Bear market rally?

I most definitely do not think we are close to THE final bottom, but I would remove the Russell 2000 index hedges now although it was after the recent rally, so it wasn't perfectly timed.



18% exposure in long equity is not much although I think the equity picks would underperform the indices (if I would be evaluated on a relative basis) as bank stocks might lead the rally. The risk/reward is not compelling though as I could imagine a few scenarios that could bring the equities markets lower, but I do not think we will have a retest of the new lows for awhile. SPY would probably test the 800 level in a month. I really hate establishing positions after inflection points... but I think we are about to enter a bear market rally. I do not know if we are going to best the 900 level on the S&P, but 840 seems likely.



Still bearish on the entire US bond market. Short trade does have a negative carry of about 2.90%... let's say that 2.90% is when I got bearish on 10 year treasuries. So I need about 3.20% yields to break even. I think it is just a matter of time for yields to go up as I think the money to buy these the bonds would eventually dry up. There, of course, is a risk of quantitative easing by the Fed though.


Still bearish on CHF/EUR/JPY/GBP



The CHF position did well today with a fall of 3%.



PMI ---> PM.. people will still smoke...