An ugly end to an ugly week. It looked like the bulls were going to get some bounce action going, with good tech earnings and a great GDP (5.7% versus 4.4% expected). Everything aligned perfectly for the bulls, but the sellers overwhelmed them and we closed very weak. Ouch.
No 401k trades or regular account trades, but I sold RGR for a small loss in the IRA. I wasn't about to repeat the mistake I made with FUQI. Once a breakout fails, the key is to get out and minimize the damage. With FUQI, I let hope get to me, and it cost me.
The market is changing character. This correction is more painful than any pullback we've had over the past several months. It's feeling to me like the market was held up through the end of last year to lock in profits in 2010 for tax reasons. The basic logic is if you close a trade in a year, it goes on that year's taxes, so if you've got to take some loses in 2009, you sell before 2009 ends and take the tax loss on 2009, but if you have gains from 2009, sell them in 2010 so you don't have to pay the taxes for another year.
I'm still in the CBI calls, too. CBI is holding its breakout level and its 50-day EMA...for now. It's one of the best-looking charts I see, as it's still holding support. Plus, the volume on the decline in the name hasn't been overwhelming, which cannot be said for many other stocks.
I forgot to mention earlier this week that CRE's shareholders have approved the liquidation plan, so this one's looking like its on track. It had a huge-volume selloff on Friday, but the price didn't drop that much. I'm not sure what to make of that, but I'm a buyer of CRE on weakness.
Position: long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
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