It is helpful to start my blog at 2:30; it gives insight into market behavior vs. firm PNL. The firm is up 63000, the Dow is down 95 points, S&P cash is at 1317. The Firm’s short value 10.6 million, long value 4.5 million the market has shown very little reason to rally, commodities are weak. Banks have rallied, as JPM is to report tomorrow morning, perhaps it is just short covering. The trend in the market has reversed, since first quarter. Bounces should be sold. Amazon is making new lows as this is written. The market is indicating that it should close near its lows. If this occurs, logically there should be a big bounce in the morning and as such the natural inclination should be to take some overnight risk to the long side. Though it a reasonable position to take short a number of high beta names that made significant lows this morning and are on highs at the end of the day. A good hedge against these would be a dollar neutral S&P book.
A gap in the market at the end of the day should be shorted into on an overnight basis; perhaps pure Index shorts or ETF shorts.
It is 2:45; this would be the appropriate time for the final sell off of the day to begin.
In the fundamental long-term portfolio, the names such as Cisco, Wells Fargo, Target, CIT, MMI, NXPI, and other can be seen in Dean Machado’s Overnight portfolio, available on our site, as all portfolios are available for viewing. The will be hedged with a basket of IWN, QQQ and DIA and a number of short names that have been showing signs of rolling over..
It is 3:08 the firm is up 71,000, long 6.2 million short 8.2. million.
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Alcoa was a very important opening Salvo in an earnings season that literally will define the amplitude of the rally or correction. Alcoa is trading at 16.67 down 6.13%. If you read last night’s blog, I was watching it trade down 4.5%. It would not be surprising to see a significant sell off early in earnings season, to re-price stocks for appropriate disappointment risk.
It is 3:21 firm PNL is 72,500; long value is 6.3 million by 7.2 million short. Market feels shaky.
There does not seem to be an institutional bid in the market. The last time fast money drove up stocks, the market corrected 5% in March.
The Fed is now faced with a more pressing decision on quantitative easing driven by the strength in Bonds. While a steep Yield curve will ultimately be a benefit for Banks, a lackluster Investment Banking Quarter and limited Proprietary trading profits will curb revenue growth in the short term. Weakness in technology, weakness in the financial sector and weakness in the Commodity space sets up for a more fierce correction than last month. Tough to see how 1300 on the cash S&P can hold.
It is 4:15 The Day ended with the firm, up 65,000, this brings us to up nearly 175,000 on the month. We are long 7.5 million and short 8.5 million. The market closed off its lows, setting up for only a marginal pop in the morning, but should continue a negative trend by 1pm.
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