"Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions."
-
Sun Tzu

Thursday, November 22, 2007

Thanksgiving Market Commentary

OK. Guess I'm back. My performance looks pretty volatile recently, which is more due to the fact that Covestor doesn't track cash positions. Since I'm 50% cash these days, there's obviously some significant tracking error.

I recently read "Reminiscences of a Stock Operator" and I really like some of the lingo. One that applies to my/the market situation in the last weeks is "you gotta sit tight".

Anyways. My 100% net short position played out nicely in the last weeks. One one side, I start building up some longs. On the other side, I feel we need some major event to clear this market negativity. On the negative side, that could be a major company blow up. One positive, it could be a major central bank interaction (I'm talking more than just rate cut).

The next weeks will be very interesting, since major negative factors can come up. What if the dollar crashes because the oil countries switch to the Euro? What if a major sell-off finally happens in China? What if Countrywide actually goes out of business?

Bottom line: I'll maintain a major cash position and play both sides until the fog clears up.

Happy Thanksgiving :-)

Friday, November 9, 2007

Sold ISRG

This was a short one: I sold ISRG yesterday because it went right through my mental stop at 300.

Tuesday, November 6, 2007

Swing trade of the week (November 7 2007): ISRG

I was a little bit unsure on where to go with this blog. Since there are already a lot of market comments and stock recommendations out there, I don't simply want to add another blog in that category. In general, I want these postings to be helpful about swing trading. So I will post the "swing trade of the week" on a regular basis. These stocks are positions that I actually own, so it's sort of a "live documentation" of some of my trades.

My "trade for this week is Intuitive Surgical (ISRG). The stock is being pushed by Investors Business Daily, which
is not a bad sign. Since ISRG is part of the "IBD 100", the company shows strong fundamentals. Let's take a look at the long term chart :


So obviously, we are in a long term uptrend. So we swing trade ISRG from the long side.
A look at the short term chart reveals an interesting opportunity:


ISRG had a nice run-up in October. Since three weeks, the stock is consolidating on lower volume. The 300 level seems to be a natural support, so we choose that as a stop (of course,
we place the stop some ticks underneath 300). Most interesting though: the market sold off today and ISRG didn't actually participate in that sell-off, which shows me a lot of relative
strenght in that stock. In terms of price target: I don't expect another run-up like in October, but the 350 level seems possible short term.

The chart is also a nice example on the fact the price always "comes back" to its (short term) moving average.

Happy trading