Minerva Market View for Feb 9, 2024
CPI revisions come out tomorrow morning and could decide the fate of this rally. Here's how we're positioned.
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 IWM 0.00%↑ and ARKK 0.00%↑ shooting up while SPY 0.00%↑ 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 BLBD 0.00%↑ 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 GEO 0.00%↑ FROG 0.00%↑ ELF 0.00%↑ CLS 0.00%↑ ANF 0.00%↑ MRVL 0.00%↑ CDNS 0.00%↑
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 SHCO 0.00%↑ and MLNK 0.00%↑ both giving double-digit returns yesterday.
Watchlist
Here are the names we’re watching tomorrow:
Long: BLBD 0.00%↑ LEN 0.00%↑ PFSI 0.00%↑ POWL 0.00%↑ CENT 0.00%↑ EDU 0.00%↑ RPD 0.00%↑ MARA 0.00%↑ IWM 0.00%↑ ARKK 0.00%↑
Short: VIAV 0.00%↑ MRCY 0.00%↑ KW 0.00%↑ SUN 0.00%↑
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.