The Wrap 2/22/11 Questions Answered


It was the most brutal day the market saw in a while, it was the worst day that our P&L has seen in seven months. Many things didn’t make sense, as the market went lower, mostly oil related. I will do me y best to address it. I will answwr questions from you guys as I received a few emails today. For you subscribers that have been around for over a year you know that we see an event like this once in a while, things get crazy, and then we get back to making money. It happens, that’s all I can say. so here we go.

Why was oil up big but oil stocks were down?

Oil stocks have been rallying and we have had decent exposure to the group. The oil stocks have been anticipating a jump in the actual commodity(crude), when they got the bump they sold the stocks, even though the commodity itself popped. Also, here is the real deal, when the institutions sell the S&P (futures mostly) the market comes down, regardless of sector. Oil happens to have a decent weighting in the S&P, so when baskets get sold (S&P contracts) oil stocks get hammered. I expect this to correct itself shortly as the “panic” sell seemed to have happened today. This doesn’t mean there wont be more of an orderly sell off with more downside. I saw this dynamic occurring and I sold our oil stocks, that doesn’t mean I wont be long again tomorrow or the next day.

Why did you take an early stop on CTSH?

I try to act for you as I would (and did ) act for me and my assets under management. When I see the market, and in this case a particular stock begin to roll over, I take a stop.

There were some big percentage losses today.

Most of the “big” losses were in the stocks under $10. I don’t personally judge “smaller” stocks in percentage terms. I like the name or I don’t. I don’t make a big deal out of a 30% return on an occasional $5 stock. Many of these stocks have ranges, if I didn’t put the stops where they are, they would be stopped the day I recommend them. I speak of REDF and FTK, there are some others.

Thank you for making me use stops, some of your stops are wider than others. Why?

My main priority is preservation of capital. Stops are part of the game. There is a multitude of factors that go in to placing a stop. I analyze many of them and make my call. I give some stocks more “rope” because of some factors, less rope otherwise. The reason why will be dedicated to an upcoming Webinar as it requires time.

Where the hell is the market going?

It’s amazing how technicals work, as the S&P and AAPL both settled on their respective 50 day simple moving averages. Cool. Will they hold? The bears are out of the closet and as usual my friend Doug Kass is taking credit for everything once again. LOL.  The bears are empowered after today, but the key is ALWAYS the second day, the follow through day, up or down.

How do I play your selections?

I get this ALOT. No one can play all the names at once, some of my institutional followers do, but I play to you guys. I have hedge funds that just do them all, they have the loot. My suggestion is to play them on a first in basis, what do I mean? When I do the Sunday night show and present 10 names, just play the first two or three that trigger, the others won’t trigger anyway that day, maybe they will on day two. Don’t obsess about the one you don’t own that may be going up. Trust me, it evens out in the end and you will have the one that the other guy doesn’t own.

Answered: There is no Holy Grail

I have a great subscriber base that grows every month, There is all so a transient crowd, Some come to the site because they hear that my picks are “hot”. I hate hot as I would rather be luke warm, bordering on hot always. Anyone can get hot, money is made over time. That’s the market and that’s me. Strait up.

We attack at dawn.


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