Tuesday, July 01, 2008

Another SKF Lunchtime Follow up

I checked in on our friend, SKF, again at lunchtime.

OK. It has done pretty well for itself in the last week. And, this is where it gets challenging. Lots of traders will give you contradictory advice regarding what's an appropriate level of hoggishness to compensate you for the risk (and your wrong plays), while not being so hoggish as to lose your gains.

Since I can't really daytrade other than to check in during my lunch hours, I decided to take about 1/3 of my skf position down (the 1/3 that was living in my retirement accounts which makes it difficult to get into and get out of). I put in the order around 164, but it was an "odd lot" which cleared out at 163 and change (the price action was jumping around quite a bit).

Does this mean that I think the run is over? No, not really.

In the very short run, there maybe more risk of a small snap back than a total washout....However, what I didn't see...even as the market was going parabolic (down) was a MONSTER spike in the index which measures "volatility". the VIX.

The VIX was at 25 and change.....it is usually over 30 when people are getting really panicky and dumping things left and right....which is the precursor for a total crash...and importantly, a washout that can lead to a whipsaw rebound.

So the long and short of it?

If you got into SKF as financials were breaking down (again) you got a nice 20 point run in a couple/few days. Is it over? Probably not. Should you take profits? Depends on your goals for this trade. In my retirement account, I'd been in since much lower and it had met my short term goals, so I took it down.

The rest, although it is probably a little "overbought" (meaning financials could be oversold) i want to see some fundamental change in their plight before I get too anxious to walk away from the trade.

happy trading,
Uruguay Guy

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