August Trading Recap
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August started with a pullback in equities which got a little sketchy mid-month as I got to issue 33 (week two) with the TLV report title: “Hanging by a Thread”.
The S&P500 was very close to a technical inflection point but we’ll get into how it was saved here.
Housing Shorts
Housing names came off the highs very fast and in a manner where it seemed like it was risk off.
These were names that I had been tracking for short ideas the last few months after being a bull back in late 2022 and early 2023.
The rally this week doesn’t change the thesis but it does change positioning.
Trading at inflections allows for optimal entry – so if you’re wrong, you’re wrong small. But if you’re right, you’re close to the turn and can add.
Warren Buffett made headlines in housing this month with purchases in a few names DR Horton being one of them.
AI - Positive for NVDA bad for actual $AI
AI had been a small short for me the last few months.
In August, week two, it became evident that it was another short opportunity. We opened August trading at $41’s and it was pretty smooth on the way down.
Short Term Momentum
The real winners of the month came from OPEX (3rd Friday of the month) and last weeks trading.
The Momentum Monitor and OPEX strategy just made the most P&L for me this month (it was housing until this weeks pullback).
The Momentum Monitor also did well toward the end of the month (last week) as we looked for a re-set higher on names.
This was after thing’s started to look a little rough for bulls but they fought back. Tesla was the real real winner there for me.
Sentiment Shift
This week was the sentiment shift.
JOLTS and Consumer Confidence were the keys and and the narrative is “good news is bad news”.
Again, the downside seems to be known here in the markets but managers are underinvested so that move we saw this week – the velocity of it rather, seems to be chasing.
I have some thought’s on this that I’ll share in Episode III of The LongVol Show.
There were also some non-market correlated ideas that have come to life in the spin-off and European energy and metals space that I shared in DeltaOne this week.
That gets me excited because the Buy & Hold/Value Monitor sans some energy ideas has been light for me the last 2 quarters.
The Final Word
August was decent and obviously heavily data dependent.
You keep hearing the buzzword ‘credit-event’ thrown around, so we’ll see if that carries over.
For the most part, pleased with the month.
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About the Author
Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital L.L.C., a multi-strategy hedge fund management firm based in San Juan, Puerto Rico. He has over 10 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.
He is also the founder of TheLongVol.com, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.
