I sold out of the rest of my $ARUN stake. It was a pretty big winner for me, in this type of market.  I want to discuss why I am content selling here. Normally, if we were in an upward trending market, I may let this winner run. However, until proven otherwise, we are still in an oscillating market sideways, where buying the dips and selling the rips are rewarded.

As the updated chart of $ARUN illustrates below, despite the fact that the stock is green (slightly) for the sixth day in a row, the candles are starting to express indecision on the part of the bulls, in the form of dojis.

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There is always the possibility for overbought to become more overbought. However, I believe that the high percentage play is to take off the rest of my position here. Indecision at the top usually presages a move lower. With profits in the bag, why jeopardize them in the face of this change of events?

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TOTAL PORTFOLIO:

EQUITIES: 22%

• LONG: 22% ($BX $SAPE $POWR $JMBA)

CASH: 78%

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With both The PPT and the McClellan Oscillator signaling short term very overbought conditions, in addition to the prospect of a parabolic move higher from the failed head and shoulders top–think July 2009– this market is presenting us with an interesting situation. On the one hand, it seems as though the consensus view is to either move to all cash, or put on some shorts here. Therefore, it follows that the contrarian play would be to press longs here, typifying the pain trade.

On the other hand, betting on a parabolic move higher again from the failed head and shoulders does not offer a favorable risk/reward profile, in my view. The daily charts of the broad indices indicate that we have retraced the move back to the “scene of the crime,” where we rolled over and headed straight down, starting on June 21st of this year. Basic psychology dictates that the concept of overhead supply is likely to cause a period of consolidation, at a minimum. Many of the longs who bought or added in mid to late June, thinking the correction was over, have endured a wild ride down. They are more likely to sell than to hold or buy more, when they are finally close to being made whole again.

To illustrate the intraday volume, I am including an up to date chart of the $SPY. See my notes on the chart below.

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Locking in some profits here. You may want to check back for updates. I sold out of $NTAP, and sold 1/2 of $SAPE.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 26%

• LONG: 26% ($ARUN $BX $SAPE $POWR $JMBA)

CASH: 74%

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The issue of when to sell a winner is a good dilemma for a trader to have. From a theoretical standpoint, there would be nothing wrong with letting your winners run within the broad context of a trending bull market, in order to buttress your trading prowess. Seeing as the current broad market has been resilient in terms of moving higher in the face of mixed earnings and headline risks, I am encouraged by what I see. However, I am not prepared, just yet, to declare that a brand new bull run has commenced.

Thus, I am still inclined to have a quick trigger finger. I have not sold out of them yet, but when I see that some of my holdings are up five days in a row, I have little interest in being cute here, by letting them run forever.

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For quite some time now, legendary investor Jim Rogers has implored able bodied people to become farmers. In accordance with his long term thesis of Greenspan/Bernanke inspired inflation, “Jimmy the Bow Tie” believes that commodity prices are going much higher in the long run. While he believes in investing in the underlying commodities as opposed to the industry related stocks, I believe that the securities of firms dealing in commodities are going to see a sharp run up as well, should his convictions become reality.

However, the inflationary run up that we saw in early 2008 turned out to be a head fake, setting us up for a deflationary crash. In particular, the stocks of the agricultural and soft commodity names that were flying high in the first two quarters of 2008 not only horrifically crashed along with the rest of the market, but have been notable underperformers ever since. In front of this most recent broad market correction, they were among the first sectors to roll over. It is only in the past few weeks that they have shown some signs of life.

Should the ag names get going again to the upside, I expect them to attract a lot of hot money and momentum. I agree with Marc Faber that the nature of the very easy monetary policies of our central bank, as well as those around the world, is likely to inspire sustained periods of volatility, where the markets alternate between reflecting sharp periods of deflationary versus inflationary expectations.

The purpose of this post is to alert you to the potential bearish to bullish reversals that I am seeing in the ag related names. Interestingly, while some are hitting multi year highs ($DE), others have been left for dead for many months now ($MON, $POT, $MOS), and are only now reminding investors that they are still in business.

See my notes on the charts below, as I extrapolate on the idea of bearish to bullish reversals. The first one is the monthly of $DBA, the soft commodity ETF, illustrating how much they have underperformed the broad market since mid 2008.

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If you have been following me since my Peanut Gallery days, then you know that “The Wine” has been fortunate enough to be enjoying a fine trading year. When the market was healthy earlier this year, I was riding the trend up. When things got toppy in late April, I got into 100% cash the week before the flash crash, and have been playing it safe ever since.

I am in a position now where I am going to gamboool a bit here. Thus, I went long a full position in $JMBA as a speculative play. Obviously, this carries a high degree of risk, so please use caution. The charts below detail my reasoning and analysis.

NOTE: More profit taking, as I sold out of my final 1/4 in $NR and sold another 1/4 in $SWSI.

All trades timestamped inside The PPT.

UPDATE: I sold out of the rest of my $SWSI stake, and sold 1/2 of $NTAP to lock in profits.
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TOTAL PORTFOLIO:

EQUITIES: 34%

• LONG: 34% ($ARUN $BX $NTAP $SAPE $POWR $JMBA)

CASH: 66%

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