Wagons are circling again

It's that time again.  Time to circle the wagons.  As I sit here looking at how the market has acted as of the last 2 weeks and recognizing I'm just starting a new slew of earnings reports, I recognize the second quarter isn't likely to be as friendly as the first was to us and it's time I stake my position, make my predictions, and try to establish some semblance of a plan.  Once again, I'm nothing more than a rookie, doing this more as a hobby with desires to improve upon my abilities day after day.  Had I a teacher, I'd be informed "I have much to learn." as I hang my head in shame.

So where do we begin?  Well, no better place than with what I have now, I guess.  I still have the same 7 stocks and I have successfully managed to make sure I have cash on hand to buy things that strike my fancy.  The one thing I can say is that I don't really want to hold more than 7 stocks.  Considering BWEN as a stock I still hold is a tough pill to take.  At this point I pretend I don't even have it most of the time.  It seems like it's too low to sell right now, however, this stock can actually go lower if they don't pick up any government subsidies at the end of the year - and that's not a bet I want to take.  So I have 6 stocks and 1 piece of paper.  Maybe if I'm lucky, that 1 piece of paper will some day buy me a couple shares of a good company.  So as I've discussed before, time to rank what I have on a scale of 1-4.  Here's my layout right now.

C: 3 - This stock has run HUGE in the first quarter.  JPM and WFC posted solid results, but they've also been better banks than Citi has been.  Also, let's not forget that C "failed" the stress tests, so is their balance sheet clean enough?  Can they live up to their promise of dividends in 2012?  If not, it might be a good time to pull out of a chunk of this at the very least for now and find something that can perform better.  Personally, I'd like the stock to get up over 36 before I sold, but if the market can't hold, EU bank worries can drag this back down to the mid-20s.

DE: 1 - China has you worried with their lower GDP numbers?  I wouldn't worry.  China is still making huge grain purchases, South America suffered a bad drought year, and the spring isn't looking much better for parts of the midwest.  Grain prices aren't likely to drop a lot right now unless the US Dollar gains a ton of strength or unless something suddenly makes crops explode with yields.  On top of that, Titan Machinery just posted huge numbers - speacking specifically to how midwest US sales are on the rise.  Deer just about hit spots where I couldn't resist filling more of my position on Wednesday, but I'm watching for it to come down a little bit more. 75 becomes my hard to resist area.

ECA: 2 - Nat gas is now below $2.  If that commodity was a famous star, it'd have to be Rihanna with the beating it's taking (too soon?).  ECA has gotten the punishment it deserves for being so focused on Nat Gas.  They're capping production and focusing on quick growth in the more lucrative liquids-rich plays now.  This company has the ability and experience to keep the cash flowing (not to mention the assets) and frankly, with a 4.39% yield, it's going to get really tough to keep pushing this stock down much more.  My low for this one was 16 and if it actually gets below 17.50, I might have to double down.  That being said, This thing won't be going up in a hurry either.  This is my LONG hold.

ONNN: 3 - ONNN is a company I believe is more than capable of producing strong results, but we're getting closer and closer to that time of year where holding most tech names doesn't produce strong results.  This one has been a little sketchy this year as it was with all the flooding issues in Thailand last year.  If I kick a stock to the curb, this will likely be the one since it's a really small position anyway.  Sure would like to see it get a 9 handle again, though first.

HON: 2 - This one is by far my best performing stock.  I "incorrectly" sold some shares awhile back thinking the market was going to pull back.  Collecting profits is never bad, but it sure would've been nicer to collect them now.  Either way, I'm still waiting for a pullback to get more.  My target price to buy more up is usually around 49, however, I might have to bite the bullet at some point and buy before then.  If we get a standard correction, HON actually could pull back to the 50-52 range, but I personally don't expect it to go below 54.

PEP: 2/3 - I'm as wishy-washy with this stock as the rest of the market is, apparently.  Margins are shrinking due to commodity cost increases, however, if we see a sector rotation to safety because of Europe, it's possible that this one presses it's 52-week highs around 67.  If it does, I gotta sell.  However, at the same time, the food plays have been falling more and more out of favor lately and it's possible that this could slip below 64 - at which point you have a respectable dividend yield - especially after the dividend increase I anticipate them announcing near the beginning of May.  So if this drops below 64, I think I'll fill my position a little more to have some additional protection to the down side.

So that's where I stand.  Where do I think things are going?  Well, truth is I don't think we're going to go much of anywhere on a holistic basis.  What I think you're going to see are individual stocks rise or fall - you just need to pick the right ones.  We had a real nice rally in the first quarter.  Things could be interesting for another 6 weeks here, but once we get towards the end of May, I expect things to get really slow overall.  If you look at gains many funds have, they'll take that and walk away for the year, possibly.  That doesn't leave a lot around to move the markets.  Now here's 1 exception - Facebook.  That's going to draw even more crazy attention and I expect the market to rally around that IPO offering for maybe a week or two, but since that's early to mid-May, it still leaves for a quiet summer.  On top of that, we have the elections this fall and that could have huge implications to the market.  If you've made big gains already, why play the odds of who will win?  It would be better for them to sit back until November - unless the winner becomes more apparent beforehand - and then set themselves up for next year through the rest of the year.  So end of the year, I figure the dow is going to finish right around 13,000 - essentially right around where we are.  On the whole year, a 10% gain might seem good, but from here until then, it'll be kind of depressing.  However, like I said, if you can pick the right stocks, the right trends, you could still end up pretty significantly on the year.

That leaves me at a problem.  I'm not a hedge fund, I don't like trading a lot, nor do I have the capacity for it.  My time horizons are always longer.  ONNN clearly looks like a candidate to sell soon and then follow suite of the funds and maybe purchase late in the fall again.  HON is a stock that I think will continue to do well throughout the year, and I think DE will put up good numbers, but will fight a market that has its future performance linked too closely to China so I don't expect huge gains there for the remainder of the year.  That leaves me with Citi, Pepsi, and Encana.  Currently (Citi might prove me wrong on Monday), I believe all of these stock have a lot higher to go in the long run.  However, I don't really see them going anywhere for the rest of this year.  So do I dump them, take gains/losses, and try to get something else that might do better, or do I play the long game and hold them - especially in respects to ECA and PEP, where I get a nice divvy to sit and wait.  I have more research to do, but if I go to buy something, I think the retail sector will continue to be strong this year.  Primary targets I'm trying to decide between is HD, ROST, M, or PVH.  Retail seems to be a good place to be, but gold seems kind of flat now.  Sometimes that guaranteed divvy is the better option than trying to game it.

What would you do as a small time home gamer?  Comments and ideas are welcome.