Mid-January Strategy: Our Opinion for a Stable 1st Half of January has Materialized. Now comes the hard part.
Premium Strategy Note: Are we in for further gains? Or is this the opportunity to reduce? All of this and more answered. And most of all, how do we approach this with execution methodology.
Note to Readers: This is our Bi-Weekly Strategy update - I was able to finish the report ahead of schedule so that you can read for the long weekend. I will be sending more Strategy notes like these to our Private Substack/Patreon members. As a result, my Bi-Weekly reports will be briefer/more concise given that intermittent Strategy reports will capture my views on a rolling basis.
To celebrate the S&P 500 moving back above its 200-Day simple moving average (a long-term constructive signal), I will be sharing my premium January 1st Half Strategy report to the public until the long weekend is over (click here) where we successfully discussed an optimistic start to January in the face of intense bearishness.
Take a moment and read the report now - we’ve done a tremendous job with navigating the markets using our research. Our Community is at a globally accessible entry point - the value to you will be asymmetrical (as long as you are patient).
Yes, I am generous with my sharing of premium content. Please practice karma, and share this email with your network!
Members,
Welcome back with another thoughtful Bi-Weekly update. As mentioned in previous notes, these Bi-Weekly updates will be shorter so that I can produce more content for you on a rolling basis in a timely manner.
Let’s recap what’s happened so far:
In early January, we successfully discussed that Markets would likely see a relatively more solid footing in the first half of the month, followed by looming danger later on. Well, the first half of January has been indeed steady. This forecast has largely been very fitting for the environment we’ve seen so far. What comes next of course is the key focus (discussed below). We are a critical inflection point here with the SPX now back at the 200 Day Moving Average.
We also discussed key names such as continued strength in Dollar Tree, XLE ETF, and the TLT ETF - all of which have continued to remain firm.
On the good side, in our January 1st Bi-Weekly Dashboard and contextual commentary, we shared ideas that DIS, MU, AMZN, AAPL to name a few were attractive from a tactical perspective. All these names (and more) did well with most of them running up at least 7-10% in quite a short period of time.
On ideas that continue to elude me, we believed TSLA was oversold, but TSLA has not moved much in the past 2 weeks and is basically back to the beginning of the year’s level.
We provided a scenario analysis on Inflation outcomes, and said that a 6.4%-6.5% print or better was like enough to keep the SPX above 3950 (where it traded Pre-CPI).
We stayed constructive on China (with a caution target produced that hasn’t yet been reached). China is one of the best performers of 2023 so far. BABA is up nearly 33% YTD. See excerpts below from what we discussed on January 2nd of this year.
So far, markets in 2023 have been characterized as a relief rally where lower inflation data points (Jobs figures, and Headline CPI) have made growth-oriented themes outperform Value names. Value & Defensive names such as JNJ, MCD, KR, and WMT have lagged growth themes.
However, therein lies the danger - and that is because my forecast for markets becomes much more cautionary from here.
In this report, we’ll discuss the following areas that we believe to be important:
U.S. Macro Strategy with Inflation and the potential of looming Inflation Volatility (we believe the easiest gains in downward pressure for CPI has now been made)
General positioning guidance and further technical analysis on key names that drive the QQQ and SOXX such as TSLA.
Thoughts on the the new China Pivot Trade that is currently in motion
Commentary on China taking “Golden Shares” in Alibaba and Tencent
Education will be provided in this note to help you understand the durability of recent inflation declines and whether future months will also be like this.
I’ve also included a note on Investor Psychology for educational purposes.
As promised, here is my January 1st Half Research note to members (open to public until long weekend is over - Be Proactive! 2023 is no joke). If you enjoy, then join us inside. Share this preview/research note with like-minded investors.