Off the Hook (getting smaller still)

Shorts are scrambling again today, as the pullback picture has all but evaporated for now.

I dodged a bullet with my short side, as the down-open action flashed sad-little power. I decided since I am getting smaller here I'll cover that side of things and just blow-out the longs then if the market didn't recover.

Better lucky than good, right? Stupid-lucky wins again.

I can brag now, since I am quite a bit smaller and frankly I'm not looking to grow aggressive again anytime soon. The bigger picture now is a bit murky. I'm not thrilled with the longs I have left and I'm not ambitious to short this either. I'll babysit this reduced group whilst preparing my next escape to lands well-under. Every trader needs a rest. Mine looks to be on the weigh.

Keep on the Tweatbeat over there >>> for the blow-by-blowfish history of shrinkage.

Beast out

Total Position: 5.1-to-1 net long, 40% invested

Currently Long (according to size): CYOU, PMCS, WNR, CEO, MYGN, MNRO, FORM, OTEX, CHKP

Currently Short (according to size): STRA (6.5%); under the 50-day for STRA looks good; mammoth HS pattern.

Trading Lessons (Rhyme over Reason)

Today was the first frustrating day here in some time. My shorts went mostly against me (to be expected given the reversal), but my longs went mostly against me as well. As such, I started reducing exposure and expect to likely continue with that plan early tomorrow. I'll then hang-out while something better takes shape, perhaps focusing on simple index trades if that is working; focus on my next hunt-and-grunt adventure if not.

I'm not crazy with the action in leadership at the moment and there are not yet enough indications the trend has changed for me to focus on shorting aggressively. The reversal in the banking uglies today was impressive, like it or not.

Okay, since I can't make money at the moment, I may as well teach...

Percentage-wise, today was no big deal here. But my trading style more and more is based on rhythm (centrifugal ramping-up as things are going well and shutting down or finding a cave as things worsen). I want to be fully insane when my position is optimal and I want to be conservative when I cannot find the handle.

This is the exact opposite of how I often traded in the past. I was a fighter, taking-on great whites in their own backpool, because I thought I knew something significant and important and I (thought I) hated to lose.

Experienced traders reading this know that it is not uncommon for traders to fight harder (average-down, etc.) when losing and then book profits too easily when winning; thus risking more on losing positions and limiting gains on a winning position. The typical psyche lusts for this pattern, even though it is a loser.

You'll never go broke taking a profit, right? Well, if you're the kind of loser who let's his losses run and at the same time takes small gains when you've (finally) got something right, then you will go broke eventually. For some of you that may be obvious, but it warrants mentioning.

Some years ago I was complaining to an artist-friend (not a trader) about having to rename a (failed) internet venture due to trademark concerns. He listened to my feeble rant and responded: "Make it a positive."

I've thought a lot about that (10 years and counting) and more and more I work on incorporating it into my trading style. I analyze where and how I am losing money and identify common, repeat-mistakes; figuring if I turned those traits into strengths I improve results significantly. If I can identify my greatest weaknesses and commit to making them positives, I optimize results.

I can be wrong most of the time and still make money. And if I happen to be running like god, then I'm killing it (and all of god's children, if it be short-selling).

I was a trader who would fight to the death, on occasion, when I was strong-minded about something. There was a succinct pattern of being early and ultimately being varying degrees of exhausted by the time the market did move my way. In the case of the 2000-top in the Nasdaq, I was more sure of that being a great short than I was of my own existence. However, I fought against the tide for the last remaining weeks of that bull (from January to early March) and when the break finally came I made back my losses for the early year very quickly, but then I moved aside; essentially exhausted. I did the same thing with the housing stocks a few years later, only in this instance I lost more fighting those uglies before the top and had little will left to capitalize when the juiciest momentum was under way. I had a couple of similar situations in the 90's where I got ahead of myself on the long-side; only in the 90's it was easy enough to turn around from a mistake and make another 200% in the following 12 months, again and again.

Earn while you learn was the mantra for the 90's. These days it is more like Burn while you learn. The market is a lot less forgiving.

