Fund positions of 1.0% or greater can be found each week in the right margin of the blog, under the label cloud and recent comments areas; I highlight weekly the larger position changes.
Being a long only fund, via Marketocracy rules, the only hedges to the downside I have are cash or buying short ETFs. I cannot short individual equities.
To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.
Cash (2 positions [SHV/BIL] + cash): 53.5% (vs 66.0% last week)
28 long bias: 36.5% (vs 28.9% last week)
7 short bias: 10.0% (vs 5.1% last week)
37 positions (vs 35 last week)
Additions: Allegiant Travel (ALGT), Thoratec (THOR), HDFC Bank (HDB), Ocwen Financial (OCN), Quality Systems (QSII)
Removals: Mosaic (MOS), NuVasive (NUVA), Luminex (LMNX)
Top 10 positions = 23.1% of fund (vs 20.3% last week)23 of the 37 positions are at least 1% of the fund's overall holdings (62%)
Weekly thoughts
After a large move as the new year turned, the markets gave back much of that gain (+6%) this week (-4.5%). And so I believe much of the year will follow, with a huge trading range as we continue to ping pong from "hope" to "reality". We entered this week highly defensive even though from a textbook point of view we should of been adding to long exposure as the market broke out of a multi week range and went north of S&P 920... it just seemed too fishy. The strongest stocks of the previous month were starting to falter as people were reaching for much weaker laggards to run up in speculative fervor. Further, we did not want to be too involved in this market until we saw the knee jerk reactions to the retail numbers Thursday, and jobs report Friday. When the market just got plain silly Tuesday [Jan 6: Back to the Future - Commodities Rule Again] with every commodity stock being run up by HAL9000 and his retail daytrading friends, we really cut back hard and moved further into cash. The next day we saw a 3% loss in the markets, and Friday we had some weakness as well. We are picking and choosing and used those downturns to add to some positions that were hit much harder than the market, or start new names that finally showed some weakness.
On a technical basis I still don't see any major edge here.... it is especially tricky due to the moving averages. I have used exponential moving averages over the years just because they seem to "work for me"... other people are successful with simple moving averages. This is one of those unique times where using each methodology gives us a different picture.
Using the exponential moving average - you see a failed breakout and now we are rolling over...
Using the simple moving average - you see a pullback with some hope for a bounce...
In either case I'd like to see a move back over S&P 920 to feel more secure. With Obamamania in the air, and a "feel good" moment coming in 10 days certainly we could go and retest the highs from early this week (S&P 940) and if we failed a beautiful "double top" would have been formed. Despite horrific news, the market is still "holding up" and for technicians that is all that matters - the news flow means nothing to them... until one day it does. Bulls also have (to this point) a series of HIGHER lows. So despite this being a very expensive market on what I view to be 2009 earnings, and far too high optimism on what confronts us in the year ahead - we'll keep playing the game as long as we stay in this S&P 850 to 920 range. Even a hardcore bull however, should understand that bottoms are always tested so we have a date with the November low at some point - it's just a question of when and if we bounce (or fall through) once we get there. If that happens next week, next month, or next summer - it would be non typical not for it to happen. Bear market rallies (from my memories from 2000-2002) generally last somewhere in the 6-12 week range so we're now about 8 weeks in.... starting to get long in the tooth.With that said, until we begin the next leg down (IF we do) it's a market of stocks, not a stock market. So with that in mind, we did take the opportunities given to us to swerve into some stocks we've been waiting on and "upgrade" the technical quality of the stocks we own. Obama thesis plays continue to be extremely strong and bought on any pullbacks - commodities pulled back late in the week but some are showing some resilience. We've been running at a very low hedged exposure (4.5% to 11.0% short) the last 7 weeks as this rally has ensued. We're at the higher end of that range now, but nowhere near our "bear stance" of 20-35%+.... with the behavior of these Ultrashort hedges in sideways markets we won't layer on until we see a clean break downward.
I'll discuss specific chart set ups for some names we own at the top of the portfolio and names we are targeting in a different entry but for now we took the large swoon Friday as an opportunity to build a 5%+ position in Emergent BioSolutions (EBS) and most of the names we added to the portfolio or added to seem to be holding well. (the full portfolio is found in the right margin of the blog near the bottom of the page - this is updated weekly). Until we break down below S&P 850 we'll remain with a high cash position but aggressively operate with the long exposure we have - trying to lock in some trades/profits as we await the "whistling past graveyard" period to end. This week brings a lot of less important economic reports - PPI/CPI (inflation) reports are announced but in a deflationary environment they are a moot point. Earnings season begins in earnest this week, and accelerates in the 3-4 weeks after so a lot of our posts for the next month will focus on earnings of companies we own or have economic importance. I continue to believe earnings estimates will be slashed (or pulled) in industry after industry as we move forward - analysts are still far too rosy for the economic condition we are in, and will face. President Elect Midas cannot make earnings go up with his magic wand. We have some major crazy cold weather coming down the pike in the Midwest so the speculators will probably run up oil and natural gas and say some lame reason for it... it is quite pathetic what a gambling market oil has become - up 30% two weeks ago, down 20% last week... more power to you if you are trading that market accurately. It looks like crap shooting to me.
