TG Watkins – Continuing To Play The General Markets With Short-Side Strategy
TG Watkins, Director of Stocks at Simpler Trading and editor at the Profit Pilot website, joins us to discuss why he is still trading these markets from the short-side. Despite the rally that some of the general equities have made when looking at the NASDAQ or S&P 500, he is seeing some false long relief rallies up to resistance, and is looking to see many equites pullback again down to their 50 day moving averages. This is true whether looking at the transports, and shipping stocks, or even index leaders like Amazon, Apple, and Tesla, where he notes his Moxie indicator is still not constructive and that we are just seeing inverse trampoline moves up to higher levels, but that we’ll likely still see more corrective action.
We moved over to the precious metals next, where TG is seeing similar inverse trampoline moves higher recently in gold via GLD and in the gold miners via GDX, so while bullish more medium-term, he believes we could still see some pressure in the sector. TG is a bit more constructive on the energy sector though with nice moves higher in natural gas via UNG and oil via USO, although, even those look ready for a rest from his perspective.
We wrapped up by reviewing the macro factors showing weakness under the surface of the general markets, from slowing GDP growth, higher inflation metrics, and a Fed rate hiking cycle, and when combined with higher energy prices he sees the potential for even a recession about year off, but believes we could see a corrective move in the general equities, followed by a big rally in stocks, and then the final capitulative move after that, catching many traders wrong-footed.
Click here to visit the Profit Pilot website where you can follow along with TG’s trading.
The way Ivor Exploration is moving up the warrants listed on the new Private Placement ($1.85) could easily be in the money before The Private Placement is even completed. Not too often you see that. The ask is really thin. DT
Cathie Wood’s ARKK is worst-performing US equity fund in Q1 2022: Morningstar
Alexandra Semenova – Yahoo Finance – Tue, April 5, 2022
“Market watchers were taken aback when Cathie Wood’s flagship Ark Innovation fund fell 24% in 2021. This year, the widely popular ETF logged an even bigger loss in just the first quarter alone.”
“According to financial analytics firm Morningstar, Ark Innovation (ARKK) was the worst performing U.S. equity fund in its universe of coverage during the first quarter of 2022. The exchange-traded fund registered a loss of 29.9% in the three months ended March 31, dragged down by a sell-off in high-growth, technology stocks during the period.”
Cathie made some great calls on Tesla and such, I think success got into her head and was stubborn to grasp the reality of overvaluation. She is unable to adapt and remained married to her thesis. She’s no Druckenmiller.
Agreed CaliJoe. Cathie had some good picks in the highly speculative growth tech and DeFi sectors when the whole market only knew buy the dip, and was raging to nosebleed valuations. However, ithe markets, and in particular the specultive growth arena was obviously unhinged from traditional metrics on how to value pre-revenue companies by 2021.
Unfortunately (but not uncommonly) for many investors, instead of harvesting gains when the the stars were aligned and booking the win, many, including Cathie, overstayed their welcome in the market. Many momo investors didn’t adjust their strategy to the new macro dynamics of persistently higher inflation, rising interest rates and an upcoming Fed tightening cycle, a weakening underlying breadth in the Nasdaq and S&P signalling sickness under the surface, and the transition from growth to value in a more defensive market posture.
Everyone looks brilliant in a raging bull market, but the real test is how one adjusts to new data and market dynamics when the going gets tough. Doubling and tripling down on the old gameplan in a new setup is the recipie for big losses, and the trajectory of the Ark Innovation Funds illustrated that point perfectly. A lot of newly minted growth investors that started their trading journeys during the pandemic lockdowns on Stay-At-Home stocks, Cryptos/DeFi, speculative EV companies, Space tourism, NFTs, Meme Sticks, SPACs, and frothy market speculation only knew one-way markets. Many of those traders losses mirrored or greatly eclipsed those of ARKK, and few recognized or would admit to how ridiculous the over-valuations had become, suggesting that we had moved beyond the need for limits to how far things could grow or any sense of forward earings to price etc…
After the tree has been shaken, many were dealt a powerful lesson in reality and humility from Mr Market, who can at times be a cruel teacher. A great deal of retail and institutional capital was evaporated in Q3 abd Q4 of last year, and again in Q1 of this year in traditional equities in previously hot money sectors.
It is a good reminder of the principal of booking profits along the way, not falling in love with positions, being willing to part with positions when they become fully valued or overvalued, and knowing when to rotate to from an offensive strategy to a defensive strategy.
Hopefully resource investors in Oil/Nat Gas, Uranium, Lithium, Base Metals, Precious Metals, Agricultural Commodities and Fertilizers, etc… paid attention to those lessons from the speculative growth sector over the last 6-9 months, and will not duplicate those mistakes when resource stocks hit a similar overvalued trajectory in the years to come.
I think we still have juice left in stock market. I will be trading from long side on Semi once the price hits my target
https://stockcharts.com/h-sc/ui?s=SOXL&p=240&yr=0&mn=3&dy=0&id=p89696886780&a=1137460509&listNum=1