I am going to take the pump and dump moment in financials to cover some Capital One Financial (COF) - I had not intended for the position size to get this large but as it jumped 80% last week I was compelled to make this position very large. I usually don't average down (or up in this case) as a rule but occassionaly make exceptions. Make no mistake I did not come out a big winner on this batch, but my average short point is $23 and I covered near $25 - considering the 80% move against me I'll consider this smallish loss a "victory". I am bringing this down to a more normal 4% sized short position - and then we'll assess from here. $24 is the bottom of a gap so I'll cover more there and then see how it behaves. This does not change my view that COF is extremely overvalued on EPS basis for 2009 and 2010 but this market has not adhered to any valuation basis in its euphoria, so we'll see where the market is & COF is in the coming days before making the next steps. Since the market direction each day is determining 90% of the move we have to get a better feel for this market that is overdue for a pullback. I did not except the stock to jump over the 200 day moving average but right now moving averages have been superseded by hedge funds being squeezed out of stocks left and right. Today's short cover I'd classify as risk mitigation trade for now, on what was an "error" (shorting too early).
I will say COF was the ONLY deal in the entire complex of financial firms that dumped shares on the public post stress test that closed on the same day BELOW the offering price ($27.75) so that tells you a lot.
EDIT 1:20 PM - as COF gets right next to $24 I covered some more.
Short Capital One Financial in fund and personal account
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