Saturday, October 31, 2009

Quicknote on Portfoilio (a layer of protection)


Sitting tight with 3 (striped) baby-longs here as I head out of the country for the week. Technically, accounts are slightly net-short, but 11% of my world will see the woodshed if leadership again leads us lower (my longs will hurt more than what I have hedged-off in that case, due to the higher beta).

I have stop-instructions to increase TWM to 10% (now 7.3), if it trades 32.62 (which will further neutralize potential bite(s)). I have stops well-lower to sell existing TWM, a stop which will rise as the days progress.

This, until I am back the following week, or I am sure I can trade instead of sleep while in Beijing.

Again, I am not interested in being short (at this point) while out of town. Although you smell the beginning of the end for the market (yet again) and the wily Piper's gin-soaked croons now hold sufficient bulltard herds in his wake, the intermediate-term trend for the moment remains up (even if barely) and I cannot fight that from in the dark.

I'm largely on the sidelines here while you guys scoop the spoils.

Finally, I am working a solution to circumvent the Blogger, Twitter, Big Brother block in China. No guarantees though I will be chiming-in at this point.

-Total Position: ~1.28-to-1 net-short
, considering levered (2x's) TWM hedge
-18.5% invested
overall
-Pure-longs = 11%


Currently Long (according to size): DGW (4.4%), ASIA (3.8%), RINO (3.1%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, 7.3%)
(Note: inverse-ETF TWM represents being dbl-short the respective index).

Futures Accounts: no current position

Friday, October 30, 2009

Remote Bloat (small and off-call)


I'm sitting outside the Chinese consulate in SF right now, on my 3rd refill of Peet's, listening complaints about the bay bridge while waiting for my 2nd visa attempt to go through.

I'm also watching the market re-trend to the downside, eating its young with no regard for appearances.

Yesterday was as graceful as it gets, for getting out of Dodge. I don't see anything wrong with shorting yesterday (or today perhaps), but for myself, heading for China and the market still in a larger uptrend (intermediate-term basis), it didn't/couldn't interest me.

I leave that to the heroes. It looks like money is out there to scoop up, certainly; so no smack from me.

I did get very small, down to 2 longs by the open today and now I've hedged-off what's remaining with spat of TWM. I'm working to reload ASIA today long as well, as yesterday was extremely impressive following earnings.

Next week I may be sparse in posting and apparently I won't be posting trades live to my Twitterfeed (there is still no Twitter allowed in China). I'll be keeping a relatively low profile in the market though, unless something extreme develops.

[Edit: it looks like Blogger sites are also blocked in mainland China. I don't have time to research a fix right now, but this may put a kink in posting at all next week]

Beast out.

Thursday, October 29, 2009

Stage Right (exit plan in hand)


The last couple days were truly punishing, in that leadership longs here were pummeled far more than underlying index-hedges could protect (even though I was more short than long in terms of allocation). I was too distracted (distraught!) to color it here, as I'm scurrying still to get to Beijing on Saturday.

Today however, is providing my exit plan on a platter (instead of my head).

Perhaps perhaps.

It is early still, but breadth is near severe-positive, big-cap leaders GS and AAPL have now both traded above their open-range highs, the gains are strong and furious, the Dollar is back on the time-out stool, etc., etc.

In other words, we are over-bouncing; which is not the healthiest action for a market which has tipped its hand recently that sideways or downside progress is now more likely (short-term) than higher-highs and a continuing up-trend.

Sloppy sentence there perhaps, but my exit-plan for the near is in place and I'll be unloading most or all of my remaining position by today's close; taking in some sideline-time to regroup.

Even if I weren't going to be in China next week, I would still opt for a break. My strategy is defined by ramping up (centrifugally) as trading goes well and cower chicken-like when it is not (all in relative fashion). Safe to say that a trading-break is in order.

I'm keying on UWM (Ultralong Russell 2000 etf) today (daytrade only), as the R2k is the strongest (tradable) major index on the day. The trade is justified by the very strong internals for this session, which have a bit of 1-day-wonder flavor to them (generally bearish going forward; when a declining market suddenly panics higher in dramatic fashion). I can bail out before the close, certainly, but the action implies we'll close at or near the highs of the session (where I don't like to know).

After that, I'm not qualified to comment. I'll be heading for the time-out corner myself.

-Total Position: 100% net-long; 33% invested overall

Currently Long (according to size): UWM (12.9%), AAPL (10.4%), CRIC (5.3%), WATG (4.7%),

Currently Short (according to size): no current position

Futures Accounts: no current position

Monday, October 26, 2009

Update on Portfolio (smaller, shorter)


I'm going to be further distracted, possibly the rest of the week, and as such may not keep up a steady flow of commentary on the present action. Quite unusual I know ;)

Next week is going to be unique as well, as I'm expecting to leave Saturday for a week in Beijing. As long as I don't sleep, I won't miss much of the market next week in China.

And speaking of China, most leadership stocks (a large portion of which are Chinese companies traded on the US exchanges these days) traded ugly today; worse than the major indexes. If this becomes anything like a trend I will either take a break to the sidelines, or else get short, depending; I did get quite a bit smaller already today.

Given my travel plans, the sidelines may make more sense than shorting, but I'm not going to miss anything uber-ugly on the account of sleep. We'll see what sort of gravity develops.

The catalyst which (rudely) reversed and roiled equities today was an explosive rally in the Dollar; naturally. I'm not sure how I didn't make money on that but it was in no way Trish Regan's fault. Credit to Trish is well deserved for ringing the bell at the Dollar's low.

I could say something cynical and mean (again!) I suppose, but I'm too much in awe of her to spoil it. Genius deserves better.

