January dividends have arrived and i managed to pull in $2421 vs $1567 for the same time last year. This is a decent improvement and a nice start to the year. January roared up breaking a ton of records – as i am a trader by heart i tried to ‘time’ the market to short it and although i was right on the thesis, i was wrong with my timing, early and somewhat painful…:) I also assumed given how good the earnings are that the pullback would be relatively shallow ~5%, i also didn’t factor in this leverage VIX bet that the street had been doing which amplified the move. The media reports that we usually get one 10% correction a year, given the length between now and the last, it was not if but when. The historical mean for these corrections are ~12% and that’s what we hit around the lows on tuesday and mid-friday…who’d have thunk eh? This is a good example of why sitting on your hands, not panicking and just riding through it is usually better – let the market come to you. Long term, the last 2 weeks are completely irrelevant, short-term, a trader’s dream. Pick your poison.
Although we have had a decent correction, i am expecting a lot of churn for a while between the old high ( 2870 and the test of the 200ma on the main indexes ( 2550 approx for S&P ). I am looking for the market to gyrate and start putting in more support with higher lows. I still believe that’ll we go and test 3000 on the S&P this year given that nothing has changed fundamentally, earnings are still good. With that in mind, i sold some dividend stocks and to take advantage of leverage for my presumption that’ll we get some decent upside from the lows…..we’ll see how that works out in due course. This may impact my end of year dividend tally, it’ll either be notably higher or notably lower but it is a risk i am prepared to take.
I am still focused on financials and tech. There were also some great dividend opportunities out there in all markets, equities are still more appealing even though 10 year rates in the US may touch 3%, i can still find plenty of solid companies giving 5-6% yield with strong earnings.
Watching the yield curve for any signs of inversion, looking for this to become more of an issue in the second half of the year, we’ll see…
I hope you didn’t sweat the sell off too much, it felt worse than it was especially having been through 2000 and 2008,this is merely a blip by comparison. The media made it out to be horrific – from what i have read, the speed at which it happened was due to those VIX instruments that collapsed on top of the herd panicking + everyone was looking for a dump.
Either way, opportunity abounds..
I am looking for more upside next week into options expiration with a 50% retrace to the 2700 level. If the vix unwind continues to rock then we could have another leg down – i’m taking it one day at a time…