This is a frustrating time for me. In early November I cashed out on half of my overall positions that I bought in early September for nice gains. The stocks I sold have either gone up a bit or are flat since then. Do I buy them back or just forget about them until next year? Some of them are consolidating very nicely here like tec.to (I still own half of my original position). When I look at the charts from a stand alone basis it says I should be looking to re-enter these stocks if the entry point is favorable and you know what? I think that's what I'm going to do but fuck I'm still hesitant. These stocks were fairly non-correlated to begin with and so I shouldn't be getting so hung up on ST market concerns. Plus I can always hedge those concerns away via an OTM index put. There's also other stocks showing great basing action as well such as nd.to. Oh boy, what to do what to do....
Tuesday, December 7, 2010
More LT positives
The Obama administration has agreed to extend Bush tax cuts for 2 more years. This is very market friendly news. How much of it is baked in though? Tough to say but with market leading NASDAQ making a fresh, albeit very marginal new 52 week high I wouldn't rule out higher prices still. I just read this article which talks about how firm hiring plans are the strongest they've been in 2 years. I mentioned the other week how initial claims for unemployment is approaching the 400K threshold which in the past has signaled sustained and signficant monthly job creation. It seems to me that more and more evidence is pointing towards strong job creation in 2011.
Subscribe to:
Post Comments (Atom)
What about the complacency demonstrated by the VIX and the low put/call ratio you see early on in the trading day? There are definite signs pointing to that the market is filled with exuberance of a year-end rally. Some of the market leader that I observe such as IBM, MMM, and MOS have not made new high this time around. In some way showing negative divergence with the overall indexes.
ReplyDeleteBut yes I do agree, price action have been very positive. You got the Government and Central banks on the side of the market and that is hard to fight against. Also the stocks I have mentioned is only 2 - 3 days away from making a new high for the year.
To be honest, 2010 has being a good year to me, and this is only my second full year in the capital markets - much thanks to your commentaries and valuable insights. I will remain focused and humbled heading into 2011.
The only thing on the horizon I can see that will have will material impact on the market is the situation in China. We all know that inflation is rampant in China and property prices are bid up by a lot of domestic and foreign speculators as well as the big state-owned Chinese companies are also in the property market.
ReplyDeleteMany people are hoping that the Chinese policy makers somehow will get it just right, in that the economy will have a soft landing and the housing market will be stabilized. But I believe it is a very tight rope to walk on, and one slip it will have a major consequence on markets here in North America and commodities in general. Again this is obviously nothing new because Jim Chanos has been very vocal about it lately, but he better be 100% wrong because if he is right that that the property market do correct, I think it will be a very nasty correction if not outright a crash with everyone heading for the exit.
The thing about sentiment....and I'm sure I've said this before in an old post....is that in bull markets, optimism, i.e. low put/call ratios, low vix, ect is to be expected to some degree and therefore can be tolerated for quite some time....sometimes tolerated for a long time when everything seems to be going the bulls way. After all, its a bull market and by definition a bull market implies optimism. This is why I don't short in bull markets. Now, sure, if we top today and drop 5% you could say "see, I knew there was too much complacency" but you could have said that almost 2 months ago when the VIX was around current levels. As I said earlier, if the market manages to close out the year on the highs then I think the first 3 months of the year will be rather rough because bull market or not, you can't just go up like this non-stop.
ReplyDeleteAs far as Chanos goes, he runs a dedicated short fund and so everything to him must look like a bubble. From what I remember he's been short China since 2009 and so he's been sucking wind big time. Mabey he's "not wrong but early" but you know what? There's always something out there to worry about. If there wasn't that's when you should be worried. I would hate to run a dedicated short fund. Everyday you wake up hoping for bad news. What kind of a life is that? What a miserable fuck this guy must be....and he looks like one.
Whatever happens, happens. The best we can do is navigate the market according to what we think the market is signaling, wait for good set ups and manage risk.