Having big positions, long or short, during earnings season is a dice roll. If you were short [[WFC]] yesterday, your head is in a basket today. But the blade swings both ways. There will be huge gaps up and down, during the course of earnings season, currently underway.
The best approach, in my opinion, is to have both long and shorts. Naturally, if you are long one of the inverse etf’s of doom, there is no hedging that, sans an upside devil etf. Nonetheless, despite today’s run, I still believe, emphatically, the market is very close to overheating.
The signs are everywhere. When the lowest quality names are just taking the fuck off, leaving skid marks on the backs of unlucky shorts, it’s time to reevaluate the market. At the moment, I find myself saddled with a lot of small cap crap, which is not my investment style. Aside from [[DE]], [[GNK]] and [[ERX]], I am long [[AMKR]], [[EZCH]], [[GU]] (sold out), [[CIEN]], [[TER]], [[STAR]], [[PKD]] and [[LDK]] aka shit.
In addition, multiple micro-cap names are exploding to the upside. This is a sign of a tired market, not one breaking out. See, degenerate OTB guys love to trade small cappers and their whorish dollars are most abundant towards the end of bull runs.
Nevertheless, I do not have the balls to short stocks here, following today’s rout. Instead, I will look to sell the lesser quality names and rebuild my cash position to above 30%.
UPDATE: I sold 2,000 [[DE]] @ $37.40
UPDATE II: I sold out of [[EZCH]] @ $14.55
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