It has been extremely intense selling since October 2018, finally after 3 months of all out control by bears, we may have a change in direction.
China US are starting their trade deliberations, it is not going to be a smooth ride as both are entrenched in their strategy, but like most trade talks, in the end, there will be an agreement with victory for both side.
Federal Reserve of USA is finally more than worried about bears taking this market down down down, so they choked badly and taking everything back......
With Fed clearly on side, there is more than enough reason to be invested.
China US trade talk is expected to be choppy...
Stock market reacted strongly to 3 positives on Friday, good jobs report, Fed on side and China & US finally meeting on Monday......
Most stocks had gains around 10% in one session, that is an outsized gain for one day, but we have lost about 50% in most stocks, everything is relative to what we just went through.
NO...it is not going to be a straight up market, but a bullish market keeps its gains and builds on it gradually.....
We could pause or slow down or a mini pullback...but those are going to be a nice entry point for many stocks...
@ this stage all stocks look attractive, but looking @ fundamentals is a good strategy.
Most stocks EPS projection has been revised downwards, so a recalculation of relative PE needs to be done when comparing stocks.
IF the tide has turned as I think it has, then we may have quick follow through to Friday's huge gains and build on it, it does mean that we may open soft and close strong.
Do not take soft open as a reversal, quite contrary it is a well established pattern to open soft and close strong.
Good luck with your strategy and comfort level.
BLOG does NOT give buy or sell.
Saleem
8 comments:
Hi Saleem,
Sold LQDA @ 19.58 on bad technicals
I will be posting my weekly stats and recap soon.
Stocktrader
Hi Stocktrader,
Bought ESTC @ $70.75.
Saleem
Hi Saleem,
Last week: -1.13% (YTD: -2.64%)
Notable Winners: ORTX HEAR MHO
Notable Losers: LQDA VCEL TENB APPN
One of my biggest potential gains in a while slipped away as I sold almost all my stocks ahead of Powell's comments. Now, I sit mostly in cash as the rally continues and earnings season approaches.
I am reluctant to enter the markets here based on a few factors:
1. I don't think a Fed that fooled me twice on the hawkish side including an October where we may need to go "above neutral" to slow the economy, and a mid-December, after such market carnage, where rate hikes and balance sheet reduction apparently still needed in an autopilot fashion, is suddenly balanced and listening to the markets based on reading the word "patient" on a piece of paper, especially after the blowout jobs report we had. This is my primary fear, and may unfortunately result in significant underperformance in my portfolio for a while.
2. I think we still need inventory correction in many areas as companies rushed to buy supplies ahead of tariffs. This may or may not end up being significant, but I think some of the incoming data has shown maybe this could be a problem in the first half of 2019.
3. I wonder if the stock market carnage and the government shutdown may have impacted the closing of tech deals right at the end of the quarter. It makes me nervous for my favorite cloud stocks, especially as some of them haven't dropped much in recent months, thereby not resetting the bar lower.
Given all this, I struggle to find stocks I like right here.
Current Holdings: ORTX TRIL, cash 85.9%
I am less optimistic about TRIL, even this far under cash value, as it seems the future of biotech is heading in a different direction, more towards gene editing solutions.
Stocktrader
Hi Stocktrader,
The main point to consider is that most % gains happens very quickly off the bottom, which is exactly the case right now.....irrespective of rationale we may have....
Market has its own mind and will do what it wants to do, that IS the reason I always stay in the market, just adjusting exposure rapidly on way down and on way UP.....
I was sensing bottom few weeks back and kept adding as the bottom was hit.....
Last week for me was mind blowing UP 21.28% and YTD is UP 22.77%......
Good luck with your strategy.
Saleem
Hi Saleem,
22%, amazing start!
What kind of leverage are you working with currently?
Stocktrader
Hi Stocktrader,
Full margin....
Saleem
Hi Saleem,
That was such perfect timing. Congrats on the great start!!
Stocktrader
Hi Stocktrader,
AMD and NVDA were the biggest gainers as they gave me max margin on those ( 70% )
while MOMO and SQ were @ 50%...with SQ being the star performer.....
Felt like a solid bottom with daily 500+ UP DOWN move....seen that movie many times.....
Saleem
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