Going back to market direction, if oil keeps going lower and dollar keeps moving higher or even remains stable, this will add to the impetus the market needs to continue its rally from here on.

Good luck
Krish

Here is a case for the trades:

ISRG reports on July 22nd. This is a do or die quarter for them. Not from a survival perspective but more from the perspective of being a growth stock as opposed to a plateaued steady eddie stock. (Getting baptized into S&P few weeks ago didn't help either.)

On the bright side, it has been doing really well in rising steadily even as the market fell after hitting an intermediate bottom at around 247. This number also happens to be the lower bollinger band on the weekly chart and the 20 month moving average on the monthly chart. Perhaps it has found a strong support there.

Not the least of all the reasons is the fundamental soundness of ISRG from a long term point of view with no life threatening competition on the horizon so far. Its biggest risk is an overall global recession finally impacting its multi-million dollar products and expensive parts replacement services. But hospitals usually have a longer investment horizons. One of the biggest advantages ISRG seems to provide them is the significant reduction in hospital stay overs. If you know anything about hospitals you know one of the most important metrics is the bed turnover rate. ISRG obviously provides a decent boost to the hospitals when it comes to that metric. Hence I see that ISRG may be able to continue making sales despite a drag in the economy. This is of course based on the assumption that ISRG is doing a good job in educating the hospitals about keeping their strategic metrics in mind while making decisions. And nothing would give us a better indication than the July 22nd earnings call which is right in the middle of a challenging economy.

Here are three ways to play ISRG:

(1) Short term but conservative: Buy either the shares or short term options until the earnings but sell right before the earnings. The idea here is that ISRG may continue to rise until earnings but you are being conservative by selling into that rise and not betting on whether the earnings will go right or not.

(2) Short term but aggressive: Same play as above except that you hold most of your holdings right through the earnings with the hope that ISRG will surprise on the upside. A better way to play this would be sell half of your shares just before earnings to take some advantage of the potential rise till earnings and let the remaining shares ride through the earnings call.

(3) Long term: I favor this the most since I strongly believe in ISRG fundamentals. Just buy the shares or long term leap options and sit on them for a while :)

How am I playing it? As mentioned at the beginning of the post my trades will effectively play two angles - mentioned in point 2 and 3 above.

I will keep a close eye on this stock though. If anything changes, I will post.

Good luck
Krish

I disagree. Why? The facts don't support the popular hypothesis. I went back to the last two intermediate bottoms (Jan 22 and March 17) and compared the volume of several short and ultra short ETFs with the volume in recent days including today when we saw something of a mini spike in VIX earlier in the morning. Let alone being significantly higher, the volume in these ETFs recently has been generally less than the previous two bottoms! I also looked at the average volume to ensure I was not focusing on too short a window and still it wouldn't confirm the fact that the average volume traded has been consistently increasing as compared to Jan and March bottoms.

Well a picture speaks a thousand words. So lets take the example of Ultrashort and Short ETFs for S&P and DOW offered by Proshares

The first figure above compares the total volume traded for Ultrashorts within three days of January 22 and March 17 with the Mid July timeframe. The blue bars represent SDS (Ultrashort S&P). The red bars represent DXD (Ultrashort Dow 30)

As I said, pictures speak volumes. Example a total of about 145 million SDS shares traded on Jan 18, 22 and 23, with Jan 22 being the midpoint of January bottom in Markets. A total of about 138 million SDS shares traded on March 14, 17, and 18, with March 18 being the midpoint of March bottom in Markets. And get this, a total of only about 127 million SDS shares have traded on July 11,14 and 15 when we saw the biggest spikes in VIX since the March bottom. Shouldn't the volume on July 11, 14 and 15 have traded higher not only because of the first big spike in VIX since March but also because of the claims that the volume in these ETFs is more than the time period around previous bottoms??

Here is another example with the simple (as opposed to ultra) shorts in S&P and DOW (SH and DOG respectively)

Again the figure compares the total volume traded within three days of Market bottoms in January and March with Mid July. The blue bars represent SH (Short S&P). The red bars represent DOG (Short DOW 30)

Again we see a similar picture. Example a total of about 2.68 million SH shares traded on Jan 18, 22 and 23. A total of about 1.96 million SH shares traded on March 14, 17, and 18. A total of 1.90 million SH shares have traded on July 11,14 and 15.

Conclusion: The panic spike is yet to come unless the obscenely ginormous manipulative power of Feds was successful in the last three days. Which wouldn't make sense because the Fed had more tools back in Jan and March and they still could not prevent the VIX spikes.

Keep in mind we may see a spike as early as tomorrow or as late as August. But based on the above analysis, I am inclined to conclude we have yet to see it.

good luck
Krish

Only hindsight will tell if the intervention was a brilliant move or a kick in the face of the already fragile economy. I am one of those who believes we may benefit short term but the inevitable financial massacre has just been pushed to a later date and may contribute to an overall Black Swan incident. I hope I am wrong. But for now I am waiting for a bottom, not anticipating ..just waiting. I will start anticipating when I get my sentiment indicators high enough. With all due respects am not stupid or stupidly rich enough to be a hero.

As I have said in the previous posts, I have taken half off my index puts or index shorts for profits and am letting the other half ride. I am STILL NOT opening any new long positions. But I will start studying and researching companies for some nice new long positions this week. The source energy aka God aka the Force aka the High aka the Feeling-You-Get-When-You-Put-A-Swab-In-Your-Itchy-Ear orchestrates such boring, mundane, drawling, slow-motion-train-wrecking and gut wrenching times for a reason - So that we can sit back on a lazy Tuesday evening and ask ourselves - while chickens are running with their heads cut off, what sweet stock/option is going to deserve my well deserved mint for the next couple of months?

Good luck
Krish

The google trends indicator mentioned couple of posts ago in combination with the VIX study and other indicators reflecting institutional participation or lack thereof, worked out really well allowing me to not to sway with the talking heads who have been calling a bottom since the last twenty sessions. Yeah..same sessions that marked the market's continued obscene decline.

A great post from Dr Bret Steenbarger published today resonated with me. Dr Steenbarger surmises that by tracking certain sectors' ETFs you can get a good idea of whether the market is in a recessionary/risk-averse mode or recovery mode. The former would pursuade the participants to move to defensive stocks like consumer staples. The latter would encourage the participants to move to stocks that have been battered off late such as financial stocks. If my theory about the week of reckoning is correct, then in addition to watching for a panic sell off, I like Doc's idea to study the sectors to understand if we have truly come on the other side. If so, I may be interested in getting long some of the financial stocks later this week or early next week.

Good Luck
Krish Rathi

Moving on, the markets remain in extreme oversold condition, and yet VIX remains stubbornly complacent. Yes at the time of this writing it has gone up to 25 but where are the "35" levels? Even the google trends indicator discussed last week has remained flat to down. But then lets not forget the seasonality. With the summer going on and lot of people taking off on vacations, the following of the markets and participation in them tend to thin down a bit. So a skeptic of VIX indicator might argue if there are not enough people, who is going to panic? On the other hand, a record outflow of money from Funds have been reported last week, which may act as a good proxy indicator for waning market sentiment.

I remain on sidelines. Anticipating the recent sell off, I had scooped up a few S&P puts in my personal portfolio couple of weeks ago, that kept me from falling off the cliff in the recent bad days. Buying these puts as a hedge protection is a good idea should the markets try to make another go at the trajectory down. These usually can be slightly pricier in this kind of a market as opposed to buying slightly out-of-money VIX options one or two months away.

If you are not an options trader and more of a stocks investor/trader, then there are several ultra short ETFs to pick from as a good hedge.

Good luck
Krish Rathi

The markets continue their Schizophrenia. In my prior posts late last year and earlier this year, I had warned that if there is a second shoe, then there has to be a third and a fourth and more. Well the sound of the falling knife is really the sound of those remaining shoes dropping, with most of the bad news coming from financials. As a result, the worst performing sector this year has been financials followed by housing. As a trader it is my job to identify opportunities where we can still make money with an in and out strategy, but as a long term investor I continue to remain on the sidelines as I had surmised back in January.

