Blood was running thick at Wall Street Thursday when the Dow Jones plunged 306 points, the lowest level since Mar 2007 and the worst three-day percentage decline since October 2002. Investors were seen selling in big wave after Federal Reserve report showed a sharp and unexpected decline in manufacturing activity – a negative reading of 20.9 from negative 1.6 in Dec. Moody’s Investors Service placed bond insurer Ambac Assurance Corp. on review for a possible downgrade instantly raised the concern that bond insurers would be unable to absorb a spike in claims.

The Dow which is now at 12,159.21 has only about 150 points above 12,000 – a dangerous level of which if breached could see more panic sellers emerge. The Chicago Board Options Exchange’s volatility index (known as the VIX) and often referred to as the “fear index,” jumped nearly 17 percent Thursday. With this it’s very obvious that Ben Bernanke’s job has been made easier – no other choice but to cut rates. So if you’re currency trader, you should know which currency to short.

However, in such scenario there’re still aplenty of opportunity to make money – stocks, options, currency, metal such as gold etc. Just take a look at Baidu.com, Inc. (Nasdaq: BIDU, stock). It was roughly two weeks ago when FinanceTwitter mentioned that Baidu.com which was in mourning mood could goes down another $20 from $370 to $350 a share. The stock went down allright but I wasted no time to take money off the table when it rebound and tried to stay above $350. You might think the story ended there and then.

Early of this week, somehow I fell in love with Baidu.com as it seems to begging and asking me to short the stock or trade the Put Option. To be fair, the overall market pulse wasn’t on Baidu.com’s advantage. The stock drops like a rock and I concluded that Baidu.com probably loves Scottish actor, Gerard Butler, a lot – so much so that the stock not only didn’t rest at $300 as I anticipated but digged its grave-hole deeper than that. So where is Baidu.com heading? Probably the stock might makes a pit-stop at $220 before going down to $200 level. Anyhow I’m not closing my Put Option positions yet. At this moment I hope Baidu.com could help me to break my own record of 486 percent profit in Google.

And talk about Google Inc. (Nasdaq: GOOG, stock), the stock is being punished from top, bottom, left and right till the current level of $600 a share. Not a nice sight though if you look at the 1-year chart as the stock could easily slide to $520 level. Nevertheless I believe there should be a technical rebound soon. Of the three stocks within my radar, only Apple Inc.’s (Nasdaq: AAPL, stock) seems to show some kungfu-fighting.

So what’s my strategy for Friday? Close all my profitable Put Options of course, since it’s the expiration Friday.

Other Articles That May Interest You …

• Make Money scalping AAPL, not enough for MacBook Air
• BAIDU Stock’s resting target might be at $300
• Spectacular last 90 minutes cheers to Tech-Stocks
• Take Money off the table on Baidu, watchout for Apple
• Baidu mourning while Google and Apple near support
• My biggest Profit in Option Trading – 486 Percent

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January 18th, 2008 by financetwitter

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