Monday, December 21, 2009

Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 20

Year 3, Week 20 Major Position Changes

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 78.4% (v 80.7% last week)
23 long bias: 18.9% (v 17.0% last week) 
3 short bias: 2.7% (v 2.3% last week) [includes 1 option position]

26 positions (vs 26 last week)

Weekly thoughts
Below are listed the closing prices of the S&P 500 the past 6 Fridays:

Nov 13: 1093.5
Nov 20: 1091.4
Nov 27: 1091.5
Dec 4: 1106.0
Dec 11: 1106.4
Dec 18: 1102. 5

The market has been stuck in a very narrow band; I will keep repeating the broken record... the larger the base the market builds, the bigger the eventual move.  We are building to a larger and larger move by the day once we leave the "box" (currently marked by S&P 1085 on the bottom and S&P 1115 on the top).  I continue to point to S&P 1112 and 1120 as important levels, the latter especially so as a breakout over that level would be a new yearly high and a sign post that we are going to move above the 50% retracement of the entire downward movement (Oct 07 highs to Mar 09 lows).   This is no small secret at this point so HAL9000 is locked and ready, waiting for said movement.  Last week was no different than any of the others, with very little volatility despite a "Fed Day". 

Just as Thanksgiving week, Christmas week (to a lesser degree) is generally a time of good cheer and nonsense speculative stocks being run to the moon, (hello Chinese small caps - you too solar stocks!) as institutional managers are at home, and the retail daytrader takes over.  Santa Claus indeed, even came to town last year at this time - in one of the worst year's in stock market recorded history.  Major change of note of late is the strength in the dollar, which thus far the market has absorbed.  As it has some $50B worth of new banking stock shares. Something is always sitting underneath the market, not allowing it to go down - so those of you on the grassy knoll can determine whom it is.  It appears bears have simply given up trying to "fight the power" and are resigned to 'fate'.

For the portfolio, we've essentially been - like the market - stuck for weeks on end.  I don't mind which way we move, but I need some sort of actual movement to make some progress.  The bull markets of late have been in sectors we don't traditionally ply our trade. [Dec 14, 2009: There is Always a Bull Market Somewhere] It's been 2 steps forward, 2 steps back for many weeks.  Late in the week we made a host of portfolio changes to try to shake things up, and move from some lagging positions into charts that seemed to have more bullish outlooks.  We restarted position in old holdings Insituform Technologies (INSU) and American Superconductor (AMSC).  2 new "breakout" positions were started in very expensive valuation stories - Sourcefire (FIRE) and Rackspace Holdings (RAX).  Brazilian chemical company Braskem (BAK) was also added. We flip flopped on EnerNOC (ENOC), first adding to the position - and then cutting back as a breakout seemed to fail; we're ready to attempt the trade again which could happen shortly.   On the other side of the ledger we were stopped out of most of the Gafisa (GFA) position, as it broke support.  We sold down 2/3rds of Indian bank HDFC Bank (HDB) and half of Potash (POT) - got lucky on the latter name as the stock was pummeled Friday.  We cut back our silver holdings, while holding onto gold.  To make room for new entrants we closed out Discover Financial Services (DFS), Fuel Systems Solutions (FSYS) [here], Blackstone Group (BX), and Morgan Stanley China A Shares (CAF) [here].  With some serious weakness in the Chinese stock market towards the end of the week, we covered almost all of our short in iShares China Xinhua China 25 (FXI).  And for all that, we ended the week essentially where we began, making our brokers very happy with their commissions.

We'll see how this switch works out in the weeks to come, and/or if we melt up for the upteempth time since March 09, it might simply be a moot point.  As we've been saying for quite a few weeks, the plan is to pile into index long exposure once key resistance levels are broken as we should have a quite material move ahead... and the presumption by everyone now is up.  In the past when everyone assumed something it rarely happened - but these days the obvious things happen over and over.  As trillions of taxpayer monies is being used to support the economy (and one would surmise markets), all we can do is go with the tsunami of money and live our Alice in Wonderland existence.  Economic reports?  We'll have a few - but all anyone looks at anymore are charts...

Now we await Santa Bernanke, Time's Person of the Year, who is a kind soul with a mighty white beard and a seemingly endless sack of US dollars.... who brings all the world's speculators great presents - if they have been naughty OR nice.  He just wants us happy in the 'today', even if it means stealing from the future children of the world.  Another Santa can deal with that....

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012