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Market Rotation:

Individual Plays vs Range-Bound Indices

We can see little argument to the fact that the major indices are in a range-bound pattern with geo-political news taking precedent over corporate earnings that continue to be the driving forces with the extreme but welcome volatility for our traders and clients at TradeviewMarkets. Being sensitive to the fact that our colleagues and fellow traders have index-funds that swing more wildly than individual stock positions we continue to capitalize on the big percentage moves of individual plays that show relative strength/weakness as compared to that of the markets. With the S&P futures swings, albeit intra-day or overnight “follow thru”, our traders focus on stock picking while gauging their positions against these moves. We understand trading the SPY’s, futures and/or ETF’s present a tremendous amount of opportunity but all of our traders keep their indices close to the vest as Greece, the volatile currency markets, Swiss news and with Russia-Ukraine offering a cease-fire this am, individual stocks like PIR/TSLA/ BIDU/ have had more consistent range and follow thru. Why would we take a chance and try to pick a direction in the market when these wild moves give you a GREAT chance to see how stocks with earnings and fundamental news are acting.

Our last article published last week stressed that we are playing the rotation thru the various sectors (gold/oil/cyclical) keeping in mind that the Dow/Nasdaq and Russell (IWM) are hovering all near all-time highs. Truth be told, we had EVERY opportunity for a correction or modest pullback with the volatility. Granted the range we are in with this price action is cause for concern and that something seems likely to give but we must admit that the path of least resistance is up. And have no ego when it comes to making the right trades. It is what it is. You can measure VIX/put-call ratio/advance and declines etc. but as we say, everyone has an opinion and we will leave that to the experts. We accept the volatility but have cut our overnight exposure dramatically and find it almost irresponsible to be holding a lot of positions overnight (except AAPL …just to be involved in the pop-culture phenomena).

Our point here is that with many stocks staying “hot” for days we will continue to play stocks that have range, high relative volume and good price action. Since the end of 2014, the SPY’s, arguably the most common ETF as a benchmark, have had a general range from $200-$210, a 5% range over the past 3 months but individual plays have had the same % move within two or three days so why take on more market risk than necessary. We will stay with the trend but after earnings season ends and if and when sensitive news overseas dissipates, it is still early to tell if when the dust settles the market will take the buy the rumor/sell the news approach but until then we stick with our game plan and will adapt when the moment presents itself.


Tradeview Ltd. is not a portfolio manager or an investment advisor. This Market Report is for informational purposes only. Any statements made or opinions voiced in this Market Report do not constitute investment advice. The Tradeview Ltd. Market Report does not constitute a solicitation to buy or sell in the financial markets. Although the information contained in the Market Report comes from trusted sources, Tradeview Ltd. is not responsible for guaranteeing the accuracy, timeliness, completeness, or fitness of such sources. Tradeview Ltd. shall not be responsible for and disclaims all liability for any losses which may be suffered from access and use of the contents of the Tradeview Ltd. Market Report. Trading any financial instrument on margin, using leverage or otherwise involves considerable risk. Therefore, before deciding to participate in any style of trading, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney, accountant or other professional upon whom you rely for guidance as to the appropriateness of an investment in any style of trading is recommended.

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Is licensed to carry on securities investment business and is regulated by the Cayman Islands Monetary Authority (CIMA) as a full securities broker-dealer. Tradeview conducts business pursuant to the Cayman Islands Securities Investment Business Law (SIBL) and its activities fall under the direct supervision of the Investments and Securities Division of CIMA.
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Is licensed and regulated by the Labuan Financial Services Authority (FSA) as a Money Broker, registration number LL15870 licensed to facilitate transactions in foreign exchange pursuant to Labuan Financial Services and Securities Act 2010, the Labuan Companies Act 1990 and the Labuan Business Activity Tax Act 1990.
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