Tuesday, March 26, 2013

Markets Reverse after Strong Start

Markets were red after the Cyprus news - was up a few points, but drifted at the end of the session.  The muted reaction made me close of my shorts in LULU, AMZN, LVS.  I was up on LULU, AMZN but lost on LVS.

There was a good short trade on the euro last night as it was at 1.3040.  A good chart on the euro pivot by market anthropology.Market Anthropology- Connecting the Dots - 03-25-2013

There have not been many opportunities in market moving macro ideas in 2013 so far.  Most of the trades have been continuation trades, usually the hardest ones to get into, if you've already missed your entry.  

The underperformance of small cap stocks and emerging markets in this rally has always been something that is a undercurrent to the trend.  The liquidity based moves are seeing money flow towards the well capitalized and highly liquid asset classes - this signifies that any sign of macro instability will see a fast exodus to cash.

Trying to short this market has been very difficult, and I still think we need a macro catalyst to see the kind've selloff we saw in 2012.  Sell in May seasonals may be on this year, but we still a month away, I will look to short in May again, but for now, hold no leveraged or short positions.

SDL takeover has been a wild ride, even as a trader, I've been well tuned with what can happen when there is a lot of speculative delays in the past.  If I hadn't been exposed to a small cap miner IGC that had delisted after promises of takeovers, I would've been trapped in the SDL position again.  Lucky I got out at the 5th sign of trouble.  I think there is a chance this stock trade 10-15c, which could be a compelling shot to take.

The asx200 is now below 5000, and I feel with the dividends behind us, election uncertainty, continued weakness in the miners, and toppy price action in the banks, we will probably see at least a modest selloff towards 4800.