Editor's Note: Below is an excerpt from today's Early Look written by Hedgeye US Macro analyst Christian Drake. Click here to learn more about the Early Look
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Timing (i.e. Risk Management) matters. Particularly as the probability for large-scale phase transitions across global macro fundamentals begins to build. We’ve been reemphasizing that reality recurrently in recent weeks. It’s also why you’ve seen us ratchet down our gross exposure in Real-Time Alerts (RTA) and selectively tighten our net exposure (i.e. add more shorts) at the top end of the risk range or when we breach Trend support to the downside. Prices change, the process doesn’t. Here’s what we did ~10:20am yesterday when SPX broke Trend support of 2703: · Sold APD · Shorted TSLA · Shorted RDFN That took us net short in RTA (4 shorts, 3 longs) for the rest of the -2.2% drawdown in beta. Recall, the @Hedgeye Trend line implicitly captures the critical price and decision levels for the market's largest constituency of investors (traders and medium-term investors). So the probability for some measure of a price vacuum rises considerably alongside a breach of the Trend line in either direction. |