Right now my trading bets are small with extreme precision. I am not casting a big wide net because the market fluctuations and less capital don't allow that kind of luxury at least for now. But hey..when did that stop us?

Here is something interesting that I discovered while perusing Google trends. Google trends is a tool publicly available to see how hot is a given search word or a phrase. I put in the words "Stock Markets" in this tool and I got this chart.

Notice the spikes closely related to the big plunges in the market. For example C is right around the Jan 22 bottom and D is right around the March 17 bottom. I wouldn't call it a 100% reliable indicator but it sure gives an idea of investor sentiment. The bigger the spike, the bigger the fear/concern and hence more chances the market may put some kind of a bottom. Lets see when the next spike comes in.

Speaking of plunges, this coming week is interesting. Expect a blood bath this week possibly earlier than later, but also expect some big swings on the upside as well. You are smiling if you are a day trader. You are cursing if you are an investor or a position trader. Either way, we will keep treading the markets carefully. So caution is still the name of the game. Will send out picks if I pick any interesting scan. But this is it for now. I am glad to be back.

Krish Rathi

Although in near future we may not likely have the kind of bleeding we had this morning there is absolutely no reason to be a bull right away. I have stepped on the sidelines as I indicated yesterday but I have also closed my short term put positions in my own portfolio (Strategy Lab doesn't allow this but I wanted to point out just in case if anyone dabbles in Options trading). It is difficult to predict if we will still have a further downswing. Signs may point to a short term bounce barring ugly quarters from companies, but the regular certainty is not there. So it is better to keep my powder dry again. Now if you are planning to buy leap options or stocks that you may want to keep for a year or longer, please be my guest and buy those cheap suckers right away!

Hang in there
Krish Rathi

You ask What am I doing? Although the model portfolio of this blog did well last year, I have not bought a single new share or call option in the last few weeks. I have some amount of dry powder. I have couple of shorts open. I will swoop in and buy some good bargain values once the capitulation starts or a convincing rally begins. But until then I am hanging on the sidelines. You know that race they have in Madrid every year where the bulls trample bunches of participants. Well I am standing on the side and watching the blood bath with the only difference being instead of the bull, it is the bear. Hang in tight my buddies. This will be over soon but indicators tell a final blood letting has yet to happen.

There is a very small chance that we may not see the extreme conditions of capitulation and the market may well start rallying for a longer term. How to know if the rally is not a fake bounce or a dead cat bounce. Here are some tell tale signs: (a) Ben announces 75 % rate cut or a combination of 50 % cut and some massive money injecting measures. (b) A few more financial m&a occur signaling the smart money and big guys are seeing the light at the end of tunnel. (c) Earnings week has the CEOs talking beyond their product revenues and describing positive global trends are still here and improving every quarter giving positive guidance for 2008. (d) the CNBC talking heads start questioning the authenticity of the rally :)

Okay the final one was on the lighter side (only slightly though). But you get the picture? If you are more interested in the indicators giving the tell tale sign of why my fear has increased, search any good blog article for lack of VIX spikes, data reflecting commitment of traders released, number of shorts on NYSE, open SPY put interest, pore over the last week's banks' earnings data and comments. We have gone way downhill but it seems we are not there still. And maybe this final downfall will finally trigger Ben to walk his talk. How can he screw up this time? If he cuts 25 or 50 basis points before the Fed meeting and leaves with comments such as "ummmm..yeeeeaaahhhh...inflation is concerning..and my beard needs a trim..and oh..we will take every sustantive action" and then goes to Princeton for an afternoon coffee with his nerdy colleagues. Ben, the futures market has already baked in all of this..so please. I don't know as much as you do but that has nothing to do with how you can screw up more than Alan. And that requires quite a talent my friend.

So Cuts may happen before the meeting and from that point on we have a rally at least for the short term assuming Ben surprises the odd makers who have already baked in at least a 50 % rate cut.

