Here is the transcript to this week’s Friday Special 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.
What’s up buttercups?
Q. TAPER!
A. Taper news hits and the markets go straight up. I thought there’d at least be a few days worth of panic selling on the TAPER news. But back to bubble blowing bubble market bonanza without a breath, I guess? Alliteration included for free. 🙂
To infinity and beyond! I’m watching gold.
Q. Afternoon. JUST saw a headline on the Fed scaling back on QE. No details yet… But it may change my questions/your answer to it re IEF. I’m holding January ’13 $106 puts on which I’m ahead. Yesterday you said you thought it’d be 5-6 months for an appreciable rise in rates. My question, therefore, was going to be Whether it made sense for me to realize my gain now ( sadly, I’ve got the losses to put it against this year) and at the same time purchase further out puts…or hid what I have AND purchase further out. Has your thinking on rate-rise changed today? And regardless, what would you recommend now in IEF puts later in year — strike price and date? Thanks.
A. Thank you for sharing with us that you have realized losses to offset this year, and remember that there’s a lot of people who spend a lot of time trying to game the tax code in their stock portfolio (not something I recommend personally) who would love to have realized losses in their portfolios to show the taxman. So, anyway, let’s look at a chart of IEF just out of curiosity before I answer. I certainly could see that IEF break back down to the 96 level or so in a hurry, but there might very well be some counter-trend move in it especially with the somewhat surprising news that the Fed’s going to try to taper QE before Bernanke’s even out of the house. Maybe do half as much of selling down some of the big profits you’ve got in your current batch of January IEF puts for now? And then look to scale out of more of them if IEF does indeed continue to break down lower. And over the next few weeks look to buy some longer-dated IEF puts with some of those proceeds.
Q. I had missed it last week but I believe you had said you are once again looking for stocks to move much higher to start 2014 or would you say with the budget ceiling, possible government shutdown and other events worldwide that the correction you are looking for 10-20 comes 1st? Thank you.
A. Feet to fire, it sure feels like Bubble Blowing Bull Market Bonanza is taking over again for near-term and you know that mid-term speaking I am still looking for this Biggest Stock Market Bubble of All-Time to keep getting bigger still.
Q. Cody, The market is soaring on the announcement of $10 Billion/month taper. Your opinion on how this news plays out for the next few weeks? Seems any talk of taper in recent past was taboo.
A. As I wrote yesterday, “You’ll likely eventually see a 10%-20% pullback in the major stock market indices if/when the Fed finally starts to “taper”, which I would expect to happen sometime in the next six months. That will likely be your last great opportunity to buy stocks before they completely take off into what I’ve long expected will turn out to be the Biggest Stock Market and Asset Bubble in History because there will be no quick way to undo all the years of excesses that this system and the bailouts and the 0% interest rates and QE and so on and so forth. That bubble could probably take us higher for another year, two years or even five years. But at some point, the bubbles will pop, money will become more expensive and those who have navigated the swings successfully will be in a great place to start buying up assets in the crash. Finally, a ‘natural’ order of free markets and rule of law will return. I’ll help us navigate this along the way.” And as I just noted to Elad above, “Feet to fire, it sure feels like Bubble Blowing Bull Market Bonanza is taking over again for near-term and you know that mid-term speaking I am still looking for this Biggest Stock Market Bubble of All-Time to keep getting bigger still.” So put together, I guess I’m saying that it looks like stocks want to rally again into year-end and beyond.
Q. Hi Cody, What impact do you think the taper announcement will have on the price of gold: short term? Longer term?
A. After seeing the action in the stock market after this taper news hit, I would also expect gold to have a bid underneath it and perhaps kick into rally mode itself in the short-term. Longer-term, like I wrote yesterday, “there will be no quick way to undo all the years of excesses that this system and the bailouts and the 0% interest rates and QE and so on and so forth.” $10 BILLION A MONTH OUT OF THE TRILLIONS OF DOLLARS A YEAR IN UNPRECEDENTED FREE MONEY POLICIES ISN’T GOING TO MAKE ANY DIFFERENCE LONGER-TERM, TO GOLD, STOCKS, DOLLAR CURRENCIES, ETC.
Q. Ok bubble blowing. Any idea on the horizon what may SPARK just such a 10-20% correction? This market has not had a10% correction in over a year. I was thinking the JAN gov possible shutdown, debit ceiling may spark a decline.
A. A new war front, maybe with Japan and China over those disputed islands, or Canada and US vs Russia for the North Pole, or a new wave of fear over the ongoing radiation and environmental nightmare from the Fukishima Nuclear Disaster in Japan, or maybe a new Occupy/99-1%/Teaparty movement that catches traction…all any and many others could cause a 10-20% correction at any time.
Q. VIX just dropped 13% like a stone. Any opportunity there?
A. It looks like stocks wanna run for now. Maybe this is all a short-term headfake though, and that would make VIX calls a nice hedge if you’ve overly long here.
Q. I’ve been chatting with some techy-inventor friends of mine about the guts in drones and where there might be some plays for us. The best intel I got is just in the geo-location sensor technology that allows them to be aware of where they are in real time and at an amazingly local, millimeterish level. Any thoughts on companies poised for growth in that space, including our current holdings?
A. Whoa now, hold your horses. How about a symbol for us to research? “The best intel I got is just in the geo-location sensor technology that allows them to be aware of where they are in real time and at an amazingly local, millimeterish level.”
