I’ve made more this week than I have an any single month in the last few years. I’ve been trying hard to keep the balance hidden, but days like this you have to look.
The QQQ’s were the first to hit the 52 week high mark this week. The SPY is within fifty cents.
What about the market hitting overhead supply? Trapped longs?
Non-existent when you factor in the breadth readings over the last year. Like most have pointed out, smart money sold earlier this year. Why? There wasn’t shit worth trading. Now that the market presented an entry point, that cash was deployed. And there was more cash (as a percentage) readily available now than there has been in the last 20 years.
It would be one thing if that “supply” represented trapped buyers. Any indicators will illustrate distribution in the summer range. Not accumulation.
Now that we’re here, let me ask you, is this “frothy?” Is this “enthusiasm?”
You have to consider much more than price when answering that question, because I am still blown away at those that are not participating in this, or even worse, are fighting this. That’s why the market keeps trading higher. It will continue to do so til morale improves, lol.
I’m done with that argument though. Sincerely. Take it elsewhere. The heavy lifting was done back at the lows, where it needed to be. I’ll point out individual ideas from here, but you can have your market analysis back. I no longer require it.
As I mentioned in After Hours with Option Addict last week, I am a Shanghai bull here in the near term. I think there is about 400 points of upside remaining this year. Suffice it to say, I’ve got some exposure here.
Lately, we’ve been talking about high short interest names, “dash for trash,” etc. While we are clearly seeing a risk rotation in the market today, you must look at the high short interest stocks as a place to get the biggest bang for the buck.
So many of these heavily shorted stocks have not moved during the first phase of the rally. But then again, the higher this thing goes, the easier it becomes to shake these stocks down, simply for the reaction.
I’m looking at $QUNR. Last week the stock got a downgrade and spiked on heavy volume. Today its down about 10%, on a small fraction of that same volume. This is one of the most heavily shorted China names on my list, and its trying hard to consolidate some pretty fast moves from last week.
This is purely a spec play, but it has the potential to see some pretty fast upside.
Trying some Nov calls, fwiw. Any additional downside from here, I like it a lot less.
You do realize the extent of this rally falls not totally on the macro or fundamental argument, but mostly on exposure, sentiment, and positioning, right?
Do you understand why the correlation to 1998 (which has the highest correlation coefficient I’ve seen) was not hinged so much on what went on in the world at the time, but how people felt about the world, and what they did with their money in response?
The best indicator I’ve used during the whole process here? Cash.
We spoke of this a few months back, but the Global FMS Cash Indicator hit an EXTREME this year. That means that there was more cash available to be deployed if the opportunity presented itself.
What if high cash levels were waiting for a market dislocation to present an opportunity, rather than to predict a crash?
I’ve posted my arguments on many occasions that this is simply what is happening. This is why you are seeing late 90’s price action in some big name stocks too.
The higher this market goes, the greater the need to deploy that cash, a la 1998.
The reason the charts have such a high correlation? Price is a reflection of behavior.
Forget the similar headlines. Pay attention to the behavior.
I gotta tell you, today’s action is the most constructive part of the last 6 weeks of analysis. The arguments are about to grow very quiet around here.
Stocks have a pretty good trend here off the open, but notice that the non-stop trending stocks over the last few weeks are not the stocks hitting days highs here. In other words, there are new names trending with the market here today.
As I mentioned a few times last week, I don’t care much about what the market does this week, I’m mostly concerned with which stocks get bid up this week.
I started up some $CRM and $JOY right at the open off this weeks watchlist. Will be paying attention to top dollar movers today to notice any themes.
I was at my sons 3rd grade football game last month and heard this noise I couldn’t locate. Finally, I looked up, and sitting still in the sky was a drone, taking video footage of the football game.
Immediately after seeing that, I wanted one. I can scout hunting spots this winter, spy on my neighbors, check on traffic, etc. Anyway, its the number one item on my list this year.
I’ve also been a long time fan of Shark Tank. This show got very little play when it first debuted in 2009. I fell in love with it, because it helped to illustrate entrepreneuralism and the American dream at a time when most people were down. It’s the only series I watch on prime time, and I’ve watched every episode.
If you missed it, there was an episode recently on a couple of guys with a drone company, looking to raise some money. Business Insider did a write up here. Also, here’s the video.
It was the most memorable episode I’ve watched. This company makes drones, one in particular that takes your phone with it as it flies. The sharks got into a bidding war, which ultimately doubled the valuation these guys were looking for, and each shark got in on the deal.
A few names that I follow as drone or drone derivative plays are $INVN, $IXYS, $AVAV and $AMBA. 3 of these 4 have been trading very well lately, and I wanted to start piecing together a position in $AMBA here around $50.
Overall these stocks were high flyers in late 2013 to early 2014. $AMBA traded on their own path to a degree.
Anyway, this is what prompted me to start nibbling into a falling knife. $AMBA has already seen some fear and panic priced in this year, but I’m a buyer down to $45. I would have gone with $INVN, but I can’t get it under $10 anymore. I plan to hold for some time.