11/14 Kelly Letter Topics
Weekly market review
The bottom holds
Big bounce volume
Recession projections
The magic midpoint
LevMark Timer holds
Crocs is dying
Hope for Goldman
Importance of retest
We're doing pretty well around here, and that's why I'm a little edgy. January was an unpleasant month, but February has been so good so far that we're well into the black. It's looking iffy again, and that has me ready to protect gains.
The main gain I'm worried about is Maxtor. I already sold half at $5.30 on February 11th, along with my entire UTStarcom position. Following those two trades, Maxtor rose to more than $5.90 last Thursday morning before selling off to close Friday at $5.53. I'm still a firm believer in the stock's long-term potential, but am trading it here for the short term. Thus, I have an order in to sell a quarter of my original position (that is, half of my remaining position) at $5.50.
Selling all of UTStarcom at a 9% loss was a good move. The stock now sits at $13.53, which is 18% below my original buy price.
Last Friday, I bought shares of Sun Microsystems at $4.20. Several readers emailed to ask about the wisdom of this trade. They noted that the fundamentals of Sun are not particularly compelling. That's true, however, they've never been particularly compelling and yet we've been able to trade it successfully in the $3.50 to $5.50 range over the past three years or so. Sun sold off prior to the rest of tech this year, and it seems to be resting at solid support in the $4.15 area. I'm not looking to hold this until I use proceeds from the sale to pay my entry fee into a long-term care center. I'm looking to sell it somewhere around $4.90 before summer. We're not off to a very promising start, though. It closed Friday at $4.16, down 1% from $4.20.
Pfizer, on the other hand, is finally showing signs of life, proving yet again that I'm as fallible as they come. Why, you ask? Because I was just about to recommend that you buy additional shares at $25 to get an average buy price of $26.50 when, lo' and behold, good news about the company's Celebrex and Bextra being able to hit the market again sent the stock to a Friday close of $26.80. While we missed out on the gains from $25, we can take comfort in our original $28 buy being down a mere 4%.
The market is not looking healthy, and technology looks especially ready to take a breather. Technology is where I make most of my money, so I'll be watching carefully. We're lucky in that most of what we need to do is protect our gains rather than guard against losses. If only all of life's problems could be so cherry.
