Chinese Burritos Soar Thanks to Tariff Delays

This from the President of the United States.

I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!

As a result, a flurry of Chinese stocks are sharply higher this morning, including NIO, BILI, HUYA, LX, QD — just to name a few. When stocks open in 10 mins, we’ll have a more comprehensive list for you to salivate over.

NOTE: Chinese stocks soared nearly 6% last night — the highest level in 4 years.

This stock was on a fast track for zero just a few months ago. Alas, now it’s higher by 15% this morning, up ~50% the past 3 months.

GE sells biopharma unit to Danaher for $21.4B GE sells biopharma unit to Danaher for $21.4B

Danaher will buy the biopharmaceutical business of General Electric in a $21.4 billion deal, the companies announced Monday.

The deal will see Danaher pay $21 billion in cash, as well as assume certain GE pension liabilities.

The GE Life Sciences unit will join Danaher’s Life Science as a stand-alone business. The GE Biopharma unit is expected to generate about $3.2 billion in revenue this year.

GE shares surged more than 17 percent in premarket trading from Friday’s close of $10.17 a share. Danaher’s stock also jumped, rising 5.2 percent from its previous close of $113.48 a share.

“We are executing on our strategy by taking thoughtful and deliberate action to reduce leverage and strengthen our balance sheet,” GE Chairman and CEO Larry Culp said in a statement.

Wow, what a deal. Roche is acquiring ONCE for $120 per day, or $4.8b. As a result, the entire biotech sector is lit — especially gene therapy stocks like QURE+17.79%, BOLD +17.62%, RGNX+11.83%, CRSP+7.36%, SGMO +6.91%, VYGR+6.63%, EDIT+5.99%, NTLA+5.83%.

Futures are +130, in spite of oil being down 1.6%. Look for a potential blow off top today — especially if oil continues to weaken. I have about 5 stocks this morning higher by 5% or more, so that has me somewhat suspicious.

Large-cap BioPharma have spent ~$36B on acquisitions for shiny sexy cell and gene therapy:$GILD -> $KITE $12B$CELG -> $KITE $10B$NVS -> $AVXS $9B
Roche -> $ONCE $5B

Will any of these deals generate a positive return?
The first two not looking so hot so far…

— Andy Biotech (@AndyBiotech) February 25, 2019

I am long. This event was alerted to Exodus members on Friday.

Watch

I’m a huge data nerd and like to believe that I have an edge on many of my enemies — because I pay close attention to the shifts in the winds of the market. One of the breezes I watch regularly is performance by market cap. For years, large caps have crushed small. Very rarely will small caps, as a whole, beat out the overall market. Last year, when I was investing my Quant based upon market cap performance, the selections never chose market caps under $1b — because they always underperformed.

Last week, all stocks jumped by 1.36%, on average — but stocks under $1b in cap leaped by 1.8%. More uniquely, this outperformance extended all the way down to market caps under $50 million, alluding to a risk on scenario that is wantonly degenerate.

It would be foolish to believe such a trend in risk will end abruptly, since we’re all having so much fun trading now.

I tell you these things now — because I am a generous and charitable man. I realize you don’t delve into small caps — because you’re above it and the ticker symbols you possess are all very distinguished and honorable. I, on the other hand, view these things as nothing more than burning pieces of scrap paper flickering into the gusty wind. Hold them too long, and you’ll get burned.

But it’s so much fun seeing it all unravel and I’ll admit that I love the sense of ruin that stalks me when I’m trading them.

I’ve been trying to get Ramp to blog at iBC for years and he did so sparingly. But nothing is like doing something on your own, being able to work with belligerent impunity that is unique to owners only. After years of swashbuckling on Twitter — he has finally decided to launch a blog.

Here it is. Go visit it and tell him to fuck himself.

What should we expect from Ramp?

Humor, witty mid-western, Ozark styled luxurious life-stlye blogging, befitting of a log cabin and twin engine speed boat — amidst the gentleladies of Missouri — smoking meth from their glass chalices.

His idea of once per week blogging is ridiculous — but that won’t stop him from doing it. I wish him the very best of luck and hope to enjoy some of his ketchup inspired recipes in the not-so-distant future.

The number one question people ask me when discussing momo investing is “how do you know when to buy or sell?”

Buying breakouts is scary for people because they feel late to the party and are risk averse. But after you realize the biggest gains in trading always involve CHASING MOMENTUM, rather than anticipating it, you’ll become a believer in what I am going to show you.

In other words, it’s better to wait for a confirmation of a breakout than waiting for one to materialize. Whatever sector you’re biased to might take a year to work, and in that time you would’ve missed out on innumerable trades. This is why staying in tune with current trends and maintaining a ‘recency bias’ is important.

Case in point, my last position in HYRE. I bought the stock on Thursday at $4.41 — because it was the FIRST white candle in a micro cap stock that, potentially, could offer parabolic gains.

How do I know this?

Recent gains in other auto plays, such as SOLO, FUV, and NIO suggested it was possible.

This is the chart I looked at in real time before executing the trade. Notice how every run in the stock started with a big ass white candle and how the recent sideways action offered a unique risk/reward. My downside was at $4, or 10%, the upside must be met immediately. Because I bought it on the first white candle, and was interested in momentum, the stock had to produce another white candle on Friday — and it did.

Now because volume picked up and the stock closed sharply higher on Friday, I view this stock as ripe for a parabolic move higher.

Why?

Well, for one, it’s a micro-cap piece of shit that is traded by low IQ degenerates. I am smarter than these people and could out-trade them with ease. Also, there is no price memory, zero resistance, at this level. If we get another gap up on Monday, it’s possible this momo could foment into FOMO and I’ll sell into it.

I’m rarely interested in catching bottoms or tops, just the fat middle.

This brand of TA can apply to all stocks. You want to look out for BIG ASS WHITE CANDLES and how that stock performed in the past upon getting them. You want to analyze price + time + volume to see where the price memory is strongest. Lastly, you want to establish firm disciplines on downside risk and thematic risk. In other words, if this little group of stocks start to lose favor in the market, SELL. Do not wait for a turn and do not care where the stock is trading. I am in this stock for the momentum, not the company.

CLASS DISMISSED.

Put a pin in $175 QQQ. We are in the latter stages of the rally and that means you need to place your foot on the pedal and zoom fast. This is where you extend yourselves and truly act ridiculous — go outside naked and read the paper in your long ass driveway.

Small caps will lead the way — degenerate plays undeserving of your money.

Into the weekend, which will be graced with large quantities of bourbon, my favorite picks are OLED, QD, HYRE, BILI, NIO and NUGT.

I might make another purchase before the end of the day — dependent on the vibe into the bell.

UPDATE: I bought LX

HEAVILY SALTED UPDATE:

Reckless abandon edition. I don’t give a fuck.

The old FAGbox is now the new FAGbox. Same story, different direction.

Sure, today feels good, but we’re more or less doing nothing the past week, consolidating recent gains — menacing to break higher.

For one, I like this move in OLED, an old favorite of mine. They have an IP lock on the OLED market and the fact that they’re doing well means they’ve finally resolved the OLED shortage issue and now all of the smartphone makers can switch to OLED.

On the small cap side, I really like this HYRE and feel it can bust loose, maybe go parabolic.

My quant is up 100bps today, far outpacing the SPY and I have no complaints. I’ve traded flawlessly, with a few drawdowns — but nothing big. My call in gold was way ahead of the curve and I’m generally a really swell guy.

Off for some lunch.