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Hedge fund trader, long/short equity
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We’ve come pretty far since the February lows, take a moment to comprehend just how far we’ve come in under two months. 1044 to 1180, that’s more than 13%, wow. In the scheme of this rally off the March 09′ lows, that may not seem impressive, but make no mistake, this has been a monumental move. But it was time this week to take a few chips off the table given the extended nature of this market. By Friday afternoon my cash levels were almost 30%, the highest they’ve been in months.

I’m not looking for a major pullback here, in fact I believe we’re going higher. But in the short term I believe we could see a move down to the 20 day moving average at 1150, also coincident with the January highs. I will be a huge buyer down there if any sign of support emerges, and place very tight stops to guard against a complete roll over in the market. Momentum has been the name of the game for over three months now with the market moving in straight lines both up and down, nothing says we won’t roll straight over again.

The S&P 500 was up a little more that 50 basis points this week with the momentum book turning in an absolute return of 1.9%, that’s 140 basis points of out performance in a flat market, I’ll take it. Along with taking my exposure down, I’ve also decreased the number of positions I hold to 18. As well, I’ve cut many position sizes significantly with only two over sized positions.

New positions added this week include True Religion (NASDAQ:TRLG) and Chipotle Mexican Grill (CMG) which I had previously owned. For an extended explanation of the TRLG position, please read the Lesson In Momentum Trading post.

Positions sold this week include Telestone Technologies (TSTC), Exeter Resource Corp. (XRA), Eldorado Gold (EGO), Evercore Partners (EVR), Veeco Instruments (VECO), NetScout Systems (NTCT) and McDermott International (MDR). I will look to add back VECO on a pullback, the stock was just too extended and my gains were significant. EVR broke the 50 day to the downside, I will revisit later. MDR has note broken out as expected, I will revisit as well. I sold partial positions this week in DeVry (DV) and Priceline (PCLN).

Solid wins this week include PCLN which broke out of its ascending triangle on large volume, a quick trade in Blue Coat Systems (BCSI), Lumber Liquidators (LL), and Allegiant Travel (ALGT) which finally broke out on Monday.

Laggards this week include EGO, EVR, and SBA Communications (SBAC).

My exposure has gotten very balanced between tech, healthcare, and service. My foray into materials and energy did not fare too well, but I will take another shot if gold and oil can stabilize.

I’ll also be looking to increase my tech holdings, I don’t believe the run there is over by a long shot.

Source: Momentum Book Update: Far From February's Lows