Market Thoughts: 8/8/24 - In short, market AM's and midday cannot be bought. I tend not to worry about getting the absolute bottoms of stocks I want to own for the long term, and just scale in when I'm happy with the price level, especially with the first entry. But ... that doesn't mean I don't like getting the best price possible.
The current environment is selling AM gaps and middday strength into the close. When analyzing my recent entries for those long term repositions, my entries have not been good - materially not good. I'm not concerned in any way because time smooths performance but that doesn't mean I don't want to get even better pricing for my first, second and third entries for the best possible average cost. ULTA, LULU, MU, AMD, etc. haven't been great entries.
I fully expect this AM's gap will be sold as well until the market is done with this round of profit taking and valuation repositioning. It's really that simple. We got a decent jobs number this AM and most of the data I'm looking at suggests we remain well positioned to head into the rates-down cycle in Sept. Yes, some of that could be priced in to the rally we had prior to August. But the setup for 2025 continues to look very good as long as we stave off recession, which is the primary catalyst for this selloff. Minor recession or soft landing shouldn't impact the runway for the rates-down cycle, but this selloff must work its way through.
My shopping list remains the same but I'm hesitant to add more legs to open positions until I see things completely unwind, and it's very possible the orderly downside we saw, and what I hoped was the final capitulation when the Nasdaq was down 6% pre-market, in fact, wasn't enough.
For chips, AI and tech, it's going to be all about NVDA's earnings at the end of August. Some are suggesting the reported Blackwell issue could be used as a company catalyst for reigning in guidance a bit. If that is the case, we'll see $80s IMO. Jensen Wang is a master at working the stage, earnings reports and narrative so we'll see how he commands this report. I suppose it could go either way. In any case, any further selloff in my shopping list names will just present the next opportunity for me to add legs to the positions, or new positions.
I'm now looking to add NVDA to my taxable account given this decline and that may also include MU and AMD as well. It's a near certainty I'll be adding shares of NVDA, AMD, AVGO, MU, ARM, and MRVL. I'll likely be adding my next position in DELL. For new positions, I'm looking at VRT, ACLS, and CDNS. I'm in no hurry with LULU and ULTA in the retail space for obvious reasons.
As I write this, the AM gap is fading again and we've lost 2/3 of the gap. Unsurprising.
Heading to our county fair this AM and getting away from the red and green of these markets.
Stay safe and patient out there. |
