Which Assets Will Benefit From QE?
Tiho Brkan | Oct 22, 2012 01:15AM ET
Equity market internals continue to deteriorate, especially in the Technology sector, which transitionally has had leading characteristics. Thursday night we saw that Google (GOOG) broke down due to disappointment in revenues and earnings. Other major components that have been struggling as of late include all the big names like Apple (APPL), Microsoft (MSFT), IBM (IBM), Intel (INTC), Amazon (AMZN), Advanced Micro (AMD), HP (HPQ), Dell (DELL) and many others. Percentage of stocks within the Nasdaq 100 index that are above 50 MA stand at 42%, while those above 200 MA stand at 52%. bubble-like record fund inflows into Junk Bond market, a very dangerous signal.
- Long Positioning: Long focus is towards the secular commodity bull market, with positions in Precious Metals (weighted heavily towards Silver) and Agriculture. A small individual position in Sugar was recently added. Call options are held on Japanese Yen (long dated OTM).
- Short Positioning: Short focus is towards the secular equity bear market, with positions in Dow Transports, Technology, Discretionary, Industrials and Junk Bonds. Put options are held on Apple, Amazon and recently Salesforce (long dated OTM). Put options are held on Pound and Loonie (long dated OTM).
- Watch-list: A major short in due time will be US Treasury long bonds, as they are extremely overbought and in the midst of a huge bubble. While Grains have exploded, Softs present amazing value for investors. Japanese equities are down about 80% from their all time high over two decades ago and offer great value.
Disclosure: I've purchased long dated OTM calls on the Yen.
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