Stocks getting hit hardest often bounce back the fastest and farthest!
Aug 17, 2021Good morning!
The markets are down in the early going after staging a comeback rally yesterday. Fear is beginning to creep in around the edges which is why it’s important to remember that stocks getting hit hardest often bounce back the fastest and farthest!
Be “in to win” or you won’t … win!
Here’s my playbook.
1 – DIY wave fading
We knew this was coming … eventually the stay-at-home trade would fade eventually, hitting key home improvement retailers when it does.
Home Depot rang up 5.8% fewer customer transactions YoY, albeit at an average ticket that was 11.3% larger according to the company. Despite beating on earnings, the stock is under pressure.
I don’t own HD nor am I interested in owning it because it’s too “narrow” if that makes sense. I watch HD closely because it’s an important barometer for retail behaviour and inflation.
2 – Walmart scores a “double”
Walmart beat expectations on both the top and bottom lines, a “double.” CFO Brett Biggs noted to CNBC that customers were “coming out of hibernation.” Travel, party supplies and apparel apparently flew off the shelves as did school supplies like backpacks.
What catches my attention is the dramatic increase in groceries. We’ve certainly contributed to that ourselves via Walmart’s handy pickup service!
Walmart, incidentally, is following Amazon’s lead by seeking a cryptocurrency lead to be based out of Bentonville HQ.
Nothing wrong with owning a few shares if you’re keen to get in on the action but I think $140 a share is more appealing if the market provides that opportunity in the weeks ahead. You could accomplish that with a simple LowBall Order or by Selling Cash-Secured Puts if you’re comfortable doing that.
3 – Fastest double on record since WWII
This is important because it highlights the power of hope, aspiration and looking forward. CNBC reports that the rally has taken just 345 days for the S&P 500 to double from pandemic lows. That’s the fastest “double” bull market rally on record since WWII. Normally, the average is right around 1,000 days.
Predictably and on a related note, anybody who went to the sidelines at the bottom now has another problem on their hands … catching up.
Better not to get scared out in the first place!
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4 – Bitcoin shows signs up profit taking – still up 56% YTD
Bitcoin is off 3.7% while Ethereum has dropped 3.66% to $45,798 and $3,165 per coin respectively. Strikes me as simple profit taking. I continue to think Ethereum is the stronger play for the foreseeable future.
5 – Here’s how I know Wall Street wants to buy more Covid stocks
Analysts are raising questions worldwide despite growing calls (and data) for booster shots etc. BoA, for instance, stated that Moderna’s price should be 75% lower calling it “unjustifiable” and “ridiculous.” This is often a move made when the big boys want to shake scared money into selling at which point they do the buying.
Don’t give ‘em the opportunity unless, of course, you really do want to take profits.
Most of the world is still waiting for a first shot.
My choice is still Pfizer (PFE) which could see as much as a $40 billion top line before the dust even remotely begins to settle.
Bottom Line
Success in the markets comes from 3 things:
- Being different and having perspectives others don't.
- Asking questions others won't.
- Taking risks that hold others back.
You got this – I promise!
Let’s make it a fabulous day.
Keith
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