The LongVol - What You Missed This Week
The LongVol - What You Missed This Week
Here is what you missed this week:
Sadly, the Spirit deal did not close - silly move from the DOJ
TSM 0.00%↑ earnings crushed - semi-conductors on Fire
China banned short selling, for the time being (important for tomorrows report)
Weekly Recap & Market Thoughts
We trekked higher this week on OPEX which makes sense and I discussed how I like to trade OPEX as a strategy in the Premium Post Thursday but most of this, to start the year, has been day-trading strategies.
And I run 4 strategy sets explained here.
But it has made this a boring start to the year for other special-situations and event-driven trading but with China this week and this market ripping higher that might all just change.
There are two ways I am looking at the market-at-large right now.
From the technical analyst lens of markets. Market internals (which I really never care about) don’t look great. From my view, the tape/price structure on some of the indices and certain names within them are off/low energy.
From a fundamental analysis lens. There is no shot that Powell is going to cut in March if we continue rallying like this as every Hanes wearing financial advisor has their clients long. It’s the easiest strategy for most RIAS: 60/40 portfolio, buy the same 7 stocks, collect your 1BPS fee and pretend you know what you’re doing.
We priced this move in so fast from October that I now believe that the odds, for me of a March sell off increase due to the lack of a rate cut.
In 1996, Uncle Greenspan coined the term “Irrational Exuberance” in his speech (Cato Institute has a good read on it here)
Irrational exuberance is a state of mania. In the stock market, it's when investors are so confident that the price of an asset will keep going up, they lose sight of its underlying value.
Even with a rate cut, if we continue to trend in this manner into that event it’s risk off.
I expect violent shakeouts lower (great for opening drive trading) which create pullbacks to then buy. What that makes it hard to do, in my view, is to stay swing long since we’re in the 7th inning of this move.
Moving on…To China
I don’t know much about China politics or economics to speak on it confidently but I do know what to look for in special situations trading.
In addition to the sell-off they’ve had they issued a short selling ban this week as well (that gets me excited) which is bad for some and good for other market forces.
And not that I care what Barron’s has to say but they wrote about it yesterday with this title.
I have no intention in becoming an investor in Chinese equities but there are some trades that are stirring up there that have had me diving in to look as a trader.
A few names and ideas will make it into tomorrow’s LongVol Report and for those in the AST Swing Trade portfolio we might finally have something to look forward too.
Wrapping it up
That’s it for this week. Enjoy the weekend and Issue 4 of The LongVol Report will be out tomorrow.
Dan
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