Financial News vs. Noise
Interesting day on Friday. The bears tried, and failed to take stocks down. Small caps did end in the red….
So much for the rotation. IWM is now between the 50 and 200. At this point it’s a short, with the 50 day as a stop.
SPY is still downtrendyish (just made that word up) but it’s rebounding nicely off the lows.
The weekly chart is a bit more troubling, as we did make a lower low.
Real interesting week. Monday people were talking about the end of the world, Fed needs to do an emergency rate cut, etc. Fast forward to Friday and SPY is 9 cents over last Friday’s close.
Stocks Brought a Week of Whiplash. It Might Not Be Over Yet.-Barron's
May not. Hard to believe we go from outright panic to everything is fine in a couple of days. CPI, PPI, and retail sales this week could help decide where we go from here.
I think there are a few great lessons from this past week:
- If you were panicking then you are taking too much risk
- This is not easy
You are going to start seeing a bunch of stuff like this. The Market Is Scary. These Stocks and Bonds Can Protect Your Portfolio. Adding defensive stocks can allow investors to stay invested while protecting themselves if the economy goes into recession.-Barron's. There is no such thing as a “defensive” stock. Some are less volatile than others but that changes. Utilities were once thought of as “defensive” but now they are AI plays. The article mentions NEE, a stock I trade. Look at the weekly chart, this is not a stable stock anymore.
You need to have a well thought out methodology and stick to it, but you also get feedback from the markets and you can tweak your methodology accordingly, like when the market tells you that you are taking too much risk. This week finally convinced me to write the book I’ve been thinking about since “How Harvard & Yale Beat the Market” in 2009. Working title at the moment is “The Unbalanced Portfolio”, yes it’s a bit of a dig at balanced portfolios, which I think are stupid. I think investors could get value from a different perspective on how to look at markets.
And stuff like this. Bonds Are Back as a Hedge After Failing Investors for Years-Bloomberg
Here’s a weekly chart of TLT, it was down over 2% last week.
This, on the other hand, is a great way to reduce risk. Traders Wary of Going Back to All-In on Stocks Weigh Up Options-Bloomberg
Even better if you combine T Bills with options.
Yes. Not blindly, you should have a well thought out way to buy the dip—RSI, Connors RSI, Williams % R, Internal Bar Strength, etc. Better yet, use all of them. Market Turmoil Revives Age-Old Question: Should You Buy the Dip?-WSJ I bought a ton Wednesday at the close. Not because I am so smart and I knew that Thursday would be a big up day, but because all my indicators flashed buy signals. Not going to lie, it was scary as f&^%ck, but I always find my best trades are when I’m the most scared.
Why Nvidia Is Still the Undisputed King of AI-WSJ
Over the past two decades, Nvidia has created what is known in tech as a “walled garden,” not unlike the one created by Apple. While Apple’s ecosystem of software and services is aimed at consumers, Nvidia’s focus has long been the developers who build artificial-intelligence systems and other software with its chips.
Nvidia’s walled garden explains why, despite competition from other chip makers and even tech giants like Google and Amazon, Nvidia is highly unlikely to lose meaningful AI market share in the next few years.
Most of what I do is short term mean reversion with a bit of trend following thrown in, but I do have a longer term options portfolio of AI names (Thank you Larry Connors), and NVDA is the core of it. I also trade NVDA short term in a fixed model, which got out Thursday at the close. I do still own it in a NASDAQ pull back model. Would like to see it break above the 10 day and it has to hold $100.
Going to keep hammering this theme. Tech companies want nuclear power. Some utilities are throwing up roadblocks-CNBC.com
“When you’re talking about large [demand] load that also wants to use zero-emission energy, you’re going to bring it very close to nuclear power plants,” Dominguez said on Constellation’s second-quarter earnings call Tuesday. Constellation, headquartered in Baltimore, operates 21 of the 93 reactors in the U.S.
I agree, it does seem far fetched, but what if it isn’t? Trump’s Plan for a U.S. Bitcoin Reserve Looks Far-Fetched-WSJ. I continue to believe the spot Bitcoin ETF was a game changer.
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