If you've seen the movie Schindler's List, there's a scene where Schindler is interviewing secretaries for his new business. He's quite the ladies' man, and most of the women he interviews he finds very attractive. So, in a bit of a comic relief (to an otherwise very dark, heart-rending movie), he winds up hiring dozens of them. He explains: "They're all so……….qualified."
I feel a bit like that when it comes to my stock picks. "I never met a chart I didn't like." Well, OK, that's not true. But I think you're getting the picture. When I see a stock that's attractive, I want to take a position.
Well, there's a problem with that. The problem is that it's one whole hell of a lot of work to trade a large number of positions responsibly. I have 176 positions right now, and there are times that number has approached 200. I don't think most mutual funds have that many positions!
Now, I'm sure virtually all of you will be glad that I'm finally coming to my senses. Hardly anyone runs around saying a person should own as large a quantity of stocks as possible. But I think a reason I've become seduced by taking lots of positions is that, during the formative 2007 trading year, I had to be very much a prospector. If I happened to dig up a chart that was good, I took a position. In the final throes of the bull market, great shorts were few and far between, so I considered any "finds" to be precious.
Well, they're not so precious anymore. There's a bajillion great charts out there. And I really shouldn't feel the need to have a position in all of them.
This finally sunk in recently, because I was given charge of another trading account with a respectable amount of cash to trade. I had a list of over 50 enticing long candidates, and I dreaded the thought of, once again, having to babysit stops, entering positions into MarketMatrix, drag symbols around in ProphetCharts, and so forth. Hell, I was up until 3:30 this morning updating my stops. It gets old!
So I decided instead to just focus on a handful of ultra ETFs. I usually had just one or two positions on, and I "peaked" at seven. I have traded this account for a mere two days, but it's already up 18%. And that's with just plain old ETFs! No futures! No options! And just a handful of positions. Simple. Easy. Profitable.
So I think that, in the coming days/weeks, I'm going to start exiting these positions and change my trading style to be more focused on a single digit quantity of positions in any given account. I will make an exception for my IRA, which has had good success with a few dozen little bitty positions that I just let sit and grow. But it also requires virtually no babysitting. For my actives, I think it's time to take Thoreau's advice: "Simplify, simplify."
As for the market – – my "pure long" accounts (the IRA and the aforementioned new account) did sensationally well. My other two accounts were up, but the gains were muted due to many shorts and puts.
I pointed out earlier today that I thought the EUR/USD had a chance of moving higher, taking energy and commodities with it. I did that post at just about exactly the point where that did, in fact, happen. I'd say this could get back up to almost 1.40 before rolling over again.
I am long energy in a very big way. My core positions are in USO, OIH, DXO, DIG, and I've also got DBA. I'm pretty confident OIH is going to fight its way back to about $88, and if it busts above it with any robustness, we could see some real fireworks. I am sort of counting on a failure, though.
I'd say the $INDU has a very good shot at around 8,500 in short order, and possible a cross above 9,000. Only the most sensational efforts by the bulls could put it past that, and even then, I can't see us getting past 9,750 or so, tops.
My view of the Russell is a claim to no higher than about 510, if that. I'm bullish, yes, but very short term!
And, the most important of all – the S&P 500. I think another 30 points of padding are within easy reach. We'll have to see how things look if/when we get there, but my guess at this point is that the bulls are in for their ninety-fifth instance of disappointment.
And a shout out to mole over at Evil Speculator – you are sounding a little down, my friend! I am completely addicted to your wave count charts, and I love your writing style. I hope you keep your blog going strong. I think it's terrific, and I wish you well with it.
