Top 5 Reasons For A Sell-Off, “Check The Crypto Scoreboard” Trash Talk, Etc

Here’s the transcript from this week’s Trading With Cody Live Q&A chat.

Q. Last week you wrote: “My rough playbook here is to continue to trim and sell long positions into this rally and (have new names) to start scaling into, hopefully on a big broad sell off in coming days and weeks.” Is there anything specific that makes you anticipate a “big broad sell off” coming?

A. Five main reasons that have me somewhat expecting a “Big Broad Sell-Off” in coming days and weeks:

1) We had an historic Bubble Of All Bubbles that just popped like in the last year. I don’t think the odds favor a quick resolution with little economic and market pain to unwind all that in the midst of a new Fed/Inflation paradigm.

2) Valuations for most of those aforementioned former highflyers that have crashed and then bounced are still too high to be good risk/reward for the long-term.

3) Everyone seems to agree that the Fed can and will simply go back to easy money policies like in two months or six months or something. I just don’t think the Fed/Inflation playbook that will work for the next ten years or longer is the same playbook that has worked for the last forty years.

4) Crypto’s crash doesn’t seem like it’s over and I don’t think the tech stock market can bottom until crypto finishes washing out. Too many people who have own cryptos that are off 70-95% off their all-time highs from last year are still talking trash to crypto bears and crypto luddites: “You’re so stupid if you can’t understand that my crapcoin is going to go back up to it’s all time highs after this latest crypto winter is over.” I have people talking trash to me who have lost tons of money on cryptos that I warned them to get out of before they crashed. It reminds me of the time when I was leading the state in scoring but my team was 5-17 on the year. One day when I passed the 30 point mark on a two handed dunk on top of two defenders and got sent to the line for a one-and-one and I was like, “Ain’t nobody in this gym can cover me” as I dribbled at the line. The 5’6″ backup point guard from the other team laughed dismissively and said, “Scoreboard. Scoreboard. Just look at the scoreboard.” My team was down by 23 points with five minutes left in the game.

5) Anyway, back to the question at hand, reason #5 that I expect a Big Broad Sell-Off is that greed seems to be back driving the market action lately as almost all of the worst crappy penny stocks and trashed former highflyers that were down 90% or more are now up 50% or more from their lows (which means that those stocks are still down 80-90% from their all-time highs and almost none of them are ever going back to those levels.

Q. Hi Cody, will you be sending alerts when you see the market is about to do a Sell Off?

A. I think you can consider last week’s note about it as such. I don’t plan on trying to time an exact top, but I plan on trimming/shorting slowly if this market continues to rally near-term.

Q. If there is a big broad sell off coming, do you have a price at which you would buy more TSLA?

A. $600ish.

Q. Hi Cody. A few questions for the chat. I see RKLB has had a nice rally off the recent lows. Not sure what the main driver is for that. What are your expectations for this week’s earnings report? Seems like they have a great pipeline of contracts.

A. I don’t think there will be many surprises in Rocket Lab’s earnings report. The company seems to be executing quite well.

Q. Cody, any current thoughts on your former space revolution positions BKSY and RDW?

A. Both are ok but neither one is as good as some of their private competitors who will probably be coming public in the next two years and many of which I invested in already and I’ll have an edge on these names if/when they do hit the public markets.

Q. Can you please share the ROK and LLAP position write ups?

A. Yes, this week.

Q. Does NVDA warning impact the INTC position? Is this a sign that INTC is taking market share or does this warning apply to INTC as well?

A. NVDA’s gaming business is bad and inventories are going to rock their earnings for a while in that segment of their business. Intel doesn’t really compete directly against NVDA’s gaming business in the way that AMD does. NVDA’s data center business might have lost share to AMD. Not sure there’s much to interpolate from NVDA towards INTC though. Remember that Intel just reported like two weeks ago.

Q. Uber had a seemingly blowout quarter. What is your take on their earnings and the path ahead? Has it impacted your rating? Great to see some momentum in this name.

A. It was a good quarter and the company seems to be catching its stride. The stock has made a 50%+ move off the recent lows and I trimmed some in the hedge fund after having bought more near those lows as noted in prior Trade Alerts. Steady as she goes for now.

Q. And finally, can you please provide some updated thoughts on Unity? The stock has rallied off the lows but not sure what’s driving that outside of the recent tech rally. What is your current rating on this stock?

A. Yes, amazing rally off the recent lows for Unity U. I trimmed some in the hedge fund today. It will be interesting to see if the business fundamentals have improved since the prior earnings report when the company reports tomorrow after the close. Current rating for U is probably 6+/10 as its has hit $52 a share this morning where I trimmed some.

Q. Are we still short CVNA?

A. I wasn’t short CVNA in the personal account. In the hedge fund, I trade around a relatively small short position and added some puts in the hedge fund on CVNA today.

