T-t-talking about some alpha generation! Out of QQQ & KWEB last week, yesterday long USO and short SMH!
From 6/26 post: "In addition, special 1 day timing cycle indicates higher than usual odds of a market smash on Tuesday. What qualifies as smash? Let's say QQQ -1%." Quant that folks!
"Stock bulls have won but jeez I would like to see that timing cycle play out tomorrow as indicated. For this reason I will go out on a limb and issue speculative short on SMH based on rejections of 1HR3, Q2R2, and D20MA failure."
So there you have it. It is calls like this that sent me into a small hedge fund that was literally top of the charts in 2013 with one of two funds under management in top 5 in the world with a 110% gain. Alas, fund closed near the end of 2015 and I am not checking people's boxes enough to fit in their box like thinking that generates sub-par returns. I have more to say about the current quant fixation - that seems to still be severely lagging SPX btw - but let's look at markets. How important was today?
-s
SPY Q2R1 break, back to YR1 test
QQQ Q2R2 rejection, back to YR2 test
DIA 1HR2 rejection, Q2R1 slight break, YR1 break!
IWM Q2R1 rejection
VTI YR1 rejection!
VIX liftoff from Q2S1
So that is serious - bearish action on all 5 USA mains including the very important Dow YR1 and VTI also rejecting YR1 level.
+s
VIX still below all pivots
XIV still above all pivots (although down from JunR1 today)
GLD still not above all pivots
According to the media this move was 1) Google fine and 2) Trump-care rejection. Oh yeah? Why was INDA -1.7% and USO +1.9%? This is called profit taking, re-balancing and mean-reversion. That's all. The news provided the spark. But as to what that timing cycle was that called this in advance... my lips are sealed.
If VIX or XIV was confirming trouble I would have no hesitations about cutting more positions, but they didn't. Still I think 80% net is too long even if one of those positions is oil which was up today. I think the smartest thing is to hedge out 2 EEM longs with 2 FXI shorts, valid below the FXI YR1. This brings portfolio to 60% net, all SPY.
Even though yesterday said timing cycle due for smash especially on QQQ today 6/27, I am going to hold the SMH short one more day (playing for an abc ie zigzag down). Holding oil long too.
Here is the key point: While Wall St is going gaga over bullish second half forecasts, we are on the verge of a real deal Dow YR1 rejection. If that happens, top for many weeks, months or even the year could be in. Watch.
SPY, DIA, QQQ, SMH, USO, VIX below.
