Repositioning

I was pleased not to have thrown in the towel on the longs yesterday but it hasn't done me much good. I stopped out of MSB at 750 as the support level came under threat again and I'm glad I did because the slide has taken the price down to 732.

This was a situation where I was looking for another run at the 800, 810 level but that didn't eventuate. I sold bits and pieces at good levels so there was a small gain overall but it's slightly disappointing nevertheless.

My other pharmaceutical long is in PXS. I've been expecting the stock to drift back into the mid 120s and stop me out but so far the price has held.

SBM has bounced back to be up 5 at 208. I think I'm trying too hard to pick a rally in gold stocks and if the action is subdued over the next couple of days, I'll probably cut this.

The other two longs are held via call options in OSH and SUN. Neither are doing much and since my options are out of the money, there's a daily cost in time decay. The OSH April 725 calls are down to 4 and have two weeks to go. The stock is at 699 so there's ample time for it to run through the strike but a range seems to be developing and momentum has stalled.

SUN failed to accelerate as I'd hoped and the stock is slowly retracing an upswing which went from 768 to 847. The April 750 calls are down to 1.5, virtually written off. I have some May 850 and 875 calls which could amount to something eventually. In retrospect, the stock has been in a range for some time which made buying call premium risky. I'm still looking for a higher low – relative to 768 – but if that happens, I'll probably just trade stock.

I'm reasonably happy with the short position in WPL. I expected the stock to rally harder today and I hope to add some more May puts if it pushes up towards resistance but doesn't go through.

The whole repositioning idea is that my base scenario has changed. I'm now looking to sell rallies and I'm ready to get out of any long positions. I don't want to leap into a bunch of short positions without a great entry because there's no confirmation that the rally is over, it just looks that way.

4.12 The market pushed up further in the match for a rise on the day of 34 points to 4280. Even if this is to be a turning point, we could easily see another few days of retracement. See late October, early November as an example.