Stocks on fire as the ol “Fed’s inflating asset bubbles” logic dawns on everybody. So it goes in this time of great market manipulation. We’ve been positioned for this and predicting these ongoing bubble blowing bull markets for the last four years. But nothing wrong with letting off the gas pedal and having raised some cash while stocks were at all-time highs. Speaking of which, even with the 5% pop in the markets over the last two days, they’ve only cut their losses for December in half — still off their highs by quite a bit and still masking some of the huge sell-offs in individual stocks underneath.
Speaking of times of great market manipulations, I’ll be interviewing Gerald Celente later today for Cody Underground and I’ll share the podcast once we publish it later tonight. You can watch Gerald’s Premium Scuttle 2015 Top Trends Conference Videos (where Gerald unveils nine trends that will impact your quality of life and bottom line in 2015) on Scutify by clicking here — I watched each one last night and this morning and I highly suggest checking them out if you’ve got an interest in an alternative take on what trends matter to you and our society.
I am buying a small first tranche of call options in GOOG, dated out into January 2016 with strike prices around $540 or higher. Will add a second tranche to this batch if GOOG were to get hit again in the near-term. I’d mentioned I’ve been thinking about scaling into some more GOOG exposure and this is the approach I’m taking as I already have some common from much lower prices still.
Here’s the transcript from the Weekly Live Q&A Chat from yesterday afternoon.
Howdy folks, let’s do this Live Q&A Chat. Ask me anything, even about my 1990s McIntosh CD Player that I put in my now not-running International Scout II.
Q. Any thoughts on what is holding $AMBA down when it continues to get good support from analysts?
A. I’ve long said that $AMBA will sometimes follow $GPRO but to a lesser volatile degree. $GPRO’s been getting crushed and $AMBA’s sold off too. More likely tho, the main reason is valuation — at $55 where it was before earnings and where I trimmed 20%, $AMBA’s discounting a lot of big growth and high margins into the next year or two. Ebb and flow, in some sense too. I’d like to buy back the shares I trimmed if $AMBA gets closer to $40.
Q. Hi, Cody: just a reminder to keep your eye on Radio Shack for a possible BK play. I’ve been making some good money parens on paper; to keep my eye on timing) with 50-cent January puts on the way down, but it surely seems like a crummy situation for them.i’m hoping for that wonderful day when I can cash in on my puts and go long on the stock at the same time! Anything wrong with that hope?
A. I just don’t know if that BK trade is going to work the same that it has in years past right now — too many retail investors and penny stock traders in the pool are dirtying our water. That is, even if RSH goes bankrupt, I don’t think I’ll look to buy it for a quick flip like we have others in the past. Gotta stick with what’s working when you do those kinds of trading systems.
Q. Re BK — you mean penny stock traders are “on to” the system at this point? Just out of curiosity, how do they muddy up the process?
A. Yes, I think there are lots of day traders and penny stock retail traders who have gotten into the market while it’s up at all-time highs in the last year or so and that some of those people are indeed crowding us when we try to buy the stock the day the company goes bankrupt. Some of them are already in the stock and others are piling in because they’ve read about buying a BK stock for a quick trade. When the markets are down and those guys have lost their shirts again and are out of the way, maybe the BK system will work again.
Q. How do you feel about SNE’s issues with being hacked? Does this impact your feeling of the stock? Is this more of a temporary issue? Would you scale into more at these levels?
A. I have been surprised at the traction that the hacked Sony emails have had, but then again, it’s Hollywood and celebrity names from the emails that are getting all the attention. I think the North Korean hacking and the concerns about them with the new The Interview movie are way overhyped and sort of even ridiculous, and I hope that is the correct analysis because I don’t want any trouble for anybody going to watch a stupid movie. At any rate, I don’t think we’ll remember this Sony hack stuff in a year or two and it doesn’t really factor into my analysis as I’m looking at Sony becoming the next Samsung in wearables and/or monetizing their many films and movies, and all the while benefitting from a collapsing Yen currency.
Q. Speaking of Sony benefiting from the collapse of the yen, are there any companies we should look at that will benefit from what’s happening with Russia and The decimation of the ruble? Or, alternately, any companies in which we might play the other way — getting in early on the downside from the ruble collapse?
A. Good question for an aggressive hedge fund manager…which I’m not. I don’t think trying to game the collapse of the Ruble and its effect on individual stocks or companies is a recipe for long-term success for any retail investor. Remember Long-Term Capital in 1998? Who’s the Long-Term Capital of Russia’s collapse in 2014. Bet we’ll find a few co’s here in the US that are blowing themselves up right now as they bet wrong on Russia before this collapse, but I wouldn’t want to try to game it.
Q. $BKS is trading around $23.25 currently. Is this a spot to add to our short or should we continue to wait for a better entry point?
A. I look at that $BKS every day and every day I think, “Is it time to add a tranche to that short bet yet?” and everyday I decide to wait a bit longer. I’d like to see it pop to $24-25 before adding I guess.
Q. What do you make of this pop in energy stocks? I’ve read you didn’t want to invest in energy until you see some bankrupcies…this a dead cat bounce then?
A. Yea, I wrote early yesterday morning here on TradingWithCody in a note when oil hit $53 or so that it was probably a short-term bottom and that $60 would be next. That’s what I still think is going on with oil/energy right now.
Q. cody any thoughts on mu
A. $MU has benefitted from consolidating the DRAM industry into an oligopoly and it seems they are now set to make big money whenever the growth part of their cycle is in play, as it has been for the last few years and appears to be for the next few. I like SNDK better.
Q. If oil hit’s those guidelines you just presented (sorry if you answered this before), where should we go for the best short-term and long-term growth from a bounce up or an actual recovery? (Two questions – short-term and long-term) Thks
A. Short-term, I’d play the $WTI call options and put options, but again, I don’t think that’s such a great idea for those playing at home. Longer-term, I’m looking starting to scale into some of the biggest oil plays like $CVX and $XOM or so. But not any time in the next few weeks.
Q. can you please comment on CREE? I have a position on which I am down approx. 30% and I’d appreciate your advice on whether I should sell it before year end for loss. Thank you, as always!
A. CREE just can’t keep their margins high enough to satisfy analysts and investors. 50% earnings growth is what the street has modeled for next year and at 15% topline expected to drive that kind of pop in earnings, there sure better be some margin growth. Good luck.