Financial News vs. Noise
After another red day we are seeing the inevitable attempt at a bounce this morning. The undercut & rally pattern is one of my favorites for discretionary trading. I learned it from Gil Morales and the idea is you look for stocks that undercut an important prior low or moving average and then rally back above. It’s a nice spot for a long entry and you use the low or moving average as a stop. Yesterday, we saw a bunch of those. For example, the QQQs did it at the 10 day MA and 20 day EMA.
AAPL, AMZN, GOOGL, and META all had moving average U&Rs also.
My sense at the moment is that the battle between the market and the Fed is playing out sooner than I anticipated. So I don’t expect to go anywhere fast, up or down, until something changes. Doesn’t matter to me as there will be plenty of short term opportunities as things move around, and I think yesterday was one of those short term ones. Will see, breadth and sentiment both suck so they could easily turn this around and sell it off this morning. All of these investment banks and talking heads who forecast the market are just noise, but a guy like Jamie Dimon is at the center of a lot of stuff, so when he speaks I do listen.
Jamie Dimon warns ‘all these very powerful forces’ will impact U.S. economy in 2024 and 2025-CNBC.com
“Ukraine, the terrorist activity in Israel [and] the Red Sea, quantitative tightening, which I still question if we understand exactly how that works,” Dimon said… “When stock markets are up, it’s kind of like this little drug we all feel like it’s just great. But remember, we’ve had so much fiscal monetary stimulation, so I’m a little more on the cautious side.”…
My favorite area at the moment is short volatility. Remember, I short volatility with put strategies on the VIX ETPs. These are awful products designed to go to zero, but DO NOT SHORT THEM OUTRIGHT. We are way overdue for a VIX event, if you have puts you know exactly how much you can lose and can even set things up where you potentially break even. If you short volatility outright it’s picking up pennies in front of a steamroller and you eventually get carried out in a stretcher. We run 5 strategies to short volatility, one trend following and 4 mean reversion, all are short at the moment.
I continue to watch the commodity names, and in the spirit of it’s better to be lucky than good sometimes we bought BTU on the U&R yesterday as it looked like buyers came back into coal.
After hours it was announced that they are being added to the S&P 600.
Speaking of the commodities and U&Rs, oil stocks (XLE) had one at the December low of $79.97. This continues to be a tough area, but I am long CVX, XOM and CVE.
A lot of the other commodity names are setting up in potential U&Rs so will be watching them today. Still like my commodity theme even though it has been horrifically wrong to start the year. After all, we are less than 3 weeks in.
Subscribe to our other newsletters
Laffer Tengler Research Bulletin
Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
At Tuttle Capital Management (“TCM”), we want to help educate investors about different ways to allocate and manage assets. TCM strives to create innovative portfolio management tools coupled with investment strategies designed to help mitigate risks and potentially enhance returns.
The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades.
Tuttle Capital Management is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investor’s financial situation.
© 2023 Tuttle Capital Management LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.