Q. In August 2021 you wrote: “I’ve actually nibbled on a few call options in NKLA dated out to January, with strike prices that are maybe 30-40% out of the money. The risk/reward in the stock has probably shifted to the bulls as the company might actually deliver a few trucks this year which would, at this point, shock the market.” Do you still have any position in NKLA? Options or common? How would you now rate NKLA?

A. That was simply for a trading idea, not a long-term investment. I sometimes put on a small short position in NKLA as a hedge to my TSLA in the hedge fund. I don’t think NKLA is going to make it.

Q. Hi Cody, I’ve been reading about hackers stealing from cryptocurrency software wallets. I’m guessing, Metamask is a software wallet!? In contrast, cryptocurrency hardware wallets are apparently much more secure, but many are only compatible with bitcoin. Could you recommend some hardware wallets that are compatible with SKTLS? Ideally, I’m looking for one that works with a smart phone. For example, do you have an opinion on the Trevor Model T and Model One? Are they SKTLS compatible and connect to a smart phone, do you know? Thank you.

A. I need to take security a little more serious than I have been lately for my cryptos. You’d think I’d have learned my lesson when I lost what is now well into six figures worth of crypto when MtGox got hacked and I lost a few bitcoin I had taken as payment for one month of Trading With Cody a handful of times back in 2013 or whenever that was. Anyway, I’ll order some hard drive crypto wallets and see which one I like best and will let you know. Right now I’ve simply got some of my 1 million+ SKTL tokens sitting in a Metamask wallet. By tonight I’ll have them better secured and will study the other wallets and let you know.

Q. Quick question for you, Cody. I finally got around to getting BNB in my MetaMask account, and I was looking at doing my first swap. In your instructions to the group (below), you mentioned “$0.001 or so worth of BNB for each 1 SKTL token”. Is that 0.001 BNB, or $0.001 USD converted to BNB (~$276 USD for 1 BNB)? “I’ve been buying just a few dollars of SKTLs at a time (literally, like $20 or $50 or so at a time), bidding around $0.001 or so worth of BNB for each 1 SKTL token. That is about 1/10th of 1 US cent worth of BNB per SKTL token. That is about $10 or so for 10,000 SKTLs. The price has been fluctuating quite a bit already and I’ve bought a few SKTLs below $0.001 and above that price too. I’m in no rush.” You sent the email back in May, so I know the prices have changed since then, but I want to make sure I understand this all before doing anything. When I entered ~$10USD (0.036 BNB, it was showing about 508 SKTLs, which seems really low (or the price of a SKTL has gone up really high).

A. To clarify, let’s just talk about dollar amounts instead of BNB. You can use a stable coin like BUSD to trade directly for SKTLs which didn’t yet exist when I wrote that quote that you’ve included there. There has been hundreds of thousands of dollars worth of SKTLs bought and sold on various crypto exchanges at this point. I’ve paid anywhere from about 1/10th of 1 cent ($0.001) to 2 cents ($0.02) for most of my SKTL tokens. One SKTL is currently trading for about 1.8 cents each (so yes, it’s gone up a bunch since the first few days after it launched). You can see the real-time quote and volume and other trading data for SKTLs by going to a site like this which tracks it: thebittimes.

Q. Hi Cody, I transferred my wife’s 35K SKTL airdrop to my Ledger protected account. The total amount visible in my ledger protected account was 70K SKTL. Now it shows only 35K. Can you tell me how can a contract reduce my holdings that is Ledger protected? I no longer see my airdrop of 35K and only my wife’s transfer.

A. I have no idea and no way of helping. I think the team at SKTLs offered to hop on the phone with you to see if they can help you track it, but once we sent out the tokens on the airdrop they’re obviously your responsibility. I couldn’t get Satashi Nokomoto to help me when I lost my bitcoins at MtGox for example. Good luck and hopefully the team at SKTLs can help you figure out where you sent them.

Q. Cody, you created a Crypto Currency! Made a team and got it done! Can you put that same effort into your website? Just change the address and put in a re-direct. I had this done for my company because the site stunk also.

A. Ha, ok, ok. I’ll spend some time and money updating the Trading With Cody site after Labor Day.

Q. Hi Cody, can comment on websites such as EquityBee that claim to sell private shares of SpaceX. Are these websites legit? Can you find out through your contacts at SpaceX (assuming you’re an investor there)?

A. I am investor in SpaceX through my hedge fund and it’s actually gotten to be one of our largest positions since the valuation has gone up about 4x since I invested in it three years ago. Unfortunately, I don’t have any contacts at the company directly either though. I will take a look at EquityBee and if it seem legit, I’ll let you know.

Q. Look at DVAX!

A. 🙂

That’s a wrap! Thank you all.