Because of that last point, you have to be very careful if you are considering shorting the markets. Be prepared for a huge rally anytime Ben announces unpredictable measures and unpredictable cut amount. I would be suprised if this would be the first thing Ben does on Tuesday but who knows. Your best bet: keep your powder dry. Be on the sidelines and let the massaccre begin. Then when the blood is flowing everywhere, you go out there and pick your diamonds from the street.

Krish Rathi

I would like to hit you with my bullet "isms" that I have learnt from this contest and in general investing and trading

(1) In the End, Agility Wins - I have learnt that if you don't change your strategy with changing times, you will become irrelevant. The contest offered an excellent microcosm of this often overlooked investing philosophy. At the beginning of the contest, the market was in a general uptrend. What would have paid off most would have been to bet on reliable up-trending horsemen like high beta stocks and commodity stocks. Then by the middle of the contest, the market got into this ominous downswing first and remained fairly volatile. What would have paid off most during this phase of the market was risk management. Not knowing the eventual direction of the market, it was important to book your profits on your highly profitable positions and let a small portion ride just in case the market would trend back up. Also it would have helped to identify the failing sectors (financials, for example) and bet against them or pull them out of your portfolio. Towards the end of the contest, we swung to a definitive downswing. What would have paid off most would have been to turn bearish along with selective stock picking and risk management. More specifically, it would have helped to protect your profits, purchase index ultrashorts and still up-trending stocks like solar companies.

In other words you needed to be a trend trader in the beginning of the contest, a risk managing trader during the middle of contest and a stock picker towards the end of the contest to have finished in one of the top slots.

Isn't that amazing? One short contest taught us to adopt different avatars during the different stages of this market. In other words, you had to be agile and you had to be on top of everything. The market's swings worked in favor of providing us with this wonderful opportunity to learn about the importance of the agility I am talking above.

I believe that most of us who came in the top 50 or even top 100 were able to exhibit the above characteristics of agility. This disciplined and flexible behavior allowed us to successfully perform and even handily beat the indices. It is a great feat indeed and while not all of us can be on top, I would like to personally congratulate each and every one of these successful contestants. Hats off to you, my friends

(2) Complacency Is Fatal - Personally my biggest failure in this contest was I let it slip from my attention during the middle phase of the contest as I juggled my priorities with a full time job. Although it seems I will end up finishing in the top 50 or top 75, had I shown the same alertness throughout the contest as in the last thirty days, I would have been far ahead. (side note - curiously though in the last two days my rank is not even visible although marketocracy's percentage gain clearly shows I am in the top 50 with full compliance. I have followed up with the help desk at Strategy Lab Open). I offer no excuses of course. The moral of the story is - you signed up for it. You better show a commitment. Now that I have more confidence in my trading skills and if the strategy lab open board allows me to, I would like to enter their round 2, apply my lessons with full vigor and win.

(3) General Sense Of Sector Behavior Is As Important As Picking Stocks - Many experts offer the advice that if you have picked your stocks right, you don't have to worry about the direction of the market. I have a problem with this theory and the contest offered great examples in that respect. First, it is a vague and general advice that can only be proved, but never disproved. I get scared of such pieces of advice just like a non-practical Zen saying. Second, most of the time the stocks that fall in this category usually happen to be story stocks or biotech stocks. Third, during the duration of the contest when the markets tanked more than once, it also took down with it the stocks of exceptionally well run companies. Example - Goldman Sachs was the best run financial company in the face of turmoil the markets faced during the last few months. Yet it was punished alongside the likes of companies like Morgan Stanley and Bear Stearns that were far less impressively managing the whole sub-prime mess. Granted, it didn't tank as much. But the stock was relegated to macro-event trading by active traders who knew how to take advantage of the stock channeling between its support and resistance with the directions being triggered by the sub-prime events that Goldman wasn't a major or direct contributor to. This and several other examples clearly crystallize a trading strategy - when you buy the stock of a company, also study the trend of the sector it belongs to.

