What Could Go Right and A ‘Perfect’ Indicator to Get Long?

Gooooood morning from beautiful Coronado.

I am getting into a bit of a morning routine which is nice.

I was reading this morning that China is opening back up. Even Disney China might be opening.

What a different world it is from early 2020.

As I have been covering in my Momentum Monday’s here on the blog for a while, with stocks well below the 200 day moving averages, bad things tend to happen to stocks.

Lately it has been the energy stocks pulled into the bear market.

The tech stocks that led this great long run – the semiconductors – look the weakest technically right now:

The good news is that the longer this bear market runs, the better the bull market will be on the other side.

The key is to keep as much capital as possible for that run and a clear mind.

I saw this great indicator yesterday that I will keep my eye on for a better ‘coast is clear’ to buy stocks. Have a look:

Stocks will have already gone up a lot and you will feel uncomfortable buying stocks and likely feel like you are chasing, but that is how trends work.

Have a great day.

Momentum Monday – How Long Will Relief Rally Last?

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Good morning.

As always, Ivanhoff and I tour the market looking at momentum. You can watch/listen to this weeks show right here. I have embedded it below…

Ivanhoff shares this thoughts below:

The market is better at predicting the news than the news is at predicting the market. Financial markets typically look 6-9 months ahead and try to anticipate what could happen. They are currently betting that the Fed’s aggressive tightening policy is going to send the economy into recession and the Fed will have to stop hiking sooner than previously expected. As result inflation expectations are tapering and we saw a major mean reversion last week. The worst-hit groups year-to-date outperformed significantly last week – ARKK went up 18%, the cloud ETF – WCLD, went up 15%, biotech XBI went up 14%. In the meantime, the best performing sector year-to-date – oil & gas (XOP), lost 6%, tested its 200-day moving average and it is now down almost 30% from its annual highs.

The odds are that this is just another bear market bounce that will eventually be faded again. It is really hard to know how long it can last. The conventional wisdom says that the declining 50 and 200-day moving averages are likely to be major areas of resistance for SPY and QQQ but markets often overshoot. In the meantime, there’s nothing wrong with being nimble and playing the relief rally. If the bounce has legs, we should see more stocks setting up and offering decent risk/reward entry points. As of right now, the number of good long setups is still relatively small.

Last week just 2 percent of stocks in the S&P were above 50 day moving average and that generally leads to great forward returns.

But, the longer term picture continues to be a mess now that all moving averages are pointing down. It will not be medium term easy to get all these averages trending up again. Expect the unexpected.

Finally, here are the Stocktwits 25 momentum lists.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.

Some Sunday Reads and Listens – Laughs Edition

Good morning…

‘That’s My Time’ with Dave Lettermen is excellent. Dave’s opening monologues bring back great memories of Dave being smart and silly. He takes shots at Netflix stock and even Will Smith. I forget about his age. He also talks to comics which is what he should be doing. Short and sweet. Netflix has a hit series with this and I look forward to the next batch of them.

This Gary Vider joke showed up in my Instagram feed and made me laugh. The setting is what really caught me off guard for the punchline. I would not have expected this type of joke.

My friend Richard sent me this old Johnny Carson clip and it brought back memories of me probably seeing it live when I was a kid.

Talking about Carson, here is Gary Shandling’s very first Tonight Show appearance. I remembered watching it with dad and both of us laugh out loud.

Have a few laughs and a great Sunday

Comedy and NFT’s – Laugh Lounge is Happening

Happy Saturday.

My internal clock is all messed up after going San Diego to New York late Wednesday and back right away Friday.

Onwards…

I have hinted at working on a comedy venture and Thursday night in New York we had 100 friends join us at The Stand Comedy Club in NYC for a launch event.

Yes, I did do a few minutes alone on the stage explaining the motivation and idea and telling a few stories (they went over pretty well). Here is a couple of tweets:

I have been working with my friend Claude Shires (founder of Laugh Lounge) and his team at Laugh Lounge as well as my Social Leverage partner Matt on how to build a marketplace and also deeper community for people that love comedy.

I believe I have a good idea about how to use ‘Web 3’ as part of the company building.

My friend Brian calls our idea ‘crafty’ which is perfect. I want to be crafty and we want this idea to be ‘clever’. We also want the company to be lean and profitable early.

We are focused on building something that comedy fans will want to use and comedians will appreciate.

I believe we are in an era of company building when lot’s of capital and brute force will not define the big winners.

JC picked up on something interesting about the mood of the comics…the complete disdain for NFT’s and the stock market. The comedians can’t define NFT’s (nor can most of the founders and investors in the space it seems) yet they hate them. They associate NFT’s and crypto with ripoffs and scams. They are not wrong.

This disdain and negative sentiment is part of the opportunity.

I will have more on the launch in the coming weeks.

Have a great weekend.

Abe Finkelstein of Vintage Investment Partners on Israel, Tech Investing, and Living Through Multiple Market Cycles

A Good Healthcare Experience ??!! One Medical Delivered

I have been less than 50 percent the last week battling a nasty virus which was mostly a dry cough. It was wearing me out.

I don’t have a doctor I go to in Coronado, and just assumed it would take a week to get an appointment, so I called Gary my partner who is my ‘MacGyver’ of all things quality.

He said I should use ‘One Medical

I am such a cynic about healthcare, but I googled One Medical, found an office in downtown San Diego and had a same day appointment at their clinic almost immediately.

I downloaded the app and filled in a bit of information and was done.

At my appointment I only had to wait a few minutes and the doctor took me back and did all she thought he should do (luckily – for both of us – no prostate check necessary for the cough) and I was out with a prescription for something to help with the cough.

On the way out I set up a full physical a few weeks out.

The whole process felt like how healthcare should be. Sure, I am paying an extra monthly fee for this service but luckily I can afford it and I really just needed the attention because of how sick I felt that moment.

These types of comforts and conveniences are such a great reminder of the progress to be made in healthcare. I am glad we have been able to make some investments in the healthcare space at Social Leverage. There is so much more to do.

PS – I had the founder of Carbon Health on my podcast moths back who talked in depth about this same subject.

Web 3.0, Golf, Cycling and Comedy…God Likes Me!

Good morning.

I hope everyone had a great holiday weekend.  I did.

Back in September of last year, I wrote:

If I could work on/participate in just three areas over the next 20 years it would be Web 3.0, biking and golf and all three are in growth mode.

The full blog post is here.

I have made one change to the title of the blog post as nine months have passed and added COMEDY.

While my industry argues about the definition of Web 3 and use cases, I have been dabbling with some personal capital trying to enjoy this ‘Web 3’.

I have NOT liked what I have seen or used for the most part.

When I think of the internet/world wide web I think of 8 to 80 companies/brands. Companies that have built products and brands leveraging the internet that appeal to the masses (8 to 80 year olds).

In 2006, we got YouTube, Facebook, Twitter and LinkedIn exploding out of the gates. We got AirBnB, Stripe, Shopify, Uber as well.

I don’t want to put any more pressure on Web 3, but so far I feel like there is nothing for me, let alone the 8 to 80 masses we need for true sensations.

The biggest problem Web 3 has is ‘expectations’.

Whatever the reasons – let’s just call it greed and good storytelling – Web 3 is not living up to expectations.

My job is not to argue with people on the internet about why, but to figure out the good and try to avoid the bad and the ugly.

For me, so far the good is community and NFT’s. I am not sure that either requires any venture capital let alone billions which is probably the reason for all the high tension arguments in my Twitter feeds.

I will have a lot more to say about community and NFT’s in the coming weeks which will hopefully gather some attention and excitement.

In the meantime, the bear market is in charge and that means valuation compression is real and keeping it simple to get to the other side.

Too many founders and investors are ignoring the bear market which is a luxury, and possibly a delusion, that I won’t indulge in.

Momentum Monday – Coal Baby Coal… And In Defense Of Crypto

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Good morning.

The markets are closed today so we caught a break.

I’ve been sharing charts all week, so I will keep Momentum Monday short and get right to our weekly show. Ivanhoff and I tour the markets and talk what we are seeing and some strategies as we dive deeper into bear territory.

You can watch or listen to the show right here and I have embedded it below on the blog:

Here are Ivanhoff’s thoughts:

In a bear market, eventually, every sector gets under pressure. Up until last week, oil and gas stocks were enjoying one of their best years. And then, they were hit hard. The Fed raised the base interest rate by 75bps and declared that its goal is to bring down inflation to under 2%. All of a sudden, the market’s main worry was not stagflation (high inflation and very low growth) but a recession (negative growth). The oil & gas sector ETF is now down 24% from its 52-week highs. Despite the drop last week, most oil & gas stocks are still in a long-term uptrend and many might have a short-term bounce near their year-to-date volume-weighted average price.

There are not many stocks left that are still above their 50 and 200-day moving averages. Lately, we have seen select Chinese ADRs and biotechs push against the mainstream weakness but overall there are just a few decent-looking long setups and none of them are really very exciting. The silver lining is that even the scariest and longest bear markets experience powerful counter-trend rallies from time to time. Market breadth has become so weak that we might be close to one. SPY is about 5-7% from major potential support near 350–340. If that level doesn’t hold, we might see a major panic selling and acceleration lower. The faster, the better. It’s always preferable to rip the bandaid quickly than to be tortured for many months by choppy down-trending price action. I am not in a rush to be aggressive on the long side but if I see signs of a bounce, I will try some long exposure. Typically, bear market bounces characterize by very high correlations, so I might just as well participate with an ETF like SPY, UPRO, QQQ, or TQQQ.

