Q. It seems stocks want to go up at the moment, What are the chances to test the previous low set in late August? Is it safe to begin adding stocks from here?
A. Tough, tough questions you ask. The markets have had a nearly 5% straight up move since the most recent bottom was put in last Friday morning. On the one hand, there’s that old saying that has some merit that “The biggest rallies happen in bear markets.” On the other hand, that Friday bottom is a higher low that the chartists will have to respect. I still think there’s a lot of money managers out there who are underexposed to the markets and were worried we could get a 2008-like meltdown but are now starting to cover/buy more stocks as the market runs away from them. Certainly there’s a possibility that we drop back to the August lows, but feet to fire, I think the path of least resistance for the stock market is higher into year end.
Q. What do you think of the prospects of an energy stock rebound over the next 12 months or so? Lately some light rebounding from punishment. Any interest yet in that sector?
A. Yes, some big bounces in all energy-related stocks of late. I’m still far from being an energy bull and probably will be until/unless there is a wave of formerly big cap stocks hit $0 and/or there’s a wave of bankruptcies in the sector. That doesn’t mean it will happen, I’m just saying that it’d have to be a scenario like that before I’d buy into energy stocks.
Q. All indicators from manufacturing to retail seem to be trending down. Feet to the fire, do you think this is priced into the recent declines in the overall market or is the Fed ZIRP theft propping up the market from a eventual further fall?
A. I tend to think retail is about to rebound. Most important economic indicator for the stock market is corporate earnings, which aren’t trending down (yet at least).
Q. My $SLV call is expiring on Oct 15. I am at loss. Do you think its time for me to sell it and get whatever I can instead of letting it expire and go worthless ? Just wondering what you do usually in these cases. Let it expire or sell it for whatever its worth to reduce the loss ?
A. Tough call. I’m holding my $SLV call options for now. Will be tough for $SLV to get above $16 in the next 10 days before the Octobers expire tho. I sold $SLV 15 call options at a small loss today while holding $SLV 16 call options. $16 call options become lottery tickets just 10 days before expiration. I don’t have a standard way to let options like this SLV play out. My decision will pretty much always depends on the current setup.
Q. What is your latest take on $FB and expectations for earnings coming up? Also, I admire how you are balancing a tough family situation with keeping your feet to the “trading” fire…hang in there.
A. Thanks for the kind words. Frankly, I feel inspired to work as hard as I ever have and to try to deliver results for all of us. Our newborn is growing and getting healthier and bigger all the time. Our 20 month old has decided she’s Spider Girl and makes me help her scale the walls….as for $FB, let’s talk about it. I cringe when I hear or see the “FANG” (FB, AMZN, NFLX, GOOG) term thrown around on CNBC or RealMoney.com. There’s a lot of retail traders who have gotten long each and/or all of those stocks in the last few months. Those are “weak-handed” shareholders who will sell if the quarter disappoints and/or the stock sells off post quarterly report. In other words, I would think that expectations are pretty high going into the report. The good news is that I do expect strong revenue growth and otherwise very impressive fundamentals for $FB so maybe they can deliver on those high expectations. I plan on holding it steady for now as one of my biggest positions as it has been since the low $20s.
Q. With the latest news on TWTR have you changed your opinion on when to buy more?
A. It’s not like it was big news when TWTR finally officially announced that Jack Dorsey was taking back over as CEO. This morning Twitter launched Moments (previously known as Project Lightning) as a separate tab within the broader Twitter app highlighting the “best of what’s happening on Twitter in an instant.” I saw several analyst notes that mentioned that feature will be highly monetize-able, but there’s no real change in the outlook here. They have a terrific platform that gets loads of free advertising with their bird logo and #hashtags everywhere you look and Periscope is gonna’ big a big winner for them. @Jack‘s gotta take it to the next level.
Q. Do you have an opinion on how $AAPL will perform between now and year end?
A. Feet to fire, I’d guess that $AAPL stays range-bound between $100-115 and maybe gets back into the $120s into year end.
