DARK HORSE HEDGE – Jumping off HUSA
By Scott at Sabrient and Ilene at Phil’s Stock World
BUY to COVER HUSA at the Market Wednesday, August 13, 2010
HUSA has provided us a nice 12% return since the July 1, 2010 SHORT position was taken. We recommended the SHORT based on our belief that the company was significantly overvalued based on the company’s confirmed assets and earnings potential. HUSA will announce its quarterly earnings report sometime today and while we don’t expect any surprises it is prudent to take the profit at this point and keep HUSA on our watch list. We will recommend a short replacement for HUSA later today or over the weekend to keep our virtual portfolio in a BALANCED Long/Short tilt.
Take note that the S&P 500 had a MACD 12-26-9 rollover this week, confirmed by the RSI 14 day moving back below 50 and the index is trading well below the 200 day MA. In the last 2 days, it has also crossed the 50 day MA. We will look for further confirmation of the weakness before altering our BALANCED portfolio to a SHORT tilt. (Similarly, we did not act when our technical indicators suggested an uptrend might be developing. This market has displayed too much whipsawing motion for us to be comfortable jumping into a developing trend wholeheartedly.)
Chart courtesy of FreeStockCharts.com
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