Howard here again.

The one sector that is working…..COAL.

Right now, the crypto market is taking criticism and selling from all angles. The bears are saying I told you so as they always do.

There are so many Raccoons (I love the term financial raccoon coined by Ben Hunt) in the crypto space, specifically non competent raccoons, but thats what you get in an unregulated global bulletin board stock market.

Getting past the bad actors, where are we? This part of the conversation is still over, maybe under my pay grade. It does feel like we have too little to show for all the monies and time invested.

Chris is a really thoughtful investor I met at FTX Bahamas and he makes the following point about Bitcoin and Ethereum:

You have to stay in the game to take part in the eventual reveals that the market will offer.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.

Happy Father’s Day – And Some Sunday Charts

Happy father’s day today to all my dad friends.

My kids are out of the house so most of my opportunity to be a great father is gone. I had my time. Based on how they treat me, Ellen, each other and other people I think we did great. They seem happy with their paths so far and grateful for their opportunities.

Rachel and Max send me these lovely texts and photos all the time (any text not asking for a VENMO is lovely) sharing their days and it makes me feel good.

Next up is being a grandfather one day. Later would be better than sooner, but I am ready. I know I will be a fantastic grandfather. I’m excited to eat popcorn and candy and watch Jaws, The Godfather Raiders of the Lost Ark and Jurassic Park with the kiddies.

Hopefully my kids will still have a nest egg…and at the pace the markets are falling, they may be working in a coal mine.

Coal has become a safe haven growth sector in 2022. To get my kids prepared I have been sending them a list of coal stocks and YouTube mining videos.

The S&P has now been down 10 of the 11 weeks. The last time that happened was in 1970. I was 5 years old. Once I heard this stat I can forgive my dad for being pissed that whole year. I thought it was because I scratched his Cadillac with a hockey stick.

The year 2022 has been an outlier bad year and my best guess is it stays that way or gets worse before better. This chart will give you some coxtext:

The wealth destruction has been epic. Even though I have had a high cash allocation, my 30-40 percent allocation to mostly tech stocks has me in my largest stock portfolio drawdown ever. That’s definitely bad on my risk management but I have never seen this many great brands and profitable companies drop this far this fast together.

One more chart to highlight the carnage in 2022 – the wealth destruction (real estate has likely been a huge buffer so far) :

Finally…the fear, which is approaching pandemic highs:

I was less worried during the COVID panic than I am this Father’s day. That and a nickel is worth a nickel, but that COVID panic felt hysterical. This fear is not hysterical. This is real financial pain and worry and anger. The bond market is going to freak people out. The crypto market will continue to be the crypto market of boom bust but great investors will shift to the stock market from crypto and private markets because of the opportunities are much better relative to liquidity and trust. A ‘known’ rigged market is easier to manage :) .

Just some thoughts…

I am off for a ride, a stretch and an afternoon of naps and US Open golf on the couch.

Crypto – The Flippening of The Flippening

In March of last year, a flippening happened in my portfolio.

Due to gains (not realized) in crypto in just the last year I have more capital in crypto and tokens and funds then I do in the stock market. More importantly, I think that will continue for my lifetime. Software did indeed eat the world now that it has eaten the actual markets.

Now would be a good time to follow up.

A flippening of the flippening has taken place.

In December, I redeemed a partial amount of my gains from crypto funds and had a couple of exits in our Social Leverage portfolios. I flipped the flippening.

In early May, I had a bad feeling about crypto and shared my thoughts on why.

I did not expect a 70 percent crypto crash from the time of that blog post and it has stung, but not in a way that it could have.

So, where are we now?

I think web 3 is still at the beginning. So much financial and human capital has moved to the sector.

But, I won’t be just handing my capital over to people to manage it, this time, I will dig in myself.

I know what I want to see, but I doubt the web 3 purists will agree.

I want a ‘stablecoin’ that is backed by dare I say it (a good old evil, creepy bank) and the US government and an Apple or Google Wallet that allows me to move money back and forth from digital to assets to US currency. I want to pay taxes. Taxes means someone can track it.

I never used ‘defi’ or ‘stablecoins’ or held much crypto in wallets or cold storage (I paid fund managers). I am old enough to know that when interest rates are ZERO and you are promising me 8-18 percent on my crypto, that bad things would happen. They did and will continue.

The people that buy or collect the NFT’s that I have in mind should be able to pay for them with Apple pay and easily understand the benefits.

It is time to go backward and fill in some gaps and holes and show some of these ‘yoots’ how to do it.

Meanwhile, most Nasdaq stocks are down 60-90 percent as well, so there have been few technology places to hide.

The end of a growth cycle always hurts, but a new cycle has already begun.