Click chart to enlargeThe chart above is a logarithmic chart that shows POT going back about 18 months. You can see that it has reached the very top of its channel, meaning that it is roughly as far from its moving averages as its ever been since it broke out to new highs and began its steady uptrend in October 2006. Now that fertilizer stocks are the new "hot" sector, and everyone is trading them, there's no reason these stocks can't do the unthinkable... double by Tuesday. This is the point where we get nervous holding them, and rely heavily on our hedges for psychological comfort.
If these stocks go up further from here, as far as we're concerned, they'll be trading in bubble territory. Consolidation or correction is needed in this sector.
We are jealous of anyone who got into MTL yesterday. We were ready to pull the trigger at 138, but missed it by 50 cents or so. Now with the stock up 10 points today, we're just going to have to look for the next opportunity.
4 comments:
Thank you, Snot, I did get into MTL by following your recommendation.
What's your suggestion on SKF and DXD from here?
Your Ultrashorts should only be small positions relative to your longs. They're only meant to smooth out the bumps in the road, not to necessarily be profitable trades. If they become profitable, even better. We sold half of our DXD today at 54.5, at a 1/2 point loss. In another 100 to 150 points, the Dow hits resistance in the 12750 area (February's highs). It could happen as early as tomorrow with IBM and Ebay's earnings beats tonight. If 12750 is broken on a closing basis, we'll get rid of the rest of the DXD then. Otherwise we'll hold onto it. If the Dow does break out above resistance, we should be making a lot more on our longs than we're losing on our Ultrashorts, so in a sense, we're hoping DXD drops despite the fact that we own some of it. We sold 1/2 of our SKF a while back. Nowhere near the high of 120, but at a 6 point profit nonetheless. We're holding the other half with the same wait-n-see attitude as DXD. We traded the last of our FXP today for some more SMN, considering we're long Ag. These insurance policies should not have much of an effect on your bottom line. If they do, you own too much of them. They are only there in case the market crashes, at which point they work wonders.
Congratulations on MTL. If you bought yesterday, you must have had a good day today.
I am looking to 12750 too, before adding any more longs. I have positions in FXP (@ 84) , SMN (@32).
I am feeling quite testy about FXP. I want to believe that FXI will finish its long overdue correction to 88 or so. But it is taking way too much time.
My longs are in Ag. But it looks extended too. I am certainly in an uncomfortable place right now.
Filled on POT option this morning SNOT. What are your thoughts on this trade?
Bought 25 MAY 200 PUTS
Sold 25 MAY 210 PUTS
Credit received $5.00
Max Gain $5/share or $12,500 @ 210 or higher
Max Loss $5/share or $12,500 @ 200 or lower
Breakeven = 205/share
The above prices are at expiration which is May 16th.
Post a Comment