Friday, October 2, 2009

Bookkeeping: Covering Eaton (ETN) Short

There is still a gap in Eaton's (ETN) chart in the mid $40s, and frankly this company reported one of the worst earnings reports last quarter of any I follow; but mutual funds are piling in this name as an early cycle recovery stock.

With the stock pulling back to its 50 day moving average, I am going to limit the damage here and exit with a 5% loss. This was a 2% exposure. Much like Caterpillar (CAT) and PPG Industries (PPG) - until managers who follow the "playbook" give up the ghost on recovery - these type of names will be hard to take down. I expect all these stocks levitating on Kool Aid to take a hit at once.

No position

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