June 17, 2024
Conviction and the “New Bull Market”

Conviction and the “New Bull Market”

Dear Reader,

I’m not a person who beats his chest very often. I’ve seen some smart or lucky (or both)  people beat their chests and fly too close to the sun. 

Three weeks ago, Cathie Wood said that her ARK Innovation Fund (ARKK) was the New Nasdaq. Remember this headline?

This headline appeared on Bloomberg.com on… February 2, 2023.

And what happened on February 2, 2023?

ARKK peaked in the short-term.

Funny how that works, right?

Since Feb. 2, I’ve warned about a pending negative momentum move. 

I’ve warned about a coming downturn. I’ve explained how money has been flushing out of the market. I’ve turned net short, moved to cash, and prepared for today’s PCE number…

Your result?

The first large selloff of 2023. 

There’s more to come… so buckle up.

It’S tHe NEw bUll mArkET!!!

For a month, I listened to people with little understanding of capital flows tell us that this was a New Bull Market. 

Hogwash. 

Bull markets don’t see the most overvalued stock lead quality stocks in performance. 

It doesn’t work that way. Bull markets are sustainable. They have fund managers pour capital into good stocks, with improving earnings per share and improving book value. 

I know that people like to claim, “ThIs tImE iS dIfFeRenT!”

There is an incredible amount of liquidity in this system, which helped pull risk assets higher. But there are a few other important truths that people need to understand…

  1. Executives ALWAYS buy the bottom in the market. It has been this way for more than a decade. And corporate insider buying is at its lowest level… in two years. 
  2. Quality matters in a real Bull market… not some stocks trading at 10 times sales with no profits. There isn’t a chapter in The Intelligent Investor saying that you should buy stocks at 130x earnings when the Fed is raising interest rates.
  3. There will not be a pivot unless the Fed breaks something… and I mean really breaks something. We already saw a big crack in the Bank of England and a complete debacle in the crypto markets in December. 

Looking ahead, what matters is Momentum. Capital in, capital out. And capital has been flooding out of this market for a month. It is now starting to reach its breaking point, which is where the retail investors start to dump indiscriminately. 

We’re now going hard on a few very junky stocks with put options over at Hyper Momentum – now that the hyper loop has turned negative. This is where we look for huge gains in the next two weeks.

Today’s Momentum Reading

WORLD’S BIGGEST INDICATORS

Broad Market: Red
S&P 500: Red

Recap: The World’s Biggest Indicator (Momentum) is Red… The next primary support level is 3,940 on the S&P 500. Look for the bulls to try to prop this up today as we head into the final hours.

Today’s Trade

In to the ground… Buy-to-Open the Carvana (CVNA) March 3, 2023 $7.00 put for $0.35 or less. Run this into the ground. Price target for this stupid stock is back under $5.00. 

What You Missed

Wall Street elite are flat out telling people to ditch stocks before the economy goes into a full tailspin.

One of the bigwigs at Morgan Stanley thinks now is the time to pivot to bonds.

Seriously? Is this the best Wall Street can do? (here’s what I recommend)

Now I agree that the economy is headed for a rough patch, but you can still bank some serious profits by staying in the market and playing hyper turns.

And it doesn’t matter if stocks are going up or down.

Using hyper turns we’re targeting trades with massive profit potential, when stocks go up and when they go down.

Heck, I think it’s the only way to trade in this market and come out ahead.

See how I do this.

Stay Liquid,

Garrett

Topics: ARKK, CHPT, IWM, NSC, NVDA, PLUG, SPY



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