I am slowly increasing long exposure here with a broad based buy list - most of these are increases of 0.4-0.7% each so nothing material in each but as a group they are pushing up the long allocation. The general markets have lost 9%+ in a week - that does not mean we don't fall another 9% from here, but we'll incrementally add down here as the market weakens, and then sell when Lucy puts down the football and everyone is screaming we are missing the buying opportunity of a lifetime.
I added to
- Mosaic (MOS) [replacing the portion I sold Friday]
- BHP Billiton (BHP) [replacing half I sold Friday]
- Ocwen Financial (OCN)
- Potash (POT) [replacing portion sold early last week]
- James River Coal (JRCC) [replacing portion sold middle of last week]
- AeroVironment (AVAV) [I had cut this to a 0.2% stake on the strength Friday so just replacing half of what I sold]
- HDFC Bank (HDB) [I had only a 0.1% stake going into the day so its back to the lower end of a recent range]
Also a long standing limit order to buy Allegiant Travel (ALGT) at $33 hit this morning so we're up to a 1.0% stake there (up from 0.1%). All together this is about a 5%ish increase in allocation to the long side.
To offset this I've added about 3% in index shorts - still shaking my head I came into the week with sub 10% short exposure; mother market smirks at me.
Both the Brazilian ETF (EWZ) and the Chinese A Shares (CAF) are back to support - so those are intriguing plays down here; if you are a believer in the Chinese miracle this is where you'd want to make a stand. But once again it shows you - you simply cannot buy breakouts in this market because they are reversing so quickly. I cannot stress how counter intuitive this is - "signposts" that we used to trade on no longer work.
Missed opportunities include gold/silver and that short on Mobile Telesystems (MBT). Capital One Financial (COF) is an amazing chart of death.
I'm incredibly intrigued to see if the market completely ignores Obama's "savior" speech on housing tomorrow.
Interesting note ---> The S&P is down about 28% from the 200 day moving average. 25% used to be "extreme" divergence. (i.e. buying opportunity for "reversion to mean" aka snapback rally) We hit an all time peak of 37% on that dark day in November 2008. So depending on where you sit we're either at an extreme (based on historical averages) or have a chance for another 8% down to match the new "normal" extreme. Food for thought.
Long all names mentioned execpt EWZ, CAF, MBT in fund; no personal positions
Did you like this article?
's
