This is a melt up if there ever was one. As I said, when this rubber band finally one day does snap it would be tremendous (reversion to mean). And this once again shows why bear markets are hard on bears and bulls alike - imagine entering this day positioned the only way you could be to make money the previous few weeks (heavily short) - you'd be decimated. We were fortunate with some market timing and eviscerating our short exposure Friday morning. Better to be lucky than good, but preferable to be both ;)
S&P 960 was that "resistance level" way back... Thursday. Now we'll see if it provides any resistance on the way up. We are SO oversold that the 20 day moving average is way "up" in the 1080s.
My plan, assuming we hold today is to sell a next layer into any Kool Aid move tomorrow morning. For now I just want to "keep pace" with the market, using about 65-70% of our capital - we entered the day with roughly 19% cash and we sit now around 30% after taking our first layer of profits in the AM. It is still too early to begin re-hedging. Remember, once we get through the credit crisis we still have to deal with an impaired economy. But all in good time. How quickly fear can turn to greed....The financials are actually not acting too great here - I am wondering if this is due to dilution possibilities (i.e. when the government takes stake in your company, each shareholder is diluted)
Our NAV just crossed back over $9.00 which means since August 2007 we lost less than 10% in the 15 month period....which in the sharpest, quickest downturn in history, I'll take.
4 comments:
I'm noticing that not only the financials are "somewhat" lagging what they "should" be moving, but so are the early cycle stocks. This rally looks like a reversion of the the smackdown that was given to the global growth story - more of a late cycle move. So, anything global, yet directly sold to the US early cycle companies. infra, energy, etc
I would not read too much into the sectors
What I see is the top holdings of hedge funds are rallying most
those which were sold relentlessly for months and culminated last week... finally have a break for relentless liquidations.
Dont think it speaks too much to any economic trend.
back to our discussion last week... today, MCD > WMT, KO > PEP, FWLT/MDR > SGR
ok.. so MO > PM ;P I'm just thinking that this time around, we dont get that early cycle rally.
But for a silver lining to all of this - I was actually heartened to see the world leaders finally agree on something! - even if it was an impending end of the world as we know it...
If you think fund liquidations were bad last week/month, wait till Obama gives everyone the ability to liquidate their 401ks penalty free!
Post a Comment