It has been 9 weeks of churning in stock market where most high flying super stocks have shed about 30% of their lofty valuations.
Reasons given were many but none of them made any sense except when valuations does not reflect reality, stocks have to come down in a hurry.
There was multiple expansion initially then multiple of earnings became multiple of sales, that is when trouble starts in every market, when most common trading strategy becomes " its different this time "
When RSI is ignored and sentiment is ignored...trouble cannot be far away....
10 year rate of 1.75% is being pinned as disaster....what a joke.....it is a reflection as we are transitioning from " Covid-19 driven economy to vaccine driven economy " yes there is a difference between the two...
In 3 weeks we went from 3950.43 in S&P 500 ...to 3723.34 loss of 227.09 points or a quick loss of 5.75% ....it was a better performing picture of all indices....
Nasdaq has taken a huge plunge from February 16 to March 8th a slump of 1778.07 points or a sharp fall of 12.54%....in 3 straight weeks.....10% loss is known as correction....
Hopefully we have discounted the change in economic picture of US.....most stocks have reacted positively to improving economic activity ......
All the churning which resulted in Nasdaq moving sharply lower along with Russell 2000 while Energy, Cruise Lines, Airlines, Casinos kept moving UP...seems to be in balance in terms of valuation for now.
Wall Street always gives new words to worry about like 10 year rate or Fed Funds rate...BUT they are an ongoing and changing scenarios reflecting economic malaise or resurgence...nothing more...
IF you have a balanced portfolio of higher near term earnings your portfolio is ready to benefit vs those @ home stocks which have borrowed from future in terms of earnings, in plain English some @ home stocks may show declining rate of earnings increase...quarter over quarter comparison may not be healthy...
Good luck with your own thesis and comfort level.
BLOG does NOT give buy or sell.
Saleem
2 comments:
Hi Saleem,
Last week: -5.78% (YTD: +11.06%)
Notable Leaders: none
Notable Laggards: EH GRWG PSNL SNAP MTCH SUMO AVLR
The speculative stocks got hit hard this week and the portfolio suffered greatly. Small stocks got hit the hardest, while many large cap stocks actually rose. With many stocks down 30-50% from highs, I think there has to be a base-building stage before any serious rebound. I have always been an investor in these kinds of stocks, so I'll continue to pick my specific stories and companies based on upcoming catalysts and valuations I can justify. I am definitely looking for ideas that can benefit from a global re-opening thesis, even if they rose during the "stay-at-home" time and got hit hard this past month.
Holdings: FDX AGCO EAT QRVO HUBS ENPH AVLR PLAN SNAP MTCH SUMO PSNL GRWG EH, cash 0.3%
Stocktrader
Hi stocktrader,
Last week Down 3.59%
YTD Down 3.38%
Saleem
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