One of my top follows on the twitter stream is @vcutrader. Thanks to his generosity, I have learned infinite amounts of wisdom from him over in The PPT User Notes section (“chat room,” as is referred to by the steerage class), as far as macro and microeconomic fundamental analysis is concerned. In my mind, he deserves the ultimate compliment in the finance world: Great trader, great guy.

I am following him into his long The New York Times Company ($NYT) play. Over the past few years, talk about the death of the newspaper industry is well deserved. The overwhelming majority of the daily rags have lost a battle on two fronts. First, the shift from print to free online content has eaten into their revenue stream. Beyond that, their content has become more and more out of touch with the average reader. “Pinch” Sulzberger, who inherited The New York Times, exemplifies the mindset behind the turn away from straight news on the front page, towards an ideologically driven hidden agenda on the non editorial pages.

However, Steve Jobs and Jeff Bezos may very well be the saving graces for the newspaper industry. The e-reader growth story is likely to benefit the $NYT in a way that the stock market has not yet taken into account. Looking at the daily chart, the possibility for an inverted head and shoulders bottom formation compels me to take a position here.

As usual, timing is everything. I will obey my usual 7-8% trailing stop loss on this trade, despite my belief in the fundamental thesis. Keep in mind that @vcutrader is building a long term position here, so you should ask yourself whether you are in this for a trade or an investment, should you choose to follow.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 34%

• LONG: 34% ($NYT $CBI $CREE $VMW $TQNT)

CASH: 66%

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Just kidding.

This market is too gay to have conviction either way (that rhymes).

Before we get the next explosion in stocks, in whichever direction, we need to see some frustrating compression, complete with both false breakouts and breakdowns. We have been seeing that for the past few days, and it can easily last into tomorrow and early next week as well.

The best strategy, as boring and unsexy as it sounds, it to have a high cash position and be ready to pounce when the big move comes.

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At this point, I am looking to take profits in some of my more extended holdings, and roll that money into names that are setting up behind them. However, seeing as the market is still printing dojis below the key 1131 level, I am going to force myself to keep a heavy cash position.

Today, I took profits in my $CMG position. I am currently stalking for new longs.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 28%

• LONG: 28% ($CBI $CREE $VMW $TQNT)

CASH: 72%

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Into the final hour rip, I made a few trades:

• I sold out of $CTXS, taking profits.
• I sold out of $ROVI for a push.
• I bought a 3/4 position in $CBI.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 32%

• LONG: 32% ($CBI $CREE $VMW $TQNT $CMG)

CASH: 68%

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Never short a boring market, indeud.

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[youtube:http://www.youtube.com/watch?v=Y_HmL4gPwZw&feature=related 450 300]r

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In Japanese candlestick terminology, a “doji” candle reflects a tight, neutral trading range, indicating indecision on the part of market participants. Depending on the size and shape of the candle, there are different types of dojis. However, for our purposes, let’s focus on the fact that a string of dojis have appeared each time the market has banged its head up against the the very top of our multi-month trading range. In short, since May we have seen several days of notable indecision at the top just before we rolled over and headed back down to the bottom of the range.

As has been one of my recurring themes this week, I submit to you the question of whether this pattern has now become too obvious and predictable to repeat this time. Assuming today continues to chug along the way it is, we will have seen three dojis in a row this week on the S&P 500 actively traded ETF, $SPY. Despite the bearish results after we saw the dojis earlier in the summer, the pattern is generally considered to be neutral. If you have not noticed it yet, the period in which we have been trending has shrunk considerably, even intraday, as momentum is drying up. The market is compressing to the point where it will eventually explode.  The easy answer is to say that we are in a trading range, and therefore the explosion will be to the downside.

But has that now become too easy of an answer?

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