Monday, May 24, 2010

Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 42

Year 3, Week 42 Major Position Changes

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

Cash: 84.5% (v 75.0% last week)
18 long bias: 13.5% (v 18.2% last week)
2 short bias: 2.0% (v 6.8% last week) [Includes 1 'long dollar' position]

20 positions (vs 24 last week)

Weekly thoughts
A very busy and exhausting week which had most major indexes giving up roughly 4% of gains - it would have been substantially worse if not for a miracle finish in the closing 15 minutes Friday which garnered a 1.5% gain on the S&P 500. Not sure what to make of that last flurry - seemed very phony to me but has potential to affect charts in the near term.

Technically, it was a bad week for the S&P 500 as the index broke below the 200 day moving average for the first time since July 2009. And remained below that level.

Friday's action had some signs of an intermediate reversal back up, but was losing momentum in the afternoon. Technically with the 1.5% gain in that last flurry Friday, it was more of a typical reversal day but as of 3:30 PM it looked very much a disaster. So hard to tell what to make of it. Either way, until the market can regain the 200 day caution is in order.

Individual stocks took a beating - there are littered bodies all over the stock charts. Many are potentially deeply oversold, to the point they can rally 10-15% but still be in bad technical position. The larger question is can this market pull off another magical V shaped recovery - the type that used to occur once in a blue moon but the past 15 months has become a regular occurrence on any pullback. Historically one should doubt it, but in 'recent historically' one should expect it.

To the downside are lows reached last week, along with S&P 1045 from Feb 2010. Below that it can get ugly. I outlined the areas the market needs to work through on the upside. Until we get back over the 200 day moving average to the upside, or break to new lows to the downside we're in another white noise area.


Much of the economic news last week was ignored as technical measures and European news dominated. Let us see if the same issues arise this week - nothing was 'solved' Friday other than a 15 minute flurry of buying and a technically oversold market tried to bounce.

Monday - Existing Home Sales; an interesting number as traditionally home sales figures should begin to rocket as spring selling season takes off but the meddling by government with the $8000 (and $6500) tax credits is skewing all data.

Tuesday - Consumer Confidence

Wednesday - Durable goods (volatile) and the less important New Home Sales.

Thursday - First of many revisions to Q1 GDP

Friday - Personal Income & Outlays, Chicago PMI


For the portfolio after trying to do some buying the previous week as individual stocks broke back over their 50 day moving averages after the 'flash crash', I was busy reversing course. Once more the market dictated terms to us and we were stopped out of smaller type positions with manageable losses, while hedging that with intraday put and levered ETF positions most of the week. By Thursday we began looking for a bounce and said we'd be interested buyers in a move to the 1060s - which happened Friday. So we partook in a quick play on the long side with calls and levered ETFs for an intraday trade. Building long term positions is (a) too cumbersome right now and (b) not many charts are good enough to begin doing so; it is all knife catching.

On the long side:
  • Monday, sold half of Lennar (LEN) and BorgWarner (BWA) for 3 and 4% losses respectively.
  • Tuesday, cut Skyworks Solutions (SWKS) by 2/3rds but didn't like the looks of the chart and said I'd most likely sell the last 0.3% in short order. Which I did the next day.
  • I had attempted to get back some Riverbed Technology (RVBD) the previous week when it began bouncing nicely but the market selloff caught this stock in its wake, so I was forced to sell 60% for a 4.5% loss.
  • Wednesday, added back to the Ultra Silver (AGQ) I had sold the previous week (20% of the position) 14% lower.
  • Closed hotel chain and long time holding Wyndham Worldwide (WYN). Chart was weakening severely.
  • Closed Netlogic Microsystems (NETL) - another chart situation and clearing out space for some potential buys in the future.
  • Friday I began to hedge long in the morning with TNA ETF in the lower S&P 1060s, I added more nearer to 1070 as well as intraday SPY calls. I sold one batch mid day and then the rest once S&P 1079 broke to make sure I locked in profit.

On the short side:
  • Too many "Short TNA" and "long SPY Put" positions for intraday action to mention; most were short term intraday to avoid overnight headline risk.

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