4th December 2023
Chasers really stepped things up a notch on Friday, sending multiple sectors & names into upside extension levels; following an extension to the downside just 4 weeks prior. Breadth has improved dramatically with numerous names putting in 30%+ moves in November.
Whether we like it or not, things are a little frothy and just like everybody was bearish at lows, many are now calling for further enormous moves to the upside after SPYs 12% move in just 24 trading sessions. Everybody who missed this move and certainly those that sold at lows, are somewhat begging for continuation so they can get involved.
PATH, IOT & many other names have put in huge EP moves closing Friday at high of the day. PATHs weekly breakout from Stage 1 and into Stage 2 was impressively clean. Whilst I was on holiday so missed the initial entries, I’ll be looking for a continuation setup at a later date.
I’m by no means bearish and November was a great month for me, yet I’m aware that big tech and large caps are too extended. Therefore growth names, small to medium caps & unloved high FCF companies are my main focus this week.
All I can about is the best R/R trades on any given day/week. So if big tech moves higher, It can do so without me.
KRE (Regional Banking) broke out and moved over 5% on Friday helping to push IWM higher and out of consolidation. Most moves were backed by strong relative volume.
Gold Futures broke into ATH during Asian trading hours, reaching a high of $2,150 before fading the entire move. We’ve been bullish on Gold for weeks however this stuff needs to recover or I’ll be ditching the rest of my positions.
Crypto continued to edge higher as Bitcoin breaks $42,000 sending COIN into $147 pre market & ETH into $2,250 respectfully. As far as I’m concerned these names are now too extended to pay any attention too.
China remains the weakest sector as practically everything heads lower par a select few. Now that names are trading at ludicrous multiples, the papers are out in full force, with this specific piece catching my attention.
I like buying names going up & I have no interest in catching a falling knife. Yet the backdrop for a huge rally in China equities is building, even if Short lived. Why? Everybody is increasing their bearish stance whilst many have already been burnt for buying “too soon”. Funds have been loading relentlessly for months on end, whilst Chinese equities reach insane FCF and growth valuations. Human emotions don’t change, just Like META at $80 was going to Zero and Tesla at $100 was going to $35 and AMC at $60 was going to $5,000 – You can’t make this up.
The second a name like BABA is mentioned you’ll be met with, Yeah but Chinese government this, regurgitated fact that. Nobody wants to hold overnight & whilst we can of course head lower (there are currently more sellers than buyers) I’m sat waiting for the pivot.
The same can be said for a lot of names this Morning, Fridays action lifted all boats and therefore most now need time to find an appropriate entry.
$BIDU – Nice first leg from lows, good RVOL, looking for next leg.