Just a handful of weeks ago, which now seems like a lifetime ago, do you remember all the daytraders and momentum lovers all highfiving and joking about all the money they were making?
I wrote about it thusly:
Highflying stocks: Nemesis for the hubristic coming sooner rather than later
I have a few thoughts about the markets and hubris and trying to keep perspective about the next 10,000 days of our lives, as we head into the weekend.
I see multiple stocks up 20-30% every day these days, even giant multi-billion companies like SPLK and other already-overly-loved tech stocks like AMD and NFLX going up close to 10% on upgrades from analysts who have missed the entire bull market.
While that might be a great market for daytrading and momentum swing trading, that’s always fleeting. Sentiment and momentum can swing in a heartbeat and all those people highfiving because they made big gains this week are likely going to be in pain when the turn, even a temporary downturn hits. And I tend to think we’re about to get that 5-7% downturn I’ve been expecting, starting likely next week as hubris and highfiving go hand and hand. And the markets hate hubris.
And this comment from a long-time subscriber this afternoon in the Trading With Cody chat room, as the trading week comes to a close underscores the feeling that many of us, including me, have from not having owned EVERY stock that’s gone up a ton this week, even as the fact is that we do own and are up nearly 800% on this stock since we bought less than three years ago.
Subscriber: “New high today for NVDA. In your July 17 Latest Positions you mention that NVDA ‘is still quite overvalued and overloved.’ The stock is up almost $20 since July 17. What are your thoughts on NVDA in light of these comments?”
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Cody back in real-time today October 11, 2018.
We are now getting pretty much to the flipside of that market where instead of seeing multiple stocks go up 20-30% per day, we’re obviously seeing hundreds of stocks go down 20-30% in two days’ time.
So anyway, not much to do right here since we’ve been prepared for this downturn except to trim a few more of our puts. I’m selling another 1/3 of my remaining QQQ and SPY puts now with stock markets down another 2% today across the board.
I’m likely to do some buying/nibbling on some favorite names next, maybe later today or tomorrow if there’s even more panicky action.
