Friday, 11.19.2021 8:37 AM ET
The market continues to hover in an extended posture. The price action has been quite strong and we have received some price target acquisitions this week in several positions for our Intermediate-trend Models.
I don’t have much else to add this week except for this maintenance of open positions. Continuing to stick with the strong trend is important but we also want to be mindful that we are managing risk accordingly and keeping ourselves in a position where we can take advantage of any opportunities that come our way.
With extended price action like we have seen in many names and the broad market, I like to slowly accumulate cash reserves so that when we do get a reset we will have the dry powder to increase exposure at a more opportune time.
Friday will be Options Expiration for the month of November. We were already seeing evidence of the typical volatile shenanigans that tend to come around these mid-month rebalance periods. AAPL and AMZN were making some massive moves higher in Thursday’s session while others like Weed Stocks, PTON, etc were getting smoked on the downside. I expect this kind of outsized action to continue into the end of the week.
We are also approaching the point of the year where Tax-Loss selling will increase in the more weak performing names over the past year. It would surprise me if too many of the real dogs of 2021 (BABA to name one specifically) find any notable bid until very close to the end of the year or into 2022.
With 6-weeks to go in the year it is usually best to focus the majority of our attention on the winners year to date. These tend to continue to win as many managers try to window dress their portfolios for client examination in the new year.
This week I want to be lightening up in several of our Intermediate Trend holdings:
- AMD trim 1/3 of current positions as price extends notably. Price has ripped higher following our position add back in early October and we have a +40% profit over the last 5 weeks. Taking some off after the stretched move is prudent.
- SNOW trim 1/3 of current holding as price has moved back to the prior swing high after a sharp rally.
Since our entry in early July our current positions are up +60%. Moving back into this prior high is a good spot to start lightening up.
- NFLX trim 1/3 for Intermediate trend positions. Price has run to the first base extension. I am watching for the Weekly failed rotation. This has the look of a “false Flag” where price doesn’t reset fully to the trend support and then tries to push back higher. The failure of that push tends to cause a retracement. I like to take some profits when those signals occur and this would have to close Friday over $691 for me to consider holding the full amount into the weekend.
Our positions were entered back on August 20th so we have some healthy gains, and I’d like to book some more if this rotation up fails to stick.
- PYPL Dip Buy positions are on watch for Exit into the close of the week if price cannot hold the recent lows here around $200. It closed Thursday right on the line. Any follow-through lower will be enough for me to call it quits.
I will be looking to step away from this trade if we see no response on Friday.
I have no new buy opportunities at this point and prefer to just keep rolling with what’s working, while continue scaling back into further strength.
Remember that the Fed is beginning to taper asset purchases starting this week. “Usually” that’s not a great indicator of equities and another reason to have a little extra dry powder in our accounts.
After these trims Weekly (Intermediate-trend) accounts will hold about 20% Cash going into the weekend. I like the idea of lightening up some into this great run we have seen.
Our Dip Buy/Opportunity accounts have not had too much to buy into recently (as is the case when the broad market presses relentlessly higher for 18-months) and if this PYPL position fails, those account Models will be left with about 40% Cash.
That’s all I have for the week and I will see you on the Stream tomorrow!