Diary of a Financier

From the Trading Desk: Trade Reconciliation (Week of August 15)

In Trading Desk on Sat 20 Aug 2011 at 00:11

This week brought the relapse that I had expected.  SPX found resistance at 1205 (1208 intraday), just shy of the 1215 I targeted.  As a result, I was a bit reactive to the mid-week downward reversal.  (I would’ve preferred to have been a bit more proactive, but I’m more of a trend-follower than a swing-trader anyway.)

I took the opportunity to sell around half of my remaining long equities–mostly Beta singlenames–at around SPX 1193 on Thursday, August 18.  At the same time, I opened a long position in 20+ Year Treasuries (TLT).  I only executed half the desired stake in TLT, because I feared a midday pullback given the volatility.  When the pullback came, I’m afraid it wasn’t substantial enough to coax me into doubling-down.  The position closed the week +0.63%, and I still expect to add to it one way or another.

When the market took its deep breath that afternoon, I shorted High Yield Bonds (HYG) [a pure hedge for my singlenames], Financials (XLF) [again], and Agriculture Commodities (DBA) [small position]…

  • $CRMT avging 10pc rev growth yoy, credit losses 20pc of sales, but profit and int income still 14pc per unit. No conviction, just skeptical. Aug. 19 at 3:07 PM
  • $CRMT can’t figure it out. Subprime used car sales and financing. They brag about their biz model, but how has stock been so strong?Aug. 19 at 2:39 PM
  • Trade summary fm intraday… long $TLT… short $HYG $DBA $XLF. Poor execution on TLT at 110.50, I should’ve trusted 30-min chart, patience.Aug. 18 at 6:17 PM
  • Jim Cramer on CNBC right now. He’s so scarred from Lehman/2008, psychologically damaged, I almost feel bad. Aug. 18 at 9:57 AM
  • $SPXresistance was exactly 1205. That’s shy of my 1215 target, but the “ephemeral rally” is over. Getting aggressive on shorts here…Aug. 18 at 8:31 AM

–Romeo

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