Minerva Market View for Feb 1, 2024

The QRA and FOMC were both hawkish. We might have seen a near-term top with a chance of a 5-10% dip from here. Here's how we're positioned.

Feb 01, 2024

Good evening! There was a lot to digest today from the QRA and the FOMC. I won’t repeat what a lot have already commented on: both were much more hawkish than what the market was expecting. Add to it all the weakness we have been seeing since the last few weeks in terms of deteriorating technicals, breadth, etc. and we might have seen a near-term top.

The seasonality also does not favor the bulls as February and Q1 of election years tend to be weak. While the longer-term trend remains bullish, we might see a 5-10% dip here over the next few weeks. We have been reducing exposure and will continue to do so if this market tone continues.

Portfolio and Performance

Today was a red day for us as we entered with a “risk on” composure in anticipation of a supportive Fed and Treasury. Still, our stock picks, hedges, and shorts ensured that we were down less than 1% today compared to a much worse faring by all the indices.

Here’s what our current portfolio looks like. Items marked in orange are on watch to cut if they continue to underperform tomorrow. We have also added several shorts and outsized hedges on IWM 0.00%↑ and ARKK 0.00%↑ which helped buffer the fall today. VGLT 0.00%↑ / TLT 0.00%↑ are also good hedges if the stock-bond correlation stays negative. We’re currently 25% net-long.