In response to changing market conditions, I'm making some significant changes to the model portfolio. The market was down this week on low volume as volatility jumped upwards. The market seems to have hit a wall at 1300 as I predicted. This is slightly worrisome, and it remains to be seen the full affect that this resistance will have on the market.
Bank of America reported poor fourth quarter results and today the Wall Street Journal dubbed them the weakling of the banking industry. Shares were down roughly 6.6% on the week as opposed to the market's loss of .8%. I didn't buy Bank of America in my real portfolio because of the risk it posed due to bad mortgages. Bank of America's post-recession hangover isn't over, and the fourth quarter made that very clear. On this bad news, I'm tightening my stop to right under support at $14 per share. I think that, at least technically, I can make some more money on BAC, so I'm holding out for now.
In my model portfolio, stop orders expire very quickly. I should have sold Genco Shipping & Trading at a higher price, but I didn't. The shipping industry is very hectic, and Genco has no edge over the competition. I didn't call the bottom right, and I'm cutting my losses and selling.
GMX Resources took a big hit, and it's starting to recover on strong volume. The ride up has been bumpy but definitely bullish. I'm holding for the foreseeable future.
NRG Energy broke out on Friday to cap a fifth consecutive week of higher closes. I'm holding for the foreseeable future.
Navigant Consulting has moved much more slowly than I expected. It has yet to break through resistance at $9.65. This will be very bullish, but I don't know when it will happen. It's a slow mover, and I'm willing to wait.
I'm keeping an eye out on the 40% of the model portfolio that is in "short-term" trades: Bank of America [BAC] and Genco Shipping & Trading [GNK]. This part of the portfolio needs more frequent monitoring and trading, because it is shorter-term. I'm freeing up some capital with the sale of GNK which I will look to employ in the coming weeks.
Disclosure: I am long NRG, NCI, and GMXR in my actual account.