Feed me.

Continuing to stick with my system I had an open limit order to buy FEED. It got filled this morning as FEED is pulling back sharply. The position is already in the red, it is updated in all trackers.

In Momentum We Trust!!!

Some of my holdings and plenty of stocks on my watch list are looking parabolic. The ones I own are buoying my portfolio, which is good, and the ones I do not are making me regret not buying them.

Couple that with my view that the broader market is getting too overbought and is due for a nasty correction and I am facing a dilemma.

Most psychologists will tell you that humans are not built to speculate in stocks. Most of us get fearful when our stocks rip higher. We fear that the stocks will come down crashing and sell too soon.

Many of us also get greedy when they see a broken down stock. Instead of running away from bad stocks we view them as cheap and get greedy and buy into the stocks only to see them sink much lower.

They call that the Fear and Greed psychology of the average investor.

Well, here I am, looking at things like ICO, PDO, TTES and DRYS climbing in a straight line and wondering whether I should bail or not.

Recently I let my Ag. and Energy stocks get called away when I was selling covered calls against them. I thought there were parabolic and due for a correction. I was half right, they did correct, but they corrected mildly and continued marching higher without a chance for me to re-enter. I let SU get called away at $105 just mere weeks ago. I had a limit buy order waiting for it to pull back so I could re-enter. I missed the pull back by 50 cents and today it closed at $127.30

Ironically, the only stock that I kept on the books from that group, AG, was the only one that lagged and is way below the strike price of the covered call.

Last year I traded Mastercard. I bought it around $110. About a year ago it hit $140 and I sold because I viewed it as too extended. Today it trades at double that.

I have been watching and investing in coal stocks all year. Once stock that intrigues me but I stayed away from because it was too extended is James River, JRCC. Several weeks ago I decided it was too extended and bought into ACI and MEE instead. JRCC was around $16 then when I passed on it, it is over $33 today.

On the other hand, another momentum stock that I am eying but have not purchased is GENC. The stock was over $32 less than 48 hours ago. It closed around $17.60 today. Close to 50% haircut in 48 hours.

The problem with these momentum stocks is that the trade is very crowded. When people head to the exit they all rush at the same time. Leaving no bid to buy from them. A high flier can go POOF!! in no time.

So what a speculator to do? The ratio of my short to long exposure is about 1 to 3. So I am well hedged. I still have a bunch of money in cash and about 10% in FXC, the Canadian Dollar ETF.
The portfolio is near the high water mark for the year, all time highs since I started tracking it at the beginning of 2008.

I am going to stick to my plan. I will keep on adding long positions that show up on my screens and I will trade them using my systematic trailing stop levels.

Only time will tell if that's the right strategy or not, but what's the use of a system if I do not stick to it? I have faith in my system and I am sticking to it.

I am looking at several stocks to buy that have triggered buy signals in the past few weeks. During today's trading only a single stock on my watch list triggered a buy signal, PDS. It is on my short list of stocks to buy.

CEL, The Israeli telecom company is near all time highs while my ISL ETF is sputtering around, probably due to the effect of TEVA on it. TEVA just closed below its 200 day moving average and looks like it may see more weakness from here. I am seriously considering swapping out of ISL and into CEL.

PRGO, a high flying momentum stocks broke down few days ago. On Cinco de Mayo it traded near all time highs and just under a million shares swapped hands. The very next day it was down around 18% on seven times that volume. It kept going down since then on above average volume. It is approaching the rising 200 day moving average and may find support there and bounce off it. If it breaks through it we may see mid $20s very quickly.

I am thinking of shorting the stock with a stop around $35.

Booked profits.

I booked profits on the coal ETF, KOL, will look to enter an individual name in the space, or add to my ICO position, instead of holding on to the ETF.

Balls Out!!!

This darn market refuses to go down... Who am I to argue?
I backed up the truck and bought EXM (shipper), DOM (royalty) and WMS (add to existing shares).

all trades are listed in the Last Trade and the Real-Time portfolio tracker Spreadsheets accessible from the side bar.

Musings

Windowz Sucks and is losing me money.

I mentioned earlier in the week that I am having laptop problems. Since I use my computer for everything, work programming, speculating, research, reading, scheduling, blogging, etc... the loss of access to my laptop is a disaster. I of course have secondary machines and my data is always backed up but the inconvenience of switching setups is burdensome.

Since I cannot afford to be out of commission for too long, I went out and bought a new set of memory sticks and replaced my laptop's memory. This did not fix the problem, and I now have an extra 2 GB of laptop memory sitting around. I then ran a hardware check on my hard drive. All is well, no issues. I then ran a Windows Chkdsk on the hard drive, after many hours of scanning and testing my hard drive came out clean.

This was confusing to me, because in Safe mode the machine was functioning well. However in Normal mode it just alternated between being pathetically slow to unresponsive and unusable. Every now and then it would operate normally for few minutes but then the all of the sudden the CPU usage would ramp up and the hard disk would start working like crazy. When the machine was normal I could not detect any abnormalities. When it was malfunctioning I could not really do any troubleshooting because it took many minutes for each key click or mouse move.

As I cannot afford to be out of commission for long, I already lost significant amount of billable hours dealing with, I went out and ordered a new laptop online for delivery early this coming week. It is pretty much the same machine I currently have except that it has a faster processor, more memory and a bigger hard disk.

After I ordered the new laptop and while painstakingly watching task manager I noticed that svchost.exe was taking up all the CPU whenever the machine was unresponsive. This is a windows program that acts as a container for other programs launched as services. So I started to think this may be a software problem after all. I killed the process through task manager and the machine started acting normally again. I would go poking around control panel and then all of the sudden the machine would be useless. The process was back in Task Manager. I'd kill it again and go poking around and then it comes back.

So I started stopping services and uninstalling programs, one at a time, trying to figure out what's going on and at the same time doing Google Search on svchost taking up so much CPU.

Lo and Behold, it turns out that other people ran into similar problems and for many of them the cause was the WINDOWS UPDATE service... Can you believe it? The f****n Windows Update service is what's killing my machine!?!?! Just for kicks, without rhyme or reason, the Windows Update service loses control and takes over the computer consuming all of its resources. Just like that!

I found a tip on some Microsoft forum on how to verify whether this is Windows Update that is running within svchost or not. Sure enough, running the tasklist -m command as described showed that it is indeed Windows Update that is causing this. Windows Update is also tied to the Add/Remove programs in Control Panel which is why it kept popping up while I was trying to troubleshoot even after I killed it.

I found numerous postings of people complaining about similar problems caused by Windows Update, I also found numerous denials from Microsoft about this being a wide spread issue.

Several of the pages had a list of items to try to fix the issue. They all centered around a multitude of Knowledge Base Articles from Microsoft, Hot Patches, Services Packs and fixes. The weird thing is that it was not just one fix, it was a maze of options to try, with details of how many of those options did not work for everybody and instead you had to try another hot fix once the first one fails to fix, etc... it is a travesty.

After reading through the list of solutions, and all the users comments that could not get the solutions to work I came up with a better solution on my own. I replayed in my mind all the problems that I had ran into after Windows Update ran and downloaded new "fixes" and "updates" that broke many things of my machine. For SQL Server breaking, to .NET framework breaking, to MS Office's Interoperability breaking, to this and that. So I said to myself, f***k it. Why bother fix Windows Update since at best it just adds bloated software to my machine and at worse it breaks existing software. I just went ahead and deleted the Windows update DLLs from my System folder. So now Windows update cannot run no matter how hard it tries to start itself up whenever I use Control Panel.

I am Windows Update FREE and I am loving it... I also have an extra laptop on the way and an extra set of laptop memory sitting on my desk.

I also downloaded the latest copy of Ubuntu Linux desktop edition. When the new laptop gets here the first thing I will do after reformatting the drive to get rid of all the rubbish that HP puts on there is to partition it and install Ubuntu Linux on one partition and Winblows XP on the other. This way at least I can be half functional the next time Windowz decides to puke all over the place.

weekly wrap

The Portfolio

 
The portfolio hit a new high water mark this week powered by strength in commodity related stocks. I closed five positions, all cutting losses. In a classic trend following move I am cutting my losses and letting my winners run.

PTEC was a new addition to the portfolio, it is in an uptrend, had a big pull back on earning disappointment, I bought it on weakness assuming it will hold its trend line and continue in the long term direction. It did not and I had to cut my losses. The stock may recover from here and resume its trend which would make it a great long candidate. However I am staying away for now.
RCI was a short that did not pan out. I cut my losses in two different trades, this one hurt the portfolio as the loss on half the position was over 30%.

I added one short, PDX, and three longs. PDX was a holding on the long side for a long time, predating the portfolio. It disappointed and got hit hard, I closed my long position and flipped to a short with a stop above the high from the gap down day. The four longs are in up trends. HEW I owned for a long time and I am adding to my position, though it is new to this portfolio.

