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Waiting for the Trend to Turn Is More Than Okay

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You can't hit the tops or bottoms, but you generally catch 80% of major moves.

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Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).


Greetings from New York where the sun is shining, God is in her heaven, and all is right with the world. Seriously. I'm in a good mood. Drag your chins off the ground and listen up. I'm getting virtual sacks full of email from bruised shorts. Most of them want me to tell them we're rolling over. They see yesterday's flat tape as a rollover. Banks are a joke. Airlines "can't" and "shouldn't" be higher.

As it turns out, you can't deposit "shouldn't" in a bank. You can only do that with actual gains. Tomorrow is promised to no one and Mr. Market gleefully kneecaps traders who are early. I'm an advocate of waiting for the trend to turn before I leap into or bail out of positions that are working. You can't hit the tops or bottoms that way but you generally catch 80% or so of major moves. If you trade at 80% you aren't in the Hall of Fame, you are the Hall of Fame.

Here's what I'm watching before my mood trend dips back into surly:

  • Two reasons to ignore the airlines rather than short them:

    1. They can't go to zero. The transportation grid is utterly vital to the US Economy; no way Obama "lets" them fail.

    2. The whole world is taking dark-side shots against the move. Crowded shorts lead to 10% moves higher.

  • The clock stopped because it had been running all day. Same holds for the retailers. Five percent in as many days deserves a rest if not a pullback. Want a name for opportunity? How about J. Crew (JCG), down over four bones today on a downgrade. In the long-term, good management beats analysts. J. Crew has management.

  • Is it my good mood and my Ford (F) shares or do the shrieks of Toyota (TM) owners in out-of-control cars sound like money to anyone else?

  • Disney (DIS) getting Cablevision to blink is but one example of good managers winning on the margins. Head Mouse Bob Iger is going to grind cable companies throughout the country into talcum powder over the next 12 months.


With that I'm off to smell roses, tiptoe through tulips, and generally disappoint those who expect me to be surly. We'll resume our snarkiness at some point this week.

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Position in F, DIS

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