Newsletter - 7/23/2023
Holy CRAP its hot out! Records being broken everywhere temperature wise so stay cool and safe!
The word for the week is "anticipation". Storm clouds are building in the market, covered below, but I don't expect a start to a prolonged move until we get the blow off top. But when it happens, its will be painful and damaging to every single investor that thinks everything is "A-ok". It is not and we need to be vigilant.
PREVIOUS WEEK MARKET:
Earnings are back in swing and we saw multiple companies report good earnings BUT the market is now focusing on "margins" - how much money a company will make after operating expenses. Look, margins are going to start contracting but now because revenues are dropping, yet. Companies across industries have jacked up their prices they charge and that, for the time being, is helping companies report better than expected numbers. However, as demand continues to contract, which it will, companies will not have the cushion of revenues to "hide" the overall economic problems that are beginning to seep through the economy. Everntually, those problems will become like a flood of bad news and it will cause the market to correct. How far I do not know yet but its coming.
Last week the markets ended up for the week but we saw weakness towards the end of the week. In fact, on the daily charts, both the SPY and the QQQ printed HCD's, reversals. However, I will not get short the market until we see the same thing on the weekly charts. Then it will be an all "hands on deck" shorting opportunity. Its part of the reason I have materially adjusted the number of long plays. Risk is rising and I do not know which "domino" will cause the rest to start falling. Until then, I remain opportunistic and careful. Now is not the time to be fully invested. On to the charts!
SPY is trading at 2SD and printed a daily HCD. Bad. I still believe we get a move to the 3/8 highs and then even a new annual high.
Short Term: Bearish
Mid Term: Bullish
Long Term: Bullish
CLOSED TRADES THIS WEEK:
We closed the following trades this week:
-
BBIO calls: +100% (18 days)
-
NDAQ calls: +52% (19 days) - 1st half
-
KRE puts: -64% (14 days) - rolled
-
NDAQ calls: +80% (20 days) - 2nd half
MODEL 5K PORTFOLIO:
Since May 9, here are the numbers:
-
Total Return: +92%
-
Average Return: 53%
-
Average Hold: 9.62 days
TRADE IDEAS:
I added some solid Core trades this week and caught the RIVN move!
-
LYV Earnings Idea
If you are not a Member and want to see these, become one here.
TRADE UPDATE:
ANF
We survived the market's temporary love with consumer spending and ANF is headed back down - needs to break 35.36 and then 33.33.
Pay Attention:
Macro issues take time to affect the markets and stock prices. But there were some pretty significant developments this week on a couple of macro issues that COULD cause the economy, and the markets, to turn strongly downward. A couple we have discussed and some we have not.
-
Yellow Trucking - They are going out of business. As the nation's largest "last mile" trucker, they failed to make a $50m payment for their employee's pensions and health insurance and the Teamsters approved a strike. A bit too little too late but if and when they finally cease operations, this will have a medium effect on supply chain for the economy.
-
UPS Strike - Of course at the last possible moment both sides are jerking around to try and extract more money from the other side. However, a strike has been authorized by the Teamsters (busy summer for them) and if they end up striking, this would have a huge effect on the economy. It would severely affect supply chains, consumers, businesses. It could bring the economy to a pause and unlike the railroads, the White House cannot force them back to work. Watch this closely.
-
Auto Loan Rejections - People applying and then being denied auto loans is rising significantly. This is extremely bad for the auto industry, and I suspect, it is worse than the 21% rejection rate and is coupled with increases in rejection rates for loans and mortgages, Lending is collapsing and I am not exaggerating. No money to buy means less products sell which means margins don't matter.
-
Commercial Real Estate - I have been posting articles in the Boardroom but it just keeps getting worse and worse. And we haven't even started yet. The 4th quarter is when the majority of CRE loans that are due to be refinanced must do so - good luck with that. Look for continued news of large property owners just walking away and tossing the keys as the lenders are forced to eat the losses. I don't know when or which one but all it will take is for a lender that is forced to seek Fed help as a going concern. Its only a matter of time.
-
Profit Loss Changes
Make sure that you have read last week's blog post (see below) about my changes to target profits and stops. Risk is rising and I am tightening up my methodology in order to meet the first goal of trading: PRESERVE CAPITAL.
In conjunction with this, I have also reduced the number of ideas purposely. This is temporary, There is no exact number and I actually think that this week we will have a number of ideas as I want to get positioned for what I expect to be a blow off top. But as I shared above, there are pretty big macro events that could undermine any large move upside. Now is not the time to be wantonly aggressive. It is the time to refine and focus and be more picky.
Make sure you are in chat and watching your email because any trade ideas will be time and price sensitive. Do not chase and do not get "cute" with taking profits.
UPCOMING WEEK:
Instead of an Economic Calendar, I will be posting MY schedule in the Boardroom as well as position specific dates.
I will be in the Boardroom:
-
Monday: 7:30am to 12noon MST
-
Tuesday: 7:30am to 12noon MST
-
Tuesday: IRNT earnings released AMC - MAYBE
-
Wednesday: 7:30am to 2pm MST
-
Wednesday: KO earnings released BMO
-
Wednesday: EVNX earnings released AMC
-
Thursday: 7:30am to 2pm MST
-
Thursday: LYV earnings released, AMC
-
Friday: 7:30am to 10am MST
-
If you are interested in a paid membership, let me know and we can discuss which one is best for you!
BLOG POSTS:
I did a new blog post regarding new profit targets and stop loss levels. Check it out HERE!
VIDEOS:
WHAT I AM LOOKING AT:
This week I want to get long QQQ and some select tech stocks but I am wary/watching UPS. Also, I have a couple of earnings plays that I am watching as well as a couple of Core ideas. I will be looking at slightly longer durations to soften the effect of theta decay in the event of stops, especially if a stronger downturn occurs. I would like to get long MORE ENVX and short MORE KRE, but again, I must wait on the macro news and the charts.
IMPORTANT:
I want to do live sessions but I never know when its best for everyone. Now that I am posting my schedule, please take time to let me know when a good time is and what topics you would like to cover.
CLOSING COMMENTS:
-
I WILL HAVE AN UPDATED SPREADSHEET OUT TO PAID MEMBERS THIS WEEK WITH A NOTE CONCERNING THE CHANGES I HAVE MADE.
-
If there are any stocks or investments you want me to look at, send the to me at info@MrNotAdvice.com. I will answer them in next week's newsletter.
-
Don't forget the Discord live chat is STILL FREE but it will be closing to new members soon. In the meantime, come and join us - its the best community out there: Discord.
Thankyou Family!
theBoss
Nothing above is investment advice nor should it be construed as investment advice. It is offerred for entertainment purposes only. Always consult your advisors before investing any money. Do not "follow" or "mirror" any trade ideas provided. Mr.NotAdvice is not a licensed or registered investment advisor. Do your own research.