Sweet dreams, sour selloffs

I got up early, 4:40 a.m. Nice. Sleeping earlier and rising earlier than normal wasn't my plan. I was just exhausted. So, while it was still dark outside, I watched my portfolio climb. It was up 1.6%, something like that, when I fell asleep on the couch, lamp on, CNBC blaring away, at around 6 a.m. Hawaii time.

I woke again at 9 a.m., an hour before the close. My portfolio was entirely in the red with the exception of a tiny position in Under Armor. What happened? A quick scan revealed nothing. My only guess was that it was simply profit-taking on a wide scale, triggered by quant funds. Only later did I find that J.P. Morgan's had lowered estimates on BIDU, and that triggered the landslide. BIDU went from a high of 359 to a low of 301. The whole tech sector declined in basically 30 minutes, around 8 a.m. my time.

I was peacefully asleep. Initially, I wanted to get rid of my short-term trade in China Digital TV (STV). It was down big from 51 to 46. Then I had to do a radio interview with some friends with a sports show over at KUMU 1500 AM. That was a good 15 or 20 minutes and I gave them my full attention. I hung up and found STV down to 41. Pretty funny, huh? If my position were big, I'd have sold half the position above 50, but it isn't, so I'm holding for awhile.

I watched and watched, reluctant to pull the sell trigger, and STV found a temporary range between 41 and 44. Looking at the chart, it almost looks like there was money (big money) sitting on the sideline just waiting for the stock to hit 41. Major selling was met by humongous buying volume, which tells me that this is no ordinary pump-and-dump vehicle. So I'm holding my position though I am still a bit concerned about next week's Congress in China. Though there is data that shows a decline of 22% in the past two Congressional sessions (1997, 2002), the market for China's economy was entirely different back then. A decline next week wouldn't shock me, but neither would a move to the upside.

I don't have a take on where the U.S. market goes from here other than the simple fact that we're one pinky toe into the earnings season, and folks with dry powder (as well as the big boys) are going to scoop up their favorite growth stocks at a nice discount right now.