Here is the transcript to this week’s Live Q&A chat. Join me next Wednesday at 2pm EST at https://tradingwithcody.com/chat or send me an email with your question at support@tradingwithcody.com.
These are crazy, crazy, crazy, crazy nights: Kiss – Crazy, Crazy Nights. Sometimes days are so hard to survive, a million ways to bury you alive.
Q. Hi Cody. So for the last 6-8 weeks or so it seems like you’ve been encouraging all of us to trim, trim, trim and wait, wait, wait for better pitches to come…bubble bubble gonna pop. I may have taken this a little too much to heart and have moved 401k monies to Money Market and stocks to about 50% cash while adding all of your hedges and a couple of my own. Unfortunately the market keeps going up so I miss gains in stocks, while my hedges lose money as well and my existing calls and common in the likes of GDX, JNPR, CREE also lose money = portfoliogedden…at least right now. So I’m probably 50% cash, 30% long, 15% short, 3% interest rate, 2% metals. Stay the course and keep waiting or start wading into more individual longs in small tranches here? Perhaps others in a similar place.
A. Thank you for sharing all those details with us. Yes, I bet others have also got similar questions, as nothing in trading or investing, certainly not hedging, is ever easy. If you think you are not long enough here, I would suggest, as always, starting to wade back in with some of my highest-rated stocks and/or trades when you see me do them here. I do hope you remember how I always finished my cautionary pieces over the last month with, “I’m still quite net long and think this bubble-blowing bull market is still headed higher” commentary, yes? Good luck!
Q. Cody what type of selloff are you expecting in NASDAQ??
A. Not sure I’m “expecting a selloff in the NASDAQ” per se, any more. I do think there’s got to be a 5-10% pullback in the broader markets at some point soon, probably before year-end, but I’ve been dead wrong about that for the last four-six weeks and the markets have been crawling higher. It is what it is.
AMAZED, we have not had a ten percent pullback this year.
Q. Except TSLA, lol… Hey, I am up 19% year to date in my 401K being pretty agressive. I know you’re not a fan of 401K’s, but for us employees, they are important. That said, do you think I should lock in my gains and slide the scale back to more conservative, steady eddie income plays? Thanks… PS – The 401K is about 25% of my portfolio of liquid-ish investments.
A. I don’t know enough about your own goals, risk-tolerance, exposure, diversification, income potential and so on to feel comfortable trying to help you with that question, but if you’d like to request a Deep Dive with Cody https://tradingwithcody.com/money-management-services/ please let us know. That said, the fact that you’re asking that and the fact that I do know from these past few years of chatting with you that you know what you’re doing, makes me think you probably should indeed lock in some gains and scale back to some cash in the 401k for now.
Q. Holding cash in this Fed print till you run out of paper seems like a sure way to lose capital. What are the upper limits % wise you would put into physical Silver and Gold?
A. Depends on so many factors to your personally. Let me say I plan to own 5-10% of my portfolio in gold coins and smaller than that on the silver coins for a very long time. In the future, as always, I will let price and reality determine how I handle it from these current upper limits.
Q. Cody, any more recent thoughts on Gold and our option plays around it?
A. Sometime before year-end there likely could finally be a comeuppance in the gold delivery markets like the COMEX where there are currently 55 claims of paper promises to deliver each ounce of gold that actually sits in delivery vaults. 55x leverage. That’s more than AIG or Bear Stearns in 2008. I’d rather own gold coins than promises heading into year end, that’s for sure. GDX call options are as long-shot to pay off for us by January as ever. Mea culpa on those.
Q. From Fled November 6, 2013 – 12:56 pm Haven’t been around for a bit. Won’t be in the chat today but wondering about sentiments on WAGE common, double down or cover the short.
A. I think $WAGE is still one bubbled up stock and probably still a pretty good short hedge to our own bubbled stock longs. I haven’t done anything with it for a while, and will let you know when I do strike on it again.
Q. Hi Cody. Re WAGE: I know that charts are not your preferred analysis tool but I do think they can be somewhat useful in conjunction with other tools. WAGE chart is looking VERY strong – to me it shows no sign of breaking down. If I remember you have either Nov or Dec $45 puts and both of those are not looking good at this point. When you first recommended WAGE puts in August I decided to short stock rather than buy puts and I’m thinking it’s prudent to think about covering here. What is your opinion of WAGE here? (1)What would be your strategy if short shares? Do you have any interest in buying more puts here? If so what expiration/strike?
A. I don’t disagree that the $WAGE chart, like most every other stock chart, is beautiful right now. Like I’ve said about all our shorts/hedges during this cycle — they are hedges and not outright profit-generators. I plan on adding to some $WAGE puts at some point, probably looking out to April of next year and using somewhere around a $50 strike. Not in any rush to do it though.
Q. Re WAGE, thanks for your insight. It often helps to have a more patient perspective to moderate my anxiety. I learned a long time ago that some stocks continue to “look good” . . . until they don’t. Some fund decides that some metric is not what they anticipated and they head for the exit precipitating a stampede. When it happens there probably won’t be any warning. It’s seldom easy to apply that knowledge.
A. You have that analysis dead right. I love it. It’s exactly that reality that you describe there that so many Technical Analysts just don’t get.
Q. Good morning Cody. What is your take on FB? The report was good, but it has stayed down below 50 ever since. Should I pare down or build up my stake there?
