Monday, July 21, 2008

7/21/08 Stock Position Update - Bought Potash and Southwestern Energy

I have started purchasing and shorting stocks from my buy list and short list of 7/7/08. So far I have taken three long and one short position. At this point, I believe the market will have a short term rally. Given the volatility of the market, I continue to be cautious for both purchases and selling short.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

From My Wealth Builder 7/7/08 Buy List
Stock [purchase date]SharesPurchase Price

Price on 7/18/08

Range Resources (RRC) [7/10/08]50



Potash (POT) [7/18/08]10



Southwestern Energy (SWN) [7/18/08]50



Originally, I was not planning to purchase any of the four oil and gas stocks: Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). However, this week's further decline in oil prices caused me to reconsider and buy Southwestern Energy and Range Resources. In addition, I decided to buy Potash even though it was above my target price 200, since my market indicators show a rally is likely to happen.

From My Wealth Builder 7/7/08 Short List
Stock [short date]SharesShort Price

Price on 7/18/08

Las Vegas Sands (LVS) [7/7/08]100


closed 7/11/08 @ 33.69

I have only able to short Las Vegas Sands so far, which I closed out before the market rally of last week. When I tried to short Sears Holdings and Lifetime Fitness two weeks ago, my broker cancelled the order since the "stock is not available to sell short." This seemed strange since both stocks have trading volumes between one and three million shares per day. If the market rallies significantly this week, I may try to short all three stocks again.

The market continues to be choppy. As of the close on 7/18/08, the Dow, Nasdaq and S&P 500 indices were respectively down 12.12%, 13.93%, and 13.13% year to date. Two of the three indices are significantly below the previous respective lows of 9.37%, 16.58% and 11.86% in my 3/17/08 Stock Purchase Update. In addition, all three indices have been in bear market territory.

I continue to believe that the probability of a recession in 2008 is relatively high, if we are not already in one. The multitude of negative factors will eventually outweigh any actions by the government and financial institutions. Originally, the Fed interest rate cuts and other actions led me to expect that the bull market would last through summer, 2008. However, the economic data of the first half 2008 has caused the bull market to end earlier. I expect the market to continue to be choppy in 2008 with many short term rallies and declines.

For now, I will create a long and short portfolio in my trading account. I will continue to maintain my holdings managed by our financial advisor, and plan to sell of small portions during any short term rallies, which hopefully will occur.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern Energy in my trading account. The managed accounts are long Range Resources, Hess, and Sears Holdings.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

No comments: