You can also feel free to ask me questions over there and I’ll do my best to answer.

You can join the chat here:

And of course, if you haven’t subscribed yet, you can fix that here (for free):

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Disclaimer: This site is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening. Indices and sectors like Semiconductors are getting oversold and are ripe for a bounce here. However, the dip/correction is likely not over yet, and we’re likely to give up those gains and head lower before forming a tradeable bottom.

IBD / MarketSurge have changed their outlook to "Market in Correction". Exposure is their minimal recommended range at 0-20%.

Both major indices have their 21-day EMA breaking their 50-day SMA. The power trend that had been on since the October low is now off (one of the shortest power trends).

The Insurance sector has been showing relative strength of late. Let’s see if that follows through this week. We have a few holdings in this space including and .

The next important date for a major inflection point is May 1st when the Treasury will announce the split of the QRA (Quarterly Refunding Announcement) into bills and bonds. If they announce more bills than expected, that can provide liquidity for the next leg higher. On the other hand, more bonds would spike long-term yields higher and suppress all risk assets further.

Watchlist

Long:

Short:

Feel free to hop over to the chat to discuss!

Worth checking out

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter.

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Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening. It has been a while since one of our regular Substack updates. If you follow us on Twitter @ MinervaCap, you’ve seen our stance turn gradually cautious over the last few days.

Both the major indices – and – have broken out of the upward trending range they were in since the last couple of months, and have also broken their 50-day moving averages on high volume:

We still feel that this is a short-term correction that may take us down ~10% from the recent highs to about 4800 on the S&P, and set us up for a rally to follow. Being active traders, we want to trade both sides.

Portfolio

To trade this dip, we’ve reduced our net long exposure to ~20% and added a basket of shorts that have been serving us well. This is in line with the current Investors.com / MarketSurge recommendations:

Here’s our current portfolio:

Watchlist

For tomorrow, these are the names we’re looking at:

Long:

Short:

We’re also activating the chat so subscribers can receive regular brief updates similar to what we post on Twitter. You can also post your questions or comments there. Subscribers can access the chat here:

If you haven’t subscribed yet, you can subscribe for free:

Subscribe now

If you’re unfamiliar with the Substack chat feature, continue scrolling towards the bottom of the post for information on how to access it.

Worth checking out

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter.

If you need more information on the Substack chat feature, continue reading on:

Today we’re announcing a new addition to our publication: the Minerva Capital subscriber chat.

This is a conversation space in the Substack app that we set up exclusively for subscribers — like a group chat or live hangout. We’ll post short prompts, thoughts, and updates and you can jump into the discussion with your questions or comments!

To join our chat, you’ll need to download the Substack app, available for both iOS and Android. Chats are sent via the app, not email, so turn on push notifications so you don’t miss a single conversation.

How to get started

1. Download the app by clicking this link or the button below. Substack Chat is available on both iOS and Android.

Get app

2. Open the app and tap the Chat icon. It looks like two bubbles in the bottom bar, and you’ll see a row for our chat inside.

3. That’s it! Jump into the thread to say hi, and if you have any issues, check out Substack’s FAQ.

Join chat

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! The market continues its ascent in the well-defined channel that we discussed in our last post. A minor dip within this channel could take it down to about 5000 on the S&P, where it would also meet with its rising 20-DMA:

As of now, we don’t see anything serious that can throw the rally off its tracks, although there are a few large bond auctions this week as well as the PCE report. Today the rally broadened to small- and mid-caps, with those indices outperforming the large caps.

We’ve discussed various breadth thrusts that have been firing since November in support of a strong rally. Now hear this from Wayne Whaley, award-winning market historian:

Assuming a positive close for February, which is the most likely path, this indicator would also turn green. As if the above post wasn’t clear, Whaley added today: “Not sure the significance of such has had time to sink in but of the 10,000s of scans I have performed in my lifetime the DJF Barometer signal posted Friday night is the only +25 case study in my domain perfect back to 1930.”

So the bulls have the upper hand and there is no point fighting this rally. A correction, even if we finally get it, is not likely to exceed 8-10% but will most probably be around the 5% range. In any case, it is difficult to predict, and better to ride the rally with the wind at our backs, using puts and selective shorts for protection.

Portfolio and Performance

Our portfolio continues to do great as we're tilted towards the small / mid-cap, high-growth names that found favor today:

and shorts also did well.

On the other side of the ledger, a small position in still managed to put a dent due to its outsized fall today. (short) rounded off the losers today.

