Good to smell the hallowed corridors of royalty once again. I believe Monsieur Le Fly declared that being the King in the month of December is one of the highest honors. Who am I to disagree with him?
The StocksRider portfolio is making a new high, thanks in part to positions like NFLX, CREE and recently sold positions in DLTR, FDO. Also my losses in CRM short taught me some important lessons in risk management that I believe were as valuable as the profits I could have made. Plus the grapes are fucking sour. No…really! Grapes ARE sour.
You can find my recent posts in the regular Peanut Gallery here in case you are seeking continuity or want to see my past performance, or you just can’t get enough of me.
Couple of days ago, I indicated in my last post that we will soon enter a trading range of sorts just like how we did during summer. Yesterday I was going over the other blogs on this site and to my amazement, Scott B made a similar observation! Considering am a big fan of his posts, this was very reinforcing.
Current Strategy
I was skewed way too much into longs. But I made a series of trades in the last 48 hours that have made me lot more comfortable as I hedged my positions. As always, I post my trades close to real time in Twitter.
Current Positions
Longs – NFLX, NTAP, AKAM, CREE, GRMN, SPY, Q
Shorts – WFR, EXPE, TINY, UGP
A Note on Qwest
Q has two things going for it. December seasonality shows Q giving solid returns based on The PPT screeners. Also December 1st was the ex-dividend date for Q. Normally you would suspect the stock should go down right on or after the ex-dividend date. Q managed to hold up. That to me is a healthy sign. It seems it may very well be on its way to record another positive December.
A Note on Netflix
Long time readers know I have been long this stock for quite a while and expounded my theories here, here and here. Today’s downward move didn’t make that much of a dent for me.
There are a couple of things perceived to be going against NFLX besides it’s over rich valuation. (The valuation doesn’t bother me as much since I am not in NFLX for long haul even though I think it is a terrific company):
First, it became technically overbought couple of days ago. Back then, I wrote in the comments section of one of my prior posts on NFLX to expect seeing it go down a bit and consolidate its base. I believe that is what is happening right now.
Second, substantial insider selling occurred this past month, which may have given the impetus to the last two days’ selling not to mention Cramer insisting on his show too to sell half now. The most publicized insider trading was the CFO selling 100,000 shares on November 30th. I think that should not be ignored by long term traders and investors. However intermediate term, it is not that much of a cause for concern due to momentum supporting the stock along with a whopping 20% short float. So let’s put the CFO sales in that perspective. 100,000 represents 1% of the overall short float that is currently at appx. just over 10 mill shares. In other words, not only will the current short interest absorb the CFO’s shares and other directors’ smaller quantities from this past month but also will continue to sport a plus 15% float even after covering the CFO and past month’s sales. Add to it the fact that we may have a whole bunch of new short sellers from the last two days judging by the stream on Stocktwits. This all contributes to possibly another explosive rally sometime this month.
On the flip side, 188-190 forms a major support level based on the open interest configuration. I will be selling all or major part of my position if we break that level.
Bottom line, NFLX likely has a lot going for it to remain in an uptrend in intermediate term even if it consolidates in the short term. I wouldn’t hold it for long term though at the current valuation levels especially if the insider selling continues unabated.
Looking Ahead In General
Normally Decembers are a safe bet for a dart throwing monkey market. I am going to be extra agile because of the choppiness I expect to see this month not to mention some wild swings right after December 10th. More on that later. In spite of the choppiness, the 3-6 month timeframe still looks bullish to me.
Good Luck
StocksRider
Congrats Rider.
Welcome back Capitan
Yogi and Bo Beach, thank you.
Congratulations.
Welcome back, missed your posts.
lol…the “stocksrider” crest at the top is AWESOME