Trade Alert: Last INVN tranche, stocks likely to rally next and Full Bubble Analysis
STOCKS TODAY
The markets have no juice and have been rather volatile and down lately. But interestingly, some of our biggest positions are more than weathering the storm. Facebook, Ambarella, and HiMax are all up and at new highs, FB and AMBA both setting new all-time highs today. FB is now worth $205 billion dollars.
Stocks I think might look ready to bounce back include: Sandisk SNDK, First Solar FSLR. HiMax and FB both look like they could continue to climb. Ambarella’s chart is so straight up it makes me dizzy, so I’d be patient on chasing that one for today at least.
TRADE ALERT
Meanwhile Invensense is down again today and is now about 10% from its 52-week lows. I’m down about 10% on my cost basis for the common stock and my call options from last week are down big. I’m going to add another very small tranche to my INVN call options, using January-March expiration dates with strike prices around $21 or higher. This will likely be the last time I scale into Invensense for a while as I have now made my bets and will let it play out.
BIGGER BADDER BUBBLES AHEAD?
How many investors and traders and people at home missed out on huge fortunes because they were scared out of the burgeoning tech bubble when everybody was “warning” them that “tech is already in a bubble” back in 1995.
Believe it not, I actually wrote exactly that paragraph back in May 2011, when the Nasdaq was at 2700. I finished that article with this: “I expect we will look back in 2013 and 2014 and be thankful that we ignore the noise and tried to capitalize on the biggest marketplace in the history of the planet, the app/smartphone/tablet/cloud marketplace, when it was still early in the game.”
Since back in 2009, I’ve long been predicting a bigger and badder stock market bubble than ever before. And we’re now in it. But that doesn’t mean it’s all about to come crashing down.
Corporate profits, corporate profit margins continue to shock most economists (not me though). The Fed is still in “emergency measures” mode with 0% interest rates and QE and other stealthier forms of helping banks and corporations minimize financial costs (as I’ve outlined for years). The Republican Democrat Regime at the federal, state, county and local levels still kowtow to corporations with ever more excessive subsidies and protection. Every saver and/or retiree is still desperate to find some sort of yield and decent gains on their money.
When will it end? The seemingly insanely huge advances in productivity our economy has gained from apps, smartphones, tablets, PCs, Internet, etc., is what has enabled the Fed to play these games much longer and has likewise enabled the Federal government’s debt/low-rates addiction to grow much larger than they would have been able to in other times. And so it continues for foreseeable future. Is it an endless bubble-blowing cycle after another?
But to be sure, the U.S. isn’t destined to have a hard landing if/when all rates go up on all that debt upon which interest has to be paid. Indeed, this version of a 1%-3% slow-growth GDP economy is a self-fulfilling dynamic whereupon destructive policies always suck out anything above that, but never more than would cause it all to crash down. And it that could be here for years to come, no?
In an article called “Why you must fight the Fed and get ready for a new stock market bubble,” and in this interview with WSJ’s Simon Constable, both from 2010, I wrote the following to explain why we were likely headed into a stock market bubble and it looks like we’re headed into an even bigger one today:
“Both the fundamentals and the macroeconomic (i.e., Fed’s relentless liquidity/money pumping) forces seem to point to much higher prices… We’re done lowering rates and easing. But I do think the most likely scenario is, indeed, for a booming or even a bubble in the stock market again.”
Sectors that I expect to bubble next includes wearables, robotics and drones. Be careful though and start slowly.
To download a pdf copy of my 25 Stocks for the Wearables Revolution, click the link below.
25StocksfortheWearablesRevolution
To download a pdf copy of my 12 Stocks for the Robotics Revolution, click the link below.
12StocksfortheRoboticsRevolution
To download a pdf copy of my 12 Stocks for the Drone Revolution, click the link below.
