Monday, February 22, 2010

Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 29

Year 3, Week 29 Major Position Changes

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

Cash: 70.3% (v 78.1% last week)
21 long bias: 24.0% (v 13.8% last week) [Includes 1 option position]
4 short bias: 5.7% (v 8.1% last week) [Includes 2 'long dollar' positions, 1 option related]

25 positions (vs 25 last week)

Weekly thoughts
Just as a reminder posting will be a bit sporadic this week until Friday.

US markets were able to post a very strong week, despite some late week surprises with a minor discount rate increase which seemed to hit Asian markets much harder than the U.S.  China comes back from lunar new year and at this point these 2 markets, along with the Greece drama appear to be the only thing investors are focused on.  All of the major US indexes were up every day last week in the holiday shortened period; and Russell 2000 is now up 8 sessions in a row.  One would assume a consolidation period, even if minor, should be fast approaching.

Off to the index charts.. one item to note is a specific situation to the S&P 500 which differs from NASDAQ and Russell 2000 at this time, in that the ''simple" moving averages have a slightly different interpretation than the ''exponential'' moving average (which is what I use).  As always, there is nothing right or wrong about using one or the other, and generally they line up quite close but from time to time you have some small divergences. In this case the S&P 500 50 day moving average has a resistance area at 1109, whereas the index has already cleared the 50 day on the exponential chart.

[click to enlarge]



Below are the charts for NASDAQ and Russell 2000; if interested the 50 day simple moving averages for the two are 2231 and 620 respectively.

So with the caveat that the S&P 500 is sitting right at the 50 day (simple) moving average, the charts are on their normal path upward.  With "Magical Monday"awaiting us, it will be interested if the S&P 500 will have any trouble with this level.

I did expand some individual positions along with adding index exposure once the trio of levels I was seeking to pass over happened, but with on and off access to computer for most of this week I am below long exposure I'd normally have. Further, we are overdue for some sort of pullback so a drop back to the exponential 50 day moving averages would not be surprising.  But at this moment we seem to be right back to 2009 type rallies... V shape, with weak volume.  Very different than usual.

Interestingly, the market has been able to do quite well even in the face of the US dollar having a solid week.  I have been using the dollar as a low beta hedge against market drops, but it's performing well even during a time the market rallies so that's a bonus.

On the economic front, nothing of note Monday but a Ben Beranke appearance Monday (11 AM EST).  Case-Shiller and a consumer confidance survey are on Tuesday, with new home sales and yet another appearance by Helicopter Ben (10 AM EST).  Durable goods are Thursday morning with yet another Ben appearance at 9 AM.  How many times can one man say  "I have the kerosene - and I am happy to use it for an extended period of time"?  I am sure one of these days, 1 small phrase in paragraph 28 will cause a selloff or a rally as we obsess about one man controlling our markets with his money levers.

For the portfolio as discussed above with limited computer access in the near term, I am underweight some exposure versus how I would be if I had better ability to adjust if the market turns very sour.  In a larger sense all dips are to be bought now that the 50 day (exponential) has been recaptured in all index charts, but that policy changes if they begin to break down again.   With the market due for a breather the nature of the pullback will be interesting to watch.  Overall however, it seems in this new paradigm market all light volume days mean the market will be walked up... whereas the market can only sell off when the sellers come out in force (high volume).  In any year other than 2009 this would make no sense.  For individual positions, we sold half the Wyndham Worldwide (WYN) to lock in a quick profit, looking to repurchase on a pullback over a move over a recent highs.   American Superconductor (AMSC) was closed out, as it was unable to mount a rally even in a very strong week for the market and was stuck below the 200 day moving average, so there are easier directions to turn.  Skyworks Solutions (SWKS) was added to as a solid looking chart.

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