Weird title isn’t it? Today I traded a stock called CardioNet Inc. 
Its stock ticker is “Beat”. Its stock price got beaten up today dropping more than 40% because of lower earning forecast. I got in at $9.59 and sold it at $9.90. Close to the end of the trading day I got in again at $9.60 so I am holding 500 shares of Beat right now.
In its yahoo profile it says that CardioNet, Inc. provides ambulatory, continuous, real-time outpatient management solutions for monitoring relevant and timely clinical information regarding an individual’s health in the United States. I have no idea what kind of business that is about. I did check on its financial statement and this company had a problem managing its ever increasing receivable and cash out flow. It is very suspected when receivable grows faster then sales but I was tempted by its 40% drop. Hopefully it will be up a bit tomorrow.
 account balance 20090701 |
My account is up about $100 today. Dropping 40% in a single day seems a lot to me especially for a stock that has never traded that low. I am hopping it will bounce back above $10 in a couple days.
Account Balance Changes: +$109.93
I sold my 1000 shares of PCX (Patriot Coal) at $6.47 this morning. Net about $250. So my account is up a little bit.
PCX launched a secondary offer not long ago with offering price at $7.90. Its stock price started dropping before the offering from above $9 to $5.60 a couple days ago. I don’t know whether the secondary offering was a successful one. But I feel its stock price is stabilized. Seems to me it has a good chance to bounce back above $7 and I feel it is safe to get in around $6. It dropped to $6.08 this morning and I hope it will do that again tomorrow. I sold PCX because I am betting ADP Employment Change tomorrow won’t be good. Just a wild guess and I will see if I can get in pre-market if PCX really drop tomorrow morning.
I am bit forgetful. When I bought PCX I was planning to wait till tomorrow after the window dressing effect. I only recalled this when I read my previous post. I also notice PCX has a good volume today. Hopefully I will not miss out a good run up tomorrow.
Account Balance Changes: +$249.81
It is a very unproductive day for me. I watched the market all day but didn’t make a move because I wanted to take the long side. I wanted to buy something but didn’t find anything attractive. I wanted to buy PCX again at $6.15. The order is still hanging around I think. Let me know if you see something you think attractive so that I can at least have something else to look at =)
Bank of America was closed at $13.14. It went up to $13.25 after market. Too Bad I sold it already. I guess I really have a bearish mind. Citi Group’s downgrade easily caught my mind. Before the conversion I believed that BAC would be trading above its conversion price and that was why I was willing to buy 2000 share of BAC at $12.50. The downgrade destroyed my belief.
There are a number of analysts that are bearish about banks. News related to bank and real estate sector are not so good actually. Malls are going out of business. More regional banks failed, etc. However market sentiment seems still bullish on BAC. I am thinking if it worth to hold BAC until earning release. My mind right now is waiting to see BAC below $12.50 again so that I can get in. Not sure if that is going to happen.
PS
Not long after I posted I bought 1000 shares of PCX at $6.18 in after market. See the following screen short of PCX right after I bought PCX. It shows the after market price at $6.18. It proved yahoo’s real time quote is really real time. =) Not sure if it this buy is a good move. We will know tomorrow.
Today I sold everything in my account. I mean the 2000 shares of Bank of America. I sold them at $12.59. I made some profit on that trade and my account balance went up a few hundred dollars from yesterday. But look at BAC it is closed at $12.75. From time to time I told myself not to take action too early and try to see how it close first. I just don’t believe that feeling. It is more than a few times in the pass few trading days that I regret taking buy or sell decision too early. I really just need to sit back and take it easy and not to watch the market frequently. I just need to take a peek at market close then decide whether to buy or sell. I am going to try to that next week.
I regret buying PCX and I regret selling it too early. I lost $1400 trading PCX. My account is still down $600 from its initial capital of $30,000. Hopefully I can get back to my feet next week. One thing I always feel good about is to hold only cash but nothing over the weekend.
