Lost Leaders (plus making enemies on twitter)

I was drafting much of this post over the weekend, but couldn't hit the publish-button in the end. The main reason for my indecision - I’ve knowingly become an especially mean-old ass behind the scenes (in general, but especially in my trading life), but I was having a difficult time being a complete jerk in public.

Then I read the Nick Denton article Search and Destroy in the New Yorker and I wondered - why should I be so god-damned nice?

I've been conveying pretty much everything I do here the last couple of years (I didn't realize I'd live this long), so I may as well stop holding back. I'm just trying to make a living after all. Scroll to the bottom here for the dirt.

First, enthusiasm (sentiment/animal spirits) had risen measurably lately, coincident to everything no longer working in equities (whereas just a couple weeks ago, everything had been working, throughout September, and yet sentiment was considerably more cautious at the same time).

The general environment remains favorable, sure, maybe, but there have been some dramatic blow-ups lately and themes blowing-up do matter (the site of blood slows down investor appetite).

The education stocks (not a leadership group) were destroyed last week, while the previous week saw the cloud-space tech leaders lance dramatically, on tremendous volume, and fail to recover by any significant degree (normally, a first, sharp-slice lower in a leadership stock or group is a buying opportunity only, certainly in the short-term; the wall of worry is built on such bullish slices, followed by a gradual return to higher prices; but the cloud space did not return to higher prices). Microsoft news today that they will put their Office software on the cloud may be the best reason for this, but that is a guess only (it may be the market is telling us something instead, that leadership is waning). But whatever is going on, I still insist EBIX blowing up was not worthy of creating as much damage as it did.

If I sneeze on the Pope and he dies soon after - there were more negatives to his health than my little germs. EBIX did not kill the cloud space. The cloud space was apparently sitting on a pin prick.

Today, for example, cloud stalwart VMW sold-off, managing lower-lows from the day EBIX collapsed, even though posting strong earnings and guidance last night. The negative market helped today, but lower lows on good news is not going to come out positive when you call your boss with the bottom-line news.

If you go back a little more than a month (few will recall, I suspect, since so many of the Twitterscente have more recently been piling into similar names which are/were rallying late in this cycle), the US listed stocks of Chinese growth companies began a new trend of blowing-up, coincident to indications of ill-accounting, shuffling auditors, resigning CFOs, etc. In other words, the underlying fundamentals of these Chinese companies listed only in the US were not very-well reflected in the information at our disposal.

Imagine that.

Since I wrote on this young phenomenon September 9th, a few more have blown up and a fabulously interesting article + ensuing drama has surfaced with another, UTA. This trend is likely to grow, in my estimation, and the throngs of Twitterbugs piling into RINO, CHBT and the junkier solar names (LDK, SOLF, CSIQ, etc.), are scooping up nickles in front of a proverbial steam roller. These names will rally 10% on a good day and they will halve your balls when stories of fraud surface.

I featured a fundamental look at RINO's technicals yesterday, one of the Chinese companies listed only in the US, which had become a favorite long recently with traders posting to Twitter. There have been no stories suggesting fraud with RINO and this will not be one of them. But given the accumulation of fraudulent stories surfacing in similar names, I think the reward for Russian Roulette needs to be higher. I'm avoiding anything Chinese which is listed in the US-only now, especially if it is not making higher highs.

Ok, let's get to the ugly...

I've nothing against Twitter. I'm quite big on the application, actually, especially as it relates to the stock market. It's just that I'm becoming a bigger fan of Twitter.

At the risk of coming off as a scumbag, I'll admit (far down on the page) the inverse genius is easier found these days on Twitter than any source I know right now (except for Scott, perhaps). And I love the inverse genius. I'm accumulating a mostly secret anti-follow list, whereby certain inverse superstars keep me in the loop - of what not to do, when not to do it, what I should do the opposite of, etc., etc. If you're on this list, it's no guarantee I'm fading you, since most the list is informational, or peer-leaders, or something banal like a reserve bank of Philadelphia (there you see, I'm not actually fading Philadelphia).

About a third of this list though are followed for pure contrary reasons. A couple of these are highly coveted. Twitter names I follow on my regular Centrifugal account are respected-only, for one reason or another. I might fade a trader here from time to time as well (I fade myself, so anyone is eligible), but ultimately it's because I respect your moves, insights, etc. and am interested in these in real time (such a nice guy, see?).

