The individual names do not matter at this point so I am going to just consider this mini basket to be "1 position". Last Thursday as the chickens were running around with their heads cut off about the "strong dollar", I was incrementally adding to my coal stakes [May 1: Incrementally Beginning to Add to Coal] so today I am simply reversing those purchases plus taking out some Alpha Natural Resources (ANR).
Let's look at them as a group since that is how I look at these 4 names - I had a 10% weighting going into day with Arch Coal (ACI), Massey Energy (MEE), ANR, and Consol Energy (CNX)
They have come a long way in just a few days
ACI from $53s to $62s (+17%)
MEE from $48s to $57s (+19%)
ANR from $46s to $58s (+26%)
CNX from $75s to $89s (+19%)
Please note I did not buy at the lows Thursday, I am simply showing how far they have come in since Thursday.
Is this the top? I have no idea. That doesn't matter to me. I am taking profits out, and if they continue to run, I still have a good allocation. If they reverse and go back, I will reapply my cash at a lower price. Same thing I always do - never catching the top nor bottom, but catching the middle often.
My new allocation for this group is 6.2%. If the stock prices go higher, I'll continue to sell down. If they go lower, I'll add back. I will continue to have my goal to be, on commodity dips, to have this stake as one of the top stakes in the fund. I continue to hold my Russian allocation as well, which the market is completely missing... per usual.
Long all names mentioned in fund; no personal position
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6 comments:
TM-
I like your "layering" philosophy and it's working for me. Just a couple of questions about it: Since I'm investing a small amount I can only put about 2k in one position at a time and transaction fees are $14 (in my IRA account - only $4 in izone acct). So, I need to limit my trades to prevent erosion of profits. How do you decide when to start layering back in as a (say, coal) stock begins to drop? Is 4% enough? Does the stock chart help with this decision? 20/50 DMA?
Thanks,
Link
First, call your broker and say you will switch to ABC broker unless you get a lower rate
$14 is obnoxious in this day and age
Second, I don't have any pre-set answer to your question. There are 10,000 variables to do with the charts, the market moods, potential news, etc. Every situation is its own set up. But I will never look a 20% 3 day gain in the eye and not take money off. You just have to do it and find what works for yourself. Many people beat themself up when they sell a stock and it continues up, and hence its not a method for them at all.
I don't have any easy answer, this is not a science - its an art. The more you do it, the more you detect things or find patterns that repeat, is all I can say. I usually leave money on the table in all of my trades but that's ok.
Mark:
I took some profits in the coals as well this morning.
I am curious about your stance on natural gas in the current market... with gas and crude prices at all-time highs, are you looking to take s-t profits in nat gas stocks as well as the coal plays and buy back on a pullback, or are you gonna hang on to or add to nat gas positions here?
disclosure: i have no nat gas positions right now and have not had for a while. I am waiting for a pullback, if any, to dip in...
thanks much
obviously that's the right play taking profits on such a big gain in a short time frame. But, on the charts, ACI in particular looks like it might break out of its double top that its forming > $62.5. Obviously took profits (yesterday) but will add for a momentum trade as well if we see strong volume on the breakout. Just wanted to point that out. MEE is setting up for a breakout-pullback-breakout scenario as well. looking to add around $55. all depends on the volume and price action though
jeffrey,
I think big picture as more coal gets exported on barges, nat gas replaces it since many utilities can switch from one to another. That plus it usually trades along with crude
mad,
you are thinking more like an individual trader. Again, different perspectives, different strategies from what I am doing. CNX has the same chart as ACI - both are double top breakout buys. I have a different timeline for what I do here than I do as a personal trader.
haha yea i know. was mainly putting that for the 'trader'mark rather than the 'fundmanager'mark
all kinda blends in the end... investing in it with core position, then trading the rest of the position around the technicals until this market picks a definitive direction with conviction.
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