Momentum Book Update

Quick post this week as there isn’t much going on in my trading book these days.  After not trading at all since May 21st I took a long position in the US Dollar via $UUP on Thursday at the close.  That position was 20% of my book, very large, but that ETF hardly moves, so it was a low risk trade.  I closed the trade at the close on Friday afternoon for a nice gain.  I also closed out my Banco Santander $STD short on Friday, covering 1/2 of my remaining position just after the open, and the other remaining 1/2 towards the close.  The last quarter of the original position was covered at a gain of about 23.5%.  Given the very large size of the trade, it’ll be one of my best of the year.  Just eyeballing it here, because I don’t feel like doing the math, the average gain on the trade was about 16%.  I also took a small day trade short in the regional bank ETF $KRE on Friday, which I covered waaaaaaaaay to early for a little profit.

To put it frankly, I had an awesome week.  I picked up 340 basis points of alpha and about 100 basis points of absolute return.  I’m now about 1100 basis points ahead of the market for the quarter.

The only position I still hold is the last 1/4 of my $XRT short, and to be honest, I’m really only holding it because I’m damn certain it’s going to 37 and I just want to be able to say I covered it at my target.  Bad trading, maybe, whatever.

I’ll sit this market out for the large part until I’m sure it sets up the way I want it to.  I have no reason to chase a thin cabal of leadership stocks in a volatile market.  And you know what, I think the market actually presents a lot of opportunity on the short side after Friday’s action.  I’ll probably get involved here and there, some day trades, some quick short positions.  But as you all know, I don’t like trading equities from the short side on the intermediate term time frame, it’s just not in my nature.  Because I’ve racked up so much alpha this quarter, I do have a little bit of a longer leash to go and try to make some money on the short side here, but it will never be a significant sum.

I’m up about 225 basis points of absolute return this quarter, I’d love to get that up towards 350 in a market down about 9% as of the close Friday.  For someone who runs what is primarily a long momentum strategy, I’ll take that any day.

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.

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