Bookkeeping: Some Morning Transactions

Last week, I cut 4 names back on potential breakdowns in their charts. Three of those names immediately reversed (2 of them being fertilizer which seem to move together)

So this morning I have done transactions (reversing what I did last week) in 3 of the names... first Gafisa (GFA) - it broke its exponential 50 day moving average but NOT (in retrospect) it's simple. (see I'm evolving and learning myself every day) :) So I cut back, when in fact since it had not broken its simple moving average I could of held. The stock promptly bounced off that level (mid $38s) to become one of last week's big winners. I gritted my teeth. [58 Stocks Returning 8% this Week] Since that time, peaking at nearly $45 Friday, it has lost $5 bucks straight away in 1 and a half session, dropping to $40 (11%) so I'm getting another chance not to screw this one up, so I will rebuy what I sold off and make Gafisa back into a 1.8% position. Now I am checking both the simple (just over $39) and exponential ($40) moving averages - if it breaks BOTH - then I'll cut this name back again to a lower exposure. Nothing works all the time, so you'll see the triumphs and tribulations here in plain sight as we move forward on this journey.... because the stock did return back to near where I sold it, this "mistake" did not cost much at all.



On the other hand, the 2 fertilizer names I cut back for similar reasons, did break both their exponential AND simple moving averages on a closing basis. Traditionally, you sell/cut back at those points anticipating the potential for further downside. This did not happen in this case. So be it. I said if they reversed and showed strength, I'd pay up and reverse course. This happens alot when a stock is jumping up, down, and around a key moving average. No harm, no foul. So I added back some Mosaic (MOS) and CF Industries (CF) this AM.

I also added some Potash (POT) which I had not cut back on last week.

Current stakes in my trio of fertilizers (I added a fourth name yesterday of course, but these 3 I've held since late last summer)
Mosaic 3.8%
Potash 3.0%
CF Industries 2.4%

I've held Mosaic up to 8% of fund holdings in the past, so I have no problem going higher; much higher if this is the beginning of a larger move (if only my crystal ball would tell me if it was). But, what I do love about this group is it has consolidated for nearly 6 weeks, in a narrow base.... off such long bases come strong moves (we never know whether it will be up or down) - but as I've said since last summer, the fundamentals in this specific group (especially potash producers) are the best I've seen, period. The fundamentals call for MUCH higher prices - even after huge moves over the past 2 years. So we saw some stupendous moves upward last fall and in the spring... after such huge moves generally we get a consolidation/pullback periods. I was hoping/expecting for more of a pullback - maybe we will still get it... or maybe not. Most likely it will take one of those "waterfall selloff" moments in the general market to push these names down in a meaningful manner. But the charts are starting to really firm up... I won't post all 3, but you can see from 1 the same pattern in all. Again, there is (in my opinion) very large market risk at this time so this is the trouble we have with opening much long exposure at this time - but with less than 50% long exposure in the entire fund I'm willing to buy some of the higher quality fare even if things might reverse on me in the near term.



Now that coal has had a huge run, which we enjoyed thoroughly at Rising Tide Growth, wouldn't it be sweet, as that group rests/consolidates we could now enjoy a run in fertilizer of similar magnitude? Then when the fertilizer rests in 4-6 weeks, coal will be ready to resume a new run... and then when coal rests 4-6 weeks after that move... we could... ok ok, I am dreaming but it would be nice ;) Again, could be just another headfake and these fertilizer names could break down in a few days - we never really know - if we see continued strength later in the week or even this afternoon - I'll probably be adding more to these positions. Frankly fertilizer has been our top "sector" weight for most of our public life so we've felt kind of naked without it, but hey coal was a nice blanket in the interim.

I also added some Vale (RIO) as the stock has trailed nicely down to its 50 day moving average, but again if we ever get this "long awaited" commodity correction, all these purchases today will be underwater very quick - this is why we scale in (and out) of positions in pieces.

Long all names mentioned in fund; long Mosaic, CF Industries in personal account