The Weekly Selection
144: Big Beautiful Bill, AI in Healthcare, Headline Tranquility
Introduction
Investors,
Welcome back to another iteration of ‘The Weekly Selection’, where I cover my thoughts on the market, what’s upcoming and some other little nuggets for your enjoyment.
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Indices
Welcome back to another Weekly Selection writeup after a short 4th of July week. I hope all my American subscribers were able to get out and enjoy the weather away from screens, I know I did.
A new development in markets that is roughly 3 years old is short weeks being squeezier than times past. Pre-Covid price action usually led to short weeks being duds, with mostly flat action. This has changed dramatically and now we see some of the most volatile individual names squeezing heavily on these days where algorithms are turned off.
For those who don’t know, trading algorithms that usually dominate day to day price action are designed for full session trading, so on half days and short weeks they are usually not as prevalent or impactful on price. This has lead to much more volatility, making these days some of the best to be active.
Wrapping up the week, SPY saw a further push to all time highs, signifying what many consider to be a lock out rally, or a period in which price is increasing, but opportunity to get in with typical technical entries is minimal. These are some of my favorite periods to trade, as it rewards market proficient participants, and hurts inexperienced individuals.
As long time subscribers know, I was able to capitalize on the lows during the April 6th week, and the positions bought have kept me above water despite the difficult individual name action during this run.
The quotes about a few good winners paying for all losses is holding true, as my win rate has gone down recently, but a few key positions have done the majority of the grunt work. I would say in reflecting upon my June stat sheet, I need to get better at holding entries for a higher first exit, especially with broad markets looking so good. On multiple instances I was selling between 8-15% initial trims on 1/3rd of core positions, and that has cost me as most of my final sales are between 50-100%, culling a significant portion of my gains on those large winning positions.
I will make a stronger effort to address this in my July postings.
XLI 0.00%↑ Industrials is a group I am watching closely for a cyclical rotation. Pushing ATH here, I am now looking for additional government support for key contractors and major legacy players like CAT DE GE HON GEV and ETN. Slower movers, so some leverage may be applied to capitalize on the move. I will likely calendar spread the initial position, then just rollout by quarter when targets are hit. This type of positioning worked for GOLD, which moves similarly to industrials, with huge periods of underperformance, followed by periods of outperformance with the right tailwinds.
Upcoming Week
Looking forward to the week ahead, I would anticipate more opportunity on the individual name front. I think the bear market rally sentiment has been quelled nicely as we push to highs, however that’s not to say that we will continue to blast higher. The worst of the headlines are behind us from my understanding, so it will be a matter of getting opportunities on the high quality names I’ve liked for months.
For the power demand and electricity trade, I was able to get into GEV on Tuesday, as to not mess up my VST average. I think this ties nicely with both the thematic and cyclical XLI and AI trade. Similar names like PWR CEG VRT also look nice.
SMR in the nuclear/speculative energy trade is holding its pivot well, presenting a nice r/r here below the SMAs. OKLO looks worse, I don’t think the offering helped it much a few weeks ago despite it being a negligible event given their cash burn and market cap, barely diluting.
ALAB 0.00%↑ for the semiconductor trade. Its not my favorite idea as I think a huge majority of the meat has been taken off the bone in this group, but I cant deny a fat pivot and previous ATH tight range. Over $100 or below $86 and it’ll play for long in my book.
CRWV 0.00%↑ is a fan favorite recently in both datacenters and cloud infrastructure. Ideally we see this put in some higher volume to confirm the trend.
Despite the HIMS chart being terribly broken after bad news a couple weeks ago, the look it is giving now with a higher low/sharp hook upward leads me to believe there’s some some juice in this tank, to either close the gap or give $51 another try. tight risk against the bottom of the higher low range.
It seems as though the bulk of the chop is done on DE 0.00%↑, now putting in a 9 weeks tight setup at the all time highs. If this begins to gain traction with volume Id like to be involved with leverage, probably 2 year out and one quarter out strikes.
All in all, there’s tons of opportunity out there. Breadth is strong, indexes are ripping. Dips have been bought so far, what will take us lower?
That’s all for this week! Good luck out there.
