Thursday, September 17, 2009

Sitting on Hands (sans hedge here at moment)

Yes you can!

Bears are jumping up and down now, seeing actual red on the tape and a negative reversal in the major averages.

Myself, I had a sloppy cover of my new SDS hedge, coughing it up as the averages surged early, only to watch them revert right back to Earth afterward.


Fine. Normally I would hop right back on, if/when I regret exiting a trade. But this is a hedge and I am committed still to the long-side as long as it is working.

And no offense to bears (ha!) but in many ways I am less nervous today than I have been most of the week.

The reason is that I'm looking to hedge in order to protect - for defense. But of my still-too-many 13 longs today, there are only 3 in the red at the moment (meaning, if this is the pressure I was worried about ensuing, then I may as well just try to ride it out).

CNBC's Fast Money just finished (morning segment) and 4 out of 4 of the trader pros there suggested selling this market; but breadth is not very negative, far from extreme; leadership is obviously holding well, with names like AAPL and GS still up strong on the session; stocks are still breaking out to the upside, charts remain live and I'm up almost a full percent with currently 10 out of 13 longs in the green.

What me worry?

Anyway, my finger is not far from the trigger, but I am going to keep to the strategy of hedging only if I have to (may be before you even read this ;). I don't mind a bit of whipsaw now and then and I don't expect to trade perfectly. But I will not be net-short this market until the long side stops working.

Total Position: Aprox. 7.5-to-1 net-long, considering under-levered UUP hedge; 72% invested (pure-longs amnt to 60%)

Currently Long (according to size): SNDA (7.2%), CFSG (5.6%), NEU (5.6%), CTSH (5.6%), CYOU 5.5%), RKT (5.4%), ULTA (5.3%), CLW (5.1%), JDAS (4.2%), ININ (3.9%), SWI (3.3%), FNSR (2.9%)

Currently Short (according to size):
-Long-UUP here (12.1%); which due to inverse correlation with equity mkts defines this as an equity hedge and I have it in the short-camp as a result.

Futures Accounts:
-20% Dec BR Pound short, from 1.6497
-Covered Dec SP500 short today at 1057.75

My leg - bear mouths...

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