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Show Notes

Housekeeping. No podcast episode covering Thu and Fri sessions. Taking a long weekend.

Will resume covering Monday Aug 14 session releasing Tue Morning.

I will be active sharing analysis on Substack Notes and Twitter as much as I can. 

Breadth

* 130 New Highs

* 269 New Lows

* 33% Advancing

* 61% Declining

Healthcare was only real sector green

Morning broad selloff

Dow was down 400pts at one time

NASDAQ fell the most intraday but recovered into the close

Ton of charts shared during am. If you don’t follow Notes bookmark this link. It basically is like twitter but better! No ads. No hate algo. 

2:20 started bouncing but weak breadth volume

3pm buying volume came in

What to watch

CPI Thursday

Banks

Mag 7

Financial Freedom is not free but the pursuit is worth the treasure. Building a community with that goal. Let's go get it!

Financial Freedom is not free but the pursuit is worth the treasure. Building a community with that goal. Let's go get it!

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Available on Spotify | iTunes | Amazon Music

Show Notes

Housekeeping. No episode Thu and Fri. Taking a long weekend. I will post analysis on Substack Notes and Twitter as much as I can. 

Breadth

* 181 New Highs

* 216 New lows

* 55% advancing

* 40% declining

* Every Sector is green

At 11:55am breadth was weaking

Rotation into dow 30 was evident

Selling of risk was also evident

the 10 yr closed at 4.1% and remains strong

30 yr mortgage very high 7.25%

While risk shares looked like it would lag behind the DOW 30 heavily, in the afternoon buying came in and the $VIX got whacked.

What Stuck out

Vanguard Funds in my 401k

I posted this morning “Your fees to Wall Street are wasted”

Take a look at this. I logged into my 401k plan via Vanguard. I looked at one of the middle of the road performing funds. All it has is a collection of other Vanguard funds. Both are managed by different fund managers! Talk about double dipping. And there is nothing illegal about this.

So what isthe composition of the first fund within this fund? The Magnificent 7!

And investors are paying fees to at minimum, 4 CFAs/fund managers! Must be a very nice lifestyle!

My friend and mentor, Bill Cara reported on this many times and taught many of his mentees why it is so important to know the real battlefield before once can succeed in the game of stocks and speculation.

Here is Bill’s recollection…

In 1997 or 1998, the Executive Director of the Ontario Securities Commission asked me to be the public’s sole representative in Canada’s final hearing of all securities regulators before they set policy regarding electronic trading. He also asked my opinion of the new Fund of Funds in that meeting.

https://www.investopedia.com/terms/f/fundsoffunds.asp

I opined that it was double-dipping and would become common among friends in the investment management industry; hence it should be banned.

We don’t give enough credit to our regulators. They mean well and work hard. But, in the end, Wall Street gets what Wall Street wants.

It’s up to us to fight back by exposing our concerns as you have today.

Here from my upcoming book, The Maverick Investor, is the start of Chapter 2:

Understanding the Adversary and Focusing on What We Must Do.

Investors share a common goal: to achieve wealth accumulation and financial freedom through securities trading. However, in the vast and complex world of financial markets, not all participants have the same interests.

Standing opposite independent investors are the formidable sell-side – an entity wielding immense power and influence that directly impacts our financial independence and wealth. Understanding this adversary is crucial for navigating the treacherous waters of the market.

The sell-side encompasses diverse entities, from giants like Humongous Bank & Broker (HB&B) of Wall Street to the agents of misinformation found in online and broadcast media. Recognizing and explicitly defining their role and tactics within the financial landscape is the first step in gaining an edge.

To comprehend the battlefield, we must understand the battleground itself – a space to the right of your left ear and the left of your right ear – the center of gravity where critical financial decisions are made. From this vantage point, we can unravel the sell-side’s strategy and identify the ways, ends, and means they employ to exert control over independent investors like us.

Rather than viewing the sell-side as interminable boogeymen, a more productive approach is to assess their capabilities, needs, and vulnerabilities. While we can’t entirely shut them out, we can become adept at discerning the kernels of truth amidst the chaff in their words and actions. We can submit our complaints to securities regulators, whose job is to protect our rights and interests.

