Saturday, 29 November 2014

Weekly Update - Week Ended 28 November 2014

Market Summary and Technicals 
  • Emerging markets underperform - I expect this trend to continue in the medium term in light of dollar strength
  • Small caps under-performed significantly on Friday - down 1.5% as we near resistance from the highs in March and July earlier this year 
  • Market Breadth deteriorating but no near term divergence yet 

Readings and Trends 

 Investment Implications and Opportunities 

  • Energy counters have highly attractive valuations and I believe this is the time to begin scaling in - see my previous article for some ideas 
  • Considering buying out of the money options in TWM (2 times inverse short Russell 2000) as a hedge to other positions
  • US dollar up-trend remains intact, though it is due for a pullback - likely negative implications for emerging markets - question is whether the US economy be pulled down as well
  • Recent disinflationary trend and fall in commodity prices could result in central banks keeping rates lower for longer (US) and expanding their balance sheets (Japan and EU already doing this) - there will be a bubble somewhere, possibly in US equities 
[Update: I own call options in TWM as of 2 December 2014]

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