-Total Position: ~1.8-to-1 net-short, considering levered TWM and SRS hedges
-44% invested
overall
-Pure-longs = 23%


Currently Long (according to size): HMIN (increased today, 6.8%), CRIC (5.3%), DGW (reloaded today,5.1%), WATG (5.1%),

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, 16%)
-SRS-long (US Real Estate Dbl-short, reduced today, 5.7%)
(Note: inverse-ETFs TWM and SRS represent being dbl-short their respective index).

Futures Accounts: no current position

Quicknote

A rallying Dollar has led to a reasonably nasty reversal in stocks today. I've reduced exposure and am presently about 1.75-to-1 net-short, considering levered hedges; but only 45% invested total with pure-longs now just 23%.

I'm going to be away from the screen for most of the rest of the day. Updates from here on my Twitter page may be delayed as a result, but unless we re-reverse higher today I may have little or no further activity this session.

Thursday, October 22, 2009

Choppy Toppy (just when you thought you'd had enough, you find a way to miss the little thing you were waiting for)...


Over their, beyond the hill
Lies the Picnic still

So much self doubt out there tonight. I really have to chide you.

Self doubt is almost as bad as conviction - even worse in other fields; just not as bad here.

The right amount of self doubt as a trader is essential, typically. It saves lives. Superman is going to get hit by a bus at some point .

But too much self doubt is not any advantage. Far from it. If you have such a condition, vacations are the best thing. However, if you find yourself still passionate (let's say inspired), even though slathered in doubt, you may not need a lengthy break. One should be working when inspired. That's where breakthroughs are born.

If you're exhausted and defeated and have no such spark, absolutely, the only thing keeping you from certified self-destruction would be a mandatory, self-imposed break; certainly in this field. In this place (this special game of the 21st century whereby everyone is playing whether they like it or not, since it dominates our civilization; so you might as well play it, right?). In this place you do not want to impose self-destruction. It's bad for you - it's bad for evolution.

Anyhow, I'm just posting to say something fresh and I'm even a little cheeky (Chichikov!) right now. If we were surfing, resting upright and looking out, I'd be pointing at something right now and personally I'd be moving to where I could take advantage of it, or at least paddle to where walls of water wont be face-planting and pummeling me cartilage-first into the coral.

The Dollar's been holding like a rock. Like a stone under water.

Trish has not done a lot for us with the stock market lately, but she has branded the US Dollar quite sufficiently now and this has possible negative implications for stocks. I say possible, because she cannot go a day anymore without very brightly mentioning the tight inverse-relationship the USD and equities hold, and just how sad and weak is the state of the buck. Therefore, if you fade Trish fully (and she is the genius here) it's possible the Dollar could de-couple that relationship and both Dollar and equities rally (not out of the question).

If Trish is worth her salt, and I'll argue again that she is, then this weak Dollar may or may not punch-down once more, proving everyone right that the Dollar is pawned - before punishing them all at once. Just for being right when everyone and their ancestors were on the same side of the ship.

It's the punishing them all part that I am more or less now convinced of.

Maybe this is the first, next wave down then for stocks (assuming we don't see any de-coupling). If so, the first slice is usually the deepest (for the short term anyway).

Yes, that last part is even meaningful. If I know little in the way a market behaves, I know that strong stocks and strong markets, correct sharpest (short-term) on the first real slice down (subsequent waves create higher-lows for some time after). And important, we haven't yet had a real slice down, presently. So far the market has been bought rather abruptly for several attempted declines in a row.

This last decline though was different. There was real blood in the water late Wednesday and volume that hour was stronger than any force we've seen recently. On top of that is was the half-dozenth or so distribution day for the major indices in recent weeks. And, importantly again, the time-duration of selling was even briefer (encased inside of two hours between late Wednesday and early Thursday).

Momentum, for now, has peaked (and it broke down on Wednesday). Even if prices manage higher-highs in the next couple of days, which would get a lot of the party-goers all on one, smart-side of the ship, momentum is already leading us down.

So I suppose I have a (fluid) script in my hand right now (though I'm not memorizing any text!). I might even be inspired a little myself just not and this is why I am up so late, taking psychological risks in sharing such thoughts; I'm not yet sure.

Or perhaps I am about to get walled - just for saying as much.

Goodnight.

Lickety CRIC (Jailbait IPO China Real Estate Info)


I'm back to market-neutral for the moment, although I'm working orders to blow-out one of these pigs below; so if nothing else changes I'll be slightly net-short, shortly.

Half full of half empty is the action today - you can slice and dice any way you, want but we're in a bit of a waiting game. That leans positive, perhaps, for the very near term, but I don't think there is going to be higher and higher highs this time around, should today's low represent something of a pivot-point.

I'm allowed to be wrong fortunately, especially with my thoughts, but I will continue taxi-dancing with various names and position coat-tails as needed; always conscious now of the current emergency exits.

I mentioned last night I wanted newer leadership to accumulate long, at least early in this correction (I said it). That idea remains true. I do this because every fire alarm does not equate to a burning building. Thus, when bells start ringing I like to shift my ass towards the exits, but I am willing to ask some of the hot-money Amazonians for a dance at the same time. Or - I'm jamming for false-alarm opportunities but I'm in a heightened state and willing to bolt for the door at the point smoke is undeniable.

Enter CRIC (China Real Estate Info). CRIC is definitely jailbait (a Chinese IPO only 5 days old), but I was able to pick it up on a back-test of a promising gap-higher; from Day-2 of trading. I have very little to go on, other than under-developed technicals, and some of the underlying fundamental metrics are not yet available. But I know the look of an IPO that I like and this diddy is oozing that scent so far. Yes it may develop into a dramatic loser (prom date with Carrie), but that is okay since I am keenly looking for indications of blood and I am willing to take the (relatively) small hit upon rushing then to the exit. Potential risk vs, potential reward makes the expected value firmly positive (+EV); if I think I stand to make more than I'm risking and I think the odds of success are higher than chance of failure, then I am wiling to lose that bet every time. If CRIC can swing, she will make higher-highs in no time. One caveat, is if I awake to dreadful CRIC news and the stock gaps below more reasonable benchmarks (i.e. a bucket of pigs blood lands directly on my head). But surprise negative news is exceptionally rare in an fresh IPO which is trading well-above its initial IPO price ($12/shr in this case). Underwriters do not want to bring a company public without a certain amount of visibility and you almost never see surprise fundamental negative news in fresh, hot-money issues.

