3/20 Daily Market Note: Fed's Playbook Favors Bulls
Animal Spirits Keep Roaring Louder
Hey Everyone -
A robust day for Bullish positioning as the Fed stays consistent with their projection that rate cuts are on the way - 3 currently being planned for the rest of the year. The Buyside is relieved that recent hotter than expected CPI/PPI reports did not derail Powell’s plans for loosening monetary policy.
For our Community today - a couple exciting events happened.
Discussed in our pre-market, our view was that if NQ (Nasdaq-100 Proxy) can break above 18350, an intraday rally would soon brew. We ended the day +150 points from that key level at 18500.
Pinduoduo rallied 15% all the way to 150 from 130 in the pre-market after robust earnings from TEMU and their Mainland China operations. We had been buying this company at 130, 120, and at 110 in a series of scale-in tranches. The post-earnings move gave our Limit Order Sell methodology an opportunity to take profits at target 140-150. After the company erased the entire gain to trade back at 128-130, I shared on Twitter and on Instagram that 130 was a good level for re-entry. Shares closed up 2%+ on a new Re-entry position at 133.
I viewed Micron to be a beneficiary of the AI wave, and their earnings release tonight shows that their positioning in the AI industry continues to gain steam. I shared this on Twitter that I was bullish ahead of their earnings print. Shares advance 10%+ after the bell.
Other previous laggards in the market such as small cap Russell 2000 (IWM) and the equal-weighted S&P 500 ETF (RSP) are also participating in the rally.
With breadth expanding, we keep looking for bullish positioning that still offers value (ORCL, GOOG, AAPL as some examples we added recently at swing lows). This allows gains to be more enduring when pullbacks come at the index level. Any short-selling is strictly intraday-only and only for scalps.
I will be on the lookout for more opportunities using my DCF model.
More to come - thanks to my readers for your support and I’m excited to find more alpha for you when I think probability of certain setups favors our side.
-Larry