Soos Global Investor Update...Friday, August 21, 2015

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Soos Global Investor Update:

The negative sentiment in equity markets, most recently driven by last week’s surprise devaluation of the Yuan by China, intensified this week, with little sign of ‘bottom fishers’ and no ‘bounce off a floor’.   The market ended this week by falling today over 500 points (over 3%).  The search for a ‘floor’ from which to bounce and stabilize proved futile.   

Our cash holdings and some of our defensive plays have fared better than the broader market, but it’s been almost impossible to avoid getting hit by the bus of selling that has smashed markets in the past couple of days.  I too participated in selling some holdings as a way to raise cash and increase defensiveness.  We sold some of our UN, and exited from TSN, CHI, XLE, NUE and QCOM.  In preparation for just such an event as we experienced this week, these were the names from among our holdings that I targeted to go, and there are others, should the need arise in coming days/weeks.  Conversely, in most cases, I’ll be monitoring their price action, and would consider re-entry if market conditions improve.  Also, our remaining holdings include names that, at this time, I feel more comfortable holding onto and, for now, plan on riding out the storm with them.  Our defensive holdings, such as the preferred ETFs, also might be  possible adds with the cash that I’ve raised from the recent selling.

In sum, overall, the market has been in a ‘rollover’ mode and is approaching formal ‘correction’ and possibly ‘bear market’ territory.  (see charts below).   US growth data has been mixed at best, China has shown economic weakness along w/its equity market debacle, panic-driven attempts to resuscitate it, and finally, its devaluation of the Yuan, all of which sent EM currencies into tailspins, along w/a selloff in global equity markets.  The US market sentiment turned from having thought a Fed rate hike was bad news for equities and any talk of delaying rates hikes was good for equities, to now realizing that no rate hike is a sign that economic growth, and in turn, earnings, are likely to be weak! 

Technically, the markets are focusing on significant negative chart facts:  there’s the ‘death cross’ and the DowTheory, both indicating very negative trend! (see charts below).

I will continue to keep you posted and invite emails or calls to discuss any questions or thoughts.

Best,

Ed

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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Additional Disclaimer: currently long many stocks/ETFs including UN.  Positions may change at any time without notice.