As always, don't do what I do. Find your own partner, bud.

This Carrie is mine!

-Total Position: roughly market-neutral, considering levered TWM and SRS hedges
-63% invested
overall
-Pure-longs = 41%


Currently Long (according to size): CRIC (new today, 6%), ININ (increased today, 5.6%), SXCI (reloaded today, 5.1%), RKT (5%), HRBN (5%), WATG (4.7%), HMIN (4.2%), CHBT (3.2%), OWW (reduced today, 3.1%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, 15.5%)
-SRS-long (US Real Estate Dbl-short, reduced today, 5.6%)
(Note: inverse-ETFs TWM and SRS represent being dbl-short their respective index).

Futures Accounts: Out of Dec BR Pound, 1.6572 ave.

Wednesday, October 21, 2009

Looking Lower (shift to net short)


What I really meant earlier today, when I alluded to conflicting cross currents and I didn't want to speak, was that the market was setting up for a dramatic late day reversal ;)

I've got a special talent. Something causes me an uneasy feeling before the hammer actually hits and this has saved me from more than a few drubbings; as I am ready to scramble as soon as somebody sneezes. Seriously, I get irritable for no apparent reason, I start breathing irregularly, sweating palms while singing 29-psalms and my spleen begins to hurt. Friends and family nearby do not know what to make of me.

I didn't want to say anything about it earlier, as this happens pretty much daily!

For better of for worse, I am net-short now, holding fewer names (7 tidy-longs and 2 large-shorts) and I do not consider today's action anything less than...nasty.

That's right. I'm as good as bear tonight. I'm in the lifeboat with the rest of you suckers now. I picked up several whole salmon from Whole Paycheck and I'm looking to gnaw raw on these amazing, tasty creatures while watching my favorite Herzog movie on HD.

My downside target for this leg down is - Oh, piss off. Targets are for losers. I'm inclined to trust that some amount of downside is now in store, but I don't even like that much conviction. Let's just say it does go lower, for the sake of argument. It will go lower and lower and even lower, until it stops going lower and then it will go higher or sideways instead.

End of target.

I'll try to be more or less in-line with this (letting you heroes make the calls and such). I'll give you bears this, though - There was something altogether worse about today's higher-volume failure than anything we've seen in, well, weeks!

Seriously, I didn't like it.

But I want to make this clear: I've shifted beyond neutral and into net-short territory for the primary purpose (thus far) as to afford taking on new entry-stabs long as new set-ups develop. In this fashion, I can initiate, add or re-load leadership longs without worrying so much about the overall market; as I will try my best not to get too far again into net-long camp until I think the bull is back, or at least until I perceive selling as tepid (since this is a bull market I am aloud to get a little in front of the trade, going long, as that is trading with the larger trend. When I make fun of you geniuses for getting ahead of the trade it is because you are anticipating a change in the larger trend and going against the larger, existing trend; which is wreckless if not stupid).


If we see but a brief correction, then I've managed to accumulate leadership names for a new swing higher (simply covering short hedges then once the market improves). Whereas if the market continues taking lives I hold onto my short position(s) and simply play damage-control with the longs (dumping accordingly and trying again until it is clear these set-ups are mostly failing).

These new set-ups usually have a reasonably close benchmark underneath, which makes the risk vs. reward favorable. For example, an extended leadership name can be bought slicing down to support (buying near previous highs from earlier consolidations, near key moving averages, or by using other entry-tricks of the trade maniacs like me have accumulated) and I can use that level as a benchmark then for stops (normally I use benchmarks on a closing basis, unless volume is heavy enough to clearly signal a breech; in that case I don't wait for the close to unload - i just take lumps and move on).

I'm heavy into SRS now, so there will be no nodding off during the session tomorrow. Someone once(!) said the next shoe to drop is commercial real estate. Well, the previous generation of SRS fans are long dead and buried now, but I post the below video in their honor.

If you're going to drink that much vodka it is better not to sleep on your back.

-Total Position: ~1.5-to-1 net-short, considering levered TWM and SRS hedges
-54% invested
overall
-Pure-longs = 31%


Currently Long (according to size): RKT (5%), HRBN (4.9%), WATG (4.6%), OWW (4.5%), ININ (4.3%), HMIN (4.2%), CHBT (3.4%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, 15.7%)
-SRS-long (US Real Estate Dbl-short, 7.6%)
(Note: inverse-ETFs TWM and SRS represent being dbl-short their respective index).

Futures Accounts: Short 30% Dec BR Pound, from 1.64785 ave.

Quicknote

Going to be brief here today.

I pride myself on never knowing what is going on, but today's action is loaded with conflicting cross-currents. I'm not taking time just now to point them out and I'm certainly not going to pretending any brilliant conclusions. I'll continue to react and can be followed real-time via my Twitterfeed, should you care to watch.

If possible I'll chime in again sometime after the close. In the meantime and as always, don't do what I do; at least not because of anything I say; or don't

-Total Position: ~1.3-to-1 net-long, considering levered TWM and SRS hedges
-74% invested
overall
-Pure-longs = 54%


Currently Long (according to size): CYD (new, 6.2%), ASIA (5.3%), DGW (5.2%), NEU, new, reports tomrrw aftr clse, (5.1%), RKT (5.1%), CLW (5%) HRBN (4.9%), WATG (4.7%), ININ (4.4%), HMIN (4.3%), CHBT (new, 3.4%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, 15.3%)
-SRS-long (US Real Estate Dbl-short, added today, 5.6%)
(Note: inverse-ETFs TWM and SRS represent being dbl-short their respective index).

