May 20th Review

$19,615, Up $2,425 on the day.

Positions traded for a gain: MXC ($2,010), PDO ($520)

Positions traded for a loss: CPST ($105)

Open positions: Nothing at the moment.

Day three of summer trading was just as good as the first two. The usual "suspects" acted just like they have the past couple of days. MXC touched $45 a share today, and no that is not a typo!!! PDO was rockin' with a couple of other oil plays such as FPP, EWST, and ROYL. Although I wasn't even close to trading during the Tech Bubble, looking back at some of the charts from then look awfully simialr to the charts some of these oil companies are putting out today...all I'm saying is to watch it because these suckers will fall hard when its over. I am going to reserve shares to short every morning now until they collapse just to be ready.

PDO was the first trade out of the block this morning. Minutes after opening, the stock was pressuring the $20 mark, and using what I learned from yesterday (big dollar amounts such as $10, $15, $20, $25, etc. can produce rather large profits if you buy them after a breakout) I bought the breakout a little early at 19.69. About a minute later, the stock was acting in my favor but not to the best of its ability, so I took a nice profit of $500ish after commissions.

CPST was then on the fall, so I sold all of my shares because I obviously did not want to lose any of my nice gains that I had made over the last few days. As usual, I sold my shares and then the stock rallies all the way up to 3.95 to close at its highs of the day! Gap up tomorrow at the open probably, and also watch for a possible breakout of the $4 mark. Another possiblility is that people may take some profits tomorrow since it has gone up so far so fast.

Then came the king of volatility...MXC! (said really slowly in a very deep movie announcer voice...M!...X!...C!)(and then little screams in the distance of buy and hold investors) Anyway...I traded this one twice today which is typically a no-no, but afterwards I added some more money to my account (which I will set aside and not even seen by me as part of my balance) so that I might not get tagged with the PDT rule. If I can keep the gains going like I have been then I will be able to get to the $25k mark very quickly and be able to remove the money. This addition will let me keep trading steadily so that I can lock in almost automatic profits while this bubble in oil lasts.

Didn't play any breakouts on this one today...just touch and feel which sometimes can be bad. The stock was looking really, really strong so I bought into it and sold 3 minutes later at higher prices by almost a dollar. Quick $1k there and even quicker $1k here...Later on, MXC was bouncing wildly and dipped strongly from $40ish to $33ish in minutes. I was worried that the amazing run was finally over, but wait no! Again, minutes later the stock was back and going even higher to $45 a share...unbelieveable!

So what did I learn from that sequence of events? Well, my doubt had been that there weren't many buyers underneath where the stock was sitting at the top in the 40's. When it had the sharp collapse and recover, I realized that there were many more buyers than I had thought and they were not just trying to hop on the ride. They actually understood that the drop made MXC cheap...and I guess a good buy? And then you ask what did I do with the information I just learned about the buyers/sellers in the stock?

Use it, of course. After the skyrocket to $45, the stock again took a massive dip from $44ish to $36ish in two minutes. Taking the information I learned, I quickly bought in at the depressed prices. Lo and behold, the stock started to pick back up when the buyers came back to buy cheap shares. I ended up selling a mere 39 seconds later for the quickest $1k gain in my life. If I could always make money that fast, I would make close to $788 million in one year! Still not as much as some of the big time money managers on Wall Street. Pretty amazing if you ask me.

I think this post is long enough, so good night and good luck tomorrow with your trading. Feel free to join me in discussing what to trade tomorrow morning.

The Market Kid