Monday, November 30, 2009

Bookkeeping: Cutting Back Blackstone Group (BX) on Break of Support, Shorting iShares MSCI Japan (EWJ)

Private equity firm Blackstone Group (BX) had a rough few sessions last week, showing weakness even as the market rallied in the first 3 days of Thanksgiving week.  With some support lines broken, I am going to cut back the position 80%, take some minor losses and wait for better action.

Last week [Nov 25, 2009: Japanese Stock Market Appears to Have Rolled Over] I mentioned that Japan, represented by iShares MSCI Japan (EWJ) was rolling over but I wanted to see a bounce first before potentially shorting.

I am considering a short of this ETF, but am hoping to see a bit of a bounce as it has been "straight down" type of action for a while here.

With the Nikkei up 2%+ overnight this gives us our chance and we'll use about 2.7% of the portfolio with a short entry around $9.55. .  I will consider stopping out on any move over $9.80 or so, which would be a 2.6% loss.  This type of slow moving object won't give us huge gains even if we are correct, but it's a way to employ a hedge of some sort.

It has obviously been very difficult to use pure play shorts the past 9 months so we are trying to find some things off the beaten path ... with lower volatility, or as we did last week use synthetic shorts (long volatility, or the US dollar) which won't hurt us as much if the market continues on month 10 of rallying.

Long Blackstone Group, Short iShares MSCI Japan in fund; no personal position

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