Wednesday, August 5, 2009

Bookkeeping: Stopped out of Majority of O'Reilly Automotive (ORLY) and Allegiant Travel (ALGT); Rolling into Some Short Term Index Shorts

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Well those were short stays - recent purchases back of these 2 names, were stopped out this morning. Allegiant Travel (ALGT) @ $41.29 and O'Reilly Automotive (ORLY) @ $38.39. I am ok with both as we were purchasing stocks just over a support level, which allows us to parachute out if the market worked against us. Unlike Goldman Sachs I don't have a 95% winning percentage so we take a lot of small losses quickly. We went into these names since we were struggling to find long exposure and we chose stocks nearer to areas we could identify as exit areas rather than stocks 30-40% over their 50 day moving average for example.

We re-entered larger stakes in ALGT yesterday and ORLY Monday; both are now back down to nominal holdings. 4.0% loss on the former and 2.5% on the latter.

Allegiant still is "ok" as long as it holds the squiggly green line but I don't want to take a 6-7% loss finding out if it will. O'Reilly Auto now looks like a short - I said a risk here is if we keep doing Cash for Clunker programs these auto repair stocks could take a hit.


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Concurrently, while I am not breaking out some of the very short term intraday things I do most days (of which I have been doing nothing of the sort the past 6-7 sessions) I'll break out the thinking today in that I am looking for a potential trend day [Trend Days] down and have positioned myself accordingly.

Effectively I am doing the inverse trade of what I did a few weeks ago as outlined in [Mr. Obvious - Looks like a Breakout] and then later that afternoon [Bookkeeping: Getting Rid of Morning Calls] - same intraday charting and logic but in reverse.

Of course if the market fools us and this is not a trend day we'll be out once an intraday trend line is broken (in this case resistance areas, versus a few weeks ago the support areas) since short term options are not things you want to be holding for any length of time if your thesis is wrong.

Weapons of choice here are SPY 97 (SWGTS) and 98 (SWGTT) puts and inverse ETFs - about 20%ish of the portfolio has been moved from cash to these instruments for the day. As long as its a trend day we'll hold til 3:30 PMish. Since we are SO overbought, I might even hold some until tomorrow. We'll see.

Long all names mentioned in fund; long SWGTS in personal account

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