Tuesday, May 19, 2009

Ruff and No-Tumble


Volume is running at a higher clip today and leadership is still rallying. So even though the market's overall gains are subtle, under the surface things remain firm.

For now.

I took body shots being net-short most of yesterday, but today is more than making up for it. I made adjustments, both yesterday and earlier today, but I'm still keeping things close to market neutral (although my longs are high-beta).

If oil prices and the Euro vs. Dollar stall-out here, I think the market will soon stall as well. Look for this. If these keep rallying, I'll keep looking for leadership names breaking out of nice set-up consolidations and key them long.

ASIA is the breakout of the day today (highly ranked stock within a highly-ranked and rising relative-strength group, breaking out of a nice looking 6.5-wk base, on a volume pace now about 3.5x's normal). It's less than perfect, but reasonable. Perfect is when RS runs to a new high ahead of the price (RS here is a little below the previous high, even though stock price is now at a NH; so, a negative divergence there); and volume would be nicer if it were running greater than 4x's normal (which it may still manage if it surges last hour). I like above 4x's ave. vol. for an indication of power in a breakout. I'm not complaining, but as such I didn't increase beyond my initial 5% attack as it broke above the 18.63 pivot earlier this session. I hold this much still and will how well it follows through.

SNDA is breaking out today as well. I didn't add from my existing position though, as the base is less than 5-weeks old and volume is not much better than 2x's average. Often it is best to trade out when there is a low-volume breakout (especially given that the previous base was extended in price), but this name has been so powerful in the past I will give it greater respect; risk losing some of the meaty gains there.

CYOU I added to earlier when it was still down on the day, since SNDA had begun exploding up and it made sense CYOU would follow. Better lucky than dumb sometimes. I'm a bit of both, which is why I out-perform most market geniuses.

Also, I'm trading MDT short following earnings released this morning; paying me a small dividend for the 400 some-odd hours I spent updating my working short list posted last night. Scroll down if you dare.

All these boring trades are being spit live via Twitter (for educational purposes only); if you come here only for the pictures then you are on the right page. Otherwise all of this is old news by now.

Blah blah blah - when is the market going to top, right? Watch the Euro. If it turns the equity market should soon follow.

But may as well grab what it is giving in the meantime. The rally may out-live all of us for all I know. That's not a recommendation however. Gotta be too late to make money now. There's only an hour left on the session.

Total Position: 1.42-to-1 net long (plays 1.06-to-1 net long considering leveraged short etf's), 56% invested

Currently Long (according to size): CYOU (9.2%), SNDA (6.6%), ASIA (new, 5.3%), WNR (5.3%), DRI (3.8%), PEET (2.8%)

Currently Short (according to size):
TWM-long (reduced to 4.9%; Russell2k Dbl-short), STRA (5.3%), AIPC (4.1%), BKE (3.5%), SRS-long (2.7%; US Real Est. Dbl-short), CNO (2.2%)
(Note: inverse-ETFs TWM and SRS represent being dbl-short the respective indices)

Futures Accounts:
-Covered SPX Jun today, 904.50, from 911.75 last night
-Short 20% Jun Euro last night, 1.3577 (no stop at this moment)
-Short 10% Jun BR Pound today,
1.5499 (no stop at this moment)

Options (relevant accounts): 0.4%,
Sept GM 2.00 puts, paid 1.57

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