Portfolio A Update - Bye, Bye Centex

Posted by Dan Hung

April 22, 2008

Apologies for not updating sooner. I actually sold this stock on Friday. It seems that I’m shaking off some rust for my short term trading skills. While my initial pick of Centex was correct, my upside prediction was quite wrong. The stock moved swiftly to about $27.80 before hitting hard resistance and cracking down. Beyond simple technicals, it was mostly due to a slew of continued poor news for home builders. Once again, I need to remember to stay awtsay from industries that the market is generally down on. It’s best to go after neutral or under-covered industries when trying to play in the short term otherwise you expose yourself to too much randomness. The other issue was that my purchase of CTX may have been hasty as I purchased during its technical run up and did not optimize the entry point. In effect, I bought more risk than reward by purchasing at $26.80. When the stock couldn’t establish strength on Friday after pushing back up towards its 50-day moving average, I just had to cut ties.

So, what’s on the docket now? I’m going to take some more time and really try to find the best trade possible now. Here are a few stocks I’m looking at right now…

Vornado Realty Trust

An uptrend hasn’t been confirmed so don’t read too much into the trendline drawn in. The stock seems to be playing with resistance at the $94 level and has established some strength at $86. I would buy on a pullback and bounce off of $86 or a strong push through $94.

Western Union

Upside surprise in earnings today sets this chart up really nicely. MACD turns decidedly bullish as does RSI. The volume hasn’t come in as I would like, but this could have some legs. First resistance I would see is around $23, then the stock seems clear to refill its gap to $24.50.

AU Optronics

Marginally bullish looking graph. Today, it broke through its resistance at 19.60ish, but there’s still another crucial resistance point at $20.32 before I can officially declare a trend reversal. Also, I’m not entirely happy with the RSI not reaching a high similar to is most recent peak near the beginning of March.

As you can see, none of these three charts set up perfectly right now, but there’s some potential here and I’ll keep abreadth of it.