Time to Say Goodbye

 | Feb 08, 2012 | 12:00 PM EST
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This piece was first published on Real Money Pro.

It took long enough.

I began to question if we'd ever arrive here. Last year, the markets would rise and fall wildly, like a choppy sea. Breakouts would show promise and then fail. Yet somehow we made it through.

The target was 1350 on the S&P 500. Technically, we haven't touched it yet, but yesterday's intraday action brought us to 1349.24, less than a point away and that's close enough. I'm all too happy to take some profits at this level, but as Boyz II Men once sang, it's so hard to say goodbye. 

Goodbye S&P E-minis. I bought you on your 10-day moving average (blue) back on Jan. 27. I even time stamped my entry in Columnist Conversation for the benefit of our readers (arrow). Now we're too close to 1350 resistance, so it's time to cash in a 40-handle profit. Goodbye.


InBev (BUD), we've been hanging out nonstop since Jan. 6, when I picked you up just under $59. But here we are again at $64.75, where you've already failed twice. The last thing I need is to hang on to a stock that may be forming a triple top. Adios, BUD.

Extra Space Storage (EXR), what can I say? It's not you, it's me. OK, it's you. You're up 17.91% since I first mentioned you on Dec. 9, and yesterday you closed at your all-time high. Now you're overextended and your RSI has been overbought every day this month. I have a feeling we'll meet again someday.

Public Storage (PSA), you reached your all-time high on Thursday (arrow). You've given a 7% profit since Dec. 9, not as impressive as your friend EXR, but commendable nonetheless. It's time for you to go.

Goodbye, Big Lots (BIG). You've gained more than 10.4% since I first wrote about you on Jan. 30. Now you're testing resistance from April of last year at $44, and at the same time the S&P 500 is testing 1350 resistance. That's a bad combination. See you around.

Not every name being set free is from our Portfolio of Pain, stocks like EXR, PSA, BIG, and Dollar General (DG) that benefit from the tough choices one must make in a prolonged economic slump. We bought Carnival Cruise Lines (CCL) after its disastrous selloff, purchasing at the close on Jan. 17. While CCL has showed slight gains, it hasn't bounced back the way I'd hoped. It's time to bid CCL adieu.

It's not as if I'm closing all my positions; I'm still long Microsoft (MSFT), DG and Fred's (FRED), but I've lightened up a bit. I'll stay short Amazon (AMZN) as long as it trades beneath its 200-day moving average. 

I'm also short Research in Motion (RIMM) and Sears Holdings (SHLD), which is making me a little nervous after closing above its 50-day MA yesterday, SHLD's first close above its 50-day MA since Nov. 16. I was also short Netflix (NFLX), but got burned when it gapped higher after earnings. That one left a mark. A short trade of Boston Beer (SAM) resulted in a loss as well, albeit considerably smaller.

Will I regret closing some of these longs? Maybe, but I can always buy them back, hopefully at lower prices. If the S&P roars through 1350, I'll look for some new longs.



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