Rocking and rolling here…Amaris and Lyncoln and mom and dad had a great weekend. Hope you guys did too.

I often remind Trading With Cody subscribers that there’s a lot of value in not over trading, not forcing trades, not trading because you feel like you have to.

One of the reasons you pay for this subscription is because I’m one of the few guys out there willing to tell you that sometimes it’s better NOT to trade than to just simply chase any trade you see.  There are thousands of trading opportunities every day the markets are open. You certainly should not be trying to catch every one. Rather, your job is to focus exclusively on the very few trades that we know represent the best risk/reward opportunities for your capital.

Right now, there are a lot of traders, including Trading With Cody subscribers, who are desperately wanting to trade /put money to work / do something!

From the Trading With Cody Chat Room this morning:

Q: “Are you planning on any new trades soon? I seem to vaguely recall that you said you might have something new soon. This is a vague question I admit, but I want to pull the trigger soon.”

On the other hand, so many of us, including me, see how many stocks are overextended and straight up for months and up huge over the last few years and we would love a pullback so we can put some money to work on the long side.

Also from the Trading With Cody Chat Room this morning:

Q: “The power of the bull keeps pushing names I’d like to be in ever higher, but it’s hard to buy up here since we haven’t had a meaningful correction in several months.”

I responded in the chat room by saying: “Well put.”

On the other other hand, there are plenty of bears and/or those who think stocks are no longer attractive:

From Scutify from two of my well-respected and oft-right colleagues:

@HowardSimons: “As there is little reason to be negative here and as the only meaningful upside we will have is if we disconnect from reality and go into a bubble, then your choices are simple: Either you reduce net long exposure and be willing to watch further gains without regret or you go longer with recognition of the lower reward/risk ratio. I recommend reducing long exposure.”

@JeffMiller: “My definition of ‘up here’ relates not to market price alone, but to price and earnings for individual stocks. Some have hit their targets. After many years, I recently sold AAPL. A couple of months ago a sold my regional banks. I am shopping, but not among the high-priced names.”

Meanwhile, I see several incredible and still burgeoning Revolutions from AI to Autonomous Vehicles that I can hardly wait to get our new books on those revolutions and the companies powering them finished and the Trade Alerts to buy some of those names out to you.

So like most things in the market, the answer is not one of science or total clarity. But one of art and nuance. I’m going to cover my HUBS short (I’ll send a separate Trade Alert in a few minutes specifically letting you know that.) I’m going to keep riding our incredibly well-performing Revolutionary longs and I’m going to add another short or two this week and next.

Don’t feel like you have to make a bunch of trades or regret missing the ones you haven’t made. Feelings are the enemy of a successful investor and trader. Be cool. Let the pitches come to us. There will be many, many more opportunities to make huge money in the markets and we’ll be ready to continue being a part of those opportunities.

Here’s another comment from the Trading With Cody Chat Room to underscore the value of our Steady-Eddie approach:

“Whelp… Even though it was years ago, I’m embarrassed to say that I’ve pretty much have done that with a couple of high risk/high reward trades that I was long and overweighted in. And those losses are still in one of my ports. One is worth only a few pennies vs the $15ish share price I bought it at, the other is zero (EvergreenSolar). It was very painful, and that’s when I sobered up and decided that Steady-Eddie is best because clearly I didn’t manage the risk well, now can you imagine had that been a short that I didn’t cover? YIKES! It’s been years since, and to this day, I’m happy to say I’ve a healthy respect my capital and the risk I subject it to.”

Finally, here’s a reminder from when the DJIA was at 12k and the Nasdaq was half of today’s levels and large cap tech stocks and other Revolutionary stocks we had started buying were all getting crushed. Here’s a sample from six years ago this week (came up on my Facebook Memories feed today) when I saw incredible pitches everywhere, both short-term pitches andmarket-broad pitches as well as long-term homeruns. In it, I talked about “Bet big when the odds are in your favor, bet smaller when you’re less convinced, and don’t bet at all if you’re not sure” and I noted that at the time “I [thought] the odds are increasingly in the tech bulls’ favor here in this second trading week of June 2011, so I’m starting to bet bigger.” This is not that time. So don’t feel like you have to bet big right now. If you’re a new Trading With Cody Subscriber, start slowly with some of the highest-rated names in the portfolio. But go slowly. Be cool:

I still have the notes I took from a meeting I had with Jim Cramer back in September 2002…

June 9, 2011 by Cody Willard

Oh, so there are some days when the markets don’t just drip steadily lower all day.  I’d almost forgotten what it was like to see the blinking lights in green and not red after six straight down days coming on top of five straight down weeks.

