Stopped Out of Four Long Positions - Washington Is the Culprit 11 comments
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We were stopped out of quite a few long positions as I tried to keep my long exposure in case the market continues running. As I still like the fundamental story of each, I want to do a quick update - I'm content with the sale of all 4 for technical reasons on first glance, although one of them is still holding a lower support (but trading below where we sold it).
Let's start with that one - Allegiant Travel (ALGT) which is still holding support and many times moves inverse to the market. Reason? The market loves when oil goes up - commodities up = everything is fine in the world = dollar down. Airlines on the other hand usually are punished when oil is up. So this stock trades to its own beat. I continue to be a huge fan of the fundamental story. Technically it is compressed in between a whole slew of moving averages... I'll continue to monitor it as it's dirt cheap in my opinion.
We sold all of Quality Systems (QSII) in error yesterday, I like this stock and like to keep my "history" by not completely exiting a position (hence all our 0.1% stakes). But it continues downward after a poor earnings report that it first ignored.
Ocwen Financial (OCN) I'm thrilled with our exit just under $14 - I was scratching my head why the market was not punishing its massive dilution, we got out in the morning - it crumbled that afternoon and again yesterday before a late day rally. Really a shame here because the fundamental story is intact and improving as more taxpayer money is being funneled by the day to U.S. homeowners, and Ocwen gets 'paid off' for each homeowner it helps under Obama-care. It would be very healthy to get back over $13.00, which in my mind would mean the dilution is then priced in... I assume every stop loss in the stock was triggered with the death drop to the $11s yesterday.
O'Reilly Automotive (ORLY) - I continue to like the story here, but Obama-care in this case hurts since it helps new car sales with Welfare for Clunkers. Still hanging around support but stuck underneath. Hopefully it bounces back soon.
As you sadly see by the comments above, so many stocks are now affected by Washington D.C. rather than their own merits, but this is our corporate socialistic (not the European type) system. Capitalism you say? (chuckle) Sure.
With these sales, we are back down to about a 1:1 long short exposure; waiting to see the next move by Goldman Sachs. The speculative nature of the stocks that ran yesterday has me more cautious, but it's not your daddy's market anymore, so I'm going to wait for more signals to increase short exposure. For example Lloyd Blankfein saying "Larry Summers ok'd a 10% correction here" would be the most prominent sign, but since I am not on that memo list, we'll have to watch the markets for hints. I am bearishly bent for the intermediate turn UNLESS the S&P gets over 1010 or so.
Obviously the very faulty, but taken as gospel, monthly jobs report is tomorrow morning and will sway the action.
Disclosure: Long Allegiant Travel, O'Reilly Automotive in fund; no personal positions
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This article has 11 comments:
If you can't get a tip from an insider, maybe the next best thing is a tip from an outsider like Naufal Sanaullah, "Was August 6 the Stock Market Top?", here:
seekingalpha.com/artic...
They have taken this market so high, so fast that it has become unhinged from the underlying fundamentals and mocks technical analysis.
Understanding this, many investors have not participated in this fraudulent rally and have avoided exposing themselves to sector rotations determined by the Fed and their agents.
With so little volume and real liquidity, the market will be reduced to a bunch of HFT trading platforms screaming at each other. And when the algo traders see momentum turning, as it surely must, this thing will fall like a rock.
On Aug 06 05:00 PM CautiousInvestor wrote:
> Whether through policy actions or more directly through the dark
> activities of the PPT, Washington controls the market along with
> everything else.
>
> They have taken this market so high, so fast that it has become unhinged
> from the underlying fundamentals and mocks technical analysis.<br/>
>
> Understanding this, many investors have not participated in this
> fraudulent rally and have avoided exposing themselves to sector rotations
> determined by the Fed and their agents.
>
> With so little volume and real liquidity, the market will be reduced
> to a bunch of HFT trading platforms screaming at each other. And
> when the algo traders see momentum turning, as it surely must, this
> thing will fall like a rock.
On Aug 06 09:15 PM BigJake wrote:
> I just don't understand. If you are so confident in the plunge protection
> teams ability to support the market why isn't everyone all in and
> long? I mean why not make money off a rigged market if you know which
> way its rigged? No one ever seems to want to answer this question
> no many how many times I ask it...
Thus often what's good for the government entity being saved often turns out to be bad for perfectly solvent, fiscally prudent companies. Trademark is in the market and profited off the upcycle (most everyone has by now), he is just exiting things that don't fit into the Obamanomic market model.
You should stick to the political blogs when using words like Obamanomics... leaning on politics when making economic decisions is a recipe for introducing political bias into your investing decisions. Making economic decisions on the basis of politics and opinion rather than fact is a good way to find out how to be wrong a lot.
On Aug 06 10:25 PM Moon Kil Woong wrote:
> Big Jake: The problem is the government is as arbitray as it always
> is and no one knows when the party will end. That being said Trademarks
> sells are exiting positions that are running counter to the market.
> He is correct that government intervention affects the entire market
> from the point of entry on down.
>
> Thus often what's good for the government entity being saved often
> turns out to be bad for perfectly solvent, fiscally prudent companies.
> Trademark is in the market and profited off the upcycle (most everyone
> has by now), he is just exiting things that don't fit into the Obamanomic
> market model.
> Because as soon as you think you know the rules they
> change the rules.
++1
> It's about time now for Obama and GS to cause a
> correction before things get much more crazy
> overbought.
Nah! Abbey Joseph Cohen was touting the new 1020-1100 top by year end. Since we're in an inventory replenishment cycle now, the GDP, hours worked, etc. will all show smal improvements for the next couple of months.
That will suck in a lot more retail/institional investors.
*Then* we get the correction scheduled by GS et al and they cover their shorts. The "longs" will be doing the same, but they'll cover their shorts with excrement as they realize they've been had yet *again*!
HardToLove
seekingalpha.com/artic...
Also, if you really have an interest use the SA search capability for (include the quotes) "Plunge Protection Team". If you do this you'll probably learn more than you wanted to know (based on you comment).
HardToLove
On Aug 06 11:28 PM BigJake wrote:
> Come on guys. If there is a PPT, what is their purpose? To keep
> themselves in power pulling the levers of power. Exactly how does
> crashing the stock market keep that equilibrium for the "PPT" or
> the powers that be? It doesn't. It creates a giant mess and could
> cause political instability. Not good for the PPT. So, logically
> things should go up. Not straight up of course because then it would
> be too obvious and too easy. But the point is, if you wait long
> enough, its up. I waited out June which was a bull trap and in July
> they sprung the bear trap. Yes maybe in 7 years we might have another
> crash, but why not make money while we wait? Seriously, if you think
> there is a PPT, you should be long for the next few years and you
> will make money!!!! If you don't believe in a PPT and the market
> isn't rigged is when we should be ready for anything to change up
> or down at anytime....