Freddie and the homies

Finished up the Freddie Mac trade today. I closed it out at $5.40 per contract for a very respectable gain of 100%+ on the trade. Here is the p and l snapshot:

I may re-enter this one for another round at some point in coming months. For now though I am out and in 100% cash. Also - unfortunate development - re: summer school. I had to take all the profits and then some from past few trades in order to make bills for summer school so cashed out $2,500 and portfolio is back at $10,500 and ground zero. Hopefully during course of year there will be a few more good ones to keep it goin.

The next setup I am lookin at is in the homebuilders. Pulte Homes. I have shorted it before and I plan on shorting it again here - probably very soon. The chart is extremely tempting at this point but I think it still rebounds higher one more time before the optimum entry point. Another impressive candidate is Toll Brothers (TOL).

The main thing that makes the homebuilders so attractive at this point is all the value-based buying interest that has been generated over last several weeks. A lot of new money has piled back into this sector driving prices up in the short term. This creates some opportune entry points as you are able to initiate the new shorts from established resistance levels instead of forcing things and initiating the short from a support zone with the hope that it will break through. This is more of a give and take type strategy and is more in tune with current market that has not given clearly telegraphed bull or bear signals up to this point.

That is the bottom line for now. I should be back later this week or next if new position gets under way.

Best regards,

BG