So it appears that hedge funds are now all long the equity markets which means we will likely have a little more upside in the near term followed by another round of selling later on this year. If the S&P clears the $1278 level then we will likely head higher over the medium term as $1278 is the 200 day moving average. The market model is still holding our 33% short position which can be covered for a 1.5% loss to the total portfolio. While we are hurt by the small loss, the market model is still up nicely since our July 7 short call and we have had absolutely no correlation to the roller-coaster equity markets this summer. Once the S&P 500 hits $1274 we will again be more negative on equities and will likely issue another 100% short position or more at that time. We are now over the 100 day and 50 day MA’s so the vacuum higher should be relatively easy for the robots to perform even without any fundamental reason to move up in the near term. Stocks in general move higher over the long term but the situation in Europe needs to be watched closely.
Tag Archive for Stock Trading
My politics are decidedly liberal/libertarian/fiscally conservative/anti big government (Constitutionalist) but one thing I cannot stand about the Clinton and now the Obama administration is the idea that stock prices are efficient and that poor business decisions by management at public companies should be left alone and not dealt with on a regulatory basis. Why should a guy make $20,000,000 for losing someone else’s billions? It simply seems naive to assume that managers and CEO’s of public companies have the best interests of their shareholders at heart.
In short, we have entered the new dystopia which seems eerily similar to the 1999 dystopia — fraud is cool again on Wall Street, and that sucks. Essentially, managers who bankrupt a public company need to face comepnsation clawbacks. They should lose the same amount on a proportional level as their shareholders. This is the only way that markets can self-regulate and we all know that the current system is not working.
As for oil prices, the OPEC announcement should make investors wonder if OPEC can actually increase production at all… When a despotic leader is behind the spigot, they will want to pump as much oil as they can before their political influence declines.
Pomo is the tail wagging the dog these days so remember that next Monday is “just” a 1.5 Billion Dollar day and that usually these smaller POMO days end with losses or flat markets. It’s very hard to make a valuation argument for many of the more speculative issues trading today that most everyone loves, and while cloud computing is huge, it is likely not enough to create another leg up in the current tech bubble in my opinion. Additionally, several more famous market timing models have turned negative so now may be a good time to either get short 1/1 against your longs or at least to play defense versus playing offense.
Real Estate: I do think that Real Estate could eventually catch a meaningfull bid and also that Gold and Silver are decent investments for the longer term right now as well as agricultural land…
All in all, a mixed bag with equities being priced for high inflation (ie as an inflation hedge) and commodities under fire from a margin hike and regulatory/political perspective.
Consider investing in Blue Chip companies before small cap value stocks: Here are 10 of the best Blue Chippers to own: