2-7-2012 morning comments

[Mike]

The Market School exposure model remains at +5 or 100% invested. We only have two distributin days in the count. It has been at the 100% invested level since January 6. It took me a while to ramp up to that level of exposure because I believed that leading CANSLIM stocks were lagging what the indexes were showing. There is greater traction now in the market leaders. My holdings include: KORS, SWI, TDG, MNST, MELI, TSCO, BWLD. I also hold GLD but do not consider that a CANSLIM play. KORS shows the most gains, up 21%. I normally take profits in positions from 20-25%. I conducted a recent study however with IPOs that showed that IPOs probably should be held until much higher, from 40% to 200+% gains if Mr. Market allows.

The recent break to a multi-year high by the NASDAQ I have to admit surprised me. It was an obvious place for the bears to reassert control. It appears the bears are hibernating right now.

[jmbarnette]

Mike,
Thanks for sharing, i'm somewhat fretting over being shaken from a swi position just before earnings. Just curious as to what your thoughts were holding the position into the report. I don't think mondays action could have been any uglier. The stock opens at the upper boundary and is sold off on very heavy volume all day. Even with a decent profit cushion, i could not justify holding based on the action of Monday. The EV charts took a hit as well. I dont want to sound like i'm complaining about closing a position for a gain, but i could face a similar situation with RAX in the days ahead.
Thanks again
Matt

[Mike]

Mike,
Thanks for sharing, i'm somewhat fretting over being shaken from a swi position just before earnings. Just curious as to what your thoughts were holding the position into the report. I don't think mondays action could have been any uglier. The stock opens at the upper boundary and is sold off on very heavy volume all day. Even with a decent profit cushion, i could not justify holding based on the action of Monday. The EV charts took a hit as well. I dont want to sound like i'm complaining about closing a position for a gain, but i could face a similar situation with RAX in the days ahead.
Thanks again
Matt

Matt,
I know many people who were shaken out of SWI. Many of them are quite experienced. The action was ugly indeed.
One of the things I have noticed is that if I am up overall that I am more able to hold on to something like SWI. Everyone of us was watching SWI with our hands on the sell key. Because I bought SWI on the pocket pivot coming up off of the 50-day I had plenty of room to explore what SWI would do next. My portfolio was also up nicely giving me room to explore. What I find is that if you buy right you can sit. If you do not buy right you are forced to sell. This compounds if you have an entire portfolio of stocks bought wrong.

I had no idea that SWI would recover but the fact is that the Market Smith model said to get in the market, I got in the market and I was in with substantial gains by the time I had to face SWI. I had a lot of reserves to call on to stay in. I did the same with BWLD today. I had the decsion to exit or stay before earnings annoncement today after the close. If you look at the LEV you will see that large players were very much behind BWLD. I decided to sit tonight.

All I can say is that I bought right and could sit easily.