Wednesday, November 17, 2010

Bookkeeping: Closing Tibco Software (TIBX) & Cutting Size of Baidu (BIDU) Back to Pre "Breakout" Levels

I am looking at all my positions with a much more critical eye, and as I scan the charts I have a bevy of new stop losses sitting out there waiting to be triggered in case my master plan of a substantial selloff bears fruit.

One name of concern as I chart watch is Tibco Software (TIBX), our 3rd oldest holding.   It broke the 20 day moving average recently which is not of great concern as it still holds the 50 day.  However the gap in late September at $16.50 speaks to me.  Mostly it speaks to me of future potential losses.

I'd normally place a stop loss just below the 50 day moving average of $17.90, so in this case maybe $17.65 or so - but since my average cost basis is now up to $17.30 that would leave me with little profits to celebrate.  Hence, I am going to lock in roughly 7% gains on my position and close out the name.  This is more proactive than I usually am, as the individual chart is not horrid, but I am overlaying what I think might happen in the greater market in my thought process here.

While a nice little company, unless it gets bought out by Oracle (ORCL) or someone like that, it is not a name that excites me as a secular growth story like some of the other positions.


As for Baidu (BIDU), I thought it had a potential breakout last Thursday as in the first 2 hours that day it had an entire day's volume going, and broke (slightly) over highs of late October.  Of course Friday was the broader market selloff and being a high beta name Baidu was sold off, and the breakout was a fakeout.  The stock was hammered yesterday, down to the $101s.  With the bounce this AM to $107 area I have a far better price to 'right size' the position, so I am going to take it as my reason for doubling the position size was a breakout ... hence my catalyst is gone.  For risk control purposes if the stock breaks below the $100 area, it will need to be punted, so I'll be saving some future losses as well by reducing the stake in half here.

Long Baidu in fund; no personal position


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