Sunday, 14 December 2014

Weekly Update - Week ended 12 December 2014

Market Summary and Technicals 

  • After VIX ended below 12 last week, we had a huger jump this week
  • Broad based decline across sectors – not just energy
  • HYG breakdown this week
  • Market Breadth confirms decline
  • US dollar with a slight pause
  • Russell 2000 close to important support at 1150 

  • Low inflation figures from China – CPI up 1.4% yoy and PPI down 2.7% yoy
  • BIS sounds warning over a stronger US dollar
    • Dollar denominated debts harder to repay
    • Capital outflows 

Investment Implications and Opportunities 

  • Energy counters yet to form a bottom
  • Broader market correction underway?
    • HYG broke support this week.
    • Market breadth deteriorated
    • Small caps at critical support
    • Maintaining TWM hedge

 [Disclosure: I am long call options in TWM]

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