Tuesday, August 17, 2010

Bookkeeping: Trio of Morning Sales - Potash (POT), Netflix (NFLX), Riverbed Technology (RVBD)

We've had two days in a row of bad housing metrics, weak guidance from Lowe's and not such great data from Home Depot and Walmart, but the dip buyers came in yesterday morning and the Potash news has a bid under the market today.   I said in the weekly summary the best hope for bulls is not that the data in housing/retail will be good but that expectations are so low that even bad news is ok.  So far, that seems to be the case... but all those serial housing bottom callers must be tiring by now.

In terms of the S&P 500, the 50 day simple moving average looks to be up over 1087... recall there is an upside gap to fill at 1088.50 so I would like that to fill before assessing what to do next.  If we go up there and then fall back down, it would be a great place to do some index shorts.... but if we go up there and keep running then the S&P 500 is back in a 30 point range between 1085 to 1115 (roughly) so one would be more neutral/long oriented (for a trade) as we re-enter the "chop-fest" zone.  That is what I am watching.

In the first 30 minutes or so, I'll be making 3 sales today

1) Potash (POT) - obvious reasons, the stock is up to $144 from $112, so the market has already put a $14 premium on BHP's price.  A premium is not surprising because the first bid will be lowball, but I don't see this going past $160 max, and my first inclination was something closer to $150-$155.   So why would I sell if there is more upside potentially?  First, I am just guessing on a price - if the offer is withdrawn there is no takeover premium as BHP is the main firm I see going after Potash.  Second,  the lion's share of a move from $112 to "$145-$160" is complete.  I can take my cash back and either sit on it, or look for new ventures.  So I'll be closing the entire position and take a nice profit, the position size is small at around 0.8% (before today's big jump) but it is something.  Normally, I'd roll the money over to peer Mosaic (MOS) since I like the action in the agriculture sector, but Mosaic is going to be bid up strongly this morning as well so there is no use chasing.

2) Netflix (NFLX) - this stock is a monster.  I took profits last week in the $125s on the EPIX announcement... the stock closed in the $137s yesterday and is in its own parallel universe as some sort of short squeeze seems to be happening.  The stock is now extremely overbought and nowhere near any meaningful support area (i.e. 20 day moving average) so I am going to take my profits and see if I can buy back in the future on a pullback.  If not, there are other fish in the sea.  I will be selling all but a cursory amount of about 0.1%.

3) Riverbed Technology (RVBD) - this was bought last Thursday morning with a limit order as the stock 'filled a gap' - it is already up almost 8% from that level (pending this morning's open).  I plan to take some profits to "lock it in" and keep some of these gains realized.  Of course if the market runs through S&P 1087 and up to 1115, or whatnot - all sales will be foolish, but since I don't have a magic 8 ball, I am simply going to take some profits as I get them.  I'll edit this piece in 30 minutes once I see where RVBD is at, and then determine how much I will sell.  EDIT 10 AM - I sold half the RVBD position around $35; this is roughly a 10.5% gain since last Thursday.

Long Riverbed Technology, Netflix in fund; no personal position


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