(4) Intuition Should Be Listened To- This may be slightly more controversial as there is no definite logic to it, but I believe in it. At the end of the day after doing your research and due diligence before you execute the trade, I have learnt that it helps to ask yourself - "What is my gut telling me about this trade? Am I feeling uneasy? Am I feeling good?" I believe that your intuition is your biggest "finishing" weapon before you actually execute a trade. This is something that may take a life time to perfect but I think as you keep fine tuning it you start reaping advantages along your way.

(5) Say No To Trading When You Are Desperate or Frustrated- This is almost another version of point 4 but I felt to split it out just in case you find the above point not too practical to follow. Very simply, if you are feeling icky or if you are desperately trading because you just had a major loss and if you think you are looking like someone chasing the big bad truck of momentum, that is a fairly reliable sign to really take a pause before hitting the Enter button.

(6) Best Way To Make Money Is To Actually Sell Some Of Your Profitable Stocks- I feel this maxim is much talked about but least paid attention to. If you have made profits, quite simply it helps to book them. It is understandable that you don't want to miss out on a great uptrend. So how do you get the best of both the worlds? Most of successful traders follow the half off strategy that has helped me too - they set a certain profit goal on each stock. When the stock reaches that goal and if the trader feels it still has a potential to go a long way, they sell half of the position and let the other half ride with a stop loss. This is helpful in two ways - it allows you to book profits and make money as a result of the discipline. At the same time you don't feel left out because you are riding the uptrend wave on the remaining half of your position.

(7) Investing And Trading Are As Similar To Each Other As A Chinese Solar Stock And A Muni Bond - I have learnt that it helps to know the difference between investing or trading and what is it that you are personally good at. It doesn't matter what your style is ..what matters is you don't pretend it to be otherwise. Both of them require different strategies and different discipline. Sometimes you can learn about the investing philosophy while being a trader and vice versa. But the bottom-line is your blueprint has to match with your investment philosophy. This contest was more about trading. That said, the contest was unique in the sense that it did offer some wonderful insights into investment side as it provided people a platform to make a case of well run companies through the blogging platform.

(8) There is no such thing as a lost opportunity - During our lifetime we should be getting plentiful of opportunities to exercise our strategies. So there is no hurry as there is no such thing as a lost opportunity. There is such a thing as lost money though. The worst feeling is when you suddenly realize a golden opportunity but you don't have enough money to play it because you put it all on a less researched trade just because you wanted to catch it before the trend was over. I have learnt that the house always wins except in one case - when you can manage your risks and still make confident bets. Its smooth sailing from that point on.

Here is to success, good luck and a great new 2008 to all you wonderful people!

Krish Rathi
(ps - outside of this contest you can catch me on my website Stocks-Rider Blog active since Feb 07)

I had been postulating that the Feds would certainly cut and they may use shock and awe again. The Fed did cut but didn't go with the shock and awe immediately. However, the story is far from over. I had also mentioned that the Fed could induce the shock and awe in a different way this time - doing some more radical moves in the coming days such as bigger liquidity injections into the markets or another surprise cut before the January announcement. The latter may sound outlandish while the former is very very possible. But the fact is both of these remain possibilities along with any kind of a measure where the Fed could show some nimbleness just to let the markets know they are still in control. And if it doesn't, you can start counting Ben's last few days.

Now what after the cuts? - The markets tanked because it wasn't an immediate shock and awe. Unfortunately the deep plunge didn't give me enough chance to place all the ultra shorts trades I was fantasizing about. But I chased the momentum before it was too late, and immediately added the ultra shorts on Russell 2000. Other than that, I have kept all other positions unchanged. I will sell these shorts in a day or two and here is why.

I still believe we have more of upside left than downside beyond a 1-2 day horizon as I mentioned in the post just before the cuts. One thing is for sure - as the market digests the Fed speak, they will realize that hey that wicked "uncertainty" phrase leaves the possibility for more rate cuts. Meaning the easing will continue. This along with lot of money on the sidelines will have to play together and create a positive atmosphere as we go into the year end.

In one of my prior posts I had also mentioned that 1475 is the key level for S&P 500. We are very close to that at the Market's close (1477 and change). Not to mention there is lot of support at 1460 and 1440 levels too.

