TRADING UPDATE
The S&P500 was up another 22 points today, after yesterday’s 32 (after the day before’s 80 down). Although Monday was nasty, the past two sessions have shown a much firmer tone. When the market goes down now, buyers step in. Today as well, the market started off down 16 points at around 830, rallied to 865 late morning, flattened over lunch hour than came back down to 835 looking like it was about to roll over again, but then rallied smartly for the last 2 hours right through the close. More and more it’s demonstrating that it can recover. Maybe that’s just wishful thinking on my part because I have a 76% net-long market bias at the moment, but the market “feels” firmer, and like it’s going into an up-trend.
Yesterday’s trade was a similar pattern, with wide intra-day swings but then a steady rally into the close. With financials still trading like pork-bellies, REAP picked off the ProShares financials ETF (UYG) at $4.33 near yesterday’s low, and it was already trading out again today at $5.12 on another signal generated today after the two-day rally.
| REAP TRADES | ||||||||
| # | Trade | Qty | Stock | Symbol | Price | Grp | ||
| 192 | Sold | 32% | ProSh Ultra Financls ETF | UYG | @ | $5.12 | 1 | |
| 192 | Bought | 29% | HBP Cr Oil Bull+ ETF | HOU | @ | $3.71 | 1 | |
| REAP methodology detailed in the blogroll under “My Portfolio” | ||||||||
| Qty % are amount by which shares counts are decreased/increased | ||||||||
UYG was up from yesterday’s low by 20% when REAP signalled, and it was touch-and-go whether it would be the S&P500 short ETF (TSX:HSD) or the crude oil bull ETF (TSX:HOU), who were neck-in-neck for the honour of being the worst performer since yesterday. We bought (more) oil.
It’s funny about oil. I just read in the paper how Air Canada’s hedges are now a major liability for them, exacerbating their cash crunch. They have commitments to buy oil at $90-$102 well into next year when the going rate now is $47. I’m sure many other energy consumers are in the same boat (or aircraft).
The ags and energies didn’t really participate in the rally, and in fact remained boat anchors. The portfolio recovered a little more in absolute terms, but also gave up ground to the S&P500, which is unencumbered by the Canadian dollar and my commodity weighting. To gain on the S&P500, I will need commodities to rally for a while or at least jump around in a range.
| PORTFOLIO SUMMARY | 3-Dec-08 | ||||
| (in $C, adjusted for $US exchange rates) | |||||
| PORTFOLIO | S&P500 | S&P500 | SP500 $C | REAP | vs S&P |
| Tot Retrn | |||||
| Reference Date | Start | Last | % | % | Var. |
| Inception MAR 07 | 1406.2 | 870.7 | -28.2% | -30.6% | -2.4% |
| Re-start OCT 07 | 1526.7 | 870.7 | -20.2% | -18.3% | 1.9% |
| 2008 Year to Date | 1468.4 | 870.7 | -18.0% | -8.8% | 9.1% |
| Discretionary Trading P&L (included in above results) | -5.8% | ||||
| Canadian dollar | Last | Inceptn | Var. | Restart | Var. |
| 0.7977 | 0.8547 | 6.7% | 1.0069 | 20.8% | |
| Dividend Yield (current) | 4.32% | ||||
| Intrinsic leverage (from 2x ETFs) | x | 1.30 | |||
I still think we’ll get a multi-month rally off the November low, the occasional 80-point back-slide notwithstanding, but I’m certainly not putting out any guarantees.
To change the subject, finally we have something interesting happening in Canadian politics. Our Conservative party has a minority government at the moment. But in trying to pass legislation eliminating government subsidies for political parties (provided today based on popular vote count), they so pissed off the opposition parties (who would be most financially weakened by the move) that the latter formed a coalitiion. Now they’re planning to defeat the conservative minority in a non-confidence motion on Monday Dec 9th, and then go to the Governor-General to form a new government as a coalition majority. The conservatives are up-in-arms over this of course, but they may not have a choice. Coalitions have only happened twice before in Canada, but the precedent is there.
One of the three parties involved is the Quebec separatist party called the Bloc Quebecois. They run candidates only in Quebec, to represent Quebec’s interests at the federal level. Their leader is a feisty, articulate little guy called Gilles Duceppe. I think it would be an absolute hoot if Duceppe become prime minister because the other two parties couldn’t agree on who should lead. This would mess with everyone’s heads. The rest of Canada would be thinking “what just happened? did we just like leave Canada and join Quebec?”, and Duceppe would be thinking “what the &^*$*& do I do now? I’m prime minister of the wrong country”. To me, just the fact this could be possible at all is great fun.
Cheers,
Allocator
a.k.a George Parkanyi
gparkanyi@hotmail.com
