moves in practice account

In my practice account, I opened three positions today. Two are short, and the third is a small speculative option position.

The first move was to short IBT, the Dow Jones US Home Construction Index. I think housing stocks will continue to get pummeled, and though down 50% since last year, the news will only get worse. It's too bad to get better any time soon. Fundamentally, the fund trades at 1.3 time book value, and I believe we may see the fund trading at book value before its over. On top of that, book value is a trailing indicator which will probably erode as well. The position was opened at $34.38

The second move was to short Station Casinos (STN). Barron's described this as a play against the Las Vegas housing market. Since it's one of the most overvalued markets, (Barrons estimated by 43%) it has the most to fall. With a debt of almost six times equity, they will also be hurt by shrinking credit. The company is down over 20% this year, but despite the warnings, the company is opening new casinos at breakneck speed. This is a recipe for disaster.

The third position was an option play on Kinetic Concepts Inc. They have a lawsuit that will probably be won, but if it's lost, the stock is worthless. My play is a statistical one. There is a 25% chance that the stock will be worth $20. So I bought Aug. 25 puts for $0.45. If the statistics are right, it should be worth $1.25. If I win my bet, it's worth $5.00. If I lose, I lose $0.45.

In the near future, I will look for tech and growth stocks to short before earnings come out over this week and next. I should have shorted Amazon, but this strengthens my belief in this strategy.