Friday, July 30, 2010

Bookkeeping: Closing Akamai Technologies (AKAM), Selling 2/3rds of Acme Packet (APKT), Shorting some TNA

Well after a week or two of student body left, it appears we are back to student body right. (wax on, wax off)  Next week?  It could be left and right.  We have Chinese PMI overnight so we'll certainly gap up or down based on that figure on the open Monday, then domestic PMI figures, then the employment reports Friday.  I expect the lemmings to get a big workout, but who knows in which direction.  The major US multinationals are finishing up their reporting so we're now going to be be focused back on economics.

Due to the student body changing directions the chance of Akamai Technologies (AKAM) recapturing its 50 day moving average is slim.   I cut the position in half yesterday to reduce exposure, and as with Netflix wanted to give it another day or three to see if it could quickly recpature old support.  There will be no chance with today's opening action, barring a late day stick save so I am going to be pre-emptive and dump the last smallish position (about 0.6%) exposure for about a 12-13% loss (based on premarket), depending on what price I get this morning.  After this sort of damage it is going to take a while for the stock to build a new base from which to create an intermediate term run (surely there will be dead cat bounces along the way) - but it's 'dead to me' for a while.

Acme Packet (APKT) - just a tactical error due to a busy week.  It is weaker in premarket than it was in after hours, trading in the $27s.  This is below the level I want to see held, so I am doing the exact same policy as with Akamai and Netflix; chop the position upon a break of support - give it a little rope with the remaining position, if it cannot save itself, the rest will go soon.  Gun to head, I suspect it will act like AKAM and NFLX and hence sustain more damage and not bounce back immediately, but I'll give it some leeway with a much smaller exposure in case I am wrong.

As to the S&P 500, the 50 and 200 day moving averages around 1093/1094 will be broken by this morning's action... so with that condition met, along with S&P 1100 broken it is back to a neutral/negative stance.  Up until now, the action has been more benign on this pullback.  I've taken on some short TNA to get some extra hedges on (in the real world I'd use "long TZA").  Downside targets come back into play and the recent levels of 1070 and 1060 are the first obvious ones. 

A break over (first) S&P 1093/1094 and (second) S&P 1100 would negate this more negative stance, which again could happen on a gap up Monday morning due to Chinese PMI (or a stick save today).  I'll get rid of my short TNA if this happens.  EDIT 10 AM - I will be covering the TNA short as the S&P 500 regained 1093/1094... I want to be short on the index only if the S&P stays below 1092 or so.  Stick save engaged.

This market has no memory from day to day and each day's reports are treated as if there has been no news the day before or week before. Which is why time frames over 1 day are difficult.  Long story short, it's very choppy, and not a place to have large exposure strewn on in either direction.

Today's GDP figure means little to me... our economy is weakening sharply and this has been obvious from data the past 6-8 weeks.  2.4% is only near consensus because economists have dropped GDP expectations sharply from a month or two ago when it was 3-4%.  Otherwise today would have been a huge miss.  And showing how useless forward looking estimates are by economists.

I cannot reiterate often enough that after a huge swoon as we saw in 2008-2009 in GDP we should be printing +6% GDP quarters... not be clapping at 2.5% or 3.1% chock full of government spending. 

PMI and employment - those are the ones that are going to be the shaker and movers; so expect next week to be hectic.


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