Don't Be Complacent
According to my observations from the Fed over the decades, it has been my experience that the market usually sells at the start of the meeting. Uncertainty about what the Fed can do or even say created at least some sales that go into the meeting. Not this morning, the certainty that Powell will secure the market that cavalry will come will be the accepted wisdom. There is even an endless 30% predicting that the Fed will cut this week. This is monumental complacency that will only result in disappointment. Just look at how high beta names are running, Amazon (NASDAQ: AMZN) breaks $ 1[ads1],900 in the pre-market. As I write Beyond Meat (NASDAQ: BYND), up to 28 points are now just under $ 200 and Tesla (NASDAQ: TSLA) is over $ 230. One can justify almost all of these names pricing (except BYND), my only drawback is that These and almost all the tall names have shot up relentlessly. It appears that the market will sell itself even though Powell says something benign; In order for this market to continue to run, Powell needs to get right out and get behind the tax cuts. One of the most important ways to generate returns is not to lose money. One of the best ways to do this is to identify complacency. If everyone believes something, everyone who wants to invest in the accepted concept is already there.
I don't want to work the point, but I think market participants will be disappointed tomorrow. I think Powell will hold the course and not yield to the market's demand to lower interest rates at the wrong time. Those who are as interested in the way I see trade and speculation will trim positions and generate a cash cushion to fund purchases in the upcoming sale
Adobe, The Trade Desk, Tesla
I have supported Adobe (NASDAQ: ADBE) for more than 5 years. It has grown into a fairly large Cloud Service share with revenue growth of 20-30% YoY. It trades 10% during its all-time high. My discipline says that if you hold ADBE as a speculation, you should reduce your position in revenue. If you are looking for jobs to trim, ADBE should be on the list. Trade Desk (NASDAQ: TTD) and TSLA have been specific names that I have designated as long-term speculation with similarly good results, albeit in a relatively much shorter time frame. I recommended the TTD in the $ 190's, it hit $ 250 yesterday, and TSLA is probably the most successful call in a long time. I called to sell it at around $ 300 and asked for it to keep the $ 180- $ 190 level, as it did, and I strongly backed the name calling it to rise 100 points over time. But at this time of TSLA trading over $ 230, it seems weak not to take at least some of the table. I believe this for both TTD and TSLA, although they have much more potential for the upside. I ask you to go through your speculative holdings and consider making some profits. It is easier to sell positions when the names rise, eliminating the stress of selling a position that was only 10% higher a few minutes ago, and threatening to go even lower.
Loyal readers know I pay attention to insider purchases. It gives me insight into areas of the market that I do not know well, and it also gives me investment ideas. So here are some interesting insider buys:
Rupert Murdoch spends $ 21 million on his heritage Fox (NASDAQ: FOX) media property. Can FOX be undervalued?
Two insiders spend $ 6,000,000 on Guess (NYSE: GES). GES is an older jeans business, can they be restructuring or changing product and getting into growth mode? GES is still a recognizable valuable brand. I'm not saying purchases, but if you can understand the consumer and retail products, it might be worth seeing.
Intra-Cellular Therapies (NASDAQ: ITCI): The director bought nearly $ 2 million in shares. I haven't made any secret that I know more than nothing about biotechnology, but this purchase caught sight of me. I remember that ITCI was a hot speculative biotech firm several years ago, shooting up to $ 60 and then flaming out in precise fashion. I can't wonder but wonder if something can continue with the ITCI.
Right now my position that Powell will not give the stock market or Trump what they will seem quite lonely. We'll see soon if I'm right. Don't be complacent.
Editor's Note: The abstract schools for this article were selected by Seeking Alpha editors.
Enlightenment: I / We have no positions in any of the aforementioned stocks, and no plans to start any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (other than from Seeking Alpha). I have no business relationship with a company whose stock is mentioned in this article.