Watchlist

For tomorrow, these are the names we’re looking at:

Long: $BYDDY

Hedges: Puts on

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Worth checking out

A great read on US economic growth and what’s powering the rally:

Pinebrookcap's Substack

U.S. Economic Growth Update

The sub-title of the last U.S. economic growth update was. “We Have Landed”, published on November 19, 2023. For new readers, the criterion for the above is defined as follows: A strong labor market that continues to create new jobs. Inflation at or below the Fed’s 2% core-PCE target (assuming live market rents for core inflation…

Read more

2 years ago · 31 likes · 10 comments · David Cervantes

Interview with the man of the times, Jensen Huang of :

Lex Fridman’s interview with Bill Ackman has interesting insights:

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! can be single-handedly credited with saving the rally for now. We have been in this upward-sloping channel since Jan 19 (shown in light green in the chart below), when we broke out of about a month-long consolidation phase:

This has been a confusing time for market participants with a strong market defying weak seasonal patterns and technical divergences. In support of the rally, we’ve had some major breadth thrusts with near-perfect records:

It also helps that we’re in a “power trend” which has been identified as a strongly bullish pattern by the IBD team:

As such, it doesn’t make sense to fight this momentum until it breaks. Agile traders can still try to time the rally as it bounces back and forth within the channel. We’ve been using puts and shorts for that. However, most of our portfolio is long-only for now.

Portfolio and Performance

We had several winners on the board today – and they weren't all about AI: . We had some losses on the short side and in a new position.

Watchlist

For tomorrow, these are the names we’re looking at:

Long:

Short:

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Worth checking out

We are nowhere close to the bubble phase yet – but looks like one may be beginning to form:

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! CPI came in hotter than expected. The major indices sold off drastically, although the megacaps did recover somewhat before the market closed. No such luck for the small caps and high-beta corners of the market such as . We will see over the next couple of days whether this sparks off a broader decline.

In any case, the consolidation period that many were waiting for may finally be here. We still have the PPI number to digest on Friday, and that may be the more important number for the Fed and the rates complex. But the markets are no longer going into it as confident as they were a day back.

We have reduced our long exposure significantly today and added a lot of hedges to balance out the longs. We flipped from long to short on in size and that helped in offsetting the losses somewhat.

In addition to all the divergences and weak seasonality, today we saw a 90% downside volume day. When such days closely follow record highs they don’t bode well for the market:

Portfolio and Performance

Today was a red day for our portfolio but the shorts and hedges helped somewhat. We might see an oversold bounce/relief rally in the next couple of days, which we will use to hedge further for Friday’s PPI number. Just to be clear, the long-term trend is still likely to remain intact, but we may see a dip of 5-10% from highs. As a trader, we’d like to sidestep such dips and benefit from them if we can.

Here’s our current portfolio. We’re 23% net-long:

Watchlist

For tomorrow these are the names we’re looking at shorting based on their price and volume action:

• Rising Rates:

• Short scan:

• Overvalued:

• Big drops:

• Insurers:

• Boat/RV makers:

• On Watch:

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Worth checking out

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! Our portfolio has been doing great and outperforming the . We think this rally still has legs but the momentum is moving to other parts of the market. Here are the key things we’re watching:

1. As we noted in our previous update, the rally is rotating to small-caps and other sectors (biotech, , , etc.) of the market.

2. Stocks also seem to have parted ways with rates i.e. even with 10-year rates going up since the last few days, the rally has been powering on.

3. A lot of eyes on the CPI report coming out tomorrow. Our best guess is that it should remain conducive for the rally to continue.

4. This is not a market you want to be shorting (yet). Anyone managing money against a benchmark cannot afford to be too much underweight equities.

5. The divergences that have had a lot of us worried can also correct themselves in favor of the rally.

6. Breadth continues to improve:

Portfolio and Performance

Our portfolio continues to be helped by several big winners, and not too many losers. Here are the major movers for today:

Here’s what our current portfolio looks like. We’re about 75% net-long:

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Watchlist

Here are the names we’re watching. We’re also planning to reallocate some of our beta from to (equal-weighted S&P) if breadth continues to improve.

Long:

Short: $CRLBF $TCNNF

Worth checking out

This thread from Warren Pies and the video at the end is worth going through:

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! All eyes are on the CPI revisions due before the market opens tomorrow morning. Last year, the revisions showed a picture of higher-than-expected inflation, leading to a swift dip of 10% from February to March.