Futures Accounts: Short 20% Dec BR Pound from 1.6344

Tuesday, October 20, 2009

Bearish Interruptus (getting smaller here)


Irony being what it is, I returned home last night to my normal trading desk and now with nothing to distract I've cut back and nearly neutralized exposure early in the session today.

Pulling out a bit of twig, so to speak.

We're selling off on mostly positive news again today, on rising volume and broadly negative breadth. Commodities are taking body shots and the Dollar has suddenly snapped to life.

That and root canal reminder message from my dentist will get me to retract every time.

I suspect that bears are frothing today (yet...again!), seeing so much red, but there is nothing yet which suggests I need to get short, pull up pants or anything like that. As long as the market has a reasonable degree of volatility, I prefer acting one (slow step) behind, when accounting for a change in direction. I've trimmed most of the growth names on my list now and hedged-off most of the remaining exposure (not fully accounting for a discrepancy in beta - longs here are a little more volatile than TWM, for instance).

That is the extent of my bear brilliance and I gave back only about 0.55 percent from higher-highs in accounts to get here.

That last line is not to brag but to illustrate that being behind the trade in this market is not necessarily so nasty. Certainly not when compared to being ahead of the trade, which has been deadly.

Fresh 52-week lows remain sterile, something which contradicts the idea of this being any major top. And, as always these days, I like to look at AAPL on one side and GS on the other for broad leadership guidance. With the market turning lower now, and the end of the world still nigh, these two should be leading the charge.

Goldman is flat and Apple is still trading higher.

I don't mind the sidelines, or even playing light, but I hate the idea of making more out of the tape than so far exists. You guys with the bear breath can make that money without me; for the moment.

Regarding the SRS (Ultrashort Commercial Real Estate ETF) hedge added today (to go with a larger degree of TWM from last week): Trading into SRS seems counter intuitive perhaps (finally!), but the IYR Real Estate index has notably diverged lately, trading well below its previous high while the major indices managed higher-highs. This is only a trade and potentially quite brief in duration. But as long as I have something negative to chew on the tape and the commercial real estate brine is in fact trading lower, then I see no reason not to hop on and off the one and ugly death wicket, SRS.

I don't plan on getting pants down and holding SRS in my book at the same time that the IYR is rising; not in this episode.

-Total Position: ~1.2-to-1 net-long, considering levered TWM and SRS hedges
-62% invested
overall
-Pure-longs = 43%


Currently Long (according to size): ASIA (5.2%), DGW (5.1%), RKT (5%), CFSG (5%), HRBN (4.8%), WATG (4.7%), ININ (4.4%), HMIN (4.3%), CLW (4.3%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, 15.3%)
-SRS-long (US Real Estate Dbl-short, added today, 3.9%)
(Note: inverse-ETFs TWM and SRS represent being dbl-short their respective index).

Futures Accounts: no current position

Monday, October 19, 2009

Bear Market for Bears


Life is tough for bears again today, as the ridiculous market rally takes them once more by the horns and runs with it.

Bears remain right, heads and shoulder patterns above the rest. I mean, we've moved too-far-too-fast, well, too-far and too-fast. The market must be rallying out of spite at this point. Anyone in their right mind knows it's completely unreasonable. Lives will surely be taken now and soon.

Fortunately, I remain an idiot.

One bone-fide negative divergence - the Dow is leading the major indices higher. The Nasdaq, NDX and Russell-2k have yet to make higher-highs along with the Dow. The broader NYSE has managed a marginal higher-high, but you don't like to see Jonestown leading a charge higher; especially should the NDX and Nasdaq turn down at lower-highs.

Fine. In the time it took me to write, link and edit the previous paragraph, all but the Russell-2k have traded now to marginal higher-highs. If the market reverses lower today, it will qualify as something ugly (something like a doomed house head and shoulder head fake) - which would indeed force me to adjust.

In the meantime, Chinese growth names traded in the U.S. continue to lead (leading even those Dow Jones's) in the U.S. and I have to answer as to why I have any hedge on at all just now.

Bah!

-Total Position: ~1.75-to-1 net-long, considering levered TWM hedge
-67% invested
overall
-Pure-longs = 52%


Currently Long (according to size): ASIA (7.4%), HMIN (7%), HRBN (7%), WATG (6.2%), DGW (5.3%), RKT (5.1%), CFSG (5.1%), CLW (4.5%), ININ (4.5%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, reloaded today, 14.8%)

Futures Accounts: no current position

Friday, October 16, 2009

Night Gallery (red devil squid)



[If you are in a hurry, skip to 3:45]

Hedge and Fledge (retracting slightly)


Who eats the pelican? Something similar was gnawing on me this morning.

I never liked seeing a market near its highs gap-lower for a second day in a row; not when I'm aggressively long. There is something about the second attempt that tends to stick.

So I'm out back today, fending off body blows, staring at a freshly painted woodshed before me, down almost a god damned percent (ha!).

Fine. Eat me alive. I'm not going to take it lying down. Currently I'm shoving turtle necks back into pasta shells, looking to regroup. This may be it, surely (certainly for my kind). Hot poker barbs straight between the eyes. The end of the rally as we knew it (I knew it!). CareBears reign again while scum like me is stamped out of a wily existence; finally! After all - who in their right mind ever believed in this market anyway? Didn't you hear the sucking noise? Didn't you walk outside and smell the despair? Didn't you think?

Anyway, my mess. I'm not sure why you need to know about it. My clients are surely freaking out reading this just now, so I guess I'll refrain. Fortunately, damage control is one of my better suits. I've hedged off a large chunk of my net-exposure and I'm in babysit mode now.

