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Wednesday, June 10, 2009

Stock plays update

The market is a non stop bull mode. The odd thing for me is, in January I was all over the concept of Obama rally. And when SPX hit 666, I started going long with my lottery ticket picks.
But as the market came close to the 200 DMA, I got cold feet and then started shorting for a downturn.

The fundamentals are still there, huge unemployment, market is over-extended in a bull rally, and interest rates are staying high, threating to choke any "green shoots" of an economy. I am a very cautious bear now, since this bull seems to be more dangerous than I expected.

From WebSurfinMurf's Financial Blog

I still advise caution on shorts, or lottery tickets, Better to be late to the party than get yet another run against the position before the market breaks. A break of SPX BELOW 920 would catch my attention.

As a quick check, lets see how the short plays are now.

ALL of these stock plays assume you short the stock.

Stock 4/16/9 6/9/09 Percent Gain
SPX 873.64 942.43 +8.9% (guide)
AAPL 121.45
BAP 50.01 61.75

BBY 38.5339.52

EAT 18.7817.87 4.8%
DEE 82.72 54.38 34.3%
DECK 62.33 68.17

WYNN 33.4738.31

new entries 4-24-096/9/09 ----

new entries 4-29-096/9/09 ----

CAKE 17.6517.08 3.2%
BWLD 40.60

All things considered, really not hurt that bad being short a market, after such a long move upwards over the weeks. I took some off the table with BAP, DECK, AAPL, back when I warned I was getting nervous. I can tell you this, WHEN (not if) the market starts to take a turn down, all of these will collapse faster than the average stock. If you can short some of these stocks as the market rallies, and still be up 10%+, it will be much better when the market is running in your direction.

As for AAPL, as I warned, it is really dicey, but I actually like it more now as a short. But at this point I would rather add to lottery tickets than AAPL.

So if you joined me in some of these plays, and have extra equity, consider adding (small) additional positions here to average your costs.

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