Tin Can Logic (back from traveling)

Back at my trading desk now, after two months out of the country.

I could say plenty about my trip, as well as current markets, but I'll be brief (...bam!).

Regarding the markets, let's sum it up by highlighting that the investor public and financial media remain fixated on potential negative effects of a weak economy on stocks (especially after such a strong run up) - coincident with action in the market which remains significantly constructive; consolidating at worst. This is a key factor, as the strongest advancing markets historically climb mostly prior to proven improved economic data. By the time the public is aware the economy has certainly improved, the easy money and often the rally altogether is already behind.

The light for the moment remains green for buying and holding. More on this in upcoming posts.

As far as my trip, I'll likely delve more into that, but I'll share this much for now:

In Amsterdam it is easy enough to find an open wifi signal (unlike the majority of my travel this summer). But one secure-network I came across last week had a very catchy name: We're Online - Fuck All of You.

Total Position: 100% net-long, 62% invested

Currently Long (according to size): MRVL (8.2%), BIDU (6.9%), NTAP (5.5%), CPSL 5.5%, CNQR 5.3%, CORE (5.3%), CTSH (5.1%), STEC (5.1%), CYOU (5.1%), LFT (4.8%), RAX (4.7%)

Currently Short (according to size): no position

Futures Accounts: no position

Potential Pivot Point (and a brief game plan)

Still quite busy here, but here is a synopsis now of how I hope to play things for the short-term period. If the market does not cooperate I will have to adjust, obviously. But so far so good...

Today's reversal may create a nice short-term pivot-low.

If so, we may manage to trend higher up into the end of Q-2 and onto the July 4th holiday. That would then provide good seasonal-strength selling opportunities on the Friday-to-Monday; 3rd-to-6th of July.

If not, I'm going to have to lighten-up, using today's lows (in most cases) for benchmarks. In this case I would begin getting defensive and very small, until the market shows better.

I let go a lot of the increased hedge today and at moment am only holding 5.4% SRS for that purpose.

I was down more than the broad market yesterday, even with hedges, as the growth names took it much worse than indices. Volume though was not heavy, nothing really broke significant support, the entire world was expecting this pullback at the same time that the charts of leadership names still look like they should be bought. I couldn't really see anything too ugly yesterday, so I just upped the hedge instead of selling names.

Finally, unless the month of July is a clear trend higher, I'm looking to play it very light, decompress some and get rested for the second-half of the year. I don't want to work hard if the environment of summer is at all choppy; as I have found again and again that a choppy summer environment is both tricky and difficult to prosper Normally, as a result, it is the best time to rest and refresh. By later in August I find the environment to be typically more playable and then September to January is generally money-time, as far as my historical performance.

That last part suggests I'm getting ready for extra-curricular activities. Thus, even if my trading gets boring by the time we hit July 4th, the hunt-and-kill reports posted here will hopefully suffice your personal bloodthirsty appetite.

Total Position: >10-1 net-long (plays >5-1 net-long considering levered SRS), 58% invested

Currently Long (according to size): CYOU (increased today, 6.9%), ASIA (6.1%), RAX (4.7%), SWN (4.5%), WFT (4.3%), SNDA (4.3%), TQNT (4.3%), ARST (4.1%), LFT (3.8%), MRVL (3.5%), PEET (3.5%), PAR (3%), AU (2.9%), JDSU (2%)

Currently Short (according to size): SRS-long (5.4%; US Real Est. Dbl-short)
(Note: inverse-ETF SRS represents being dbl-short the US Real Estate index)

Futures Accounts: no current position

Quicknote on Hedge, Wheel-O's and Cramer Dividends

I'm going to be a little busy this week, as such I'll be posting less. I will however continue to Spit-twitt new trades live.

We have something of a pullback, so I'll take a minute and explain how I am hedging for it. First, Friday ended much better here than it began, capped-off in the after-mkt by two lovely set-ups courtesy of Dr. Cramer. I got short HBAN up in the nethersphere (as high as 13.5% above the closing price) and I also got to unload my largest long, TQNT, also in the exosphere (6.325, greater than 9% above the closing price).

So while ravaged, bloody and bitten early Friday (somewhat), I got back to the cave with dignity and well, grace. More Kisses for Cramer. That guy that keeps on giving.

I just let go the Chinese hedge (FXP) and from here I will look to hold my (4) Chinese growth names (CYOU reloaded again today). If tomorrow is down further and there is no sign yet of a bid in the market, I'd prefer to reduce exposure and the number of longs, instead of re-loading another FXP-hedge.

I'm still holding TWM and SRS. Given the severe negative breadth on the day (volume however, is relatively low). I increased TWM intraday, but I expect to back-off the additional shares near the close (sooner if the market catches and keeps a bid). So while I'm closer to flat at the moment, in terms of exposure, I'll go into the night leaning around 3-1 net-long, depending.

