MARKETS ARE OVERSOLD — HOW TO PLAY THE BOUNCE

The mean reversion algorithms inside Stocklabs flagged oversold today — the second signal over the past week. We could get one more before I go all in on the long side and there’s always a chance “this time is different” — but on the whole these signals are fucking gold.

Here’s how to play the coming move.

Buy the stuff that is down most. That’s it. No need to overthink it. But remember to hedge closes and don’t get caught up in your own bullshit. If we gap up tomorrow and you are long, you will quickly begin to feel like a Roman God — casting aspersions and feeling a sense of invisibility because the money is all yours. But this would be FOOLISH and commiserate with BELIEVING IN PEACE, something we do not endeavor to ever partake in.

Here’s my trading portfolio into tomorrow, with around 40% cash.

I am heavy commodities with a TQQQ position so I expect to yield about 0.75% at the open. The best course of action might be to sell everything but TQQQ and then add some stocks for the real move higher. Although I must admit, this plan doesn’t appeal to my cerebral side.

Nevertheless, the stated goal on moves higher is to ensure you are positioned into stocks that will participate in the move. This is not rocket science you fucking faggots — but simply a matter of buying high market cap stocks that will receive institutional buyers. To curate my list, I looked for larger capped stocks down more than 10% the past week. I will most likely sprinkle in much higher risk stocks based upon alpha screens in Stocklabs tomorrow. Providing the rally fades, I will throw all of these ideas out the window and do whatever the market is telling me to do.

My list, as of now.

(STOCK/ 2 WK RETURN)

NVDA -23%
BAC -10%
BABA -13%
UNP -11%
AMD -21%
NOW -12%
SHOP -16%
SQ -11%
FDX -11%
MCHP -15%
(GIVEN THE LARGE NUMBERS OF SEMIS — I MIGHT JUST BUY SOXL)
DD -11%
COIN -25%
BILL -14%
GNRC -15%
AA -10%
ETSY -18%

Fuck, you get the point. Looking at this carnage, admittedly, makes me have second thoughts. PLAN B will be to ditch the idea of a multi-day rally in exchange of ripping trades and then cashing up. To be honest, I am much better in real time, as my ideas formulate as the day progresses. I feeeeeel like we should get an oversold bounce. NASDAQ futs are +75 as I write this — but the technical damage is in fact very severe and the news is atypical and not your standard run of the mill headwind.