Weekly update 1/30

With the SPX down to 1498 from 1511, that could actually be it when it comes to downside for now.

Weekly update 1/29

SPX at 1508. Look for a short term top in relation to the FED-meeting. I am completely hedged now with beta adjusted 0% net long positions (hedged long and short equity positions as well as equities vs commodities). Looking to gradually increase net short in the coming 3 days both in time and space (index level 1410-1415). This is not for more than 10-20 handles downside target. Also not sure how much higher we can go before a larger downturn as well. Not willing to risk net long at these levels and above.

My strategy will still be to sell volatility on any day spike and collect some premium. Writing covered calls is an excellent strategy in this environment where the market is stretched to the upside but still has limited downside. I would also write some puts as we go down 10-20 handels to best take full advantage of the consolidation phase.

Chart update 1/25

S&P now at 1502. A lot of people have jumped on the bandwagon the last week. Earnings and Revenues are not super great but they are there and equities are valued at around p/e 15 on this years earnings. Apple is yielding more than 10Y US Treasuries. I am not saying 10Y US Treasuries would be where they are without the FED's actions but still, there are bullish cases to be made and as long as that is the case, the bullish bandwagon is to be respected.

Considering the rapid rise and many days without correction I think the market will frustrate the  hell out of both bulls and bears in the coming weeks, a trendless low volatility market say 1490-1510. Then we will see some final push in to 1520-1530 where the situation will need to be reevaluated but for now I am comfortable shorting equities there and being long short individual equity names as well as long short equity index vs commodities on the way up there. Most likely we will have a trendless market up there for some months.

What is more interesting and potentially trending is the commodity space. Gold could be breaking down hard and to a lesser degree copper. I believe there are two drivers behind this move now, 1) the beginning of the first period end of money printing (i.e. there will be more later on). 2) the great asset class rotation from interest bearing assets to income generating assets.

Apple earnings

I have been negative towards the iPhone 5 and lack of new ideas after Steve Jobs death, but at 445 AAPL is a screaming buy no matter the obstacles. I believe the shares will continue to trade violently in something like a 100$ range until all weak hands have been shaken out. Longer term the company will face pressure from competitors but short term, valuation and still a strong product mix will help the shares.

Weekly update 1/23

I am once again establishing short positions in precious metals. It seems a lot of the central bank news, including BOJ has been discounted in the short term and I belive we will have a nontrending/declining picture for the precious metals this year so I will be shorting on rallies.

This also rhymes with generally excessive hedges in the risky markets which means any short positions in the equity markets will have to wait until these hedges have been neutralized.

Weekly update 1/17

January OPEX tomorrow and the S&P at 1484. Looking back at the previous post I would actually ride this rally a bit further considering the latest central bank news, the more nuanced FED ending QE-talk, the overall decent earnings and general (still) tendency to very quickly take profits, hedge, be under weighted, whatever.

I think my strongest calls on 1) low volatility / sell volatility on spikes, and 2) short commodities vs equities, still are the place to be. Looking at individual equity names there has been huge rallies in the most shorted stocks lately. They are mostly still awful businesses so the upcoming short opportunity will not be in the major indexes but in individual names. I am preparing a basket of shorts against the market to be entered gradually as the market will be topping out/drifting sideways during the period starting february and forward. I will then also try a short basket of commodities against equities, although the hedge will not be 1:1 since I also believe there will be a decline in equities in absolute terms but not in relative terms.

Weekly update 1/3

Woha, debt ceiling relief with a boost! So what is the reaction to the action?

1) Debt ceiling relief. Short term, sell voll and await a further squeeze to 1480-1500. There it's time to be net short again. Seems like we will have a strong NFP report tomorrow and maybe finish the squeeze into january opex.

2) The Feds announcement of ending QE 2013! This is huge. My calls on buying USD, selling commodities including gold was valid even without this announcement. Now these strategy calls seems like the best bets for the year. Sell everything commodity and small cap like and buy large cap and relatively safer assets. Don't confuse end of QE with end of 0 short term interest rates. I believe that further along there will be requirements for more QE and then new buying opportunities in commodities. We are far from there right now though. The bullish retail speculators need to be flushed out.