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Institutional investor pessimism over domestic and international economic matters has risen to the highest levels in the past 5 years – driving stock prices down further as they exit equities for other markets. In just 8 weeks major Indexes have lost what it took 18 – 22 months to gain, with the Dow 30 Index back to where it was in December 2013. Among our focus stocks, chosen purposefully for being more price sensitive than most, many have fallen substantially more than Indexes would suggest, with price percentage declines of an extent last seen in 2008.

For those of you holding short positions this continues to be a very productive period.

For those of you unable to short or preferring long-only positions this is a limited opportunity market as the broad-based downtrend exerts pressure on long positions and new positions are few. Additionally, those institutions which thought it wise to buy stocks in the past 3 weeks at deeply discounted prices saw no follow-through buying by their peers, abruptly reconsidered as prices stalled, and in becoming sellers found no buyers until prices were far lower, ultimately taking large losses – an unproductive scenario referred to as “catching a falling knife”. Their losses are our losses.

Trades this week, with few exceptions, are those exits from recent longs – most for loss, some substantial – and re-entries into shorts recently exited.
Most major indexes are at or near lows for the year.

Highlights: only 1 new weekly high. No double-digit long gains.
3 new weekly lows. Double-digit short gains increased in HPQ +23% and XOXO +13%.

Stock list changes: Several deletions pending exit from current trades and additions of the following, with compound trading returns listed and traded indicated:
Rovi Corp (ROVI) [software], +68.6% in past 7 months
Sprouts Farmers Market Inc (SFM) [retail-grocery], +41.1% in past 11 months
Xencor Inc (XNCR) [biotech/drugs] +50.0% in past 5 months

Analytics: A tweak has been tested and incorporated that slightly reduces sensitivity to short exits, which would have kept us in some recent short positions longer for greater gain, and will do the same going forward. Version 46.