Trend Trading, Government “Help,” Bannon vs Bailouts, Buying Bitcoin & More
These markets have been historically crazy for the last month. That’s just a fact. Here’s the transcript from this week’s Live Q&A Chat.
Q. Some of our stocks are down below our original basis. Wouldn’t it be better for us to trade with the trend until we have more clarity on the situation? Can’t help but to think we actually should be adding puts. Thanks.
A. Most stocks won’t go up straight up from the moment you buy them. I’m not sure when “the trend” which at this point is a crash-trend is going to reverse. My style is a bit more contrarian. We hedged, trimmed and sold at the highs when the trend was that stocks were going higher seemingly forever. Now I’m on the other side of that, although it has been painful and wrong to have been fighting this crash-trend so far. No easy answers, but I am confident in my approach, playbook and analysis.
Q. One thing I am concerned about is that Bannon, who may still have trump’s ear was heavily motivated by His distaste of the big bailouts in 2008 and this will slow down the institution of govt. action. how do we game Trump? he wants to get elected and he wants the stock market up….One thing that ended all the previous crashes was concerted effort whether from the fed or otherwise…
A. Bannon and most every other Republican (and Democrat) were never against the bailouts in 2008, regardless of the cover they try to use with it these days in re-writing history. But I don’t think the government can do much fixing of the Coronavirus Crisis anyway, but I’ll hope for the best from them. The markets will correct, deal, heal around this Coronavirus Crisis in time with or without the government “help.”
Q. Is there still time to hedge the market or is it too late? Maybe short IWO or EF_S?
A. I do think it’s probably a good idea to have a little bit of hedges still on the books but I usually stick with SPY, IWM, QQQ, SMH, IGV and/or DIA ETFs.
Q. All I can say is this is the #1 reason I subscribed to Cody’s service. Even more than stock picks but for times in market like this. Gives us a game plan to protect gains we may have accumulated over past 10 years or so. Can’t speak for others but for me having the hedges and switching up a small amt of my portfolio to trading what the market is giving us this two weeks like he has been recommending is a life saver.
A. Thanks so much for letting us know. It has been a crazy time to be in this business. What have I done for us lately though?
Q. What are the most vulnerable positions in the TWC portfolio right now?
A. They’re all vulnerable. The “most vulnerable” are probably names like (UBER) and (DIS) which are already down a bunch obviously.
Q. Are you doing call options or mainly buying the names now?
A. Mostly sticking to common stock, not call options. The premiums are the options are high for both calls and puts right now.
Q. Can’t thank you enough for all of your guidance!
A. Thanks for the kind words. It’s been a crazy year to try to navigate — and it’s not over!
Q. I think there is a better than 50 percent chance we go below 18000 on the DOW before this month is up. Maybe 50 percent chance we go above 24000 too..not a gamble I want to take. I am holding hedges steady right now.
A. Thanks, be careful on both sides. I don’t think the DJIA is going to 18,000, but stranger things have happened before.
Q. What happens if we have another crisis or black swan…everyone in my street was selling their houses the past 12 months as the prices skyrocketed in California. Reminded me of 2007-2008.
A. Another crisis or Black Swan would probably do what they usually do to the markets — take them lower. I don’t think it’s wise to try to bet that another Black Swan is coming though.
Q. Any bio-tech stocks you would recommend at this stage to take advantage of Corana Virus? Like GILD?
A. No, not really. I know hedge fund managers with doctor degrees from Harvard trying to game the vaccine/biotech angle on Coronavirus — and getting their heads handed to them because timing is hard.
Q. Thoughts on how to trade the credit crisis? Short junk bonds somehow?
A. No edge on that now. The experts are picking apart the retail people trying to game that at this point.
Q. Any thoughts on (DOCU) here? Who wants to actually sign a piece of paper with an ink pen nowadays I know I don’t like it…
A. Yes, it’s another one along with (WORK) and (ZM) that we should buy because it’s a de facto standard that enables remote interaction. In fact, consider this a Trade Alert. I’ve been waiting to buy this one and we’re getting a chance to do so now. It’s part of my new basket of “Remote Platforms” stocks.