I am looking to add to my positions this week both on the long and short side with tilt to the long side.
I am looking to close out FXC on strength to deploy the money elsewhere, still eying the Australian dollar ETF, the Yen, the Peso and possibly the Chinese RMB. I am waiting for the Brazilian currency ETF to start trading.

Berkshire violated my stop loss level but I am not closing this one out. History is on the side of long term holders of BRK/B and i am holding on... for now.

The Israeli ETF is showing weakness, there are couple of Israeli companies that I'd like to invest in including CEL. So I may swap the ETF for individual issues. There is a new company out of Israel working on innovations in Electric Vehicles. The company is awesome, but not public as far as I can tell... I will be looking to buy when they go public.

For the first time this year I can say that the portfolio is achieving all of its goals, 1) Beating the pathetic S&P 500, 2) Profitable, and 3) beating inflation (on annualized basis)... all is well.

The Markets

The S&P 500 reached up to the declining 200 day moving average, almost kissed it and then turned away heading lower. This index is heading back to 1220 which is about 13% below where it is now, mark my words.

Earlier in the week Bill posted a chart of the S&P making the bull case. I posted a chart making the case of a continuation of the down trend. I of course believe that my assessment will pan out but that was not the point of my posting. The point is that technical analysis is not about being right or wrong but about probability and risk management.

Even though we each have a different view of where the market is headed we both can trade the chart effectively using good risk management. We may not make money on the trade but it will be a good trade because of defined risk and a clear exit point.

Of course being trend followers neither of us is actually trading that index, which is just stumbling around, as there are so many better places to put our money in this market.

Speaking of places to put your money I am going to add a new feature to my weekly wrap for my faithful readers. It will illustrate my view of the current trends. The list only includes items from my watch list, not everything under the sun. It reflects my subjective assessment based on eying the long term chart. The Best long and short setups represent counter trend pull backs that create a low risk entry point. The strongest and weakest entries are what I should have been long and short respectively, had I been smarter.

This and That...

I hate Windows... If it was not for Visual Studio I would never use Windows again. I was out of commission all day today as my computer woke up sick. Took 90 minutes to boot up this morning. After that it was unbearably slow while the hard disk spun like crazy and then it would just completely die and reboot at random.

I went out and bought memory and replaced all the memory in the laptop... i then ran hardware disk checkups, windows disk checkups, this and that, all kinds of diagnostics, no issues...
still reboots randomly... but at least it is usable in between reboots.

Now, i cannot blame Windows for a hardware fault but the point is that I do not know if it is a hardware fault, a software fault, a windows update problem, a break down in my anti virus software, i just do not know... not a single indication.... I had hardware problems in the past. I could always tell with a Unix/Linux system... With Winblows I never know what's going on.

I pretty much have a replacement for every single thing I do on Winblows except for Visual Studio and .NET. Maybe from now I should only take on projects that do not use .NET...

While on the subject. What's the story with Buy.com? I remember when the site first started and the founder claimed partnerships with all those companies that turned out to be nothing more than standard run-of-the-mill agreements that anybody can sign up for. It is like me claiming a partnership with Google because I use AdSense.

Any how, I am on Buy.com's email list and I often get good deals in the emails, I click the link and I buy the items. But I can never find anything useful on the site starting from scratch.

They must have the worst search functionality of any online retailer out there. I want to check out HP 17" laptops. Very specific. I have one, never had problems with it till today. It is big, robust, does not run too warm even with 18 hours of high intensity usage daily.
I like the screen, the weight, etc... I just like the laptop and want to see what deals do they have on newer models.

Is it too much to ask to be able to browse for HP laptops? Why should I get a "Baguette Diamond Heart Pendant in 10K Yellow Gold" when I am specifically searching for a 17" laptop? and it is not like I typed it in the search box, I specifically clicked the link that says 17" under the laptops listing.
How more specific can I be? WTF is a SONY 17 in 1 card reader doing in my search results for a 17" laptop from HP?

I cannot search by brand, I cannot search by screen size, I cannot search by type (laptop), what ever I search I get one relevant entry and a bazillion useless ones. I do not know if Buy.com knows this but they've lost a ton of my business over the years because I could not search for what I am looking for. Though I prefer their price and delivery to everybody else out there.

They must be competing with GoDaddy for the least useful website award.

I talked about couple of hot sub-sectors yesterday. Between computer troubles and meetings I could not do anything with the markets today. Later in the day I saw Cramer touting shippers on his show and the shippers were up after hours. It is good that he is touting the group, a day after I did, but the amateurs that buy everything he mentions will push the price up for couple of days. I may buy something in the group tomorrow if I get a good entry, otherwise I will wait till next week.