What the Market is Telling You Thus Far

If you haven’t read this, do so now:

http://ibankcoin.com/flyblog/2014/01/05/sometimes-the-less-you-know-the-more-you-make/

An excerpt:

Last year was orderly, with large capped stocks leading the way. The buy and hold strategy held true and old men made a bundle of coin in their stupid toilet paper stocks. I believe 2014 is going to imbue a different quality in the investing public, something far more debauched than 2013. If last week was a preview of things to come, expect to see speculation run rampant in small cap, low brow, stocks, whilst the mainstream of Wall Street lags behind and gets flogged with wet towels upon correction.

 

For people who pride themselves on stock picking prowess, this is a welcomed development. I don’t like it when my dentist makes bundles of coin in his stupid 401k plan, managed by mutual fund hacks. I’d much rather see him destroyed, unable to deal with the market, cashed out and looking for real estate. This doesn’t make me an evil man, of course, only one that is interested in seeing the complete destruction of my dentist’s retirement account.    – Fly

In my 2013 Outlook in January last year, I made the comment that 2013 would be the year of the stock. This year, one of my predictions is of the same viewpoint that Dr. Fly suggests, and that is that 2014 will be the year of the stock picker.

Fewer stocks will participate in the market this year, which means that the stocks that actually move, will move in short frantic bursts. If you look at each trading day of the year thus far, we’ve been positioned into stocks making frantic upside moves (YY, YOKU, VMW, CREE, WDAY, SSYS, SCTY, ANGI). The moves will be more explosive than they were last year. I also think what you’ve seen here will be the norm for the year. In other words, if your expertise is picking stocks and timing explosive movements in stocks, then you sir are in for a real treat.

Don’t trade the market. Trade stocks.

OA

Despite every neighbor within a 10 mile radius of my home owning this stock here, I’ve graciously taken a loss and closed this position.

This further proves the point that even though the entire world can be of the same opinion on the same idea, doesn’t make the timing right.

Good thing I am fully leveraged in YY, YOKU, CREE, ANGI, QIHU, YGE, SCTY, VMW, WDAY, SPWR, CZR, TRLA, PACB and GLUU and everything else my neighbors don’t own.

A Sore Loser,

OA

I bought Jan calls in CREE here, looking for a pop this week.

More later,

OA

My favorite downside ideas are when I can see the general public holding hands and frolicking over a shared idea. Last time we did this was with Twitter, when all the Average Joe investors of the earth as well as financial “experts” all scoffed at the opportunity. As you know, I love sentiment as an indicator.

I’ve seen a stock over the last several months that has been actively mentioned, watched, and salivated over by many. I am asked about it often, despite my lack of enthusiasm to trade it. In other words, it is mentioned to me like it is a core position. This is why I am starting a position to bet against it in the short term.

The stock? $GOGO.

I have taken a bet in the January puts, with a target of $18. Thinking there’s a rug pull here soon.

OA

Behold, here is my Weekly Watchlist. Trade it well:

ANGI, GMCR, MS, KBH, Z, SRPT, BITA, VIPS, QIHU, MU, ZHNE.

We’ll be spending some time on After Hours with Option Addict putting together an “Under $10” equity list for the upcoming week.

See you in the morning,

OA

I’m looking to build a watchlist in After Hours with Option Addict tonight. Thus far, our last collection of stocks were a fine assortment and I am already wanting a lineup of fresh longs to enter as I book gains from existing positions for Jan expiry.

Today, I have my eyes set on QIHU. I haven’t looked to far beyond that, other than the financials mentioned earlier ( MS, C ).

If you have any strong set-ups, please bring them to After Hours with Option Addict for group analysis.

OA