Yeah $SPY is down only slightly and $QQQ actually is positive while defensive sector $XLU is down over 2%. It looks like people are actually rotating out of defensive into risk. Tech Trader meanwhile taking a lot off the table on both sides and getting more neutral, now about 67% long by 25% short (33% cash), with technology remaining the biggest exposure at 25%.

I am expecting risk off next week. I am disappointed today with weak risk off reaction but next week would be ugly. "Bloody Monday"...


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Doesn't seem like much risk-off at all today. Defensive sectors like $XLU and $XLP are actually selling off hardest while everything else is holding up.

Surprised TT hasn't bought into financials?

Yes  you are right. I expected Fed to be dovish but they came out hawkish, which caused repositioning and created this illusion of 'risk on'. High beta out performed low beta by 0.9% today and Momentum lost 0.35%. This is good for today but worse for next few weeks. I think we get a massive reversal and you want to own Utes and Staples. I am amazed how oil held up relative to USD move. It might be up for geopolitical reasons or it a fake reaction. Let's see on Monday. Next week will be interesting. I stayed defensive and even added. Good luck


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By the way look at EWZ and EEM. I was short since last week, as well as XBI. These are early signs of risk off. I am short IWM too which is flat since I shorted it but it does look weak and ready to break down soon. It is just my opinion.


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I recommend to be neutral or short Oil and energy stocks. Next Friday is NFP, which is expected to be strong, and if it is strong they could hike. USD would likely rally next week (normally the case after hawkish Fed) and Oil inventories in US are now turning up. Chinese demand is likely going to weaken since they are consuming less and exporting more. Geopolitical risk (Yemen threat for Saudi oil) keeps oil up which means it is overvalued relative to fundamentals.

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Typical risk off reaction before Yellen develops as expected. I expect it gets more ugly.


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Risk off is playing out so far. EWZ is leading the pack lower. IWM is holding for its life but I see pockets of risk giving up.
TLT is nicely rebounding.


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Equities are still pro-risk. Cyclical rotation continues despite weakness in Oil. I think most people are short indices while not many are short individual equities. This should end badly.


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Thanks Stefan.  Never pulled yhe trigger.


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Thanks Stefan, yeah might be a good time for a trade.


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Good job TT! It is a tough month for hedge funds.

I remain bearish for next week. My favorite shorts are IWM and EWZ. Expect a delayed risk off reaction next week. My favorite style is Price Momentum now. Its volatility fell 50% over past few weeks. We just need oil down and it works out. European banks are pulling back, Energy stocks sold off today, and bond yields are rising.





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Many ETFs already up sharply since TT's call. $XLU now up almost 1% after starting down this morning.

I have positioned defensively on Monday. xLU would work for next 5-10 days. I am negative on IWM.


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More bottom picking, this time in $FE (utility/energy) based on options call activity for October.

FE 10/21/2016 34x Calls, 11050@$0.8
MV: $0.9M | $Not.: $14.9M | OI: 5121 | 18.5% TotalOI
21.6% StockVolume | 95.8% OptionVolume

Also added $HAIN as another potential breakout.

$YELP up an additional 5% after hours coincidentally.

Do you see any big put spread trades in XLP over past few weeks? Thanks!

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None that we can see are notable.

Thanks!

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$SYMC up about 5% after hours on beat. Initial reports were that it missed; hence why we trade price and not news.

I am the opposite. Short Tech, health care and consumer. Betting on Financials, industrials, and Utilities. Good luck!


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Guys,
Some interesting fact for you. The best performing market neutral factor this year is 20-day RSI. The factor buys bottom 200 stocks in Russell 1000 ( oversold) and shorts top 200 most overbought stocks as determined by their 20-day RSI, rebalanced each month end. Over past 7 months the factor is up almost 17%. This is incredible performance. Basically traders market where fundamentals don't matter. Quants are trading baskets back and fourth. Until uncertainty is gone, it might be the best strategy for the rat of the year.
 

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great job!