Monday, June 14, 2010

Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 45

Year 3, Week 45 Major Position Changes

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

Cash: 85.6% (v 84.8% last week)
16 long bias: 10.6% (v 13.1% last week) [Incudes 1 option position]
4 short bias: 3.8% (v 2.1% last week) [Includes 1 'long dollar' position]

20 positions (vs 21 last week)

Weekly thoughts
The first positive week in the markets in 4, a series of premarket mark ups were once again a key component in last week's rally.  Last minute flurries of buying or selling have also been a hallmark lately, similar to what we say in much of 2009 where the last 30 minutes dominated each day's trade.  "Student body left" trading remains the name of the game as it has been for the past 2-3 years... what you own has little importance... if the market is up, you can buy almost anything, if the market is down, you can sell almost anything.  Each day is news driven and without memory of the previous day.

Technically, we have a quite simple setup really.  Either we've just come off a 'double bottom' and are ready to rock and roll, "V shape" style once some resistance is punctured.... or we've simply bounced to the top end of a recent (large) range and will soon be hitting a brick wall.  Obviously no one knows the answer in advance.

[click to enlarge]

I've mentioned this large range as S&P 1040 to 1100ish, which has been split into sub categories of 1040 to 1070, and then 1070 to 1100.  But I also want to note there is a distinct level of resistance if you are using the exponential 200 day versus simple 200 day, about 9 points: 1099 v 1108. Why is this important?  Because on the last rally attempts it was the simple moving average, rather than the exponential where the market actually topped out, albeit it the 2 figures were much more closer back then.

Other than that, the other main focus continues to be the Euro which is heavily shorted and continues an oversold bounce.  It seems every computer on earth is triggered to but "risk on" (wax on, wax off) when the Euro is headed upward, and take "risk off" when the Euro falters.  We'll see how far the Euro can go as it probably faces some stiff winds in the mid $1.22s and then $1.24.

As for economic news, the U.S. has shown some weaker signs the past few weeks with a shoddy labor report along with weaker retail sales.  But as last Friday showed, the market will do what the market will do and economics is many times just a sideshow (in the near term).  At this point the market seems much more technical in nature and the economic data - aside from the 'big name reports' - has been largely ignored as we are slaves to Euro moves and charts.

This week the economic data are focused on Tue-Thur, with Wednesday being the most interesting day.

Tuesday: Import Prices, Empire State Mfg - neither really move the needle

Wednesday: Housing Starts, Industrial Production, Producer Price Index - most likely there will be a move in premarket based on this data set

Thursday: Consumer Prices, Leading Indicators, and Philly Fed survey


In the portfolio, I used last week's strength to lighten up on positions that were not performing.  Of course if "V shape bounce 8.0" is in the offing all sales will look foolish.   Bigger picture we are in a large range and nearing the top of it, so my inclination is to assume a failure and retreat but I am in 'wait and see' mode.  Further, China's market remains weak, (doctor) copper is bouncing off 5-6 month lows, and stimulus measures shall begin to slow down 2nd half 2010.  On the flip side the Euro banking system is engaging in their own form of 'liquidity' and in a world where economic activity is weak in most developed markets (Asia is another story), all this liquidity needs to find a hope and is happily gathered in financial markets.

Since the market is in one of those rare times below the 200 day moving average one should still skew to caution as that is a very important line in the sand.  If we get back over it in the coming days or weeks then one has to change assumptions - it really is as simple as that. Hence the area of interest this week is 1100 (200 day exponential) to 1108 (200 day simple) and seeing how the market acts in this area.  Near term game plan is to see if some of my limit short orders hit here in the 1090 to 1110 range, with tight stops in case the market does another "V shape" bounce.  If the market can burst over the 200 and 50 day moving averages, I will change themes and focus on the long side again - this would be over 1120 or so.  So the next 30 points will make a big difference to my intermediate term views.  Staying below 1100 = bearish, getting over 1120 = bullish.

On the long side:
  • Early in the week I cut back Tibco Software (TIBX) and F5 Networks (FFIV) as they both broke support, once again marking a short term reversal (when I buy these, the market reverses down, when I sell them the market reverses up!)
  • I closed TriQuint Semiconductor (TQNT) which is simply not performing.
  • I created a starter position in (CRM) when it fell to initial support, as I create a wing of the portfolio where valuation means nothing.
  • Wednesday, I put on some modest index long positions expecting a bounce - but was shaken out by the late day reversal.
  • I closed SL Green (SLG) and Riverbed Technology (RVBD) as the stocks had rebounded a bit from their worst levels but there are many other stocks with far better conditions right now in their charts.

On the short side:
  • Tuesday, I sold all my SPY 107 puts and 2/3rds of my SPY 106 puts as the market went down into the 1040s, for a nice profit. I sold the rest as the market began to bounce over 1050.
  • I shorted Irish airline Ryanair (RYAAY) with a simple technical set up - the stock is near the 200 day moving average.  Either it will run through it or fail. 

To our English readers - a big shout out to Robert Green.  Your check is in the mail.

    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