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Tuesday, March 19, 2024

Finally Friday

Asia is mixed and Europe is down, maybe the money will flow our way today or maybe everyone is like me and wants to be in cash for the weekend.

Even if our market goes up today, I still say it’s nice to cash out when your position is going up rather than cash out on the way down. Options even more as they are volatile and tend to deteriorate on weekends when they are out of the money a little more so than week days. We still have 3 weeks on these very long April contracts so nothing to worry about but also no reason to stay in things we are not certain of.

Why am I so worried? Because I held stuff last April and boy did I get fooled! The situation was different, stocks had been going down all quarter but we had a March rally to 10,940 and everyone was talking Dow 11,000 so I took a lot of long positions. In the first 3 weeks of April the Dow dropped down to 10,000 and the Nasdaq was just taken out and shot and all of my options expired worthless. That’s why!

The similarity is we are rallying into key resistances, oil is rising and the Fed is tightening and it’s the end of a quarter so funds may rebalance so I really urge caution here. It is almost completely random whether any given stock will go up or down in the next week. Once we see where the fund money is flowing, we will have tons of great opportunities to deploy our cash!

Oil is heading down a bit which is why I initiated my puts yesterday instead of waiting for today as I had originally planned (that would be the older, wiser me making a better decision than the old me) and I’m very comfortable taking the next 25% this morning and I’ll let you know in comments if I take another 25% this afternoon or wait it out. As we know, it’s crazy to short oil into the weekend but this rubberband may snap (or it may keep going up and we will cry) so I’m taking the chance.

Gold is all the way up to $590 this morning but, just like oil, I think gold traders will take profits into the weekend on fears that World peace may break out so it might be best to take even the gold profits off the table and reenter after we see what resistance the $600 mark gives. Remember, gold stocks fall faster than they rise on the POG!

We got some good consumer spending news at 8:30 which should give us a nice open and corporate profits are up 14% so all is set up for a continued rally but, since we are still 50% behind the Nikkei, I don’t think sitting out a day will make me miss anything…

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In addition to my oil puts, I’m keeping my put on RIMM and my October MSFT $27.50s and INTC $22.50s as they are unlikely to hurt me more than the commission it will cost to sell them.

At this point I will have to say I may have been wrong about the end game in Google. We played the perception well but we would have done better if we had had the attitude that it was all BS as we could have taken our 500% profits out Wednesday without the stress.

Whatever forces are at work here I just don’t understand how the stock can still be under $390. If it were $400 or even $398 I would be confident but $388 just perplexes me.

A: How can 1,000 funds with $10Bn to spend ALL be sitting on the sidelines until the last minute? Well, not entirely all as it has been a 40 point week but that’s just 10%.

B: Who is selling and why? When we were less emotionally involved in this trade I said that if there is heavy selling then that means this company is probably going to miss the quarter by a mile and will be a great short but now I am concerned that 60M shares have already headed to the exits while 30M shares are tied up in funds that can only sell after someone else does.

C: There’s been a lot of positive news on the stock lately which, in a vacuum should have moved it up 10% anyway so perhaps we have exhausted all the retail buyers.

I said on Friday that I can’t believe funds can actually be so stupid and poorly chartered that they can be forced into a mad run (like Yahoo) twice in one decade but we will see in an hour or so.

I have a ton of money on the side to play this with, whichever way it goes and I will post in the comments but I think today is a total crap shoot and I’m going to pick up most of my chips and head for the buffet!

– Phil

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