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Long & Short Update from December 13th

Last week saw successes with Rimage (RIMG), Versar (NYSEMKT:VSR) and Harris Interactive (NASDAQ:HPOL) with a miss for Bank of America (NYSE:BAC). For the current round of picks a mid-week sell off kept most of Jim Cramer's lightning round picks lower by Friday. 

He had four bullish picks and five bearish ones. Of his four bullish picks only Caterpillar (NYSE:CAT) and Cleveland Cliffs (NYSE:CLF) finished higher. Four of his five bearish picks were down, but the greatest loss went to one of his bullish picks, Bidu (NASDAQ:BIDU), which finished the week down -8.7%.

How did PatternDNA perform? 

Cree (NASDAQ:CREE) had exhibited a relatively common Pattern with a mild bullish bias; day 1 had the highest probability of a higher close at 59% falling to 56% by day 5. However, the week started bad for CREE and by day five the stock was lower by -6.9%. The Pattern offered no real edge in either direction but CREE finished as the second worst performing pick of the nine. 

Caterpillar (CAT) had traded a very common Pattern with 239 historic matches. The Pattern had a bearish day 1 bias with a 60% probability of a lower close, but by day 5 there was only a 49% probability of a lower close. In reality the stock bucked the trend of the broader market and closed higher on day 1, 2 and 5 and finished up +2.2%. The Cumulative Annualized Return for this Pattern was +6.4%

Bidu (BIDU) was the worst performing bullish pick of Jim and did not perform to expectations using PatternDNA either. It had the rarest Pattern with only 9 historic matches across 18 stocks over the past year. The Pattern had a strong second day bullish bias of a 68% probability of a higher close (which dropped to 56% by day 5). It started positively but was down slightly by the second day. However, on the third day the stock took a nose dive which left it stranded down -8.7% by the close of business on Friday. The Cumulative Annualized Return for this Pattern was +11.1% based on a exit condition which set an initial stop at -10% (so in all likelihood this would have run into its stop - not every play can be a winner!). 

Cleveland Cliffs (CLF) had the most bullish Pattern for all of last Monday's picks. It had 25 historic matches and so was a relatively uncommon Pattern. From an 80% probability of a higher close on day 1 it still held a 68% probability of a higher close by day 5. This Pattern played to form across all five days and finished modestly higher at +0.6% - while it didn't set the world alight it bettered most stocks which finished down 2% or more. The Cumulative Annualized Return for this Pattern was +7.2%

Nanometrics (NASDAQ:NANO) traded the most common five day Pattern with 260 historic matches. There was a mild bullish bias over the five days but nothing which cracked over 60% probability of a higher close. Last week NANO traded down over the five days and closed with a loss of -2.1% on Friday. 

L&L Energy (NASDAQ:LLEN) had a relatively uncommon Pattern with 49 historic matches. It had a 63% probability of a lower close on the day after the Pattern and 59% of a likewise close by day five. Initially it traded against the Pattern with a push higher over the first two days but by day five it was down -2.4%,  playing to expected form. 

The Pattern for Scientfic Game (NASDAQ:SGMS) offered a Cumulative Annualized Return of 11.8% with a bullish bias of a 65% higher close by day five. It met the goal of the Pattern finishing up 1.8% on Friday.

Teva Pharmaceuticals (NYSE:TEVA) traded a common Pattern with 179 matches but offered no real edge in probabilities. The Cumulative Annualized Return of 7.7% wasn't much of a kicker either. The stock traded down across the five days and closed Friday with a -3.3% loss. 

Finally, F5 Networks (NASDAQ:FFIV) traded a rare Pattern with only 21 matches. The Pattern was unusual in it started with a 56% probability of a higher close on the first day after the Pattern, dropping to 37% by the second day, before recovering to a 53% by day five. However, the Cumulative Annualized Return of 16.3% suggested this was one with a strong bullish bias. The stock traded down across the five days, closing with a loss of -5.4% by Friday. Maybe the dip is a buying opportunity?

Four of the nine picks matched a 5-day performance to the Pattern. Of the Patterns which offered a Cumulative Annualized Return of greater than 10% (i.e. Patterns which offered the most going forward beyond the 5-day window), BIDU was down 8.7% and FFIV was off 5.4%. Are these exceptions to Pattern expectations or great buying opportunities? 

The answer to this will be known over the coming weeks.