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

Message for those...Stuck (letter to investors)

I hate speeches, but if you have been stuck long, a member of that group that held held held through each successive wave of market hell when we were slicing downward, then now is an opportune time to begin reducing exposure with a bit of sunshine and grace.

This is not advice to any individual (you for instance), since every case is unique and suitable only to oneself. However, in a bear market rally it is when things look most promising that downtrends tend to resume.

Today the buzz is almost giddy, the faces are well too hopeful and CNBC heads have shifted from questioning the bear-market rally to asking if this is a new bull market (does your dog bite?).

Think back long ago to those feelings you held a full month ago, at the beginning of March.

While I don't like calls on the future (I'm weird that way), I do study the past. If this is as serious a bear market as it has flashed thus far, then what I can say is prices should be lower 15 months from now, and the likelihood of a secular bull market beginning instead is low low low.

Much more likely: right now the patient is pumped up with adrenaline, he is up and moving about and we are all looking and saying hey, he looks pretty good.

When the injections wear off, the market should re-grind lower (or worse), often with sharp counter rallies, but always with a resumption to the ever-seeming grind lower. Then, after investors have had more than they can stand, that is when market behavior becomes susceptible to panic; all that is needed then is a fresh negative catalyst.

So while I am not advising you (read disclaimer on right, talk to your attorney, preacher and tax adviser and forget you ever read this nonsense), I will let you know that I am speaking with people I know and care about personally (sorry Fred) and suggesting they consider having to re-endure further downward hell following the feelings of promise they now hold. A slow and steady regression (which is not necessarily going to take place immediately) might erode their confidence and in the end they are selling in a panic because of a new, unforeseen catalyst some months from now.

It's fairly simple: On the one hand, investors risk missing out on participating in a new bull market. On the other hand, they risk getting ground-down slowly, over way too long a period of time their lives are accustomed to and then having to act like heroes to hold forever or else sell at much lower levels because there just doesn't seem to be any good reasons to be in equities.

Good luck either way. If you scale out here in the bright sunshine then don't credit or blame me later (it's entirely your problem). And if you sell 36 months from now because there is no reason to be in equities, then I intend to take your shares (thanks Fred).

If you're not planning to buy at the World's end, then I don't know why you wouldn't begin selling now.

Kisses

Updated Position (leaning slightly short at moment)

Faster Pussycat Kill Kill...

I mentioned earlier I wouldn't sit tight and hold my dozen or so longs if the market was going to scream higher. Today was a screamer and I'm strapped now onto the fastest energy particle accelerator I could find on short notice.

Briefly, the strategy here for the near term is to attempt to hold 4 or 5 core positions long (each in the neighborhood of 5%-size) and trade around additional tranches (adding on new swing set-ups and then selling the added shares on strength). But at the same time I am going to hop in and out of other movers, with a 1-5 day time frame, so that I can participate in whatever the best set-ups may be on any given day (speaking long trades here). And at the same time still I am going to hedge according to the weather of the day. The objective is to basically break even (or better) on market pullbacks and then shoot the moon on subsequent waves higher.

Earn while you churn.

On that note, my accounts for the moment are playing more short than long (1st time in a while and not until the final hour of trading). Today was a sell-the-news opp for me and If we cannot sell-off much tomorrow, I'll adjust hedges quickly and hold my now-fewer longs. If the market trades ugly, only to trade uglier still, I'll stop buying set-ups long, gradually reduce the longs and simply push with the shorts.

If you want to keep up (welcome to crazytown), I will continue sharing trades live (and current long vs. short ratios) on the Twittfeeder. If I'm not posting on the blog much, it is because I am too active to compose new rants. But either way I will update the action live via Twitt >>>.

As far as where we go from here, I have my suspicions and following this post is a message to longer term investors which highlights some of those thoughts, but understand I have no preconceived conclusions when it comes to trading an environment like we have now. It is not for me to say how high is too high - if the market action keeps positive and there continue to be good looking leadership charts en masse, then I will key long. On the other hand a bear market rally can end on a dime, so if the charts begin breaking down and the negative action becomes dominant, I will key short; increasingly so as energy accelerates.

Easy game.

This is all possible as long as volatility is high. When we lose that volatility, it will not be possible to flip so many stocks back and forth profitably. At that point I will likely shift to trading more in indices, but for now there is ample volatility (opportunity) to trade individual names; long/short.

Total Position: 1.45-to-1 net long, 90% invested
(Note: accounts are playing more short than long at moment due to 3x's leverage on new FAZ hedge)

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

Currently Short (according to size): NTRS (new), GE(new), JPM (new), RSH, FAZ-long (financial's triple-short), ACC (new), ELOS (new), EGO, KIM (new)

Swing Like Darwin

I'm in protect-my-profits mode now, but I need to see the market flash some weakness before getting serious.

At the moment the internals remain firmly positive (still), yet there are a couple of concerning factors.

1st, the largest percentage-gainers today are from the worst-ranked industry groups (not that leadership is trading down, but I prefer to see better stocks leading a rally). Anything related to autos is screaming the loudest and if the Transports close at these levels (up 10% as a group) that will mark the greatest 1-day gain there since...1939.

2nd, Financials are below where they opened on the session and may be showing the first signs of stalling; too soon at moment to say.

I continue to use GS and its 200-day ma as my proxy for the Financials. My FAZ (partial hedge) added today will be increased or decreased based on GS's ability to retake its 200-day (explained in previous post).

I'm not getting bearish here, I just want to be careful to swing correctly (keep in front of the pendulum). If we do stall today, I'll shift neutral asap - but even if we keep and close strong (something internals suggest at the moment) I will be a net-seller at the end of day. This will protect gains here by neutralizing exposure, but also this allows me to reload as the water level subsides, or as new set-ups emerge.

Recall yesterday I said I would begin selling if we screamed higher but would hold bloated-long if the gain was more quiet.

Perhaps unexpected when these were initially added, I have a couple of core-long holdings at this point (now that the trend is clearly higher and some of these names have behaved well enough to hang-onto long - the market has made a reasonable number of leaders which are now more than swing trade; whether or not that continues is crucial), but most of my position remains swing-fare; where I am looking to leap from rock to rock, skipping along a rushing river and clawing whatever I can along the way.

There are more good stocks these days than I can hold, so I will move from set-up to set-up in an attempt to catch the better moves. Hence, I have reduced NFLX and MNRO today, while I have stepped-out completely on SNDA, NVLS and TNDM; for now.

Will leap live via Twitt >>>

Total Position: 3.75-to-1 net long, 83% invested


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

Currently Short (according to size): RSH, FAZ-long (financial's triple-short), ACC, GE, EGO

Quicknote (protecting gains slightly)

Internals are very strong so far today, but the potential to sell on the news may be high. I've reduced long exposure, but not significantly at this point.

I paired-back a bit on some extended and/or thin names. And on the other side I'm hedging some, using GS above or below its 200-day MA as the key. GS is presently below the 200-day price of 115.60, but not by much. If GS can re-take the 200-day and hold, then I will let go the (new) FAZ hedge. If GS starts trending lower now, I will increase FAZ to further protect longs here. [written fast here - I'm not short GS, but using it as key to adding/reducing new FAZ hedge]

I also added ACC short earlier today (18.28 ave). However I should stress that I came into the day exceptionally long, so these shorts today represent only a slight hedge at this point.

I'll update the full position here in another hour or so. In the meantime I continue to Twitt the changes live.

Night Gallery (london calling)

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