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Old 08-04-2011, 09:58 PM   Nav to Top  #1
Vinnystocktips
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Money Jobs Number Will Be Ugly But Put Together A Shopping List

These last two weeks have been painful, very painful. Today was the perfect definition of why you never stay 100% vested to the long side. Declines like today, which we haven't seen since 2009 crash, can destroy someone fully vested to the up side. I felt the knife in me as well; however, it was bearable since I am hedged. Granted I am less short than I was just a few days ago as I have closed out my American, Delta (yesterday) and OpenTable (last Friday) short positions. But I still had my European Banks (Deutsche Bank and HSBC) shorts and VIX calls which tremendously helped. I have been preaching the VIX calls as the best hedge over a multiple month period. Today it set new 52 week high of $32 moving over 35% to the upside. That helped out my massive paper loss today on Walter Energy. I really wanted to add more to my position today, but I think I will get a better price tomorrow.

Yes, today was rough; however, I do not think anyone saw that coming. I said I thought last night that today we would get a slight rally and then get a big down day on Friday, but I obviously missed that one by a day. Even so, I did not expect a 513 down day on the DOW, maybe 200 but once again, I too am human. All of this is even more reason to stay hedged.

I have been mentioning for months that I felt Europe was by far the weak link and that was my thesis behind shorting European banks over US banks. I just did not think it would impact our markets by a trillion dollar of market capitalization in 2 weeks. Gold even went down today as the dollar strengthened, yes strengthened! I personally think that is a good thing in the intermediate term. Oil was hammered even though gasoline didn't fall as much but it will sooner. That also is a good sign as it puts spending money directly into the consumer's pocket which they will spend.

So what do we do with this market. I personally think the jobs number is going to be ugly. I hope we do not see another 500 down day, but if we do, I am ready for it! Last night I also said for everyone to start their shopping lists. That shopping list most likely got a bit bigger today as the market had a red tag sale! Look for areas that will have growth without the European Union and United States. Growth is king and will be what everyone buys when we come out of this correction. Look for stocks that are heavily weighted to China in their portfolio. Walter Energy once again is first to come to mind after it was absolutely raped yesterday and it continued all day today losing 30%. Freeport McMoran, Caterpillar, Joy Global, Cummins, technology (huge growing Chinese middle class) or that just have plain accelerating growth GMCR, SODA, Apple, etc.

Yes, today sucked, I will be the first to say that. But it is going to happen again sometime I promise, so try not to act emotionally during any loss. That is when you make bad decisions. Also listen, study, and pay attention to the big picture. Can the market go down more from here, yes, but I think we are capped at another 5% of downside remaining. Today has to be viewed as the first day of a sale in certain sectors and companies.

http://www.vinnystocktips.com/2011/0...t-waters-more/

Good Luck!

Cheers,

Vinny
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