Our best guess is that the revisions might be favorable or neutral tomorrow based on all the data we’ve been observing. Anna Wong from Bloomberg seems to agree:

In any case, it will pay to be vigilant tomorrow and see how the market reacts. Should the markets not like the numbers, we might get the dip that everyone has been calling for, and it will be imperative to take swift action to protect profits and get short.

On the other hand, if markets rejoice, this could very well lead to a broadening out of the rally as we’d covered in our last note, and similar to what we saw today with and shooting up while finished close to unchanged on the day.

After large divergences between the S&P and the Russell 2000 like the one we’ve seen this time, that has usually been the case:

We will be open to either direction that the market chooses to take.

Portfolio and Performance

Today was a great day for our portfolio. We booked profits on at our limit of $33 which was great because it tanked later, in what seems to be an overreaction to strong earnings. Other 2%+ winners are

China and Japan continue to underperform. Many of these positions are close to their stops, so if they don't recover soon, we will be out of them.

Our short book has also been performing well with and both giving double-digit returns yesterday.

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Watchlist

Here are the names we’re watching tomorrow:

Long:

Short:

Worth checking out

Vibha Jha has been a top performer for several years running in the USIC. Her story is inspiring and informative.

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! Here are the 3 key themes we are observing in the market currently:

1. Has Momentum started stalling?

Momentum has been one of the key factors driving relative performance since the October bottom, as seen in this chart of the ETF:

Today we saw a reversal in several key names that have been momentum-driven. It’s still too early to call it a top, but this will be interesting to watch.

2. Is Breadth broadening out?

Along with that, we saw breadth broadening out with instruments like , etc. rising along with (long-term bonds). It remains to be seen whether it was just a short squeeze or an unwinding of long-short positioning since we saw many heavily shorted names shoot up as well. Again, something to keep an eye on.

3. Has China bottomed?

We’ve been waiting for a follow-through day to get back into Chinese equities, with a huge rise on heavy volume and it looks like we may finally have gotten one today. We’ve started to dip our toes into the water here. Earlier, the authorities seemed to be openly hostile to shareholders but now it looks like their tone has changed. There’s an excellent thread from @ShanghaiMacro going into the reasons (I’ve included it below). If this is indeed the bottom, there are several Chinese equities and broad index ETFs that offer tremendous value. We’ve covered them in the portfolio and watchlist below.

Portfolio and Performance

It has been a struggle to decipher the market’s moves over the last few days and performance has lagged behind the S&P. Here are the big movers in our portfolio for today:

And here’s the trading portfolio:

Watchlist

Here are the names we’re watching to enter based on price action. Most of these are either China-linked or bets on falling rates:

Long: $LKNCY $BYDDY

Short:

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Worth checking out

The rationale behind why China needs its public markets to recover:

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! Today we got a glimpse of the roller coaster market that we’d been anticipating. Our portfolio finished the day +1.05% vs the S&P’s +1.25% while being just 25% net-long. More importantly, the equity curve stayed in the green throughout the day, with the shorts and hedges providing enough cover when the market was in the red and not holding performance back once it turned green. This is the kind of robust portfolio we believe will be needed over the next few weeks.

Tomorrow, we get the job numbers. If they’re too hot, they will raise fears of rate cuts being pushed further out. If they’re too cold, they might stoke fears of a slowdown/recession. A Goldilocks number will be needed for the market to continue rallying. Of course, and reporting great earnings will support the mega-cap / tech indices, while will detract. Our short should help.

Portfolio and Performance

We had several winners >3% today and no losers greater than that.

We got stopped out on and and booked solid gains on the and shorts.

We shorted .

Watchlist

Here are the names we’re watching to enter based on price action:

Long:

Short:

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Worth checking out

We agree with this observation shared by @ukarlewitz on X that we’re still in a long-term uptrend but with a minor dip/chop phase coming up:

Insightful interview with Marios Stamatoudis, one of the top performers at the USIC last year:

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! There was a lot to digest today from the QRA and the FOMC. I won’t repeat what a lot have already commented on: both were much more hawkish than what the market was expecting. Add to it all the weakness we have been seeing since the last few weeks in terms of deteriorating technicals, breadth, etc. and we might have seen a near-term top.

The seasonality also does not favor the bulls as February and Q1 of election years tend to be weak. While the longer-term trend remains bullish, we might see a 5-10% dip here over the next few weeks. We have been reducing exposure and will continue to do so if this market tone continues.

