At one point on August 1, the Nasdaq 100 was above 8000. Heading into August, I got a little bit bearish and highlighted the SMH in particular as a short. (Trade Alert: TXN pops, semi’s look ready to drop (and a change to my TV schedule)).
Two trading days later, it was down nearly 650 points (-7%) to 7356. Into those panicky lows on August 5, I turned rather bullish again and covered a bunch of our shorts and bought a bunch of our longs (Trade Alert: Stay tuned, be cool, be opportunistic).
Three trading days later, it was up 370 points back above 7726 (+5%). Into the August 8 highs, I trimmed our longs and reloaded puts again (Trade Alert: SEDG’s up 500%, Reloading puts, A little trimming).
For a time, just two trading days later, at one point it was down almost 200 points (-2.5%) or to 7528, and I was selling our puts and buying our longs (Trade Alert: Bizarro World Stock Market) again.
The next day, the Nasdaq 100 traded back up 250 points above 7778 (+3%), and we trimmed again (Trade Alert: Trimming into this big rally).
Two days later, the Nasdaq 100 was down at 7429, down 350 points (-5%) and we were once again buying our longs and covering our shorts/selling our puts (Trade Alert: The algo’s and media suddenly fear Recession and Latest Positions with quotes from Nikola Tesla).
From those intraday lows just two trading days, it was up *checks chart above* 310 points (more than 4%) to 7740 again, just two trading days later. You dizzy yet? Long-time subscribers know that I’m not always this much of a trader. But we took the pitches the market threw us.
Which brings us to tonight, and what’s always most important — what’s next.
Net, net, the Nasdaq 100 is down 3.5% from its intraday highs 13 trading days ago, but the Nasdaq has gyrated over 26% from its various highs and lows during those 13 days. I suppose you could call that an average of 2% per day so far but let’s not get bogged down in the numbers any deeper, as I think we’ve very well underscored the point of how wildly volatile both up and down the moves have been this month.
I’m sitting here late, listening to my Spotify Discover Weekly (just discovered Lou Reed’s Dirty Blvd powerful ditty) and going through the charts and doing homework. And I have to say that I tend to think the markets are probably finally going to chill out a little bit here. Perhaps, just perhaps, the path of least resistance just might be headed higher now once again.
I’m going to keep some index shorts and puts on the sheets as hedges, but I’ll probably give the markets a little bit of leeway before I’ll add much to them again.
There are trillions of dollars around the world in the hands of investors, corporations, banks, funds, etc that are looking for *checks notes* a positive return on their money. That is, as rates around the world have collapsed in the last two weeks, trillions of more dollars of value are stuck in government bonds that have negative interest rates. That’s why our own Treasury and mortgage rates have collapsed — people are sending their money to the US and the first stop has been Treasuries. That money is going to continue seeking the US and that likely means more of it will be pouring into our equities too.
Let me be clear that I’m not sounding the all clear, but once again, it appears that the markets that the markets , as evidenced by the 26% high-to-low gyrations in the last 2.5 trading weeks — as well as being evidenced by the collapsing interest rates driving trillions of dollars instantly fleeing cross borders and cross-continents — have been doing their best to keep up the Kurtzweil Singularity Rate of Change*.
Think big. Think deep. Don’t be greedy.
*”What happens if it all works out?
Even if it doesn’t work out, how low will we go and how long will we be there?
I’ve talked for years (ironically) about how the economic/stock market bubbles and busts that we live through run on ‘Internet time’ which means they happen much more quickly than in decades past. Reading Ray Kurzweil’s The Singularity Is Near has helped me understand that I shouldn’t call this concept ‘Internet time’ because that’s a bit too limited of an explanation for it. The fact is that mankind itself, our society specifically, is growing our innovation, prosperity and economies exponentially.
And if there will be billions of times more technological advances in the next few decades as there was for the first few millions of years of mankind’s existence, then you can imagine that the ups and downs and bubbles and crashes will play out many times in the next few decades but that the general trend of technology, society, the economy and the most Revolutionary Stocks in the markets, will all be quite hockey up over those next few decades.”
*From my full article from the lows on December 26 called Evaluating The Risk Factors: Sentiment, Valuations and Geopolitical.
And also tomorrow morning, let’s talk markets, stocks, economy, politics, hedge fund and/or anything else you all want to hit on this morning. Join me tomorrow (Tuesday) morning at 10am ET for this week’s Live Q&A Chat. Join me in the TWC Chat Room or just email us your question to firstname.lastname@example.org.