If themes in the market are going to blow up, then accounts are going to blow up. I've blown up and I know what it looks like. Now though, I am stepping over the dead bodies of my trading past, trying to get ahead on other trader's lessons. It's not a reflection on intelligence or anything other than aligning yourself to a blow-up, for whatever reason. We're all winners - we're all losers - but some of us at certain times are more aligned with the former.

I'm going to take the other side.

Follow Centrifugal to fade trades in real time ...(hey, if you believe in Karma than I can most certainly make you money tomorrow;)

New equity blow-ups on earnings tonight as I in fact hit the publish-button: CREE, ISRG and JNPR.

Beast out!

Dis(cussing) RINO International

"...On the other hand, after an extensive advance which finally spreads to issues neglected all throughout the bull market, belated individual strength and activity not only are likely to be short-lived but may actually suggest the end of the general recovery, especially if the early leaders begin to show no further response."

The Battle for Investment Survival; G.M. Loeb, 1935

We're seeing plenty of laggards come to life lately and plenty of bullish chatter on such issues; based largely on technical positives, such as stocks breaking above moving averages, upside break-outs of lengthy (though low-level in these cases) consolidations and/or price-breaks above obvious resistance points.

Coincident to the late-to-the-party cheerful rush, is a rather uncomfortable numbers of previous leaders stalling or turning lower (Cloud-based technology leaders, Semiconductors, etc.). Not every leader has stopped rising, but enough of the early leadership has stalled now to raise concerns (especially in terms of relative-strength), while general sentiment of investors have seen an increase of optimism.

And while some of these laggards coming to life will represent good, quick trades long, the risk vs. reward here resembles the classic image of picking up rolls of nickels in front of steam rollers. They may work more often than not (shorter-term), but the fundamental reason for longer-term under-performance could surface at any time (flattening traders grotesquely). I am personally looking at which to short instead.

RINO International, a Chinese company listed only in the US (i.e., it does not trade in its home country China, like so many Chinese names on Nasdaq), is a former leader and broke above its 200-day MA today after breaking through earlier resistance last week. There are a lot of traders getting involved, as RINO's near-term technicals suggest higher prices ahead.

While I won't recommend getting short RINO, I will go out of the way to recommend staying away from the long-side. I am short RINO, as of this afternoon, but not very much and not in all accounts. This is a difficult stock to borrow; I've taken what I can for now in case nothing further shows up. I'd rather wait for the first sign of failure, but will take it day to day and see what is available and how the name continues to perform.

RINO was a staunch leader as a younger IPO last year and I was trading (the beast!) aggressively (long) along the way. Like a lot of IPOs, I've learned to walk away once the first top is confirmed, since so many never really come back (love 'em and leave 'em!) [EDIT: I should stop calling this an IPO from last year - it existed earlier, but as a penny stock with minute trading volume]. This was basically the pattern RINO demonstrated, as the stock traded essentially lower-only for six ugly months (from 35 to 11). RINO then consolidated consolidated sideways and is arriving late now to this year's equity party. FWIW, the stock still needs to rise another 95% to reach the high posted last December.

RINO has an incredible short interest. Over 50% of RINO float is short (>16.5% total shares outstanding). This may seem a positive to some of the enthusiastic traders on RINO today, since a high short interest could create a squeeze. But when shorts get this aggressive they do tend to be right (they are more sophisticated traders, for one thing and large shorts do large amounts of homework on the fundamentals. Names with heavy short interest tend to prove shorts correct in the end; it is a matter of when and it is not prudent to take them on with the other side). While 16.5% (outstanding) is not incredibly high, the >50% float is truly exceptional.

Of further concern is the recent pattern (beginning late summer) of Chinese companies listed only in the US blowing up with accounting scandals, fired auditors, resigning CFOs, etc. We have gone a few years without seeing much of this and then we saw a half-dozen of them in just a couple of weeks. Would you be surprised to learn that the accounting standards on these names is commonly slack?

Finally, click on the chart below and focus on the relative strength (RS) line, now at 26. Even though RINO has had a break-out and a nice run, the RS is still below the previous 17.06 high (in other words, RS is negatively diverging). I love buying breakouts when RS precedes price and I prefer avoiding or else shorting a breakout when there is a defined negative divergence in RS instead.

