at $0.93 but that is just pie in the sky. I would consider $0.50 or about +40% as being a decent trade.
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