Saturday, July 14, 2012

Week 28 Performance.....Tough Trading Waters

The markets snapped their consecutive days loosing streak on Friday with a snap back rally of sorts.  Likely this action was due to people covering their shorts as most of the news this week either economic or earnings related had been weak and disappointing.


Below is a chart courtesy of Bespoke that summarizes the major earnings releases from the week.  We also noted that China's GDP had slipped again and is in a clear down trend.  The global economy is indeed slowing so how do you play it?





People are still flocking to bonds and quality dividend paying stocks.  Depending upon who you ask or what analysis you look at these assets can either been seen as in bubble territory (especially bonds) or close to reaching their full value.


We believe that for those investors that have a tilt toward risk aversion both of these assets are still a better place to be in right now vs. other more risky assets.  The remainder of the summer leading into September we expect continued volatility and choppy markets.  You then may catch a one month break until the US election is sorted out and if the US economy really enters into recession territory.


The DWCM Fund experienced no less than a good roller coaster ride this week swinging from up 1% to finishing the week with just under a 1% loss.  We did make one trade this week, we closed our SDS position which is the double short S&P 500 ETF.  The ETF never really tracked the S&P 500 like you would think it should.  With the markets looking oversold and ready to bounce we exited the position even though we took a loss on it.  This move brings our cash position up to 53% which we believe puts us in a good position to take advantage of opportunities we believe will reveal themselves in the coming months.




The Week Ahead
Earnings season continues to roll on this week which should drive market activities especially in those names releasing earnings.  Here is a link to an Earnings Calendar.  You can sort by company or just input the stock symbol of the company that you are looking for.  I'll include in a separate posts regarding the names we will be following this earnings season at DWCM.


Economic news this week will be focused on housing which could very well affect our short position of 6 home builders we are continuing to carry.  Retail sales could be a driver of market activity right off the bat on Monday morning.  And watch out for Bernanke speaking on Tuesday and Wednesday and what the markets take away as far as QE 3 being in the cards.

DreamWorks Capital Management
DWCM has scheduled our next finance lecture & seminar for Tuesday September 18th at the The Community House located in Birmingham, MI.  This quarters topic will be Balancing Your Changing Investment Needs: Emergency Fund, Investments, Retirement, Education, and Philanthropy.  This is going to be a very broad topic in which we will cover significant points regarding creating, developing, and executing on your wealth management plan.  We should have a very interactive group so be sure to sign up by emailing me directly at pfenner@dwcmllc.com or by contacting The Community House at 248-644-5832

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