And you don't want me as a babysitter. I hate all stocks equally. The boss of my discipline says get smaller and I scrutinize the list for weaknesses - hacking this and eliminating that; feathers everywhere; remaining kids crawling under desks, wondering if they're next.

But I'm lucky stupid, and an idiot fortunately still. Therefore: should this market torpedo the very jockstrap of our existence; rip holes into ill-gotten jackpots and mealy-mouthed gains; spawn caviar nightmares and Pied Piper dreams; Lancelot of pasta and 401k screams - I'm incrementally getting neutral and then short, according to the damage.

However, if this ugly, ridiculous, rigged trend continues, if the good guys will not yet win - I remain net-long (roughly 2-to-1 so at moment), pushing varying amounts of leadership growth long.

I'm taking body shots now, yes - but I'm not thinking. I'll react and retract and sometimes slow, but in the end I want to be pointed in the right direction.

You guys know more than me which way that will be.

[Note: I just increased TWM to 22.66% at 26.94. However, I expect to trade-out of this tranche today, and will likely (depending) then hold the other 15% overnight. This is merely an attempt at averaging down my hedge here, something I don't recommend (everything here, in fact, I don't recommend. Follow along on my Twitter feed if you care].

-Total Position: ~1.8-to-1 net-long, considering levered TWM hedge
-70% invested
overall
-Pure-longs = 55%


Currently Long (according to size): ASIA (7.2%), HMIN (6.7%), HRBN (6.5%), WATG (6%), DGW (5%), RKT (5%), ULTA (4.9%), CFSG (4.8%), CLW (4.5%), ININ (4.4%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, reloaded today, 15.3%)

Futures Accounts: no current position


Thursday, October 15, 2009

...The Water's Fine

Pigeon Pressure (downside fails to impress)



Similar to Tuesday, it is often the down-days where you can best assess your potential risk; allocate accordingly.

Things change quickly these days and I'm not glued to any scenario. However, I would look at it like this: I know the market is capable of rocking higher, it's been that way roughly non-stop since March. Thus, each downside set-up (today for instance) which looks less than respectable, gives me the go ahead to throttle further.

In other words, if they can't take this down, I'm looking to shove even more down the gullet, long, working working working towards gainful digestion. It may be more than I can chew - but I'm not even chewing!

I (again) don't want to say more than that. I remain, on my guard and lucky stupid; still.

-Total Position: 100% net-long
-64% invested
overall
-Pure-longs = 64%


Currently Long (according to size): ASIA (increased today, 7.2%) RKT (7.2%), HRBN (6.9%), CFSG (6.5%), HMIN (6%), DGW (reduced today, 5%), ULTA (4.9%), CLW (4.5%), ININ (new today, 4.3%), SWM (4%), PTI (4%), WATG (new today, 3.7%)

Currently Short (according to size): no current position

Futures Accounts: no current position

Wednesday, October 14, 2009

At Gravity's End


The question on the Street is evolving now to whether we'll hold and close above Dow 10,000 (that important psychological milestone), or will we see something resembling a pull-back.

I need a new career - more certain than ever now I'm very likely, definitely doomed. My only hope is Trish is off the air when 10k is hit. I'll likely be forced to sell everything if not.

Internals are strongly positive, but not severe today. INTC, JPM and Dow 10k hats are dominating the headlines, but it is the Chinese ADR's which continue dominating leadership growth.

Security software provider Asiainfo (ASIA) is the latest big breakout. ASIA is doing major volume, breaking out of a roughly 6-month base.

I like this thin name Harbin Electric (HRBN) perhaps most. This is the stock that broke out on the news they were buying another company (an accretive deal; I do like breakouts where the catalyst is driven on buying another company).

RINO (Rino International) is the exception today, but that stock was extended beyond extended, so I'm not ready to call an end to the Chinese growth-stock surge just yet. I unloaded the RINO position at the open today (>27). I will likely lay-off now at least until they price the upcoming secondary.

I don't want to speak more than that, sorry. Good luck with your shorts.

-Total Position: 100% net-long
-60% invested
overall
-Pure-longs = 60%


Currently Long (according to size): RKT (7.1%), DGW (7%), HRBN (7%), CFSG (6.4%), ASIA (6.2%, going on 7%), HMIN (6.1%), ULTA (5.1%), CLW (4.2%), SWM (4%), PTI (4%), CHBT (3.6%)

Currently Short (according to size): no current position

Futures Accounts: no current position

Tuesday, October 13, 2009

Sans Hedge (dare the bear)

It's usually the action on the way down that matters most; as far as positioning and allocation.

While I'm no doubt going to get pounded for it tomorrow, following the slew of earnings reporting and subsequent thrashings tonight (Wed, Thurs, etc.), I let go hedges today and am positioned fully long again; albeit only 46% exposed.

I can't say much more than that. If I were stupid enough to get long-only and then chide the other side, I'd be stuffing envelopes for a living.

Tune in tomorrow to see me eaten alive.

-Total Position: 100% net-long
-46% invested
overall
-Pure-longs = 46%


Currently Long (according to size): DGW (6.6%), HRBN (6.6%), CFSG (increased today, 6.2%), HMIN (increased yesterday, 6.1%), ULTA (5%), CLW (4.1%), SWM (4%), PTI (3.9%), RINO (3.%)

Currently Short (according to size): no current position

Futures Accounts: no current position

Monday, October 12, 2009

Bleak Week

Bleak as it sounds, the market may not be up every day this week again.

I'm laying a bit low, focused instead on getting back to the water immediately after the close; literally. I'm really geared-up this time around, having packed the latest high-powered rubber band technology known to mammals; front and rear flash floodlights, waterproof encased with adjustable cranium domeband; and a finely spun tooth-proof body suit to set the mood.

If I can't kill the market, something's going to pay.

