Summary on the last action
We give a brief reminder of our plan following for the last trade (action) launched on a basket of Stocks on US & French market since last week:
1. We find an indication of a temporary bottom:
Posted on March 17, 2008
Filed Under Stock Code Trading, US Market | Leave a Comment
The VIX volatility index once again closed above 30 end of last week. Many investors have been looking for this +30 reading to indicate a washout has been made. However, we should not miss the point and the line of all the story: there are still many open questions still for Financial stocks, some of them will be answered this week!
Then, the best is to wait a bit… A bounce may come in the middle of the week, at least temporary, just a bounce in a global downtrend: possible! Based on contrarian sentiments and decrease in short interests…
2. We enter into the GAME. We weight the baskets such that we follow our general views on sector strength (& selection) (exposed earlier in the month):
Posted on March 19, 2008
Filed Under Debrief, French Market, Stock Code Trading, US Market | 1 Comment
Finally it occurs! As anticipated on the sentiment indicators, it was more likely that stock market could find a kind of peace with the recent FED actions and “not so terrible” LEH, GS results…
We play it through consumer staples, health care and financial sectors (weighted portfolio)… More later. There is some open space on the upside now, even if we may expect some kind of chaotic moves. Do not hesitate to buy stocks when the flows, macro economic news and earning estimate revisions, run in the optimistic direction for stocks… even during a bear market, bounces can be violent and can happen with large amplitudes!
WMT, OMI & JPM on the US market / CA, SAN, & CS on the French market… We overweight WMT in the US basket and SAN in the French basket (*3 with respect to other positions)
3. We confirm our view on QID & SDS Ultrashort indices (clear reversal patterns here)
4. We close the trade @ a reasonable return (+4% per basket)!
Posted on March 25, 2008
Filed Under Debrief, French Market, Stock Code Trading, US Market | Leave a Comment
Yesterday, we have booked profits on our US positions & this morning, we book profits on our French positions : +4% in average per stock baskets (*) & (**)!
5. We keep on analysing the market for a next shot:
SPX has bounced above an important level @ 1350 pts! If there is no remorse and this level is consevred, it will be a very positive sign for stocks… On the plot, we also display the 10Y yield note, which follow precisely the S&P500 prices… In fact ther is no mystery. It is the the recent bounce of the 10Y yield (decrease of bonds) which has driven the positive move for stocks (according to standard market mechanics)… The upmove on the TNX itself is a consequence of the economic actions taken recently and largely mentioned in previous posts… Then, it becomes a relevant indicator to check in order to analyse the continuation of the short trend on the SPX. The important level for 10Y yields is 3.75%. If this border can be overcome, I expect a strong short term continuation of the upmove for stocks…