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

Added Long (and Mount Deer Doom avoided)

Outside of the Chinese growth stocks, the market showed further resilience yesterday and I'm buying in some on today's early weakness. Nothing too extreme and I've spread-out now between 4 leadership groups.

Trades here are still being fed live via my Twitter page; while commentary on this side remains subdued.

As for the Chinese internet-content/video-gamer names yesterday, in the end action there was suspect at best. CYOU's The Duke of Mount Deer release-date will be delayed, God forbid, and the name remains under pressure. I'm not yet against it, but I've yet to reload any trigger there. While they have yet to break anything significant, volume has been heavy on the decline.

Total Position: 100% net-long, 28% invested

Currently Long (according to size): MRVL (8.2%), BIDU (7.1%), GS (7%), NTAP (5.9%)

Currently Short (according to size): no current position

Preachy Keen

While I remain committed to blogging very little, the market refuses to let me rest.

I could log my 1000 complaints, except the moves out there are sick; multiple breakouts into and out of earnings reports, and few appear to be failing. I will keep it quiet and just keep trading.

Outside it is beautiful here. Big nature in a million small packages. The Tour starts again today and that will also provide distraction. If you are one of the majority who is rooting for Armstrong to fail and pining every angle for which to criticize, I suggest holding a higher opinion of yourself.

Greatness has a history of being criticized by the rest of us.


Total Position: 100% net-long, 54% invested

Currently Long (according to size): BIDU (9.9%), CYOU (9.1%), EWT (7.3%), MRVL (6.7%), SNDA (6.4%), NTAP (5.4%), TSRA (5%), FFIV (4.9%)

Currently Short (according to size): no current position

Futures Accounts: no current position

same boring location

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

Mush!

I may have spoke too soon yesterday. Like the end of Grizzly Man, where the guy decides to stay too-long into the pre-hibernation period and that new loner bear comes around whom he has no previous relationship with - that's the bear who eats his ass. No care to what a good guy he is/was. Chomps without reflection.

Well, maybe not that bad. You bears are sweating some. We're all sweating some. Wake me up when one of us is getting eaten.

We're back to murky, mushy action. Retail is taking body shots, following housing revisions and rising foreclosures (apparently, up to 8% of mortgages are on the stretching rack). Otherwise the market remains as half-full as it is half-empty. If you are picking good stocks to play (long or short) then you are doing alright. If you are expecting huge fireworks, then you are living in the wrong month.

I'm flat on the week, somehow!, but daddy still needs a new pair of snowshoes if you know what I mean. I'm focusing long (though lightly invested) until we can actually break this trend. If action waxes uglier now I will have to hedge at least; but so far I remain patient. If we resume higher and leadership is firm, I'll be happy to increase exposure.

I cut-back the Euro short last night and might be happier now if I had let it all go (it has recovered from last night's sell-off). I was bailed-out nicely this week, but if the dollar is truly weakening again I'm not going to take a second ride against the tide there.

Gold is at a 3-month high. I still favor LIHR, which broke out last week on reasonable volume. This has been a nice pair-trade to my dollar short. If you forced me I would admit the gold trade looks better than the dollar short (but what do I know anyway?).

As far as other longs, RIMM and that group of Telecom-Wireless equipment stocks remain quite firm, while the Internet-Content trio of CYOU, SNDA and NTES continue to suggest that institutional money has still got game(rs); and I continue to see ASIA (Asiainfo, from the Internet-Solutions group) as the most powerful, reasonable break-out leadership play. There are other bigger gainers out there, but I'm not swinging for 150% risers who've suddenly cured the need for cancer.

Tread well my friends.

Total Position: 100% net long, 38% invested

Currently Long (according to size): CYOU (9.4%), ASIA ( 6.5%), LIHR (6%), SNDA(5.8%), PZZA(4.3%), PEET (2.9%), MRVL(2.9%, reports this evening)

Currently Short (according to size): no current position [was just stopped on MDT]

Futures Accounts:
-Short 20% Jun Euro last night, 1.3683 ave. (covered 10% last night, 1.3793)
-Short 20% Jun BR Pound, 1.5602 ave.