Momentum Book Update

Life  is tough out here on the west coast, I’m telling you, between the surfing, drinking, eating steak dinners with a bunch of great guys, hanging out by the pool at the Hotel Del Coronado, and playing 18 holes at Torrey Pines, this place is awful.  No way I’ll ever move back out here (I went to the University of San Diego for undergrad).

It seems that a few weeks ago I picked a great time to step out of the market for the most part.  Not only have I racked up a crazy amount of alpha with the marketed tanking over the past few weeks, but I’ve participated on the short side.  The key to this market for me right now is staying small in my positions sizes and overall exposure.  This isn’t my kind of market, the volatility is crazy right now, I’m not a knife catcher, and I often have no edge.

For the week the momentum book was up about 33 basis points and banked 475 basis points of alpha.  The S&P 500 fell more than 4% this week slicing through the 200 day moving average before turning around off a very ugly open on Friday and closing up more than 1%.

I did cover another 1/2 of my Retail $XRT short this week, after covering 1/4 last week.  I’ve got a quarter of the position left along with half of my $STD short.  All in all my short exposure is now under 10% of total capital.  150 shares short of $XRT and 400 shares short of $STD.

There’s more downside for Europe coming and I’m stalking a larger short position in $STD and other European issues.  There are many bear flags playing out right now, and there will be more as the US equity markets consolidate at these lower levels, I highly doubt we bounce hard here and stay up, it will be a great opportunity to establish new short positions.

I will never be heavily short this market as that isn’t my style, but I will take advantage of a few good opportunities.  Although the alpha I’ve generated on the downside is great, I would still rather be even with the market with it surging instead of getting crushed.  Hopefully at some point over the next few months the market will calm down, set up, and allow me to put on some serious long exposure, but until that happens, I won’t force a hand that isn’t there.

Nothing that I say or show on this blog should ever be considered investment advice or a recommendation to buy or sell any security.  The performance numbers that I post in the momentum book should never be regarded as representative of any specific client account managed by Surfview Capital, it is there solely for educational purposes and should be treated as such.

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see the Disclaimer page for a full disclaimer.


blog comments powered by Disqus