Last week when we cut back on the name [Dec 10: Taking Some Profits - Thanks Obama] we wrote
Cutting Potash (POT) from a 2.2% stake to 1.1% with sales just under $67; resistance lies in the lower $80s where we'll cut the rest.
And here we are - as over the past week the resistance has fallen to near $80.
We are exiting the most of our remaining Potash - cutting from a 1.3% stake to 0.1% with sales in the $80.20s. Again, if we see a move to say $84 on good volume than this trade is "on" and we'll get back in, or find another global growth name of similar ilk to ride since the market treats the whole group as a monolith. We've had a nice move from below $50 to $80 in two weeks (60%) - no need to be greedy in a bear market.
Long Potash in fund; no personal position
2 comments:
If you could short, would you short the SMN for a quick trade, now that all the materials names have hit resistance?
SMN is betting against the commodities so shorting it would be going long :)
UYM is its inverse so if you want to bet against commodities you'd short UYM I suppose (or buy SMN)
Honestly until the market really weakens I don't want too short too much. I've seen what hedge funds do on light volume other years around Thanksgiving and Christmas. I could see them run this market up 100 points (S&P) on nothing than manipulation. Hence I don't want to be short too much even if it's all a hoax.
Everything on the commodity side is 1 simple formula. Dollar down - buy any commodity at will. And vice versa. It is so simplistic but this is what all the "sophisticated" investors are using as their mantra. So instead of shorting I am cutting back but not shorting. I could be very wrong and this could be inning 3-4 of a "the world will be booming in 6 months" thesis that drives commodity stocks up far more. I don't believe it will happen but what I believe does not matter - thesis is all that matters on Wall Street.
Personally I am hoping for a very large run into Dec 31st so I can take advantage of a hoax rally on the short side as we enter the New Year. They did the exact same trick last year and within a few weeks of January stocks imploded. The only difference this year is Obama hope. So we'll see how it goes. Too early too short for me. I'd need to see material weakness. I don't like to call "turns", I just like to jump on them once they happen.
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