I like to use $KWEB as a proxy for the China internet stocks. That ETF broke to multi-year highs just recently. As you know, I’ve been trading the shit out of these China tickers…just trying to ride the momentum which is always fairly strong this time of year.
I bought some $BITA and $YY into weakness this morning as discussed on After Hours with Option Addict last night.
These stocks are starting to break out from multi-year downtrends/consolidation patterns.
I am currently long $BABA, $BIDU, $YY, $BITA, $VIPS and $JMEI.
Find me some more of these to trade please.
One of my bigger rotation themes this year was a shift back towards consumer oriented plays. If you were on the last couple Boot Camps, this was an accumulation idea I had for Q1-Q2 of 2017.
I’ve made a few bucks in $SHLD and $COH and still have $JWN, $LULU and some BTFD $UA. $RETL was the last purchase I posted here on the blog…take a look how the chart is developing…
According to VIX, investor fear levels are hitting lows not seen since 2006. I remember that market phase like it was yesterday. There was never a time in my career I had grown more fond of trading and fond of the market in general.
I’ll keep this brief, as there’s only one detail you need to remember about a VIX heading to new relative lows.
The VIX bottomed in 2006. The market topped in 2007.
What took place between those two reference points were opportunities that changed my life. Don’t miss what’s coming until you know the top is really, really, really in this time.
Taking one more date with a China name before the fun is over.
Long some May calls here. Also added to $HAL, booked $AIG and $XON…and got $INNL shares and $DDD calls (yesterday).
I’ll recap this all after the close.
I’ve been stressed, distracted, and overly focused on getting prepped for a move. While blogging here, I am trying to piece out fragments of a market narrative, trade ideas, and the usual daily therapy for my readers.
As I’ve said, I do believe that the market narrative starts to speak a bit louder in the coming weeks. For all the reasons I’ve mentioned, but most importantly because the mood I warned about is starting to spread just a little bit.
At the last couple boot camp’s, I tried to anticipate what the first market pullback might look like. I said that the first couple “dips” would be 1-2%. They have been just that.
I also talked about an April to early May rally that would need to suck in traders at high prices. I think we’re seeing that to an extent right now.
I also talked about “Sell in May and Go Away.” My take on this is that people will make that remark in years where the market has been more difficult. They don’t talk about leaving in May during the good years.
If people are deciding to stay and play, we might get our first good “woosh” of the year. Nothing to crazy…but enough to kick these late buyers out.
The structure overall still says we’re heading much higher over many months to a year, but I’m already looking to adjust strategy starting in 1-2 weeks.
I haven’t seen any fund flow data yet, but will be watching for it through the week. It seems the pain trade/chase scenario still has a hold on the market this week and the action today was fantastic.
I still think the Trump trade here for the intermediate/long term is a steal.
On the day I managed to grab $NFLX calls right at the open, along with $BIDU and $ACIA calls.
Have my eye on $EDIT, $DAL, $VIPS, $CMCM and $CNDT. Going to start up a list of trashy cheap stocks to play this summer, starting a few weeks out.
For today’s write up…I wanted to speak on where we are heading into the Summer.
Let’s start with something I’ve been warning of for the last few years. The use of the indices to measure market direction, health or analysis is becoming defunct. I’ve been noticing this over the years and have done my best to give members alternate ways to measure market direction, health and overall analysis that tells a deeper story.
Bottom line, the rotation into ETFs and Indexed products over the years has literally thrown everyone off an important underlying narrative. 2014 was the best example of this. The market crashed that year. Period. Worst year in terms of overall breadth in over two decades. You’d never know that because the bid under the SPY kept it in an uptrend, despite 70% of stocks being down more than 10-20% that year.
Why do I bring this up?
This week I tried to make opportunity out of select strategic buys – away from the market. Do I feel good about them? Of course.
But what about “the market” here?
I don’t like the jump in bullish sentiment. This was part of the trap I had been speaking of at the Q1 Boot Camp. I said “real market corrections and analysis will take hold based on sentiment extremes…such as big +/- in overall sentiment ratings, big monthly fund flows, etc.”
Over the last month, people consistently sold out of stocks while sentiment plummeted…and the market went nowhere.
Market pops this week, AAII sentiment jumps 12 points to the average of 38.5. Enough to potentially slow things down for the month of May.
This is almost verbatim of what I said at Boot Camp…a rally into May that gets everyone excited about NOT selling in May and going away. This market move forced people to jump back in at some higher prices too.
While I am skeptical of what the SPY will do, I am thrilled at what individual charts continue to do. Before I get to firm on what I think May ends up looking like…I want to see where fund flows are pointed May 1st. I also want to see how strong/weak money coming into equities is. That will tell us whether or not it will be a long summer.