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Dallas Salazar
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Former FA with AIG and Merrill Lynch to wealthy clients and institutions. I have 5 years experience in the financial industry and now trade my personal account. I am interested in using volatile small caps, leveraged ETF's, and the occasional option trade to add outsized returns to my portfolio.... More
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  • Key Market Moving Events For The Week Of May 20-24 0 comments
    May 20, 2013 8:23 AM | about stocks: DIA, UUP, SPY

    The following tables will outline any medium to high importance events, their currency, a forecasted number, a previous reading number, and my take as to whether the number will beat expectations (+), meet expectations (=), or miss expectations (-). Doing due diligence on these events and taking a position based on the opinion derived from that research is a way for traders to play the markets using beta movements from these events. My calendar is in no way entirely inclusive of all data events globally, simply the events I will be watching that I feel will impact my trading strategy of being either beta neutral or beta levered. The events in the tables are events that, in my opinion, will have a significant impact on the S&P 500 Index, which can be most closely be followed by watching the SPDR S&P 500 ETF Trust (SPY), and the Dow Jones Industrial Index, which can most closely be followed by watching the SPDR Dow Jones Industrial Average ETF (DIA).

    It looks like we did a good job, for the most part, with last weeks predictions of data prints as we correctly called the poor Euro GDP's and the at expectation Chinese (made up) data (Key Market Moving Events For The Week Of May 13-18). We also correctly called the much better than expected Japanese data across the board as their efforts to stimulate seem to be off to an incredible start. Where we missed was on the US data. We were expecting better housing starts and better jobs numbers, both failed to meet expectations and caused the markets to actually post a negative close for the day on Thursday.

    Overall I was happy with the week from a standpoint of calling the prints and I was happy that my missed calls were to the downside and that I didn't price in any data points that surprised to the upside. I was not happy with the market action. If you check out last weeks article, I pointed out that it would be interesting to see how the market reacted to any misses (expected) in the EUR GDP's and anything else (US jobs, housing). It appears the market didn't seem to mind much outside of the temporary negative close on Thursday. Friday's buying frenzy showed that sentiment still remains extremely bullish in the face of the poor data. I went net short on Wednesday at the close and am currently underwater on my positions.

    I am expecting more of the same this week from the data as I held my short into the close Friday and will continue to hold as the week progresses. I am expecting all Japanese data to exceed expectations and all Chinese data to meet or exceed. I am expecting bad PMI numbers out of Europe, a continued miss in the jobs data for the US, and continued declines in the new home sales for the US. That being said, following our theme from last week, this week will greatly depend on sentiment and comments we receive from a few of the worlds most important central bankers. Investors will have to decide if the data outweighs the actions from the central banks and the dollars continued rise against other currencies, which can be followed by tracking the PowerShares DB US Dollar Index Bullish Fund (NYSEARCA:UUP). I stand behind my opinion that the higher the dollar goes the better consumption and spending will remain as the increase in the dollar acts as a "tax cut" of sorts by putting downward pressure on commodities. The bad prints in Europe and the downward pressure Japan is putting on their currency should help take the dollar higher this week.

    In conclusion, I go into this week expecting the data to finally matter. Two weeks of poor data should show the markets that this is more than a temporary blip and that the market has come too far too fast. I'll hold my shorts on but will close the positions if we reach Friday net positive from today's close. The risk in the markets is to the downside but the pain trade is most certainly to the upside. Good luck to all.

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    Disclosure: I am short SPY, DIA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Themes: market-outlook Stocks: DIA, UUP, SPY
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