Tesla & Netflix Offering Clues as I Start to Temper Exuberant Enthusiasm
The markets gave us an interesting clue to where the rally stands on Thursday. Both Tesla and Netflix reported earnings that were generally fine. There were a few tiny pieces of negativity, but nothing really big. Both stocks were hit hard as was the NASDAQ 100. You can see Tesla and Netflix below, which we own in our Unloved Gems strategy. Look all the way to the far right of the chart to see the decline.
Both stocks have had epic and meteoric rises and they are very volatile. My sense is that the market’s default through earnings is going to be to punish the highfliers that do not blow out earnings. In other words anything that comes in as expected or worse will be met with selling. And that should give us the first real pullback since March to buy.
I could see the NASDAQ 100 pulling back another 1% or so right in here and then bouncing strongly, but that’s really short-term. I started buying small cap value and I would like to think it’s more than just a quick trade, like the Dow Industrials position I have. In a perfect world, the NASDAQ 100 and other leaders pull back as the rally broadens out. That’s wishful thinking.
To be clear, I am starting to temper what has been exuberant enthusiasm for 9 months.
I know you are shocked. We have had yet another humid and stormy week in CT. 6 weeks of mostly crummy weather and I am starting to think Ma Nature just doesn’t like me anymore after really sticking it to me last winter. But there is hope. I was at the FOX61 studio the other day chatting with my buddy, Matt Scott, who is their morning weather guru. He promised me a weekend with sun, few clouds, no rain and lower humidity. Well, the weekend is here and we shall see Mr. Scott!
On Wednesday we bought EWW and IWN. We sold PGJ, IWO and WEBL. On Thursday we bought levered S&P 500. We sold PCY.