I don't pretend to know how ugly the selling will get. What every pro that rolls onto CNBC tells me lately though is that an imminent pullback on company earnings will be followed by a strong year-end rally. That Earnings will not yet show enough strength to justify these levels in stock prices; so naturally they will sell on the news. Then, the seasonally strong year end period, combined with the same pros being so far behind the market this year, will conjoin like Siamese Twingos and rock us ultimately higher; to even more unjustified levels I guess.

That's a tidy assessment. If I were an odds-maker I would have to take the line of strength into and out of earnings, followed by an anti-seasonal year end drubbing.

Listen, to use 'seasonal' as an argument for anything these days is, well, un-pro like. Seasonal has been upside down if not sideways for almost two years.

Wake up cowboy.

Anyway, I'll let those guys make the money for the time being. I'm fairly neutral, lightly exposed and getting lighter. Leadership growth still behaves well (else I would be out altogether), the charts still show power and almost nothing will surprise me in the near term - aside from a pullback on earnings, followed by strength into the seasonally strong November/December period - ha!

Speaking of neoprene, that'll be the last time I fly in a full body suit of the stuff. I thought I was being clever, fully wet-suited right down to my 3-ply Saran wrap skivvy's, corduroy jacket around the shoulders to keep appearances leaning normal; looking to hit the water within an hour of landing. But I was sweating liquid faster than I could replace it, trying hard to speak coherently, asking for more and more water, dripping on the passenger next to me in order to take the next bottle; otherwise staring out the window at my own Islands of Langerhans passing below.

Something's gotta pay.

-Total Position: ~1.7-to-1 net-long
-58% invested
overall
-Pure-longs = 42%


Currently Long (according to size): DGW (6.8%), HRBN (6.7%), ULTA (5.2%), CLW (4.3%), SWM (4%), CFSG (4%), HMIN (3.9%), PTI (3.9%), RINO (3.6%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, reloaded today, 9.7%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).
-TER (5.5%)

Futures Accounts: no current position

Friday, October 09, 2009

Retail Hell (a trader's guide)


More of the same today. I'm not making much long-side money - since I'm so sick-conservative.

No problem. Not today. Today I'm shopping Sunday underwater hunt-and-grunt getaway packages. I can't leave yet, since I'm keeping on hand tomorrow night for the 90-minute set of Bob Dylan Christmas songs, but after that I'm out of here.

I know you guys like PCLN as a short (I'm still avoiding such frisky behavior, conservative as I am), but I'm a big customer of their product. I love arriving to far-flung corners of the world between 11Pm and midnight local time and getting home a couple of hours before the market's open on Monday.

Given my consumer habits (I'm gnawing on organic pigs knuckles just now, while warming last night's spaghetti, below), I'm pretty much the worst example of "going with what you know." 3-piece woot suits and rubber-band harpoons aren't going to sway the mainstream anytime soon.

What I've noticed though, as far as retail, is that if the stock is hot and I would never consider myself a likely customer of the product, I'm inclined to like the stock even more. Case in point at the moment would be ULTA Salon/Cosmetics (ULTA). The fact that the website is a gross violation of common sense and decency (credit Ignatius J. Reilly), gives me that much more confidence they are onto something I want to be a part of. Similar big winners of the past include things like Nutrisystems, Coach, Dress Barn, Chico's (love the fat-velvet look, btw), Ross from Hell Stores, Dollar in my pocket Tree, Big Lots (god save me), Walmart, True Religion, Barbie, Clap-on Clap-off, Klic-Clack, ZZZ-best Carpet System and Nordic Track!

I think Nordic Track was symbol CML at the time; one of the greatest ride-it up and short-em-down plays from the 1990's. Rubber-band technology (a favorite of mine, harpoon in hand) was the death of them. We loved Nordic Track dearly, but I was going to break my legs on purpose before getting on one of those rat traps.

You are correct, I still don't have much to say regarding the current market. In fact, I'm pulling in a couple of names long today (stepping out for now on SXCI, BCSI and I have silly-priced orders higher-up for a few others). I'm going to get smaller (likely, at least) and prepare for the inevitable underarm armageddon y'all been warning me about.

Actually, earnings begin flooding en mass starting Tuesday. I don't expect anything in particular, especially since I try to not expect just on principal, but given the lack of spirited direction on either side of the market at the moment I see no reason to have my neck out very far.

Undersea however, I intend to extend all appendages; bandaged or otherwise; apperati or not; and expect the worst.

-Total Position: ~2-to-1 net-long
-65% invested
overall
-Pure-longs = 50%


Currently Long (according to size): DGW (7%), HRBN (6.7%), SWM (6.2%), WYN (5.3%), ULTA (5%), CLW (4.5%), HMIN (4%), CFSG (3.9%), PTI (3.8%), RINO (3.3%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, reloaded today, 10%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).
-TER (5.2%)

Futures Accounts: no current position

Thursday, October 08, 2009

Tony G and Me

You're still here?

Well, my apologies in advance. I'm doing anything I can right now not to sell out my entire line, take to the sidelines and book an overnight flight to the pup seal capital of the world for a little R&R.

Why should I be miserable? Prices are rising, my names are performing well as leadership continues to out-pace the broad market, fewer jobs were lost last week and dullwether AA smacked the industrial complex higher after reporting less than pathetic numbers.

How bad could it get?

But here I am, sitting mostly on hands while my amygdala screams intervention, listening to an uncomfortably growing excitement and enthusiasm in all directions regarding the prospects for stocks.

Save one.

Normally, I prefer to keep accelerating exposure as the market rallies, but not so much this time around. Leadership growth continues to out-perform (I mentioned, which is keeping me from doing anything rash); excitement is running higher now than the major indices (a negative divergence); we have not yet traded to higher-highs in the overall market, nor in momentum, yet the jump-up-and-down brigade has broken-out to new recent heights (a shift-side-to-side negative).

Why am I angry? Why should you have to suffer?

