Hope you did not join the FaceBook hype

I wrote about FaceBook (FB) back in Feb, warning that its IPO would be priced too expensive and was subject to a significant risk to buy at that price. However honestly I thought FB would go much higher for a while as there was so much interest and euphoria for it. I was wrong! It did go up for a couple of hours at its IPO day up to $45 per share before starting to plunge. It has not really looked back since its downturn started. In just a short few weeks after its IPO, FB has already dropped over 35% from its peak. What a disaster for such a high profile company! I don't think its downturn has been near its end. If it is going to be traded at a comparable P/E with other Internet companies such as Google etc, its share price should be just at around $7-8. However, at the very near turn with such a fast decline with such a depressed sentiment on it, there is a chance that it will bounce back to some extent before resuming its downturn again. With this speculation, I actually put in some small money to bet a near turn "dead cat bouncing".

What a bullish price action today!

It was truly a magnificent fight-back in today's stock market! It plunged as much as 190 for S&P500 but it recovered almost all its loss at closing. This is really bullish, no question about it!! Barring a crash in the Euro zone overnight, I think today's market price action hits a nice rally in the next few weeks before the final leg down sometime in the summer to finish its current correction. If you are an aggressive trader, you may consider to buy a leverage bullish ETF, SSO, to bet for the bouncing. I think there is a good chance this will work out well in the next few weeks. S&P500 may advance 50 points or so in this bouncing rally. Of course no guarantee, especially if the Euro zone situation becomes significantly worse.

Get ready for a short-term bounce

I have been extremely busy lately with travelling and heavy workload, therefore no time to sit and write here. Just a quick comment on the current market status. The overall market has been kind of oversold to quite some extent and is due for a significant bouncing rally. There may be still some decline in a day or two but I don't believe it will be severe. Likely following an exhaustive selling, a strong but short-term rally will ensue with a 5-8% jump in the next few weeks. Of course I also don't think this round of correction is completed. We likely will see another leg down below the current low to finish this correction and then we are ready for a more sustained rally towards the year end.

If you bought VIX or related stuff to bet for a market drop in the past 2 weeks as I suggested, you should be happy to have a nice quick profit. I think it will be wise to take the opportunity of a weak market in the next one or two days to cash out your profit. If the market indeed bounces back strongly, your profit will be wiped out quickly.

Market status, Euro, AAPL & VRTX

I have been waiting for a significant correction for months and I said it would a good idea to buy some VXX for protection last week. Finally it appears the moment has come. In the past week or so, S&P500 dropped 5%, which is significant for such a short period. Temporarily it is oversold and is due for a rebound but I think this correction is not over yet. More pain is coming in the next few weeks at least. There is a chance S&P500 may plunge to 1300 before it is over. Save some cash and you will have some very good opportunity to buy the stocks of your interest in the coming weeks if not months.

EU is a total mess and as you know I have been short Euro for years. Another downtrend for Euro has started again. I won't be surprised if it plunged to 1.25 from the current level around 1.30. The situation is just too dire for Euro. There is a real chance Greece will leave the Euro zone within this year, which basically means the Euro Union is broke. I said the current Euro will not survive another 5 years. Actually I may be too optimistic and  this may happen much faster and earlier than I thought. Buying EUO call options is a good way to profit from this trend.

Apple has corrected as well, as I expected.  From over $600 it has come down towards the mid $500. If the overall market is correcting, I think there is more room for AAPL to drop. I hope it can come down below $500, when I may consider to get in long for AAPL.

I have talked about VRTX a couple of times. It jumped 50% overnight a few days ago due to a surprisingly good clinical trial result. If you have already got in before the jump, congratulations. VRTX is certainly a long term good investment but I'm not sure a 50% jump overnight is really justified. After all, it is only a small phase 2 study, even though the results were quite impressive. However, there is still a long way to go before the new indication can be approved, if successful. Sounds too far too fast to me. I bet it may come down to some extent in the coming weeks and I have even entered some put options to bet for the possible downturn.

Buy some VXX to protect your portfolio

I think the market is at a real risk of breakdown, although maybe just a short-term panic-selling. Two major risks out there as I'm writing:

- The US job numbers were quite bleak, much worse than what was expected. The market has priced in a rather healthy recovery of the job market and GDP and this surprise hit many bullish guys' never quite hard.
- Three elections/votes are ongoing in EU, which are potentially very detrimental to Euro: it appears the French President Sarkozy has already been kicked out by Hollande. The Greek government may also be replaced by those who is likely campaigning for an early exit from the Euro zone. What happens in Italy may also be negative to Euro.

While the market has defied the gravity for many months now to refuse going down, it would still be wise to have some protection in case this is the time that the market wakes up to face the reality. One way to do so is to buy the volatility ETF, VXX. Of course be mindful of the potential K-1 form, which is something I'm not sure about. The safe bet would be to buy its call options. If the market indeed plunges, VXX will shot up explosively. SDS has the similar effect but specific to betting a bearish trend of S&P500 at a 2 times leverage.

High speculative trade - Liquidmental

Liquidmetal is a family of metal alloys that combines a variety of metallic elements. Here is what Wikipedia states: "Liquidmetal alloys combine a number of desirable material features, including high tensile strength, excellent corrosion resistance, very high coefficient of restitution and excellent anti-wearing characteristics, while also being able to be heat-formed in processes similar to thermoplastics. Liquidmetal was introduced for commercial applications in 2003. It is used for, among other things, golf clubs, watches and covers of cell phones."

Do you notice "cell phones" as one of its applications? Due to its many unique & great features, actually Apple has made a deal with its inventor and manufacturer, Liquidmetal Technologies Inc. (LQMT), to use the alloy in its electronics products. Think about it. If Apple truly uses liquidmental in large scale in its iPhone, what kind of potential it could be. This is a real possibility. That's why I smell some big opportunity on LQMT. Of course, it is highly speculative and even you may call it gambling. But at around $0.40, I guess I can throw in some money and forget about it.  I'm prepared for a total loss. Just in case the speculation works out, which could be huge.