Thursday, October 01, 2009

Quickshift (from bounce to trounce)

Don't bother to scroll down and read recent market musings, brilliant as they weren't. Talk is great, but a striking blow really gets one's attention.

I've adjusted towards market neutral here; increasing the TWM hedge and culling-out a few longs. Unless the market pulls one out of the hat again today (doubtful) we have a bonafide pullback now under way.

While today's internals are not quite severe, they are resolutely negative and imply a low likelihood of any recovery for this session. Given that potential sellers may be hopeful the market may again recover, the stage may be set for an ugly final 90 minutes; as it becomes clear a bounce-back will not be the case.

And important to note - leadership growth is taking considerably bigger blows today than the broad indices; opposite the action during recent selling pressure.

I don't want to sell too dramatically yet, but I will respond further by 2:30 PM EST if I don't see improvement. If we close badly I expect to be market-neutral at minimum before the end of day.

There are bright spots still, but these are now shrouded by a majority of worse. I do not have downside targets. We are in a pullback at the moment and it will be my focus to determine whether or not it is developing into something worse (or not) and act accordingly.

How bad has it been here so far? I'm absolutely reeling - ha!

-Total Position: Aprox. 1.5-to-1 net-long, considering levered TWM and low-beta UUP hedges.
-61% invested
-Pure-longs = [Edit: 34%, not 44%]

Currently Long (according to size): SXCI (6.3%), TSRA (6.2%), CFSG (6.2%), SWM (5.5%), BCSI (4.9%), JDAS (4.9%), CTSH (7.9%), ULTA (4%), RINO (2.4%)

Currently Short (according to size):
-TWM-long (Russell 2k Dbl-short; 15.1%)
-UUP-long (12.2%); current inverse correlation with equity markets defines this as an equity hedge
(Note: inverse-ETF TWM represents being dbl-short the respective R2k-index).

Futures Accounts: no position

No comments: