This past week was stale regarding progress. What gains were seen early in the week were given back when names like MOD STRL and DUOL reversed hard and early gains in CVNA and CELH were lost when they failed to follow through.
That happens, ending a week flat is not a big deal for me.
My goal is to position UP into names. Sometimes I add and increase my position and they reverse and stop me out. That is what happened across the board this week.
I am still holding NVO and LLY along with BRBR NTNX FAST DUOL AVPT and JPM. Exposure is on the lighter side. This next week starts to kick off earnings season, and with it the potential for a lot of PowerMoves.
I did mention on the Midweek update I would take it slower the rest of the week. Unfortunately, I did not follow my advice and my assumptions were correct. We did see weakness ending the week. Learn and live.
Stock Market Last Week
Below is an excerpt from Ed Carson on Investors.com
“The stock market rally started the week strong, extending gains from the Nasdaq's Oct. 6 follow-through day, helped by tumbling Treasury yields. But the major indexes stalled out amid whipsaw Treasury moves, while underlying market action was weaker.
The Dow Jones Industrial Average climbed 0.8% in last week's stock market trading. The S&P 500 index advanced 0.45%. The Nasdaq composite fell 0.2%, thanks to Friday's 1.2% retreat.
The Nasdaq cleared the 21-day and later the 50-day line, but fell back below those key levels by the end of the week. The S&P 500 also finished below its 21-day average. The Dow Jones hit resistance at the 200-day line multiple times.
The Russell 2000, which tried to retake its fast-falling 21-day line, reversed for a 1.5% weekly loss, ending at a six-month closing low.
Leading tech stocks made bullish moves, but then fell back. Some energy and pharma stocks did well. Insurers continue to do well, along with select other financials.
The 10-year Treasury yield tumbled more than 15 basis points to 4.63%, but with some big daily swings. Notably, the U.S. dollar extended its long weekly winning streak.
U.S. crude oil futures jumped 5.9% to $87.69 a barrel for the week. Friday's 5.8% spike was the biggest one-day gain in six months. Gasoline futures popped 3.3% for the week and 4.6% on Friday. Israel-Hamas fighting trigger gains on Monday, with tougher U.S. sanctions vs. Russian crude spurring Friday's advance.”
Earnings for the Week
Below is a screen shot from Earnings Whisper from X.com
Monday- A couple banks and notable Charles Schwab before the bell
Tuesday- A look at the defense sectors with Lockheed Martin, real estate with ProLogis, and a few more banks along with transportation name J.B Hunt and United.
Wednesday- This is the day that could set the tone for the market. ASML leads the chip stocks with earnings before the bell, and Lam Research follows up after the bell along with giants Tesla and Netflix.
Thursday- We get TSMC in the morning and some ore banks
Friday- More financials.
Wednesday is the most important day on the docket. I will be watching closely to see what the reactions are to the earnings and overall risk appitate.
Setups
AESI AVPT BRBR CASY DRS ELF MNTK PGR SNPS FAST FTI IMVT INSM J KNF KTOS PDD VMW
New PowerMoves- FAST PGR KTOS
Recent Breakouts that are holding- AVPT BRBR DRS J VMW SNPS MNTK PDD VMW
Pullback Setups- AESI CASY ELF INSM
Sea Change
I regard Howard Mark’s as one the of the most thoughtful asset allocators of our generation. The work he has done at Oaktree is remarkable. It is said when he puts out a new memo, Warren Buffett drops everything and reads it.
His latest one is about the possible sea change in the investment landscape. I agree with everything he says.
Something I have talked about as well is the bias of investors to miss how the persistent decline in interest rates benefitted them as asset owners over the past couple decades. My parents generation saw incredibly favorable conditions to hold assets. And they they seem like genius.
However, I argue they are just lucky.
Mark’s details this in his memo.
I also believe that the next decade will be much harder for investors. We will not have the persistent tailwind of declining interest rates. Instead, we must contend with historically elevated debt levels and the possible entrenchment of inflation.
This creates an environment where what has worked in the past, might not work as well moving forward.
As this pertains to stocks, I believe this will mean fewer stocks will turn out to be massive winners and outsized gains will stem from your ability to find them early, hold them tight, and let them run. I believe mediocre overall returns will be available from stocks moving forward. And with debt levels and fierce competition, I strongly think only a few big winners will emerge from time to time.
For me, this means moving away from equity diversification. This means having the skill and knowledge to get adequate position size in a few names that have a great story backed by fundamentals and charts. This skill is hard for many. But I have to firmly believe this is where the true alpha lives moving forward.
I think the sea change, pertaining to stock selection, means being patient and learning (if you dont know how yet) to wait and pounce when a trend starts to develop, and have the mental fortitude to understand there will be lots of starts and stop outs.
This is summed up nicely by W.D Gann "The big profits are made in the runs between accumulation and distribution. Therefore, you make more money by waiting until a stock plainly declares its trend than by getting in before it starts. Its just like a race . It often takes fifteen or twenty minutes to get the horses away from the post, but once they are off the race is over in two minutes"
And something Livermore was excellent at. Maybe the best. Probably the best.
Good luck
—NS