Every day I go through roughly 200 stocks/indices/indicators, several times per day, looking for signals, attempting to connect dots and ultimately, hoping to find risk/reward situations that create outperformance.
The title Lies, Damn Lies seems appropriate as when the markets want to reveal any kind of truth, they first do so through blatant lies. Conversely, whenever truth appears apparent, there is likely to be deception involved.
These are simply thoughts (some completely random) as I attempt to connect the dots:
- AMZN has reversed convincingly. While it may have a few more tricks up its sleeve, the December low should hold in January. Safest buypoint in some time not just for it, but FANGs in general.
- Took a position in AVGO on Monday. Demonstrating wonderful relative strength within technology. Relatively safe way to get exposure to semis.
- Traditional and plain vanilla, yes, but BRK.B allows exposure without normal concerns for volatility. A conservative consideration for exposure to the financial space.
- BTG is an example of the convincing strength that took place in mainstream gold names during December. The pattern looks set for continuation as it is becoming apparent that a weaker U.S. Dollar is the release valve the global economy needs to sustain growth.
- C is in a low-risk short-term buying position. The compression in price/book for financials is overdone. Q4 results should be relieve some of that pressure.
- Every market bottom has its hook. A hook is the primary market average that will lift the rest of the boats. For this market bottom, the hook is the Nasdaq Composite. It has managed to reverse at an important technical level, which will give the rest of the market averages the courage to push forward.
- GOOG is another FANG name that looks to be setting up for a push higher during January. Economic data and earnings will be seen as strong enough to justify purchasing growth at 30%+ discounts.
- Not buying JPM on a 20% pullback will only be seen as a mistake for most large cap fund managers when it's down less than 10%. Unfortunately, buying into points where fear and misinformation is at its greatest point does not present a situation comfortable enough for a majority of those who manage money. And this is why they underperform. If you're comfortable doing anything, then odds are something is wrong. Was talking to a bodybuilder at my gym recently who was training for a competition. He told me that whenever he feels good, he knows something is off in his training regimen. Whenever he's uncomfortable, he knows he's doing it right.
- MSFT falls in the same category as JPM. Large cap portfolio managers will be feeling foolish not making a move on it later this month.
- Took a position in NFLX on Monday. The relative strength it has demonstrated in recent weeks along with generally compressed volatility is an important indication of tendency towards outperformance once the market firms up. Since I believe the market is in process of firming up, the risk/reward was too mouth watering not to take a bite.
- Took a position in SA during November and continued adding to it in December. The company was up 13% during December. Looks well positioned for continued upside. Details on the name are available in my report on gold published a few weeks back.
- In a period of overreactions to what's ahead in the next few months during Q4, long-term US Treasury yields will probably be seen as the most ridiculous in hindsight. They should adjust higher in Q1 making TLT, as one example, a good short sale candidate here.
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