11-15-2015 Comments

Watch lists are updated.

I have no idea how the market is going to react to events in Europe. This evening it may be possible to gauge the Asian markets when they open; I think Shanghai opens at 5:30 PM pacific time.

There are no unexpected stocks on any of the watch lists and the whole issue going forward is what is Mr. Market going to do. I am still in the mode of staying away from classical base breakout setups and preferring buy points near the 50-day. 50-day entries have been the only way I have been able to book profits, I was able to book a 20.2% profit in LGIH using these techniques on 11-5-15. If you read Bill’s book How to Make Money Selling Stocks Short where 50-day stalling-rally entries are bread and butter trades, a 50-day long setup is essentially like an upside down short entry. With a strong stock, we look for buying a pullback to the 50-day with signs of support using the 50-day as a selling guide in case you are wrong.

The market may show more weakness, but it is usually not a good bet to be short going into Thanksgiving-Christmas time. Santa Claus rallies happen often and holiday periods suffer from lack of liquidity, 2008 was a notable exception and a period I played the short side well. With the possible Fed and European news, I just don’t know what is coming next so I am playing both sides and will let the market decide my next moves. Bill O'Neil has said that in a topping market you will often be short at the same time you retain some long positions. We are medium term investors and we try to play the major trend. When the major trend is in question we may try both sides.

I am short BIIB from Thursday and long MAS, GOOGL, LXFT, and DY.

The retailers are falling knives and too dangerous for my blood to consider shorting now. I took a 35% profit from an SKX short by covering the gap down, much too soon it seems.