Lock ‘N Load

This was a significant rally today in that we did close above 826 S&P. Do not short this market unless you plan to day trade. People I am talking to are looking to buy pullbacks. You see, it’s human nature to want to see things get better. In addition, many just want to “stick it to the bears” for all the pain they’ve caused the average bull. There’s still a healthy amount of skepticism out there as well, which is an added benefit for a continued rally.

We’ve now rallied 23% off the low on 3/9. The rally off the 11/20/08 low was 24%, so we’ve essentially equalled that. Now comes tomorrow’s test to see if we can close this week on a positive note. So far, the S&P is up 8.4% for the week.

I expect to see the market give some back tomorrow, but even if we close the week up 6%, that is still a huge win. This rally will still be intact, in my opinion.

I’m thinking a target of a 30% rally off the 3/9 bottom, which puts the endpoint somewhere between 875-880 S&P. Just a guess. We’ll see what happens if or when we get there.

The happy day for the bulls is when the bears finally roll over with a broken back, writhing on the floor in pain. We haven’t seen that yet.

People talk about 1,000+ point down days on the Dow, but who’s talking a 1,000+ point up day? If there’s one impression this past year has left on me, it’s to expect the unexpected.

We shall see.

The big question is, how much more can this rally go? With the NYSE Bullish Percent Index rising up to 40% as of yesterday, sentiment would indicate that there is still room to run (70%+ is traditionally overbought territory).

I’m also watching the 75 day MA which, at 826.12,  is a key level near term. If the market can break through that level this week, I think we could see 875-880 next week. Just saying…. 

Trade what is in front of you, not what the talking heads are saying or what your emotions are telling you.

Yeah, I’m stuck in a cabin with a raging blizzard outside. My backcountry skiing trip has turned into an extended stay in my rustic cabin, as I burn cords of wood to stave off the cold of a spring blizzard, while using a dial-up connection. Good times!

Oh, by the way, the 30 stocks that I bought the past week? Up 16.25% as a group. Thankfully, my thesis about bottom fishing proved to be the correct thing to do. Here’s the gains of the Top 10:

ACAS +56.73%; IX +54.68%; AFL +40.75%; SFY +38.29%; PVA +36.98%l CENX  +34.43%; GDP +30.19%; TXT  +30.00%; WTI  +29.08%; SGY  +28.40%.

Bottom 3:  SAY -0.00%; AMGN  -2.00%; JTX  -6.66%

I will sell these tomorrow along with MGM, PETD and WGOV, since all of these lagged the S&P’s return of 7.17% today. JTX,, as you might have surmised, will be sent to a special hell, due to it’s egregiously wicked return today.

My take on this market is that we will see this rally extend, until it doesn’t. Just keep the “big picture” in mind and don’t hesitate to take profits and get short again. The D-press-shown that is coming will eventually drive prices back down again.

In the global macro account, I now only hold small positions in SH and TBT. I bought more SPY earlier today and also sold FXE, FXB and bought FXA and FXC. I’ll update more on this tomorrow, as some explanation is in order.

Time for another log on the fire and goblet of Grand Marnier.

That is all, friends.

I gave up about 1.34% of my gains this week. However, all in all, I’m still up 11.86% for the week so far. Again, this are speculative stocks that have been beaten down into the dust.

This weeks gains for the “Dirty Dozen” included:

CENX +43.04%; SFY +29.43%; IX +29.11%; SGY +28.62%; AFL +28.03%; PVA +26.95%; OSG +26.45%; TXT +23.58%; GDP +23.10%; WTI +22.43%; DRI +19.27%; CRZO +17.48%.

Added money to : LDK +10.93%; MGM +8.27% and SGY +28.62% 

Out of 28 stocks, I have 3 losers: ACAS -0.96%; AMGN -6.08% and AINV -6.27%.

Of course, all this could change tomorrow.

Allocation: 47.4% stocks; 52.6% cash.

Going into tomorrow’s Triple Witching, I’m keeping my stops somewhat looser than normal, in anticipation of potential volatility. I’ll be skiing out of the office (as opposed to skiing in the office) and will let the market decide if the stocks I bought this week are worthy. I’ll be back Monday.

No, not all environmental, as in “let’s all hug a tree and drink Chai tea”. I’m talking about looking at committing more dollars to stocks. Currently, I’m hovering at 42% stocks, 58% cash, and looking to add to positions on a pullback (but not on a big selloff).

Just be cognizant that the NYSE Bullish Percent Index is now over the magical 30% threshold, the point at which it is time to start putting the offense back on the field (still in football mode).

I had guests over last night, celebrating our profitability over the past week. Therefore, I didn’t get the time to update my stock purchases, which I will do in The PPT later today.

However, lest I leave you wondering, here’s how the Optimal Alpha portfolio is doing currently, since the buys on Monday:

TXT +36.79%, AFL +36.46%, IX +30.88%, SFY +27.09%, WTI +26.80%, to name the top five. That group of stocks as a whole is up 15.79% since Monday.

Yesterdays buys are up 10.90% today as a group, which include: CENX +22.51%, FOE +17.36%, ACAS +17.30%, LDK +11.61%, ZLC +10.28%, MGM +9.31%, JTX +6.42%, SAY +3.68% and AINV -3.03%.

It behooves me to keep bottom fishing this rally with low-priced stocks that were formerly fliers. As long as it looks like they will be going concerns for the next year, it is an opportune time to wade into these with some of my money.