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Category Archives: geopolitical

Monday Market Expectations - Ignorance is not bliss, it is just ignorance

Greed is the disease

I have been looking for a pullback in the market to the 1288 level on the S&P; I have not changed my opinion. I have been a bull for a long time and am very aware at the significant improvements in our US economy. I correctly predicted in a recent blog that we would see the unemployment rate, for various reasons, gap down to 9%. But the market has not been acting normal of late. I have seen this strange pattern in the past. When you have done this as long as I have, your gut begins to have a mind of its own.  I will continue to play from the short side. I have been very specific about the names that we have taken to the long side. From the short side I am 2X the value of my longs. Short indexes as well as particular names such as QCOM, NFLX, HAL, and BAC. At 1287 I cover my short excess, below that I start to return to a long bias. I am bullish, but I am not ignorant. Ignorance is bliss? Many investors are enjoying the bliss. The blizzards distract us, the super bowl distracts us and The Bachelor distracts us. I look forward to American Idol and taking my kids out for hibachi. It is all bliss but it is also a distraction. Bliss is enlightenment, but then how is ignorance bliss? Market pullbacks or corrections begin with a shock to the ignorant. Shock to the ignorant is what is blissful because it ultimately brings enlightenment. Ignorance is not bliss. The ignorant are ill informed because they chose to be. They chose to ignore what is in front of them, that is the essence of ignorance. I was wrong in a previous blog where I said the market is behaving irrationally. I now actually believe that ignorance is perfectly rational, when it comes to greed. How could we all have been so ignorant to the credit crisis, to subprime unqualified homebuyers, and to Madoff? The answer is simple; GREED. The market is behaving like a rational ignorant crowd. Soon there will be bliss as enlightenment will come. Things do not go up day in and day out in the midst of geopolitical uncertainty. I actually fear that continued ignorance will lead to a much more intense pull back. Retail continues to chase this market. They will be the first group damaged by a pull back and they are the least likely to be able to absorb it. A minor pullback from here will not systemically damage the tenuous confidence the market has been able to re-instill in the retail

ignorance is the side effect

investor’s mind. A more systemic correction might setback the investor mentality to that of early 2010, when we began to believe that the European Union was going to crack. It didn’t. Ignorance works in both directions. Early last year the media and other pundits who look to ferment fear, ignored the reality of the Greece debt crisis and prognosticated another coming financial meltdown. They claimed the euro would reach parity with the American dollar. It did not. Enlightenment bought logic back to the market and we began a 200-point run in the S&P. When we ignore that which is around us, when we trade on ignorance, to the downside or the upside, we are just begging for a shock the system. I fear that it may be coming.

Thursday Market Expectations- People of Egypt, Hedge Fund Live Stands Behind You, Down with Mubarak

Mubarak is pissed off, F**k him

Yesterday was a bit more volatile then the indexes indicated with names like LVS , and AKAM, swinging 3 -5% high to low. This was common for many of the names I trade. The S&P traded in such a tight range that it sliced in half today’s pivot point range for the S&P, that I watch for determining overall market direction. A break below S4, which is 1255.75 on the futures, signals deterioration. I expect this to occur later in the day, but I would not be a buyer even if it appears that this level is holding. Initial jobless claims came out at 8:30, I am not that impressed. 415,000 is still moving in the right direction, but we will need that number to drop further if we are to take another leg up in the market, I do believe that we will see much better employment number as we get closer to the spring. On the Egyptian front, I am as excited by the movement toward real democracy as I am concerned that things will get worse before they get better. It will spread beyond the Egyptian borders. As European leaders spoke up demanding immediate regime change, our government remains strangely quiet. I am further embarrassed by my vote for Obama. He continues to show a lack of real leadership skills. It was easy for him to attack Wall Street but seems more difficult for him to take a stand against a totalitarian regime that often brutally oppresses its people. At least tell the world that turning off a countries Internet access in ludicrous. Or perhaps this is something Obama wants to reserve the right to do to us. Maybe he has a switch that just turns off Internet for Wall Street. Any way, back to my expectations for today. I expect a continuing negative trend, acceleration toward the end of the day. I expect a more substantial sell off tomorrow. Our firm is short 14 million in value against a long value of 6.8 million. Best to stay off the trading keys and more time on research and business today.

