Back in the Exxon short!

Selling some Exxon Mobil again, with the stock trading around $74.80, I sold £5/tick (that's £5/cent, or ~£38,000 worth).

As I mentioned in one of the posts when I shorted it recently, the market cap to me just seems WAY too high for any company to sustain, as making that much of a profit will naturally bring competitors in.

 

We'll look to try and take 5% out of this.

Cutting GBP...about time

Closed my short in GBP at 1.9675 in £6/tick. I'd originally put it on a year ago at ~1.78, which I wrote up in this post:

 

http://thetraderboy.blogspot.com/2006/01/fxcable-gbp-vs-usd-is-set-to-enter_28.html

 

 

Basically, I thought that rates in the UK would be moving down (they were then 4.50%, now 5.25%) and that rates in the US would be static or rise. So was thinking the currency would move on the interest-rate differential.

 

And those interest rates never played out. And now it looks like the UK will be hiking again, so it's time to move on from this trade. Painful...the total loss over a year was £17,555, that's on spot only not on options.

 

I think I sometimes need to close out trades just to clear my head and re-think the strategy. Feels like GBP wants to make a push for 2.00 just now I reckon, although not sure it's fundamentally justified. Also, as I've mentioned before, but rarely stuck to, I need to use stop losses on some types of trades. Ah well...

Adding to the short DOW position with Jun options

Just sold DOW 12,000 Jun calls @ 864 in £5/point...

 

...and bought DOW 12,000 Jun puts @ 173.2 in £25/point.

 

Net premium I pay is £10 (that's a tenner, not £10k!).

 

 

Will give me a nice leveraged position on the downside, need about a 4-5% drop in the DOW for it to really get going. If the DOW had a 5% drop fairly soon, I'd be up about £4,200, so think the target should be for a bit more than that.

 

Complacency rules supreme at the moment. Lets get earnings season going with some bad numbers out the homebuilders and mortgage lenders, and some weaker growth out of, say, Intel, and we can get the downward momentum going.

Buying a little Motorola for the long only portfolio

Just paid equivalent of $18.30 for Motorola, in about £5,700 of stock. Overally beaten up after results, market cap just $45bn now, this is a great long-term prospect within the technology sector. See previous postings on it, as I've been in and out of it recently:

 

http://thetraderboy.blogspot.com/2006/11/buying-20000-of-motorolanext-year-is.html

 

http://thetraderboy.blogspot.com/2006/11/cant-resist-quick-profitsold-motorola.html

 

May look to increase this, want to see the stock stabilise properly first.

Taking profits on my Exxon short:

Just bought back my £10/cent position in Exxon, I've made 6.8% on the trade (well, the original trade, not the doubling of the position) since my entry in November, despite the overall market being pretty much flat. A nice drop-off in Crude prices helped my achieve this one. Just eye-balling the chart, I fancy it maybe has a little bounce up a couple of bucks from here, so taking my £2,920 profit for now. May look to re-enter this one...like I said in the original post, the absolute market cap is just way too high.

Buying Vonage for the long-only portfolio

Bought ~£10,000 of Vonage stock, trading today at $6.44. http://finance.yahoo.com/q?s=vg

 

Market cap of $1bn. This to me seems low for a company that has had decent success with market penetration of internet phones. Plus I know many businesses are using their technology. Yes I've read that profits seem a long way off, but with a small market cap like this, you've got to think some of the majors have their eyes on this company, as there is plenty value in having a decent subscriber base.

 

Anyway, it's now in the long-only portfolio along with Whole Foods which I bought yesterday.

The new long only portfolio...buying Whole Foods:

I'm going to try another slant on my investing/trading. I'm too bearish. So I need to have a long only portfolio, not necessarily because my trading hasn't been profitable so far, but just to focus my mind on the long side of the market.

 

So I'm going to put £100,000 into the long side of the market (that's my thought of size at the moment anyway) over the coming weeks and months, gradually. And I'll keep track of my returns separately from my other trading. Hey, looks like I'm running a hedge fund AND a mutual fund now!

 

So to start...I've just bought a little over £9,000 of Whole Foods...it's trading around $46.25 right now, and I've bought £2/cent.

 

I've looked at this before, the stock has had some interesting price action, what with a warning recently that growth is slowing (but still respectable). Following that, the stock has had a decent slide. Reading Slate today reminded me of it, and the thought of them expanding internationally is interesting.

 

Plenty room for growth, and whilst I am a firm ANTI-BELIEVER that organic food is better for you OR the environment (pesticides were made for a reason, to kill bad things! and organic food production uses FAR more land to produce the same amount of food as regular intensive farming, so we better get chopping those rainforests down to make some space for these organic crops!), I think the "public" will embrace this more over the next few years. So demand will go up and growth will continue.

 

Will be looking to put on about 10 trades of ~£10,000 each...any comments appreciated and I'll look at anything!  Next one I'm considering is Motorola, following its recent warning that its numbers will come in below estimates. The 8% beating the stock took is making it look decent value. This is a great long-term tech play.

And selling USD/JPY

Also, I've just sold some USD/JPY. Carry is expensive on this trade, but
if Japan is beginning a rate hike cycle and since I believe a US rate
cutting cycle is not far away, maybe it can really start to move. Also
the entry point looks good here.

Spot is trading at 119.00, I sold Jun '07 at 116.51 in £4/cent. If it
starts to move my way, I plan to increase the size and put in a stop
loss, and see if I can catch a trend. If the global carry trade decides
to take a breather, then this is what's going to move. Come on the
January rate hike BoJ!

Closing Copper short after a perfect trade, and doubling up the Exxon short:

Covering my Copper short that I put on on Dec 19 at 301.20 in £1/cent, I had put a buy order in at 260.00, the level i'd written in my original post that I planned to buy it back. £4,080, that'll do nicely. Chart still looks ugly, but that is a very fast correction, down ~13% in 2 weeks, can't argue with that! Again, thanks to Mish for the original idea.

 

I also shorted ExxonMobil at the end of November selling the Mar '07 future at $77.00 in £5/cent. The Mar '07 contract is trading at 73.00 today (the stock is ~72.50), oil is dropping and the chart doesn't look good for this stock. I've doubled my position by selling another £5/tick, and put a stop at my average price of 75.00 on this contract, so at worst I'll be stopped out flat, but hopefully I can ride this down another 5-10%.

 

That'll do for today, am short on time. So far this year I'm up £11,500, thanks to Copper, Exxon and my long in Dec '07 Eurodollars, although my timing on that one looks like it could have been better.

 

Am more and more convinced of my US stock index shorts...P/E multiples are too high, and I think the slowdown/recession risk is not being priced in and will take the market by surprise when it finally dawns that the best is behind us.

End of year 2006

Final 2006 P+L. Yes, pretty disappointing, I set out the details of it in a recent post. Fought equities all year by being short. Going to do some long hard thinking going into the New Year.

Current open positions:
Short GBPUSD in FX.
Long Pipex (UK internet operator)
Short ExxonMobil
Short Washington Mutual
Short Vodafone (small size)
Short Copper
Long Dec '07 Eurodollar
Short S&P500
Long Jan and March Puts on S&P500 (1330 and 1350 strikes)
Long Jan and March Puts on the DOW (11,600 and 12,000 strikes)
Short Jan Call on DOW (12,000 strike)


Yes, I could do with a decent drop in equities over the next few weeks!

Thoughts on the market another day.