Continued Confidence Amidst War Fears
179: The Weekly Selection
Introduction
Welcome in to another iteration of the weekly selection. It brings me great annoyance to continue to provide commentary on the issue in the middle east, as I still fail to see the larger plan here for the U.S. That said, here we are, and although markets have broken down from ranges I previously thought would go unbroken, there are a number of themes that are holding up exceptionally that I would like to discuss here.
Lets first quickly chat about commentary amidst a crisis like this. At the end of the day, the people you are getting commentary from in regards to markets, are not experts in oil, economics, naval strategy, or have inside information into the administration of this country. Myself, and many of my peers admittedly attempt to cover the news and our opinions, but it is important to use these outlets as tools, not end all be all answers.
Lately, I have felt an overwhelming surge in bearish commentary on my timeline and in the circles I frequent, and I am reminded that these same individuals were doing this last year as well. If history repeats again, they will also be posting huge winners out of the bottom that they missed.
In my eyes, you either remain delusional in the long until it works, or you flip flop for impressions and miss everything you wanted only a few shorts months ago.
With that out of the way, lets take a look at where we are, and where we are headed below:
Overview
My personal philosophy is to remain long. My stat sheet, my emotions, everything tells me that my best investments are long, not short. I am a firm believer that there is always something going up at all times, and I have worked for years to garner a strategy to capitalize on this truth. Over the last few months, I have held all of the stocks That I discuss behind the paywall of this publication to remain ahead of the pack, returning 15% ytd despite the primary index being down 5%. I will keep this moving forward into the year, for those who are asking me if I will flip short at some point.
Taking a look at the index itself, we can see the early signs of capitulation starting to show. We have rolled below all major levels, and volume is starting to accelerate. If we get a capitulative bottom, I will be backing up the truck so to speak. For examples of market bottoms, read my piece here:
SPY
Note the big volume starting to pile in. As we know, huge spikes in volume in either direction generally lead to a trend change, as volume is the battleground of price.
S5FI
Note the S5FI next, and its proximity to the bottom of the range, where historically, stocks have bounced… HARD. This is the gauge I am most interested in to potentially add any dry powder I have left to my book (its not a lot).
Now, am I making a bottom call here? No, not at all. This could be the end for SPY for a while. Maybe war does come, AI gets shelved, and the world falls apart. If this is the case, I will lose, and probably take 15-20% of my account with it. However, if I am right, and this is just another bump in the road as I have said for the last 12 macro/geopolitical happenings, then I will continue to outperform. I am betting on the latter, as It has been significantly more profitable.
Speaking of outperformance, lets look at some of my names, as well as some I would like to own.
Looking Forward
Themes to watch for:
Batteries: AMPX EOSE KRKNF
Datacenter Equipment: GEV CAT MOD VRT POWL ETN
Optics: AAOI GLW COHR CIEN
Memory: WDC MU STX SNDK
Space: PL RKLB RDW ASTS SATL
Specialty Materials: SOLS AMAT AXTI
One name from each below:
AMPX
POWL
AAOI
SNDK
PL (personal favorite)
SOLS
This one doesn’t even need annotations. Look at that chart and tell me that isnt the best looking one in the market right now. Super tight SMAs and flag. Top theme, top name behind AXTI. This is one I am super interested in.
That’s going to do it for this week. I am still 95% long. I am still not worried about the middle east and will continue to have a delusional conviction in the AI tailwind until I pay a huge price for doing so.
Good luck this week, see you all soon.
Still a nice look on SOLS