Monday, November 26, 2007

Back to Nature

I'm somewhere in the Pacific, listening to Vaughn Monroe while spearing and canning my own radioactive mackerel for the upcoming winter.

Back home I've got the weekend's kill of buffalo-elk and Bambi flesh strung upside down, dehydrating in the living room. When I get back to trading, there is nothing more pleasing than building positions while chewing on various species of jerky.

You guessed it, I'm almost entirely idle as far as stocks are concerned at the moment. And since short-sellers are first and foremost ruthless beasts - I've got to keep the teeth sharp somehow.

When the market next shows a big hand, I am going to move that direction. It would be convenient if that was to the upside (as in, the re-trend lower today amounts to a successful re-test of lows), because I would love to focus on the year's leading stocks driving higher into the year-end. But I'm not writing any script just yet. We have to prove something down here first.

Aside from the ISRG and ONXX, I unloaded everything by the end of Friday's shortened session. And if you had asked me over the weekend whether I was looking to bull or bear this market from here, I couldn't have answered with any certainty, but I was happy last week to have taken profits on the shorts and then bag a couple days gains out of the long-side without skipping a beat. I got the most out of that long-side trade, at least as far as low hanging fruit is concerned.

I should have beared it again today, obv., at least for a re-test. But now unfortunately I have to skip a beat while the market re-re-defines itself. While things are driving decidedly lower today, there is still out-performance from the leading NDX stocks (something bullish), volume is low (shows lack of buying is perhaps more to blame than heavy selling) and this retreat may amount to nothing more than a re-test of last week's lows (which is not much of a move from here).

I can see the bull case as the year winds down here, which is a change from my recent focus, but there are no flashing green lights following last week's easy scoop of Apple's and Oranges. This is the proverbial wait-and-see moment. Sell it lower or else buy it higher - but leave well enough alone now in the meantime.

I don't care which direction I fire next, so long as I can fire. If the picture remains cloudy, it might even be both sides in the nearterm - long the leaders and short the laggards; each side attempting to hedge the other.

I'm holding only the ONXX long (so far), as I banked the profit early today in ISRG, above 289. This turned out to be a few points below the high of the day, but my trade was prompted by the calendar; the magnitude of the moves in these stocks was not in my program (my pencil ain't that sharp, sorry).

Neither are my teeth. At the moment I have only my own gums to chew on while the tape is bleeding further red.

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