The list of stocks below their 20, 50, and 200 day moving averages after this hectic 6% rally in a week and a half is quite limited - only about 220 names that have any sort of decent volume to them and a market cap north of $300M. (list of losers here) Hence if they have an inability to rally much during such a surge the probability increases that they will be leaders during down days.
Intuitive Surgical (ISRG) is one of those names - we've held it on the long side of the portfolio in the past but this high flying name has its highs and lows - momentum traders either cling to it as if its a cloud computing play, or they abandon it. Right now it's in the latter camp. This rally has only led the stock up to the 20 day moving average so we have a very low risk entry, where one can short here and stop out on a clearance of that resistance around $288. That is less than 2% exposure to loss, while providing a higher beta type of name (i.e. during a downturn it will fall more than some of the slower moving large cap merchandise)
I have shorted a 2% exposure under $283
NASDAQ (NDAQ) is pretty straightforward - most of the stocks I play trade on this exchange. This is a completely technical trade and my first experience with the name. The stock has rallied back into the 50 day moving average and like ISRG has some bounce to its step (a higher beta name). I am short a 2% exposure in the $18.85 area and can use the weekly high of $19.25 as a stop out, which also would be a clearance of the 50 day resistance. This limits losses to just a tad over 2%.
There are actually a few other short set ups that are quite mouth watering but in case the S&P can run a bit more, I'll leave it at that for now since I let go of a lot of long exposure this morning.
p.s. I mentioned Netezza (NZ) as a potential short candidate this morning when it was down 4%... should have taken that trade. Now down 9%+. This name is one of so many "takeover rumors".... I have never heard so many rumors as I have the past few days.
But one can see the point since cash rich companies are having a hard time growing in America, and Ben Bernanke's regime is funneling desperate people into the debt market, searching for any sort of yield. Since govt debt offers nothing, into corporate debt they go - the bigger the better since they are trying to replicate the risk levels of sovereign. Hence large cap multinational type of companies especially can borrow at will for rates never to be believed in the past. Armed with that money they can just acquire, acquire, acquire further stifling any potential competitive threats & cementing their oligopolistic (is that a word?) place in our hierarchy. This puts their private competitors at a huge disadvantage, as well as smaller companies. Thanks Ben for all you do in creating a complete farce in market forces! On a very related note, a good piece in the New York Times today as well on how Ben is destroying Americans savers... something that could have been ripped almost verbatim from these virtual pages. [Mar 31, 2010: Ben Bernanke Content to Sacrifice American Savors to Recapitalize Banks and Benefit Debtors] I am getting a kick from reading the comments section on that story because people are finally figuring out that their savings are subsidizing the banks recovery. But that's true to form - this country is run for debtors and spenders - savers be damned... we don't want your kind in this country. Shop, borrow, consumer, speculate, flip homes.... or the terrorists have won!
/End of Rant
Short Intuitive Surgical, NASDAQ OMX in fund; no personal position
Thursday, September 9, 2010
Bookkeeping: Short Intituitve Surgical (ISRG) and NASDAQ OMX (NDAQ)
Best Of FMMF
- 1: Warren Buffet Piles on Europe
- 2: [Video] Jim Chanos Returns from Europe, Even More Bearish on China
- 3: A Chart to Open Our Eyes - Staggering Changes by Multinationals in Employment Behavior 00s vs 90s
- 4: Futures Blasted on Dexia Woes... and Poor Preliminary China Data
- 5: Market Working to Worst Thanksgiving Since 1932
- 6: Et Tu, German Bonds? Poor Auction Raises Eyebrows