The last week and a half have been tough, I can readily admit that I’ve been chopped up quite a bit here.
Money seems to be rotating out of the leaders and into the beaten down names. If I had more time I would take a look at the relative performance of the growth and value indexes and I’d bet you dollars to doughnuts that value is kicking some ass right now. That’s not my field obviously, I buy high and sell higher, which right now is not working. Breakouts are failing in most momentum names, and those which are at the highs come earnings time are getting taken down. If you are a high growth stock and you don’t blow earnings out of the water, including the top line, your fate ain’t good.
Thankfully I haven’t had any huge earnings blowups, but losses in Peet's Coffee (PEET), Titanium Metals (TIE), Garmin (GRMN) short, and Impax Labs (IPXL) haven’t been fun. Big earnings wins in Power-One (PWER) and Isilon Systems (ISLN) are a little aloe for those burns.
The market as a whole looks pretty healthy here consolidating right above the 200 day moving average, but underneath I’m starting to see a lot of the most beaten down stocks run and the quality names fail. I still haven’t been more than 50% long at any time over the past few weeks and until I see these type of things start to change I won’t be. We’ve still made a few percentage points of absolute return since getting involved on the long side again, but the alpha bleed is starting to get to me a little. It may be time for me to reduce exposure and step aside a bit here to reevaluate.