Account Balance Changes: +$471.36
Yesterday I bet Bank of America would rise above $14 today. It is definitely not going to happen. Because Citi group’s Keith Horowitz just downgraded Bank of America and lower its price target. If it is not for the downgrade $14 today is not out of reach as the prefer to common share conversion of Bank of America is over subscribed and Bank of America has surpassed the government’s capital raising requirements as I expected.
Well I guess, Keith Horowitz the analysts at Citi Group who downgraded Bank of America must have work with some investment banks which took a short position on Bank of America yesterday. =) It is just a wild guess. I think for whatever reason the downgrade is stupid. It hurt the sector including Citi itself. If I were him I would at least postpone the downgrade tomorrow. That will make more sense evaluation wise. Because without it Bank of America will be above $13 today for sure and downgrading it tomorrow will absolutely shake the market and show the power his opinion.
Bank of America closed at the same price as yesterday. I am still holding it so there is no change on my account balance. I am kind of in waiting mode right now. I am waiting for BAC to bounce back so that I can recoup my loss and start trading again. I feel BAC may not be a good candidate to trade since it is kind of unpredictable to me. I feel USB is more predictable.
I found I held positions over night frequently in the past couple of weeks. For a period of time I just hate to hold position over night especially for short positions and I usually took profit or loss at the end of a trading day. Usually when I took loss it was not considered big. I did extremely well for that period 
of time though. I guess holding position over night means something to me. It probably means I didn’t get a sense of the market. I have no confidence about closing a losing position and recovering the loss subsequently. So I am asking myself the question “am I a stock trader or stock holder”.
I am still holding Bank of America. The longer I hold a position the more I doubt about it. It is the third day I am holding my 2000 shares of Bank of America at average $12.50. I saw the chance of closing out the position with a profit this morning but I didn’t do it because I was hopping for more. However I couldn’t resist my doubt on holding 2000 shares of Patriot Coal. I sold it early in the morning at $6.25 only to see it raised above $6.45. At the time I sold it I was hopping to get it back at a lower price. Like I said I didn’t get a feel of the market and again probably I act too early in a trading day.
Anyhow I decreased my long position buy selling PCX and I am not using any margin now. My account was up about one thousand at today’s close but it is still down more than one thousand dollars from my initial capital.
Account Balance Changes: +$1069.63
From the past few weeks of trading I had concluded in a previous post that live was much better on the long side. So I reminded myself from time to time to avoid taking the short side. I thought about taking the short side in pre-market this morning when I noticed future was down so much but I was hold 
back because of past experience. In retrospect if I went short at pre-market and went long in after-market then what a great day it was going to be.
Anyway I bought Bank of America and I bought 2,000 shares at average $12.50. I not only bought Bank of America but also added more Patriot Coal (PCX) also at $6.12. My average on PCX is now $6.90. I am buying the dip. In fact I am all in already and on a small margin. I changed from the short mind to a long mind and the market changed from bullish to bearish. The result was of course I lose big. At today’s close I lost almost $2,500 today. My account balance stood at $27,107.79 which was 10% down from my initial capital.
I bought Bank of America because I was betting there would be a run up after the prefer to common share conversion. I am surprised to see someone post my link about the conversion on yahoo message board
http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_B/threadview?m=tm&bn=1903&tid=1042741&mid=1042741&tof=11&frt=2.
I still think my entry point at $12.50 can make me some money in a couple of days because I believe the conversion price will be above $12.50. But I feel a bit shaky after seeing the market tanked like this today.
I am not sure if I should put today’s trading in the lesson learned category but I put it there any way. I don’t know what kind of lesson I have learned today. Probably I act too early again in the trading day. At least I put it there so that it would remind me what I was thinking when I losing big on my trades.
I was able to escape the fall of Verisign (VRSN) and Western Refining (WNR) but I caught the falling knife on patriot coal (PCX). If you follow my previous posts you knew that I was lucky enough to escape the free fall on VRSN and WNR. I bought VRSN at around $19.06 and WNR at around $8.18 and I was able to get out with a small profit. VRSN is now at $18.52 after falling to $17.54 earlier. WNR fall to $7.63.
I wasn’t so lucky on patriot coal. Yesterday when I set up the buy order at $7.55 PCX was still trading at above $8. It stood at that level nicely in pre-market. Since it had the secondary offering price at $7.90 I thought it would be safe to set the buy order at $7.55. I was thinking $7.50 would be the support line. The minute when the market open it fall to $7.03. I was watching it fall only could not cancel my order fast enough. Now I am stuck with it. Yesterday it was close at $7.10. I thought about increasing my bet on it but luckily I didn’t. Now it stood at $6.55. I am having that thought to increase the bet again. If you have an opinion feel free to let me know. PCX has been falling for 5 consecutive days from $9.30 to $6.55. That is 30% drop in five days.
 Patriot coal price graph |
The coal energy sector is not doing well but seems to me PCX is falling too much. Its trailing twelve months P/E 2.53 sounds extremely low to me. Anyhow I have lost more than one thousand dollar on PCX at today’s closing price. Today my sold put positions went up nicely because BAC and USB went up. I sold BAC at $12.90. So my account balance actually went up. It stood at $29,217.36
 Account balance 20090618 |
Account Balance Changes: +$409.27
Sometimes you really have to believe some of the popular theory. The option pain theory says that stock price will trend toward their max pain when option expiration day get close. I sold 20 contracts of BAC June 12 puts last week and 10 contracts of USB June 17.50 puts a couple weeks ago. When I sold the put on BAC it was around $12.90 and running up and I felt it was pretty safe. When I sold the USB puts it was at around $19.00 I felt it was safe too. But look at today’s after market BAC is trading at $12.26 and USB is at $17.74. BAC’s max pain is $11 and USB’s max pain is $17.50. So they are trending toward their max pain.
If BAC drop below $12 and USB drop below $17.50 I will probably end up buying 2000 shares of BAC at $12 and 1000 of shares of USB at $17.75. Including the 1000 shares of BAC I am already holding I would probably end up holding 3000 shares BAC and 1000 Shares of USB by the end of this weekend. I prepared for that or I have to take lose by buying back the puts. I will know in a couples days.
After I bought 1000 shares of BAC yesterday at $12.76 S&P downgraded 18 US Banks today. The news together with FedEx’s depressed earning report drag the market down. The Dow was down 30 points not long after opening. It came back up in positive territory later. Inflation was in check but it does seem to help. Bank of America dropped more than its peers. I feel I am getting slap on both side of my face. A couple days ago I lost more than a thousand dollars by shorting BAC. Now I lose again because I am buying BAC.
I think Bank of America dropped more than its peers for several reasons. First it rose substantially for the fast couple days. The higher it flies the harder it drops. This rule seems always apply. Option expiration this week also weight on price. The max pain for Bank of America June option is $11. There is a popular view that stock price will trend toward the max pain when option expiration is getting close. The view is based on that institutional traders will manipulate stock price toward max pain so that they can maximize the profit they get on writing options. Bank of America has other reason to go down because the trading price this week will determine the prefer share to common share conversion price. I believe Bank of American doesn’t want to set the price too high to dampen the conversion interest.
But As I mentioned previously I expect BAC will rise after the conversion. That’s one of the reason I am still keeping it. In addition to BAC I also bought Patriot Coal Corporation (PCX) today. I bought it at $7.55 so I lost a few hundred dollars on this one too.
My account balance is not going anywhere one month after I setting up this blog. I really hope this blog can provide values other than entertainment. I don’t know where this blog will standard a few months later but I truly hope this is a long last endeavor.
My account balance stood at 28,807.69
Account Balance Changes: -$920.30
