Tuesday, April 28, 2009

Bookkeeping: Covering Most of Capital One Financial (COF) for Now

The market continues to be resilient and each dip is aggressively bought. I believe Capital One Financial (COF) is extremely overvalued but for now it trades back over the 50 day moving average so I want to cover the majority of my short after taking extreme pain Friday. I took losses on some shares I had to let go as a risk control measure Friday and am offsetting with some smallish gains today. Today's cover is just north of $16.00. In retrospect it is obvious that covering any of the position as it ramped north of $19 was in error, but you don't know it at the time - a stock trading at $20 can go to $25 just as easy. Now perhaps we have a double top forming on the chart but as we've learned this can move +/- 20%+ in any 1 day. Too hot to handle for now.

Until a resolution is made between (a) breaking north of S&P 875 or (b) falling below the 20 and/or 50 day moving averages - we appear to be in a relatively narrow range where traders buy at the lower end of the range and sell at the top end. Until that changes, that is the range.

Short Capital One Financial; no personal position

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