Wednesday, October 6, 2010

Bookkeeping: Stopped Out of Majority of (CRM)

Today could be a day we look back on in 6 weeks as very important.  The "cloud plays" and most associated momo stocks in NASDAQ are taking a beating.    Equinix ... a stock most people don't follow or know is now down 30% and taking a lot of the cloud plays down.  This is damaging a lot of charts.    The cloud complex has been the 'go to' area for this entire move... and until last Friday (the day after quarter end window dressing) they were bullet proof.  Now the entire complex could be showing dangerous flashes.  At this moment the market has cordoned off this section of tech land and ignored it; time to rotate into new areas - I guess coal is the sexy sector HAL9000 chose today.

Last week, I was willing to give (CRM) the benefit of the doubt on a buyback at support.  (I had already sold almost all of my original shares on the trade earlier)  However my stop was very tight.  This is what I wrote.

To compensate for the potential downside, my stop loss will be around $107.50, where I will exit today's purchase near $111. 

Well, that stop in the mid $107s triggered (I've sold all the shares I bought last Friday and am back down to a 0.1% exposure), and now $100 looks very much in play.  I was originally going to buy down there but again that is within a vacuum.  This sort of market is no vacuum.This market is "out of control" and stocks are acting 1999ish, which is increasingly dangerous.  That doesn't mean it ends today, or tomorrow or even next week - it just means the risk to make gains is increasing by the day as we continue to move in non stop fashion up.  Further, seeing some damage in these leadership stocks is also troubling.  Granted its related to 1 of their brothers taking a hit so its news specific, but that still creates potential trouble in the charts.

I am contemplating a short position here in the name to fill that gap at $100; but I don't have the cajones to short these types of stocks right now since the market has obliterated any attempt at shorting for weeks.  However, part of a hedging strategy is losing far less than the market on any downside moves.   I am still hoping for one more blow off top now that every bear has succumbed to the "move over S&P 1150".  But I said that on the "move over S&P 1130" as well.

The QE2 meme is getting very old... its been 6 weeks of buying on the same thesis.  This type of stuff does not last forever, no matter what the permabulls will tell you.  Eventually it is *in* the market.  We're drawing closer to that time - I watched Fast Money last night and I never saw the crew so bullish - even during the Kool Aid of fall 2007.  Not 7 weeks ago no one wanted to touch stocks.  This speaks to sentiment.  To keep betting on never ending upside is hoping the music never stops and chairs are everywhere.

Long in fund; no personal position


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