A. I don’t know how big your own $FB stake is or how big you want it to be relative to the rest of your portfolio, so I have no idea how to answer the “Should I pare down or build up my stake there?” part of your question. I still think there’s long-term upside in $FB and if this bubble-blowing bull market keeps going for another year or two, the stock could easily double from here. After the report, I sent out a note, saying “I thought the $FB call was good and the numbers were great. The comments about teens are just what they are — that is, for the last 75 working days, Facebook’s management has decided it should focus more on teen engagement and I bet management figures out how to fix whatever is they’re concerned about. ”
Q. The chart of FB looks like a nasty head and shoulders
A. It depends on what your risk-tolerance and time-frame and goals for the $FB position are. I have owned it since it was close to $20 a share and loaded up on common and calls at those levels. I’ve sold those down big time and locked in huge profits but even so, $FB has been my biggest position pretty much this whole year and I plan to own it for a long time still, so I’m obviously not going to try to game the chart or the reaction to the $TWTR IPO.
Q. I have Jan $55 calls and I’m thinking of walking away
A. Where did you buy the calls at? If you’ve got huge profits, nothing wrong with taking a tranche profit. Even if you don’t have profits, you could do half or something instead of all or nothing on the $FB over the next 90 days.
Q. I hear what you are saying. I’m going to stick with it for now. The staples have been doing really well over the last couple of weeks. Any suggestions like PEP or SJM
A. I’m not a good gauge for trying to game and trade weekly sector movements like “staples” per se. I have no edge in $PEP and $SJM as they look like every other macro-cap stock chart.
Q. I’ve noticed INTC stock price more often than not drops soon after its Dividend Record Date. Am I right thinking it’s a good time to sell my Jan 2014-$25 calls before the next Record Date. I’m thinking to replace them later with longer dated calls.
A. That’s another one of those very near-term kind of movements that are so tough to consistently game. I don’t know whether it’s worth your time and commissions to move around those $INTC calls like that, although you’re only giving yourself 70 more days for that stock to play out on what is my own longer-term Intel mobility growth possibilities, so be careful!
Q. Thanks Cody, I’ve been holding those INTC calls since August and fear January is getting close. On a long term projection like that do you keep updating the option call dates or concentrate more on owning the stock itself?
A.I suggested and still suggest using mostly common on all of our long-term stocks like $INTC. I’m going to get paid that dividend that you’re worried about trading around!
Q. Is TQNT a takeover candidate? Possibly by Intel?
A. It’s a possible takeover target, no doubt, but Cramer taught me a long time ago never to invest in a company on the hopes it gets taken over. If the stock doesn’t go double digits in the next year or so and the bubble keeps blowing, it’ll likely get bought, and yes, maybe by Intel.
Q. Hello Cody ~ I took my profits on Cree prior to the earnings announcement . It’s priced right now pretty close to where it was when you first recommended it and of course I’ve noted in your comments, etc. that you still like the play. Your last position ranking had it as a “7” but that was prior to the earnings and the drop. Would you still rate it a 7 or possibly higher after the drop?
A. $CREE was a 7-rated stock before the earnings report simply cuz it’d rallied so hard after we’d bought it. I think it’s an 8 or 9-rated stock now back near $60. Crazy six-month chart on $CREE, that’s for sure!
Q. Any new thinking on APOL? Planning to short or buy puts again? If puts, what expiration/strike?
A. Not sure what to do with $APOL here. It’s been stuck around the $20s for a while, and I might not add to it til it cracks below $25 again or closer to $20 a share. Long-term, I don’t see how this company survives the coming cuts from taxpayer loans to its students.
Q. Cody a little while ago you trimmed your position and locked in some profits on $ZNGA; what is your current outlook with respect to starting a position at its current price of $3.70?
A. $ZNGA at under $4 is a never-expiring call option on online gaming and this company’s ability to somehow figure out how to make some money over the next couple years. If they don’t figure out how to grow some revenues in the next six months, though, it’s going to have a hard time ever getting over $5.
Q. Cody XLNX any opinion?
A. I still would rather own $ALTR than $XLNX after $XLNX confirmed what I’d reported was a trend a few months ago — $ALTR’s been taking share from $XLNX. From JPM’s analysts: “Xilinx : Guidance Falls Short on Design Loss to Altera, but Overweight Thesis Remains Intact. Xilinx posted strong F2Q14 results but guided its December quarter below expectations on a design loss to Altera. As a result, we are adjusting our estimates but remain Overweight XLNX due to share gains, secularly increasing margins, strength from the comm end market, and superior capital allocation.”
Q. Thoughts on PCLN earnings?
A. The biggest problem with our $PCLN puts heading into earnings is that the company is definitely one of the fastest and most consistently growing large cap stocks out there. I think expectations are HUGE for $PCLN going into this quarter, but I’ve no true feel for whether or not the stock will get crushed if it doesn’t just blow away the numbers, mainly because this bubble-blowing bull market seems to be willing to pay almost anything for large cap growth.
Q. Any thoughts about EQIX?
A. $EQIX at 40x next year’s earnings and at 4x next year’s sales has a LOT of growth to catch up to its market cap despite it being at 52-week lows right now. $EQIX might be a good short/put hedge candidate for our bubble stocks, though.
Q. We need a good play on fingerprint ID’s… Did you hear that Google lady say passwords are dead? I think she’s right…
A. You have a link on the Google password quotes?
OH, sure, Hang on.
Google security exec: ‘Passwords are dead’
Q. PS – Good stuff on GSVC. I likely how that’s shaping up. Look out below!
A. Gulp! Don’t jinx it on the $GSVC. Still could pop to $20 and rip our heads off as the $TWTR IPO pops tomorrow.
lol, I know. Hey, have you heard of Mosaic solar? I think we should all do our part and invest a little in that company to fund these solar arrays. I’ve only got $1,000 to test the water, but follow them on FB or Twitter and see what you think., Gotta get away from big oil.
All rightie, rock n rollers, let’s wrap round this wrangling and roll on.