RINO may go higher and this post is not to say it cannot. But the name is a former leader and current question mark now at best.

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)

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).

Update on Portfolio (shorts neutralized for now)

Something has changed and some things remain the same. I still don't like the larger picture, but I still must react.

Rather than stepping out of the short-side today and going hunting, I went ahead and picked up several leadership longs, looking for the potential pivot higher. So far so good.

I don't expect any terrific upside, but if I am surprised I would not like to be skewered in my shock. I'm making money at both ends this week, which is nice since I am the one skewering in that case; but I have no pretense for keeping perfect.

Bears can go back to grumbling. Bulls can go back to foaming. I'm just a working stooge trying to eat a worm now and then.

RINO (remains a beast) reported today. I'm foaming some over that one, but still no sign of a 2ndary date. I did trade into SWI today though, with the same outlined strategy. SWI management held 73% of the outstanding shares prior to today's offer; priced at 18.75 and will be benched there, on closing basis.

One note: yesterday aggressive accounts were really 10-to-1 net-short and not 2.5-to-1 as originally posted (I failed to update that part of the position) Some were confused why conservative accounts were twice as short as the aggressive. Today's allocation below now is accurate. It's not like you care, I know, but I have a couple of widows and orphans around here that really do give a damn.

Aggressive Accounts:
-Total Position: ~1.5-to-1 net-short, considering levered (2x's) TWM hedge
-57% invested overall
-Pure-longs = 27.5%
Currently Long: (according to size): HMIN (6.2%), SWI (5.3%), ASIA (5.3%),HRBN (4.6%), RINO (4.2%), CYD (2.2%)
Currently Short: (according to size):
-TWM-long (Russell 2k Dbl-short, 15.2%), WTW (4.9%), PEGA (4.9%), GS (4.7%), BUSE (covered today, 3.21)
(Note: inverse-ETF TWM represents being dbl-short the respective index).
Futures Accounts:
-20% Short Dec SPX, from 1090.25
-10% short Dec Euro: trading actively - presently short 10% from 1.4885 (updates coming via Twitter here)

Other Accounts:
-Total Position: ~1.33-to-1 net-long, considering levered (2x's) TWM hedge
-38% invested overall
-Pure-longs = 26%
Currently Long: (according to size):HMIN (6.2%), SWI (5.3%), ASIA (5.3%),HRBN (4.6%), RINO (4.2%), CYD (2.2%)
Currently Short: (according to size):
-TWM-long (Russell 2k Dbl-short, 11.3%)
(Note: inverse-ETF TWM represents being dbl-short the respective index).
Futures Accounts: NA

At Gravity's End

The question on the Street is evolving now to whether we'll hold and close above Dow 10,000 (that important psychological milestone), or will we see something resembling a pull-back.

I need a new career - more certain than ever now I'm very likely, definitely doomed. My only hope is Trish is off the air when 10k is hit. I'll likely be forced to sell everything if not.

Internals are strongly positive, but not severe today. INTC, JPM and Dow 10k hats are dominating the headlines, but it is the Chinese ADR's which continue dominating leadership growth.

Security software provider Asiainfo (ASIA) is the latest big breakout. ASIA is doing major volume, breaking out of a roughly 6-month base.

I like this thin name Harbin Electric (HRBN) perhaps most. This is the stock that broke out on the news they were buying another company (an accretive deal; I do like breakouts where the catalyst is driven on buying another company).

RINO (Rino International) is the exception today, but that stock was extended beyond extended, so I'm not ready to call an end to the Chinese growth-stock surge just yet. I unloaded the RINO position at the open today (>27). I will likely lay-off now at least until they price the upcoming secondary.

I don't want to speak more than that, sorry. Good luck with your shorts.

-Total Position: 100% net-long
-60% invested overall
-Pure-longs = 60%

Currently Long (according to size): RKT (7.1%), DGW (7%), HRBN (7%), CFSG (6.4%), ASIA (6.2%, going on 7%), HMIN (6.1%), ULTA (5.1%), CLW (4.2%), SWM (4%), PTI (4%), CHBT (3.6%)

Currently Short (according to size): no current position

Futures Accounts: no current position

Sans Hedge (dare the bear)

It's usually the action on the way down that matters most; as far as positioning and allocation.

