Bob, Bears, Bulls, and Buys

Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won't come again
And don't speak too soon
For the wheel's still in spin
And there's no tellin' who
That it's namin'.
For the loser now
Will be later to win
For the times they are a-changin'.
Bob Dylan

With the bears now growling about the onset of Armageddon, I felt Bob's timeless lyrics were appropriate. Take a look at Tim Knight's post Sweet Relief if you care to read about the dark side.

My day started with me putting a market order in to sell my QID at the open, as I saw the futures were up, and I was going to be out of the office and away from a computer until the afternoon. Bad timing on that one. After my meeting, I met my wife at her office, pulled up a quote screen, and did a little dance as I was up another 1.5% or so. I decided to celebrate my unrealized gains by taking her out for a nice lunch. Again, bad timing.

By the time I got home, AAPL was in an all-out free fall. Rather ran reacting instantly and buying the panic dip, I went searching for news. Of course, there really was not any. I spent probably thirty minutes just watching things and looking for an explanation for the selloff. Now don't get me wrong, I knew things were extended and due for a pullback. It just looked a little more violent than usual.

Anyway, I did use the weakness to sell off some losers. I sold the rest of my PTT at $7.94, which means I was able to get rid of most my shares for a smallish loss. I also sold 500 AKRX @ $7.50 for an even smaller loss.

In the past, I have participated in panic selling. Today I remained fairly calm and objective. This is a big improvement for me. Now that doesn't mean I did everything correctly. I did sell 200 LLNW @ $11.02, which was not a good move, especially since they raised guidance after hours. I also sold my AAPL @ $160.80, when it looked like it was going to continue down into the close. I still got a nice gain on the sale. However, I bought back 2/3rds of the position for a tiny bit higher than I sold when it showed strength going into the close.

Another move that I am proud of, even if it turns out in the future to be wrong, is that I bought this dip. I added shares to my BLUD and BWLD positions. This is crucial for me because it is damn near impossible to buy low and sell high if I can't buy during panic. I did today.

As for the Nasdaq, I view today's move as a much needed pullback.



The chart shows support on the 10 day simple moving average. The strength of this rally can be measured by the fact that this is the first touch down on the 10DSMA since September 18th. The blue line I drew shows the lower trend line established from the August low.

The volume today absolutely shows distribution, and the Stochastics and RSI are overbought. However, there have likely been a lot of traders waiting for a pullback to get in on this rally. In fact, our very own Ragin' Cajun has been waiting with 50% cash. In short, I am still bullish here, but will be watching the moving averages and trend lines very carefully. If the Nasdaq looks like it wants to trade below the blue trend line, I will likely continue taking profits (assuming I still have some at that point) and will liquidate speculative plays.