The recent rally recently reminded me of these traits, but after net-losing money shorting stocks like BZH, HOV and LEN a few years ago I took the idea of "making it a positive" and decided that I should train to be a little late (instead of early) and focus on having my maximum energy on a trade when that trade was working (instead of anticipating it working and burning up confidence and will in the meantime). I don't need to care at all what really happens, nor whether I am right or not - but simply suspect what might develop. Focus on reacting, in real-time as things take shape. No more hero stuff for me.

So while I did attack short again coming off the initial bounce in early March, my own rules forced me to stop. And given there were so many decent growth charts out there at the time, my rules allowed me to increase exposure on that side as things continued to work.

By not averaging-down (no matter what the brainpan is shouting), but instead adding to wining positions only, you're getting big into a position as profitability is increasing and you are only lightly invested in one that is losing. And then instead of exhaustion from battle fatigue, one can trade aggressive when the sharp teeth are to the side of the pond.

Be Late, be Great. Or, Fortunately I am an idiot. I don't know anything ultimately, unless the market tells me it's true.

Being smart is over-rated and total conviction can be deadly.

Being a meathead however, is just fine. As long as you are willing to adjust.

Re-Re-Shift (grinding neutral at moment)

Already half-way in today and I don't have a great deal to say. There was measurable damage to the uptrend yesterday, but internals today are positive enough to suggest we won't see much in the way downside drama; for the moment at least.

I was nicely positioned coming in (having moved to market-neutral late in the day and into the after-mkt session yesterday), but I'm taking a couple of body shots; with NFLX and MYGN longs down in an up-tape.

Today I've added a couple of individual shorts as well as increasing longs. I'm trying to keep more or less market neutral and allow direction to take greater hold before committing again to one side. I'm not crazy about the action of leadership names today. More of this under-performance tomorrow would impress me enough to reduce longs.

Regarding NFLX, MYGN and the new reload of OTEX longs, I will cut any of these if they are to close near the lows of the session so far (or worse). In the meantime I'm willing to let them recover (I'd like to see NFLX close at least near the 10-day of 47.25; MYGN >40.25 or so and preferably closer to the 50-day at 42.23; and OTEX I need to close >50-day of 33.31).

I'm down about 1.5% on the week at the moment. That is perfectly acceptable given I came into the week mostly long (and the give-back is mild compared to recent gains). At the same time though, if accounts keep slipping here I will start getting smaller; regroup then for later.

Like Bernie, I hate to see accounts dropping...We'll see.

[edit: I should mention the STRA short - the comm. school group has been dropping considerably in terms of relative strength and this group is breaking on rising volume again today. And while I'm here, I was stopped on the NTRS and NTG shorts]

Total Position: 1.27-1 net long, 73% invested
(Note: accounts are leaning roughly mkt-neutral, considering leverage of SDS)

Currently Long (according to size): NFLX, PMCS, CYOU CEO, WNR, MYGN, MNRO FORM, OTEX, CHKP,

Currently Short (according to size): SDS-long (SP500 Dbl-short, currently 14.7% position), NTRS, STRA, GE, NTG
(Note: inverse-ETF SDS represents being dbl-short the SP500)

Bear Spring

Too soon to say yet if the bear is back, but not too soon to adjust. I increased my SDS-hedge in the pre-market and added SKF after the regular session failed to find any positive traction 60 minutes in.

Internals are severely negative and while volume on the NYSE is not extreme, the Nasdaq volume rate is running historically high so far.

I'm positioned more short than long for now, but I'm willing to let go longs as it becomes necessary (which presumably increases my exposure short). Anything breaking on rising volume will go. Anything remaining is hedged for now.

If internals remain extreme AND we are not beginning to recover, I will look to short aggressively in the final 75 minutes; for a daytrade. If we do manage to recover later, I'll reduce hedges accordingly. Either way, I'll convey via Twitter.

Total Position: 1.62-1 net long, 72% invested
(Note: accounts are leaning net-short now since leverage of SDS and SKF hedges outweigh long exposure)

Currently Long (according to size): PMCS, NFLX, CEO, MYGN, RJI, WNR, MNRO, BKE, BBY, FORM, CHKP, CYOU

Currently Short (according to size): SDS-long (SP500 Dbl-short, currently 22.1% position), SKF-long (US Financials Dbl-short, currently 5.3%)
(Note: inverse-ETFs SDS and SKF represent being dbl-short the respective indices)

North Snort (bear is good food)

Well, horseshoe up my ass.

