1/8 Daily Market Note: Squeezing Last Week's Late Bears
Big Green Candle at the Neckline
Note: The organization MoneyShow has invited me to present on Hang Seng and U.S. stocks in a 2024 outlook. Feel free to check it out. They also asked me for top 2024 stock ideas - one Defensive and one Offensive. I chose JNJ and ORCL. You can read more here. I’m on page 74.
Dear Folks -
Hope you had a great weekend as always. Over the past few days, I published equity research on BYD (BYDDF) and DECK (Deckers Outdoor Corp) on SA as continued educational enrichment for my public and private readers.
Last week, I wrapped up my Thursday Note discussing that Apple had become a personal target for me to Sell Puts on as it met the criteria that I look for when doing so. The Puts have since fallen 40%, and that means our position now gives us the option to keep holding, raise stop-limits, or take what’s available.
Obviously, any Call Options on Big Tech would have skyrocketed today. But as of late last week, there was no way to know ahead of time that would be the outcome, and I had to rely on probability & statistics to guide my decision making. Selling Puts was the best risk-adjusted decision at the time.
Today’s action in SPY and QQQ is an epitome example on why holding Long Puts or Shorts for too long will be see short profits get erased.
New Ideas issued in 2024 have been strong so far, but as it stands, my longstanding constructive view on China from 2023 is again being greatly challenged by adverse market forces. At present, I’ve decided to lower China exposure and simply position more conservatively for the time being while retaining modest upside.
Below, I will share commentary on today’s squeeze (yes, I think it’s a squeeze rather than enduring buying activity) and talk about whether today’s advance pull-forwarded any potential advance from the upcoming Inflation CPI report.