Change in Tactic , Not Strategy
The market closed near the highs of the day for all the major averages. The volume was good and the breadth was minty. Much of the move came from the oil index which slightly tarnished the luster of the rally. We were impressed though that the small caps and semicondutors put in a good showing. Traders are pointing to declining interest rates as the main catalyst for the rally. They believe that the Fed will be forced to at least pause due to concerns of an economic slowdown from the storm.
We do not believe the Fed has sent any such signal. They have too much on their plate trying to cool housing at the moment. A Fed pause around these levels might reignite the housing bubble just when it seems to finally be stalling.
However , should the economy demonstrate significant signs of distress, the Fed would reluctantly cease its tightening campaign. Most likely the Fed would be percieved to have been late in their decision to pause . We believe that they are likely aware of this" image risk", but are too focused on their mission to be very concerned. We must always remember that the Fed is primarily interested these days in the housing sector and core inflation, both of which are too perky for their comfort .
The stock market is trying hard to suck in more players before dishing out the nasty. Our dilema is that we have positioned ourselves in a very defensive posture , yet the message of the market today signals a small bullish reversal. Today's move can not be described as pathetic as were the more recent up days . In fact , this move has the potential to travel another 2% before the Bears in waiting start to maul everthing in sight.
After careful consideration , we have decided to add a little bit more long exposure by covering some of our ETF shorts on the next pullback. We intend on still being less then 45% invested, but a potential 2% lift is too much for us to completely ignore. Our very large cash hoard will still offer us the protection and ammunition we want to have. Our overall strategy of being well positioned for the significantly better buying opportunity that we are expecting in a few weeks will not be materially hampered by this decision. More importantly, should the market rally and not look back, we need to at least participate a respectable amount due to the fact that we are intermediate and long term raging Bulls .
If You Held a Taser to Our Head: We will slightly reduce our moderate bearish position by covering our shorts. By moving into a mildly bearish-neutral position we can play both sides with out compromising our overall strategy. When the stock market starts to loose its mojo that it discovered today, we will not hesitate to replace our ETF shorts .
Have a good night. ___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (âKTBâ) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (âKCAPâ) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firmâs principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________
We do not believe the Fed has sent any such signal. They have too much on their plate trying to cool housing at the moment. A Fed pause around these levels might reignite the housing bubble just when it seems to finally be stalling.
However , should the economy demonstrate significant signs of distress, the Fed would reluctantly cease its tightening campaign. Most likely the Fed would be percieved to have been late in their decision to pause . We believe that they are likely aware of this" image risk", but are too focused on their mission to be very concerned. We must always remember that the Fed is primarily interested these days in the housing sector and core inflation, both of which are too perky for their comfort .
The stock market is trying hard to suck in more players before dishing out the nasty. Our dilema is that we have positioned ourselves in a very defensive posture , yet the message of the market today signals a small bullish reversal. Today's move can not be described as pathetic as were the more recent up days . In fact , this move has the potential to travel another 2% before the Bears in waiting start to maul everthing in sight.
After careful consideration , we have decided to add a little bit more long exposure by covering some of our ETF shorts on the next pullback. We intend on still being less then 45% invested, but a potential 2% lift is too much for us to completely ignore. Our very large cash hoard will still offer us the protection and ammunition we want to have. Our overall strategy of being well positioned for the significantly better buying opportunity that we are expecting in a few weeks will not be materially hampered by this decision. More importantly, should the market rally and not look back, we need to at least participate a respectable amount due to the fact that we are intermediate and long term raging Bulls .
If You Held a Taser to Our Head: We will slightly reduce our moderate bearish position by covering our shorts. By moving into a mildly bearish-neutral position we can play both sides with out compromising our overall strategy. When the stock market starts to loose its mojo that it discovered today, we will not hesitate to replace our ETF shorts .
Have a good night. ___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (âKTBâ) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (âKCAPâ) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firmâs principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________
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posted by Kleiner Capital Management, LLC. | 6:34 PM
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