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Oh, now the world is bullish.
As rates start to creep up a bit, we have to let some exposure go. Why? Just follow this simple idea.
As SPY starts to rear into the 423 level (TD Risk Level from 9 sell), we need to be cautious on the market if the bonds continue to decline. Growth stocks are more sensitive to changes in interest rates than value stocks. When rates rise, growth stocks tend to fall more than value stocks. This is because growth stocks are more expensive and have higher valuations relative to earnings. As rates rise, the cost of capital increases and this has a negative impact on growth stocks.
The plan is to get very short for a tactical trade in the 330-333 range on QQQ with a tight stop. Why? Range projections are lining up with the 9 sell risk levels.
I mean, look at the AAPL Monthly 13... and now we are approaching the weekly range projection which happens to be TDST.
I don't know the future, but I've been pretty bulled up since June and now starting to feel like its time to let markets be markets. I always "overthink" the situation in these moments, and often miss the core of a bull run like this in my tactical trading accounts because there are still a lot of bears out there.
However, with inflation falling, everyone preaching that the bear market is over etc, we have to use some basic market psychology and copper the public. Just to be clear, this is no call for a resumption of a bear market or anything, I just the the left tail skew is now open a little bit in this region.
For example, I talked about buying META at 160 because nobody, literally nobody in finance, really understands how this is going to be a multi trillion dollar company once they execute. Look at that Monthly 9 and daily reversal pattern. Am I selling my Facebook? Hell no.
PS if you want to see a perfect example of what a meta verse looks like, check out Valve. Now imagine this business model with every person in the world and beyond gaming. Yea, it's a big deal. By the time it's obvious, you think the market cap will be here? Anyway, </rant>.
I've also been a super bull in biotechs, but this is getting into short term resistance and its time to do some covered calls. Some charts look amazing though, REPL et al.
Anyway, TLDR -- trying to fade the sentiment flip we have seen this week while remaining long-term bullish. See you in Discord for the live trading.