If you haven’t noticed yet, the current risk theme in equities is locating the stocks that are heavily shorted and buying them in hopes of squeezing the shorts. In each market cycle, there are changes in risk appetite, and recognizing this and knowing the template is the key to successful stock picking; anticipating what the next stock is to be in demand and why.
Fly is all over the short covering theme. Listen up. It could last for weeks. However, when the shorts have all been murdered and are laying dead in the streets, the last and final phase of risk is what is otherwise known as a “dash for trash.” Start planning ahead.
Take FNMA for example. FNMA is up nearly 60% in the last 3 trading days. Why? No idea. In fact, I don’t care. What I do know is that soon there will be epic demand for stocks like this. I’ve been building positions in several stocks like this, because soon, these types of stocks will be flying off the shelves. Take NBG as another example. I’ve built a sizeable position in this at $0.78. I am celebrating better than 100% in that stock in less than a month.
It will be this final stage of risk appetite that will be the last phase of risk before the market starts to put in its top.
I will be sharing a screen for these types of stocks later today, granted my free trial of PPT is approved.
OA
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would be interested to hear you elaborate on the risk appetite template – i have a few cheap stocks accumulated for the dash myself, but how do you view the transition from defensives to broader risk?
Defensive stocks did well in April, as most retarded fund managers anticipated a “Sell in May” set-up. Markets were flat in April, and XLP, XLU, XLV ripped.
Now its the opposite. Market ripping, defensive stocks lagging.
IWM leading, risk sectors outperforming.
About to book gains in $YOKU calls here.
Fly should give free ppt access to tabbed bloggers, just saiyan.
It was a joke, just saiyan.