Q. Cody – surprised gold has started to pullback as well. Thought safe haven asset would surged more?
A. If you look at a five year chart of gold prices, you’ll see that it has been a pretty sharp 30% pop off the lows from a few months ago. If you look at a ten year chart, it’s surprising that the price is still another 20% from its highs a few years ago. If you look at 20 year chart, it’s surprising how high the price of gold still is. Anyway, to answer your question, I’m not too surprised about gold being where it is. And I wonder if it’s likely to struggle to get above $1650 for a while.
Q. Do you think Bitcoin’s performance/resiliency (or lack thereof) in this market panic is in in any way indicative of its potential long-term viability?
A. It’s possible that the market is telling us that bitcoin is eventually going to be a bust. I doubt that though. I’m bidding on some bitcoin futures for the hedge fund here.
Q. Cody – are you nibbling at SPCE as well?
A. Yes, a little nibble in (SPCE) here and there. Easy does it. I haven’t yet bought back all the SPCE I trimmed at much higher levels yet.
Q. SEDG a buy here as well, Cody? Is it oil pricing that are dropping it out of proportion?
A. I’m not sure what you mean by “dropping it out of proportion” but I do think (SEDG) is a buy here close to $90.
Q. Are you done with (BA) or is there a level it drops to that gets you back in?
A. BA sure looks attractive here at $160, down 60% from its recent highs. But I’m not sure I’m going to make it a full position again anytime soon.
Q. I may have missed that you got out of BA (ouch!), but what is your view on it now?
A. See prior answer. Sorry. I do like BA pretty good here at $160 — would rather buy it than sell it today.
Q. Cody. Do you still own BA puts?
A. No, I’ve been selling them and have none left at this point.
Q. Cody, Don’t you think (AMZN) will really benefit because people order everything on line including food so they don’t have to go out?
A. Yes, and you’re exactly right that the fact that you can now get your groceries delivered from Amazon’s Whole Foods businesses makes that acquisition by Jeff Bezos a few years ago look smarter than ever.
Q. Cody, have you bought any (TSLA) today?
A. Yes, got filled on a limit order this morning on a tiny tranche of TSLA.
Q. Any short ideas that stand out. I did all of your last ideas in chat … GM, VIPS, M, etc.
A. You made a killing on those short ideas I put out there then. I hope you’re covering some of those and locking in some profits. VIPS still looks like a good short. The others are awfully oversold at this point. I’m still short a little bit of each of them though. But, at this point, I think shorting could be very expensive if the markets don’t outright keep crashing.
Q. Yes, I made a killing Cody on those shorts and HTZ, GLUU… and I sold out of them all. Thank you.
A. Just a technical correction for you — you sold them short, so you had to cover them all to get out of them, not sell them again. Congrats!
Q. TSLA seems like a blown few quarters with CV. I sold most of it much higher. Time to re-enter?
A. I’m bidding on TSLA here. Not in a rush on it though.
Q. Thoughts on (DIS) now? I feel like we can see lower with a closure of the parks… should we wait and buy in then?
A. I’m sitting mostly tight on DIS right now, as it’s not my favorite name to buy here for exactly the reasons you’re talking about.
Q. What’s the deal with PANW? is it buy?
A. No, I don’t think so. I’ve moved on from it.
Q. What about (CSCO), I noticed it was not mentioned in TA. With all the companies pushing work at home I would imagine many companies network infrastructure may not be fully capable of handling all employees working from home, may be something that may benefit Cisco once this blows over as companies prepare for next thing that comes along.
A. Yes, Cisco should benefit. The fact that 5G spending is going to be pushed out some is going to hurt Cisco though. I bought more CSCO this morning when I got filled on a limit order.
