However, at this point technically we have some technical resistance ahead, both the 50 and 200 day moving averages lie ahead; the 50 day in the $26s and the 200 day around $27. Honestly this is as perfect of a setup as you could ask for from a technical perspective. Sell now right below resistance areas, and rebuy either (a) on a move over $27 or (b) on a pullback. So I'm executing the first part of that strategy (sell) here around $26.20... then for the second part (buy back), if the stock shows strength we'll pay up maybe around $27.50 and get the position back or on a pull back to lower to mid $20s we'll do the same buyback.
Well here we are in the $23.70s, so we can execute the 2nd part of that trade; this is a 9% drop in 48 hours, so we'll take that all day, every day. Now again, I really don't like to buy charts like this where the stock is below both the 50 and 200 day moving averages because the potential for a much larger drop (with no real technical support) is out there, but much like a certain solar company I own, the valuation is getting very compelling down here. (below 15x forward earnings, for more than double the growth rate)
If one were drinking Kool Aid, one could say that a double bottom might be forming, from which we could get a nice bounce. Since I don't imbibe, I'll just say if it pops back to $26+, I'll probably do this exact same trade again (sell as it approaches resistance) and see if it pulls back again or breaks through resistance. March lows were $21 - so that's my downside target - we'll keep building this position up if it continues to falter. For now I am just taking it back to where it was Wednesday; a 1.1% stake.
Long Perfect World in fund; no personal position
2 comments:
Hi Mark
What shorts are you adding today?
Doesn't seem like we got an invisible hand today
The drop has been pretty hectic today so I would assume we'd get at least a minor bounce Monday that might provide some shorting opportunities. Tought to buy some of these Ultrashorts at +8 to +10%.
I did add a little Russell 2000 that's it
What I'd like to see is the commodities turn over and then add to SMN and DUG but not at this point.
just sort of sitting with large cash and waiting - if this day ends as it, you'd most likely get some "bargain hunters" trying to push the market up Monday.
But we might be changin in nature from buy the dips to sell the rallies after today's white washing.
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