Bookkeeping: Weekly Changes to Fund Positions Week 48

By: TraderMark Monday, July 07, 2008 3:07 AM

Symbols: AA, AAPL, CLF, CSIQ, ENER, FSYS, GE, GS, JRCC, JRVR, MA, SGR, WLT

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After the disaster they sprung on us last earnings period (Apr 11: GE Warnings and Import Prices Show us Real Inflation) , the contrarion in me says after such destruction in the market, and such a bad mood - simply an "in line" number from them will brighten the mood of the market and we'll go back to "it's not as bad as we though, we can come out of our fox holes" type of thinking. Unless crude oil is $155+ by that point. ;)

After a lull for most of June, it was a very hectic (short) week for us - the larger changes (chronologically) to the fund below:

Monday, most transactions were of the ETF variety...
Tuesday was an incredibly tricky day, as the market opened down - threatening to break support - than rallied hard - then broke down again - once more threatening support and looking as if it was going to roll over - before a rally towards the end of the day saved the markets. Early Tuesday I continued what we've been doing for weeks - cutting into the "generals" (the leaders) in fertilizer, coal, oil services, and natural gas. By the end of the day that looked like a foolish move since we had such a promising reversal but by the next day it looked smart as coal fell off the cliff and other leadership sectors were also blown apart.
We cut Apple (AAPL) as it headed towards the 50 day moving average (from below) - the chart actually held up quite well all week and we'd be willing to buy back on a push above the 50 day ($173s) as this would signify great strength in a perilous market.
We began a new "trading" position in Ultra Financial (UYG) which is the inverse of the tool we've been using since last August - Ultrashort Financial (SKF). This ETF is down 35% in the past 30 days, so hopefully we are catching it within the last 5%ish of it's fall and can get some nice hedge from it on a "rotation" into these names (however short term). The hope is to hold this for a few weeks to 6 weeks and derive a nice gain when the inevitable "oversold" bounce happens in the sector. Then we'll switch back to SKF - the carnage in financials I'm afraid is going to be with us for a long time.
I've changed tactics on solar - since my individual selections have been not what the marker likes I've decided to adopt a more basket type approach and used the recent selloff in the sector to really add to this group. We started off with a new position in Canadian Solar (CSIQ) - the thesis here was the stock had held up the best, and was holding its 50 day moving average unlike all other peers - and was down 30% in just 2 weeks. Well that lasted all of a few hours as the stock was pummeled for another 15%ish loss within 48 hours. We added a bit more later in the week (Wednesday). This is one group I am abandoning my typical strategy of buying on strength or on breakouts because simply put the moves are so quick, and so strong by the time you are buying on strength the move is sometimes 1/2 over. So we are just going to systematically buy as they fall, knowing that momentum willl return at some point to this group. This happens over and over and over in the 2 years I've been investing in this sector.
Wednesday the coal carnage began with many names down 17-20% in 1 session alone. This was long overdue as the charts had turned parabolic. We began a new stake in an old favorite that we never pulled the trigger on, Walter Industries (WLT) - much like solar I have some favorites in this sector - but unlike solar the market has agreed with me on whom the favorites are, but I am willing to take a broader basket approach in this group too.
We restarted an old position in LDK Solar (LDK) - just another name to the solar "basket" - we had last sold this name around $36 only to watch the stock run to mid $40s. But now we are able to rebuy near $32. If you haven't gotten the picture yet - solar is a very difficult sector to "buy and hold" - the inherent volatility of this group is among the highest I've ever seen. I added more to a current position in Yingli Green Energy (YGE) as well.
We began our 3rd name in the "non solar alternative energy" space with Fuel Systems Solutions (FSYS) in the $32s, with a target of adding more on next support at $28. We got that $28 level within 24 hours - this is such a "generous" market, eh? While we overpaid in the short run with the initial purchase - we did not change it up in the mid $30s and into near $40 range, so we did not suffer the quick reversal many did in this name (Louis Navellier by the way recommended it recently in the upper $30s - his subscribers must be happy) Again, I wish I had bought in the low to mid $20s when I first identified it but I wanted to do more research before I pulled the trigger and the stock simply was a moon shot straight up with no pullback. So now we get the pullback and we have to stick with the conviction despite the stock price acting haywire and take advantage of the opportunity. Certainly it could go lower for all we know.
We added to some Goldman Sachs (GS) - the financials all things considering held up well this week. Only when the market truly looked like it was about to fall off the cliff (which was multiple times) did they weaken....
We had cut back our position in Cleveland Cliffs (CLF) to almost nil far too early and left a lot on the table - as the stock fell from $120 early this week to mid $90s we upped our stake materially to 1.7% - we added a bit more Thursday on the morning drop (not substantial) - a move to the $80s or $70s would have our tongues wagging and we'd love to make this a top 3-5 type of position in the fund at those prices.
Thursday, to finish off our solar basket we had waited very patiently for Energy Conversion Devices (ENER) which we felt was overpriced and without sense in the mid $80s to fall to a meaningful support level - we achieved that with a move to $59 (50 day moving average) in the morning and struck. Does that mean it was the bottom and it cannot go lower? Certainly not, but we got a 30% discount from prices just seen in the recent past.
We bought in the abyss Thursday morning - spreading purchases across a lot of the generals we had just sold off Tuesday for much higher prices, along with some other names we had been waiting for "sale prices" on.
To finish off our coal exposure we began a trading position in James River Coal (JRCC) near its 50 day moving average in the low $40s - a move to the mid $30s or so would have us adding.

The above do not include the majority of my trades in my Ultrashorts which I am trading quite often as the market ebbs and flows.

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