Financial News vs. Noise
In this episode we discuss an important question, is Jim worse with the stocks he tells you to buy or the ones he tells you to sell, or not buy? Anyone listening to Mad Money on Tuesday night ahead of FOMC was set up for a ton of alpha on Wednesday Technical Analysis vs. Jim Cramer
Clear rotation yesterday out of large into small as the QQQs were slightly red, SPY was up a bit, IWM was up a lot. ABDE’s (Cramer favorite) earnings may have helped this rotation along, but my sense is that you are seeing a broadening rally and the rest of the market has to come up to meet the Magnificent 7. While it now looks like traders are pricing in a near certainty of a rate cut in March the ECB came out hawkish and suggested that the market’s are pricing in too fast rate cuts in Europe. Does this explain Santa Powell?
Was Yellen setting the stage in October? Yellen Says Higher-for-Longer Scenario Is ‘By No Means a Given’-Bloomberg 10/3/23
Continued to see a rotation info commodity based stocks across the board. I mentioned AA in yesterday’s note, missed it myself as it took off and never looked back. Personally trimmed a bit of metals exposure and will look to buy dips across all the “stuff” stocks, assuming we get dips. The time to buy all of this stuff was pre Powell and I don’t want to chase. There are still a couple of energy stocks that haven’t gapped too much, in particular I will be watching AR and RRC. Also, MSFT could be interesting if it dips into it’s 50 day and holds.
Did end up buying some BABA yesterday. Regardless of all the problems over there I feel that traders are going to be buying anything that isn’t nailed down. China is never a long term trade for me, but so far so good this morning.
Strategy remains the same, buy dips. Going to be hard to come by, last week, I think it was Thursday, we had that small dip that got everyone flustered, turned out to be a great buying opportunity. Seeing a lot of bulls on Twitter taking victory laps, while a lot of bears look like they got wiped out. Just reinforces the fact that you trade based on what you see, not what you think. Nobody can predict the market, but you can see what’s going on and capitalize on it. You are also only as good as your last trade. Wall Street is littered with people who made one good call and then became contrary indicators.
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News vs. Noise
Fascinating article, if you are a geek like me. I used to be a fan of factor based investing, but am no longer. I think the only “factors”, if you can call them that, that work are counter trend and trend. With trend being much harder to implement. A Quant Winter's Tale-FT
Good read, consensus is usually wrong. Good thing about being a retail investor is we can be nimble. Big guys are like the Titanic, they may see the iceberg eventually but they are too big to avoid it. Beware the Most Crowded Trade on Wall Street: Next Year’s Soft Landing Each of the past three years had a similarly strong consensus that proved entirely wrong-WSJ
At the end of last year, investors thought recession was a done deal. The year before, they thought big tech would be immune to rate increases. And a year before that, they were convinced that paying high prices for stocks popular with the wider public would make them rich.
This December, they believe, again with absolute conviction, that the economy is heading for a soft landing and lower interest rates. Maybe this time they will be right.
Then again, maybe not.
The key point for next year. Wall Street divided on how many Fed rate cuts there will be in 2024-MarketWatch
One is reminded of President Bush’s victory in Iraq. Markets are declaring victory over inflation for Powell, and that has some economists worried-MarketWatch
This hasn’t gone away. Our inverse regional bank ETF got delayed until January, which in retrospect probably isn’t a bad thing. Commercial real estate a top threat to financial system in 2024, U.S. regulators say-MarketWatch
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