Market Expectations Wednesday , Egyptian crisis will get worse before it gets better

Hedge Fund Live says "This is a tepmorary top in the market"

My market expectation for the next few days is pain. Typically I am 99% Bull and 1% Bear. But that 1% is now. The bottom line is this; Institutional buyers are going to step away from the market. Exogenous risk far outweighs systemic reward. Egypt will not transition quietly. Fast money will start to play the market from the short side. Inflation is starting to be a seriously overlooked problem. I look for a downward trend tomorrow to repeat itself and gain strength on Thursday and culminating in a sell off on Friday. If you

Hedge Fund Live says "It is time to short the market"

read my last 2 blogs, we did in 2 days what I thought should take 2 weeks. That has always been a very strong signal for me to sell. I am short S&P futures and DIA (the DOW) as well as QCOM , IBM , LULU and BAC as well as a few other high flyers of the last month. I am long CREE , YHOO , THOR , BBY and a number of other beaten up names. I will be short 2:1 in value. The complacency in the market develop at high level where there appears to be a barrier. Let things unfold, as they will in the Middle East. Mubarak has let his thugs into the street hoping to create a volatile situation that will green light the military to react aggressively. He is hoping to break the military’s passivity.  This will backfire on him. He is not the leader of Iran. It is 10:30am as I write this the S&P futures are up at 1303. I do not believe they will be there when I publish tonight’s blog.

Tuesday Market Expectations, How To Trade An Egyptian Million Man March


Odd that in my blog yesterday I compared what was going on in Egypt to the civil rights movement and the next day they announce a million man march. As I said yesterday, the place to be is the NASDQ.  I am expecting the S&P to drift a bit higher as things work themselves out in Egypt. Perhaps the 1292 + level. But any quick attempt at 1300 - 1307 should be met with selling. Without a week or two of consolidation I cannot have confidence in another leg up driven by fast money. The weekend was filled with talking heads predicting a 5 to 10% correction. Where did they all go? Why doesn’t CNBC call them back and ask them “What they have to say now?” I actually expected today to be a bit quieter. We did the down 5 handles thing pre-dawn and from there drifted up. But I did not expect the NASDQ to be as strong. I continue to look upon the movement in Egypt as a positive process. The military is clearly not taking authoritative action, and I see a reasonable probability that they take the side of the crowd and bring a quick end to the Mubarak regime. If the demonstrations continue to remain peaceful, the market will move higher. The vacuum of information will be replaced by something more powerful that can move markets. HOPE. Real hope that we are at a positive tipping point in middle east geo-political history will drive the S&P market through 1300. Here is a simple rule for how to play the day; The more things remain quiet, the more things feel stable…continue to add to you high beta long positions and short DIA – The Dow and perhaps some S&P futures as a hedge against exogenous shock. I am long YHOO , BBY , CREE , CTXS , AKAM ADBE , IMAX , STX , GME , LULU QCOM as well as Home Builders and the game makers TTWO , ATVI , ERTS. I am short DIA and S&P future. Tune into our broadcast tomorrow and I will let you know how it turns out for me. HEDGEFUNDLIVE.COM

Monday Market Expectations, How to trade an Egyptian crisis and the M.A.S.S. Minimizing of America’s Superpower Status

Egyptian Stock Market - "The looters took our flat screens!!!!!!"

As we move closer to the end of the weekend, my expectations of tomorrows’ trading activity begins to form. As always, it is more of an intellectual exercise that helps keeps my Socratic Trading Mind sharp. In addition it helps me prepare to contribute to the collective thought process on the HedgeFundLive.com trading desk, we have over 20 million dollars of open positions. But I believe we are well structured for the day ahead. Egypt is still a mess. I am optimistic that we are seeing the end of a totalitarian regime, and the beginning of real Middle East democracy, but this will take some time to sort out and puts the market at risk to exogenous shocks. Example would be a significantly more lethal response by a sill Mubarak controlled Military on its people; call it Egypt’s Tiananmen Square. Example would be Hammas thinking this is a good time to attack Israel; they are always so impeccable with their timing, or perhaps our Foreign Affairs novice President continues to remain basically silent on what is one of the most seminal events of democratic evolution. The same democracy we are spending billions on in Iraq and Afghanistan. his continuing silence is an affirmation of what I call the ongoing

Egyptian Trading - The Stock Market Before

M.A.S.S. Minimizing of America’s Superpower Status. None of this would breed confidence in a market that has only recently gained its footing from the realization that much of Europe is theoretically bankrupt. There will be much grief in the coming weeks, as innocent people will suffer for macro change. As Mohandas Gandhi said “What difference does it make to the dead, the orphans, and the homeless, whether the mad destruction is wrought under the name of totalitarianism or the holy name of liberty or democracy?”

Barring an immediate positive change in Egypt, we should sell off a little more into month end and then remain range bound for a while. The Market loathes a vacuum of information. Even peaceful resolutions in Egypt, will still not satisfy the market. It is my opinion that this event is just the beginning. Similar to the Civil Right Movement, where Martin Luther King began a revolution that is still being fought every day in this country. Democracy will spread in the Middle East. Syria and Jordan are truly at risk. Saudi Arabia seems to be the chosen destination for retiring kings. In many ways Iran is probably the next most logical Hot Spot. If this is not such a seminal moment, why are the Chinese censoring searches on Egypt on their Internet? I think the range bound trading will keep us under 1300 on the S&P cash until we get another set of positive economic indicators from our own government. This should happen in approximately 3 – 5 weeks, a reasonable time frame to expect some progress in the Middle East.