If the market still lives, then by tomorrow we'll see something resembling strength. If we are ugly still tomorrow, I'll reduce exposure by shrinking the number of long positions (holding winners first); let the remaining hedges go then according to the action, exposure-long, etc.

And certainly, I don't mean to suggest that the market cannot begin trending downward now (I just need to see it and respond before giving up the easier job of buying leadership in a good market instead). Who can blame me for that?

In fact, my go-to voodoo guy is spinning perpendicular right now and that has me a little nervous (not kidding). The illustrated chart above comes from TX Tornado's post The Wheel. Apparently, price, time and areas of Da Vinci influence are are all in harmony (my description). (SPX 950 was tested on 6/5 at a time/price which was 90 degrees from the 3/6 square and previous resistance).

I don't know what any of that means. Frankly though, I don't need to. When the universe lines up its ducks and starts playing Wheel-O with the markets, I keep my guard up.

Let's see what transpires.

Total Position: 3-to-1 net-long (plays 1.5-to-1 net-long considering levered TWM and SRS), 66% invested

Currently Long (according to size): ASIA (increased today, 6.3%), SWN (reloaded today, 4.7%, WFT (reloaded today, 4.6%), RAX (4.3%), ARST (4.3%), LFT (3.9%), MRVL (3.6%), PEET (3.5%), CYOU (reloaded today, 3.1%), SNDA (2.9%), AU (2.9%), JDSU (2.1%)

Currently Short (according to size): TWM-long (13.7%; Russell2k Dbl-short), SRS-long (2.7%; US Real Est. Dbl-short)
(Note: inverse-ETFs TWM and SRS represent being dbl-short the respective indices)

Futures Accounts: no current position

Pelted (shift towards neutral)

While I've been fiendishly attempting to neutralize exposure, reducing names and adding hedges, my brand of longs today are taking it worst on the tape; especially Chinese-growth ADR's.

Whereas earlier in the week leadership growth was rising, regardless of the rest of the market, today the Dow (for example) is relatively flat while leadership is giving it up considerably.

The market has teeth - even for me.

On the positive side, a slam-thrust down following strong, lengthy moves higher can be bullish action (in that the first hard slice lower very often marks the short-term lows for such stocks going forward). But that is hardly worth praising out-loud when you're being taken out back and flayed. I have somewhat neutralized my position, but frankly the beta of my longs is higher than the hedges, so dollar-for-dollar I'm still a little more long than it looks currently below.

Also encouraging, the reversal on ARST following last night's eps report looms positive. Forward guidance there was an issue, but the market has a different outlook there.

I'll incrementally cower out of this stance if things worsen from here. Otherwise if it does develop such that today's lows on the growth names look to be holding, I'm wearing them from here.

Lovely furs of growth in that case.

Total Position: 2-to-1 net-long (plays 1.18-to1 net-long considering levered TWM, FXP, SRS), 61% invested

Currently Long (according to size): TQNT (5.3%), ASIA (4.5%), RAX (4.5%), ARST (reduced today, 4.4%), LFT (increased today, 4.4%), MRVL (3.6%), PEET (3.6%), SNDA (3.1%), AU (3%), JDSU (2.1%)

Currently Short (according to size): MA (6.6%), TWM-long (6.6%; Russell2k Dbl-short), FXP-long (4.8%, Xinhua China Dbl-short), SRS-long (2.5%; US Real Est. Dbl-short)
(Note: inverse-ETF TWM represents being dbl-short the Russell2k index)

Futures Accounts: out of Long Russell-2k Sept, 528.25 ave. (+3.2)

Bearing the Pain

Bears are feeling it still. I don't want to be a bear as long as it looks like this.

Like it or not, the market is behaving well today; notably resilient on the heels of this week's blast-up.

I reduced yesterday's (new) shorts as a result, and while some of the exit points were poor relative to the day's range, these were presumed hedges; when they were closer to profitable I was holding out of necessity but ultimately unloaded when it was clear they couldn't hold their own water.

Accounts here are still positive today (so far) and this is because the leadership longs are making up for negative recent short trades.

That and a nice entry into DIOD long in the opening minutes.

These blaring-ugly trades can be laughed at via the Twittfit on the right >>> Notice how long my losses are held, relative to gainers. Even if I'm full-out pathetic with fresh-fires, I'm rarely ruined because I keep my broken clocks telling the right time and throw out anything worse.

If I brush aside everything I might think and simplify matters, the simple truth is that 1.) the market is consolidating softly and quietly, which is constructive action; while 2.) Bellwether GS has so far managed to re-take its 200-day moving average today (>115.27); and 3.) when I put on shorts it feels a lot like a pitchfork in my skull, while my long positions have been basically printing money.

