Tag Archive for short QQQ

Hedgephone Says: “HEDGE”

March 28, 2012 Equities

       The time is here to lock in gains and hedge your portfolio risks. Even though this rally could still have a few percentage points left to run, we think the time is right to take much of your equity long exposure off of the table and to wait for a meaningful correction in equities. While “timing” the market is difficult, valuing the market based on CAPE or the Shiller PE ratio makes a good deal of sense. Right now, profit margins are higher than they have been in thirty years and profit margins are generally mean reverting. Granted, the rise of the internet has become a source of higher margin revenue for companies but the general theory of mean reversion when it relates to profit margins is pretty sound.

All in all, only the most risk hungry speculator should own stocks here unhedged after a 15% or so rise in the Nasdaq 100 so far this year. We think that the market is poised to repeat last year’s timultuos summer of discontent and are looking to short some things here including but not limited to Salesforce.com (CRM), QQQ, Amazon.com (AMZN), LinkedIn (LNKD), Dunkin (DNKN), IWM, MDY, etc…

On the long ledger, consider holding GOOG calls as a hedge against your other internet stocks as well as Dow calls for a “long hedge” against your net short position or fully hedged position in stocks. While it is okay to own some stocks forever, we think that the stock market is at least 35% overvalued at current prices and that it is certainly time to sell stocks hand over fist.

Buy low and sell high is the fundamental tenet of becoming a good stock market investor. Right now the market is too high for us to be anything besides extremely cautious when it comes to equities. That said, some investors with a long term view should simply add on the way down or remain invested in dividend paying stocks. Warren Buffett now gets his original investment in Coca Cola back every single year thanks to KO dividends.

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WD Gann: “Never Be Short on the Third Day of a Market Correction”

March 6, 2012 Macro Economic Viewpoint

Looks like that old quote from Gann may be true this time as futures are pointing up around .3% on the QQQ. While I think we have a lot further to fall, I also have to look at the behavior of traders in the past and accept that the future could look somewhat similar.

The damage to the chart is ongoing, and I think this rally will be one to sell or short into tomorrow.

All in all, stocks look vulnerable on valuation concerns, macro economic risks, housing related shocks, banking and finance related pressures, and sovereign debt and currency devaluation.

All of the headwinds that were around last summer are just as prevalent today. While we debase our currency to prop up markets, the picture beneath the surface is not as pallatable to the long side of the tape.

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The Long Gold, Short Stocks Trade is BAAAAAAAAAAACK

January 15, 2012 Macro Economic Viewpoint

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GLD

SPY

Gold held its 200 Day MA while stocks are getting nailed due to their overbought technical condition — IE another “BAD SANTA” rally as long time hedgephone readers already understand and have sold into…

Either way, one thing is clear — Gold’s 200 day moving average at $1638 an ounce has held and the shiny yellow metal is likely going to continue its upward trajectory for the foreseeable future.

Still, our 100% short stock market model is on right here and after ten years of refinement this signal is proving resilient and accurate! Staying short stocks and long gold is (YET AGAIN) proving itself to be the trade of the decade…

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10/25/2011 Hedgephone Market Model Switches to 100% Short

October 24, 2011 Equities

This is the second or third time this year we have switched to a 100% short equity rec. at Hedgephone.com

Look to go short the CRM, AMZN, QQQ, LNKD, IWM, etc… etc… etc… of the world.

The market tape will likely get pretty ugly as the UK parliament rejected the unification of the UK with the debt zombie that is the European Union.

Also, Pumpflix’s implosion will leave momentum investors psychologically scarred.

The market is technically overbought and due for a ripe pullback.

All in all, don’t buy the hype, or buy the rip — instead short the rip and cover the dip!!!

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Market Update and Some Humor…

July 18, 2011 Macro Economic Viewpoint

So the big move today was the gap down in equities and the gap up in commodities. As many readers know I prefer gradual sell offs to gap downs, but since we are only in a (hypothetical) 50% short position in equities and a 30% allocation to metals we can move our stops closer to the current market prices and continue playing the trend.

As for the IWM I would place stops at $82 though personally I have moved from a heavy index short position to a more equity (momo plays) specific short position for the 50% short — still in the QQQ and IWM puts, but traders should consider a put spread…. IE buying the QQQ August $61 puts and selling the QQQ August $57 puts…. If you are hedging an existing book of longs, you should likely just stay in puts and not spreads, but if in a full cash position the spread trade makes a little more sense as you can always buy back the short puts for profits on a spike in equity prices….

One strategy that has worked in the recent past has been “buying rips and selling dips”… I personally like such a strategy when QE is in the market, but without QE right now I feel a more cautious longer term bearish stance on the overall market is appropriate.

As for Gold and Silver, I am getting a tiny bit more cautious on these, but the endgame is still for higher prices due to the sound money nature of the metals… Because they are a bit overbought here at present I feel a 30% allocation to metals is plenty of exposure at present but will update my allocation view on a daily basis.

If you want a more tailored approach you can always sign up for my real time newsletter service at $30 a month… I have not started the service just yet, but thanks to a small amount of demand I will likely begin August 1st.

And here is a bit of market humor for those sitting on profits with some spare time:

WORLD ECONOMIC SYSTEMS

FEUDALISM
You have two cows. Your lord takes some of the milk.

PURE SOCIALISM
You have two cows. The government takes them and puts them in a barn with everyone else’s cows. You have to take care of all the cows. The government gives you as much milk as you need.

BUREAUCRATIC SOCIALISM
You have two cows. The government takes them and puts them in a barn with everyone else’s cows. They are cared for by ex-chicken farmers. You have to take care of the chickens the government took from the chicken farmers. The government gives you as much milk and eggs as the regulations say you should need.

FASCISM
You have two cows. The government takes them both, hires you to take care of them and sells you the milk.

PURE COMMUNISM
You have two cows. Your neighbors help you take care of them, and you all share the milk.

SOVIET COMMUNISM
You have two cows. You have to take care of them, but the government takes all the milk.

DICTATORSHIP
You have two cows. The government takes both and drafts you.

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