Because this is yellow-light material only. I can't really do anything about it (save complain). Momentum, volume and price-action carry greater weight, while reading sentiment is more like tomorrow's weather forecast. I don't like to see sentiment rising faster than price levels, but over-enthusiasm it is not a proper license to sell. Over-enthusiasm is more like a warning to re-fill Koolaid cups before they take the punch bowl away. Shuffle your body closer to the filling station so you can grab two last hunks of meat and stuff it in your shirt when you see them coming; just to casually toothpick a modest meatball and refill your cup as you smile to the arriving host.

Save one.

Ok, wtf is Save One? Save this! Jerky. You call yourself a professional?

Seriously, students of the market should just leave now, because they are going to get this wrong and it can only screw up how they look at things. It makes zero sense. Continue shorting the rigged system instead because you know better (if you last long enough you'll be right, certainly, and then you can sharpen pencils and figure out where to take profits lower; cause your that smart and can ultimately re-short higher then after bagging a few percentage points and catching a beer with some friends).

Or, hold your head under water for 20 minutes. I guarantee you will the upside pressure will go away.

Trish has yet to chirp-maximum. That's it - that's all I have to say. Nothing brilliant - just stupid in fact. Trish, who is only on for about 90 minutes during the session - no signal. Nothing. She may as well have went to sleep today. She is not yet moved - she is not yet excited.

Is the market due to keep rising because Trish has not gotten excited yet? No no no. The goose lays golden eggs, she doesn't make you a sandwiches while you wait. All I know from Trish is that when those octaves reach the high end of her lovely singing spectrum - for the time being the party is over. Other than that no value for traders of markets, not from Trish.

If she had done so today, like so many other jokers this session, I'd feel better right now since I'd be taking (knowing) action instead of sitting here and worrying (not knowing) about how much upside meat could be left; whether we will make higher-highs or fail- whether we gap-lower on the failure and smack me in the face; whether I can take a few days off from Bob-obvious Pisani's voice soon because I can't keep up this shouting match with my screen without worrying about my well-being; whether I can try another sport, just for some refreshing variety.

That's how you play king-jack - and you call yourself a professional? On your bike - up and away...



-Total Position: ~2.5-to-1 net-long
-74% invested
overall
-Pure-longs = 59%


Currently Long (according to size): DGW (7.2%), SXCI (6.8%), HRBN (6.6%), CFSG (6.2%), SWM (6.2%), WYN (new today, 5.2%), BCSI (5.2%), CLW (4.6%), PTI (3.9%), HMIN (reduced today, 5.1%), RINO (reloaded new today, 3.2%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, reloaded today, 10%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).
-TER (5.2%)

Futures Accounts: no current position

Wednesday, October 07, 2009

Trinkets and Trims

I've settled down a bit today. Went to bed late, got up early and listening now to Bob Dylan Christmas songs to ramp energy back upward.

As far as the market, it's quiet so far, for a change, so I'm not changing all that much; even if I am increasingly concerned about the ensuing face-plant I'm going to have to dodge once the roof starts caving.

Actually, I prefer this set-up (hence the aggressive allocation). I sit, mostly quiet, climbing up and down my plywood box of worry; convincing myself that I am on guard for disaster when really I am just jamming the throttle forward with whatever amount of thrust I can justify.

Fear is fine, but full fanged fighting is better.

Anyway, enough talk. I'm filling white space again and your tired little eyes have so many place still to run. On your bike - off you go. Come back after the train wreck and look for the carnage. I'll be strung up and spiced, like a carcass of pepper jerky.

...Bob Dylan Christmas songs still in the background.

-Total Position: 11-to-1 net-long
-61% invested
overall
-Pure-longs = 56%


Currently Long (according to size): DGW (increased today, 6.8%), SXCI (6.6%), HRBN (6.5%), CFSG (6.4%), SWM (6.1%), BCSI (5.2%), HMIN (reduced today, 5.1%), WYN (new today, 5%), CLW (4.5%), PTI (3.9%)

Currently Short (according to size): TER (5.1%)

Futures Accounts: no current position

Tuesday, October 06, 2009

Ice Water Veins (and fortunately, shit for brains)


Fortunately, I remain an idiot.

The session was a little wild and I did whip myself some today, I'm still riding long, in push-it-till-it-pops fashion.

So while I did take some caution when a GS-led sell-off threatened to reverse the market today, I am happy to report I was crazy enough to whip right back to full-fool long-mode; once it became clear the reversal was going to fail.

Right back on the bike.

I suspect that bears got very excited when Goldman Sachs (GS) reversed lower and especially as that led to a reasonable counter-wave of selling throughout the market. If I hadn't had so many orders to enter, so many positions to monitor and 3 Faces of Eve to council (sorry Fred), I would have been lurking the boards for value today. Pure, natural value. But two things kept my mind thinking long, even without seeing the bear-board jamboree (and even whilst I was entering GS shorts myself).

First, the market internals were still very strong, down from extremely positive earlier in the session, and it was a broad-based, rising-volume rally. Second, leadership stocks (GS aside) were out-performing the major indices (again!). Third, the time-of-day was a little too early (12:30-1:00 EST) and didn't hold the weight of a late-day reversal attempt (time-of-day has provided an incredible edge many times for me in the past - I have discussed it plenty, though not lately; I'll look to explain the nuance of this again soon).

Fourth, even though I wasn't able to confirm, would I be wrong to suspect bears were pounding tables with extreme excitement? There was great cause for celebration after all - as the indices were up only .75% or so at that point! Practically an up-day if you had been short, right?

And while that is amusing, or not, it doesn't really mean anything going forward tomorrow. In fact it may even be a negative for tomorrow (especially after bears cover positions on the up-open). These were good only for today and on top of that, the now-choppy advance is a little suspect. Why? Well, tops are sometimes choppy in nature. Secondly, we have not yet traded to higher index highs (although leadership names are much closer to highs than the indices). Thirdly, you know about forty-five thirdlies, so let's leave it at that for now.

