Trading Mom » wachovia

Lehman, Wachovia, Washington Mutual… – which one is going to be next?

admin — Wed, 10 Sep 2008 09:04:13 +0000

Which of the big banks is going to be next to fail and how many of them are going to be rescued?

It looks like US government is taking a bite it can’t chew.

Rough trading times.

admin — Tue, 19 Aug 2008 05:26:37 +0000

Ok, I must admit the last week-and-a-half was awful.

First, both boys got a virus and even though they recovered quickly, I managed to catch it as well. Whatever the heck it is, I don’t have energy to move straight, even less so to concentrate on anything of importance. Today, I finally went to the doctor and got some prescription. Hopefully it will work sooner rather than later.

All my positions have moved against me.

- Both gold and oil kept falling. My theory about rising inflation and US troubles has been beaten by the incredibly strong negative correlation of gold and oil prices to the strength of US dollar.

- CPTC fell as well, so instead of taking 8 cents profit on $1.20+ stock, I am now losing 10 cents.

- GM profit of about 15% (I bought GM on August 13 @ $10.24) has almost disappeared.

- Builders are going up, as if they suddenly got some business, though I still don’t see any huge number of buyers diving into real estate.

- Yet, the only position I unloaded – my short in Wachovia ( I bought the stock back on August 15 @ $16.22) is now falling in price without me.

In the next few days I have to either close all the positions, get a break and start from the beginning, or at least create some exit strategy – it is not much of a trading in simply watching as chunk of my profit disappears.

It looks like I am still struggling to find my game after 3-week long vacation. I probably have jumped back in way too early, but what if I am wrong in my assumptions?

Is Wachovia out of whack?

admin — Fri, 01 Aug 2008 20:17:13 +0000

As if it was not enough for us to pull money out of Wachovia, I also shorted its stock @ $17.05. On one hand I was surprised that the short sale went through, as I thought SEC has protected big banks from the short sellers. On the other hand, I was disappointed to see that my shorting level was not perfect – the stock went up to $18.32, before being pulled down by the market to $17.27 closing price. Today it got even worse, with WB touching $19.11 high (so far). Both days I had a way out with some profit ($16.30 & $16.60 lows, accordingly), but the nightmare of getting out of a similar Lehman Brothers position a few months earlier prevented me from disposing this short.

It took LEH about 2 months to start falling toward a “panic level” of March 17th – $20.25 from the $45+ it rebounded to almost immediately afterwards. Slow, yet stable decline from May 16th to July 15th, brought Lehman Brothers stock to $12.02.

Wachovia panic level was $7.80. It rebounded to $19.55 almost immediately.

Two questions remain unanswered:

- Would Wachovia follow Lehman Brothers pass? If yes,

- How long would it take Wachovia to start moving toward the “panic level”?

After all, just look at the flyer I used to get in my Long Realty’s mail box every week until a few days ago:

How much in bad loans would Wachovia write-off in the third-quarter?

LEH – Lehman Brothers Holdings Inc.

WB – Wachovia Corporation.