Players Change, The Game Remains The Same

Uncertainty is back in the market due to the recent developments in the Mideast.  Egypt is one of America’s most important partners in the Mideast and the story has played through several news cycles.  Unless widespread instability develops throughout the region, I feel this should be constructive to traders playing from the long side/pullback.  My thoughts are with those who have family and loved ones in the region.

I’m positioned very light and fully hedged in the midst of earnings season.  We’re still in a bull run, and bullish momentum can last far longer than most traders allow for.  Many are saying that the market is due for a breather and there’s some anecdotal evidence that playing from the long side has become a bit too easy lately.  Even with the uncertainty in Egypt and the legion of pundits calling for a pullback I’m not willing to skew too far short unless we get a push to 1310 SPX.  A decent pullback to ~1220 SPX on the other hand would have me skew aggressively to the long side once again.  That’s the game plan, until it changes.

Value continues to outperform growth since we highlighted the shift at the start of the year.  Defensive names have outperformed in the recent volatility as expected.  Value is in favor, so value is what I will play.

Busy week in economic data with non-farm payrolls capping the week.  Non-farm payrolls have a curious way of pivoting the market.

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