Friday, January 15, 2010

Reviewing Recent Sales

Thought it would be helpful to review positions we have exited over the past 3-4 weeks to see how they have done since we left.  Almost all of these (perhaps all) were sold due stocks that had broken support, and I believed better near term money making opportunities could be found somewhere else.  Let's see how that worked out.

Perfect World (PWRD) - huge rally on first day of the year helped the stock out; since then it's been hovering around the 50 day moving average.  Should be making a larger than average move relatively soon, but no large lost opportunity here at this time.

CNInsure (CISG) - one of these charts that is completely at odds with my style of trading around a core position.  Each time it would break over the 50 day moving average I would be adding to a core position, and vice versa each time it fell below.  Which means I would have lost money chasing my tail on this one.  Until it starts to behave, it's a no go.

E-House Holdings (EJ) - very good decision.  This is the only stock I have considered shorting the past month, and I should of gone with that theme.  Not only did it fall back each time it tried to jump over the 50 day moving average, it has now fallen below the 200 day.  I am wondering what the stock performance is telling us about the Chinese real estate market.

Gafisa (GFA) - good decision.  If the stock breaks mid $28s it might have a visit with the 200 day moving average near $27.

Morgan Stanley China A Share Fund (CAF) - after I sold on a break of support the closed end fund raced higher, but now is back around where I sold.  Hard to assess this name because aside from the underlying performance of the stocks, there is a random premium / discount to NAV which is impossible to model ahead of time.

Discover Financial Services (DFS) - no life in the stock since we sold; it clings to the 50 day moving average but from below.  A good low risk entry short actually, with a stop loss on any break north of the 50 day.  However, unless the market breaks down it seems this stock will not ... just marking time.

Blackstone Group (BX) - bounced back above a moving average, after I sold it - but has since given back some of its gains.  Another stock just hanging out by its 50 day moving average; only worthwhile for people with far shorter time frames than me, for trading purposes.  A break over $14.25 would be a positive.

Baidu (BIDU) - well we only had 1 whopping share, but the Google (GOOG) news of a pullout caused the shares to spike.  I don't consider that a failure as news events are impossible to predict.  After we sold the stock fell to a new lower level, before the news event helped change the game.

Fuel Systems Solutions (FSYS) - the volatility in this stock might be the highest in anything I track.  8-10% moves are now common; while fun for daytraders - it tends to wreck havoc if you are trying to use charts.  The movements also seem completely random at times; without news to support them.  Along that line of thinking, the stock rallied sharply after I sold it - on no news - and now is back near where I sold it... on no news. 

Myriad Genetics (MYGN) - sold earlier this week after an analyst downgrade ruined the chart.  After a cursory bounce it's breaking down again.

Human Genome Science (HGSI) - so far it remains below where we sold it earlier this week.  But the story is not over as long as $28 holds.   If it can begin to ramp again, I could see a return to this name but thus far the correct move.

All in all, I am pleased with the decisions.  Other than Baidu (our smallest position when sold) - in which the stock actually weakened after we sold, but an out of the blue news announcement changed the trend - most of the stocks have weakened further or are simply treading water.   If "time is money", these are the type of stocks that would sucking up oxygen and offering us little in return.  We want to continue to avoid the majority of the charts above until the hurdles they face are overcome.  At which point they can run with fewer impediments.   If we were in a less steroid / morphine induced market - many of these would be attractive low risk (with clearly defined exit areas) shorts.

No position

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