The Action Ain’t Bullish But Rocket Lab’s Results Are
“There’s times are volatile
There’s no room left for you
Dead
Dead and bloated
There’s no room left for you
There’s times are volatile”
That’s Machine Head. Wild lyrics if you read the whole thing.
It’s never boring around there these days. Recall that there have been times when the S&P 500 can go 100 days or more without making a 1% intraday move. They’re the norm around here right now. And tend to think that’s not a bullish thing over all.
Neither is the fact that the many of the worst of the crappiest penny stocks that are down still down 80-90% from their all-time and annual highs are continuing to spike. Much, probably most, of the recent rally action in those and many other stocks that have made big moves off the bottoms have been largely due to short covering (short covering means that people who borrowed the stock from their broker to sell it without even owning are forced to go buy the shares in the open market to give back to their broker in order to exit their short position). Shortselling got be very profitable for a month or two there when the markets were tanking in May and June which of course brought it too many shortsellers which made it crowded. And that crowd has very much thinned out in the last couple weeks or so.
Stocks are up big since I sent out several Trade Alerts about buying stocks during the panicky selling action. I’ve raised some cash since then as noted.
In the hedge fund, I have been shorting some of the hyped up, rallied up solar stocks including the TAN ETF. I’m also staying short some of the worst electric vehicle manufacturers like FSR although I did cover some of it just yesterday.
I think we’ll look back in two months’ time and say things like: “How did all those crappy stocks go up so much so fast this summer?”
Rocket Lab had a great quarter, beating the topline estimates by 10%+ and guiding next quarter up by 10%+. In updating its numbers on Price-To-Profit (PP) ratio spreadsheet, it’s cheaper today that it was yesterday even with the today’s 18% pop in the stock, because adding 10% to the current year’s estimates magnifies the profitability in the future years because of the strong topline growth we expect for several years. I’m mostly sitting tight with this name which we’d added to repeatedly in Trade Alerts at much lower levels when the markets and it were near their lows.
Look, I wouldn’t go selling a bunch of your long-term stocks or try to game a potential market down turn. We did some buying at those lows that are far away right now and there’s no reason to feel rushed to make your next long-term move. Easy does it as always.
I leave you with this shot from Meow Wolf with my nephew, niece, daughter, wife and me from the other day:
