Monday, September 14, 2009

Red Rocket Forecasting (and a dish of Trish)

Here's a guy who looks like he knows what's coming next.

While the US market has continued to rise, market sentiment is erecting faster now than prices themselves. Monday's reversal had merit, but this was no great percentage reversal; while volume declined to the lowest levels in the previous few sessions.

As long as the market is rising, this sentiment stuff is not so important (lunacy has no boundaries). But if a down-trend were to develop, coincident with eager, buy-any-dip sentiment present, that would get me defensive in a hurry.

That said...

-Parading CNBC-heads who at much lower prices were arguing we'd pullback because the market was overdone, have shifted to the general opinion that this market wants to go higher and can be bought.
-Maria Bartiromo was uncharacteristically giddy Monday, in fact she was cackling, even, over the market's incredible resilience (we should discount this some, however, since her big-boned parent GE was leading the generals, up >4%).
-And message boards today saw a notable pattern of capitulating bears covering shorts, citing something along the lines of "this market wants to go higher." Interestingly, there were several examples of people covering and turning around and getting long.
-Tuesday we'll see if Trish's octaves shift to dramatic, as she was on too early Monday to digest more than the market's negatives (fears of a trade war with the Chinese rattling investors around the world, etc.).

Trish is basically a sentiment composite; a sponge. I'm pretty sure she has no real thoughts herself (think Buddha), but her job (posted by CNBC on the floor of the NYSE no less) is to ask questions, interpret and report what all these smart people around her are saying; presenting it in her best professional news-casting persona. That sounds cruel, but I'm not being cruel. I don't think she knows anything about markets, what's wrong with that? Trish is pure, In fact she's a muse. If you know how to listen, especially to changing tones, then Trish is the best real-time sentiment indicator who's still in the business. When the inflection gets extreme (such sweetness), that grating shriek signals the wave is complete (that ride is over).
Recall a lady named Trish
Far from a CNBC dish
But if you listened real close
When that shrill voice did roast
The opposite direction commenced

Special thanks to TK for inspiring the latter, with his Green Clovers limericks post after the close today.

Total Position: Aprox. 3-to-1 net-long, considering hedges; 89% invested (pure-longs amnt to 70%)

Currently Long (according to size): SWI (5.9%), CTSH (5.4%), NEU (5.4%), CYOU 5.4%), ULTA (5.2%), RKT (5.2%), SNDA (5%), EBIX (5%), CLW (4.8%), MRVL (4.8%), SWM (4.1%), JDAS (4.1%), ININ (3.9%), HAWK (3.5%), FNSR (2.7%)

Currently Short (according to size):
SKF-long (US Financials Dbl-short; (7% position)
(Note: inverse-ETF SKF represents being dbl-short the respective index).
-Also Long-UUP here (12.1%); which due to inverse correlation with equity mkts defines this as an equity hedge.

Futures Accounts: Short Dec BR Pound (20%), from 1.6678

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