Wednesday, September 22, 2010

Rotation Plan in Play Update

Further Update:  Closed rest QLD short for 10 cents, closed TNA short for 25 cents,  Sold more OIH for 1.7 points.   Sold more XME over 53.  Starting to close the swing.   Have left small XLF,  1/3 OIH, 1/3 XME.
10:30AM update.  Flattened out rest of positions.  Swing closed.  Back to day-trading!  

As we wrote yesterday we didn't know whether XME 53 breakout would work or not but we did have conviction it would at least be touched.  As per plan we took off 1/3 of the position from 51.68 into 53 and now stop has been moved up to above break-even.   We won't let this go to a loss (unless gap down of course).   Next target is 54.

We also took off half of our QLD short for a 12 cent loss.

We also  sold 1/3 our OIH swing this morning for 2 points (entry 107.89) and also would be stopped now on any move below breakeven.

We have left the TNA short position which is small and we have not added to and will probably just sit on for a while (unless IWM 68, would probably add there).

We also have our initial XLF position which we added early yesterday and which we will not add to either until we get some type of pull-back.   The XLF TNA positions were a fraction of the XME position which was our largest hold in a long time.

Tuesday, September 21, 2010


On Sunday we wrote on StockTwits that we were looking for a rotation into areas which were not extended and instead basing: 

Tech got more extended and we went short yesterday. Step One.  Now we're looking for Step Two and that's a rotation into XME (we're also long OIH sub 108 and a small XLF long we probably won't add to unless market pulls back 2-3%).    Today was a good start as XME closed well off its lows while QQQQ closed on its lows. Let's see if we can get some follow-through tomorrow.

This is the type of trading around the core swing we do on a daily basis:

As posted at 1:55 PM EST we added to XME

Day-trade around the swing:  add on the pull-back, sell it on the strength, keep the core.  Posted at 2:44 PM EST:

As long as we have conviction that XME will touch 53 (which we do), we can constantly trade around the core.  We will take off at least 1/3 on 53 itself.


Note divergence of XME/QQQQ price-action post FOMC.

Why do we like the rotation idea?  As we wrote last week in our blog we do believe we will go higher and if this is the case the market cannot just be led by REITS and momo tech; other sectors such as financials and commodities will most likley catch up.

QQQQ to our eyes is running on fumes -- however we wouldn't short it without being hedged.  Why?  Because we often engage in momentum trading ourselves and know very well how irrational the moves can be and how extreme the pendulum can swing.

Great hedged short.  We're short QLD 65.26

This chart on the other hand represents to us a very nice base getting ready for break-out.   That being said we are also aware of the lagging status of the XME, thus the adds only on pull-back and the exit on strength.

Monday, September 20, 2010

New Positions

All updates will be edited on page on daily basis.

We opened up a hedged swing today -- here are our positions:

We know all about the power of momentum -- resistance is futile in front of a real melt-up.  However we do think that this is a great place to initiate an initital position short hedged with other longs. Decent size QLD short position 65.26 after adding short in front of QQQQ 48.8.  which we will add to slowly if Nasdaq keeps running this week.

We have a small  token TNA short position from 44.75 that we have not added to since we think IWM has room to run.   Not adding to this - just letting this one sit.

We posted this chart a few times last week/weekend for our subscribers and in StockTwits with a trend-line and 108 alert.  We started long on the trend-line and added at 108 for a good position size at 107.89.

We added more to this late in the day in order to even out the hedge and are long average 52.17 for a good size position. Edit: added to XME on this pull-back today, average now 51.68

Our timeframe is potentially longer than usual in order to wait for the plan to unfold.

Edit: added initial XLF position at 14.90 to the swing book, will re-assess post Fed for any additional adds.
Edit:  added to XME on the pull-back