Friday, April 4, 2014

Indices closed down .96% to 2.60%.......

TAPE ignored below consensus jobs report @ open & went to make new all time highs in Dow & S&P 500......after that it was straight downhill until the closing bell on heavier volume.

S&P 500 @ 1865.09, low 1863.26, high 1897.28

RSI @ 51.35

CMF @ 0.004

Internals were :

Down volume led by 2.31 to 1 in NYSE & 7.95 to 1 in Nasdaq

Declining stocks led by 1.89 to 1 in NYSE & 5.32 to 1 in Nasdaq

Net new 52 wk highs were leading by 157 in NYSE & by 5 in Nasdaq

VIX UP 4.41% @ 13.96

Oil @ $101.14

Gold @ $1303.50

Canadian $ UP 57 tick @ 90.22, Job growth in Canada was well above expectations, actual 42,900 expected 22,500.....Canadian $ is @ recent high......

Stocks which closed green included LULU
FSLR ARUN ZNGA KOG EGO SU
JCP MCD ABX GG AEM CCJ
WLT Z......

In my portfolio :

Bought OWW @ $7.77

Here is my portfolio weighting :

MU      30.94%

WUBA 28.86%

LULU 21.21%

RAD   12.94%

OWW 6.05%

Weighting 149%

By the way.....IBD tonight has changed its market outlook to "market in correction"

Next post by 2 PM on Sunday

BLOG does NOT give buy or sell.

Saleem

3 comments:

Unknown said...
This comment has been removed by the author.
stocktrader_1996 said...

Hey Saleem,

A crazy week ended with the portfolio down 0.19% versus the S&P's +0.40%.

Weekly Winners: WUBA (+14.1% upon sale), AXLL (+7.3%), JKS (+6.0%), AAL (+3.3%), WLH (+2.9%), PFPT (+2.5%)

Weekly Losers: YELP (-14.0%), SPLK (-11.2% from purchase), NOW (-9.7%), DATA (-6.7%), SINA (-4.4%), CSOD (-3.3%)

YTD Info:

Portfolio: -5.76%
S&P 500: +0.91%

The week started pretty well with the portfolio making large gains Monday and Tuesday. By Wednesday, it was all downhill and the portfolio gave back all the gains. The moves this week were to try and catch some tops/bottoms which worked in some cases (WUBA/AGU sells, FDX/GM buys) but the biggest impact to new positioning was the poor entry in SPLK after a bounce was short-lived. Here's the portfolio now:

Top Holding (20.3%): AAL
Middle Tier (9.5-6.6%): AXLL CSOD DATA PFPT FDX GM
Lowest Tier (6.4-2.3%): JKS WLH SPLK NOW YELP SINA BLDP

Closed Positions: DRYS AGU WUBA
New Positions: BLDP FDX GM SPLK

On March 2nd, I wrote some of my wisest words:

"So this week saw some of the highest fliers make blowoff tops. Reporting stocks like WDAY, CRM, and SPLK all saw sharp losses on Friday, and many similar went with them like YELP, N, CNQR, DATA, and CSOD. I think end of month flows and an uncertain US economy contributed to massive chasing and short squeezing which ended Friday. It sets up now for all these stocks to rest for many weeks in my opinion as catalysts and flows have exhausted themselves."

Unfortuntely, I re-entered many of these way too soon, forgetting how long some of these unwinds take. This is probably one of my biggest mistakes in a while, but fortunately, some of my diversity has sheltered the portfolio from larger losses.

Going forward, many of these software stocks like the ones in portfolio are undervalued based on discounted cash flow models given their huge recurring revenues streams. It is important to stay with the leaders, however, as future predictability is extremely important in these models. Based on my research, both current and ongoing, I have confidence that these stocks will eventually return to favor, but am prepared for another 10% downside still.

As for the broader market, a shaky technical ground faces off against an earnings parade of high quality stocks in coming weeks. Quarter after quarter these companies demonstrate great execution on business plans to improve revenue and margins in a slow growth environment. I expect more of the same here, and it leads me to think the market will continue to grind higher.

In recent weeks we've heard calls for additional stimulus from China and the ECB. While I think the world's leaders will continue to remain accommodative (including the US), I think many of these "stimulus" measures could fall short of the optimistic projections. A letdown here could be a catalyst for sluggish trading and we should remain watchful of global companies to see how they are impacted.

Overall I am mostly pleased with the composition of my portfolio heading into this earnings season. I may make a few adjustments, but I've had the earnings thoughts in mind for a while and have by necessity moved into companies where I am most comfortable. I realize more downside may be ahead in some names, but my prior experiences tell me I am a bad market timer in stocks I really like, and that selling now to buy lower later almost always fails for me. That means I'm in for the long haul now...

Stocktrader

Stocks100 said...

Hi Stocktrader,

Nice analysis of your portfolio composition & its prospects.

Market shows all of us our vulnerabilities & shortcomings..a great teacher.

We are all believer in our own strategy & i do go against "common wisdom of CNBC & Wall Street"

Saleem