Thursday, August 6, 2009

Update on "Stopped Out" Positions

We were stopped out of quite a few long positions as I tried to keep my long exposure in case the market continues running. As I still like the fundamental story of each, I want to do a quick update - I'm content with the sale of all 4 for technical reasons on first glance, although 1 of them is still holding a lower support (but trading below where we sold it).

Let's start with that one - Allegiant Travel (ALGT) which is still holding support and many times moves inverse to the market. Reason? The market loves when oil goes up - commodities up = everything is fine in the world = dollar down. Airlines on the other hand usually are punished when oil is up. So this stock trades to its own beat. Continue to be a huge fan of the fundamental story. Technically it is compressed in between a whole slew of moving averages... I'll continue to monitor it as it's dirt cheap IMO.

We sold all of Quality Systems (QSII) in error yesterday, I like this stock and like to keep my "history" by not completely exiting a position (hence all our 0.1% stakes). But it continues downward after a poor earnings report that it first ignored.

Ocwen Financial (OCN) I'm thrilled with our exit just under $14 - I was scratching my head why the market was not punishing its massive dilution, we got out in the morning - it crumbled that afternoon and again yesterday before a late day rally. Really a shame here because the fundamental story is intact and improving as more taxpayer money is being funneled by the day to US homeowners and Ocwen gets 'paid off' for each homeowner it helps under Obama-care. It would be very healthy to get back over $13.00 which in my mind would mean the dilution is then priced in... I assume every stop loss in the stock was triggered with the death drop to the $11s yesterday.

O'Reilly Automotive (ORLY) - I continue to like the story here but Obama-care in this case hurts since it helps new car sales with Welfare for Clunkers. Still hanging around support but stuck underneath. Hopefully it bounces back soon.

As you sadly see by the comments above, so many stocks are now affected by Washington D.C. rather than their owm merits, but this is our corporate socialistic (not the European type) system. Capitalism you say? (chuckle) Sure.

With these sales we are back down to about a 1:1 long short exposure... waiting to see the next move by Goldman Sachs. The speculative nature of the stocks that ran yesterday has me more cautious but it's not your daddy's market anymore, so I'm going to wait for more signals to increase short exposure. For example Lloyd Blankfein saying "Larry Summers ok'd a 10% correction here" would be the most prominent sign but since I am not on that memo list we'll have to watch the markets for hints. I am bearishly bent for the intermediate turn UNLESS the S&P gets over 1010 or so.

Obviously the very faulty, but taken as gospel, monthly jobs report is tomorrow morning and will sway the action.

Long Allegiant Travel, O'Reilly Automotive in fund; no personal positions

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