That company is still a thing? I thought the iPhone killed it? ~ JC during The Morning Show on 6/15/23
Yep. Today's trade is a play on a stock in a company we were all kind of surprised still exists, and even more surprising that is doing well!
Upon further digging, we learned the company has handled the pivot away from online maps for car drivers into things like GPS for boats, golfers, and wearables!
We may have stumbled upon an underpriced opportunity, one that must be off the radar of most traders because it's practically jumping off the screen at us.
It's an international banking name with speculative exposure to China, yet the DNA of old-money British aristocrats.
And we're breaking out today!
Here's a recent chart of HSBC Holdings PLC $HSBC:
What you don't see on this chart is $HSBC breaking out above that resistance level today. As I type this, the stock traded as high as $39.14.
We've been talking a lot lately about the number of stocks setting up to play "catch-up" to this bull market that is only just now starting to get the attention it deserves, in spite of it being nearly 8 months old now, by our measures.
Today's trade is in another one of these setups that continue to work for us ($CAT and $IWM are great, recent examples).
I have a feeling there will be a large segment of the trader population that hates this trade. And that is precisely why I think it has a good chance of working.
It's Friday. It's late in the day. I won't waste your time with a long preamble. Let's get right to it.
As the bull market in stocks continues, the lifeblood to keep the ball rolling is sector rotation.
We're already seeing some of the big caps that have driven the first leg of this run start exhibiting signs of overexertion (check out $GOOG today).
It makes sense to us that stocks further down the cap scale are going to start asserting themselves and perhaps in some cases play "catch up" to their big brothers.
Today's trade is in a cyclical name in the Logistics space.
It feels like whatever items have been holding the broader markets back are falling by the wayside one by one, clearing the path to the next leg higher in this bull market.
And with volatility (as measured by $VIX) making new yearly lows, it's getting more affordable to make a bullish play with simple long call option trades.
My spidey senses are beginning to tingle with speculative fervor.
What we're seeing in the AI space as well as in the comeback in cryptocurrencies as of late has me thinking speculative players are soon to begin widening their net to capture alpha.
And some of these highly shorted equities with crypto exposure could be extremely ripe for short squeezes.
High on this list is Marathon Digital Holdings $MARA. It currently has in the neighborhood of 40% of its outstanding shares held in short positions. That is some major fuel for a short-covering rally if this stock starts ripping.
Here are a bunch of pictures illuminating why we think $MARA might be set up for a run higher. First up, the $MARA chart:
I'm continuing with my recent bent of positioning carefully in speculative names that have the potential to rip if the market resolves higher out of this Washington nonsense.
Today's trade is in a name that is showing signs of squeezing higher. It just needs a spark.
We all read them and they mess with our heads. It takes steadfast resolve to listen to the message of price action when everything else we read tries to trick us into doing the wrong thing.
The best way to keep ourselves level-headed when taking risks is to define that risk and trade small. There are few things more powerful than knowing with complete certainty the most I can lose, no matter what the market throws at me.
With this in mind, we're putting on a trade today in a stock that has the potential to be a real highflier if the markets stabilize and head higher following any Washington drama while limiting our risk in case we're early or wrong.
