Situation changed, hedges are on...

O.k. so this pullback turned into a banking crisis.

Hedges are on since Friday. If we do not get good bailout news on Monday morning hedges will be around 42% of the long exposure.

My models never have financials in the book, because they screen badly. So not feeling the KRE 0.00%↑ kind of pain.

But I am down about 4% YTD so far.

Since my post on Jan. 9 (“Tradable rally”) the SPY 0.00%↑ had a roundtrip.

IWM 0.00%↑ down hard since it has a lot regional banks in it.

Market situation:

Bad things happen in Quad 3 and Quad 4 with the FED raising interests rates.

My best guess is, if we do not get good news until Monday market opening (basically a bailout via merger or something like this), the sell off will cont.

Also, my best guess is, that this is not a systematic banking crisis. There will be a solution. But I think the Fed is not keen to help fast, they need this kind of pain to get inflation down.

Nevertheless this rally is over and it will take time to see more. The market knows now that interest rates are starting to break things and that is intended.

The follwing hedged small cap value momentum model is in play now.

Best Regards

Andreas

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