May 6

10:30 a.m PM did break out after all. Got in again @39

12:10 P.M Got into PBT into what looks like a bull flag at @9.20

1.45 p.m The mother of all tests for natgas is at hand now, 50d moving average. Accordingly, peeled off 20% of position. We only have 10% of our initial position left. We do believe there will a nice fight. Even more interesting will be the reaction tomorrow. Volume wise etc. things are very indicative of the bottom. But what is a bottom when there is no doubt about a bottom. As they say, rallies ride on skepticism and top when there is none left. We need to see how natgas handles the pullback, if at all there is one.

2.00 P.M By the way, the nasdaq has been lagging for the last week or so. This is classic sector rotation. As we said, in a post earlier, the upside in most of the NDX stocks like amzn etc. is now limited. Money is flowing into what we believe is the literally the LAST few sector where > 10% upside remains, - energy, specifically gas and gas stocks, and a few consumer stocks like PM etc. Once these are done too(and we think soon they will be), we could have a nice down leg. It is better to start hedging positions with a stable short.

4:30 P.M We were busy in the afternoon, so could not look at the tape. When even the defensive stocks are beaten down, a bear market is over (for a while atleast). This is what happened in Feb-March. Last bastions of the bull like XOM, WMT, JNJ finally succumbed and the bear market was over. This time around, exactly the opposite is true, once the last bastions of the bear market are over, the bull is dead.
In other words, we scanned a few charts last night and the number, quality of breakout patterns or charts with sufficient upside has reduced considerably. The percentage of stocks above 200d is now 40%. A massive downward correction cannot be far off. Therefore, we are also uneasy about new longs now. We will keep one eye on the door for our positions in PM, NVS, PBT which we have loaded up in the previous few days.