Finally, notice how the markets behaved after the last two cuts. It surged and then tanked in the coming weeks. We are to a certain extent seeing the reversal today. And the only way for the reversal to play is to eventually surge in intermediate term. The big question is - will it be soon enough so that some of us strategy lab contestants can recover on their existing positions? I say yes.

And one last thought. Hey Ben, if you are reading this, two things - (a) it is spelled as a "cut" not with a silent 0.25 but a loud "0.5", and (b) all along I was thinking you knew something that I didn't. Your notes with a generous usage of the word "uncertainty" makes me think I was wrong. And that is scary, Mr Chairman.

Krish Rathi

So my strategy is - If the market breaks on the upside right after the Fed announcement, I am going to cash out most of my long positions over the course of the next day. Since this competition doesn't allow to remain fully in cash, I will place some short term trades in ultra shorts. And then I will switch back to longs next week. The only exceptions would be any stocks I trade as a play on earnings.

As a result of this I have already done several in and out trades quickly over the span of last few days and it would be difficult to explain each one of them given their short term duration. Your best bet would be to follow my portfolio and know that the underlying philosophy is - whatever sticks on the wall and taking the profits off the table.

I know the above sounds too nimble and short term but remember we have only a few more days left and I intend to go from my current 40 position to a much higher position. The only way I can do that is by being consistent and agile.

Taking a deep breath,
Krish Rathi

Okay so I happened to listen to Dell's conference call due to my shares in Marketocracy and I want to share what I consider an interesting mix of feelings.

First, the earnings barely met the consensus estimate. The outlook was murky at best and hence the plunge in after hours. You can get the numbers from any website such as this so let me talk about some intangibles that may help you assess the state of Dell.

Surprisingly, what horrified me more than the numbers was the persona of the executive trio handling the conference call. I listened to HPQ's call a couple of weeks ago. There was such a marked difference in the degree of confidence, the amount of preparedness, the clarity and knowledge of one's own business.

I remember a time when I was supposed to give a presentation in my day job. I spent so much time making the slides fancy that I had hardly any time left for letting the content get under my skin. As a result, I was vague while talking outside the bullet points on the slides, and was mechanically turning them 1 by 1. A version of that episode seemed to be playing during the call. They had some major presentation slides but they could not respond to most of the questions with an answer that was specific enough or confident enough. The strategies in place by acquiring the relevant companies may be good from a year or two down the road. However nothing suggested me that they were finally back on track to recapture a sizable part of their previous market share let alone handily beating HPQ anytime soon.

I could go on and on. Bottom line, it was disappointing. So what is my conclusion - feeling the attitude and level of confidence during the call along with the numbers in the presentation, I came to a not-so-pleasant conclusion. Dell will suck for at least the next two quarters, if not more. Unless one of the two things happen - (a) Dell initiates a buyback program that was suspended in the past or (b) if HPQ or Lenovo decide to acquire Dell, which is not that exaggerated. As for buyback, Dell did indicate they might announce something in "early December". This means the fall in after hours may be cushioned by first or second week of December. Not to mention the fact that Ben's comments could lift the market and Dell may perhaps rise with the tide. But given the length of this contest, it doesn't make sense to experience the percentage fall, if the fall starts tomorrow. So I will watch the price action tomorrow and may dump Dell. There are plenty of other good stocks out there.

I would be interested in hearing other blogger's opinions on the state of affairs at Dell and in general - tech stocks. Thats it for now. If you are interested in my overall take on the markets, picks and strategies, please refer to my recent two posts here and here. Would love to hear comments.

Krish Rathi

Okay so how are you gonna play this? I will tell you how I am playing it.

First nothing is guaranteed. So it is important that I remain agile and make some solid picks after a lot of research with a slight bias towards the conclusions made in this post. This is what I am trying to follow. I also explained some basic tenets of this strategy in my prior post.

