Tuesday, February 22, 2011

Punting Darden - DRI

I have been watching the restaurant stocks for some time with an eye to getting short. Completely forgetting input costs in the food arena for them, I have not fully appreciated the Great Ponzi's pervasiveness.

I get the fact that one can eat out, shop till one drops and basically discretionary spend one's ass off a lot more when one hasn't made a mortgage payment in 18 months.

Couple this with a bank that has buried said delinquent note as current and only starts foreclosure proceedings if some other party (re:homeowner association, contractor etc), forces their hand kicking and screaming.

This process then takes another 12 to 18 months to conclude so approximately 2 to 3 years of mortgage free living goes a heck of a long way in the current American dream known as the Great Ponzi.

Having said all this, the time has come to punt Darden on the short side, ticker DRI. Daily chart is below.

Note the recent rally on fumes into previous resistance. This disconeect from reality seems a bit long in the tooth hence I am shorting 1 unit here at $49.61 with a stop just above the recent highs at $60.11

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84
Short 1 unit Freeport McMoran ticker FCX @ $56.40 stop @ $57.76
Short 1 unit Darden ticker DRI @ $49.51 stop @ $60.11

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