Bookkeeping: Weekly Changes to Fund Positions Year 2, Week 46
Submitted By Trader Mark
Year 2, Week 46 Major Position Changes
ng>To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.
Cash: 50.2% (vs 58.0% last week)
31 long bias: 42.0% (vs 38.2% last week)
7 short bias: 7.8% (vs 3.8% last week)
38 positions (vs 37 last week)
Weekly thoughts
First to our 2 charts, simple versus exponential....
On the exponential end, we had a rejection at the 200 day - and now a bounce. Really I don't see much here - I'd be leaning to get long if we get north of the green line and started a new "breakout". But for now we are in a white noise are between "red" and "green" with a lot herky jerky but nothing of consequence. That said the 20 day moving average was finally broken last week for the first time since the 2nd week of March.
On the simple end, a very interesting chart - after stalling out in the S&P 940s, the index reverted exactly back to the 200 day moving average mid week... at least where the 200 day was at that time. It bounced.... where did it bounce back TO? The 20 day moving average intraday Friday morning... so we have another triangle - only in this case the triangle is expanding wider by the day - at least for now. Very soon the 50 day moving average will cross over the 200 day which normally is a very bullish condition but normally that is when both are moving upward.
 The only period in the past decade when the 50 day spent a long time below the 200 day and then crossed above it was mid 2003. That marked a great time to buy; the new bull market (within a decade long bear) had begun ... however the 200 day moving average (simple) had flattened out by mid 03, and indeed was starting to curve upward. Due to the steepness of this rally in 09 - in duration (very short) and magnitude (extreme) ... the 200 day has not had time to flatten not to mention turn back upward; in fact its almost at a 45 degree angle down. So these are uncharted territories, at least in my experience. Maybe a better example could be found in the 80s or 70s.
Either way I am going to be relieved when these 2 charts begin to track each other much more closely - this 200 day moving average is a very important indicator and watching 2 completely different stories unfold is just another fog of war situation. What is even more amazing is we were rejected at the 200 day EXPONENTIAL moving average but then bounced off the 200 day SIMPLE moving average. Yeh... you try to explain that to the kids.
This week is "Fed week"; by all "words" the Fed won't be expanding any of their programs - they have repeated in multiple stories I have read they view the rise in bond yields as "healthy" even as it retards the house ATM refinance plan, and slows down home purchases. But right before the did the first quantitative easing program (at the March meeting I believe) there was any number of Fed leaks saying they would not do any QE anytime soon. Then lo and behold, they surprised the market with easy money rained from the heavens and speculators rejoiced... shorts were shot. So as with all things government or quasi - watch what they do, not what they say. Speculators have already switched from deflation to inflation and predicting interest rate hikes by year end - I've said already 3-4x I find this thesis to be complete garbage considering we still have deflation in many parts of the economy - and the US consumer is in disarray. So we could see the Fed adding new language to make it clear to these folks that they plan on keeping rates low and money nearly free for the rest of the year... we'll see.
We have 5 full days for the quarter this week and then 2 more days the following before June, and by definition quarter 2 ends. For many a year now the quarter ends have been defined by "mark ups" not necessarily in the final day of the market (even the SEC could catch that) but in the 2-4 days ahead of it. Urban myth or reality or self reinforcing dynamic - who knows, but almost everyone will be talking and anticipating this now almost obvious situation. We'll see if it begins to happen around mid week.
Outside of that we have a few economic data points ... I am almost resigned to everything being better than expected at this point because HOUSING IS SEASONAL and MAY is ALWAYS BETTER than MARCH ... every year. Just as June is always better than January - every year. But "we" are so desperate to keep this going we continue to point to month over month housing data as "green shoots". When instead we should be discussing year over year data (still abysmal)... but there is no point talking to a wall of lemming. What this does tell me is when the housing data falls into a seasonally unfavorable period (post summer) there is going to be a lot of disappointment as month over month data (which is the incorrect way to look at real estate) falters. So both new and existing home sales data come out mid week, as does durable goods orders, as does the Fed news. So expect a lot of gap ups and downs as we react in knee jerk reaction to every data point as if it changes all our views minute by minute, as if the NYC casino is some fantasy football game. "What? Existing home sales increased 1.7% when economists predicted 1.62982912%?! Get me into every stock you can, pronto! Yes! Any price! Good days are here again!" or "Durable goods orders fell 0.21289128% more than economists predicted? Sell the market - I want out! Everything! Get rid of it all! The economy is doomed!" or "Bloomberg reports that the always open & transparent Chinese government is telling us that their Purchasing Managers report (with a whopping 4 year track record) is showing positive news! Better than expected! Get me into everything! Double the commodity exposure! NOW!"
 And so we go with the A.D.D., video game generation, react to every economic report as if its Peyton Manning's completion percentage - HAL9000 casino. It sounds facetious but that's how the market really does operate now. Off to go read some earning reports and review fundamentals while snickering to myself what a waste of time it is.
I wish there were more panthers and less lemmings in this world
To conclude let me finish with a chart of a little known stock that is among the hottest in the entire market... I'll have to investigate this one, new to me ;) Notice how good things happen when the 200 day moving average is broken resoundingly.
 
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