Full-Fledged Crashes
The stock market remains in the consolidation to short-term pullback. It’s so interesting that the once overloved and overhyped and overowned AI stocks have become almost hated so quickly. That’s the market. We have a very large position in the levered NASDAQ 100 and weeks like this become a little painful. Some have ask if this bout of weakness impacts my forecast for all-time highs this month and quarter. It does not.
You can see below a favorite chart of mine. High beta (risk) stocks have underperformed low volatility ones lately. Am I worried? Not really. Does this change anything? Not yet, but it could. I will let the market tell me.
In the same light, consumer discretionary has underpeformed staples lately to fairly significant degree. This is a warning sign if and when stocks go back to new highs. If staples continue to lead then we have a bonafide issue. FYI, staples are now at new highs along with drug stocks. Utilities and REITs are not.
Let’s look at software which was so beloved not long ago and is now fully hated because folks think AI is going to wipe out the industry. Normal and healthy selling turned into a full-fledged panic over the past week. Just look at the volume traded on the bottom of the chart below. People are basically selling at any price just to get out. That creates opportunity.
FYI, on the way up, we sold pieces of our software stocks when the position size became too large. Wanna guess what we did yesterday during the panic? We certainly were not selling. I can tell you that. And you can see our trades at the bottom.
There’s lots more to cover, but I will save some for either tomorrow or Monday. Folks asking about silver and gold which have crashed as I have been discussing. Silver looks like the bounce has ended and another move to new lows is coming. While I am interested in trading here, it’s a game of musical chairs and I am not willing to get left without my chair. The crypto folks have been taken out in body bags, yet another crash. I have not heard from those who used to brag about having the bulk of their assets in the sector.
On Monday we bought SSO, PCY, more UWM, more RMQHX and more TQQQ. We sold some NJNK. On Tuesday we bought more TQQQ. We sold SSO. On Wednesday we bought INTU, MRNA, SN, more TSPY, more TDAQ, more BA, more MDB, more GWRE, more TOST, more PFF and more PANW. We sold CVS and PCRX.
