I sold down a bunch of my trust positions on Friday. I still hold about 1/3 of what I bought last month. The number one reason for profit taking is that, IMO, the Government is unlikely to back off at all on the their trust policy, even if it leads to further political turmoil. Flaherty is digging in. So that is taking way some near term optimism.
The number two reason is the reversal in ECA on Friday. Whether the downgrade on ECA created a stock specific situation, I am not sure. But I have seen many comparisons of energy trust valuations based on the likes of ECA. If they are selling ECA, I want to be careful with energy trusts in general.
The third reason is natural gas. It has rolled over here and could be weak for a period.
The fourth reason is tax loss selling is not over yet, and there could be some more selling/squaring of positions in the coming week.
And the fifth (which should be number #1 really), is that there are no clear buy signals on any of these positions. So with so much uncertainty and doubt, I would rather reduce exposure.
I sold positions in AET.UN, FEL.UN, and YLO.UN for trading profits. I still hold a big position in SND.UN because it is so undervalued (ie. large tax pools etc.) and my cost base is around $5.00. I hold PEY.UN primarly because I am slightly underwater on the position and willing to hold it in our RRSPs.
I guess we will see what comes this week. Note that there are no clear buy signals on these trusts, at least with the indicators I like to use. Also the bollingers are now compressing price in many of these trusts, so we are about to get a decent move up or down.
So factor all this and let's not mention that the general market keeps rallying and is bound to hit some selling in the next little while.
Edited by SilentOne, 18 December 2006 - 08:10 AM.