Momentum Book Update

Dude, where’s my volatility…

The market took the express train past the rally highs this week and provided yet another round of excellent swing trading to the long side.  While everyone was buying puts and inverse ETFs to protect profits from an organized pullback, the market marched higher, stopping them out one after another.  Are we seeing a repeat of July here?  It’s completely possible, the two sell offs look very similar, if we surge out of the gate on Monday I would venture to say that it’s likely we repeat the action from July.  Anything can happen on mutual / merger Monday, I almost bought a few very speculative options positions in some oil names just in case, but alas I ate another sandwich and chilled out.

The US Dollar continues to act weak, I’m expecting more of the same next week with major rotation into materials and energy names.  We had the run in tech last week, this week was all about retail, I think next week is energy’s turn.  I still have no exposure in either, but have several names on my list including $DRQ, $BEXP, $XTEX…

I picked up more than 230 basis points of alpha this week with an absolute return of about 3.4%, in other words, I killed it.    Unlike last week where I was disappointed not to have put more points on the board with the market surging, this week was a huge win as my heavy exposure earlier in the week paid off.  I took cash back up to 15%+ on Friday afternoon as I believe we will consolidate and pull back a bit here.  If Monday opens flat and sees strong buying on volume though, I will be a buyer of energy names.

Positions added this week include $VECO $NYB $TSTC and $EVR.  I had been watching $VECO for quite some time while I held $CREE (I added to my position this week), but an excellent entry was give on Tuesday that I could not pass up.  The $TSTC position is very small, 1/4 the normal size, it is a very volatile stock and could open up or down 5% on Monday.  If it opens strong I’ll be looking to add.  I bought $EVR on the large gap off the Goldman Sachs conviction buy list upgrade and the break of its downtrend line.  I love this company and the technicals on the weekly chart set up very well right now.

I did some selling this week as gains were heavy.  I cut my position in $IPXL $ARUN and $INCY in half.  I’ll look to add back to them if the market pulls back.  I sold $RVBD Thrusday and Friday as I had big gains and the position was extended.  $SBUX $HAS and $LUV were also cast off, frankly they all look great here.

Major winners this week include $CMG, which is about 1/2 my original position, $V which I’m heavy in, $VECO, $INCY, $SFSF, $GMCR which is now my biggest position, $MJN, and $PRAA.

There were no large losers this week.

As I said, I’m looking at energy and materials next week.

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