Now we're back at the top of our recent range - the pattern would dictate to go short tomorrow or Tuesday. Then cover 3 days later, and go long. Rinse. Repeat. Continue until this market actually does something.
I've cut out most of my remaining Lennar (LEN) into this move today, as we wrote yesterday we were looking for high to mid $12s, and we more than got it - so it is down to 0.2% stake. What gets me about this rally is not only do I have very little in the portfolio running with the crowd, I have a 500-600 stock watch list and only about 20% of it is really up more than say 1%. I don't have many zombies on my watch lists apparently. I appear to be completely out of touch with the "hot stocks" at the moment. But those airlines are up 10-14% across the board ;)
A few points about the stocks rallying right now, one thought from myself and one from Robert Marcin over at Realmoney.com. From myself - GDP estimates for Q2 originally were 2.7%. They came in at 1.9%. Today it was revised up to 3.3%. Our rebate check mostly hit this past quarter so that was a large part of the strength. Yet almost no one is mentioning that. (crickets chirping) The second point is, isn't that data backwards looking? Or is it only when bad news is reported do we call it backwards looking? And when its good news from the past we call it a "turn in the action". But not backwards looking. Funny how that works.Last, a comment from Robert Marcin which I am also shaking my head at in agreement but complete and utter amazement at this market action. Most of the "strength" (ex rebate check) is from our exports yet as he writes....
The market's rallying on stronger than expected economic news over the past couple of days. Much of the strength is in the export related markets. Yet, it's the domestic consumer and financial stocks that are rallying the most. Go figure. Regional banks, apparel retailers, and home builders are hardly out leading export driven companies.
The market remains a riddle wrapped in an enigma wrapped in hedge fund redemptions and quant traders making moves that boggle me. I said the only thing that could hurt us as currently positioned is a big rally, and the last 2 days have hurt us. But every time we "give in" and cut back short exposure as the pain gets extreme over the past few months (when the market rallies) it reverses within 48 hours, and we have to scramble to put the short exposure back on. And then the market reverses back up within 24-48 hours, and we have to cut back short exposure. And... well you get the idea.
Hence ... well hence, I don't know :) And I'll readily admit the toughest market I've ever encountered. So I'll scratch my head, keep watching, and realize sometime in the next 10-30 years markets won't be like this. I hope :) I continue to watch a bevy of stocks growing 40-60% at PE ratios of 10-14 completely abandoned. And "leaders" Apple (AAPL), and Research in Motion (RIMM) left on the side of the road in a ditch (down on a day like this)? As unprofitable and shrinking businesses scream upward. Oh to be a fly on the wall of a microprocessor of HAL9000 to understand how "it" thinks.
May I introduce to you the new hottest stock in America....
Long Lennar, Research in Motion, Apple in fund, no personal position
