Intrinsic Value System

Intrinsic Value System

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Intrinsic Value System
Intrinsic Value System
1/17 Daily Market Note: Intraday Flip

1/17 Daily Market Note: Intraday Flip

Short-term resilience in the context of longer-term distribution

Larry Cheung, CFA
Jan 17, 2024
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Intrinsic Value System
Intrinsic Value System
1/17 Daily Market Note: Intraday Flip
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Note: Thank you to Interactive Brokers for being my partner Brokerage where we get 4.8% Yield on Idle Cash which accrues daily.

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Hi Everyone,

I’m in Toronto this evening as I prepare for a speaking event on China’s investment landscape. In brief, my core message is that China will continue to be volatile but opportunities are again soon resurfacing.

In last night’s letter, I observed rather large Distribution (selling) activity in the S&P 500’s orderflow data. That led me to believe that a small number of big players are beginning to leave the market - at least temporarily- and stand on the sidelines.

The data followed through with a very adverse session in the Hang Seng shedding another 500 points to reach 15,276 (~400 points away from 2022 and decade lows) and caused a opening flush in the S&P 500 and Nasdaq-100 today to the magnitude of -.7% and -1.25% respectively before recovering.

However, early into today’s session, I noticed that selling pressure began to abate, and larger buy orders began to come through.

Today’s Intraday Activity

With this in mind, I sent a message to our WhatsApp members group with a hypothesis that the “low of day” was possibly in on an intraday basis. Now what I can try to do is on days of significantly higher volatility (like today), I can put my best efforts to attempt to identify if there are any potential pivot points. On normal days, I resort to researching in the background as not every day offers opportunities like today.

LOD reference points 471 and 403 for SPY and QQQ worked for the most part today

In the rest of this note, I will briefly discuss my thinking on China stocks at this juncture and ultra-conservative ways to think about retaining exposure. In future notes, I will share more orderflow data as U.S. markets go through a shakeout phase which could leave some investors off-guard.

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