Portfolio and Performance

Today was a red day for us as we entered with a “risk on” composure in anticipation of a supportive Fed and Treasury. Still, our stock picks, hedges, and shorts ensured that we were down less than 1% today compared to a much worse faring by all the indices.

Here’s what our current portfolio looks like. Items marked in orange are on watch to cut if they continue to underperform tomorrow. We have also added several shorts and outsized hedges on and which helped buffer the fall today. / are also good hedges if the stock-bond correlation stays negative. We’re currently 25% net-long.

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Watchlist

Here are the names we’re watching to enter based on price action:

Long:

Short:

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Worth checking out

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! Today, the Treasury with its QRA (Quarterly Refunding Announcement) has given a taste of what to expect on Wednesday when they share the details of how the borrowing will be split between bills (short-term) and bonds (longer-duration). Most of the market watchers I respect expect the Treasury to support the markets. With inflation falling rapidly, the FOMC is also expected to be dovish – with either rate cuts starting in March, or with dovish messaging around rate cuts starting in May.

Both of these developments should be supportive of risk assets, and we saw a preview of that today with rallying close to 5%. If events do indeed play out as anticipated, we can see a repeat of Oct-Nov price action. Here are some of the candidates I have identified as potentially rate-sensitive:

Falling rates = falling dollar = rising bond prices = beneficial for anything that needs cheap capital = risk on

• Long-term bonds: /

• Biotech: /

• Small-cap: /

• Solar / EV:  

• M-REITs:

• REITs:

• Homebuilders:

• Emerging Equities: /

• Emerging Bonds:

• Innovation / Speculative:

Not all of these will benefit to the same degree, so the key will be to watch the price action and build a diversified portfolio that combines the most beneficial elements.

Portfolio and Performance

Our portfolio is already exposed to a lot of these factors and we saw a nice pop today, with several of our holdings gaining more than 2% on the day:

The only notable loser was our short, which we’re still holding as we think it has more downside after it fills the gap to 195 or so.

Right now, we’re about 70% net long and looking at increasing exposure if the thesis outlined above plays out. We’re also mindful that February-March isn’t the best from a seasonal point of view. We can reconcile some of these factors if small-caps, mid-caps, and the broader market starts rallying more than the mega-caps.

Here’s what our portfolio looks like currently:

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Watchlist

Here are the names we’re watching for tomorrow:

• Dividend plays: $PBR-A

• Falling rates:

• Setting up bases:

• ETFs taking off:

• Short candidates:

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Worth checking out

To anyone who dismisses AI as a mere "toy", show them these examples from a16z and remind them that the iPhone and the PC were also dismissed as "toys" when they came out and today they're responsible for two $3T companies:

Source: The Future of Prosumer: The Rise of “AI Native” Workflows

That’s all for now. Happy Trading! Make sure to follow @MinervaCap on Twitter for real-time updates.

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! Markets continue their steady rise on healthy volume and look set to continue their march upwards. We have the PCE, FOMC, and Treasury QRA data coming out over the next few days, which should influence some moves, but it looks like the data should be constructive. The breadth indicators we track have also been improving.

At the same time, some ominous signs are brewing, as Parker Ross shared in this analysis of state unemployment numbers ticking up to a level that has predicted recessions in the past. Parker is not a permabear so this bears watching:

Portfolio and Performance

Today was a mixed bag with housing-related and other stocks dragging down performance from the winners (mostly AI-related):

Watchlist

Here are the themes we’re watching for tomorrow:

• Boeing fallout: we’ve been shorting and for a while, but it looks like this is worsening. Their only major competitors are worth a look: Airbus $EADSY and Embraer . Read this article for more: Shares in this aircraft manufacturer could continue to soar.

• China: like others, we’ve tried picking the bottom in China a few times since last year, and failed. Let’s see if this time is indeed the bottom. If China has bottomed, we’re watching stocks like $TCEHY .

• Japan / India: there seems to be an inverse relationship between China and markets like Japan and India. It might be due to the reallocation of the same funds between these markets. And sure enough, the Nikkei and Sensex have been falling since the last couple of days. If this continues we might look at exiting our Japan positions and shorting both of these markets.

