Quicknote for Year End

I've been more awol than expected this week, and traveling again now today. As always, it is easy enough for me to update trades via Twitter, since it requires less time and energy vs. blogging. When I go missing here, I have so far kept up with updates over there.

I'm still holding a few smaller-cap longs (HMIN, CISG, HRBN and ULTA; 14% invested overall) and at this point expect to take them all into next week.

I did play several more, with the intention of selling by today. The year-end didn't work out so well, but no disasters either.

I don't like the idea of holding anything long into next week which has had an exceptionally strong 2009, as these have a tendency to sell-off early in the new year (historically). This was a mucky quarter for me (basically flat in a decent market), but the year over all was very strong; so I'm far from complaining.

Straight-up or straight down action next week would surprise me the least (and drama is possible in either direction). The common idea held of a short-term pullback early in the year is the scenario I agree with the least. I would argue we've had a pullback already, in most of the leadership names (although the NDX leaders did finish the year strong); so opening the new year and rallying strong from the get-go will make perfect sense; short-term.

Otherwise, I would be surprised to see early weakness, followed by strength; or if not straight-up, I would be wary of the potential for straight-down instead.

As always, we shall see. Keeping small here going into the year, so I can adapt easily.

Best luck in 20TEN!

Mavvy Christmas

Laying low, blog-wise (though I did a brief post at ES yesterday).

Mavericks is about to pump Santa. The Contest window is open and judging by the data, we're about 100 hours now from possibly 25 foot breaks; which would make this year's event well worth watching. I'm in SCal (unfortunately, since it means I can't get to Mavericks), and moving to the desert for the weekend and much of next week.

Cheers!

Quicknote on Action (chinese growth suspect)

The market indeed rocked higher, so I got that right.

Or wrong.

Chinese growth, where I accumulated most of my line, is acting poorly this week. Shanghai is at an almost two month low, down another 2.3% last night. So while US equities continue (so far) to fade the stronger Dollar and have worked back to highs, leadership growth in China is behaving a bit sick; especially in terms of relative strength.

Given that this has been the leadership in the market, it commands some attention. We might see strength in the China names between now and year end (cannot count out the strong seasonal period we're entering, unless/until it becomes clear the market is selling-off in spite of the calendar). But without renewed strength in the higher-growth Chinese plays listed in the US, I wont remain bullish for too long; China or elsewhere.

Total Position: ~3.5-to-1 net-long; 34% invested; Pure longs = 29%

Currently Long (according to size): CML (reduced today, 5.9%), AMZN (5.4%), HMIN (4.9%), CISG (4.1%), RINO (3.7%), HRBN (reduced today, 3%), ULTA (2.2%)

Currently Short (according to size): TWM-long (R2k Dbl-short, reduced today 5.1%)
(Note: inverse-ETF TWM represents being dbl-short the respective index)

Futures Accounts: No current position (see the Twittspitt for details)

Catalysts and Cattle Lists

Let's go ahead and say the least - this was a beast of a week in the markets. First let me say - I wasn't the first guy to turn bearish on stocks, but I do like my killing to be easy; especially since markets have a way of chop-dropping downward with greater velocity than they do in fact rise. So at the risk of refreshing my status to born again idiot, I will admit to you now I'm beginning to turn a lot like bullish.... More

Updated Position...

Total Position: 4.5-to-1 net-long; 45% invested; Pure longs = 39%

Currently Long (according to size): CML (9.3%), RINO (6.6%), HMIN (5.1%), CISG (4.3%), CAAS (reloaded today, 4.1%), HEAT (reloaded today, 3.9%), HRBN (3.8%), ULTA (2.1%)

Currently Short (according to size): TWM-long (R2k Dbl-short, reduced today 5.3%)
(Note: inverse-ETF TWM represents being dbl-short the respective index)

Futures Accounts: No current position (see the Twittspitt for details)

A Trader’s Guide to Hedging Strategies - Part III

A Trader’s Guide to Hedging Strategies - Part III posted earlier on ES Here.

The FOMC announcement is out and while the Fed is signaling the beginning of the end of zero-rate stimulus, the market's reaction is rather benign so far; while the VIX only continues to erode (down another 4% today). I've been scaling into a larger net-long position, although at this point I remain rather lightly positioned overall.

Total Position: 1.33-to-1 net-long, 34% invested

Currently Long (according to size): CML (increased today, 9%), HMIN (5.2%), RINO (4.3%), CISG (4.3%), HRBN (4.1%), ULTA (2.2%)

Currently Short (according to size): QID-long (NDX Dbl-short, reduced today 5.4%), AAPL (out for now, 0%)
(Note: inverse-ETF QID represents being dbl-short the respective index)

Futures Accounts: No current position (see the Twittspitt for details)

Updated Position

Total Position: 1.21-to-1 net-long, 45% invested

Currently Long (according to size): CML (7%), HMIN (5.2%), RINO (reduced by half today, 4.4%), CISG (4.3%), HRBN (4.1%), ULTA (reduced today, 2.3%)

Currently Short (according to size): QID-long (NDX Dbl-short, 7.5%), AAPL (10.5%)
(Note: inverse-ETF QID represents being dbl-short the respective index)

Futures Accounts: Short 10% Mar NDX future, from 1800.75

A Trader’s Guide to Hedging Strategies - Part II

A Trader’s Guide to Hedging Strategies - Part II
...just posted to ES Here.

Updated Position

Total Position: [Edit>>>] 1.40-to-1 net-long, 50% invested

Currently Long (according to size): CML (6.9%), DGW (increased today, 6.6%), HMIN (5.1%), HRBN (4.1%), ULTA (4%), RINO (new today, 5.7%)

Currently Short (according to size): QID-long (NDX Dbl-short, 7.7%), AAPL (10.4%)
(Note: inverse-ETF QID represents being dbl-short the respective index)

Futures Accounts: Short 10% Mar NDX future, from 1800.75

A Trader’s Guide to Hedging Strategies - Part 1

A Trader’s Guide to Hedging Strategies - Part 1 was posted just now to ES here.

