Mr. Obvious: Looks Like It’s a Breakout
by Chart School - July 23rd, 2009 1:16 pm
Mr. Obvious: Looks Like It’s a Breakout
Courtesy of TraderMark at Fund My Mutual Fund
It doesn’t take a rocket scientist to see today is a trend day. Zoom zoom zoom up all day.
While I still have that 3% insurance policy (puts) and will hold until the middle of next month, as we wrote yesterday we replaced some individual stock risk with index risk and once we broke over that double top we joined the party. For now I guess we just keep riding and watch with a close eye.
Both our remaining shorts were called away this AM, BHP Billiton (BHP) and ProLogis (PLD) in the euphoria – took 3-4%ish losses on each but just a minor part of the portfolio. I sold a small portion of PLD for a gain yesterday but not big enough to mention. (1/4th of the stake).
Since the move over a double top is so powerful I actually put double the normal we’ve been doing "intraday" into S&P 500 (SPY) calls and that’s our main weapon on the long side right now. They tend to act like firecrackers if you get the direction ‘correct’ and already have expanded from 16% of the portfolio to about 19%. For you option folks these are August 97 & 98s.
I am not going to be too greedy and will be back into cash by the end of the day (which to me is now 3:30 PM based on the crazy action in the last 30 minutes many days) if not sooner. On trend days I have a simple game plan, choose a moving average and don’t sell until it breaks below – yesterday was one of the few times I can recall we actually had to sell what looked to be a trend day. We had a very mild reversal but the shorts were weaklings and did nothing with it in the last 45