A few quick transactions
- Buy in Research in Motion (RIMM) - I had this as a 0.1% stake going into the week and bought a small splotch yesterday to get it to 0.4% but was targetting $120 to add anymore, but today it gapped down yet again to the upper teens, so I added a little bigger stake in $117s. This looks destined for the 200 day moving average of $113. Still going slow and only up to 0.7% stake.
- Buy in Lennar (LEN) - this homebuilder is now at 2007 lows, so I bought in low $12.00s. I am hoping this huge double bottom formation holds, and we can make a nice flip trade out like we did in DR Horton - so far this position has not worked for us as well as DHI. Shamefully this has moved into the top long position at 2.6% of fund. Breaking below $12.00 would be a very bad thing in this name - so we'd cut back what we bought today if that happened.
- Sell in EOG Resources (EOG) - I added some natural gas exposure earlier this week and simply am hording a bit of cash here. The stock is building a very nice base from which it should make a nice move, but it keeps flailing over and below the 50 day moving average. ($130ish) So I am selling just below that number and reducing this to a 0.5% stake. With the weakest chart in the basket of 4 I own, I decided to cut back for now but my sector exposure is about the same that I entered the week since I added elsewhere.
The "generals" continue to be impervious to sell offs - and we haven't tested S&P 1275 so it is hard to really get too constructive on the long side, other than some dead cat bounce opportunities. I continue to believe we don't put a bottom in until people give up in natural gas, fertilizer, and coal. It appears all the institutional money is hording in the same 25 commodity stocks. I am amazed there has been no rotation at all for weeks on end. I'll be curious after quarter end Monday, if these big pools of money rotate away to new pastures, since they can show their clients "hey look at us, we're brilliant we held these best performing stocks all quarter" :) I never understood window dressing - say your fund is down 6% for the quarter but in the last week you loaded up on the big winners so that when your holdings on June 30, 2008 are made public you look smart. Wouldn't anyone question that? How did you lose 6% when you had the biggest winners in the market all quarter? I guess not because that seems to be a popular strategy for managers to bamboozle their investors. Anyhow, I digress...
Oil spiked $5 in the last 30 minutes of trading yesterday - once again Ben - a measly 25 basis points and you could of changed the whole psychology and not made people feel bullet proof buying crude day after day. The world won't be any different at 2.25% versus 2.00% - other than psychology. Oil spiked $11 in the day and a half since Wednesday 2:15 PM. Psychology is everything in the short run - another misstep.
Long Research in Motion, Lennar, DR Horton, EOG Resources in fund; long Lennar in personal account
10 comments:
Off subject but what do you think of gold here. I am looking at the DGP (double gold).
Thanks Tradermark
Sliman,
wrote about it yesterday - see archive to the left in margin. "Gold. Back from the Dead?"
If things degrade that's where people typically flee. I am surprised it has not acted better the past few months since its supposed to be a hedge on inflation but it appears oil is the new gold as that hedge.
Mish wrote an absolutely fantastic article yesterday. A portion of it (or all of it) pertains to Gold.
Excerpt:
Gold Up
Gold was up big today. Some look at gold as a sign of inflation, some as an inflation hedge. The reality is that it is neither, except perhaps in the extreme long term. There was positive inflation from 1980 to 2000 yet gold fell from 800 to 250. As an inflation hedge, it would have been hard to pick a worse one! And if gold is rising because of inflation now, why was it falling for 20 years when there clearly was inflation all the way? Let's look closer.
Historically, there are times gold does well: Hyperinflationary times and Deflationary times. Gold does poorly under more normal conditions, and gets hammered in disinflationary conditions, a falling but positive rate of inflation.
If gold is signaling anything right now, it is the further destruction of fiat credit (deflation) as we move from disinflationary conditions to deflationary ones.
Gold rose in the great depression, and it is poised to do so again. Recent action (the last several years) in gold is very consistent with deflationary theory about the destruction of credit. Gold, unlike fiat, is no one else's liability. Money with that attribute (and gold is money), should rise under these conditions.
Link:
http://globaleconomicanalysis.blogspot.com/2008/06/is-inflation-scare-over-yet.html
Wonder why you like "LEN", the home builder & bank chart do not look too good..
Yesterday I mentioned 2 times to buy gold and they were: 1) still in bull market and this was a pullback to its 200 d ma; so this represented a good time to buy; 2) negative real interest rates.
I forgot the third reason and that was as a safe haven during stock market duress. Take a model of when to buy and sell the SP500 and if your model is bearish on the SP500, then it should be bullish on metals. Historically, this is how my model functions --I did not create it for this purpose but this was an offshoot let's say.
If you click on any name at the bottom of an entry you can see historical posts for each name and see the reasoning why.
The housing stocks are part of a thesis that thus far has not worked out :)
I don't really like them fundamentally - but every so often the market rotates in this group and sells off the hot groups. Since I've bought them, however, the hot groups have not corrected and the weaker groups have been straight down. I basically want something working when that reverses - which it has not in a long while. It was poised to reverse 2 days ago, but not after the Fed decision/wording. But alas, not to be.
Guy, that is funny. After I read your comment yesterday it gave me pause and I thought you were implying to be cautious on gold from here on out. I was considering KGC post Fed comments, and then again yesterday morning. Looks like I missed the boat or perhaps this is just the first dock on a much bigger journey. But I read your comments as cautious on gold - strange.
I am sorry...not intended to be so or to deceive (no agenda other than to participate intelligently in blog).... you did ask me for a price target and my best guess was $992 ( which was the weekly pivot high)....that was about 8% away even with yesterday's vault higher....that is pretty good (i think)
Nah, not saying that. Just saying I must of misread it :)
trader
Coxe is big on gold. He says it has been lagging but will move way up.
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