While I'm no doubt going to get pounded for it tomorrow, following the slew of earnings reporting and subsequent thrashings tonight (Wed, Thurs, etc.), I let go hedges today and am positioned fully long again; albeit only 46% exposed.

I can't say much more than that. If I were stupid enough to get long-only and then chide the other side, I'd be stuffing envelopes for a living.

Tune in tomorrow to see me eaten alive.

-Total Position: 100% net-long
-46% invested overall
-Pure-longs = 46%

Currently Long (according to size): DGW (6.6%), HRBN (6.6%), CFSG (increased today, 6.2%), HMIN (increased yesterday, 6.1%), ULTA (5%), CLW (4.1%), SWM (4%), PTI (3.9%), RINO (3.%)

Currently Short (according to size): no current position

Futures Accounts: no current position

Tony G and Me

You're still here?

Well, my apologies in advance. I'm doing anything I can right now not to sell out my entire line, take to the sidelines and book an overnight flight to the pup seal capital of the world for a little R&R.

Why should I be miserable? Prices are rising, my names are performing well as leadership continues to out-pace the broad market, fewer jobs were lost last week and dullwether AA smacked the industrial complex higher after reporting less than pathetic numbers.

How bad could it get?

But here I am, sitting mostly on hands while my amygdala screams intervention, listening to an uncomfortably growing excitement and enthusiasm in all directions regarding the prospects for stocks.

Save one.

Normally, I prefer to keep accelerating exposure as the market rallies, but not so much this time around. Leadership growth continues to out-perform (I mentioned, which is keeping me from doing anything rash); excitement is running higher now than the major indices (a negative divergence); we have not yet traded to higher-highs in the overall market, nor in momentum, yet the jump-up-and-down brigade has broken-out to new recent heights (a shift-side-to-side negative).

Why am I angry? Why should you have to suffer?

Because this is yellow-light material only. I can't really do anything about it (save complain). Momentum, volume and price-action carry greater weight, while reading sentiment is more like tomorrow's weather forecast. I don't like to see sentiment rising faster than price levels, but over-enthusiasm it is not a proper license to sell. Over-enthusiasm is more like a warning to re-fill Koolaid cups before they take the punch bowl away. Shuffle your body closer to the filling station so you can grab two last hunks of meat and stuff it in your shirt when you see them coming; just to casually toothpick a modest meatball and refill your cup as you smile to the arriving host.

Save one.

Ok, wtf is Save One? Save this! Jerky. You call yourself a professional?

Seriously, students of the market should just leave now, because they are going to get this wrong and it can only screw up how they look at things. It makes zero sense. Continue shorting the rigged system instead because you know better (if you last long enough you'll be right, certainly, and then you can sharpen pencils and figure out where to take profits lower; cause your that smart and can ultimately re-short higher then after bagging a few percentage points and catching a beer with some friends).

Or, hold your head under water for 20 minutes. I guarantee you will the upside pressure will go away.

Trish has yet to chirp-maximum. That's it - that's all I have to say. Nothing brilliant - just stupid in fact. Trish, who is only on for about 90 minutes during the session - no signal. Nothing. She may as well have went to sleep today. She is not yet moved - she is not yet excited.

Is the market due to keep rising because Trish has not gotten excited yet? No no no. The goose lays golden eggs, she doesn't make you a sandwiches while you wait. All I know from Trish is that when those octaves reach the high end of her lovely singing spectrum - for the time being the party is over. Other than that no value for traders of markets, not from Trish.

If she had done so today, like so many other jokers this session, I'd feel better right now since I'd be taking (knowing) action instead of sitting here and worrying (not knowing) about how much upside meat could be left; whether we will make higher-highs or fail- whether we gap-lower on the failure and smack me in the face; whether I can take a few days off from Bob-obvious Pisani's voice soon because I can't keep up this shouting match with my screen without worrying about my well-being; whether I can try another sport, just for some refreshing variety.

That's how you play king-jack - and you call yourself a professional? On your bike - up and away...