GOOG, GE and C earnings are out of the way, the market dropped, as per bear's predictions. But the option-expiration action simmered into frozen dull drums, drifting drifting drifting until leadership names began quietly raging again on the tape. I'm lucky-still and still making money; loaded to the whale gills on aggressive growth.

However, I have begun phasing downward some; increasing the hedge and decreasing the number of longs. I can't stay too ramped-up for too long and I can't taunt you bears forever before getting bit.

That said, I will hang in net-long until the action forces otherwise (I don't have a target). I'll cut back on emotional thrusts; while culling-out dead wood; and I'm hedging according to present action and my own idiot-lucky determination of present risk (since I have too many names to dump at once, I'll increase the hedge dramatically once needed, allowing me then to let go and/or trim the lesser-performing longs soon thereafter).

I let go the Rimm-long today, as that one tagged the 200-day moving average. I would reconsider a new set-up long above that level (currently stands at 68.34, but is trending slightly downward); I entertained the idea of shorting this one up here today and benching w the 200-day on a closing basis, but it has too much momentum. I'll let you guys make the money on that trade.

GS flashed a negative divergence yesterday, so I blew out my remaining half. If it were my only child I'd hold it longer, but I have enough mealy-mouths left to keep me busy.

And as advertised I'm cutting this short. Action is positive now and that is good because I am out on the weekend already and have other distractions.

I'm deep outside, in some upper ascending triangle of resistance, somewhere North of Nanuvut. I'm skipping Disney-Finlayson Islands here, since I was up most of the night smoking wolves out of an abandoned whale-bone shelter. The wolves weren't too happy, but nor was I. Earlier I tried sleeping in the hull of the boat, ice cracking beneath sleeping bag and boat in unison. This place is too cold, even for my taste. The sky now shifts various shades of wanton pallor as the sun squibs higher.

Up here they bathe in salt water, hacksaw whale ribs in order to skewer other whales, then hefty-bag the cubes for easy Spring storage. I love this place.

Oh, BAC reports before the open Monday. No one would be too surprised to see this rally stall on that beast. I'll be back home for the action. Bears can point to that event now - an even better top for the market ;)



Total Position: 4.35-1 net long, 74% invested
(Note: SDS hedge is leveraged, accts are playing roughly 2.17-to-1 net long at moment)

Currently Long (according to size): PMCS, NFLX, ARST, OTEX, DRI, CEO, MYGN, WNR, RJI, MNRO, BKE, FORM, BBY, CYOU, CHKP

Currently Short (according to size): SDS-long (SP500 Dbl-short, currently 13.9% position)
(Note: inverse-ETF SDS represents being dbl-short the SP500)

17 Longs (all wrong, but lucky still)

With JPM earnings now out of the way, action today was mixed early, but now reasonably positive. Leadership is humming quietly along, with technology notably strong on the tape again.

Due to the quiet rise of this pivot-rally from yesterday's early lows, I am able to hold patiently; adding here and trimming there but, without big changes. I'm a bit hedged, but remain a mutual fund - loaded with aggressive growth.

Further big drivers on the horizon: GOOG reports tonight, then Citigroup (C) and Generally Electric (GE) before the open tomorrow. Monday is Bank O'merica (BAC) earnings. Mattel (MAT) is also set to report before the open tomorrow. I would take a stab short there ahead of that number (stabbing Barbie in this case), but for the fact that so many uglies are blasting higher on bad news.

Note the fact that AMR was down yesterday morning on earnings, and then rallied only 25% in the span of 10 minutes; a rather effective assault on bears.

I know I don't want to short a tape where losers act like that; one of the reasons I am stupid-lucky and holding half the tape long at moment.

I took profits on half the GS trade, sold 123.74 in the pre-market; I'm holding the other half for now. This tranche (now 4.9%) may end up a core position, depending. I will unload when there is a clear failure, distribution, stalling or break (In either GS or in the mkt); which means if there is no reason to run I will be in this one through to higher-highs and potentially beyond; we'll see how lucky it gets, I don't have a target.

