Tuesday, May 1, 2012

Add in May and Go Away

The standard protocol for markets are to 'sell in may and go away' and as in most cases where the media will promote a headline of empirical returns, it makes sense to play contrary to the mainstream in the short term.

Yesterday we saw some red price action, opening -0.4% in the sp500 and closing slight down -0.3% - the news 'catalyst' were the spain session news and lower manufacturing data of 56.2 lower than the 60 expected and the 62.2 last month.  Indeed we are seeing moderating growth - but the price action has remained resilient. Given the blowoff of many overbought indicators and I feel that the consolidation is still underway but we may see a leg higher soon.

I added some positions to the US portfolio - leveraging my portfolio to 1.5x.  The stocks added last night were

uthr @ 44.32 - drug manufacturer 9.62  p/e and very good margins, bouncing off a triangle wedge bottom looking for breakouts above 50.

vlo @ 25.2 - oil play 6.73 p/e and bouncing off the 200dma after a healthy retracement, looking for 30.00 exit.

GS @ 113.89 - investment banking - a good runner of mine, and has sold off back very nicely after hitting 129 - looking for a breakout of 130 on the next upswing.

SOHU@ 52.55 - chinese internet information provider - not sure how the online players work, but it's got a very solid basing formation that looks poised for breakout above the 55.00 level for a 65 target.

AFL @ 44.60 - accident and health insurance - I've been trying to round off my portfolio with an insurance player - and this one at 8.95 p/e and respect of the 42.00 level seems to be a good risk play for a 52 target.

I finally have a resemblence of diversification in my portfolio - which is rounded up by my other positions sbt, bpty, cvn, gdx, hpq, cok, cpst, cfu, bhp, amzn, bcn, abg and one LULU short.