Midrange – Place Your Bets

Raul3 Fri Jun 22, 2012 11:32am EST 2 Comments

As we enter the official beginning of summer, it’s hardly surprising to see us priced at the middle of what could be our range for the next six to twelve weeks. Most of my positions discussed in the iBC forum are swings with the occasional multi-quarter hold. Therefore the daily candle chart is my primary focus when trading.

Taking a look at the SPY daily, there are several reference points suggesting range bound sideways action:

The QQQ’s have the same look. So if you share the sentiment that we’re range bound you have a few positioning choices:

Cash – spend your time building watch lists or perhaps ignoring the market entirely
One Direction (no homo band) – Enjoy gut wrenching doubt at opposite range extremes
Mixed bag – perhaps a slight directional bias, but hedged and with some cabbage on hand (my favorite)

The thing about a range is it eventually ends, and often in a violent manner. It’s fun like most forms of violence. I think the range eventually ends to the upside. Therefore I am keeping a long bias via my favorite tech/mobile names TRIP, ADS, YELP, OPEN, P, and (sigh) GSVC. Weighting is in order of listing.

I’m playing the downside (hedging) via short the Euro dollar using EUO. As chess has been discussing, the Euro is considered a risk currency. I could go long US dollars and have similar positioning, but I figure the butt fuckers in Europe give the hedge a bit more downside spice potential.

Finally I hold around 42% of my portfolio in cash and AWK. I pool the two together, and this may be unwise, but I don’t expect much of anything from AWK except its coupon and I always add some more when the weekly chart gets oversold. My current basis in the shares is $26.00

The plan is to ride out the summer, be ahead of the herd when we bust ahead, and bank a few percentages in the meantime. Simple.

Care to share your positioning? I’d love to hear.

Also, it’s all about the summer chic pool party music on Songza: