This article from a guy I highly dislike because he has one speed - negativity because it sells - is the fly in the ointment. I believe tax data over all else. If true and continuing, this creates room to economic downside. Still, 3-4% growth is not Armageddon, US and local govt fiscal spending is in the pipeline, and a different payroll report also showing strength - weekly. I post link here to counter my own biases which I have already used to justify this away.
talkmarkets.com
To me there is one real risk to economy right now: stock and credit pricing.
This talkmarkets site is kinda interesting btw. News link for stuff above on SI but some interesting clickthroughs. I hate site mechanics but content interesting.
As of this moment, gun to head, I think there are two awesome longer term trades and one awesome ST trade. An article over there, despite being very superficial, helped me solidify my all over the place thoughts.
ST: Buy IBB. I am looking for at least 5% if not a 12-15% move to the 50 day which will fail the first time. Many individual bios have put in higher lows recently or lower lows with higher RSI. Many are even through the 50 day. Almost all through the 13 and even 21 day EMAs. They are set up to challenge higher prices and the machines should be turned off a bit - Thur scared my thinking here as algos attacked FANG and bios again.
LT: long oil/related.
LT best idea: Short TLT. Main risk here is timing on entry. TLT will likely rally when we get next pullback in a few weeks. Maybe go long a HY ETF with short TLT. Energy bond prices SHOULD be low enough in these funds to diminish risk but stay away from energy heavy funds.
A lesser developed thought: short AMZN and/or NFLX. We have seen this record before. First, energy. Next, industrials and materials. Third, bios. The downs were much more extreme than anyone thought possible. Much more. Check out AMZN chart. U. G. L. Y. FANG way underperforming after holding mkt up. A rule of stocks: new uptrends have new leadership. It WILL NOT be FANG. . I think fundamentally, NFLX is the better short but it is down much more. FB is really the best performing large biz in US although GOOGL and AMZN are close. But none of this matters really. Bios are cheaper than at any point in history relative to fundies. I really believe this. Stocks still kept going down.
AMZN has more air in its valuation and cloud-related bizzes (more than half of AMZN valuation probably). Cloud bizzes getting shellacked. FANG getting shellacked. Air pockets below in AMZN but wait for this next rally as AMZN might lead. As for NFLX and to smaller extent, AMZN, there are too many streaming players. AAPL is shifting very heavily to services now with App Store, Music (Beats), the paying service (just launched out here in China), the rest of Itunes and now, phones (replacing selling hardware with providing hardware for subscription). They have also explored new streaming options. Honestly, they are already bug in streaming. We in my family use Apple/AMZN/NFLX AND Hulu with no cable. Apple is actually the most expensive (4 series cost price of membership to rest) but it has what you want. Hulu increasingly does. AMZN and Neflix not so much. That is why the last three are producing own content now. As a pointer, this can work ST but these bizzes are like Crocs and DECK and KORS (faddish). Check out Lions Gate for what can happen.
Jon |
