The Shakedown 12/1/18


Let's Make A Deal!

The market has been closely eye balling whether or not President Trump & President Xi will either make a trade deal, or continue the tarriff game. It seems this weekend, the G20 Summit, will mark an A or B scenario in my mind.

Scenario A is they verbally agree to some sort of deal, with hopes of hashing out the details in the weeks to come. In this case I would expect it to be very good for stocks, and we may see the beaten down Chinese names get a pop and the overall broad market be more "risk-on" for an end of the year run. This would be considered the Santa Claus rally many are hoping for.

Scenario B is that they make no headway over the weekend. We know Trump plans on accelerating Tariffs directly after the G20 Summit if no deal is made. Every time we have seen new tariff announcements, the market has sold off, so I would expect more pressure on the market if this were the case. Take into account that the market is somewhat pricing in the aspect of a deal being made with the action we saw this week. So if we go back to square 1 Monday morning, could get ugly. 

Have to take into account both scenarios as they're the biggest headline risks in the market. Because of this thinking I only have about 25% of my cash deployed when Wednesday through most of Friday I had about 75% of my money working. We got a great move this week but it could all be quickly negated in this environment, so I took a lot of risk off the table Friday. Will be closely watching the outcome of this G20 Summit for clues on market direction.

Further, these outcomes are never set in stone, but this is the general consensus across the board. The market loves to do what the least amount of people expect. 

(Click Picture for Detailed Look)

The market finally got that bottoming pop we were looking for this week. It should come as no surprise that when the market stabilizes the best names always take off. Always, always, always.

This is the reason I don't look to daytrade stocks short, the opportunity cost of looking for those 1:1 risk/reward winners (and needing a >50% win rate to be profitable) would not allow me to study the intraday action of the best names, and be prepared to put on that heavy risk when everything lines up for these potential winners. So, I'm not going to look to crush the market when no one knows what the fuck is going on, I'm going to step to the side and wait until the action is more clear. But I will always be watching.

Then when I see we get that bottoming action I'll put on that major risk in my favorite names. This is a consistent system that I can scale as large as I can grow my account, which is not the same case with day trading as you can't build into positions properly.

Ton of winners this week as we were very prepared stalking all the best names awaiting some decent market action to pounce.

Pounce we did.

Click Above for Detailed Look at Companies Reporting This Week

A Few Chinese Stocks I will ONLY look to buy IF A DEAL BETWEEN US/CHINA IS SOLIDIFIED. I hear these names coming up more &more in the chat and I want to be very clear their charts make them complete dogs. Bottom right charts with untold amounts of overhead resistance. Exactly what I usually never want to buy. The only reason I would be looking to buy them in this once-off scenario is the potential catalyst is so big. These Chinese based equities got especially slammed in the market weakness due to the ongoing troubles we keep facing with China. It only makes sense that if a deal is done, these guys fly.

My top 3 favorites below.


Yes, we are really about to buy the hell out of CROCS stock. Huge earnings this quarter, spectacular earnings growth the past 3 quarters, chart looking like a dime piece -- everything is pointing to higher prices in CROX. Will look to buy aggressively if I see expanding volume through $28.25.

Trigger: $28.25

Stop: $26.81/Current Low of Day

Target:  $33+

Today in "You know you're getting old when......."

This shit is getting "cool" ^ 

Hope to see you in the chat Monday!

Definitely check out the watchlist being sent in the next email, tons of names not mentioned here.

1 comment

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