PPT Chess Party

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With so many people cautious in front of the jobs number tomorrow, combined with the natural doubters of this rally, I am comfortable taking on more risk here. I sold out of my final 1/2 position in $CCI, and took off 1/2 of my full position in $HMIN to make room for the more high beta short squeeze play, $RBCN. I bought a full position in the name. I found the name in one of The PPT short squeeze screens, as the stock has a 48% short interest.

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TOTAL PORTFOLIO:

EQUITIES: 66%

• LONG: 66% ($CTRP $CTXS $CMG $NTCT $RBCN $AAP $MELI $HMIN $RDWR $CMI)

CASH: 34%

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I bought a 3/4 position in $CTRP. I am playing it for a multi-month continued breakout from the apex of the symmetrical triangle.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 66%

• LONG: 66% ($CTRP $CTXS $CMG $NTCT $CCI $AAP $MELI $HMIN $RDWR $CMI)

CASH: 34%

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One of my holdings, $NTCT, is hitting decade highs today, at $17. I am a firm believer that price has memory, and for this stock to overcome multi-year resistance, especially given the broad market conditions for the past few months, is an undeniable sign of strength.

The monthly and quarterly charts shows a nice green candle above multi-year resistance.

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Finally, the daily chart shows a thee large consecutive green candles, pretty darn close to the “three white soldiers” candlestick pattern which is a very bullish pattern after the stock’s recent consolidation. Keep in mind $NTCT is a relatively thin stock. Apart from that, I expect much higher prices from here.

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MARKET WRAP UP 09/01/10

With the stage set for a significant breakdown headed into a seasonally bearish period for the markets, the S&P 500 naturally rallied 2.95% to finish at 1080. Breadth was the strongest that we have seen in at least several weeks, while volume was surprising potent. Regardless if we continue to move in a straight line higher from here, or if we consolidate for a few days, the bottom end of the multi-month trading range has once again proven to have been a sound buying opportunity in the face of pervasive negative sentiment. With many traders complacently assuming that the market had started a fresh downtrend, the price action today reminds us that we have been in an oscillating market, rather than a trending one, for at least the past three months. Until we see a convincing break–and hold–of the range, it lives on.

As the updated and annotated daily chart of the S&P 500 indicates below, we have quickly rallied up to the 20 and 50 day moving averages on very strong volume. A break of those moving averages leaves us with a nice vacuum to fill above.

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Turning to other key indices and sectors, the common theme is that of powerful buying at crucial support levels.

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After several weeks of seeing any bounce, whatsoever, aggressively faded, the rally today had impressive staying power. Do not discount this change in sentiment going forward. While many will look to reload shorts in the next day or two, this rally could easily last longer than anyone thinks possible. For the past few days, the market has been looking for an excuse to rally. Off of economic data last night and this morning, we found those excuses. Going forward, if risk appetite remains healthy, I expect that change in sentiment to trump all economic data, good or bad.

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[youtube:http://www.youtube.com/watch?v=QR4Y6Ll0DwA&a=GxdCwVVULXcOXl33RxUOaQ3vM3IrhPiv&playnext=1 450 300]r

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I made several trades today:

• I sold out of $APKT.
• I sold 1/2 of my $CCI posiiton.
• I bought a 3/4 position in $CTXS.
• I bought a 1/2 position in $CMG.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 60%

• LONG: 60% ($CTXS $CMG $NTCT $CCI $AAP $MELI $HMIN $RDWR $CMI)

CASH: 40%

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Today reminds me a lot of November 21st, 2008. Back then, we had seen an unrelenting, multi-week selloff after a brief recovery from the October crash. It was a Friday, and I remember seeing the S&P 500 hit 741 intraday. At that point, CNBC broke news that Tim Geithner would be named Secretary of the Treasury. The market subsequently turned on dime to finish the day a whopping 60 S&P handles higher at 800.

The financial media ran with the story, and claimed that Geithner was “the catalyst” for the market’s stunning reversal. In fact, I could not disagree more. The Geithner news was nothing more than an EXCUSE to rally. The market had become so oversold and was full of so much hopelessness at that point that traders were looking for any reason, whatsoever, to rally. As evidence that Geithner was merely an excuse, witness several months later, when Geithner tried to make a few speeches to calm the markets in early 2009, only to see more unrelenting selling leading up to the March bottom.

Today, various economic data is being fingered as the reason why we are rallying. Again, the lagging/imprecise/manipulated data is merely an excuse to rally a deeply oversold market that had become filled with breathtakingly negative sentiment. Moreover, the bottom end of our trading range proved to be too much of a sturdy brick wall for bears to plow us through that key 1040 level. Just as with November of 2008, perhaps 1040 is not a major, long term bottom.

After today, however, it marked some type of a bottom nonetheless.

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