Thursday, April 02, 2009

Swing Like Darwin

I'm in protect-my-profits mode now, but I need to see the market flash some weakness before getting serious.

At the moment the internals remain firmly positive (still), yet there are a couple of concerning factors.

1st, the largest percentage-gainers today are from the worst-ranked industry groups (not that leadership is trading down, but I prefer to see better stocks leading a rally). Anything related to autos is screaming the loudest and if the Transports close at these levels (up 10% as a group) that will mark the greatest 1-day gain there since...1939.

2nd, Financials are below where they opened on the session and may be showing the first signs of stalling; too soon at moment to say.

I continue to use GS and its 200-day ma as my proxy for the Financials. My FAZ (partial hedge) added today will be increased or decreased based on GS's ability to retake its 200-day (explained in previous post).

I'm not getting bearish here, I just want to be careful to swing correctly (keep in front of the pendulum). If we do stall today, I'll shift neutral asap - but even if we keep and close strong (something internals suggest at the moment) I will be a net-seller at the end of day. This will protect gains here by neutralizing exposure, but also this allows me to reload as the water level subsides, or as new set-ups emerge.

Recall yesterday I said I would begin selling if we screamed higher but would hold bloated-long if the gain was more quiet.

Perhaps unexpected when these were initially added, I have a couple of core-long holdings at this point (now that the trend is clearly higher and some of these names have behaved well enough to hang-onto long - the market has made a reasonable number of leaders which are now more than swing trade; whether or not that continues is crucial), but most of my position remains swing-fare; where I am looking to leap from rock to rock, skipping along a rushing river and clawing whatever I can along the way.

There are more good stocks these days than I can hold, so I will move from set-up to set-up in an attempt to catch the better moves. Hence, I have reduced NFLX and MNRO today, while I have stepped-out completely on SNDA, NVLS and TNDM; for now.

Will leap live via Twitt >>>

Total Position: 3.75-to-1 net long, 83% invested

Currently Long (according to size): MYGN, ARST, RJI, PMCS, WNR, NFLX, LFT, CHKP, MNRO, FORM, TSYS, DRI, IOC

Currently Short (according to size): RSH, FAZ-long (financial's triple-short), ACC, GE, EGO

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