Meredith Whitney Showed Off Her Power Today
Today is a big up day especially for the financial sector. Meredith Whitney upgraded Goldman Sachs dragging up the whole financial sector. All the big banks were up 6% to 9%. That was a lot in a single day for one analyst call. Of course it was not all attributed to Meredith Whitney. But she did choose the right time to show off her power. I on the other hand traded in and out of Bank of America and lost almost $250. At the end of the day I hold 2000 shares of short position on Bank of America. I feel uneasy at the moment because that is a lot of shares and I will lose $200 dollars for every 10 cents if BAC is going up. I take the short side most of the time today because I bet the big bank’s earning is not going to be as good as the market expected especially for Bank of America. Meredith Whitney didn’t upgrade any other big banks except for Goldman Sachs. She said big banks in general were in better shape. That is something we have already known however.
I made a lot of trades on Bank of America. I don’t usually make so many trades in large amount in a single day. I did that today because I found a technical indicator in my trading tool seemed to be pretty effective for the past couple of days and I wanted to see if it really worked again. The technical indicator I was talking about is RSI (Relative Strength Index). See the bottom part of the following graph. If it is over 70 then it means the stock is over bought and if it is under 30 the stock is over sold. I short sold 2000 shares at $12.80 when RSI was above 70 but it kept going up and it was above 75 at the end. Today’s trading pattern looks familiar to me. Short covering pushed up stock price at the end of an up day. I lost on the same pattern more than a couple of times by taking the short side too early. Looks like I am going to make the same mistake again.
The following are the transactions I made today.
 Tansaction 2009/07/13 |
At closing price I lost $242.29. BAC actually went up to $13.07 in after hour so I lost $160 more already.
 Account Balance 2009/07/13 |
Account Balance Changes: -$242.79
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I sold my long position today in spite of Meredith Whitney’s timely upgrade right at the close. I wanted so badly to pick up more shares below 11 bucks a share before earnings. But now like you said the Streets expectations of Earnings especially GS is to high I feel. And want nothing to do with BAC around earnings since expectations are so much higher then they were just a few days ago. Good luck with the short, I honestly have no clue which way it will move now…I really feel Meredith changed the game today with her upgrade of GS.
I just hope it will give back some of the gains today. But at this moment I feel the upside is more than the downside.
You should also try to learn about using the macd, bollinger bands, in combination with the rsi. just to start. good luck
closing above 915 bullish, on our way to 935+
closing below 887 bearish and continuation of downtrend to a least 840 S&P.
Thanks! I will try them out.