I closed the day +33bps, but down more than 8% for August. I started off bad and remained bad until this past week. Overall, the NASDAQ and SPY were down 1.55%, but the small capped $IWM shed 5%. It was a poor month for stocks, leading up to, what is traditionally bad, September.
Here is the data for September over the past decade.
Because of my mean downside bias, I hedged at 17% of holdings in $TZA — with directional longs of the mega capped to tera capped varietal. We are shifting here — I can feel it. The tone of this market has been poor — but the mean reversion to the upside from the recent depths of our lows turned out to be successful.
What I am suggesting is, for whatever reason — markets are adhering to the status quo. Bullish. You can pretend it isn’t — but it is. We might see stocks take off tomorrow, further confirming my theory. I do, however, believe that September will not be accommodating to markets as we really get into it. The earnings season has been mixed: ok for tech but really bad for retail. Very soon the focus will shift severely onto the consumer, as we fast approach autumn and the holiday shopping season.
I make no stern commitments. I am open to all ideas, a sailboat guided by the winds and not obstinately following a pre-destined direction.
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