Cummins is up nicely 5% in a general market rally, and has actually been a very stable stock the past 2 weeks since its earnings 'disappointment' (not a disappointment in my book). Technically the stock has been stuck under its 50 day moving average ($124-$125) since the earnings report and I think investors will keep it in limbo until we get more info in about 2 months. With the potential for market weakening I am going to liquidate to cash and sit on the sideline. If the market were to push it down close to its 200 day moving average of $100, or a range of $100 to $105 I would become interested. Actually from a pure technical trading standpoint you'd want to buy this stock on a clear break of its 50 day moving average (north of $125 on a nice volume surge) or on a breakdown to a lower support level like $100 (200 day moving average). It is sort of in no man's land now.
Due to some averaging down I actually did ok in Cummins Engine although it is down about 11% from my original buys in the low $130s. Post earnings when the stock tanked (way overdone) I average down in the mid $110s and mid $100s, and have been liquidating (mostly to raise cash) around the range Cummins is today. Therefore despite taking a large hit due to market unhappiness with its earnings, I am leaving the position with only a cumulative 1% loss. I've held Cummins Engine since late September, and sold the last 100 shares in the upper $110s today; this was just over a 1% position entering the day.
Again, strong franchise, the company is executing, and has made great long term inroads in the 2 fastest growing markets in the world. But a large part of business is still US based and I could certainly envision an environment where the baby is thrown out with bathwater (US slowing = fears of Cummins slowing) and we can potentially get a nicer entry point. If not, the market has created many other opportunities in the past 2 weeks.
No position
