Asleep at the Whee-lo (money manager's pullback chamber choir)

Nothing warms me more than a market which moves only higher (seemingly), coincident to a chorus or warnings (daily) why we're going to pull-back - very very shortly; most certainly; since it makes such perfectly logical sense.

Sure sure sure - we have an election on Tuesday and the Fed's QE2 menu releasing Wednesday. We've run up ahead of these events and amply so. Any bum can tell you now we'll sell-off on the news.

So brilliant. May as well sleep-in a little longer.

Meanwhile you are just getting further and further from your benchmark as the market fails to cooperate. You're just too bright for such a ridiculous game, Mr. Manager. You buy your pullback, tough guy. You can even have my shares if you get one, I'm easy. You'll make your year still - there's going to be that year-end rally waiting there at lower levels - just to grace your ass! Christmas turkeys glazing, more full of shit than even you.

Yes yes, I know. Getting cheeky is dangerous sport. Fortunately I'm so old I get away with all kinds of murder. The trick is letting go of your thoughts, beliefs and words pretty much the minute you speak them. I don't even remember what I just said anyway. I could be net-short by the end of the day, I really don't care. Where's my sippy-cup?

At least though I have so many of these guys to tell me what I should be doing. Such peaches.

Kisses

Follow Centrifugal to fade trades in real time

Total Position: Currently 2.8-to-1 net-long, 108% invested (will reduce to ~100% or less by close)

Currently Long (according to size): CRM (10.2%); BVN (8.1%); EWZ-Brazil (7.1%); ULTA (re-increased today, 7%); VALE (6.9%); OVTI (6.7%); PPO (6.1%); LTD (6.1%); MCP (reloaded today, 6%); NFLX (5.8%); COH (5%); DAL (4.9%)

Currently Short: GMCR (could get stopped today, 7.7%); DISH (7.4%); CVS (6.8%); ZMH (7.1%)

Futures: no current position

10-Minute Rule for Intraday Stop-loss (GMCR short update)

Twitter entries are 140 characters only and instead of an 8-part explanation there of my stop-loss benchmark now for GMCR, I'm going to lay it out here instead.

Readers at home can see how I suffer a position going against me. Oh my God, I'm meltinnnnnnggg!! ...tune in to GMCR today and watch me burn.

Follow Centrifugal to fade trades in real time

Would-be Tweet in 8 parts:

>11AM [EST] now, so I'll explain my 10-min rule 4-intraday stop-loss bnch. It's based on NH or NL (intraday, depending if you are long or short)..

...I will often take punishment early, whereas tighten-up a benchmark later-session. Beg. 11AM I consider the early mkt as ended...

...$GMCR early high 2day = 33.33 and %-gain + vol-pace not forcing me out (5%+ on 2x's+ vol-pace would-have forced me 2cover short)...

...No such vol or %-gain on $GMCR & rise is on take-over chatter, so I held; but 10-min rule now in effect (given >11AM now)...

...10-min Rule for short = cover-short post-11AM if name makes new intraday high & remains > previous high 10min later...

...For $GMCR now, that means if it trades 33.34 or higher, then I am stopped-out if pr is 33.34 or > 10 min later. Stop then placed 33.34

...the reason this works is that a brief spike to nh's will not shake you out, but if it sustains at new intraday high, you must exit

...33.34 stop-price would then be in place for remainder of session. The more liquid a name, the better this works; $GMCR liq-enough.

That's all for this one. This rule has saved me many times (from getting taken out too early, but still taking me out if ultimately necessary) and was designed after numerous times of being stopped-out because something made a new high intraday (or new-low for a long), stopping me out, but only to mark the high (or low) on that very spike (you'd be surprised how often this occurs at mid-day). Waiting 10-min at that time gives it the further necessary proof/confirmation that you are only screwed (whereas when they jack to new intraday high and then re-trace, you survived). Again, this is if you decided not to blow out a loser sooner (and for me, higher volume and %-gain forces me out no matter what I might think). This rule works for when you are not perfectly sure and the name might re-trace later in the session. In this case, if GMCR re-traces in the last 90-minutes - I'm less of a chump and the rule gives me a better chance to still be involved. Finally, if a stock takes out a high in the final hour (or new-low if this is a long), then the 10-min rule is not important - the stock is taking you out at a time of day you can better trust.

Who is going to buy/takeover GMCR, by the way? That's a funny one :^)

right-lick and expand to view chart

GMCR (pivot-entry reached for short)

right-click and enlarge chart in order to view properly


Getting back to GMCR again, the stock this morning has reached my pivot-entry for re-loading short. Should it manage a close above 32.44, on rising volume, I will be stopped-out for now - whereas a close below 32.44 (the lower the better) implies that gap-resistance is still maintained and we can focus then on what might happen again below.

I call this a pivot-entry (re-entry in this case), because now (32.08-to-32.44) is the level that defines whether or not I am on the right side of the trade (the 50-day moving average today is ~32.08 and the lower gap-level from the breakdown is 32.44, from September 30th).

Sure, a position being above or below water in your account is a good measure of whether we are on the right side of a trade, but in fact we could be profitable on something and ultimately be in the wrong place (give it time, give it time). When and if the name reaches a key level (in this case, GMCR has poked above the 50-day MA for the second time since breaking-down AND the stock reached the lower-end of the gap, 32.44). Note that some will always point to a stock filling a gap, but in fact the best shorts only reach into the lower-end of a gap before losing the ability to continue bouncing).

Important: Over the weekend I mentioned (re GMCR) that when a leadership stalwart breaks-down hard and initiates a new downward trend, it is not until the 3rd or 4th jab above the 50-day moving average that it is optimal for entering short (it usually takes time to kill a giant; for reference, scroll down to the GMCR paragraph here). Understand then that I am cheating now, on faith that GMCR is going to lose steam at this area, therefore I must keep stops tight and acknowledge there is a good probability that A.) GMCR may in fact survive as a leader and in that case I have no business shorting; and/or B.) The likelihood the name will ultimately poke above the 50-day a third and fourth time down the road are strong.

In other words, I am getting ahead of the more optimal trade, as we generally need to give a falling giant more time before coming in with swords. I will do this at a key entry point, however, because I will know very quickly if I was too eager (I'll take a quick loss if the name survives and closes >32.44, while I can consider myself on the profitable side as long as it does not). Therefore I've got an enviable risk vs. reward trade at hand, beginning now - assuming there is no take-over or other news which gaps this one through my heart.

As always -don't do what I do, especially when I am discussing shorts. I lose money on something every day. If you play along with GMCR short because of me, it will most surely occur for me with this one!

Try this instead - Follow Centrifugal to fade trades in real time

Beast out.

Oh, I should add that time-of-day is meaningful to my entries. If this were the end of the session that GMCR had managed to recapture the 50-day and then the 32.44 lower-gap, I would hold off entering at that point. I always give more credit to the end of the session that prior to 11AM est, certainly.