Bill Rempel, a.k.a. NO DooDahs!

It’s tempting to lighten up for the sake of lightening up, given the run that’s taken place over the last month. Almost for a lark, I updated the models mid-week to see if they supported that assumption, and, well, they don’t. The models are more bullish than they have been in weeks. So there won’t be any gratuitous trimming of the positions, but some moves are called for.

I’m 95% long, and have been since buying Uranium Resources on April 24. About 10% of that long exposure is foreign index ETFs and the rest is composed of companies trading on U.S. exchanges. I will be making some adjustments to the portfolio tomorrow.

Ingle’s Markets (IMKTA) is below the recommended “sell” line and I’ve been experiencing some angst over this position. The company reports earnings on Monday. The stock is currently around $35, an area that might show support, based on the 2007 YTD price action. IMKTA has had a good run over the last year or so, but it is well off the highs. It has a short DTC of about two weeks, and a float of only 12 million. There has been a lot of insider selling over the last six months, with about 4% of their shares being sold by three officers and the profit-sharing plan. I had been inclined to hold it through earnings, but at this point, I think it’s time to sell. I will exit this position tomorrow.

Jones Soda (JSDA) is also below the “sell” line, and has been for a while. The suggested exit would have gotten out with some profit, but given the earnings miss, by tomorrow JSDA will be back to near my cost basis. This was a small position, sized according to the 4xATR(45) rule, but does that position-sizing algorithm mean much if I pull the stop? Is 4xATR(45) “loose” enough to follow a long-term trend like a HANS or like I think JSDA might be? I thought not, at the time I pulled the stop. In a move that has some implications for both my prior ideas about position-sizing, and for my ideas about semi-mechanical stop loss and profit-taking exits, I will not be selling JSDA tomorrow. I will, instead, add to the position during the anticipated morning gap.

LHC Group (LHCG) beat on earnings in a minor way, but didn’t respond well in the stock price. Perhaps the fear of recent Medicare proposals is impacting the price. This is another sell for tomorrow.

RTI International Metals (RTI) had an earnings miss, and I think it’s safe to sell here and keep on the watchlist in case it shows an opportunity to wash rule. Another sell.

Selective Insurance (SIGI) is at a point where it looks like the v-bottom is done, and on a longer-term chart, I see a good deal of recent overhead supply at the $27 to $29 level. I will sell this stock tomorrow.

TRX Incorporated (TRXI) didn’t respond very well to its earnings announcement, and my guess is that TRXI will not be missed by me if I sell it here. Goodbye.

There it is; five sells and one position that will be added to. Assuming that JSDA falls to $21 and all the other transactions take place close to the current price, I will go from 95% long to 78% long, and from 22 positions to 17 positions. I haven’t decided if I’m gonna place the orders tonight for the open, or let the Wifeykins execute during the day, but they’ll be made tomorrow. When I get the fills, I will update the watchlist.

I will be looking at what to go long, and when, over the weekend. Despite the model output, I am finding it hard to commit to new longs tomorrow, preferring to wait it out a bit. I will also be giving some more thought to whether the ATR-based position sizing and exit-planning fits into a vision of following fundamental trends with technical tools. It troubles me that the suggested adjustments to position sizes implied by the ATR methodology would essentially have me running from volatility, which doesn’t strike me as the best plan. But I could be all wet, there.