My almost-seven years-old daughter, Lyncoln, went to the dentist in Las Cruces this morning and my wife sends me a text that says “She earned a target price for that.” I was like, hmm, a “target price?” Oh, a prize from Target! Haha.
As for the markets here, it turns out apparently everybody was positioned for a sell off as I’d mentioned last week they might be when I said: “There’s some tension building in the markets, so you can get some relief if there is something clear. Maybe even if it is contested, you get a little relief rally after the election is over. That’s the other problem, right? If you guess what the reelection results are, it doesn’t mean you’re going to guess what the market’s reactions will be.”
The longs had trimmed and/or hedged, the shorts had loaded up on shorts and puts and few traders were positioned for a big rally, especially if they correctly guessed that the US Presidential election was going to be tight and contested. Which it turns out it looks like it will be as of about noon ET the day after the election as I type this.
And since the market started bouncing this morning, the traders have decided that they were wrong and that the market doesn’t care that it could take days or weeks or even months to settle who won the presidential election and when the election is decided that there’s still plenty of risk for civil unrest. Traders, both the under exposed longs as well as the loaded up shorts, have taken the last few hours worth of relief rally action and reflexively fed into it, as they have worked all day to reverse their positioning…simply because the market didn’t immediately tank upon the tight election results.
I don’t like that. And I’m still cautious in my analysis about valuations and economic trends so I’m taking advantage of the spike in the indices combining with the decline in put premiums to add to some index put hedges, including VOO, VTWO, VGT, SOXX, buying puts dated out to the next week or two and buying puts that are both in the money and out of the money. If you don’t understand any of this, don’t try to do this, simply sit cautiously tight and maybe look to trim a name or two in your portfolio today if you have too much weighting in any particular positions.
I’m also going to sell my WORK stock here. I’m just giving up on its ability to have accelerated its business during the Coronavirus Crisis and am wanting to keep disciplined about managing our positions.
Q. Any thoughts on TWTR here??
A. Long-term, because it’s established itself as the primary outlet for news/celebrities to directly connect with the world, I think it’s still a hold. Short-term, could be dead money as the momentum traders abandon ship.
Q. SEDG is ugly after reporting. Time to switch to FSLR? SEDG guides lower. FSLR beat earnings.
A. SEDG has grown exponentially topline and earnings and the stock is still up more than 10x our purchase price from four years ago. Meanwhile, FSLR is still trading at the same level it was four years ago and is actually still down 70% from its all-time highs from two decades ago. I am holding on to my SEDG but not adding to it.
Q. Cody, I am always intrigued when a high flyer like SEDG is down 30% off highs. Of course, it is up many times from where we bought. But if one is under invested is it a good time to buy a bit? Thanks.
A. I’m not buying more SEDG right now. Mostly sitting tight.
Q. Bought NIO a while ago I’m up about 4X, I think the trajectory will continue but I don’t know when to take some profits and I think I might like to buy more.
A. I think NIO is going to pull it off. Not sure the stock is safe enough for me to buy, certainly not right now as its gone parabolic, but I’d rather buy NIO than sell it.
Q. Cody. Your view on Momentus merger with SRAC as a Space Revolution play.
A. I’ve been working on SRAC as a passible Space Revolution play.
Q. Hey Cody, I thought the market was looking to rally if there was an uncontested election? Unless I’ve missed something on the newswire it certainly appears to be headed towards the opposite… does today’s rally make you any more cautious?
A. Yes. See the prelude analysis before the transcript.
Q. Hey Cody. I have a 2.5 year time frame before college tuition is due for my daughters. Can you give me the best TWC names for this shorter time frame?
A. Wow, that’s a tough question. 2.5 years is too long a time frame to for me to feel good about trying to give a feet to fire guess about stock market trends and it’s too short frame to give a Revolutionary Trends analysis. Maybe TSLA, QCOM, SPOT, NFLX, SEDG? Those names are diversified at least.
Q. Are you loading up any shorts?
A. Not loading up on shorts, but am buying some puts on the indices today, maybe a put or two on some NKLA, TTD, EVBG or something like that. Not much though. Premiums on puts are not too bad after today’s big pop on top of the steady-ish action this week.
Q. Cody, what’s your outlook on BTC short and long term? Lots of movement and new interest in it lately.
A. I’m worried there’s getting to be too much movement and new interest in BTC for the short-term rally to continue apace, but I’m mostly going to sit tight on my bitcoin regardless.
Q. What do you think of PLTR?
A. I think PLTR wouldn’t exist if Peter Theil’s name wasn’t attached to it. I don’t like it.
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