Last 6 weeks have been the steepest slump in S&P 500 in a long time, we lost 265.81 points or 12.46% from 2nd week in July to 3rd week in August.....
In the last 12 trading days we have recovered 94.04 points or 5.04% to close @ 1961.05 from low of 1867.01.....
Many traders are wondering, IF we are headed back to test lows and go sharply under as predicted by technicians & big time hedge fund manager......
Reason for above slump is known to all China, China ,China......
Chinese economy is taking a swift dive from super growth rate of 12% in 2008 to current 6%.....
It IS important to analyse how huge economies like China operate, it is shifting from export oriented to consumption oriented, they are no longer the cheapest place to manufacture goods, it could be Vietnam now......
I do not believe that 6% growth rate is bad @ all, it is among the highest in first world countries, India is growing @ 5%+, US 3%+ & Europe coming out of major slump.
Canada & Australia hurting badly due to commodities slump.
SO..we have gone through many months of discounting Chinese growth issue and Fed intention of raising interest rate......
This week we may see the climactic resolution of interest rate debate, which may result in .25% raising of interest rates.....
Now the next debate is how the market will react to interest rate hike, most common conclusion is,that we go down to test lows and undercut recent lows.....
The trouble with technicians, pundits and hedge fund genius is, that they are only right 50% of the time, a law of Wall Street to teach humility and allows for backtracking or Monday morning quarter backing.
I personally believe that we have more than discounted Chinese sluggish growth & Fed interest rate uptick, there may be knee jerk reaction to these news, but we are on firmer ground, technically speaking, so may withstand these mini shocks easily.
On the sentiment side, after a long long time, i am seeing extreme negativity, bulls are 25.7% and bears are 27.9%....this tilt in bears on the lead by 2.2% is extremely good news for "contrary reaction "
All in all, i will not be surprised, IF we see a major move UP in indices this week.
BLOG does NOT give buy or sell.
Saleem
4 comments:
Hi Saleem,
As usual, I sold during one of the final echoes of the big decline in selling just over a week ago. Although it provided a good chance to reset and rethink, it caused the portfolio to severely underperform last week gaining only 0.38% versus the S&P's +2.07%. This leaves me with a -3.66% YTD versus the S&P's -4.75%.
Big gainers were FCX (+6.1% when sold) and LNKD (+3.1% from purchase). NEFF (-4.7% buy/sell) and TZA (-2.5% from purchase) were the biggest drags on performance. Here's the current portfolio:
15% weight: TZA
9-10% weight: PRU TGT FDX CYBR LNKD MS
Cash: 27.5%
With the triple short TZA hedge, this portfolio translates into roughly 15-25% exposure depending on the treatment of the higher beta stocks. I am mostly comfortable here, but do hope to add on dips. The Fed meeting this week should provide some good opportunities.
With the volatility finally abating somewhat, I think we can go back to individual stock picking as certain stocks continue their growth path while others languish. We are getting into that part of the year where portfolio managers start to chase performance, and I believe a few chosen stocks could really ramp hard into year end. They key is identifying these stocks early and moving confidently into them.
Good luck to all! :)
Stocktrader
Hi Saleem,
Sold CYBR @ 46.902.
Something's not right with the way the stock is trading. Either it's a CYBR-specific situation, or PANW is just sucking the air out of the room. Regardless, it looks like CYBR wants to trade lower for now.
Stocktrader
Hi Saleem,
Bought AMBA @ 67.15
Amazing analyst read today on the possible future for AMBA in the "computer vision" space where computers have to use sensors to perceive the world around them.
http://blogs.barrons.com/techtraderdaily/2015/09/14/ambarella-jumps-6-about-to-extend-lead-with-computer-vision-says-stifel/
This should help provide more confidence for the out-year estimates which I think has been the major problem for the stock of late.
Stocktrader
Hi Stocktrader,
Good move with CYBR and AMBA.
Saleem
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