The market is speaking. It wants higher prices. The year-end, seasonality-driven rally may be taking hold. Or it may be something else? It doesn't really matter. We only follow price, and right now prices in certain stocks are pointing us to start taking some directional bets.
Today's trade is in an industry-disrupting name that has already had an impressive move over the past week that we feel is only the beginning of a much larger drive.
Check out this chart of everyone's favorite ride-hailing service Uber Technologies $UBER:
The Nasdaq100 index just went out at the highest levels in history relative to the much broader Russell3000 Index.
Technology represents about 50% of the Nasdaq100, with Apple's weighting coming in at 11% of the index and Microsoft currently at just over 10%.
But the Nasdaq100 is a good representation of these mega-cap names, because Amazon, Google, Meta and Tesla all carry huge weightings. Remember, none of these stocks are in the Tech Index.
So the Nasdaq100 broadens it out to what most people consider "Tech".
Here's the QQQ hitting new all-time highs relative to Russell3000:
If these were the first three lines people read in a book about profitable trading, odds are many wouldn’t make it past the first page.
It’s natural for humans to want to avoid pain, to choose the easy path, and to put in the least amount of work for the maximum amount of output. Business schools call this “efficiency.”
And you can find plenty of examples in the real world where this is good, solid advice.
Trading is not one of those places.
The hard truth is that 80-90% of people who attempt trading in any capacity, frequency, or timeframe eventually end up net losers.
So why would we want to choose to do what the average trader is doing? The average trader is a loser. The stats don’t lie. Don’t make this fact worse by denying it.