Friday, December 17, 2010

Week Review

price flows
- oil continuing higher, will it get to 100 in JAN? or will it sell off
- euro looks to have found a bottom
- sp500 storming higher, despite low vol.
- aud has broken the head and shoulder daily formation, and looks to set higher.
- yen is in a range - this could set the tone for the markets
- gold is looking like the uptrend is in tact - might need to start building some long positions in gold.

china's rate @ 5.1% but not raising rates
us continues it's tax cuts/ bond buying
(continued USD weakness)

australia's unemployment came in well
australia's home starts came in not so great - but not a primary offset

themes
- retail may have a strong run up before xmas
- technicals see retail oversold (due to rates hikes)
- overseas retail data in US improving


trades this week
I speculated in some currencies - generally the euro/usd and aud/usd pair. My macro position is that the USD will weaken due to the current bond buying and the aud and euro will strengthen as a result. However, it seems to be an undercurrent that the euro has some bearish sentiment around the current debt issues of it's european countries. Namely the lower rated countries, weighing the integrity of the currency. The aud has seen some hits from the inflationary concerns of China, but I think those concerns are still a few qtrs away.
Finding the right position to enter and the size has been the biggest terror to my learning process - I am putting in stops too tight - as I find the leverage/naked long positions to be just too risky. I can't eat 5% portfolio volatility, when I have no idea what I'm doing.
I'm continuing to research my options here.

portfolio strategy
I have a well balanced portfolio, this week adding a big chunk to my aussie retail recovery play - obviously the christmas shopping I expect to be a doozy and the numbers will reflect that in the next quarter - the price action seems to have formed a bottom, and US retail showed some signs of life this week (although unrelated to actual aussie fundamentals).
I added FGL to my portfolio, as the price floor will be in the 5.20 range, and the demerger, despite fgl's pitiful earnings it is more likely to unlock value compared to the TAH merger - I plan to put more funds into this trade over the next few weeks.