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Shorting opportunity in XL

(Update July 11th, 2008) XL shorting trade worked out well. That being said the market maker looks to be holding inventory in the low 20’s and may move the stock higher out of this double bottom at least in the short run until more clarity over the future business prospects of XL are more clearly stated in upcoming earnings reports. )

XL is an insurance company that had some of its debt cut to junk on Wednesday by Moodies. Friday Jan 18th, 2008 3:30 pm

Last month an article said this would be disastrous for the company when they were put on watch by Fitch as two chairman stepped down. The company has exposure to homeowners insurance among many other problems areas of the insurance business model. The company should have a hard time going forward. The limited time this company has had in the spot light over its exposure to the housing market indicates to me an opportunity to short unexploited. Company breaking out lower of a consolidation pattern. The argument against this trade is the company has alot of cash, earnings, and assets to offset the losses. Earning come out in early February and I hope will put a big dent in the share price.

http://www.reuters.com/article/marketsNews/idUKN1627979520080116?rpc=44

http://biz.yahoo.com/ap/071228/xl_capital_chairman.html?.v=1

entertainment purposes only

January 18, 2008 Posted by topstockblog | Stock investing links, ideas, and opinions. | bear market, debt, financial, insurance, investing, money, profits, shorting, stocks to short 2008, trading, trading systems, trend following, XL | Leave a comment

Topstockblog play book.

1. Use the 50 DMVA (Day Moving Average) to gain insight. Be aware of how different Moving averages like the 200 day moving average influences a stocks. Consolidation takes time and averages influence direction. The 50 DMVA shows when a lot of money moves into or out of a stock. Look for stocks ready to break out of consolidating patterns. Look for support and resistance levels. look at over sold and over bought indicators (VIX) (MACD) Wait for blood in the water to make trades. Do not buy over bought stocks. Buy over sold stocks.

2. Work with liquid and solid stocks only. Hard enough to figure out what a liquid stock will do, let alone one that is controlled by the action of a few people. Focus on getting price improvement for all trades to slightly improve trading results. Look at a one day time frame to likely best price of the day to get the best price. Look at what might be the best price of the week. Look to what could hold the stock up. i.e Look to get in at or near the low of the day or week. Look to trade with the likely direction of the market.

3. Use a set unit size. Will help ensure a long run positive return. Overly investing will significantly increase the chance you eventually go broke. No matter how much money you accumulate along the ride.

4. Look at the potential return on the trade versus the potential loss on the trade. Look at the likely hood the trade will work, and what I expect to gain from the trade. A trade that looks like I could earn double my money or better while have a projected likely loss of 1/3 or less is a trade with a positive expectation if it is successful 50% of the time.

6. Focus on a set or refined list of stocks to better understand how a stock may move in the future to gain an advantage

7. Always be careful. Good luck and bad luck are a part of trading markets. Trading has and will always be difficult.

8. Understanding myself is important to deal with mistakes that may be predictable in nature. Looking to where I may falter. My strength lies in my hard work ethic. My weaknesses that can side track me are aggression, emotional instability, drinking, negative attitude, lack of financial resources, and lack of patience.

9. Be patient, and follow my rules. I found it hard to diversify and not add to losing positions. I find it hard to keep my money in cash. I have found taking money out on a regular basis helpful to finding balance. Keep some money in cash always, go over my rules repeatedly to stay within the rules. Do not add more than once to a losing position.

10. Work a schedule of Monday to Friday 9:00-4 and 6-8. I found it important to set boundaries for hours to work and/or worry about the market.

11. Use a two step buying process. Averaging down trading approach may be useful. A two step exit approach may also be effective. Both to lock in profits and let profits go higher

12. Do not trade options expiring the same week.

13. Be aware how progressive an idea may be or how it may be of little importance.

14. Look at both sides of the trade.

15. Stay focused on the stock market. Don’t confuse political ideals with where a stock is going or get overly focussed on what you think should happen. Focus on what is likely to happen.

16. Take time out when I am emotionally drained .

17. Stocks tend to move the opposite of options volume. i.e. a lots of put buying in OIH compared to call buying often indicates a hedge by real buyers and dumb money guessing wrong in my experience.

18. Use indexes that move with your stock; despite fundamentals stocks will often trade directionally with an underlying index. i.e. XOM or RIG will trade with the OIH index.

20. Be very selective about trades, takes to try to find profitable opportunities. Call and Put writers are very intelligent and often time ideas, news is already priced into the price premium of the option.

21. Go over actual results of trading. Look improve future trading performance and learn from the past.

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Updated 4/13/09 -- AAPL, AUY, CALM ,CMED, FEED, GFA, IBM, MTW, PBR, UPL, VAR, YGE. YGE is a solar stock of china - management bought shares, MTW - is falling apart, recently bad aquistion food service products- demand is low; but, good risk reward. ***Took out Crox, added FEED - China food demand growth strory, and VAR - top of line cancer treatment equipment. The market volatility is declining, uptick rule if reinstated should be supportive to stability, Retirement costs, recession, greed, environmental damage, war, theft, and debt obligations have the potential to bankrupt communities in worst case scenarios. (Added greed, war, and theft to list of world problems. Removed Energy shortage.) Innovation, sacrifice, leadership, peace, hope, technology, charity, and security are helping. Seasonal and long term trends in the market always seem to play a big role. I like AAPL as a long term value to the world, and a positive image of American Technology. ****Entertainment purposes***
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last years trade ideas 12/2008

GOOG is gaining market share; but, aproaching a size in which growth rates should decline. Missed earnings last quarter. Has new ideas in pipeline. RTH rising when it becomes over sold, and declining over bought. Increasing occupancy rates, and a recession can not be good. UNH less attractive over bought, and better value over sold. OIH looks range bound and tradable. Oil is probably over sold currently around $40 a barrel. QQQQ looks like a good short until this becomes over done. Monetary policy is supportive of stock prices, and home prices. Entertainment purposes,
Stocks looking tradeable

My watch list updated 4/13/09, YGE - under $10* FEED - under $3 * AAPL - under $125* MGM - under $7* GV - under .50 cents - huricaine play Entertainment purposes,

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Shorting opportunity in XL

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last years trade ideas 12/2008

Stocks looking tradeable

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