Updated Position (building a position)

I've been back and forth between slightly net-short and slightly net-long this week, but I'm increasing exposure at the same time. If the market does indeed find a bid, I'll look to lighten the hedge and (theoretically) hold a nice portfolio of longs.

If the market fails, I'll be scrambling some; likely increasing the hedge first, then unloading problems as they are present themselves.

Total Position: 1.25-to-1 net-short, 35% invested
Currently Long (according to size): CML (5.9%), HMIN (5.1%), HRBN (4.1%), ULTA (4%), DGW (3.2%)
Currently Short (according to size): [edit, left-out qid] QID-long (NDX Dbl-short, 7.9%), AAPL (5.1%)
(Note: inverse-ETF QID represents being dbl-short the respective index)
Futures Accounts: no position

Updated Position (laying low still for now)

I'm still out of town, the market remains a little tricky and I'm keeping a relatively low profile for the time being.

I did cover half of my AAPL short on the further slice lower early today. Not because AAPL is acting so well, but because the rest of the market has remained more resilient than not. As a result I'm a little net-long again, but only 15% invested overall.

Not especially committed either way.

Total Position: 1.75-to-1 net-long, 15% invested
Currently Long (according to size): HMIN (5.3%), CML (4.5%)
Currently Short (according to size): [edit, left-out qid] QID-long (NDX Dbl-short, 4.4%), AAPL (5.1%)
(Note: inverse-ETF QID represents being dbl-short the respective index)
Futures Accounts: no position

A Trader's Guide to Contractions

A Trader's Guide to Contractions was just posted here at ES.

Chinese growth names are behaving quite badly now; coincident with an RS breakdown in Financials (including leader GS), AAPL (which has begun serious distribution of late, after failing to make new highs along with the NDX in November), various Retail and more.

I unloaded most of my position late today and will keep small for a bit while regrouping. I haven't played it so well lately, but I will say I find the action rather negative.

Total Position: 1.1-to-1 net-short, 20% invested
Currently Long (according to size): HMIN (5%), CML (4.4%)
Currently Short (according to size): AAPL (10.5%)
Futures Accounts: no position

Quicknote from a Dolt

I'm feeling better today, even though this was the worst session for me since fighting the tide, beginning last week.

Psychology in the markets is interesting and I have to play my own psychology sometimes. I cannot sit against the trend with conviction and feel good about it; not for more than a couple of sessions. I'd much rather be wrong and make money ;)

Wow, what cross-currents. If I hadn't been such a dolt, keying on the (million or so) toppy signs, I would have grabbed much more of these roman-candle blow-off moves in the growth names (Chinese mostly; but we have all noticed these by now, right?). I did catch a few, which hopefully saved me from the most unpleasant calls which play something like this: "How can I be losing money when the market has been so strong?"

I hate that call, which is why I fire myself from that client.

I also hate firing myself, so I am forced to do things I may not like, or may even think better of (like covering shorts in a blow-off move). But this is how you stay in the game.

I have only so much more game to stay in, so I'm not going to muck it up by standing in front of set after set. For the record, my mistake was not in covering shorts early today. My mistake was in not covering Monday (which failed to follow-through with selling begun Friday). After Monday, I was in front of the trade - not the best method for keeping your energy up and motivated.

Again, moving to the side is a fine strategy (and not used enough around here!), if and when you do not trust the trend.

One of the most interesting cross-currents is the institutional darling tag-team of GS and AAPL. Both exhibit an inability to rise, no matter what the tape looks like lately. I'm drafting a (Trader's Guide) piece featuring AAPL and will post it up later at ES; hopefully tonight.

RINO failed to close above the 2ndary price of 30.75 and I blew it out late in the session today. I know I've led you to believe I'm in love with this stock, but unless there is some good make-up sex in the very near future, RINO and I are over!

In fact, I hate all stocks equally. A healthy trait you should take from me.

Yes, I love a powerful, small-cap growth name that is beasting higher, but I cannot hold faith that such a small, unproven name ever comes back after posting a high-volume failure. Some of the best disasters begin exactly like this.

If I do play RINO long again, it will occur only like this:

-I will only buy that stock above 30.75, or...
-I will buy following a successful pivot (thrash-down + recovery)...
-Or finally, I may make a faith-buy below 25, but bench tightly then on the 50-day (currently 24.02 and rising).

Otherwise it is just another STEC-wreck to me.

Total Position: 1.8-to-1 net-long, 29% invested
Currently Long (according to size): DGW (11%), CML (4.5%), YONG (3.4%)
Currently Short (according to size): AAPL (10.4%)
Futures Accounts: no position

Quicknote on RINO 2ndary

Can't get into it now, but I'm playing the RINO 2ndary pretty much how I outlined it a while back - here.

30.75 is the 2ndary price and that is my benchmark, but on a closing basis. I will likely unload earlier than the close if it trades (and sticks) below today's intraday low of 30.11).

Quicknote (bearish interruptus)

Moved out of most positions today and left now with only two longs; very small overall position at the moment.

Somehow I got through this storm flat (thanks to longs like HEAT; and now DGW); my futures accounts did get nailed-ugly however. Gory details are available via Twitt-feed here.

I mentioned in a comment here last night, I'm not going to ask a question like how long can this market go on like this - instead I have to ask how long I can go on fighting it.

Total Position: 100% net-long, 13% invested
Currently Long (according to size): DGW (8.5%), CML (4.5%)
Currently Short (according to size): no position
Futures Accounts: no position