My new quantitative strategy is quite relaxing. It makes me money week in and week out, and I barely need to lift a finger. I just sold out of last week’s portfolio, which demonstrably crushed the indices and reallocated into a new set of stocks — all of the degenerate small cap varietal.
There wasn’t an emotional move or a gut feeling, but based on statistics. Over the past week, stocks with market caps under $1b beat all other market cap groupings. As a point in fact, most stocks traded down — with the exception of very small cap. That’s odd.
Secondly, risk off assets outperformed, which meant that I increased my TLT position to 15% of assets and I got back into GLD at 5%. Right now, I have 20% cash, 20% risk off assets and the rest in subhuman small caps. An odd mix.
In my experience, and this isn’t backed by any data, when small cap stocks outperform like this, the rally is close to an end. The theory is, the level of degeneracy is at its highest just before the cataclysm. All of the casino hoppers are rifling through micro caps, trying to hit paydirt. Meanwhile, back at Goldman, they’re enacting distribution programs to lighten up market exposure.
If forced to make a call, I’d say that’s exactly what’s going on here.
Buyers beware.
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Nice work Senor~
What’s the ticker for the Champagne futures? Let’s go halfsies on a magnum of chateau neuf de pape- it’s fine like wine (extra Beasties)
CHAMP~
i outperformed the spx all year by a much large margin , on a monthly base if not daily .. this doesn’t mean I’m a a genius , it means the market was very east
nice edge on tvix and tza around here, I will take my chance and suffer some points , will add later if the degeneracy hit new highs
You wrote a piece on RH on June 8th when the stock price was just under $50. I agree with what you wrote and agree that this is a piece of shit, mismanaged, and over valued company.
The stock price has RISEN by more than $10 in the past 2+ weeks which defies sound logic but perhaps comports with your thesis above regarding distribution.
Good short play here?
I think so.
russell rebalance day
Got your stop loss orders set up?
Only 49% of the stocks <$2 B mkt cap are trading above their 20-day MA. I'd expect to see a reversal if that got closer to 70%. Also, a casual glance at the volume signature for the NASDAQ 100 /QQQ's indicates that since June 9th, supply is being absorbed—not by your mom and pop submentals, but by the Goldmans of the world. In others words, they're doing what they do best—use the media and fear to vacuum up the supply of shares from the weak hand's liquidations. The market is even more controlled by the strong hands at present, and they want MOAR. Add to that the current rotation into the healthcare sector and the downtrend in the dollar since the beginning of the year, and I would expect that there's still more gas in the tank.
Rallies always extend farther than they should. Always.
We are already well past that point.
I know this is an unpopular viewpoint on this site, but I think the fundamentals of the economy are pretty solid. I don’t think stocks are a bargain but I also don’t believe the ‘wildly overvalued’ hype.
Same thinking here, I think. The fundamentals are only getting stronger. Everyone seems to be waiting for the correction, as always, but the direction was set up a long time ago for a Hillary win. We blow off way higher.