Monday, June 21, 2010

Bookkeeping: Some Stop Losses on Short Side Trigger

As expected with such a large gap up as risk in "on" (wax on, wax off, student body left, student body right) some stop losses on the short side have hit this morning. It goes without saying that now that we are over both the 50 (exponential) and 200 day moving averages - the thought process changes from 'hedged' to 'buy on dips'.  I said I'd be more constructive on a move over S&P 1120 and this morning's rocket launch did the trick.  As I said in the weekly summary once over 1120 there is really no congestion ahead until 1140.

Here are the names that triggered thus far; based on what I am seeing across the board the "% of stocks over the 50 day" chart I like to review for 'oversold' v 'overbought' conditions should see a huge increase by 4 pm today.

#1 Pitney Bowes (PBI) - my stop loss was $23.35 (entry $22.92), but the price point hit hit this morning was $23.46, for a loss of 2.3%.

#2 Discover Financial Services (DFS) - my stop loss was $14.26 (entry $13.84) which is where the trade triggered, for a loss of 3%.  Fair enough, this morning's melt up took the stock over its 200 and 50 day moving averages.

#3 My second foray into Celanese (CE) - my stop loss was $29.26 but the action was so strong the stock opened over $30 and I was taken out at $30.14.  In this case my stop loss was supposed to lock in at a 1.8% loss but due to the 'gap up' I am taking a larger loss of 4.9%.  Not much you can do about that as the big surge this morning took the name through both the 50 and 200 day moving averages.  Essentially this loss offset the gain I had last week in the same stock - net net, left flat on this stock in 2 trades.  That said, if I had not covered the first short of Celanese last week it would have been a straight 4.9% loss.

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