Wednesday, August 8, 2007

Great Day for Longs

As I noted earlier, I was unfortunately not able to really watch any of the action today, or trade. I was stuck on some crappy DOD computer with an old 15 inch CRT that made my eyes go dizzy. From there, I was able to check Yahoo, and could see the action in the indexes. However, if I tried to blog, or send comments, check email, etc., the network security would not allow it. Believe me when I tell you that there is nothing worse than listening to a bunch of government losers telling you stuff that you don't give a rat's ass about, while getting streaming quotes (15 mins delayed) through Yahoo, all the while knowing the markets are splitting the fricking skulls of the short-sellers.

After reviewing today's action, I think my plan needs modification. Specifically, this market still looks very unprofitable for a short-seller. For whatever reason, it seems to want to go higher. Sub-prime and credit crunch be damned. However, my inaction as of late, while it has allowed me to get a great deal of work done and meet some deadlines and not lose too much while the market dropped, has cost me some $$$ in terms of opportunity. Had I stayed with my winners (SWHC, ALVR), and just dumped losers, I would be a few percentage points higher for the year. Note to self: in times of market weakness, dump losers, but consider giving winners a wider berth.

My plan was to get short on the first bounce. Well the first bounce is here. Looking at the strength of the bounce, I'm not sure that getting short is a good plan. It is beginning to make more sense to me to wait for a pullback, and then get long. The question that I will be seeking an answer to is whether it makes more sense to buy potential breakouts, or to buy good stocks that have been beaten down during this correction. What say ye, readers o' this blog, on this matter?

On a side note, my 401-K is signed up for automatic portfolio rebalancing. Typically I catch it before it does it automatically, and I choose what funds I want to sell or buy. Well it rebalanced without me, and it looks like that mother humper sold some of my 3 index funds (S&P, Nas, and Dow) at the absolute bottom and moved the money over into bonds. What the hell?

Update: After reviewing charts and noticing the Nasdaq stopping its advance at the 50 day average, it looks as if there might yet be many shorts out there ready to play for more downside and longs who are selling into the strength. As much as I want to get back to trading, sitting on my hands until there is a clear picture (will there ever be?) is probably wise, although right now it really sucks.

7 comments:

Ragin' Cajun said...

Woodshedder,

Come play fantasy football with us, we need one more person.

Danny said...

short this and all bounces, until a retest. chase a HANS, no thanks.

Danny said...

^ I rescind that. I don't think shorting the market is a good idea--just very select names. trading the swings will chop your account to shit. Just find powerful growth stocks that, in a years time, will be selling more. Bear looming, how can a market not justify a stock with huge growth, and increasing margins?

If you are willing to hold MVIS on what is indeed an incredible premise/situation, you ought to be able to bear with some other stocks with good opportunities, even if less opulent than the MVIS'o'tunity. I understand the market sucks balls, sometimes, but there is no place in life that lets you tap the good, without occasionally being dealt some of the bad. And if such a place exists, it sure as shit isn't Beulah's house.

Jason said...

Danny, which personality should we hear :)

Doesn't it make sense that any bounce would be stronger than usual considering the record short interest? Perhaps we're still at a top, I say look for a short tomorrow. Tomorrow is the key continuation day so if it shows strength tomorrow, keep a tight stop on shorts. I think a qqqq short over 49.60 with a stop at 50.10 is a good trade.

Just a qualification, I am sitting on all cash. What a pussycat I am. I've got 200k with nowhere to put it.

Danny said...

oh dude, you are so wrong about that one--there are many places.

You sound more risk-averse, so, put 50% in Money Mkt. yielding 5+%, 25% strong dividend stocks like O, MO, DEO) 15% in a couple growth stocks, with ARG (acc. rev growth) with stories you believe and like (FWLT, AAPL, AGN). Put 5% into a story-stock like MVIS, and the rest just let sit.

Don't touch it, and call me in 5 yrs when you have 350k.

Just my 2¢ on stocks and weighting, of course

Danny said...

^and it is a combination of them both

Jason said...

thanks for the 2 cents.