Anyway, this is a lot about nothing - especially when I won't even tell you how to use time-of-day to your advantage for a fake-out counter-move; Or why buying a high-volume breakout whereby a name is breaking-out on news of buying another company is such a high-percentage play (HRBN today, for example). Frankly, I'm not sure why you continue to read this site. I rarely post, compared to most, and when I do most of the time I'm just blowing steam and using you to organize what I might not think as much as anything otherwise.

See what I mean? Even when I am surmising what might be next it comes from a process of elimination, not anything so brilliant. Breadth was severe-strong today and suggested we would not see an ugly reversal. Trish came on and her opening comments did not even mention the strong rally in stocks, but instead she focused on the strength in gold and the weak Dollar (Trish would have been much more jubilant if we were going to reverse ugly. Trust me, she's that good). And those bearish boards, which I couldn't even visit so I have no right to flame today? They were no doubt salivating what little saliva was left in those giant cotton mouths - that today was progressing much like the key-reversal failure in the market a couple of weeks ago on Sep. 23rd!

Whatever. At least I always have myself to kick around once you guys go away. In the meantime, things could get exciting now. I'm going to froth and push and push again, until ugly again fairly flashes. At that point I am going to take cover as best I can, whatever my lumps may be. This way if we keep on higher (how ridiculous) I am not going to miss it. I can take the body shots of running out of a crowded theater with my ass already on fire. The real risk is a dramatic gap-lower - which means I'm in a building which has already collapsed; not good.

I'll risk the latter, until and unless there are clear signs of warning (which may be close, maybe not - htf do I know?). Or if it's a gift-horse right out of the mouth - like if Trish comes into the theater, takes a seat next to me and shouts sweet nothings into my Six Ears of Eve- I'll be godspeed the hell right out of there in such a case.

In the meantime - the machine still has teeth. Why fight the machine?

-Total Position: >10-to-1 net-long
-58% invested
overall
-Pure-longs = 53%


Currently Long (according to size): HMIN (10.4%), HRBN (6.7%), SXCI (6.7%), CFSG (6.4%), DGW (5%), BCSI (5.1%), CLW (4.5%), SWM (4.1%), PTI (4.1%)

Currently Short (according to size): TER (5.1%)

Futures Accounts: no current position

Monday, October 05, 2009

Roubini and the Patty Hearst Affect


Roubini was on CNBC earlier this morning. I missed much of it but he was suggesting the better-than-expected bounce in equities is overdone and the market is set-up now for disappointment; that unemployment is too high for a robust recovery; that consumer confidence, ISM and other recent data is suggesting a U-shape at best, or else double-dip recovery.

Nothing surprising, but that last part is very interesting, as it suggests Count Roubini may actually get bullish when once the market finally retracts. That could end up laughable - that Roubini becomes bullish in a bear market, fixating then on an economic recovery, whatever shape he thinks he sees.

I'm not going to suggest the bear market will indeed resume (I won't suggest it will not either), but here is a great example of why predicting the future is ill-advised in this business; even if that is part of your job description. Psychologically, Roubini is ready and willing to turn bullish on equities - he just needs them to go down first!

Perhaps this is a bit like the Patty Hearst affect - the idea that one can grow fond of their captors. That bears become more bullish once incessant incessant incessant bull-pain suffered, is finally alleviating.

We'll see.

Back to now, the market has pivoted nicely off of Friday's early lows, but the major indices have a bit of ground still to make up to manage higher-highs.

Leadership growth had declined less than the averages (which is bullish), but so far very few names have vaulted to higher-highs. RINO, an exception, has powered 32% from Friday's low to today's intraday high.

Meanwhile, salivating bears are pencil-pointing to a smathering of negative technicals, which draw but one (encore) conclusion - an ensuing failure is looming.

A shocker I know. But I'm noting here that bears may not be so confident now on the way down. This idea is new, and, well, we're not really going down yet either. But it will be worth monitoring when/if the bear resumes. Will bears become less bearish once they finally get a break?

Fortunately for me, I am still an idiot. And while I did re-trim smaller on the strength today, I see no reason to get overly conservative, or short even, until leadership begins behaving badly.

Lower-highs en mass would be a concern, if this remains the case once the market reverts lower. A smash to lower recent-lows would slow me down even faster. But in the meantime I'll keep old, slow and not such a hero (not like you, tough guy). If I had sense I would be shorting right here and now (again!). Instead I remain pointed longer, spitting-up on myself while spitting-out, mostly bull grovel.

And if we do smack-lower, breaking this up-trend with authority, it will be most assuring to know that Dr. Roubini is looking at where to bid for my shares as I am looking to get short.

Recovery or not!

-Total Position: ~2.25-to-1 net-long, considering levered TWM hedge.
-42% invested
overall
-Pure-longs = 34%


Currently Long (according to size): SXCI (6.5%), CFSG (reduced today, 6.2%), DGW (5.8%), BCSI (4.9%), CLW (4.2%), SWM (reduced today, 4.1%), RINO (reduced today, 2.8%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short; reduced friday, 7.8%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).

Futures Accounts: no position

Saturday, October 03, 2009

Quicknote on portfolio

While not impressed major indices could not hold positive by the end Friday, most leadership stocks did reverse higher and stick. I decided against re-hedging further.

I'll be up early Monday. If the world is for sale to any significant degree I'll be adding protection in the pre-market. In the meantime...

-Total Position: ~3.3-to-1 net-long, considering levered TWM hedge.
-61% invested
overall
-Pure-longs = 53%


Currently Long (according to size): CFSG (8.2%), SXCI (6.3%), DGW (5.6%), SWM (5.4%), RINO (5%), TSL (5%), BCSI (4.8%), JDAS (4.6%), CTSH (4%), CLW (4%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short; reduced friday, 7.8%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).

Futures Accounts: no position