Monday, December 7, 2015
12/7/15 Two Riders Approaching
One might think that a pullback today might have bullish implications (a pause before the next leg higher). On the contrary, what I see this morning as I look out from the watchtower:
(a) Heavy selling. According to one trader I follow (James DePorre), 'breadth is not just the inverse of Friday, it's a magnitude or two worse.'
(b) Emerging Markets. Despite +2% rallies in the US indices on Friday, Emerging Markets failed to follow suit. As of this morning, my positions are [again] approaching the threshold at which I begin paying attention to 'noise:' I have now given back half of recent gains (a +10% gain in EM trading the late September lows).
I closed positions in CAF (China 'A' Shares) and FXI (China 'H' Shares) in the opening minutes, for a +5.15% gain and -4.71% loss respectively. Flyers in both PBR (Petrobras) and FCX (Freeport McMoran) were closed at nose-dive losses in the -25% range (but of course both positions were quite small).
VEIEX (Vanguard EM) will be closed end of day. I gave the sector 3+ weeks to play out on a 'buy and hold' basis, but in the end I will always respect my stop losses.
The only sector that appears attractive on today's across-the-board declines is miners. I may open a position or two.