Q. Can you talk about gold generally? Why the latest blip up? Is it just a hiccup or the start of something (most would say) good? Still holding onto my December 15 $15 GDX calls as, I gather, are you. Second question: why DO you hold onto things like SLV options that clearly will not recover in their remaining few days? Isn’t it worth it to reap the small additional profit or cut the loss by a bit rather than just letting them expire (with., as you’ve pointed out, commissions being relatively small)?
A. Gold’s been strong since the Fed held rates steady at 0% at their last meeting a couple weeks ago. Then that so-called weaker-than-expected jobs report last Friday and the “Economy weaker than expected” headlines we heard all weekend gave the Fed “cover” to keep rates at 0% for the foreseeable future. I do think $GOLD could head back to $1200 or even $1300 in the next few months. At gold $1200/oz, $GDX would probably be closer to $20and at $1300/oz $GDX could get back to $25. I’m holding my $GDX call options steady. I probably should sell the $SLV call options that are about to expire worthless but just haven’t yet. Let you know if I do. Otherwise, I’ll just eat the ones that expire worthless.
Q. Does the competition from Microsoft bother you with regard to $FIT? FIT is a one trick pony.
A. I think the world has passed $MSFT by. They want the new Microsoft Fitness Band to tie into Windows…and Windows is a dying platform. Fitibit has become the de facto standard for fitness wearables and I don’t think Microsoft can break that. It’s a very cheap stock and I’m holding it here.
Q. Why is $GPRO down 10 points?
A. I agree with you that $GPRO is getting closer to bottoming action and that the downgrade with the stock down 70% is probably a good indicator.
Q. $FIT and $GPRO cannot seem to gain any traction in this market. I am going to add. Do you still feel the same? I like $FIT, just not so sure on the one-trick pony $GPRO.
Q. So is it time to buy next tranche in $GPRO ?
A. Probably not a bad time to scale into a second small tranche in $GPRO.
Q. What do you think of Prince (Saudi Royalty) buying more $TWTR—has 5 points?
A. As an investor, I don’t care too much one way or another that the Saudi Royalty is buying Twitter. As a global citizen, I’m not a fan of the Saudi regime.
Q. Is there certain strategy you follow when to sell in the money calls and calls in general, certain percentage, time frame? How close to the expiration date would you leave them? Any specific books you recommend to learn more? I did read your book, but I want to learn more.
A. If I understand your question right, I want to clarify — I don’t short sell options very often at all. I don’t have any set way of doing it. Sometimes I’ll even ride some of my in-the-money call options into their expiration and take the common stock. As for a a book, I’d recommend Victor Neiderhoffer’s Education of a Speculator.
Q. Is there another sector aside from Biotech that could see a haircut this earnings season? I’m looking for another hedge.
A. Not sure biotech will take a haircut this earnings season overall, but I do think the trend for earnings growth in biotech is headed lower as gross margins get attacked. Other sector would be any oil-related, nat-gas-related, energy-related, mining-related companies.
Q. Obviously, so far your call on $AXGN has been a good one. Is it a relatively thinly traded stock, as undiscovered/”small”as it is at this time?An idle thought: just wondering if the move over the last couple of days was actually related to your recommendation. If you chart it, the initial moves are there almost to the hour! ( not that it doesn’t sound like a very valid analysis and recommendation.) Just curious. Nice professional “ego trip”?
A. Yes, as I was saying in the $AXGN Trade Alert when it went out, this is a microcap stock that can be easily manipulated. Without a doubt it was our Trading With Cody Trade Alert that popped the Axogen stock. It’s why I am so adamant that we don’t often buy these kinds of penny stock small cap kind of stocks. I barely got a toe in the water in the stock and would like it to come down closer to $4 again so I can buy another very small tranche in it. If the company delivers and executes and becomes a standard in nerve surgery, the stock will go up a 5-10x from these levels. If they fail, I’ll some day sell the stock at a loss, I’m sure.
Cody, I have learned a lot from you since i joined couple of months ago, hope all is well with the family as well.
Ok folks, that’s a wrap! Thanks. And be sure to listen to my latest podcast.https://soundcloud.