-Total Position: ~2.5-to-1 net-long
-74% invested overall
-Pure-longs = 59%

Currently Long (according to size): DGW (7.2%), SXCI (6.8%), HRBN (6.6%), CFSG (6.2%), SWM (6.2%), WYN (new today, 5.2%), BCSI (5.2%), CLW (4.6%), PTI (3.9%), HMIN (reduced today, 5.1%), RINO (reloaded new today, 3.2%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short, reloaded today, 10%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).
-TER (5.2%)

Futures Accounts: no current position

Roubini and the Patty Hearst Affect

Roubini was on CNBC earlier this morning. I missed much of it but he was suggesting the better-than-expected bounce in equities is overdone and the market is set-up now for disappointment; that unemployment is too high for a robust recovery; that consumer confidence, ISM and other recent data is suggesting a U-shape at best, or else double-dip recovery.

Nothing surprising, but that last part is very interesting, as it suggests Count Roubini may actually get bullish when once the market finally retracts. That could end up laughable - that Roubini becomes bullish in a bear market, fixating then on an economic recovery, whatever shape he thinks he sees.

I'm not going to suggest the bear market will indeed resume (I won't suggest it will not either), but here is a great example of why predicting the future is ill-advised in this business; even if that is part of your job description. Psychologically, Roubini is ready and willing to turn bullish on equities - he just needs them to go down first!

Perhaps this is a bit like the Patty Hearst affect - the idea that one can grow fond of their captors. That bears become more bullish once incessant incessant incessant bull-pain suffered, is finally alleviating.

We'll see.

Back to now, the market has pivoted nicely off of Friday's early lows, but the major indices have a bit of ground still to make up to manage higher-highs.

Leadership growth had declined less than the averages (which is bullish), but so far very few names have vaulted to higher-highs. RINO, an exception, has powered 32% from Friday's low to today's intraday high.

Meanwhile, salivating bears are pencil-pointing to a smathering of negative technicals, which draw but one (encore) conclusion - an ensuing failure is looming.

A shocker I know. But I'm noting here that bears may not be so confident now on the way down. This idea is new, and, well, we're not really going down yet either. But it will be worth monitoring when/if the bear resumes. Will bears become less bearish once they finally get a break?

Fortunately for me, I am still an idiot. And while I did re-trim smaller on the strength today, I see no reason to get overly conservative, or short even, until leadership begins behaving badly.

Lower-highs en mass would be a concern, if this remains the case once the market reverts lower. A smash to lower recent-lows would slow me down even faster. But in the meantime I'll keep old, slow and not such a hero (not like you, tough guy). If I had sense I would be shorting right here and now (again!). Instead I remain pointed longer, spitting-up on myself while spitting-out, mostly bull grovel.

And if we do smack-lower, breaking this up-trend with authority, it will be most assuring to know that Dr. Roubini is looking at where to bid for my shares as I am looking to get short.

Recovery or not!

-Total Position: ~2.25-to-1 net-long, considering levered TWM hedge.
-42% invested overall
-Pure-longs = 34%

Currently Long (according to size): SXCI (6.5%), CFSG (reduced today, 6.2%), DGW (5.8%), BCSI (4.9%), CLW (4.2%), SWM (reduced today, 4.1%), RINO (reduced today, 2.8%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short; reduced friday, 7.8%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).

Futures Accounts: no position

Carnival Knowledge

While I know action in the US market has a direct impact on Chinese growth ADR's traded in the US, a large part of me this morning was wondering if these companies should be so woeful of lack of jobs in the west. So woeful as to gap-down an additional 5-10 percent on our negative news.

I'm having a good day and making up for yesterday's drubbing in rapid fashion. But I've still got hands (and now feet) on the chopping block and have to focus on where I am going from here. Sell, hedge or swing this position as-is into next week.

Terrifically boring, I know - but if you were jumping up and down with hearty gains last night, as you were so brilliant as to be short this ridiculous market, then you're likely getting whacked again right now. Contrary to how we like to behave, up and down excitement is no edge in the long run. Steady, dull and boring might just be better.

Yes, there are bears who were short and covered at the open today. That's good for them because they got the week exactly right. But the day you celebrate is the day you should be out of the market, not in front of it. As the next day (or next) will bite your brilliance down.

Fortunately for me, I remain an idiot. Aside from clear and obvious set-ups like a highly anticipated pathetic jobs report, I don't want to get in front of the trade. I don't want to prove anything to the market. I don't care that the world economy is a board game, I don't care if athlete's utilize growth hormones to enhance performance, and I don't care that old-world Chicago cannot topple an emerging giant.

