Banging the Table on ULTA

Leigh Drogen — Fri, 09 Apr 2010 18:31:06 +0000

Momentum Book Update

Leigh Drogen — Sat, 30 Jan 2010 19:19:41 +0000

Another week of schellacking for long only strategies. The market took a bath this week, led by materials and tech, which until Thursday morning made up about 2/3 of my portfolio. I was playing buy the dip, it obviously didn’t work. My cash position at the open on Thursday was south of 5%, I loaded up and went all in. When the major indices failed to crack their declining 5 day moving averages, I ran for the hills. I was upset at myself last week for not bailing on this market when obvious signs of distribution were evident. I should have taken my exposure down at that time. I played this week correctly though and I’m able to sleep well at night knowing that I traded my plan, and executed well. The fact that I trail the $SPY by a little more than 1 % since 11/9/09 while holding high beta tech and materials names throughout this massacre of the longs, is incredible. Believe me, I’m not celebrating negative alpha, but I should be much further in the hole right now than I am given my decision to load up earlier in the week.

As you can see below, investors took materials and tech to the woodshed. The trend in most, but not all momentum names is busted now, it will take some time for issues to base out and give goo low risk entries to the trend. If we see a quick bounce back from the high momentum names, I feel it will be shorted into relentlessly.

Some stuff I sold out of this week: $NFLX, $AMZN, $AAPL, $IBN, $IAG, $MHS, $RHT, $RGLD, $CERN, $EGO, $CTSH, $ATHR, $LZ, $ANR.

The Netflix sale is really the only one that haunts me, not holding into earnings was a huge mistake and an emotional decision based on the overall market and my portfolio, not the fundamentals or technicals of the individual issue. I fell victim to the emotion of just not wanting to be exposed to risk, when I should have traded the stock. This should be a lesson to you all, not to be overwhelmed by the performance of your portfolio or the overall market when making a decision regarding an individual issue.

Some stuff that I still like. The education names have held up very well, $DV even had a monster breakout this week. I’m holding $CPLA and believe we could see a massive breakout on the weekly chart imminently. $V still looks good and I’m happy to own this name until the weekly chart breaks or the government takes their candy away. I don’t see either happening in the near future. I’m looking to add to my $SBAC position on any strength. The tower operators may not be the best businesses in the world, but hedgies are chasing them to the ends of the earth off the idea that $T and $VZ need to jack up their networks to deal with the onslaught of mobile devices requiring massive amounts of data transmission.

My cash position is now above 40% and will likely stay that way for the next few weeks. Stocks need time to heal, and catching falling knives is not my game. I’ll also be limiting the number of positions I have on, there are still some good trends out there, and new leadership, but I don’t believe I can spread myself out to 30 positions in this market while momentum names are getting picked off one by one and shot.

This is a long / short market now, trade accordingly.

Leigh Drogen » ULTA

Banging the Table on ULTA

Momentum Book Update