Friday, January 16, 2009

Bookkeeping: Cutting Allegiant Travel (ALGT) on Spike

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Allegiant Travel (ALGT) is befuddling me. We cut it back from a 1.5% stake to 0.7% Tuesday as it broke the support we were looking at ($38) [Jan 13: Bookkeeping - Cutting Allegiant Travel] I wrote

The 200 day moving average is down at $31 so I'll look at picking up some there, if we hit that level. Or if it gets back over $41 and holds it - right now the stock is in no man's land technically.

Yesterday morning it proceeded to drop to near $33 which made me feel smug. I had a limit order waiting at $31s... but no cigar. It reversed to $37 in the rally yesterday and in a snap of a finger is now back at $40, or just below where we began. Aye carumba.

For now, we're at the very top of no man's land - so I'm going to cut back to a 0.1% stake and then go on the same advice I said above - if we "break out" above resistance; I'll jump back in (maybe $41.50 based on the chart); or if it breaks back down to low $30s we'll add there. All I know is it makes me feel like I'm a twisted pretzel.

(note - this chart shows $33.75 as the 200 day, but my normal charting shows $31; obviously in this case I should of used this chart!)

As an aside for the market, I'm neutral on the near term (onus on bulls to hold S&P 850 by 4 PM today) - after being "bullish" as we hit S&P 820. The "easy money" if you will, was that 'turn' from S&P 820+, but as I wrote last week - with the failure to break out early last week and that reversal below S&P 920 we're now looking to sell into & short on any meaningful rally. Which is a change from our behavior the previous 7-8 weeks which was more of "dip buying" attitude. My hope is we get some better prices (nearer to S&P 880-900) to do so and some of the "worst of" junk begins to rally to higher levels. If not, we'll get back to the dark side on a break below S&P 820.

If you remember, almost every "bailout" has been greeted with initial cheer (by "free market" participants) and then led to a sell off when reality struck. Seriously what is happening is pathetic - Bank of America pays $40B for Merrill Lynch (firms were paid for "advising this deal which was struck in under 48 hours; bonuses were paid out), then takes our TARP money and buys stakes in a Chinese bank - and then comes not 2 months later to the taxpayer to bail them out? It really is a disaster, disgusting, and shameful. And this won't be the last of it.

But other than that, I love the deal (ahem)

Long Allegiant Travel in fund; no personal position

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