The Investment Thread (18 Viewers)

[efil4stnias]

I took profits again yesterday. Sold WYNN, ZBRA, QQQ, GE, after selling DPST and NUGT on Friday. Just feels like it's gotten ahead of itself.

Could be wrong, who knows. This market is bizarre - news that GDP contraction is almost 50% more than the estimate comes out but the market is up on possible Gilead news.

The market is now less than 10% off it's high . . . in other words, we're not even in correction anymore. Is that really accurate? Seems insane.

was just coming to post GDP expected -4.0 actual -4.8 and market up 350 pre market around 375 implied open.

Market.Dont.Care.No.Mo. abt anything.

BA earnings were bad, production forecasts trimmed AGAIN...no worries up 5% pre market.

 

[superchuck500]

was just coming to post GDP expected -4.0 actual -4.8 and market up 350 pre market around 375 implied open.

Market.Dont.Care.No.Mo. abt anything.

BA earnings were bad, production forecasts trimmed AGAIN...no worries up 5% pre market.

This thing has to pull back again - this is way too soon.

 

[Tapxe]

Maybe it's this one in addition to the Gilead?

Oxford scientists say a vaccine may be widely available by September

In the global race to find a vaccine, Oxford University just jumped way ahead of the pack.

www.cbsnews.com

 

[Loose Cannon]

This thing has to pull back again - this is way too soon.

I'm not so sure. You've got decent news on the pharma front, you've got states that are opening up (TX/GA) and potentially laying the groundwork for the path to economic normalcy again. You've got an abnormal amount of liquidity in a down market environment due to the stimulus and PPP loans. And you've got nowhere for that money to park except in the market due to extremely low interest rates.

I don't see the market having another big correction barring another black swan event (catastrophic results in Texas or Georgia, which is obviously very possible) or a re-emergence of the virus and looming lockdowns next fall.

I see it bouncing around the S&P 2700-3000 range through summer. Then we'll see. I might take some of my money back out of play then, depending on some things.

The thing a lot of people are missing is that the market and the powers that be are way ahead of you. You will rarely outsmart it. They have more information than you further ahead than you. Right now the market is pricing in just about every possibility through the summer, except some sort of disastrous, unexpected turn of events. The things that you are worried about or that you think could cause another correction - those are already accounted for.

Essentially if you're waiting for a crash you're betting on a second big wave of the virus (before next fall) or disastrous results in GA or TX. Those are the only things that I don't think are priced in. But if those don't happen, we're going to be back on a rocket ship and you're going to be standing there with your you-know-what in your hand wondering how you missed the boat.

 

[superchuck500]

I'm not so sure. You've got decent news on the pharma front, you've got states that are opening up (TX/GA) and potentially laying the groundwork for the path to economic normalcy again. You've got an abnormal amount of liquidity in a down market environment due to the stimulus and PPP loans. And you've got nowhere for that money to park except in the market due to extremely low interest rates.

I don't see the market having another big correction barring another black swan event (catastrophic results in Texas or Georgia, which is obviously very possible) or a re-emergence of the virus and looming lockdowns next fall.

I see it bouncing around the 2700-3000 range through summer. Then we'll see. I might take some of my money back out of play then, depending on some things.

The thing a lot of people are missing is that the market and the powers that be are way ahead of you. You will rarely outsmart it. They have more information than you further ahead than you. Right now the market is pricing in just about every possibility through the summer, except some sort of disastrous, unexpected turn of events. The things that you are worried about or that you think could cause another correction - those are already accounted for.

I agree that a big move isn't in the cards, but I think a small pull back from this exuberance is likely. I don't agree that the market has "priced in" the economic impact for the mitigation measures. I think that market is very good at pricing normal/cyclical economic factors but the market isn't nearly as efficient with something like a biological/public-health event . . . evidence of that is just how long it took before the market reacted to the US shutdown. Those who sold or even went short ahead of "the market" preserved or made substantial percentages by deviating from the market.

Rather, I think the market (as a forward looking institution) is simply presuming that economic conditions will return to reasonably close to pre-Covid on a reasonably near term (e.g. by the end of Summer). And - I totally agree with you - when combined with all of that liquidity and stimulus, it's a lot of money looking for a place to go. But the combination of those two things isn't necessarily rational, nor should it be trusted without question. Obviously "the market" is what the market is, the question isn't whether the market is "right" - it's whether the timing is right. It seems to me like it's ahead of itself . . . but perhaps optimism + liquidity/stimulus is enough to push through the chop that's coming from the actual data on the ground.

 

[LonghornSaint]

I have an open order for GILD but it is already up over 9% premarket. Once again I will miss out on the gains from their press release.

 

[superchuck500]

This is from behind Seeking Alpha's paywall so posting the link probably won't help but this analyst is noting that the breadth of the rally is extremely narrow and that if you presume the market's normal "looking ahead" to be six months, is it really true that in October, we'll be sitting at less than 10% off from where we were in January?

My biggest concern about this rally: It has little support beyond what was being supported before the decline. Let me explain.

Leadership before the decline rested with the FANGMAN stocks. Leadership in this rally out of the decline has been the same. Investors did not take the time or give the attention to those fine companies that might have gotten ahead of themselves in price prior to the decline and now provide the opportunity to diversify away from FANGMAN with perhaps a greater capital gain potential. Nope, many are sticking with what worked before, ever and always.

That may yet prove to be a brilliant move, but there are those of us who see the rush back to FANGMAN as reminiscent of the Nifty Fifty of the 70s. This was a period in which the leadership got narrower and narrower until institutions and individuals alike were pretty much buying the same thing - only the 50 anointed companies seen as being the biggest and the best.

That did not end well. When the armor cracked, as it always will in one place or another, the rush to exit was brutal.

If these firms were overpriced and due for a correction before the 23-day bear market, they are fast approaching that territory again. If it ain't tech, biotech or stay-at-home plays, it isn't being bought. That kind of narrow breadth is not healthy.

Speaking of the stay-at-home plays, let me ask you this. Will Domino's Pizza (NYSE:DPZ), GrubHub (NYSE:GRUB), et al, do as well in terms of revenues and earnings after we begin to slowly move about again, return to work and, dare to dream, eat at a restaurant or stop in at our favorite Cheers! pub? I think not. I'm one of those throwback value investors who tries to look not for the "current" hot play ("Buy Domino's. They can't miss!") but where we might be in six months or a year or two, when I might be selling what I buy today. A lot of people are going to pile into the secondary and tertiary companies at prices only elevated because of a short-term potential boost to earnings.

Fine mid-cap and small-cap companies have been ignored even more than other companies. To be a successful rally we need to see interest along the entire continuum of small to mid to big to Titans of the Universe.

In my mind, in summary: Leadership in this rally stinks. Valuations are approaching levels in some cases where they triggered the decline. And while the market does predict the economy six months to a year or more out, in this case it seems to me the market is predicting a far better outcome in that time frame than I think is realistic

So economic exuberance, narrow leadership, narrower breadth (no followers of the leaders) and valuations approaching old highs. What could possibly go wrong?

All this is aided and abetted by Wall Street, of course. About 90% of the sell-side analysis I have seen notes that, well, yeah, 2020 doesn't look so hot for earnings except maybe the fourth quarter (we are in Q2 now and still in lock-down most places) but, boy, we expect 2021 to be a barn burner!

https://seekingalpha.com/article/4340363-this-is-one-dangerous-rally?utm_medium=email&utm_source=seeking_alpha&mail_subject=must-read-this-is-one-dangerous-rally&utm_campaign=nl-must-read&utm_content=link-0

 

[Loose Cannon]

I agree that a big move isn't in the cards, but I think a small pull back from this exuberance is likely. I don't agree that the market has "priced in" the economic impact for the mitigation measures. I think that market is very good at pricing normal/cyclical economic factors but the market isn't nearly as efficient with something like a biological/public-health event . . . evidence of that is just how long it took before the market reacted to the US shutdown. Those who sold or even went short ahead of "the market" preserved or made substantial percentages by deviating from the market.

Rather, I think the market (as a forward looking institution) is simply presuming that economic conditions will return to reasonably close to pre-Covid on a reasonably near term (e.g. by the end of Summer). And - I totally agree with you - when combined with all of that liquidity and stimulus, it's a lot of money looking for a place to go. But the combination of those two things isn't necessarily rational, nor should it be trusted without question. Obviously "the market" is what the market is, the question isn't whether the market is "right" - it's whether the timing is right. It seems to me like it's ahead of itself . . . but perhaps optimism + liquidity/stimulus is enough to push through the chop that's coming from the actual data on the ground.

Completely agree that it's not rational or trustworthy. I think at this point with so many investors just investing in index funds, we're slowly seeing the stock market become a bit of a replacement for SSI instead of an actual proxy for the values of companies. You can see that by the multiples that companies trade at these days vs. 20 years ago (20x, 30x isn't unheard of, which is crazy). But I'm not sure what that means long-term. Short term, I think it means the market is going to be pretty stable compared to what we've been used to in the past.

I disagree that the market hasn't priced in the economic impact. They definitely have. There's not much that you or I know that the quants on Wall Street don't. Perhaps retail investors haven't really priced it in, but we don't matter as much as Wall Street in terms of moving the market (until we do, which is usually a crash).

People paying attention were very aware that this China flu thing was very serious by around late February, early March at the latest. And many of us pulled our money out ahead of the majority of the market. That was one of the few times I believe an individual had the capability to make the right decision ahead of the actual market moving that way. It doesn't happen often at all - 2008 was almost completely unpredictable for a retail investor. But this was an opportunity and some folks took it. I did. But I don't believe at all that it's something I'll be able to replicate very often in the future. Very unique opportunity. But I don't think it was one to get greedy with. I didn't get all of the bottom, but I got most of it, and I'm good with that.

 

[bclemms]

Dow up 466, I'm jumping in front of the train and moving in big on SDOW again. No way this level is sustainable. I don't think we'll crash anytime soon, just think a 5-10% pullback has to happen. Way too much bad news is getting overlooked and it's rallying too hard on small news. The perfect example was the Malaria Drug. Dow moved up 600 points when Trump was pushing it as a miracle drug. Few days ago all trials came to an end and FDA pulled the drug because the typical outcome was death. Can't get news much worse than that. On that news the DOW still went up some. I think we're getting close to the point where everyone suddenly starts looking around and is like what have we done?

 

[superchuck500]

I think we're getting close to the point where everyone suddenly starts looking around and is like what have we done?

Agree. I'm going to start questioning my sanity if it doesn't ever pull back.

 

[B4YOU]

S&P 500 is 4% below highs from July-Oct of 2019. I don't see a quick recovery for O&G, Transportation, Restaurants, and Clothing. Maybe the announcement about covering liabilities for the meat industry was a watershed moment. If they extend this to the grocery, home repair, and restaurant industries then concerns about future lawsuits should be mitigated. The defense production act could end up being just another way government covers the cost of business during this crisis. I don't know if the act can even function the way Trump is claiming it can, but the below article suggests it can.

This may be the real reason Trump is throwing a bone to meatpackers

It's not just because the president loves steak.

www.motherjones.com

None of my limit orders placed late March and early April will execute with where things are now. Even my mid April orders may never execute. I could just always be 5-10% off and chasing a rising market. It's tough to sit on a bunch of cash especially with me saving much more per month due to the Rona.

I thinking about buying HD stock but how does housing sales being down 20% not impact them? Will DIY homeowners cover the difference?

 

[GrandAdmiral]

I know I've been boasting about DXCM and I'm happy I've held on. Up 10% after another great quarter report. Value had more than double since buying in. Thought of taking profits, but I think I'm going to hold on a little longer.

 

[El Caliente]

Sold off my AHPI position, holding the dry powder for the next drop. The job reports come out tomorrow, but the markets won’t care that the numbers will balloon.

Question for the options traders, do you calendar trade or vertical? Iron Eagle? How are you trading calls and puts?

 

[efil4stnias]

S&P 500 is 4% below highs from July-Oct of 2019. I don't see a quick recovery for O&G, Transportation, Restaurants, and Clothing. Maybe the announcement about covering liabilities for the meat industry was a watershed moment. If they extend this to the grocery, home repair, and restaurant industries then concerns about future lawsuits should be mitigated. The defense production act could end up being just another way government covers the cost of business during this crisis. I don't know if the act can even function the way Trump is claiming it can, but the below article suggests it can.

This may be the real reason Trump is throwing a bone to meatpackers

It's not just because the president loves steak.

www.motherjones.com

None of my limit orders placed late March and early April will execute with where things are now. Even my mid April orders may never execute. I could just always be 5-10% off and chasing a rising market. It's tough to sit on a bunch of cash especially with me saving much more per month due to the Rona.

I thinking about buying HD stock but how does housing sales being down 20% not impact them? Will DIY homeowners cover the difference?

so we just keep throwing air into the bubble? I mean, i get why he doing, but there has to be some economists around him that is looking at each move with perplexed faces.

Even he is successful at his bid by propping up the market, that is short term. The piper will come calling within the next 2-5 years.

Someone is going to be dealing with a MASSIVE issue.

 

[efil4stnias]

Dow up 466, I'm jumping in front of the train and moving in big on SDOW again. No way this level is sustainable. I don't think we'll crash anytime soon, just think a 5-10% pullback has to happen. Way too much bad news is getting overlooked and it's rallying too hard on small news. The perfect example was the Malaria Drug. Dow moved up 600 points when Trump was pushing it as a miracle drug. Few days ago all trials came to an end and FDA pulled the drug because the typical outcome was death. Can't get news much worse than that. On that news the DOW still went up some. I think we're getting close to the point where everyone suddenly starts looking around and is like what have we done?

looks like phase 3 trials showed efficacy.

So now back ON. which makes me wonder about the "leaked" info a week or so ago about no real positive results.

Gilead Announces Results From Phase 3 Trial of Investigational Antiviral Remdesivir in Patients With Severe COVID-19

Gilead Announces Results From Phase 3 Trial of Investigational Antiviral Remdesivir in Patients With Severe COVID-19

www.gilead.com