TAPE was strong again back to back after huge gain yesterday. This was a strong technical confirmation of this rally. Indices closed near high of the day.
S&P 500 @ 1703.20, high 1703.44
RSI @ 56.74
CMF @ 0.033
Internals were :
UP volume led by 2.34 to 1 in NYSE & 1.94 to 1 in Nasdaq
Advancing stocks led by 2.90 to 1 in NYSE & 2.78 to 1 in Nasdaq
Net new 52 wk highs were leading by 157 in NYSE & 140 in Nasdaq
VIX 4.61% @ 15.72
Oil @ $102.02
Gold @ $1268.20
Canadian $ @ 96.58
Stocks which were UP 1% or more included AMCC FNSR JKS
TRIP LEN GMCR TIF SINA TSLA YY DNKN CSIQ
CMG AMZN EBAY YUM LVS WYNN BIDU
FFIV V SPWR MS WLT TRLA Z YELP....
Portfolio weighting :
FNSR 23.26%
AMCC 22.06%
YHOO 20.42%
JKS 17.14%
MU 17.12%
Exposure 182%
Next post by 2 PM on Sunday.
BLOG does NOT give buy or sell.
Saleem
4 comments:
Hey Saleem,
Interesting interview with SODA recently:
http://www.coolhunting.com/food-drink/sodastreams-new-play-flavors-vending-machine.php
I really like a lot of the new ideas here. It seems to me that these guys have real staying power with innovative products and designs that cater to the new paradigms in beverages and aesthetics.
Stocktrader
Hi Stocktrader,
Just saw your note & read entire interview.....SODA is definitely innovating with new ideas.....
Collaboration with Samsung Fridges are quite innovative.....
Even street.com is positive as per latest note below SODA ticker in Yahoo....
Good luck with SODA.....
Saleem
Hey Saleem,
Our most volatile week in many months led to the portfolio losing 3.23% versus the S&P's 0.75% gain.
Few Winners: X (+4.4% from purchase), RALY (+1.3%), LCC (+0.93%)
Largest Losers: CLDX (-16.3%), OMED (-10.0% upon sale), TRLA (-8.3%), TXTR (-5.1%), BIDU (-4.9% including a poor sell/buyback), KORS (-4.5%)
YTD Info:
Portfolio: +53.23%
S&P 500: +19.42%
We started Monday with a drop and I picked up DRYS on a dip and sold SPLK to take profits. By Tuesday, we were in full fear mode and I bought TZA as a hedge and sold BIDU to get even less long. On Wednesday, you could feel the momentum start to turn, and I bought X after AA's good numbers. Thursday saw the market rally huge and I sold the TZA hedge and rebought BIDU. I also sold the poorly-performing OMED into some strength. On Friday I did more positioning by adding SODA and MNST and selling DRYS. Here's the current makeup of the portfolio:
Core positions (~10-11% ea): FB CSOD RALY LCC
Supporting positions (~7-8% ea): YHOO KORS TXTR
Speculative positions (~4-5% ea): FCX BIDU X TRLA SODA MNST CLDX
Cash: 4.2%
LCC has moved up into core position size through appreciation, although I mentally consider it more "supporting". That fact maybe means I should trim at these levels.
Even though this past week was dominated by political volatility, I think it exposed some glaring vulnerabilities in certain market players. You could plainly see the highly overbought longer term conditions of many of the "high fliers" as they crashed early in the week with seemingly little support. And then, even as the market gained on optimism later in the week, many of these stocks could not recoup their weekly losses as institutions were already fully committed and shorts had abandoned their positions over recent weeks. GMCR (-9.8%), NFLX (-8.0%), YELP (-8.0%), LNKD (-7.5%), BMRN (-8.3%), REGN (-5.9%), and FB (-3.8%) are diverse larger-cap examples of this problem with portfolio names of CLDX (-16.4%), TRLA (-8.3%), and TXTR (-5.1%) being other examples.
Given this issue with the high fliers, I am concerned that even in a market which may gain stability as political issues subside, the frenzy for ultra-high growth may be over for now, and these stocks could see sluggish action for a while, struggling with a lack of incremental buyers and opportunistic short sellers pouncing. I am heavily considering paring back or outright selling some of my positions that seem vulnerable from a P/E perspective even as earnings could look good.
The high-fliers aside, a short-term extension of the debt ceiling could prove problematic. If leaders decide to go with a 4-6 week extension, I don't see how businesses or consumers will suddenly feel empowered to outlay cash for expenditures knowing the debt debate will pick up again before year's end, and with the sides so far apart still. I am concerned about a serious contraction in Q4 GDP as everyone goes into "wait-and-see" mode until real resolution. I don't think the markets have factored in this possibility, and I'd be concerned about significant downside. The alternative option of a 3-month extension of the debt ceiling proposed by some could be somewhat better as at least this year gets clearer (but watch out for January then!).
Altogether, I've become much more cautious on both my economic outlook and my stock outlook for high-fliers. I think a very slow/contractionary growth environment not only decreases earnings, but also decreases P/Es investors are willing to pay. I had hoped to be able to sell into a Monday pop on a debt deal, but this looks far from certain, and we could be facing a 300+ point down day depending on how things play out overnight and throughout Monday. This makes my decision ultra-difficult as selling into a 300 point decline is much less appealing, especially as a deal is likely to come at some point. At this juncture, I'm still not sure how to play it--I'm in wait-and-see mode like everyone else.
Stocktrader
Hi Stocktrader,
I fully concur with your anguish about economy & earnings.....
All we can hope that in the end everything works out.....
Saleem
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