Wild Action, Healthy Pullback, SpaceX Coming & Opps To Prune

What a strange day it was on Tuesday. Wild intra-day price moves. Big decline early on, followed by a big rally and then settling back. Lots of unconfirmed speculation that investors have been selling AI, crypto and gold to buy SpaceX. Not sure I buy that.The most high profile IPO in years comes this Friday. I hope to have a piece out on that this week if I can squeeze it in. My youngest graduates high school tomorrow and there is the mad dash to get seats two hours early in the scorching sun and heat.

The S&P 500 is below and it still looks like a normal and healthy pullback.

Volatility is rallying and that’s not a great thing. The VIX above 20 get tougher although into the 30s is when it really begins to hurt.

On the flip side, for all the squawking about lack of participation, the NYSE A/D Line in the lower panel looks stronger than the S&P 500 in the upper panel.

The stock market’s theme has been either the generals leading (a handful of sexy tech) or the troops leading (everything else). The market seems to go back and forth although it’s really been the former most of the time. There have been lots of opps to trim positions in stocks that have rallied sharply.

And that’s what we have been doing in our Unloved Gems strategy. Recently, we pruned some software positions that we added to near the lows to add to WMT and COST which have pulled back sharply. The other day we trimmed LRN and AAPL because they’ve rallied sufficiently to where position size has grown. I also “bent” one of my rules about IPOs when I bought CBRS the other day for what turned out to be a two-day trade. I recall doing the same thing with CRCL after its IPO and quick plunge. Our highly aggressive, levered models have been long and strong for a while, but are now more active as risk has grown.

On Monday we sold SSO, CBRS, some MQQQ, some LRN and some AAPL. On Tuesday we bought SSO. We sold TQQQ.