Swine flu

I forgot to mention about the swing flu. Thanks for that.

Because of that, travel industry is getting hurt a lot. Airlines require oil to fly their planes, so oil goes down and what's nat gas going to do. Since it's the weakest in the oil industry even though there's no nat gas plane, it gets sold off first. 

Lumber is not only related to residential building but more importantly a lot of travel related buildings, for example, hotels and vacation homes. People are very fearful about doing it and lumber took a big plunge yesterday....... and today.

FOMC announcement is coming out at 2:15PM ET tomorrow as usual, so be cautious. I'm looking for markets to move higher generating a blow-out top. We're really close to the top. 

Lessons

Simply amazing. I'm learning a lot of lessons from the markets I'm in. In nat gas, I'm trying to catch the bottom and there's a basement now. Maybe there's an atomic shelter under the basement if I continue to try to catch the bottom. There are lots of argument about inflation v.s. deflation. As far as I can see, there's only deflation. I think nat gas' price is back to 1980's. Nat gas companies started to shut down, but this is going to take at least a year to kick in. I hope I don't get a margin call. 

In lumber, I tried to be smart. Instead of adding when it's going down, I waited for a higher high(s) / higher low(s) and then I added on a pull back. It worked nicely.... for about 3-4 days. As stated, it happened that I provided good liquidity to the markets for who wanted to short. Now it resumed its downtrend again. 

I honestly thought this kind of strategy would fit my trading style. But it's not for sure. Once trend is established in commodities, wow, it's just simply amazing.

What hurts more is, I talked about cotton and orange juice. I decided not to take those trades because I thought if they take off, chances are lumber and nat gas would too. I was completely wrong. Cotton and OJ took off their lows and I would say at least $5000 per contract per market. 

The beginning of April was great. I was very close to making up all the losses I had this year, but then it turned and started heading south now losing yet again a record loss per month basis. 

I'll let all of my positions alone at this moment. Fellow traders I know think deflation process will continue until the end of the year before inflation comes into play. Hopefully I will be still holding my positions at that time....

NG offset

May NG options expire today. My 3.5 put will likely get assigned, so I offset and roll-it over to June by selling 1 May NG outright and buying 1 June NG outright.

Sold 1 May NG at 3.167

Bought 1 June NG at 3.279

Sold 1 Jun NG 3.50 put for 0.305

Let's see how low this nat gas will go. 

My order to sell June NG 3.5 put was filled today for 0.305 or $3050.

Markets

Have you ever felt like you're never going to get out of a position that you're holding? I feel like it with my lumber and nat gas.

I added more on those. I tried to be smart by adding onto a rally, but in a big down trend, I guess that's where shorts would add their shorts and I kindly took those shorts. Bummer. As soon as I added, of course, lumber resumed its downtrend.

Nat gas continued to get hammered. It was 12 just a few months ago, and now it's 3.5. It lost over 70%! I have no execuse on this because I'm trying to catch the falling knife. On upcoming trades, I'll probably wait for a trend change and try to get the meat in the middle using 'stops'.

Well, it's been a good exercise and I think I'm much better off using stops instead of hoping to turn things around waiting for months and months. Besides, I don't have unlimited money.

I might add 1 more level or so, but other than that, I'll just let it run. I need to be prepared for further downmove. Carrying cost kills me, so even though, I'm adding essentially, I'm not making much money.

Sold 1 NG 3.5 May put for 0.105

I brought $1050 premium (less commissions ) for NG. There are 10 days until expiration. I have another order to sell June 3.5 put, but to get that one filled, I think NG has to drop another 0.3 or so. 

Corrected from 1.05 -> 0.105 (thanks boogster)

Bought 2 May LB at 179.1

I finally got the pullback I wanted. Accordingly, I lowered Jul call order.

Position trades

Lumber is forming a bull flag. It really needs to close above 188. I tried to add more pull back to 178, but it only came back to 180 and now at 185-6. The easy move was from 180 to 185, and now it needs to find its way out to go higher. Should it break above 188 and go to say 195ish, I'll add more somewhere around 188 which was previously resistance, becoming a support.

Oil report came out positive for crude, which I think helped nat gas. But I'm losing like $1K every day in the last three days and gain $1K in one day. It's a losing game. What gets harder is when commodities are approaching to zero, put premium goes down too. I'm trying to sell 3.5 May put, but it just doesn't come down enough and premium evaporates quickly. Jun contract has still close to 50 days to go, I don't want to sell June puts.

At the end, I have nothing to do but watching. I'm hoping to get $20K out of these two trades.

Cancelled

It came within a tick, so I cancelled it. 816.25 has been a key area today.

Looking to buy ES at 816.25

I'm looking to buy ES at 816.25

Jan and Feb totals

I was not going to post 2009 totals until I become profitable because it's embarrassing in all honesty. But all of sudden, I thought it's more embarrassing to try to hide what my current loss is. That's not why I started this blog. I'm not sure if this blog will last forever, but I should be honest about myself not only when I'm profitable but also I'm not.

Anyway, I lost about 30K for Jan and Feb and I'm not sure when I can get out of that drawdown, but it'll work out and I need to be patient.  

2009 Profit / Loss

I was not so diligent updating the totals. I was down a lot at the beginning of the year, but made all back plus some (a grand or two), but all in all, I think this was a scratch year. I withdrew all to build a house and hope to be back after the done is done.

Lumber close

Today's lumber close is very important. As some of you know, I added 2 outright at 170 (a simple pullback to 170 support after a nice break out) and today it's moving higher. It briefly went to limit-up but didn't stay long. This is normal because the previous resistance was at 178 and markets always want to test how much stops they can run and how much new market buys are there.

The logical move is to pullback around 175-177ish and test today's high area again. After that, it'd be nice to see it close above 178-179, but what do I know.

Nat gas is getting killed because of oil report today. I'm -$12000 on that trade alone holding 2 contracts. I'm looking to sell 3.5 May put, but because of time decay, it's not coming.