That last part is relevant to me and I weight that that highly when analyzing protection, aggression and whether I'll be buying a last-minute plane deal to Boca Bora this weekend; get out to the water for alternative thrills and kills.

I'll be hunting more live longs by scouring the charts this weekend (from whatever location I find myself). The market still behaves like a bull at moment and I'll continue to treat it that way until the bears finally turn this fork around.

Last weekend's list of leadership longs can be viewed here in the meantime.

Total Position: 3.42-to-1 net long, 73% invested

Currently Long (according to size): RJI, PMCS, WNR, NFLX, ARST, CHKP, LFT, MYGN, MNRO, TSYS, DIOD, DRI, IOC

Currently Short (according to size): NTRS, RSH, ELOS, EGO

Strike That (re-illuminate long)

What doesn't kill you only makes you stronger, right?

Bears can't be happy.

The market did gap-lower but demand has since Mobbed sellers. As the major's cannot break down, then we should either chop sideways or else revert higher. I prefer chopping, whereby leadership stocks work quietly higher under an otherwise quiet surface. But if she wants to burn it up instead I won't get nasty (though I will let some of the air out on any emotional blast higher.

I backed-off from (brief) hedging and am back to fully-bloated long (aggressive growth leadership). For the moment I still have half of the JPM short (from yesterday's close), but it is now paired with GS long. Other than that I have RSH and a small amount of EGO short (the latter is no hedge, just a Cramer double-promo fade; hopefully for the ages).

My FMER Cramer-fade from last night was a scalp in the end. I took profits as soon as it was clear the world wasn't going to end again. I still love you though Cramer. And thanks for the tips on buying CELG (for the last few months!). I'm sorry I didn't take that one seriously.

That's the dope on my shorts. But it is the (many) longs that are far more interesting; to this fish at least. I know these names don't appeal to you, that's Okay. I'm just going to sit here quietly and make some money while you guys find better things to do. I've got enough over-roasted coffee to last all week. I can piss in canteens if need be and I just peel-off whale jerky on an as-needed basis.

Yep, the action should get quiet now methinks. I'm thinking nap-time in fact.

The sweat shop then may closed for me today - I'm in monitor mode. I'll spitTwitt changes from here out, but again don't do anything I do (at least not because of anything I have said). Watch a mad-trader blow-up with too many longs for fun and informational porpoises only.

I'm a bloody mutual fund here at the moment. Good trading.

Total Position: 7.85-to-1 net long, 96% invested

Currently Long (according to size): MYGN, NFLX, ARST, RJI, PMCS, MNRO, WNR, SNDA, LFT, NVLS, CHKP, GS, FORM (new), TNDM, TSYS, DRI, IOC

Currently Short (according to size): RSH, JPM, EGO

Copyright LLBAG, 2009 - Locked Loaded and Bloated Aggressive Growth Fund, LTD

Warm Plunge?

Signals are mixed today.

The market internals are dreadful, with 88% of NYSE stocks and 81% of Nasdaq stocks so far declining on the session. The major indices are trading more than 3% lower, led by the NYSE; down closer to 4%.

At the same time though, leadership growth stocks are notably resisting pressure; in fact many of the leadership names have reversed higher today, in spite of the ugly tape.

I increased hedges early, scaling into a large percentage of TWM; which positioned my accounts net-short for the day (accounting for TWM and SRS leverage). At the same time I began covering individual shorts on the weakness, letting go of RSH and ELOS and reducing EGO; and soon began adding new leadership long (NFLX, TNDM and DRI so far).

In other words, I am presently hedged, but when the hedges come off I am suddenly going to be aggressively, almost fully long. This might run counter to the idea that I would sell sell and sell on a break-down in the indices, but frankly I am seeing too much continued strength in the leadership and the sell-off today has only further illuminated this reality.

If they cannot sell on a day like today, they are going to jam higher once pressure subsides. I don't have any comment on when pressure will subside, but with breadth this severely negative I would argue the odds of a reversal for the overall market today is significantly low. And don't do anything I am doing, but I am confident that leadership is going to higher-highs in the not-distant future.

So much for my Friday rant...I guess buying a further pullback may not be jumping in front of an eager bear after all. We'll see.

Currently Long (according to size): MYGN, ARST, NFLX, RJI, TSYS, PMCS, MNRO, WNR, SNDA, IOC, LFT, TNDM, DRI

Currently Short (according to size): TWM-long (Russell-2k Dbl-short), SRS-long (US Real Est. Dbl-short), AXA, EGO
(Note: inverse-ETFs TWM and SRS represent being dbl-short the respective indices)