I’m starting to think we’re really primed for a 5-10% move higher in the near-term in these markets.  There’s a whole lot of firepower out there in the form of sidelined longs/bulls and aggressive shorts/bears.

I’ve been chatting with a lot of money managers this week — aggressive tech mutual fund managers, even more aggressive hedge fund traders, retired investment brokers, and more.   Less than one in ten is outright bullish about the markets and stocks and the economy right now.  Less than one in ten is fully invested — even the mutual fund managers I know are carrying as much cash as they can get away with as called for in their charters.   About half of the professionals I’ve been talking to are actively shorting tech like Apple, Microsoft and Netflix.  It’s a bubble, didn’t you know?   At least it is this month, apparently, if you just ask the peeps running the “smart money”.

Alas, just a couple months ago, when the markets were in rally mode and tech stocks were hitting new highs daily there were all sure Cisco’s less than blowout fundamentals of late were simply a symptom of old school tech, more than half of these same guys were long and trying to figure out how to get more alpha faster.  Alpha, btw, simply means the risk-adjusted return on their capital.

But as the pain of holding tech longs has increased overproportionally with the days and days upon weeks and weeks of a slow drip lower in the broader markets, the stock prices have begun to drive their analysis — ask ’em and they’ll tell you that the long fade in tech stocks is “telling” us that the fundamentals have turned south and that the end is nigh.

“Didn’t you see Texas Instruments last night, Cody?  How can you be bullish on tech when one of the biggest semi companies in the world is telling Wall Street that business is tanking?!”

I told them back that I wasn’t changing my thesis that smartphones/tablets/clouds/apps will grow exponentially in the next five years because a company that sells to Nokia which is going to sell hundreds of millions fewer gadgets this year than they did last year told Wall Street’s analysts that they hadn’t fully accounted for that collapse of their big customer for the next three months?

Look, from a trading perspective the biggest theat to being aggressively long right here at DJIA 12k is simply the forces of seasonality.  June sucks for stocks, historically and it has so far this year too.  It’s rare that I even factor seasonality into my trading analysis at all, but the “Sell in May and go away” theory has empirically played out with such frequency that it does give me pause.  But that doesn’t mean we can’t have a big intra-month rally as the bears and shorts have gotten ever more aggressive and are now in the position of having to scramble and cover providing fuel to the upside if and when any kind of sustainable rally comes.  And of course, the underinvested professional money manager bulls will have to join any scramble as they’ll feel naked once any rally starts without them.

In addition to having spent the last few months and years preparing for this techstock-boom-to-bubble that is now playing out according to plan, I’ve been getting more aggressive the last  couple weeks about buying and I do plan to continue buying both common stock and figuring out new option strategies to maximize our potential profits on any near-term rally.

Before I finish up this post, let me remind you that unless you’re an aggressive trader and can handle big pain in the event I’m dead wrong about a coming near-term rally, then don’t worry about any of this.  Intermediate- and longer-term investors can just use this weakness to nibble on some common stock in the very best tech names, many of which I’ve bought for my own portfolio here in front of you guys in the last three months.

I still have the notes I took from a meeting I had with Jim Cramer back in September 2002, just weeks before I was to launch my tech hedge fund at what turned out to be 11 days before the Nasdaq finished putting in a bottom from its long 75% decline from its 2000 top.    One bit of advice I wrote down from that meeting was:

Bet big when the odds are in your favor, bet smaller when you’re less convinced, and don’t bet at all if you’re not sure.

Love or hate Jim, there’s some great wisdom in that quote (and, just to keep it real with you, despite having had may disagreements with Jim over the years including some hard times with Jim as I took my job as an anchor on Fox, the fact that Jim took a meeting with an at-the-time 29 year-old cowboy from NM who was trying to launch a tech hedge fund in the greatest tech stock market collapse of all time is hard to hate).  I think the odds are increasingly in the tech bulls’ favor here in this second trading week of June 2011, so I’m starting to bet bigger.

I don’t have any magic bullet or secret formula to game such near-term market action, but I do have fifteen years of eighty hour work weeks navigating these types of moves in public.   Let’s keep rockin’.

Cody back in real-time June 2017 here. Keep rockin’, be cool, don’t force anything. And stick with Trading With Cody.