That this is an unfamiliar and uncomfortable environment for many investors goes without saying. It was unforeseen to the extent that it is at odds with recent experience. For passive investors, the past decade (even through COVID) was one of only mild (in terms of degree and duration) interruptions to the underlying upward trend in their portfolios. Through this period, some things that should not have been forgotten were lost. Among these were diversification principles across and within asset classes. Commodity exposure withered to nothing and US investors were rewarded for indulging their home country bias. With the trend in the 60/40 benchmark portfolio now in its most significant downturn since the financial crisis of 2008/09, investor nerves are frayed, the mood is sour and patience is being tested. Adding to this frustration may be the reality that if one was indeed paying attention to expiring breadth thrust regimes, collapsing new high lists and expanding new low lists, some of this year’s roller coaster ride could perhaps have been avoided.
Chemicals and Fertilizing stocks have been among the sectors that seem to be "benefiting" from supply shocks in the system stemming from the war in Ukraine, as well as just general inflation touching the price of everything (except tech stocks, heyooooooooo!)
The team put out a "Trade of the Week" last week in this sector that now has my attention as the stock has held on to recent gains.
Stocks in the right sectors, making multi-year highs are stocks I can't ignore.
The largest insider buy on today's list is a Form 4 filing by Column Group, which reported the purchase of approximately $5.8 million in NGM Biopharmaceuticals $NGM.
Kevin Riley, the CEO and president of First Interstate BancSystem $FIBK, revealed a purchase of approximately 2,900 shares in the regional bank.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Back in January, the big story was the yield on the 10-year US Treasury note printing new multi-year highs.
At the time, other benchmark yields worldwide were also resolving higher, completing large bases.
This was confirming evidence that added to our conviction US yields were headed higher and that we were in the early stages of a rising rate environment.
The confirmation from global yields proved valuable information.
Almost six months later, the US benchmark is just below 3.00%. As it pauses below a critical level, we again turn to overseas rates to get a read on the potential near-term direction of the 10-year yield.
And just like earlier in the year, they’re pointing higher.
Key Takeaway: Risks to the economy are rising, though a recession is not a foregone conclusion at this point. Barring a dramatic and unlikely abatement in inflation pressures, the path of least resistance for interest rates is higher than the market is accounting for at this point. Rally attempts have been volatile but, so far at least, short-lived and as longer-term trends turn lower, many investors are dealing with an unfamiliar (and uncomfortable) environment. While moods have soured, positions are little changed. Overall these are the conditions under which bear markets can die and bull markets be re-born. The evidence at this point does not suggest that turn is at hand.
The bears are getting creative with their theories.
You notice?
And there are a lot of bears out there. More than we've seen in a long, long time depending on how exactly you're counting them.
So the big question is whether we've seen A bottom or if we've seen THE bottom.
And the truth is no one knows until after the fact.
All we can do is continue to collect the data as it comes in and make the best decisions with incomplete information.
The first thing that needs to happen before stocks can go up, is that they need to stop going down.
That's just math.
And what's interesting is that with lower lows in the price of most major U.S. Indexes a couple of weeks ago, fewer stocks were actually able to make new lows....
Mea Culpa --- I'm letting this post stand because it offers two good lessons for traders:
1. The risk management laid out below is how I manage long calls heading into expiration. So anyone holding a similar position will benefit from this or a similar risk management plan.
2. It offers a lesson on keeping good records. I messed up. For ASO subscribers, we're actually in the September calls, NOT JUNE CALLS. We have plenty of time until our position expires and therefore we actually don't need to do anything here yet but enjoy our #FreeRide. The confusion for me is that I also have June calls on in my personal portfolio and I did not take careful notes in my personal spreadsheet. And when reviewing, I accidentally confused these June calls as part of the position we put on for ASO. So, yes, I personally will be exiting my June calls soon (as laid out below). But for those of you who followed me into our September calls trade, we've got time.