Here’s the complete watchlist for tomorrow including some swing trades:

Long: $EADSY $TCEHY

Short:

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Worth checking out

The USIC results were announced and Goverdhan Gajjala won in the 20K+ category with an 805%+ return! He shares some resources in this thread that are worth following:

CWS Market Review

CWS Market Review – January 23, 2024

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders…

Read more

2 years ago · 14 likes · Eddy Elfenbein

That’s all for now. Happy Trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! Today we examine if seeing early signs of a 2020-21 asset bubble starting in assets. To wit, these tweets from noted short-sellers Jim Chanos and Nate Anderson (of Hindenburg):

Astute observers also commented about the rise of shitcoins, NFTs, and stocks of companies with no fundamentals. Now, as traders, our first impulse when we see a new bubble just forming is not to run away but rather towards it. Let us see how these things play out over the next few days and weeks, but this is something we will be watching closely.

Here are some other themes that we’re observing playing out so far:

• Long-duration interest rates zig-zagging: it looks like 10-year rates are falling again. This will likely give support to risk assets such as (small caps), (biotech), regional banks and homebuilders and pretty much any rate-sensitive sector. If and when rates were to climb again, these would reverse. We will cover some stock plays below.

• Election outcomes: we have no political affiliations and neither do we let politics get in the way of making money. That said, as Trump’s chances have improved, stocks such as $FNMA $FNMAS $FMCC etc. have shot up and many of them could still have a long way to go (remember this can work in reverse as well).

Portfolio and Performance

We had a great day today, with several stocks and ETFs popping:

Losers were limited to just a couple of stocks:

We added several stocks from yesterday’s watchlist and are now ~65% net-long.

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Watchlist

Here’s what we’re watching for tomorrow:

Long:

Short:

Worth checking out

Some of the impressive price action we’ve been seeing despite the weak underlying technicals is due to several breadth thrusts that have been triggered recently. This whitepaper from Wayne Whaley covers several of them:

Wayne Whaley is a legendary quant who once remarked that if he were limited to using only one indicator for betting on trend direction for the year, it’d be his TOY (Turn Of Year) Barometer. There’s a good reason for this. A bullish TOY signal has a very high win rate. You can find more on how the TOY Barometer is constructed here. This barometer fired a bullish signal this past week.

Neil Dutta is one of the few economists who got 2023 right. In this podcast, he shares how his outlook differed from those of other mainstream economists and what he sees for 2024:

That’s all for now. Happy Trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

The Nasdaq / popping up >1.5% on high volume on Friday gave us the bullish indicator we were looking for. With this, we're cautiously optimistic and looking at scaling up our exposure, especially on Tech and AI stocks.

The caution stems from various internals not yet confirming this bullish move and macro data releases this week that might lead to choppiness.

A decisive break below the recent range would make us cut our exposure. For now, the risk/reward favors a continuation of the bull run and we will look at puts and trailing stops to hedge.

Portfolio and Performance

Several of our holdings posted >3% gains on Friday (primarily AI-related stocks and some preferred shares) and there were no major losers.

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Watchlist

Several stocks and ETFs on the watchlist for tomorrow:

Stocks: $FNMAS

ETFs:

That’s all for now - happy trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Markets continued their up-and-down chop as we have been anticipating. Even though the major indices finished positive for the day, underneath the surface several indicators are flashing signs of weakness. In previous posts, we’ve covered those factors (breadth, RSI, Bullish Percent Index, seasonality, advance-decline line, distribution days, etc.), so we won’t rehash them here.

Our current path for the markets is to attempt and maybe even exceed all-time highs, but then fizzle out from there in a sideways or downward pattern. As always, we are open-minded and if the rally were to resume on strong breadth and stocks start breaking out and following through as they did from November through December, we will jump back in.

Tomorrow, to add to the excitement, we have 3 Fed speakers who will try to sound hawkish. And of course, we have options expiry which will add to the volatility. The trading plan is to not do much of anything as there aren’t too many great setups on the long or short side.

Portfolio and Performance

Several of our holdings posted >1% gains today (primarily AI-related stocks) while shorts detracted from performance.

Watchlist

Not too many picks for tomorrow:

Long:

Short:

2 interesting stocks that might have put in blow-off tops with diverging RSI - we will have to see tomorrow’s price action to confirm:

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Worth checking out

A refreshingly candid and informative interview with Sean Ryan (top performer for several years running in the US Investing Championship and son of two-time champion David Ryan):

That’s all for now - happy trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! We are seeing several warning signs flash. We might be forming a near-term top, and defensive strategies will likely be needed for the next few weeks.

