Cody Kiss & Tell: Selloff or DJIA 40k and 401k and stocks and more

Here is the transcript to this week’s Live Q&A Chat. Visit the Trading With Cody Chat room on the Trading With Cody iPhone app,, the Trading WithCody Android app  or in the Chat Room. If you have any questions about our service, just email us at support@tradingwithcody.com.

Q. Honestly, I thought we might get an inauguration selloff. But here we are with the DOW, S&P & Nasdaq at record highs.

A. The selloff will come. When and from what level is always the tricky part. I think we’re getting closer to a near-term selloff, but maybe not quite yet.

Q. From a recent article I read: “The S&P 500 has traded in a mere 1.6 percent range in the month of January through Monday’s open. If the month were to end now, that would make January the month with the narrowest range since 1965, according to Oppenheimer.” Cody was dead on.

A. I did expect we’d have a tightly range bound market when we almost got to $DJIA 20k the first time. I don’t think that’s the case so much any more. Feet to fire guess for the stock market for the near-term is that we get a 2-3% rally or so to DJIA 20,500 into the end of January or early February which will panic the bears and embolden the bulls…and then we get a 5-7% pullback to $DJIA 19,000 or so into the end of February or early March. Am I going to try to game that short-term feet-to-fire guess? I don’t like my toes getting burnt, so probably not.

Q. DOW 20,000? Heh! I now have my sight set on DOW 40,000 😍

A. If the market can do a little more than 10% per year for next five years, we’ll be awfully close. That said, I wouldn’t bet on $DJIA 40k before DJIA 18K, for example!

Subscriber follow-up: Right, and when we get a meaningful correction, us TWC traders/investors will be well positioned to take advantage of it.

Q. How much do you think rates would have to rise before money leaves the stock market? Or to put it another way, how much of an interest rate increase can the market bear before it turns bearish?

A. The rate of the change in rates in more important than the magnitude. That is, if rates on the 10-year were to spike from 2.4% to 3% in the next three months, that would be more worrisome than if they go from 2.4% to 3.5% over the next three years.

Subscriber follow-up: Thank you for that teaching moment re: rate rise and what to watch for. You’re awesome!

Q. I always ask you about $AMD. I keep dreaming that they will take off.

Another subscriber answers: Cody responded to my $AMD question about a month ago. Said he didn’t like it and was thinking about shorting it. Was a good short term call as it has taken a bit of a hit. With that being said, I hear they are coming out with new products that are really going to compete with NVDA, Intel etc. I am long. Might be a true turn around story… or might not.

Cody’s Answer: I just don’t think $AMD‘s balance sheet will enable them to compete long-term with $NVDA, much like the weak balance sheet and too much debt load always hampered $AMD‘s ability to compete against $INTC.

Q. I’m new to trading with Cody. just signed up. I’m curious to know what’s your view on ETFs and if you have any in your portfolio?

A. Thanks for joining. I don’t have any particular thing against ETFs and I do use them sometimes. I’m short the $IBB right now for example. An old mentor of mine used to tell me that ETFs are the lazy man’s way to invest/trade, since we should do more homework and find the best stocks to trade/invest in inside any particular ETF.

Q. Hi Cody, I have been anticipating a market pullback since middle of last year, but, obviously, the market had gone straight up. But, I’d like to be a little defensive nonetheless, so I’ve been selling some stocks and am now about 25% cash. My question is regarding 401k. My 401k does not provide option for cash, I think short term US treasuries or US bonds are the closest to cash I can get in my 401k. What do you think of short term US Treasuries? I almost converted but it seems rising interest rates aren’t good for these. In reality, I have no clue what to do with my 401k and I don’t want to see it drop 20% when the bear market comes. Any idea how to get defensive there?

A. You probably have a money market fund that you could use as a near-cash equivalent in your 401k. Can you check and let me know?

Subscriber follow-up: Hi Cody, no they don’t have a money market fund, just bonds and US treasuries, which I’m a little leery of with rising interest rates. I may just have to move part of my stock funds to short term bonds.

A. Yes, and I’d suggest following up with a direct call to your money manager in charge on your 401k to ask about other options.

Q. I’m growing a bit weary of Zillow. I’m using the site a lot helping my son and daughter make separate real estate purchases and notices their listings are often old and off the market when following up with a realtor. Realtor.com and redfin appear to be much more accurate and reliable. Now Microsoft proves you don’t have to be the best to make the most money but does their amateurish listing process concern you at all?

A. Wasn’t aware of the issue of Zillow vs other sites with old listings…interesting. Will check it out.

Subscriber follow-up: A realtor friend told me that they have to add/update/delete their own listings on zillow – that they are more interested in attracting realtor ads that you see on the right of the screen. There should be a better more automated process if that is in fact accurate. Manual processes don’t scale.

Q. Time to take $GIMO losses and move on. Everyone says wait a year, why waste a year when there are so many other buying opportunities?

A. I’m not sure those other buying opportunities you see aren’t going to end up being selling opportunities. I bought some more $GIMO the other day, but am always worried that my stocks might go down while others go up!

Q. Now we have a pack of lawyers suing $GIMO on behalf of investors. Something to be concerned about or just a gnat over time?

A. Standard operating procedure for the class action attorneys to go after any company that ever misses earnings these days.

Q. Would love to hear Cody’s take on $STX. Big earnings. 5.5% dividend?? Not bad.

A. I need to take a fresh look at $STX $SWKS and the whole chip sector but my inclination is to stay away from most of those boom/bust chip businesses.

Q. What do you think about $QCOM earnings? Should we wait to sell the rest after them?

A.  I just don’t want to try to game $QCOM‘s earnings report for the last 90 days of business.

Q. Ok… since this is ask you anything, what’s your favorite movie from 2016?

A.  I can’t think of a single movie I watched in 2016 at the theatre. I can’t think of a single movie I watched in 2016 at home that stood out to me. I sure loved Luke Cage the TV show on Netflix.

Another subscriber comment: Go see Hidden Figures. One of best movies I have seen in long time. Very feel good story and eye opening at same time as to the crap minorities had to deal with in 1960, which really wasn’t that long ago.

Thanks all, that’s a wrap.