December 9, 2019 admin


The S&P500 index was up 0.3% last week and closed a point shy of the record high of 315.48.

It has been a choppy market with volatility up 50% (as measured by the weekly ATR indicator); We expect volatility to rise again in the coming weeks based on a number of factors:

  1. Its the end of the year – as December closes and we approach the end of the year we might see some volatility as major players close losing positions for tax reasons , tax laws allow traders to reduce tax on winning positions by balancing them with the losing ones but only if they were realized, so major players are inclined to close losers in order to reduce tax.
  2. US-China front is sensitive to every tweet – The story is lingering on this front as we hear conflicting news regarding the, much debated, phase I agreement, both sides have a lot to lose in case such an agreement is not signed so our assumption is that such an agreement will be signed, ultimately, but it might take some time for it to be approved, in any case, we also estimate that the signing of the agreement is already baked into the current market price, so any good news will not cause a large move but any bad whisper will…
  3. It’s uncharted territory – we are close to an all-time high, the market has never been this high and many traders are walking on thin ice here making jumpy moves and are trigger happy to close riskier positions.
  4. The fundamentals are not supporting a big move up-as we have stated in previous posts, the, now closing, earning season did not provide absolute good revenue and bottom-line numbers, due to many factors.

We remain cautious for now as we recommend gradually increasing risk in equities but staying nimble on open positions, especially those sensitive to global conditions, despite the fact that we have a target estimate for the S&P to reach 320-325 levels.

AlphaOverBeta Trades

Closing positions in RSG, JCI made a nice profit this week 

Opening new positions in LEG, WFC, KR

You may find all of AlphaOverBeta trades in the Real Time Trading Updates of our website

We remain positive on the next market move, expect volatility to remain high but use dips to increase risk in the long equity portfolio

Trade Safely,

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