Papaya; Lessons learned: #327 - don't get emotionally involved (VBG) !
I used to go crazzzzzzzzzzzzzy when someone bashed my stocks, or talked down ''MY'' Oilpatch. Can you believe that (VBG) ? Can ''you'' remember that (VBG) ?
However, these Stocks and my beloved Oilpatch; which will forever be my favorite sector, are not the ''Hometeam.'' I don't have to root for and support FLC, or RIG, in good times and bad.
RIG isn't Notre Dame, FLC isn't the local High School Team. These are stocks - investment vehicles; period. Sure, we allways have our fav's, but this is about one thing and one thing only; making money.
Since most stocks seem to spend as much time going down, as they do going up (VBG) - why should making money on either the long, or the short side, make ANY logical difference ?
When we are long; we all often get than sick feeling, knowing - just KNOWING that the tide is turning, that the bad news ''is'' going to take its effect, that the stocks are going to sell off etc. Quite simply, I decided to quit fighting this and to profit on both sides of the plate here. Instead of merely selling, reducing margin, going to cash etc. I decided to start profiting on both momenteum moves. The Oilpatch of late, moves in trends. The volatility here on both the legs up and the legs down - has been not that hard to sense, or to time and they have been significant enough to profit on, in both directions.
As long as we have this volatility; for those who are traders and who feel they do have the pulse of the 'patch here - this volatility offers profit potential here that would normally take years to unfold. There was the opportunity to make 3-4-5 years normal trading returns in the last 6-8 months and there will be again in the next 6-8 months.
The debate is not to try to convert those who prefer to buy & hold into active traders - not at all. Trading is not for everyone, but many here are obvious traders - so why not talk trading ? There is a lot of ''trading'' bashing going on here, by people who are OBVIOUS traders !
As far as shorting here ? Right here; this is NOT about capitulation, not about panic, not about going back to prior, or new lows - Not at all ! What we are facing here and may face in this ''deadzone'' between earnings periods; will be more of a lack of buying support, than it will be about facing a torrent of sellers here.
Quite simply, we just saw a huge market shift into cyclicals. We had the fastest, most profitable run in OSX history here. Crude Prices as well. We had huge volume of late. Anyone who wanted to buy, or who was even thinking of buying the Oilpatch, or who was even remotely on the cyclical fence of late; has allready made their major move ! The Institutions, Mutual Funds and Traders are allready in here ! The ''easy'' and the ''fast'' money is in most cases - allready made. Hopefully many here put some of it in the cash drawer and are not just sitting on paper profits.
What we will face, is profit taking and a very probable imbalance of sellers to buyers. Imho; this makes for a very prudent, but yet very cautious and conservative shorting opportunity. I will short into selling strength only. I will follow the crowd in shorting. When playing on the darkside, I do NOT want to be ''beating the crowd to the party.'' I want to follow the crowd to the party, to piggyback, to be ''fashionably late'' and also to be, one of the first to leave...(VBG).
Of late, just jumping on a few high flyers on a "RED" open and riding 3-4 stocks for a quick and really an easy $1,2 move - then covering and exiting on the first hint of buying support/reversing, has been a solid play. If we catch a major 10-15% retracement, then I will ride a leg down. Its NOT as if we haven't had about 5 of those 15-50% down legs in the last 8 months now is it ?
As the ''easy'' money has allready been made here; we have entered an area where stocks like CAM SII WFT have PE valuations exceeding the S&P and even some ''name'' tech stocks ! These are no longer value plays people - these are speculative momenteum plays ! Recognize them for what they are here. UTI & PTEN are great, great companies. However - these 2 companies have the worst present fundamentals (negative - small earnings/losses) projected for another 6-9 months here, but yet these stocks have ramped here and are not too far from the highs of last year when they were very profitable and when Rig utilization, dayrates etc. were an entirely different picture.
I see a solid short play in these - as imho, they just came too far too fast; given the reality of not just present fundamentals, but the next 1-2 and even 3 quarters as well. Where do you value PTEN when they actually have good fundamentals, from here ? I do not believe that the Street will ''support'' these prices 6-9-12 months prior to the actual fundamentals being strong. This is not to say that the Street will not ''bid'' these stocks up here - but, rather, that they will not ''support'' them there. I will ''lean'' on this weak ''support'' when I see ''cracks'' in the momenteum.
Right here, with Crude Oil looking ''toppy'' and with virtually all the good news allready known - I see a 2-3 month deadzone where the ''support'' will be weak. The imbalance of sellers to buyers (read profit takers) who have to protect record gains here; will lead to some excellent short plays. I refuse to just sit idlely by - while our stocks just drift down. Why not profit on the moves down as well as up. For traders; just playing long (without shorting) is like trying to compete against the Market with one hand tied behind your back imho.
We also are in a subsector rotation here. I am as long as one can be long, the small/micro cap E&P's; especially the Nat Gas oriented companies and I will also simultaneously, selectively Short the high flying OSX stocks. This is all about logic, about making money and not anything about emotion, or what I want to happen.
Today we saw land drillers like UTI PTEN TBDI all get buying support, we saw allmost all the offshore drillers sell off. We saw the big cap E&P's like BR APA APC selloff and we saw the micro caps like MEXP PGEI AXAS etc. fly.... The Street imho; is moving like a drunken elephant here of late. The Street is easy to beat here and is easy to stay ahead of. The Street is moving into subsectors, and the 2nd & 3rd tier stocks in waves. simply ride these waves in trading here.
Never has having a plan and trading that plan been so profitable for those who can shut off the emotion and play on the cold, hard, level field of logic. This is not about what I ''want'' to happen, but rather it is about reacting to what ''is'' happening - be it good, bad, or indifferent in relationship to what I ''want'' ...
Lots of different roads to the same destination here folks. Some of us will take the tour bus, (some will miss the bus) some of us will ride in Volkswagons and some of us will be flying around the curves in Porsche's, or cruising in an S Class Merecedes. Some will arrive a little sooner and a little richer than others....but, the good news, is that everyone who just joins the ride - will enjoy it in the longrun... |
