October 12th Daily Market Note: Hang Seng rallies 1200 points to cut losses from –16% YTD to –6% in the span of one week
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Hey folks, what another great week it’s been for my Community. My personal tactical top idea BYD soared from the given 235 level to 248 yesterday evening in Hong Kong’s trading session. My opinion that TCOM would bounce from 33 has played out almost instantaneously – touching 34.8 this morning in early U.S. trading. New Oriental EDU soared to 65, discussed from 45-50 three months ago. TLT touched nearly 89 in the pre-market before inflation data released when I reiterated the Bonds seeing some sort of reprieve at 85. HD/MCD snipes for 1-2% runs earlier this week. And SOXX Semiconductors see 495 from 485!
It is my commitment to keep hunting and finding such ideas for the good folks. Will keep working hard! My ONLY ask is to please share my newsletter Community with your network. Long-time followers know that I give a LOT of free content and ideas out to the public just to help the People. Thank you guys.
What a great week it’s been! Snippets of Signals given to good folks.
Experienced members in our Community know that our core methodology only requires a stock/ETF to touch/see/visit a certain level because our primary execution style is to employ Limit Orders. Once a level is touched, the order is filled, and whether the stock/name/ETF retraces is no longer our business. While my longer-term targets for all these names are definitely higher, my primary responsibility is to identify profitable opportunities upon entry and trail my stops higher to ensure I walk away with some form of profit in exchange for my time spent researching the setup. Once the stock moves into profit above cost basis, please remember that I am not a financial advisor that can give custom advice! You have the luxury of choice of what you wish to do, and only you can make that decision 😊!
My edge is that I can focus on when and where a profitable entry may take place. How long it remains in profit, I have no idea. I can’t possibly know. I have to keep emphasizing this point, because while Entry can be Objective, Exit can be quite subjective. Fair?
Members may also observe that I tend to give out opinions on stocks & themes at the beginning of the week, and my publishing schedule excludes Fridays as I only write Monday-Thurs. I don’t issue opinions/ideas heading into the weekend, to see what “next week may bring.” This is deliberate. By having “mental capital” during Friday-Sunday to study companies independently and craft levels that I believe stack the edge in our favor, I position my ideas to have the highest chance of survival at the beginning of every single week when the narrative, tone, and sentiment is clarified.
While what you may see is the stated key level of a stock and a very brief fundamental case for a name I like, I do DCFs in the background, read management commentary, and do a LOT of groundwork behind the scenes. This is all extremely time consuming, so I want to thank you for your support of our community. It really means a lot!
Now onto the existing market backdrop - Remember with all things market related, I’ve learned to keep it extraordinarily simple – never overcomplicate anything. The market bottomed in October 2022 when inflation peaked at 9%+. The market made a local top out in July 2023 when inflation bottomed at 3%. In other words, for the market to break past its July highs, market participants must be confident that inflation’s resurgence that we saw today will not recalibrate the Fed into a more hawkish stance than they already are. In the background, there are a couple of really important considerations. The U.S. consumer broadly speaking is about to face a reset due to student loans, an exhaustion of savings, and worries about job security heading into 2024. This is demonstrated by the fact that millions of Americans now work 2 full time jobs in order to make ends meet. Politics aside, this is just a difficult setup for achieving prosperity and puts more roadblocks for hard working people to reach their goals.
As discussed in past several editions of my Daily Notes, this market has seasonal tailwinds going for it. A lot of fund managers are chasing performance into year-end and investor positioning is what drives levels in the near-term. The 2024 landscape is not promising, but that’s a story for another time. The next several months should be buyable on dips.
Part of what gets me so excited about my work is that I know I’m making a concrete difference for the members for our Community. More to come!!
More insights and strats next week. Have a great weekend.
-Larry
Forward-looking Conclusions of this note:
Macro: Inflation comes in slightly hotter than expected. But middle east tensions have the Fed on hold from their hawkish plans.
Stock-Specific: Top idea BYD from previous note performs greatly, and TCOM swiftly sees 5%+ from 33 handle to 34.8 as of this note.
Bonds: Inflation data may put in a new equilibrium for the 10Y Yield, and make it difficult to press below 4.5% in the near-term.
China: Hang Seng gaps up 4 times in a row, with a 1200 point advance, to apply significant pressure on foreign investor’s short-selling positioning. We need to see intraday advances rather than only gap-ups to be healthy.
I will do my best to keep you as updated on my research, ideas, and setups.
I cannot take any 1:1 questions related to individual positioning or guide on individual transactions. Thank you for your understanding.
My work here is solely an expression of my personal journaling, but must not be treated as formal financial advice.
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Please make sure to read my 4-6 previous letters to understand my fundamental/technical/macro views. Every update builds on top of the others. I write quite frequently now so make sure to read many of my previous editions, which often also include valuable educational content to help you grow as an investor/trader. While I do enjoy sharing my personal journaling of the markets, this is not individual customized financial advice.
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