Now a most likely occurrence is one of these 2 is going to gap down on its earnings report tomorrow on a disappointment; COF is still not projected to make money in either 2009 or 2010 yet trades in the mid $20s. AXP I like the business model more, but its pricey at over 20x forward estimates for 2009. But valuation does not matter in this market and has not for a while... either everything goes up, or down depending on the computers.
I did not go all in since my plan was to short more if they continued upward, but with earnings tomorrow I need to curtail all plans until after the lemmings move. My original intent was as follows with a 5% allocation combined:
Capital One will go at $26.40, looking to fill that gap below $23.50American Express will go at $28.00, looking to fill that gap down around $24.75
So I've covered COF this morning around $25.85, for a very modest 2.5% gain. I was going for much bigger fish than that - it is now back down to a 0.2% allocation.
I'm covering AXP at $28.65 for a modest loss of 2.3%. Effectively we are exiting the 5% stake in the basket for flat. AXP is also back down to a 0.2% stake.
Since the time I put these 2 positions on, I added an index (put) short and a metal stock so we at least have something; further I've lightened up on so many long positions that have had huge runs in 6-7 sessions that we don't need as much short exposure to be hedged. We are brimming in cash.
I'll leave the slot machine 50/50 odds of how the crowd will react tomorrow to someone else; my gut says these positions would of made good money very soon. But who ever knows - news always trumps technicals.