After yesterday’s 5,500-word opus, I’ll keep today’s newsletter mercifully short.
We are now three days into the new trading year, and it has already proven to be an interesting one.
We are making money, as usual.
Tuesday opened up with a gang buster $150 rally in the Dow Average, which it promptly gave up. Wednesday flat lined. Thursday brought a $150 point dump, which it quickly bounced back from.
I have been judiciously scaling into “RISK ON” positions every day, first in the SPDR S&P 500 ETF (SPY), then the iShares 20+ Year Treasury Bond ETF (TLT) and the iShares Russell 2000 ETF (IWM).
I was going to wait for the Department of Labor’s December Nonfarm Payroll Report out 8:30 AM EST today.
However, with Weekly Jobless Claims down an incredible 30,000 to 435,000 on Thursday to a new 43-year low, I figured the Friday number would come in hot so I pulled the trigger.
There was, obviously, some serious hiring over the holidays. Lake Tahoe was so crowded I believe it.
My view is that the new trends which dominated during the last two months of 2016 will continue on into the New Year, at least through the presidential inauguration, and possibly all the way into the Spring.
Make room on your calendar for a 4% correction in February.
“Trumphoria” will be the driving force for now, until reality sets in. Then we’ll have some great short plays at hand.
The day trading strategy for 2017 is to “Buy the Tweet”.
Yesterday’s victim was Toyota Motors (TM), a company I have been following for 45 years which is getting blasted for building a Corolla factory in Mexico.
I guess no one told the president-elect that Toyota is the largest foreign industrial employer in the US, especially in the rust belt, the result of trade negotiations with Japan during the 1980s.
It was a brilliant move which I participated in at the time. The Japanese yen then appreciated from ¥200 to ¥75 to the dollar, making car production in Japan uncompetitive. About 1 million jobs were created in the US.
The commonality in all of these tweets is a complete ignorance of the facts which is painfully obvious to all long time participants in the business. “Fire, ready, aim” seems to be the order of the day.
Trade around them.
They are going to be torturing us for four more years. It must all be punishment for sins committed in a previous life.
Thursday’s “RISK OFF” move also gave us an opportunity to add positions by selling short the Japanese yen (FXY), the Euro (FXE), and Treasury bonds (TLT) at decent prices.
I am holding fire, attempting to scale into my 2017 book slowly.
As they teach you in the Marine Corps. Flight School, “There are bold pilots, and there are old pilots, but there are no old, bold pilots.”
I am an old pilot.
The black swans are ever circling just over the horizon.
I am awaiting the next tweet on drug pricing or health care to get into a nice position there. It is one of the few sectors left that is still cheap, clearly for political reasons which is still growing at 20% a year or more.
I like biotech company Celgene (CELG), while my former hedge fund investor and friend, Leon Cooperman, prefers the Irish Shire Pharmaceuticals (SHPG).
Finally, I have been getting a lot of questions lately about what to do about Nvidia (NVDA), my top performing call of 2016. From my November 2nd research report, the shares skyrocket some 82%.
The stock clearly put in a blowout top after a hedge fund announced it was going short.
But it was just a short term trading call, and I expect Nvidia to move to new highs after the next earnings report. Profits there are still exploding at a 100% a year rate.
What is the next hot stock in the artificial intelligence area – Mobileye (MBLY).
For those who asked, I had a great time at Tahoe over the holidays. My daily routine was to get up at 4:00 AM, write for 8 hours, ski for four, and then cook dinner, bowl, and play monopoly for the rest of the day.
Evenings were topped off by watching the original 1960s Star Trek episodes, and Rogers and Hammerstein musicals.
More than six feet of snow is forecast for this week.
It’s going to be a great year.