A RECORD SETTING MONTH

Dow 20,000! Congrats on a milestone month. Seems like it was only a year ago that the headlines were painted with “SELL EVERYTHING.”

Well, this has been one of my best starts to a year in my 20 year career. Not exactly 2014-ish, but a good start nonetheless.

For the year, my analysis is going to consist of the highs and lows of the crowd. I think that will end up being more effective than most anything else. The stuff I am reading lately is really starting to shift optimistic.

We will trade much higher over the course of the year, but the giddy factor should help you sway from risk-on, to risk-less-on.

Into February, I want slightly less exposure. It’s getting crowded out there.

Have a good weekend.

This is a story worth telling if you haven’t heard it yet.

It was January 2014. I came off my second best year in my career and the first few weeks on January 2014 was my most profitable start to a year ever. The $SPX started the year in a fairly flat and tight range, but the high beta growth stocks were in blow-off moves everywhere.

After a flattish start in the first few weeks of January, the $SPX took a nose dive out of nowhere towards the end of January.

That transition is where growth stocks hit euphoria, and started a move that would take them down more than 50% on average over the next couple years.

While the market was getting nuked, I initiated a group buy on $ANGI on January 6th. It was an aggressive bet, looking for $ANGI to hit $20 by the first week of February. Take a look at how $ANGI traded up til Friday the 4th, which was expiration day.

You might have heard stray comments in the chat about “that bitch $ANGI” or something similar. When you look at this chart, the anger, frustration and constant mocking makes little to no sense, right?

I was a few days early in this trade, but there was a point where this stock was up 14 of 15 sessions. This also happened to occur in the context of a MASSIVE downtrend for $ANGI, as it had traded as high as $27 6 months prior.

You have to keep in mind that I was also in an insane winning streak, and had been printing money for people on the site for all but one month of 2013. People had become so used to massive wins, that the fact that this stock defied gravity with so many things working against it, and had been as high as a 200% gain on expiration day, but as it faded into the close on Friday, so did everyone’s profits. Friday’s big gap had everyone’s eyes on my $20 price target, and the stock only climbed as high as $19.80.

This trade, at that time, became known as one of the worst trades I’ve ever called on iBC.

It wasn’t until a few weeks had passed that I realized that expectations were out of alignment. This is the type of activity that happens at tops. People are drawn in, experienced a positive feedback loop for months on months, expectations are skewed into the favor of big winship.

In response to my rant yesterday…no. We are nowhere near this same environment. We will be though. It would be in your best interest to watch how chatty it gets, as novices become experts, and genius is born and bragged upon daily.

Until we reach that mood, there’s nothing for you to do than to “make hay while the sun is shining.” Interestingly enough, that was my Podcast tagline back in the summer of 2007.

Enjoy yourself.

I took longs in $QCOM and $LVS today, as prices this low can only mean one thing.

Booked some gains in $SOHU from back in late Dec, have an oil long from $52.40 I plan to book later today, added to $BIDU and might thro’sum’mo at $VEEV.

As you were.

Dow 20K…lol. I warned you.

I was a lot more excited about the Dow back at 15k last year. Anyway, so glad you could make it to the party!

Not sure why, but over the last few years I’ve sorta developed a strong resentment and distaste towards “the crowd.” You do realize that this new found feeling of excitement, hope, and enjoyment with your recent toe dipping into the markets was here a fucking year ago? I banged the table on this with countless forms of analysis, reasons, compelling historical arguments, etc…until every last one of my peers turned dumbshit, and did so at the bottom.  Now it’s all cool ‘n shit to trade as 20,000 certainly brings a feeling of relief, a release of anxiety, and a dismissal of fear.

So stupid.

I think part of my resentment it is due to the fact that success in this sport relies heavily on your ability to be strategic against the crowd. Less than one percent of people out there can relate to that skill. It’s one I feel is superior to all other forms of analysis. Yet, how did so many miss the fast that the supposed risk out there in the last few years was not an incredible opportunity? In fact, this 20k milestone is the type of stuff that stresses me out, brings me anxiety, and makes me slightly more fearful of the markets as it draws retards back to the fold. Perhaps you don’t realize, but a fearful crowd gives me confidence. Want to read some major blogging confidence? Go back and read what I wrote each time the Dow traded in the 15k’s the last two years. Crickets. Now that the crowd is gaining confidence? I want to get the hell out of here.

So this is where I’ll cheerlead a market crash. I’ll root for it. I’ll be there to warn those that I care to warn, just like I did in 2007. I’ll watch the others perish.

While this rant is stupid and pointless to read, there’s a good sentiment and psychology lesson here if you care to go get your own shovel.

I bought some $AMKR calls today, otherwise sat here all bugged ‘n shit.

Good day.

It’s been said that as soon as the natives start popping bottles, bragging on their newly minted stacks and shopping for new bling, it’s best to prepare for a surprise prison-sex style move in your portfolio.

The kind where you can’t quite close your mouth yet from the laughter and cheering, before you get a mouthful…

Of losses.

Might you take a small piece of your winship, and insure yourself for a rainy day. That way…you are fully prepared for all the “what if’s” that the future holds.

In After Hours with Option Addict we stalked $ATI for an earnings trade over the last 6 months. Passed last quarter, but took a good sized chunk of calls (Feb 17.5’s) into today’s announcement. They returned better than 400%.

I took the proceeds and doubled down on $XBI here.

More later,

OA