Egyptian Trading - The Stock Market - AFTER

I will look for a strong dash through the 1300 level on the S&P Resistance will become support for what should be a strong year in the markets. Until then “Trade the Day you are given”. As Patanjali teaches us, “Stay present”. That said I am quite optimistic on the NASDQ and particular the Technology spaces as well as Home Builders and Biotech. I will continue to focus on those names to the upside. I will look for Take Over speculation names. I will be spending a great deal of time analyzing options strategies, as volatility will definitely be seeping into the market. Finally I will be looking to buy names that I ultimately believe will benefit the most from a changing landscape in Egypt. I will be shorting the DIA as a hedge, more than the S&P. Buying S&P puts is becoming a favorite hedge for me. I am not particularly optimistic on the Banks at this point and see them as perhaps dead money, though there are a number of regional banks I like. Mostly I will look to short high Flyer non-tech names such as RCL, in fact I might look to short the whole cruise line space. I really don’t like cruises. Commodities may be interesting to trade intraday volatility, but I will be staying away from overnighting them. We are living through monumental times. DON’T FORGET THAT!!  And trade like you understand it.


Egypt, the Stock Market and……Yoga

Mubarak before getting into his disguise

Mubarak in disguise as he slips out of the country

I feel compelled to write a blog about the events of the day. I assume I will be one of the multitudes of individual’s blogging about Egypt, the stock market, and yoga in a single blog. Let us begin with Egypt. Incredible, Fascinating, Mesmerizing. Look I am actually loving the fact that we are on the verge of real change in the middle east. But here is the crazy thing. It wasn’t Hillary Clinton, President Obama, Former president George Bush or 2009 senate maj. Leader George Mitchell who brought about this monumental change. Who do we have to thank for what seems to be the beginning of the end of Islamic fundamentalism? Not very surprising, Jack Dorsey – Twitter founder, a St. Louis Missouri kid who went to NYU and has changed how we communicate. Not very surprising, Mark Zuckerberg – A Jewish kid from White Plains, NY who went to Harvard, created Facebook and changed how we socialize. Definitely not surprising, Steve Jobs, the da Vinci of our generation for creating the tools by which we communicate and socialize. And yes, let us not forget to thank Al Gore for inventing the Internet. These are the true revolutionaries, sans Al Gore, who when all

Tapas in the Stock Market

the dust settles and a real democracy exists in Egypt, deserve Nobel peace prizes. Al Gore already has one. The Internet has changed our lives forever; we are still at the beginning stage of understanding just what that means. Yoga has taught me to live in the moment, to be present. As we watch these momentous days unfold, it is best not to fear the future, but to embrace the change optimistically. While he was not a yogi to the best of my knowledge, our 16th president Abraham Lincoln wisely said, “The best thing about the future is that it comes one day at a time.” Now I am not suggesting that violence and rioting are good things, but change very often is a great thing. Real change such as we are hearing in the voices of the Egyptian populous is revolutionary, it is evolutionary. And it has been driven by the genius of the aforementioned innovators. The most devastating blow the Mubarak government has thrown was not tear gas and rubber bullets; it was shutting down the Internet. It was also the final nail in their coffin. A starving man will kill to eat. A repressed society will revolt for enlightenment.  No revolutionary moment has come without a price to be paid; Without a price paid, without sacrifice, there is no success.

Yogic scripture refers to this sacrifice as Tapas. It is the suffering and pain we must go through for self-purification. Today was a Tapas day for the stock market. There may be a few more to come or not. We will have to wait for Monday to see if there is more Tapas to come. But what we saw today was healthy. We had approached a psychological level in the market. 1300 on the S&P is not a level to be taken lightly. Nor is 12000 on the Dow. We were not going to just glide through these levels. We need to blast through them when the time comes. And we needed a catalyst to sell off from the levels. But now is a time to breathe. Perhaps we need to pull back a bit more. But not much. What we need to do is rest. Observe the world around us and take stock of our current situation. Monday is month end. I do not expect much as funds will neither want to paint the tape to inflate returns, nor will they want to see much more damage done to the strong returns of the opening month of 2011. As the saying goes in the market “So goes January, so goes the year”. We are still in a bull market, but that doesn’t mean you have to be net

Breath of a Trader

long. It does not mean you buy every pull back. I expect a couple of weeks of stagnation and then a real attempt at breaking the psychological barriers in the market. Make sure you are long the market when that moment arrives. Until then, remember what Andrea Boydston famously said, “If you woke up breathing, congratulations! You have another chance.”