Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 19

Year 3, Week 19 Major Position Changes

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 80.7% (v 74.9% last week)
23 long bias: 17.0% (v 20.6% last week) 
3 short bias: 2.3% (v 4.5% last week) [includes 1 option position]

26 positions (vs 28 last week)

Weekly thoughts
Another week of listless action, as the S&P 500 trades slowly back and forth between 1185 and 1112.  While starting the week at the low end of this range, the market rallied to finish near the top end... however, most gains were made in premarket / overnight session with much of the action done by 10 AM as early morning buying gave way to sideways actions many sessions.  Japan kicked off the week with yet another stimulus in a 2 decade long fight... it's all starting to sound very familiar.  The dollar showed some very long overdue signs of life ... what will be interesting go forward is if this nearly unmitigated connection between the dollar and the market can break down. 


The S&P 500 continues to consolidate, about to enter its 6th week.  As we've been saying for quite a few weeks now - the longer the base, the larger the move.  I now expect a doozy and will be making a much larger than normal index play once the direction is determined.  Until proven otherwise, that direction will be up... two key levels - S&P 1112, and S&P 1120.  A move over 1120 should bring an onslaught of computer orders ... many wearing Santa Claus hats.

The broader (and smaller) Russell 2000, after acting neither great or terrible for weeks on end - seems to be firming up a bit.

The dollar has broken north of its 50 day moving average which could bode well for a more serious counter trend move.

After flagging crude oil as "beginning to roll over" 2 weeks ago in our weekly summary, it's fallen off a cliff.  Mid week we mentioned it could be oversold and due for a dead cat bounce if nothing else.  One to watch.... especially as much of the action has been less to do with fundamentals and more with the "anti-dollar" trade. 

Gold has fallen back almost perfectly to support and further weakness from here could bring in more heavy sellers, especially from the speculative crowd who are only in the trade due to "a nice chart".

Economically, all eyes will be on the Federal Reserve but I am not sure why - everyone knows there will be no change to the statement as Ben Bernanke and his minions have repeatedly said in speech after speech "free money for an extended period of time".  But perhaps hearing it *just one more time* will be the thing that gets us out of this month+ range... or even the anticipation of hearing it.  We have some inflation reports to begin the week but they are meaningless - they could show inflation +25% and Ben would say "extended rates, and I mean it!"


Until proven otherwise we still assume the resolution of this range will be up, as the S&P 500 remains above all key moving averages - and has consolidated the past 5 weeks above these areas.  Despite that, we lost some long exposure in the fund for various reasons.  One of our large holdings AsiaInfo Holdings (ASIA) jumped 25% in 1 session on merger news - so we took half our position off the table.  After TriQuint Semiconductor (TQNT) failed on a breakout, we were forced to cut back exposure.  We sold almost all remaining EnerNOC (ENOC) as it had rallied into resistance and showed signs of faltering; we're happy buyers once it clears north of the 50 day moving average.  Thursday, we added to Fuel Systems Solutions (FSYS) but waterfall type selling had us cutting right back Friday - still interested in the name on a fundamental basis but the "type" of investor in stocks like this always a worry.


On the volatility side, we had an excellent call that it would increase as the VIX spiked 17% from where we entered a new ETF (VXX), however the construction of said instrument is poor - so we only gained 1%.  Hence we closed out that stake (which was a pseudo short).  I am actively looking for new ideas and names to add to the portfolio on the long side as we are going to be reliant on piling into index type of positions on any breakout over S&P 1120 for now.


In summary, Santa Claus fast approaches and what better way to end a year than to mark the market up going into Dec 31st, 2009?  Would you bet against Santa Bernanke and his sack worth of dollars?