News come out that
Sovereign Bank lost $763.8 million in the first quarter after setting aside several hundred million dollars to absorb potential losses on an escalating number of troubled construction and commercial loans.
The net loss, compared with net income of $119.2 million in the year-ago period, underscores how rough economic conditions will continue to haunt the bank over the next year.
Sovereign said its provision for anticipated loan losses was $505 million in the first quarter, compared with $135 million in the year-ago quarter.
See original news here Sovereign books $763M Q1 loss, bad loans spike
There are not much events on next Monday. If other market is not doing well on Monday then very likely it will be a down day in US. Sovereign’s news is not too big a news. But if no other events draw the market’s attention the bank sector most likely will see it as a selling excuse at least when the market is open. I still believe Well Fargo price at $24.80 is too high and have room to go down.
I covered my short position on Wells Fargo but I covered it a little too early at $25.20. So my account is up about $200 if I am not going to do further trade today. I don’t feel I can spot any good deal today and I am wondering what will happen next week. I just don’t have any feeling to long or short any stock at this moment.
The Michigan consumer sentiment index is not a very good reading by the market.
“Consumer confidence rose in early May as consumers became increasingly convinced that the economy is in its final stages of contraction, and paradoxically, that their personal finances would remain dismal and keep their spending at reduced levels for the foreseeable future,” the Reuters/University of Michigan Surveys of Consumers said in a statement.”
If consumer keep their spending at reduced levels for the foreseeable future economic will not grow. That probably why the Dow was pulled into negative territory after it was up about 50 points this morning. However if it went down far enough it will create buying opportunity. Nevertheless many statistic reading indicated that if the economy is not going to grow it is indeed stabilized. I set up a buy order of 500 share USB at $17.50. Will see what happen
Added at 2:00 pm PST
It turn out that the order was executed and I sold the 500 share in after market at 17.75, net $80 more after transaction fee. So my gain today is $314.79. I feel better not holding anything if I don’t have a strong feeling where is market is heading on next Monday.
Account Balance Change: +314.79
Well that is what 
I feel and that is why I end up with a short position on Wells Fargo at the end of today’s trading. Well Fargo is the stock that I love and hate. I love it because I personally bank with Well Fargo for more than 10 years and I believe it is indeed providing high quality of services to customer. Wells Fargo acquired Wachovia and Warren Buffet recommended Wells Fargo more than one times in public as the best bank worth to invest. I recalled that was when its price was at around $8 and $20.
I hate it because it is the very single stock that caused me to lose over $9,000 in a single day and wiped out my three months of hard work. Yes just last Friday before I started this blog I took 3000 share of short position at $24.76. It was the day after Wells Fargo announced offering new shares at about $22. My reason behind this was new share sold at $22 and lower there was no way that it could be trading at 10% higher than the offering price given that Wells Fargo was traded lower than $22 just a few days before the offering. I was right in the early morning on 5/8. It ever went down to $24.45 but after that it went straight up to $28. I was nervous because I was highly leveraged when shorting these many shares. After keeping it over the weekend I covered the short position on early Monday 5/11 losing more than $9,000. Looking back if I were to keep it a couple days longer and cover it yesterday at close I could have made handsome profit.
The lesson I learned from this is that I have to have discipline in trading. I shouldn’t have put all my leveraged bet in a single shot even a good entry price is identified. If I were to short 500 shares instead of 3000 shares I wouldn’t have problem to keep it for a week.
Anyhow passed is passed. One of the purposes that I setting up this blog is to remind myself that the public is watching me and I can not behave like crazy gambler. I have to have discipline and I have to be persistent with it.
I made some trades on USB today and my account balance is up. Again I am going to keep my short position on WFC over night to see what happen. See you tomorrow!
Account Balance Change: +333.77
US Bank Corp (USB) recently announced that they can exit TRAP within a matter of a few weeks. The market didn’t have much enthusiasm on the news yesterday. I feel when that actually happen it will raise the eyebrows of many long term investors.
When that happen the prefer share’s dividend can possibly be used to pay out as common share dividend and it will be a major step closer to return to a sustainable dividend stream. It matters a lot as a bank. If a big bank can not pay dividend who can? I think the recent activities of some of the big banks like JP Morgan and US Bank to sell debt without Fed guarantee is a result of them trying to convince the government that they have the ability to repay TRAP. As you may remember one of the requirements of the government to allow banks to repay TRAP is to prove they can sell debt without federal guarantee.
So looking forward I feel those banks that are able to repay TRAP like US Bank(USB), JP Morgan(JPM) and Bank of New York Mellon (BK) will lead a small rally of the bank sector and traders should be very careful about taking short position on banks.
This is the first post of this blog. The “Stock Traders Blog”. The purpose of writing this blog is to keep track of how I did on my trading and help me to keep myself in discipline. I choose today’s account balance as the starting balance. $30,392.60
I did a couple trades today. I shorted 1000 shares of AMD (advance micro device) and covered it later. Bought 500 shares of USB (US Bank Corp) and sold it later. I made a small profit on both trades and the account balance is up $299.77 from yesterday. The biggest market event today was the April retail sales report. It was lower than expected. Also news came out that April foreclosure was up 32% percent. Because of the bad news Dow was down 2.18% at 8,284.89 and Nasdaq was down 3.01% at 1,664.19
I chose to short AMD because AMD was trading at this year’s highest price. It went up a lot these couple days because the news that Intel was fined 1.4 billion in Europe. Bad news for Intel is good news for AMD. But I think it is too good to be true. All though AMD may improve its competitiveness in Europe going forward the big run up for AMD may not be justified. I will be watching out for more shorting opportunity on AMD.
USB went down to $17.05 today. I got in at $17.16. USB later announced that they were able to repay TRAP within weeks and price went back up to $17.65 and then pull back. I sold it kind of late at $17.40. USB share was under pressure after its stock offering at $18. I personally believe USB ($17.40 close) is a better bet then WFC (Wells Fargo 24.20) even though Warren Buffet recommended Wells Fargo. I think the effect of Warren Buffet’s recommendation will continue to subside.
I feel the possibility of the bank sector going down is higher than going up at this moment. As such I don’t want to keep long position over night for banks. I was lucky that I sold 2000 shares of long position on USB yesterday at $17.56 after market at a small lost.
Account Balance Change: +299.77
On June 4th, 2009. I reset my account balance to $30,000 by transfering out a small amount of gain in order to have a fresh start. This action was intended to help me back to my disciplines and forget about the big lost in the past. See Searching for Balance and Trying to Get Back to Discipline Following Trading Guidelines
