Well... that worked out almost too perfectly. We said in the weekend summary we were hoping for some sort of pullback to let us begin to rebuild our long exposure that we let go due to being "overextended" and now plenty of opportunities.
As you can see, I've cut back my long exposure after this 7% Monday move, and 20%+ three week burst. I'm neither bullish or bearish here; while I do believe bulls have the momentum for now, we've come so far so quickly I believe even the bulls would concede a 5%ish pullback with some sideways consolidation would be healthy before a new leg up. If indeed that happens it would take us to the S&P 780ish level.
I'm again working under the assumption that this is an intermediate move up/sideways/consolidation that badly needed a pullback, so I am going to begin to rebuild the 10% of long exposure we let go in latter part of last week to get us back from under 20% to something closer to 30%. If indeed I am wrong and we slice through S&P 780ish and continue our journey to the abyss I'll change my mindset quickly. Today I began with purchases of
- Our favorite Run n Gun Stock - Excel Maritime Carriers (EXM) which we pretty much completely exited Friday around $5.35, and is now down nearly 18%
- Mosaic (MOS)
- Potash (POT)
- BHP Billiton (BHP)
- Morgan Stanely (MS)
- Baidu.com (BIDU)
- Illumina (ILMN)
I covered partial positions in a lot of things that caused me much pain last week, for very nice % wins in
- Prudential (PRU)
- Capital One (COF)
- Wynn Resorts (WYNN)
- Duke Realty (DRE)
- Morgan Stanely (MS)
These would go under the headings of short bad charts, go long good charts - but things that used to take days or a week to play out now happen in 90 minutes. (we're playing both sides of very volatile Morgan Stanley as its chart is sort of neutral) Again, we entered the week having liquidated a lot of long exposure so much of what I am doing today is beginning to rebuild those stakes at 7-10%+ lower prices. We are way below what has been our typical long weighting of 30% ....
I do believe last week was short covering, window dressing to some degree and until I see if the market can ignore another putrid labor report Friday I won't be aggressive on the long side - simply getting us back to "normal" levels during the week. I would like to get some tech exposure as this is the "go to" sector for bulls, and I sorely lack it - trying to find something I can sleep at night with.
All positions mentioned above held in fund; short Capital One, Wynn Resorts in personal account
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