Saturday, June 07, 2008

Stage Right

Since the previous post here Thursday morning, oil has climbed $16/barrel in the two days (a new record high), the dollar was slammed and the Friday employment report has the US economy back on the rack...


Friday was no picnic for the longs, but at the same time it was not exactly a disaster. The Nasdaq and growth/leadership continue to out-perform the Dow and S&P sorts. The Nasdaq actually traded (slightly) higher volume rallying Thursday than on the drubbing Friday and also closed above Wednesday's low.

The Dow, S&P 500, and broader NYSE all closed at multi-week lows (not so rosy there).

The point? We're seeing topsey-turvey, herky and jerky - nothing very clear in terms of direction. When leadership/growth stocks are out-performing (and summer is waxing) it is not the greatest environment to get whole-hog short. At the same time, when the Dow and S&P are in a defined trend downward, it is not the best time to load up load on growth or the market in general.

I'm sticking with the keep-it-safe and simple approach for now and shopping fresh travel plans to deserted districts in order to basically wait this one out. If it were later in summer, I would be net-short or possibly fully short by this action. Instead I'm going to scale further out and hit the low-road to Elba, or somewhere similar.

No changes in my position here since Thursday. My airline short was saved by the blow-up in crude and my hefty SKF (double Financials short) position more than compensated for the set-back in the group of longs (which more than held their own on Friday).

On Monday, if the market is not stabilizing, I will be moving out of much of this (covering the Financials and AMR on early weakness and then dumping the longs if the market is not reversing/stabilizing - this allows me a decent swing-shot higher with long positions un-hedged if we do stabilize and only an hour or two of un-hedged long exposure if we do not).

Exposure Long (49%): TITN; TNH; CSIQ; TTES; JASO (listed according to size)
Exposure Short (31.5%): SKF (24.5% of accounts are double-short Financials from 110.05, by being long of SKF); AMR (7% of total accounts are short AMR from 7.33).
Cash (19.5%): % of total accounts.

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