Trade Alert: Make the hardest trade; another trim of another big winner
Well, I’ve got butterflies in my stomach. The portfolio was already on a big tear higher when we hit the huge pop the last two days. And this kind of huge move in the markets which is reflected even stronger in our portfolios is making me nervous.
Two days ago I wrote this:
The market’s next 5% move will likely be self-fulfilling. A breakout with volume and gusto of just 1-2% from these current levels would likely pop us 5% and a reversal down another 1-2% from here would likely drop us 5% in a hurry. Feet to fire, I’d guess the next 5% move from here is higher.
The Nasdaq is up 100 points from its lows earlier this week, for a move of nearly 3%. That said, many of our own stocks are up much more than that and our Google January 13 calls with the strikes around $700 are suddenly in the money and that means the leverage there has really kicked in. Google’s a very big position in the portfolio right now because of that leverage (I’ll send out an updated weighted portfolio list of positions in a bit). I’m going to sell a little bit of my Google common that we were buying back when it was $150 lower than today’s quote. Just a trim to lock in some gains, reduce the size of this position while keeping some good upside exposure to the name.
And I’ve heard from a lot of you lately saying you just can’t let go of any of your stocks when they’re acting this well. That is the time to trim. The hardest trade to make is usually the right one. And I’ll remind you of just how badly stocks can get trashed, even great ones like Google and Apple and DDD, when you least expect it. Remember how badly you hated owning, much less buying these stocks at the lows? This is the flipside of that. If you were buying these stocks at the bottom, take some off the table, even if it’s just a few shares of common.
If you’re a new subscriber, don’t rush into these names. Nibble a little bit on each of the highest rated stocks in the updated List of Positions that I’ll be sending out to you guys in just a bit, but don’t go crazy.
What a wild ride this year has already been, huh?
