Tuesday, April 20, 2010

This is That Bounce

That was an exciting title - now for the boring details...

Last week's high-volume slice lower was born out of new, higher-highs in the market. Generally you can count on that scenario getting bot, even if the market is within a larger topping process.

It is on the ensuing bounce one can determine the amount of power, or distribution, etc.

Financials are showing distribution on the bounce, while technology and energy have lacked much volume, but are exhibiting reasonable power.

AAPL, however is a little sluggish and that one reports tonight. Tomorrow may see a little drama on the heels of AAPL eps.

If I were supposed to predict, I would guess there is not much upside in stocks for the short-term, but we're still one high-volume distribution day from suggesting significant downside is now imminent.

Grinding like my teeth at night might be more likely for the time being.

I re-shifted to net-long again yesterday, though nothing dramatic, and I'm looking to short another financial late today or early tomorrow in order to flatten-out exposure. MS reports in the morning (remains my largest short) and I will hold pat there for that news. DB is impossible to borrow at the moment and options are too expensive and too ill-liquid - otherwise I would be looking to attack DB on the bounce today.

I may just go ahead and short GS instead. Even if GS avoids any major legal defeats, there is enough damage and enough uncertainty going forward (regulation in particular, which means investors cannot judge the new rules of the game for Goldman, and neighbors like DB, MS, etc).

I'm looking to lighten longs again into this strength. Whether or not I buy them back again afterward depends on whether or not the action remains formidable.

Easy enough.

Total Position: Currently ~1.2-to-1 net-long; 70% invested

Currently Long (according to size): MF (6.2%); CISG (5.6%); SBUX (5.4%); CHS (5%); NTGR (3.8%); DGIT (3.8%); ULTA (3.6%); CAAS (3.5%); WATG (3.2%); AVGO (3%)

Currently Short: MS (8%); TWM-long (Russell 2k Dbl-short, 5.8%); EPV-long (European Index Dbl-short, 5.4%); DST (4.5%); SKF-long (Financial Index Dbl-short, 3.7%)

Futures: 10% short Jun R2k future short (reloaded today and active there lately), from 717.20; relevant accounts

Twitter page for details

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