Momentum Book Update

I gave back a lot of alpha this week as the market surged without me, about 240 basis points worth.  Instead of chasing the market higher as it became extended, I sat back and watched.

The nice part about having built a large lead on the market is that you don’t have to freak out when it leaves the dock without you.  If this rally is for real, and we have started a new intermediate term trend, I’ll have missed the first few percent off the bottom, but make no mistake I will get involved.

Beyond the general overbought nature of all risk assets right now in the short term, there are other things which make a further rally suspect.  Crude is running into resistance up here, and I believe it will fail to the downside.  The Baltic Dry Index is down 30% in the last 30 days, a leading indicator of global growth.  That’s not good.  The market is still very volatile, the Nasdaq now up 7 straight days, not normal healthy action.  This has been a vicious snap back rally off a major level of support.

To be honest, I’m still not comfortable being long in this market, and I’m fine with that.  Trading is about taking advantage when the odds are in your favor, and part of that is understanding when you are personally confident in one direction.  We will see what takes place, and I’ll make my views knows.  The point right now is to avoid doing foolish things.

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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