From a sentiment perspective, many permabears have thrown in the towel turning bullish while those who got a lot of things right are turning more cautious:

The NYSE Advance/Decline line topped towards the end of December and has been in a steady decline since, which typically coincides with downturns:

Broader momentum indicators have also been steadily deteriorating:

Today, we had the fifth distribution day on the S&P 500 in the last 5 weeks, another reliable indicator of a near-term top.

Portfolio and Performance

Our portfolio also dipped along with the today. Here are the major movers:

We will be looking at tightening our stops and cutting stragglers. The next few days might offer some upside and a chance for us to load up on some more shorts and defensive puts.

Watchlist

For tomorrow, we have a lot of short candidates that we’re looking at. A lot of these are rate-sensitive sectors that ran up on hopes of rate cuts. If rates and the dollar start moving upward, these will be impacted the most:

Long:

• Volatility ETFs:

• Stock:

Short:

• Rate-sensitive sectors:

• Stocks:

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Worth checking out

That’s all for now - happy trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! While the market is still in an uptrend, the last couple of weeks have seen a deterioration in breadth. We expect this choppiness to continue for the next few weeks.

Portfolio and Performance

Our long/short portfolio has been working well for us. Here are the major movers for Friday:

Here is the overall trading portfolio. Items highlighted in orange haven’t been working out as well or are in the process of topping and we are open to trimming them:

Shorts are working out well, and we will look at adding more into those positions, especially which seems to be heading into a more prolonged correction. also has likely more downside as more quality issues surface. The crypto shorts are more volatile and will likely swing up and down.

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Watchlist

Here is our watchlist for tomorrow:

Long:

Short:

Worth checking out

That’s all for now - happy trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! We had turned defensive in the last few days as posted on Twitter:

Right now, the market seems to be in a choppy environment. We will see if today’s bullish move continues. Several stocks are setting up well after this consolidation, and if the rally resumes, we will want to participate.

On the other hand, the seasonality points to a weak January, as shown in the chart below from Tom McClellan:

Here is another look at how January, Q1, and the whole year fare after a negative Santa Claus Rally and negative first 5 trading days:

Other indicators are sounding a more bullish tone:

Overall, it is a mixed picture right now. We plan to stay invested in a range of 50% or so net long until we get a clear picture from the market on the direction.

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Portfolio and Performance

We had a good day along with the market, with several holdings rising more than 2% and just a couple falling by a bit.

Watchlist

Here is our watchlist for tomorrow:

$ABBNY $FNMA

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Worth checking out

That’s all for today - happy trading!

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

Good evening! We started the New Year with a dip. Now the question on everyone’s mind is whether this is a brief pause or a more serious correction in the making. Let’s see what the tape and data are telling us.

The major indices did have a distribution day today i.e. a sizeable decline on higher volume. Having said that, no alarm bells are ringing yet on the S&P chart:

Today, we got stopped out on many of our profitable tech positions that we were protecting with trailing stops. We’ve been negative on most of mega-cap tech for a while, so that helped. With today's dip, we’re now up to 3 distribution days in the recent cycle. That does warrant additional caution, as shown by this reduction in recommended exposure down to a range of 60-80% by MarketSmith:

The NYSE A/D line also took a hit, due to the weaker breadth, but is above its 10-day moving average so far. Previous corrections have generally coincided with it breaking below:

All in all, these technical indicators point to increased caution, but still within the broadly bullish theme. If two more distribution days show up soon, then we will be much more cautious.

Portfolio and Performance

Today our portfolio took a beating along with the market. We’re now out of almost all our Tech names, except for and which have not hit their stops yet.

Today’s theme was rotation to value and more defensive sectors. Almost everything that had gone up indiscriminately over the last two months got sold off (with the notable exception of the crypto space). We will watch to see whether that continues.

Here are our major movers from today – much more red than green:

If this is indeed a buyable dip, the stocks that go through it without falling too hard will be good ones to hold for the bounce. If not, we will be looking at trimming further exposure.

Several names from yesterday’s watchlist did well today. We added and on the long side and , and on the short side.

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Watchlist

Here is our watchlist for tomorrow:

Long:

Short:

Of these, is interesting because it combines several themes: it’s a Latin American bank, that’s in a buy zone from a stage 2 consolidation phase after a nice uptrend and still trades at a 6 P/E:

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Worth checking out

In this podcast, Darius Dale predicts a bullish three-month outlook for US stocks, bonds, and crypto and a bearish three-month outlook for the US dollar. He says these are all positive signals suggesting that the current Goldilocks regime is likely to persist for at least the next three months, perhaps longer.

That’s all for today - happy trading!

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Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.