We are so subjectively focused, aren't we? I mean, how can this US market have rallied so high since March when we can't even buy the Olympic games anymore? What's been driving this rally anyway?

That's all the bile for now. I've got the rest of my RINO position (beast!). And apparently water treatment jobs in China must be doing OK, because group-mate DGW was also a bit of a gift at the open. I also have to deal now with too-much CFSG and not so much TSL. All from China, somewhere east of Rio.

Brag post? Undoubtedly. But in younger times I would have attempted being 200% short yesterday, covering and backing-up the truck long at today's open, head for Mexico for the weekend and then come back Monday in time to blow myself apart. I can't trade like that anymore.

Unfortunately ;)

-Total Position: >3-to-1 net-long, considering levered TWM hedge.
-55% invested overall
-Pure-longs = 48%

Currently Long (according to size): CFSG (increased today, 8.2%), SXCI (6.3%), SWM (5.4%), TSL (new today, 5%), RINO (increased today, 4.9%), BCSI (4.8%), JDAS (4.6%), DGW (new today, 4.5%), CTSH (4%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short; reduced today, 7.7%)
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).

Futures Accounts: no position

RINO is a Beast (and I am a madman)

I got caught with pants down early today, but here is what I can (briefly) inform, regarding the present action.

-Lower-lows on the major indices (posted Friday last wk) remain the pivot point for taking considerable action. So far today the Dow has penetrated this level, but that is the only significant index to do so; thus far this is bullish.

-GS was not invited to the selling party. On the other side, AAPL is holding its own. Semi's and various Tech are also firm; thus far bullish.

-Oil is rallying now, following earlier weakness and the Dollar has been down throughout the session (at the same time the market has weakened); probably bullish (I say probably because we may be further de-coupling with the Dollar/Equities inverse-correlation, more than indicating clear bullish prospects for equities; keeping an eye on this - even though you don't know what I just said).

-Breadth is clearly negative early, though not severe, and volume is rising; bearish, unless we can recover most of today's losses, reverse higher, shoot the moon, etc.

Heavy amount of Put-buying today; bullish.

-Trish came on and she was not very excited in reporting the Dow down more than 100 points; this is a clear negative for this session and was the tipping-point-catalyst for me taking on the partial hedge via TWM (originally I was looking to add double the amount of TWM, but not until the Russsell 2k traded below Friday's low; which has yet to occur...Trish means that much in my decision process).

-Action is not so grizzly thus far, but more big data hits this week (both tomorrow and Friday). If not for Trish, I would be simply taking lumps, pants down and hopefully wearing boxers down there. As it is I am still long, but a little less so; call this bullish or bearish - I refuse to use myself as a contrary indicator, at least publicly.

Since I have a bit of hedge now, I am free to add to longs (as long as we haven't broken any uptrend in the overall market). I'm taking an usual line on accumulating RINO. I'm paying up, as this thing is just a beast (higher again all day today, which is saying something), but I am only into a small, partial position thus far. I will intentionally add to this at a lower level (or else higher if it consolidates northward and creates a new entry). I also added back to JDAS, and I am eying BCSI.

The point regarding RINO is that I intend to break my rule of averaging-down. I don't like averaging-down, but this thing is a bit of a runaway and that strategy is my only chance now to have any piece of it; we'll see what happens. I'm probably doomed.

And if I end up with too many names as the market breaks my benchmark for needing to neutralize I will be adding to my hedge and simultaneously culling out weaker names long at that point.

Finally, if the market drives lower and the Dollar does not rally (further decoupling), then you can be rat's ass sure I am letting go of this UUP hedge.

When a hedge is not a hedge and it starts losing money, there is only one thing left to do.

Chuck it up!

-Total Position: Aprox. 2.5-to-1 net-long, considering levered TWM and low-beta UUP hedges.
-71% invested overall
-Pure-longs = 52%

Currently Long (according to size): CTSH (7.9%), RKT (7.5%), SWM (5.3%), SXCI (5.2%), CFSG (3.4%), JDAS (5%), CLW (4.9%), TSRA (4.9%), ULTA (3.6%), RINO (2.6%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short; 7.3%)
-UUP-long (12.2%); current inverse correlation with equity markets defines this as an equity hedge
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).

Futures Accounts: no position