Since election, we have clearly seen outperform by many stocks and under perform by an equal number, even indices are giving us same picture, here is RSI to illustrate my point :
Dow 79.04
XLF 68.63
S&P 500 67.51
RUT 64.03
SOX 61.68
Nasdaq 59.88
Out of the six index, first 3 have outperformed and last 3 are laggard.
As we are approaching Christmas and new year rally, it is important to factor these in your investing / trading strategies.
We do have room to rally into new year, but a sobering picture may emerge as we approach inauguration.
Currently many well known indicators are flashing caution and serious overbought conditions, they are :
Put call ratio most overbought in 2 years
Active investment managers ( NAAIM ) are most bullish , that indicator is @ all time high
Individual investors ( AAII ) are very bullish
Despite above alarming stat, we should rally into new year, as new money is allocated towards equities, this frenzied allocation into year end and start of new year may make a "top in this market "
Chinese stocks are faltering lately, they are lacking investors focus, may be a good long term buy to offset coming top.
In any emerging top in market, it may be a very good trading market, or even daytrading market.
As we run towards series of new all time highs, try to book profit and reduce exposure to a neutral level.
This rally has caught many by surprise, thus a tendency to play catch up, when it is all allocated for 2017, then it is time to reduce exposure or buy laggards.
As we are racing higher and higher, some stocks are trading near lows or making new 52 wk lows, sifting through them and buying, will create a balance in your portfolio.
I know, its lot to decipher and think about, but we may have 4 weeks of good market to deal with it.
December 27th is the last day to book gains or losses for 2016.
BLOG does NOT give buy or sell.
Saleem
6 comments:
Hi Saleem,
It was actually a tough week last week with the portfolio -3.08% versus flat most indices (although Rus2000 was -1.72%). Profit taking hit several stocks while re-thinks on Trump potential policies hit others (see apparel retailers, i.e. M). MET M TECK CHK were all down more than 5% with only a few like PI ZYNE having decent showings.
Portfolio: M, TECK LYB FDX ZYNE SPLK CHK QRVO, NEFF, CY PI, cash 6.3%
The portfolio sits +34.3% YTD which admittedly is pretty good, but I am never satisfied haha :) The border tax proposed changes create a huge amount of uncertainty that I didn't really recognize until late Friday. It will force me to pare back/sell my M position until we have more clarity. I hope to sell some today, and then some later in the week when the batch I bought on Friday comes off restrictions.
Beyond just individual sector stories, I'm starting to get a creeping fear that the Trump actions/policies will create more uncertainty for companies than optimism as he scrambles the status quo we've enjoyed worldwide for a while now. I think this could hurt many stocks and I'm more inclined to sell now than in a while.
Hope all is well as the holidays approach! :)
Stocktrader
Hi Saleem,
Sold big chunk of M @ 37.65
Stocktrader
Hi Stocktrader,
I agree with you that Trump is creating lot of uncertainties for the market. It seems it is good to keep away from some of the tech companies. He may not create a friendly atmosphere for the tech companies. I hope there is someone who can control his use of twitter and casual talks.
I see that PI and ZYNE have been great for you. You deserve to reap the harvest. Good luck with your trades.
Joseph
Hi Stocktrader,
It is always good to rethink reevaluate strategy based on your own analysis.
We all know that all rallies run out of steam, either its fully priced in or new uncertainty creeping up.
Trump thinking is US focused, that has all kind of pricing / inflation ramification for US consumers.
Market is already voting with their sell button on some sectors.
Good luck with booking profit and lying low.
Saleem
Hi Saleem,
Bought some ACIA @ 66.75
After sleeping for a decent while in recent months, I think it represents good value overall (GARP basis) and may be a large beneficiary of infrastructure spending by telecoms. The downside is not necessary broken here, but I thought I'd try it out after it recovering nicely intraday and likely is played hard by shorts currently. The risk is some kind of trade or tech war with China as their biggest customer is ZTE (Chinese telecom equipment provider).
Stocktrader
Hi Stocktrader,
Good luck with ACIA......you have done risk / reward analysis, it could be good for a trade.
TWLO & NTNX are dying.....
Saleem
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