Lol, I’m asking you that… I’ll get a link to explain what I mean.
A. Well crap! LOL. I know what you mean, but yes, please share a link. I’m not sure there’s a lot of high margins to be made in Geo-location technology at this point, as its included in nearly a billion phones a year at this point. That said, you guys ready for me to blow your mind? You know what very well might be the best geolocation-component-for-drones play might be? Our old fiber optic laser component friend, JDSU! MTS Selects JDSU to Launch Canada’s First 3G-LTE Geolocation Solution
This is one example: Drones toss and catch inverted pendulum. There are going to be hardware and software plays. I’m thinking it might be Google since they are clearly going all robot on us with that Boston pickup. The software to make those algorithms is the wave of this particular future IMHO.
Q. So how are you looking at Apple now? Thx for your resilience, tending to your family , and your sports adventures! Going to dig out the X-country skiis here in New England.
A. Thanks for the kind words. I used to always say on my show on Fox that “The only thing permanent in life is family.” Regarding AAPL right now, I do think it’s selling iPhone 5S and iPads like stilettos at a Sex In the City party. Macs too are hot this Xmas. JBL makes 5Cs and JBL missed badly and guided ugly in its report last night and that, along with the still waiting for China Mobile iPhone launch non-update today, hit the stock. I’d rather be a buyer than a seller of AAPL right now and I might actually buy some AAPL calls at some point soon.
Q. Tomorrow Red hat, RHT reporting results. What do you think of it? Any earnings play? How does subscription growth impact on earnings?
A. Haven’t got an edge for you on RHT at all right now, sorry. Here’s JPM’s latest note on RHT for you tho: ORCL, RHT, TIBX Earnings Preview : Low Expectations Against Challenging, Yet Stable Backdrop. While the IT spending environment remains challenging, it appears to have stabilized providing some confidence for November results, especially in light of very low expectations. Consensus estimates imply sequential growth below historical seasonality (for ORCL and TIBX). US Government spending continues to be a wildcard in a year of sequestration, with the US Government’s fiscal year end (Sep) included in the November period.
Q. Hi Cody. You mentioned today that you wouldn’t be a tranche buyer in FB right now…does that mean you don’t see any near-term pop from the institutional buying on the 20th or is that a red herring?
A. No idea if there’s institutional buying finishing up with FB’s recent inclusion into the S&P, but I think FB is probably still overall not well-owned by the big mutual funds in the size they want it quite yet.
Q. Hello Cody ~ Thanks for all the advise and recommendations for the past year. My winners far exceeded my losers and you pointed me to companies that I never would have considered otherwise. I’m curious if you have any new picks on your radar for 2014 that you’d care to mention at this time?
A. Thanks for the kind words! I will never be 100% and if you’ve done a good job of managing your upside gains while minimizing your downside losses as you’ve had more winners than losers….well over time, you’ll far blow away the average Joe and average professional in the markets, that’s for sure. Anyway, TQNT is probably my favorite of the newer longs in the portfolio. I don’t have a brand new name to throw at you right now, though, that JDSU discussion we just had on here about geolocation-in-drones potential for JDSU will have me digging into it for the next few days to see what might be there for 2014 and 2015 and beyond. Let you guys know.
Q. Any opinion of rocketfuel—FUEL?
A. FUEL is another BIG DATA company like the SPLK Splunk company we’ve talked about on TWC. I like Big Data and its Cloud brethren and both are bubble blowing bull markets right now. FUEL: “Rocket Fuel Inc., a technology company, provides artificial-intelligence digital advertising solutions. The company offers artificial intelligence-driven solution that is built on its real-time optimization engine, which leverages Big Data and its computational infrastructure to deliver highly-automated, measurable digital advertising campaigns. Its solution is designed to optimize direct-response campaigns focused on generating specific consumer purchases or responses, as well as brand campaigns geared towards lifting brand metrics. The company sells its solution through its direct sales team that focuses on advertising agencies and advertisers, as well as on other third parties. Rocket Fuel Inc. was incorporated in 2008 and is headquartered in Redwood City, California.”
Q. Any new thoughts on possibly re-entering CSCO?
A. Still working on CSCO. I like it under $20 if I can get it.
Q. Any way we can personally sabotage Pandora within the next four weeks?
A. You know what? I need to cancel my Pandora account. I think I’m still paying monthly for it even though I don’t use it at all since I’ve been using Spotify. My bad, fellas, my bad on having been spending money on a product from a company we’re betting against!
Q. What’s the next catalyst to get CIEN back on its feet?
A. Bubble Blowing Bull Market sure might get Ciena moving, I would guess.
Q. APOL still holding strong – any chance of another bloodletting or is it time to cover and cut losses?
A. I think APOL is still doomed to single digits over time. Our entry was $55 though and I’ve not done much trading of the stock since we entered it.
Q. Who all is going to NYC to see Cody speak? Lunch afterwards would be cool. Count me in.
A. Cool, Doug, thanks! Yeah, let’s do a poll of TWC folks here — Who all is going to NYC to see Cody speak and have a TWC lunch together afterwards?
Q. For a moment I thought TWC is the stock, Time Warner Cable. LOL
A. That’s funny about TWC.
And that’s a warp, which is not quite a wrap, cuz this day’s far from over. See ya soon.
