Cody Kiss & Tell: The Street, correction possibilities 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. What percentage of your portfolio will make up the street.com trade? I think this is important information. Or how much of a full position?
A. I wrote in the TST Buy Trade Alert: “I don’t plan on making TST a big position, maybe looking to build it up to less than half of what I consider a full-size position. But I’m starting to buy some shares in TST today buying about 1/2 of the shares I want to own and will slowly scale into more shares over the next few days or weeks.”
Subscriber follow-up: Stock is up 5% driven by your TA, I think. I may purchase on a day when it is not being driven up by our own buys.
Cody’s response: I wouldn’t worry about $TST‘s 5% pop so far. If it moves 10-15% or more, I might let it settle a bit before continuing to buy. But the spread on this stock is 5% sometimes anyway.
Q. Aside from what you mentioned in your Trade Alert, what is it about $TST that overcomes your general rule of avoiding trading in penny stocks?
Cody’s response: Management and valuation. I know $TST‘s company very well and I know the new CEO very well and have a lot of respect for the people now running TheStreet.
Q. Is TST a candidate for the Headlne white label app?
A. Some of the biggest personalities/writers on $TST are candidates for what we are now calling The IAm App Platform (what used to be called the Headlne White Label App Solution).
Q. Do you feel that there is a correction right around the corner? I am thinking of adding to some of my positions, but all I see is flat, flat, flat, except for $NVDA (out of control upwards).
A. $GOOG, $AMZN, $FB, $AAPL, $NVDA, $SNE…many of our stocks have been on fire despite the struggling indices. I thought we’d have a correction into the election, but Hillary’s dominance in the polls has the made the outcome fait accompli and the market is pricing a Hillary victory in as such. Maybe we get a sell-the-news reaction around/immediately after the election now. As you know though, I remain positioned for a continuance of the Bubble-Blowing Bull Market despite having raised cash in recent weeks and months.
Subscriber follow-up: Thank you, You just answered my question about whether there is any further reason to hedge across the election “Maybe we get a sell-the-news reaction around/immediately after the election now”. I know that’s just a grain of salt.
Cody’s response: “Maybe we get a sell-the-news reaction around/immediately after the election now”. Grain of salt or pee in wind? 🙂
Q. Any thoughts on adding to SEDG?
A. Yes, planning on nibbling on more $SEDG in the next week or two.
Q. What are your thoughts on TWLO? It’s taken a hit lately but wondering if $40 could be the floor. Thanks.
A. I see companies like uber, whatsapp growing, which would increase business for the vendors they rely on (i.e. TWLO). Increased business, increased market share should lead to increased stock price. With that said, TWLO may still be overpriced, will be curious to hear Cody’s take on the stock. A. $TWLO is just such a battlefield stock since it topped at almost $70 and has fallen 40% in the last 90 days. The growth rate of 30% and business sector is strong but the valuation at 12x sales and no profitability for the company make it a venture capital-like investment.
Q. Regarding ATT, news is out there, any gut feel going forward? hands off? Or possible bottom forming considering minimal rate hikes and unlikely merger …. or just the opposite?
A. I say stay away from trying to game the ATT/TW merger and how it would affect the stocks.
Q. $UA getting hit hard in the pre-market.
A. $UA is a screaming buy if it gets down into the mid $20s. Still got a big P/E at these levels that I just can’t get comfortable with here at $33 right now.
Q. On $IBB, wondering if the market has been pricing in a Senate win for the Democrats in addition to Hillary, maybe even the House. I’m guessing we’ll see a relief rally if the Republicans keep both chambers.
A. Yea, maybe we’ll see a stock market sell-the-news in the DJIA, NASDAQ and SPY while the $IBB gets a buy-the-news reversal.
Q. Are there sound vehicles to hedge in our IRAs? Are inverse ETF’s (which are quite limited) a reasonable option? considerations: losses from daily rebalancing = additional cost and they must be watched and acted on shorter term.
A. Hmmm, maybe cash? 🙂
Q. What is your take on $AMAT?A. Ugh, $AMAT. So frustrated that I sold that one last December . “*I’m going to go ahead and take our profits on Applied Materials here. AMAT sells equipment that companies like Intel and Samsung and Micron and TSMC use to make their semiconductor chips that run smartphones, PCs, cars, cameras, refrigerators, etc. The spending cycle fro Amat’s customers isn’t lining up as clearly as I’d like it to be for the next year or two as Samsung and Intel and Micron all seem to be struggling with their technological roadmaps ahead, each for very different reasons. When AMAT was near $14 a share, it gave us the chance to buy this stock at about 8x next year’s earnings estimates, but with the stock at $18 and next year’s earnings estimates looking more challenging to meet, the stock isn’t nearly as low risk as I’d like it to be here. I want to go ahead and lock in my profits so I’m selling my AMAT and removing it from the portfolio for now.” At this point, I’m on the sidelines and think it’s too late in this cycle to chase $AMAT.Subscriber follow-up: I agree. I really like the company however. Remember that it manufactures OLED screens which Apple needs to install in the iPhone. So, there is a good reason to keep an eye on for the short term. Buy on the next correction is what I am thinking.Cody’s response: Yes, good call and good luck!Q. Cody, would you buy $NVDA here or wait for a pull back? Thanks. A. Man, that’s a tough one. On the one hand, I think $NVDA could be a hundred billion dollar company in the next few years, which would mean the stock would triple again. On the other hand, $NVDA is a favorite stock of the momentum traders and any whiff of a miss from the company and the stock would get hit 20-30% in a day. Balance your own risk/reward entry into the stock accordingly, I would say.Q. Cody, you have been taking some profits lately. Do you believe a small correction might be in order before moving higher? Thanks.A. Not necessarily. I did think we’d have a correction into the election as mentioned above, but regardless, I have quite a few stocks that made sense to trim after seeing their big near-term and long-term gains.
Q. Are we just still holding on to our $EWY shorts? I don’t get why the stock hasn’t been hurt, given Samsung’s disasters recently?
A. I added to my $EWY short recently as noted in a Trade Alert. The market is trying to look past any near-term pain from Samsung’s disasters, but I’m betting it’s going to end up being long-term pain for the company too.