I added a new oil name long into the mix, CEO on the pullback. China seems to be the driver these days still, as so many of the groups rising in relative strength turn up Chinese stock symbols as the strongest names within those groups. Westworlder WNR is my only other oil play in the mix; been in that for some weeks now (except perhaps a day or two). IOC is one I should have held onto, but at least I sold it significantly extended (31-ish a couple of weeks ago). IOC is headquartered in Australia; it's a bit thin and it recently moved onto the NYSE; given all of that I'm ok to let someone else make the money on IOC.

I have orders to sell the RIMM-long a little below the 200-day MA. That may be a stretch for this session (200-day is 68.60 currently), but it could be reached by the after-mkt tonight, depending on GOOG. I will be open to sell within 12 cents of the mark in case we spike on the GOOG report; I'll be gone before then should the price spike that high prior.

I did manage to get back my NFLX later yesterday, and within a 15 cents of the 45.55; this too, is a would-be core position, assuming it doesn't fail in the meantime (now 5.1% sized-position). Yesterday I also reloaded OTEX-long (now 6.7%). This one does looked poised to breakout, but it is thin and now below the 1st pivot-point of 36.40 (I may have bitten-off too-much too-soon here); I will reduce if it cannot get back above 36.40 by tomorrow (sooner if it starts downward from here; below 35.70 or so).

I added to PMCS long today. This one looks poised for a fresh breakout (5.5 wk base); rising to the upper end of its range on strong, rising volume, with earnings due next week (Apr 23, after the close).

I am going to be out this afternoon, traveling early for this weekend. I'm running low on whale blubber (why go solar when you can burn blubber for free?) and subsequently I'll be icefloing in a broad, northerly direction. I'll be posting, but expect light sentencing for the next few days. Trades and allocation will continue to convey via Twitter, but I won't be talking so much. I'll be frozen.

If the market spikes still-higher with emotion I will reduce exposure dramatically. If the tide turns I will increase the hedge dramatically and then look to unload the names going poor on the charts. And if the market just continues onward, slowly and surely taking us up to higher-highs without much in the way of drama, then I will just sit fat, cull here and there and perhaps add to existing winners, etc. etc., yup yup

Total Position: 8-to-1 net long, 79% invested
(Note: SDS hedge is leveraged, accts are playing roughly 4-1 net long at moment)

Currently Long (according to size): OTEX, PMCS, NFLX, GS, ARST, RIMM, DRI, CEO, MYGN, WNR, RJI, MNRO, BKE, FORM, BBY, CYOU, CHKP

Currently Short (according to size): SDS-long (SP500 Dbl-short, currently 8.9% position)
(Note: inverse-ETF SDS represents being dbl-short the SP500)

Bull Butter

Writing fast, as I am back to being a mutual fund again; too many children to get across the intersection.

I was able to add long in several places. The largest trade is indeed GS long, but it set-up backwards (opening higher in a down market and then trading down to the 200-day).

I recovered.

Anyway I'm bloated with names again, though so far only 65% invested (including the remaining SDS-hedge). I will add further if the action remains constructive (adding to existing winning positions especially). I still want NFLX back, but am trying to hold out for ~45.50.

How the market responds from here will be important (as always), but the key for now is that selling was constructive, the pullback was relatively mild (although we did mange the first distribution day for the averages in > 2 weeks) and leading stocks remain strong on the charts.

AND the larger trend remains up. So whether or not we will bounce here, only to mark an important double top (new bear argument out there today), the point of the present is that there is no top. It seems to me the more present idea was to buy leadership on the pullback, but that's my stupid-lucky talking.

Fortunately, I remain an idiot. You'll get me yet Mr. cuddly.

I have stops, for GS certainly but for others and hedge-increases as well. Forget conveying that here and now, but I have been keeping my action up-to-date live via Twitter, so look there if you care to follow changes/adjustments. As always, don't do what I do. Bears will tell you I am going to blow up any minute - they may be right (certainly by the time you follow the trade I'm more or less doomed anyway).

Beast out

Total Position: >10-to-1 net long, 65% invested
(Note: SDS hedge is leveraged, accts are playing roughly 6-1 net long at moment)

Currently Long (according to size): GS, ARST, RIMM, MYGN, WNR, RJI, DRI, PMCS, MNRO, BKE, FORM, BBY, CYOU, CHKP

Currently Short (according to size): SDS-long (SP500 Dbl-short)
(Note: inverse-ETF SDS represents being dbl-short the SP500)