DECEMBER 14th: PORTFOLIO POSITIONING
During the trading day today, I tweeted the following: I am now holding EDC, AGQ and DGP. This is a market where you are punished severely for being a day or two early. I do, however, expect the snap back up on all of these issues to be as equally...
DECEMBER 13th: PORTFOLIO POSITIONING
During the trading day today I tweeted the following: In addition to the silver long (AGQ) I took on yesterday, I added gold via DGP. I also took on emerging markets exposure via EDC. These are all dollar sensitive trades that will benefit from the US Dollar putting in a top in the near-term, which I believe it is close to doing. This seems like climactic buying that is leading to a blowoff top in the dollar (bottom in Euro). Likewise, it is influencing the gold/silver trade and emerging markets/commodity sector. My plan is to hold these positions into next...
DECEMBER 12th: PORTFOLIO POSITIONING
During the trading day today I tweeted the following: I took off a majority of the short exposure today. My only remaining short position is in financials via FAZ. I took a 1.50 point profit on half of FAZ in the 40.80 range during the last hour of trading. I took a .10 cent profit on SQQQ in the 19.50 range. I took an average profit of .90 cents on TZA between 27.96 - 28.20 during the market and afterhours. A new position was initiated in AGQ (leveraged long...
DECEMBER 7th: PORTFOLIO POSITIONING
During the trading day today I tweeted the following: I am comfortable enough with my current thesis to add another 3X short ETF to the portfolio. This time focused on the small cap sector - TZA. I am now full in terms of short equity exposure. Currently holding SQQQ, FAZ and TZA. I am considering allocating towards a short commodity leveraged ETF tomorrow morning. If and when I do, I will post it to Twitter in real time and here later in the...
SHORTED FINANCIALS TODAY: HERE’S WHY
I took a mid-sized position in FAZ today. I have explained the trade from a price action perspective below. There are also reasons that go beyond price action, including current sentiment, potential news flow and seasonal cycles that are at issue here. I focus on price action because that is where I look first and foremost. click chart to...
DECEMBER 5th: PORTFOLIO POSITIONING
During the trading today I tweeted the following: I now have a large amount of short exposure via SQQQ taken on Friday and FAZ taken today. I will explain the reasons behind the FAZ trade in my next post. These are trades that I plan on holding through the end of this week and possibly into next week depending on how the market...
DECEMBER 2nd: PORTFOLIO POSITIONING
During the trading day Friday, I tweeted the following: I took a decent profit in TMV after the reversal back up in bonds went up much more than expected on Friday. This isn't an environment to become complacent with profits since they tend to disappear overnight. Towards the end of the trading day, I opened a mid-sized position in SQQQ. I'll be providing the chart analysis behind this trade tomorrow. It's a short-term trade that will, in all likelihood, be closed out before the end of next...
NOV 25th: PORTFOLIO POSITIONING
During the final minutes of trading on Friday I took a mid-sized position in TMV. I posted the following tweet shortly after the close: This is a short long bond/long yields trade. The dynamics behind this trade are similar to the short gold trade I initiated in September. On August 21st, I posted an article with respect to the fact that a majority of future scenarios results in lower gold prices. Basically, there were very few scenarios that would see gold continue shooting up. I believe the same to be true with the long-dated US debt at present. If you remember during the 2008 crisis, the second leg of the crisis saw yields skyrocket while equity prices plummeted. This was in direct contrast to the first leg of the crisis which saw US debt become the investment of last resort. That mentality changed as fear turned into panic. At present, we are getting to a point where if things continue moving down the fear we have seen over the past few months will begin to turn to panic. There is a pronounced difference with our current crisis, however. The sovereign debt of our next door neighbors (economically speaking) are being drawn into question now. With this past week seeing the debt of Germany actually being greeted with some suspicion based on worries of a worst case scenario for the EU taking place. You can bet if the panic police are knocking on Germany's door, it is only a matter of time before they come looking in the next door neighbor's house. Not to mention, we have seen that when fear turns to panic, all bets with respect to the stability of so called "bastions of safety" come off the table. The alternative scenario is that we begin recovering some of our equity losses here over the next couple of weeks. In which case, attention will begin shifting to the US economy and the potential for another great quarter of earnings in January. Given the compressed state of yields, we are far from factoring in any type of economic stability, with fear and subsequently safety being at the forefront of investor's minds. From my perspective, it seems that either way you slice the short bond/long yields play, it has entered a zone where substantial odds favor an increase in yields over the short to...
RISK ASSESSMENT WEDNESDAY: A LESSON IN CONFLICT
For those unaware, risk assessment Wednesday is one of the methods I use to control risk in the portfolio. It's a very simple concept. Basically, if positions are running at a loss, Wednesday is when I am forced to look at them on an unbiased basis. I will inevitably reduce risk in the portfolio if the trend amongst the holdings is detrimental to portfolio value. It's one more way of taming volatility and keeping a balanced mental capacity regardless of the situation. Risk assessment Wednesday was born out of my tendency to become so convinced of my thesis with respect to the markets that literally nothing would stand between my finger and pressing the buy (or sell short) button in an effort to take on as large a position as possible. This tendency led to a stellar rise in my former hedge fund. It also led to the dismantling of that very same fund just two years after I was at the top of the game. It is essentially my way of preventing one of my admitted weaknesses from costing me performance. I don't care how good you think you are in this business, if you haven't tailored your strategy with specific attention to minimizing the potential of your weaknesses and maximizing the potential of your individual strengths, then you already have one foot in the grave. Risk assessment Wednesday is weakness control. With the conflicting signals I am seeing in the markets currently, risk assessment Wednesday this week was a no-brainer. The seasonal studies based on performance of the market thus far in 2011 are pointing to a market that is bound to move higher. As are various sentiment and correlation based studies. On the other hand the price action now is officially disasterous. Far beyond any type of conceivable fake-out or normal pullback within a bull trend. And this is paired with the results of the study I published last night. The study nailed the August-October time period. I am not sure if the results will be as stellar here. However, it deserves a great level of respect given its accuracy over the past several years. The basis of the study is grounded in the premise that oversold markets that are steeped in pessimism have a tendency to run further to the downside than most anybody expects. When markets fail to respond to deeply oversold conditions while paired with excessive levels of pessimism, it is a sign that the market mechanism (or deception mechanism as I like to call it) has broken down. This is the point when markets become the most dangerous. More or less burying...
NOV 23rd: PORTFOLIO POSITIONING
Early in the morning, I tweeted the following: More on this...