Bears’ First Round Draft Pick Fumbles
February 17th, 2007 by Buck Woodford
We experienced a a solid upside week in the equity indexes. Teewinot captured some of the nice moves made available to us and will attempt to build on those gains in the coming weeks. Our smattering of stocks performed well, our short hedge lost a little, and clients’ Railroad stock holdings — our biggest sector allocation — ran over anyone standing on the tracks.
The major indexes are in a slow melt-up mode that I’ve described to friends as a trading range with an upward slope. It’s not a wild runaway bull.. just a controlled move higher.
The equity market has defiantly ignored the bears’ biggest & best doomsday theories, especially the recently exacerbated subprime credit/housing woes. I can’t help but respect a market that behaves that way.
However, we’re now at the top of that range.. so there’s no need to chase. But no sense getting overly bearish yet either. Markets will have to make a solid lower low before I go too heavy on the short side… but that line in the sand keeps inching up with every low pivot point that forms.
Biggest short on our books right now is one that trades at 600x sales in an overhyped Macau gaming sector.
Short MPEL
