Monday, March 16, 2009

Bookkeeping: Locking in Some Gains on Axsys Technologies (AXYS)

Axsys Technologies (AXYS) was a "sorta" flier trade we put on last week at $35 based on talk of a first round of auctions to put the company up for sale. [Mar 11: Bookkeeping: Starting Axsys Technologies as Company Puts Itself Up for Trade] The stock is near $41 today for a quick 17% gain which also coincides with the 50 day moving average. I do not expect the sale (if it happens) to be resolved anytime soon so I am going to lock in part of this trade and take this down to a 1.4% stake. We'll assess from here - if the stock keeps moving up that tells me "big money" is hearing more constructive things about the bid price.

As for the market, as we wrote this weekend we were looking for a move to S&P 780 and we were willing to be constructive on the market for now. We are not partaking much in this rally since we have such a high cash position but once more fear has turned to greed as people pile into the same market they wanted no part of 15% lower. S&P 780-800 has a lot of congestion so I'd expect if not a dramatic pullback at least some backing and filling but right now shorts are on the run since our entire banking system is just fine thank you (since this is true, please send back our taxpayer money)

The higher we go the more neutral I am on this market.... but if we burst through S&P 800 on strength - you have to respect the upside from there due to charts. But we have a lot of very extended charts now and today's leadership stocks are the "junk" (again). Lack of participation by quality companies has me concerned. But I also know many fund managers who completely missed this move will now be piling in as performance anxiety builds (lagging the indexes). A lot of people now want to see a pullback to BUY in... so the market would do its best to cause the most pain to the most people - which ironically might mean keep moving up...

Overall I'll summarize like this - bullish and consuming Kool Aid to S&P 780. Between 780 and 800, we are in a "white noise" area. North of S&P 800 technically bullish but have to be aware that Lucy is holding the ball for Charlie Brown ready to pull it away AND the market is extremely expensive once you start talking those levels on what I deem to be 2009 (and 2010) laggard earnings. And bearish below S&P 741.

The S&P 500 rallied 20% in 4 sessions off the intraday late November 2008 lows. We are now approaching 16% in 5 sessions off last week's intraday low. History does not repeat, but it sure rhymes. And you see why the serial bottom callers keep trying to catch a turn in the market when it is cascading down...

Long Axsys Technologies in fund and personal account

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