This market remains a stock pickers paradise.
The dating process has found the partners remain somewhat fickle. Good on the first date, not so good the next… The stock rotation makes it tough, with most instruments being an Island unto themselves.
This makes the actual indices a less volatile trade, since all the action is in the individual instruments. The indices trade overbought, with short lived pressure release sell offs and then the creep back up.
Everybody is short term trading looking for value and trade location.
We’ll let the day unfold and see what happens..
Model Trading Portfolio…Current Holdings
………………Stop Close Profit Points
Long TLT 116.50 121.70
Long XLE 70.40 80
Long NEM 59.80 65.50
Long SLW 34.40 37.40
Short Term View
Location ,Location,Location….if you have a good trad able pattern “Good Risk reward!” You just have to seize the opportunity and see what develops!
Trade to Make Money!
Medium Term View…
30 Yr. Bonds …147 is the all time high in the front month futures. We will watch price action off this level for any potential surrogate moves in the currencies or stock indices. 144.20 ish now becomes our macro pivot. All new closing strength over 145.20 would have us looking for more upside in the Bonds. Closing above this level would be short term positive the Bonds and negative the Equities.
Equities…We will continue to strategically buy hard breaks in Etf’s and individual instruments we feel have the best risk profiles going into the end of the first qtr.
Currencies…Our view is the Aussie Dollar remains a most attractive investment. The Bonds are high yielding making this currency desirable on breaks. It also has the benefit of the underlying commodity and Asian growth story to support buying the dips.
The Aussie typically mirrors the S&P 500 which also makes it an easy surrogate to trade, whether Risk On or Risk off. It’s liquidity makes it easy to hedge currency risk if you’ve the underlying Bonds, which makes you Long Aussie by default.