After Market Close June 25, 2007 |
Tricky Phase
We're at that tricky phase of a decline. There's room to bounce, some pessimism, but not enough, deteriorating fundamentals, and the positive pattern of end-of-quarter window dressing. What to do? The same as we have been. We're playing both sides of the market and taking very little risk, yet we're making money.
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DJIA: The Dow held pretty well. Sign of a thinning market? |  |
SPX: The S&P bounced late, but it looks like it has more work to do on the downside. |  |
RUT: The Russell was inordinately weak, which is also a Bearish sign. I am short the Russell in managed accounts. |  |
NDX: The Nasdaq may have a problem developing--too many Bulls. Use care here, if you trade the Q's (or similar). |  |
HUI: The miners are still working things out. Wait for the really ugly stick. That's your screaming buy--it'll feel like a sell. That market is perverse. |  |
ROC: Rockwood is gone for a very nice profit. Nice trading, Chartist! |  |
VIGN: Vignette is torturing us. Not a good stick, but nothing profitable, either. |  |
NCI: Navigant Consulting was down again pretty big. |  |
ANPI: Angiotech was down and we are out. No harm, no foul. |  |
PTIE: Pain Therapeutics was down, but we have to give this one some room. |  |
SFL: Ship Finance was down, but they nearly got us. Use the 30' rule on the stop. Remember, I liked a higher entry on this one, and if you shorted there, use a wider stop. This one has plenty of downside. |  |
NCS: NCI Building (confusing having NCS and NCI, I know...) broke and we're short. |  |
LIOX: Lionbridge Tech was up, but couldn't hold. We're in. |  |
MSCC: Microsemi was down, but I still like it. |  |
NEM: Newmont was down too much to chase. |  |
VCI: Valassis broke the down, but not by a lot. |  |
MEE: Massey broke too soon. |  |
WFMI: Whole Foods looks like a short. The problem with that is that I think there are too many already thinking that and there are a lot of institutional types watching this one for a break up. I'm thinking long is the better way to go. |  |
COO: Cooper was weak but the pattern is Bullish. |  |
OIIM: O2Micro trades thin, but when volume comes in, it REALLY comes in. This could be explosive, but it's not for "widders 'n' orfins". |  |
Summary:
We've got a lot of shorts. Sure, the market is down and in a down trend, but we have to be careful at this junctures. Bounces can come from nowhere and they can be quite sharp. We're also not in a Bear market, either, just a correction. Try to remain constructive.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
Current Positions:
Short 50% VIGN at 18.34, stop at 19.23
Short 50% NCI at 20.21, stop at 19.07. Target is 17.53
Long 50% PTIE at 8.47, stop at 8.47
Short 50% SFL at 29.32, stop at 30.49
Short 50% NCS at 50.21, stop at 51.92
Long 50% LIOX at 6.16, stop at 5.86
Watch List:
[color= red;]MSCC: Buy 50% on a print of 23.27, stop at 22.28
VCI: Short 50% on a print of 17.57, stop at 18.13
WFMI: Buy 50% on a print of 39.26, stop at 37.74
COO: Buy 50% on a print of 55.11, stop at 52.89
OIIM: Buy 50% on a print of 10.56, stop at 10.13[/color]
Changes in Current Positions:
Target reached on ROC; sold at 36.49 (+9.7%)
Move the stop down on NCI to 19.07
We are stopped out of ANPI at breakeven 7.06 (0%)
We are now 50% short NCS at 50.21
We are now 50% long LIOX at 6.16
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*30 Minute Trading Rule:
In order to prevent whipsaws, we use a 30 minute trading rule. This means that, as a general rule, we are going to "sit on our hands" during the first 30 minutes of trading, this includes the lifting of stops during this 30 minute period as well. Additionally, if after the first 30 minutes of trading the range of the stock pick is within the stop and buy/short boundaries presented, the trade recommendation is valid. If the stock's range is outside of the buy/short and stop boundry, the trade recommendation is VOID. E.g. if the recommendation is "Buy a print of 10.25, with a stop of 9.95," and the stop trades up to 10.50 during the first 30 minutes, we would pass on the trade. Similarly, if that stock were to trade down to 9.90 before 10:00, the trade would also be void.
There is no 30mn rule on limit orders, but if price gaps out of the buy/stop range the trade is void.
Rule on stops:
Effective immediately, as a general rule for the model portfolio, we will lift all stops on existing positions for the first 30 minutes of trading. As a practical matter, subscribers may wish to leave their stops in place if they expect to be incommunicado or unavailable during that time to monitor positions.
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