If you put the essence of the above speech in combination with the generally bullish move in the markets since the last three days, you would feel there are a few more solid uptrend days fairly soon. My overall sense has also turned slightly bullish albeit for a short time. While I can't predict the intermediate term direction, I do feel that 1475 in S&P seems to be the key level. I will be carefully watching that level and based on which way we turn, adjust my trades accordingly. I am planning to keep my short hedge bets (TWM) intact but reduce the position size to half. Bottom line - even after all the bullish events with my own bias towards a short term upside, unless we go farther away from 1475 regardless of the direction, we cannot be too complacent about the direction of the market. So be careful out there. you never know when and where is the next sharp turn. And Mr Market doesn't even put a sign on the road.

Krish Rathi

I definitely aim to come in top 10 and higher. I don't have time on my side. But I have renewed confidence.

First a quick flashback on reasons for my improvements that I think you may find useful. Why did I get higher percentage return? - (a) I finally decided to spend some time on Marketocracy instead of being a passive participant, (b) I decided to trade in and out instead of letting the positions languish given the high volatility of the markets, (c) I exploited the earnings seasons to place trades on companies that I was extremely confident of posting good results. Sometimes it backfired but for most times it netted me double digit returns., (d) Finally I built hedges in my portfolio by buying ultrashorts like TWM to avoid a free fall with the markets during down days.

Now on to Future. It is really a tough job predicting markets and every market timer is sweating in his pants. Most are predicting we have hit a bottom. But does it really help in a contest that is going to end in a month? A bottom takes weeks to form. So lets just forget about predicting business for the time being and focus on the few precious weeks remaining. Keep in mind it is excessively frustrating for active traders when time is limited and on top of it, there are these darn big range days going in both directions.

So what has worked for me in the latter half of this competition is to increase my agility in terms of pulling the plug sooner than later. Besides, the ability to not let your good trades languish for a longer time is safer and more profitable in this atmosphere. Seems obvious this strategy would have been useless had this contest been held in the first half of this year. It may have still netted you gains but you would have missed all important upswings.

Needless to say, it is important that the strategy you follow needs to change with the changing markets. I believe this and the ability to cut your losses are the two most important ingredients of a successive portfolio.

My latest positions are a result of this. Here are some comments on the open trades:

DKS: This is one of the few trades I have held for a long time. In my prior post I had mentioned that any positive announcement would send the shorts for cover big time given the percentage of float that is shorted. This is exactly what happened when DKS declared a 2:1 split in October. The squeeze practically murdered the sellers.

ISRG: My darling. I got this one before the earnings as ISRG has demonstrated a really good success rate with positive announcements and optimistic guidance. They did not disappoint in October. To top it all ISRG obediently languished for some time to form a solid base before surging again. I had anticipated this and hence I never sold ISRG even in the worst of markets.

GLD: Hedge bet

TWM: Hedge bet. Ultrashorts on Russell2000. You know they accurately say that when the atmosphere gets bearish, the small caps are the first victims that get sent to the altar.

DELL: Play upon earnings to be released this week

CHK: Steady rider, good company and play upon natural gas' increasing dominance. It has been declining recently but I am still not taking it out as it has just hit the 200 day. I love 200 day MA. I am hoping a bounce is on the cards in days to come.

SNDA: One of the few Chinese stocks I like. They are releasing earnings this week

AAPL: Christmas. iPod. iPhone. Leopard. Crazy followers. Potential Post Fed bounce. 'Nuf said.

SYNA: Love this stock. Just look at the charts. Very positive earnings. It shot up but it has come down without violating any of the technical levels. I consider this value as an excellent entry point.

MOO: Ever wondered how can you cash in on agriculture boom without knowing much about any one stock. This is the ETF for an Ag play.

DVY: As people are getting out of riskier stocks and the headline risk still remains, they are looking for defensive plays. DVY is a good example of that.

PCU: Okay this one was bad. But I can't remove it. Because this stock too is touching its 200 day MA. Anymore fall and it is out.

I hope my thought process and my picking rationale would have helped you in your own selection process. I would love to hear from you - praises, boos, questions or a silly smirk. Bring it by.

Krish