Sep 10, 2010 8:47 AM PDT
With the market winding the day down to end in the red - and probably at the beginning of a modest pullback - I'm just not interested in searching for new stocks to buy. I'm barely interested in looking for stocks to short though, as I feel the market doesn't even know itself that it's totally in limbo here. Instead, I'd rather take some time to share the mindset I have with three small cap stocks I've currently got in the public portfolio, and why I'm thinking about selling them.
While I was spot-on with my bullish telecom call - and wireless call - from a few weeks ago, I don't think MetroPCS Communications Inc. (NYSE:PCS) yielded enough of a gain for us during that period. Rather than lead the group as I expected it to, it actually lagged some/most other names. I can't complain too much, as I've made some decent money with this small cap. I just should have made more considering the chart setup and the sector tailwind.
Anyway, with MetroPCS shares back under the 20-day average and knocking on the door of the 50-day line - not to mention the fact that neither line is angled as steeply as it was - I don't think we can deny that PCS is starting to struggle. Better to take a small profit rather than let it turn into a small loss. I'll give it a few more cents though.
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While I'm glad I decided to hang on to HealthSpring, Inc (NYSE:HS) after its big tumble in late June, we're somewhat back to square one. The falling resistance line that had been guiding this small cap lower since February? Yeah, well, that's right where the rebound stopped this week. On the upside, HS is back above all of its key moving averages, and the buying volume behind the move has been heavier than the selling volume was on the way down.
This is a critical time for HealthSpring shares. They really need to get over the hurdle soon, or the risk of a repeat pullback grows. In fact, I'll probably pull the plug at the next sign of trouble from here; this is starting to be an opportunity cost.
Frontier Oil Corporation (NYSE:FTO) was supposed to continue on after breaking through the upper edge (green) of a long-term wedge shape a few weeks ago. It didn't though. In fact, it's fallen back under the support side of that triangle (orange). So much for my small cap energy play (though most oil and energy stocks have indeed made trade-worthy progress).
Fortunately a minor support line (blue) at $12.15 has come into play again for FTO, though I don't know for how long. I'll hold onto it on the off-chance it manages to recover here, but if Frontier Oil Corporation slips to, say $12.00 or under, I'm cutting loose. 
By the way, the underlying fundamentals for all these companies are still fine. I just use technicals to make my entries and exits, as the stock prices don't always fairly represent the underlying fundamental story.
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