That was a quick visit to the short side on Thoratec (THOR) - as we mentioned yesterday healthcare has seen an immense rotation into it particulary this week as computers left the reflation trade to the new flavor of the (day?) (week?) (month?). Thoratec has been a long for us for a long time, but when it broke support we exited...
We shorted it Wednesday
I am short Thoratec (THOR) for technical reasons only (I like the story if not the valuation) - the stock is actually up today go figure... so my limit order to short at $25.50 hit just a few minutes ago. That is the 20 day moving average
- the 50 day is $25.80, and the 200 day is $26.20. My stop loss will be $26.35 where I'll exit out. This is about a 3% position.
and the chart looked like this
It broke through 3 moving averages in very short order so you have to respect that; the computers want in healthcare and moving averages won't matter it appears. Now the chart looks like this...
We were stopped out today at the $26.35 so we took a 3% loss and now we have to consider it again as a long side candidate if it closes in good condition. As I mentioned yesterday morning, I am going to keep my cards close to the vest and take losses quickly - either long or short. Sometimes a stock like this will immediately reverse back and you were "shaken" out of a "correct position" but that's part of the entrance fee for playing with tight stops.
Let me reiterate the CLOSING price is a lot more important than action during the day. Since I have so many positions I am simply allowing the mechanical stops to play out, but in theory it would be best to see where a stock closes for the day and then make a determination... i.e. THOR could reverse this afternoon back down and I needlessly took a loss. I am cognizant of that but I can't watch each position like a mother hen, so hence I am just going with the intraday prints.
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I am going to do an identical short set up to Thoratec (THOR) from a few days ago, although this one bets against the consumer - I am shorting Darden Restaurants (DRI) with a 3.4% stake at $34.30 - I've had this limit order out for about a week patiently waiting for DRI to rise to a point where it is near some resistance points - it had been under $33 most of the week. This way if I am wrong, like happened with THOR, I will be out with a small loss. The 50 day moving average is $35, I'll be out at $35.20 if and when it happens and take my ball home with a 2.6% loss.
Short Darden in fund; no personal position
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