Tuesday, April 14, 2009

Quicknote for Tuesday

I'm writing fast with no time to edit, trying to beat the opening bell.

Goldman (GS) profits were essentially double the analyst's estimates, so no real surprise there. GS is 3.5% lower at the moment in the pre-market.

Intel (INTC) reports tonight after the close. That will be worth paying attention to; announcements on cap-ex spending especially will be relevant for Semi-equip, a leadership group in terms of relative strength.

While I'm not sure when, where or exactly how, I am looking for an opportunity to greatly increase my hedge. This will position me net-short at that moment, but the objective is less about getting the market short and more about creating greater ability to accumulate leadership, should the market begin to retrace.

I don't want to call a short-term top to this rally (why start a bad thing now?), so I am looking to implement this in one of two ways. First, if there is an emotional rush higher, I will go ahead and grab the hedge. Otherwise I need to see signs we've peaked near term. More on this during the day as something begins to play out.

Again, the objective of getting short near term is to allow me to re-ramp aggressively long (the strongest leadership stocks on a pullback). This way, instead of buying (and buying more) the dip and finding myself uncomfortably exposed to a further pullback, I am already cushioned and adding long will simply begin to neutralize my short exposure. Then when the market firms I cover the hedge and very quickly I become aggressively long once again.

That's the basic idea, subject to change along the way. Easy enough.

No comments: