Here's Why I'm Not Buying Equities Now
Tiho Brkan | Nov 18, 2012 03:08AM ET
We are starting to see some signs of the equity market becoming oversold from a short term perspective.
The chart above shows that we are approaching internal breadth capitulation in the near term, especially thanks to Wednesday's strong selling pressure resulting in a 90% down day. The basic railway cargo freight is looking very weak .
- Equities: Short positions are held in various US equity sectors, which include Dow Transports (IYT), Technology (XLK), Discretionary (XLY) and Industrials (XLI). Large put options have been bought on Apple (AAPL). Call options have been sold on Homebuilders (XHB), JP Morgan (JPM), Amazon (AMZN), IBM (IMB), Commonwealth Bank (CBA), Adidas (ADS) and others.
- Bonds: There isn't a lot of exposure in the bond space, as we believe this sector is experiencing euphoric investor demand. Call options have been sold on Junk Bonds (HYG). We plan to short Long Bond Treasuries (TLT) in due time.
- Currencies: Long positions are held in Japanese Yen (FXY). Put options have been bought on British Pound (FXB) & Canadian Dollar (FXC). Put options have been sold on Japanese Yen (FXY).
- Commodities: Long positions are held in various commodity sectors, which include Silver (SLV, SIVR, PSLV, Comex futures), Agriculture (RJA, JJA) and Sugar (SGG). We plan to increase longs in PMs and Softs in due time.
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