Tuesday morning I decided to sell my remaining position in (HZO) puts at a premium of $1.95. After seeing this quarter’s results and the reaction to the numbers, I’m beginning to think that while the fundamentals remain bad here, the bulk of the downside is already priced in.

Additionally, I continued to add to my position in (CHCG), increasing the position by about 30% at $2.69. I’m now beginning to really stake a claim here, simply because I think the fundamentals are just too good to ignore.

Friday afternoon I decided to take partial profits in (NUAN) and (SGR) on the basis that the stocks have gotten nice 3% pops, but pops are meant to be sold in this market. Therefore, I sold half my position in NUAN at $16.25, and sold 60% of my position in SGR at $56.00. Nuance has earnings due out on Monday, and the way this market has been, I think taking some off is prudent and allows me flexibility should we see further downside.

Friday afternoon I decided to double my positions in (BBSI) and (USO) puts, taking advantage of the big price declines in both. Frankly, I am buying these staffing companies largely because of their balance sheets, and BBSI has a very nice balance sheet that inspires confidence to buy the dips. I doubled my holding at a price of $16.05, effectively bringing my basis down under $17. Still a small position and I anticipate continuing to add on weakness.

I also added to my short position in oil by doubling my stake in the USO puts at a price of $0.80. Frankly, we are getting closer and closer to recession, and I’m not buying the argument that Nigerian production might fall or that OPEC might decrease output. OPEC is usually good at restricting supply when prices are increasing, but I doubt their ability to enforce output cuts when prices are this high due to an expected fall in demand.

Wednesday I spent the bulk of the trading day cutting my exposure to the inflation trade that I’d put on. My baseline reasoning is that oil has been the key driver behind inflation, but today’s oil inventory report was very bearish for the market and resulted in some technical damage as oil dropped below the $87 support level intraday. Although oil barely managed to climb back above $87, I believe that the technical damage has been done, and we are likely to see added selling pressure over the next few weeks and months. Given the substantial amount of speculative money still in the oil ring, prices could potentially correct pretty sharply here, and that will surely help to temper inflation expectations over the next few months.

As a result, I sold some positions in my portfolio that were centered around the inflation/global growth trade, and continued to rotate into recent purchases such as staffing and consumer plays. These buys are clearly with a value orientation, because growth looks to still have plenty of room on the downside. Here are my moves:

I made a few smaller trades Tuesday to adjust the mix of the portfolio, and I will go down the list and detail my thought process.

Sells

Monday afternoon I decided to add further to my position in (CHCG), increasing the position by 20% at $3.01. This still isn’t a huge part of my portfolio, but I continue to see weakness in the stock as an opportunity to buy ahead of Q4 earnings. I’m comfortable holding this stock longer term barring some unforeseen change in the fundamentals.

I made a number of trades Friday, so I’m gonna quickly go down the line and explain.

Sells

Thursday morning I decided to make a few moves to take on a bit more risk on the long side. From where I sit, it looks like the market is having a minor freakout over the jobless claims numbers, and I don’t think it is warranted. I’m viewing this as a final shakeout of the last few sellers before we can go challenge the resistance levels up ahead. Therefore, I made several moves this morning.

Sells

Wednesday afternoon I bought a small position in (MOS) at $90.59 after the Fed decided to cut interest rates by 50 basis points. This is in keeping with my thoughts yesterday that a 50 point cut provides support for the inflation thesis, and MOS is poised to benefit from agricultural inflation.

However, having watched the reversal this afternoon, I am not all that enthused with the market action following the cut. I’m still trying to discern the near term implications of the reversal, and I’ll have more later this evening after I have more time to ponder where we go from here.

Tuesday afternoon I decided to sell just a bit of my position in (RIC) at $3.24. After taking a harder look at my portfolio, I was getting a bit overzealous with position sizing, and felt that cutting the position down slightly would give my portfolio a bigger margin of safety against volatility. It continues to be my biggest holding and I continue to like the stock into fourth quarter earnings, which I expect will take the market by surprise.

Additionally, I increased my position in (CHCG) at $3.07. The company has already upped 2007 in late November, and has had generally positive developments since then regarding its joint venture with Carrefour in China. The stock is simply too cheap at these levels, and I will be looking to allocate more capital in that direction if CHCG stays down at these levels.

