SYNC: KICKED OUT OF THE CLUB TODAY FOR UNRULY BEHAVIOR
A profitable relationship with SYNC ended today. It was kicked to the curb during the first couple hours of trading.
As most of you know, I initiated a position in SYNC on March 29th in the low-7 range. I added to the position on April 30th in the 8 range.
It became the largest position in the portfolio as a result of appreciation, constituting roughly 25% of the portfolio before today's sell. I didn't have a clue, inkling or feeling that today would be the day I would sell SYNC. There are times I know I will be selling soon and times, like today, where I am forced to act by an event outside the realm of expectations.
I had a target above 20 for SYNC either taking place this week or in the coming weeks. That was my expectation. The expectation or rather, my analysis, is never wrong. It is the market that is in error or out of sync (no pun intended). I'm not making an arrogant statement in saying that my analysis is never wrong if you read into it correctly. What it means when I say that my analysis is never wrong is that there is a correct mode of behavior for a stock or index and an incorrect one. My analysis lays out the correct path of behavior. When the behavior diverges from that path I realize that I am dealing with a stock or index that has become ill, so to speak. At that point, I sever my relationship with that stock or index.
SYNC should have continued above 20 this week or in the coming weeks before pulling back. That would have been the normal course of behavior. Even if it didn't reach 20, a move to 18 or 19 let's say followed by consolidation or an orderly pullback. I would have been fine with that.
It wasn't the fact that SYNC went below 15 or 14 that was bothersome today. It was the manner in which it did it and the volume that accompanied it. Again, so far outside the range of expectations that I cannot accurately assess its risk from this point on. Whenever I become fuzzy about my risk in a stock, regardless of how much I believe in the company, I can no longer have anything to do with that company.
SYNC has been booted. Walked away with roughly a 100% gain in a little over 3 months for the portfolios. I'm happy about that. What I am not happy about is that given the circumstances surrounding the stock, I will likely not be allocating into the name again. It could go to 30 from here. It could go to 10. Either way, I won't be participating because I no longer have a clear picture of what risks I'm facing.
