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January 28, 2011
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The reaction to the NFLX earnings was extremely favorable. With a short interest of around over 40% it looks like many of those shorts who were trying to pick a top or shorting entire way up were finally squeezed and had to scrambled to cover today. This helped propel the stock to all time highs. Unfortunately we were not in a safe enough position to hold it through earnings and enjoy the move. The problem was the downside was 40 points vs. what we saw as an upside of 20 points. The reward risk ratio was just not favorable enough to gamble through earnings.
SBUX was another situation where we were able to hold through earnings because we were already up over 25%. The downside here was around 20% on what would be a very unfavorable reaction to earnings but that would still keep us at a profit. Our goal in this service is to get some quick profits under our belt which then gives us breathing room to let a stock do its thing. This is how we have been able to rack up hundreds of double and triple digit gains over the past couple years.
NVDA is another recent example of entering at the right time and letting a stretched stock run. NVDA is now up over 120% in the past 3 months.
As sick as it makes us to just barely miss some 15%-20% moves in NFLX and CRUS, we aren’t just swinging for the fences but taking a trade when the risks aren’t too high. The odds just weren’t in our favor enough for the amount of risk we had to take. Wall Street is littered with portfolio managers who don’t take this serious enough. We know the right stocks to be in but you can’t catch all the moves
Now let’s focus on the moves we did participate in and see how they grow into monster trades allowing us to outperform most portfolio managers out there.
NEW HIGHS LIST
VRX up 173% and 156% on 2 trades
BZ is up 48% in a few months time
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DE is up 43% since our August entry
SLG is up 23% in 5 months
PPS is up 47% since our August entry
TRW is up 71% from our September entry
DD is up 25% since August
We are close to closing FDO if it trades much lower. It is in an area where it should be finding support from institutions but so far we are seeing continued distribution even after a huge move lower.
GLD is still getting slaughtered but we still have some serious profit cushion to work with. We will watch how it behaves around the $125 level and if the current bullish uptrend is in danger of coming to an end.
SHOO needs to hold the 200 day ma
OPEN POSITIONS LIST (Click To Enlarge)
NEW SETUPS
No new setups for Friday
Thanks,
www.globalchartanalysis.com
