Market Thoughts 6/18/24 - This market remains ALL ABOUT the AI trade. NVDA, ARM and AVGO continue to lead. ARM has been a monster and the low float makes it even more intriguing. I already have a full allocation in the primary account and added in the $90s in the Roth though I left room for another three additions ... but it ran away. I got too cute with the additions as I felt very comfortable around $90 but only took one additional position.
I continue to slowly reduce the NVDA allocations I have in both the primary and Roth accounts though I'm still overweight. Just freeing up a bit of $ for other trades. I also reduced QCOM just a bit on the strength but still have a good allocation. Raising cash where I can as this market is close, or in the middle, of a parabolic move. The Dow has been left out as has the RussellI thi ... mostly. Just no reason to abandon what is working now. But being smart and trimming overweight positions is never a bad thing. NVDA has been rock solid and could continue to work but now post split, no reason to get too cute and hold too much. A 10 or 20% correction in NVDA would be fine and a 10% correction in the Nasdaq will happen at some point and should be seen as healthy.
I'd like to trim my ripping financials which are showing some topping signs, but the overall environment remains ripe for financials. Continuing to hold the big money center banks. Not adding and have thought about trimming but the income + environment remains compelling enough.
Bigger issue is my taxable account which is ripping on the backs of the hugely overweight AAPL/MSFT/GOOGL positions which I can't sell due to capital gains. Or should I say, unwilling to sell.
There are other AI opportunities outside of NVDA/ARM/AVGO. AMD continues to get little love and MRVL is trying to break out but isn't yet. SNOW continues to get hammered but the setup is there. Most have rotated out of it for other performing names and I like this level. I'm tempted to add more here. This name won't move without an earnings (or some other) catalyst in my mind which is why I have 2026 calls.
Income names continue to look good and those div payers can be added in my book. IBM, PFE, SCHD, KMB, KHC, GIS, etc. etc. look safe and solid, but are boring. Never a bad thing to roll out of huge gainers into more income, which I'm doing.
Also bonds such as AGG, VCSH and even LQD can be taken here for the interest rate move though timing is anyone's guess. Eventually they should perform but with only one rate decrease on the table for 2024, no hurry. I'm still slowly rotating out of money market where possible into VCSH for the 5.5% yield and perhaps 5-7% of price upside potential, give or take. MM % should be toppy and start to erode.
The only real position trade I have on now is CLF at a 33% or 50% position, probably 50%. Looking to add another piece but waiting to see if I can get $14 or even below. If it firms up, I may still add the next leg to this position trade. It's just the one issue I love to purchase down here, wait, and sell for 20-30% of upside. It's been rock solid on that turn.
One other position trade I'm looking at is XOM. I rolled out of CVX in the $140s into XOM at an average of $99 or so, rolled out of it in the low $120s and it's now back to $108. Hoping to catch a dip below $105 or less and I'll position trade it again.
The next likely AI trade will be into AMD. I would love to catch a dip back to $145 but it's basing pretty well here at $155. I think this one will catch fire again but patience will win the day. Hoping the recent weakness when combined with the Nasdaq rolling over provides some opportunity for a reset in AI and some lower entries. Staying patient.
I will continue to roll out of a bit more NVDA as it's still overweight. With the share count and recent price movement, while I still love the name, I have to believe that there's no reason to be hugely overweight the name any longer. I'd rather take some off the top into every % upside move while reducing and then wait it out. I full expect the name will remain my top % hold in both IRA accounts, which is fine, but reduction/trimming remains smart.
Another play I'm waiting on is small cap, possibly via TNA. I fully expect small caps will begin ripping as we near the first rate cut. With TNA, you don't want to hold for a long time due to the leverage but it can be used for outsized gains into a tailwind. I think many are waiting on the Russell (Small Cap) trade to work and when it does, I think it will provide significant potential. As in a very quick 30% on TNA. Waiting to see if I can catch a dip back into the lower $30s on a bad day/week. We'll see. No hurry.
Small caps, bonds and non performing AI stocks are where my focus is for the time being while allowing what is working to continue running.
Good luck out there all ... be safe. |
