Notes From 'The Sellout'

So, now where? Well, I'll give you my best shot, if you remember, it's only my best shot.

And that brings up an important question. A few readers questioned my call on last week's TSC TV show of selling out Friday morning. Comments ranged from, "Admit your mistake, you moron!" to "Gee, it must have really hurt to see the market ramp right back up after you sold."

Therefore, a few comments. One, did I make a mistake? Oh, if you look at what the market did, Monday and Tuesday, I most certainly did. But, truthfully, that's not how I measure my success. Rather, I measure my success in how well I adhere to a high-reward, low-risk methodology. To me, not selling when I did would have been high risk, as I thought the odds of a further drop on Monday were quite high. It didn't work out that way, but that's what trading is all about. Sometimes the long shot comes in. And frankly, I thought if you weren't selling -- and even worse, buying -- Monday morning, you were playing the long shot.

Of course, many of you thought differently or had a different set of parameters, and did buy. For you, the low-odds play was to get as long as possible. Well, excellent, and good for you. The point is that success comes not from being right, but from sticking to a plan. (Assuming the plan is well-thought-out, of course.)

The second question revolves around regret. Did I regret not buying and missing the two huge up days? Call me a liar, but the answer is no. I never believed in the rally -- still don't for that matter, as you'll see shortly -- so missing it didn't bother me.

The bottom line is that I have a strategy. I stuck to the strategy. That's really all that matters. (Of course, a skeptic could argue my plan or strategy, in fact, stinks, so I can only fall back on my track record. And, so far, so good. Certainly no regrets.)

OK, enough on that, and please always remember my motto: "Often wrong; never in doubt!"

Now, about that market, here's what I see ...

(Note: I am short MDY.)

As for the Prom Queens, we had a number of changes, adding to our positions in Broadcom (BRCM Quote), JDS Uniphase (JDSU Quote), Nokia (NOK Quote), Nortel Networks (NT Quote) and Sun Microsystems (SUNW Quote) during the last dip. Oh, and we sold Yahoo! (YHOO Quote), it having closed below its 200-day moving average, and per our rules added the next candidate, Qualcomm (QCOM Quote), to our Queens.

So, based on our starting amount of 500,000, we're up about 10%. That includes, however, the use of margin, which we employed to buy on the dip. Based just on our invested amount then, we're at about break-even. Not so good, but still loads better than the Nasdaq 100 Trust (QQQ Quote), which is now down about 11% since our Feb. 22 start date.

The Prom Queens
Security	Quantity	Cost	Last Price	Market Value	Unrealized Profit & Loss
BRCM	366	177.27	147 1/8	53,848	-17.0
CSCO	830	60 9/10	65 1/2	54,365	+8.7
EMC	430	116 3/8	130 1/8	55,954	+11.8
INTC	475	104 7/8	116 1/16	55,130	+10.7
JDSU	660	99.028	85 7/16	56,389	-13.7
NOK	1,112	48.7774	49 5/16	54,836	+1.1
NT	566	114.6043	102 1/16	57,767	-10.9
ORCL	850	59 1/8	71 5/16	60,616	+20.6
QCOM	508	98.44	109 9/16	55,626	+11.2
SUNW	729	88.6801	86 15/16	63,423	-1.9
YHOO	sold	sold	122 5/16	sold	sold
Totals		564,146.3		567,954	+0.7

(One note: I, personally, am out of all my Prom Queen positions. Frankly, I couldn't stand the pain. Of course, I got out near the bottom, but so be it. You gotta know when you can stand the heat, and I couldn't!)

So, in summary, I'm ready in a flash to be bullish. But, until I see some positive signs (see my Wednesday column on going long), the odds favor more downside than upside. And, per my opening thoughts, that's the side I'm playing.

Finally, one comment and a few charts. On the topic of email, I was overwhelmed this past week. And on top of that, I had some email problems that only made things worse. So, if I didn't respond to you, I either did and you never got it (slick one, huh? -- also, the check is in the mail!), or I just did not get to it. My focus this week was on banging out as many columns as possible, so bear with me on the mail front. (That said, my response time seems to get only worse and worse, regardless of market conditions!)

OK, a few charts that dribbled in this week.

So, that puts the brown wrapper on another week that exhausted this cowboy. Ah, but the first swim meet of the season is just around the corner, so heaven is near!