Monday morning I added two small new positions in (MCD) and (TKC). As readers might have noticed, I’m using the market turmoil to establish positions in a number of quality names with bigger market capitalizations. My buys of (PKX), (SGR), and now MCD definitely fit into that category, and while everyone else is fretting about recession, I’m attempting to plan for the post-recession. We’ve already made plenty of money on put positions on the S&P, and frankly, I don’t think there is much money left to be made trying to play recession fears. Therefore, I’m taking the other side of the trade and buying small positions in quality companies at discount prices. McDonald’s at $50.65, down 7% despite their impressive menu changes and store renovations, sounds to me like a discount.

In addition, I bought a rather small position in TKC at $22.02, which has a very attractive valuation and huge potential for growth over the next several years. This is not just a Turkey play, but a play on expansion into parts of the former Soviet Union (Ukraine) as well. To my mind, you have to buy these emerging market plays when everyone is scared of them, and people are definitely skittish about emerging markets in general and Turkey in particular at the moment.

Friday morning I decided to sell half of my position in (VGZ) at $4.68, effectively reversing my purchase of yesterday and taking 31 cents of profit out of the stock in just one day. Essentially, by doubling the position yesterday and flipping the position today, I have effectively lowered my basis while maintaining the same size position. I continue to like VGZ, but it is somewhat speculative, so managing the size of the position in essential. All in all, I accomplished what I set out to do with this trade.

Thursday I decided to increase my long positions substantially, adding a number of new holdings to the portfolio. With regards to particular sectors, I decided to inch into the steel sector, as well as get moderately long of a few natural gas producers. Additionally, I increased the size of my positions in junior gold producers. The other stocks I added were pretty much all specific to the company, with no real sector theme. Finally, I decided to divest my holding in (BEAS), because I thought there were better opportunities for my money. Here are my trades:

(CHK)–I bought a small position at $36.23.

What a change in the winds Wednesday brings. The market felt like it was searching for a bottom this morning, and after we failed to decisively break Tuesday’s lows, I decided to cover the bulk of my put positions and begin inching in on the long side. After a stampede into the close, it appears that we have found the bottom in the short term, although I doubt that we are headed in a straight line upward. I summarize my moves below:

Sells:

A quick summary of my moves for the day…

(LEH)–covered at $51.69. It managed to hold previous lows at $49, so I don’t see the need to push it further. Good gain.

Friday morning I decided to cover my (GLD) and (USO) positions at $87.73 and $71.65 respectively. They’ve continued to hold up pretty well despite the selling in equities, and that has me wondering whether they might not have another run higher next week.

Additionally, I used the strong open this morning to by a sizable position in Feb (SPY) 130 puts at a premium of $2.35. So far my entry point appears to have been pretty good, and I want to hold these puts for the time being as I continue to believe we are in a downtrend that will last until the VIX comes up above 30.

Thursday afternoon I decided to buy a modest put position on the Brazil ETF (EWZ), buying the Mar 60 puts at a premium of $2.30. Emerging markets have really begun to fall apart, and although Brazil had been hanging tough, it broke through some key technical levels today and has made a sharp downside move on accelerating volume this week. Now that the Russell 2000 is in bear market territory, I expect Brazil to come under increasing pressure as people begin to doubt the global growth story.

In my effort to further reduce long exposure, I decided to cut the size of my position in (CAGC) by about 30% by selling the stock at $2.48. From a valuation standpoint I obviously like the stock and continue to hold a position, but this is a very treacherous market and I don’t see much incentive to be putting on large positions in anything.

Another quick update to the portfolio. Thursday morning I decided to buy back the calls I sold against my (VGZ) position at a premium of 20 cents. I had sold the calls at 45 cents, and they have provided a bit of cover as gold has pulled back. In my opinion VGZ has probably overcorrected, so I want to cover here and perhaps sell calls later if the stock moves up.

In Wednesday’s daily market wrap, I spoke of how I planned to revamp the portfolio Thursday to reflect what I thought was a significant deterioration in both the technicals and some of the fundamentals surrounding the bond insurers. I’ve made a number of moves to shift the portfolio further to the short side, and I will continue to judge the exposure of the portfolio and may become less long and/or more short in the coming few hours and days. Here are my moves so far:

Sold: