Yet another of the many observations I pointed out last year and early this year about correlations of now and 1998. I was guaranteed that the market would unravel as the USD/JPY collapsed this year, as I’ve argued that this wouldn’t change the outcome for stocks. Bloomberg tried to shed some light on how they missed this move, but I’ll throw out the same chart again to illustrate how this trade collapsed in August of 1998, similar to how it did in August of 2015. It continued to get blown up while the markets entered melt-up mode.
I talked during the week of my free After Hours trial about watching for a rotation/move in retail. Since then, there were three different days where retail stocks were creeping to the top of the performance lists. Now with a few favorable earnings reports, retail stocks are breaking out left and right. $XRT just broke away from it’s YTD trading range today.
I also spoke about watching transports for this same type of move. The real opportunity was a few months back when the bullish percent hit 15…but there are still many stocks that haven’t quite broken out yet. We’ll probably do a top down tonight on After Hours to discuss this.
Other than that, I am a pig in shit today. My style was built around these conditions and they’re working to perfection.
Top ideas here: $NOW, $MBLY, $USG
We’re approaching the 1 year anniversary of this Barron’s cover that printed last year. I remember being in an airport store and took a pic with my camera. Not long after I made this one of my biggest LT positions coming into the year.
I’ve been talking up this earnings announcement over the last few weeks. Mostly because implied volatility has been FALLING into earnings. When I take earnings trades, I am always looking for discounted premium, and $BABA options are trading at the cheapest prices they’ve ever traded into earnings.
From a technical perspective, the stock chewed through a massive wall of supply this week. In fact, look at an intraday chart of yesterdays price action. It spent the first hour and a half pegged at $85.
So after Barron’s talks about why the stock could fall 50% from the low $60’s, it’s actually up 40% since the magazine hit the racks. Think the next 10% is higher or lower?
Disclaimer: Long stock, bought calls Monday.
I’m sick as a dog today. Could be the sushi I ate last night, or watching a 12% LT position in $FSLR sell off and reverse the way it did. Those moves can cause a little stomach churning.
Which by the way, don’t show up to talk shit about the stock now. Especially after you had an 87% return in the name at the start of the year while the entire world was melting down. Let it slip through your fingers? I don’t feel bad for you at all, so tell someone else that cares. I own the stock too. Have for 3 years. Blow me. Go ask someone else about it. I spend a shit ton of time researching, listening to calls, taking in opinions of others close to the name. Do you do the same? Or do you show up for a hand out, saying nothing with an 87% return, but rather prefer to show up and hate on the name in a situation like this. Take it to the message boards.
I came up with a new list of set-ups I like that we’ll discuss after hours. Right now, I’m thinking of booking a $PANW loss, rolling out $WDAY and $PYPL to September, buying a ton more $NFLX here, going “all in” on $BIDU and waiting for these other China names of mine to slow down so I can book some unrealized gains.
Watching $TSLA into the close as it sits at a spot that will dictate the next 10% move.
I bought $XON and $FCX calls this morning.
I anxiously await moves in $STMP, $TWLO, and $SSYS.
What’s your top pick here? Just looking to create some new chat.
Notice the moves in $FB, $AMZN, and $GOOGL today.
These stocks showed strength early and backed off. Might not be much to draw attention to, as lower time frames look constructive. But AMZN and GOOGL trying new highs on fumes is interesting. They did the same exact thing in late December.
Personally, I’d love to see that money rotate elsewhere. Like my $TWTR.
$TWLO. I put on my third installment of call options a few hours ago. Largest running position and am immersed in August 45 and 46 calls.
The selling pressure eliminated a lot of longs this morning. I feel like I’m one of few left here, with a huge sack. Of calls.
It’s raining Chinese burritos in my office today. They’re catching on here, with massive moves in $ATHM, $SINA, $WB, and $YY. I’ve been on this theme for over a month, and it seems they’re just starting to get some attention. I’m going to book the rest of this $SINA move and likely place a couple more bets with the proceeds.
Two stocks that haven’t broken out yet: $SFUN and $TOUR. Keep them on your radar.
Not only are we in a very low market to stock correlated environment, but we’re approaching WTF lows. Something I’ve warned about for a very long time, but I’ve never seen them as low as they are here.
What does this mean and why does this matter?
Like most, you’ll check with the indices to determine whether or not you should participate. However, in this environment that’s the worst thing you can be doing. Remember, the market is having no impact on what stocks are doing.
As I’ve said, with the massive trend and flows towards ETFs and Indexed products, I believe this to be part of the pain trade moving forward. I think that constant bid over the last two years also helped to mask a diseased market, in which the growth component absolutely crashed in 2014…yet the SPY stayed on a slow trend up. It helped to make participants feel good about the environment, despite the carnage that took place in individual stocks. Moving forward, I think the pain is owning the index or ETF while nearly every single stock out there has outperformed YTD.
So here we are, the rotational elements of the market have not looked healthier in as long as I can remember. Yet, because the indices never illustrated the destruction that took place underneath the surface, everyone is caught waiting for it. Truth is that they got it already. All the things I warned of last year…huge short position, lack of exposure, sentiment…whether the market belongs up here or not, the outcome was inevitable. Higher was never expected, and that’s exactly why we got it.
Booking some gains today, looking at $FCX, $TSLA, $VSLR, $BLOX.