StrongEverything into the close

WeakVix

What to watchCPI ThursdayTreasury budget ThursdayPPI Friday

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Reversal from overhead supply, a thing of beauty.

$VIX crushes, vix crush Friday!

$AAPL breaks key area. Under 50 day moving avg on a gap down!

$OPEN down 23% ah earnings. Still outperforming $AAPL $TSLA $NVDA YTD

Oil $OIH related all up

Strong

$TEAM Up 17.21%

$AMZN Up 8.3%

$EXTR Up 2.53%

$UPWK Up 2.92%

Weak

$SPT Sprout Social down 12%

$SQ Block down 13%

$NIO down 4%

$RIVN down 4.68%

What to watch

Yields bonds usd vix aapl

Amazon, "I’ll close with Amazon, which had spectacular earnings and an explosive move higher. Why is this bearish? Because the good news is out, and all it could muster was a shooting star. Want to keep an eye out for something? See if the high for AMZN on Monday is lower than today’s low. If so, we’ve got an island reversal pattern" -Tim Knight from Slopeofhope.com

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Show Notes

There aren’t many companies that can’t be replaced. Two companies that I believe fall in this category reported after the close today. Apple Computer and Amazon. Pause for a second. If Google vanished tomorrow, couldn’t $MSFT #TikTok $META pick up where we left off? It’s just cookies and ads!

But I do not believe you could replace the scale and economies of scale that $AAPL and $AMZN have built. Can Walmart pick up where your Amazon Prime account left off today if Amazon vanished tonight? Can Android or Samsung pick up where your Apple dependency left off tonight? Probably not.

I am typing this as I listen to the Amazon earnings call. Who can compete with their scale? delivery times? It would take so much capital and time to setup a competitor. Ask Walmart’s board.

If $TSLA vanished tomorrow and $AAPL stepped in and built EV refrigerators with wheels, would anyone miss Elon Musk? Probably not.

I still believe Apple and Amazon are going to keep their leadership position and use their scale, operating leverage, and cash war chest to crush future competitors.

Be cautious though, these two names are now blue chip safety stocks. it is very hard to fly when you are as large as they are. For now, $AMZN is leveraging AWS to generate the large scale growth.

$AAPL is becoming a $PFE or $PG and a ETF onto itself.

We are now in the cycle of finance where a few juggernauts are holding up all of our prosperity. And their prosperity also depends on the consumer continuing to #Brrrrrrrrrrrrrrrrr

PS Apple is soft ah on 3 qtrs of declining declining revenues and slowing iphone sales.

Vision Pro is still not shipping until 2024. By then I do not believe anyone will buy a $2k headset. $10B in deposits for Apple Card Savings is basically a marketed savings account. Is Apple a bank? Tech co? Utility? What is their multiple?

75%+ of the stock market have reported. There are a ton of wrecks and a few notables sticking their heads out swimming against the current.

With earnings almost behind us, we go back to being held captive to the whims of two souls…

God help us all!

PS RIP Steve

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I picked up 50 subscribers in the past 7 days so I want to welcome everyone new to the Substack. I means the world to me. I want to build a great community of investment thinkers who share with each other. 

Discuss Doomberg leaving X

I watched Bloomberg TV today and they marched on an army of talking heads to vindicate Yellen and the US. And act bewildered by Fitch’s downgrade or dismissed it. 

Yellen dismissed it. 

Rating agencies are commission eating sell side shills. 

Devils advocate. Hey they downgraded in USA in 2011 and prices are higher today than 2011. 

Until you see $ES_F 4185 break down we are still in bullish waters. $AAPL $AMZN could change everything tmrw. i.e Apple could say we are revealing a $20k EV going on sale in 2024, YAY!

Defensive names and sectors were green.

Drug co, healthcare, $ABBV, $PG P&G,, $SBUX, $MCD, Walgreens $WBA

319pm breadth was weak.. no dice …

Strong - Swimming upstream in sea of red

$CVNA up

$EXTR up on earnings

$YOU up on earnings (clearme)

$DASH up on earning ah

Weak

$QCOM down 2% ah earnings

$ETSY down 2.5% beats but guides low

$PYPL down 3% after earnings

$WIX down 5% ah earnings

$AFRM down 9%

$HOOD down 3.5% losing users

$Z Zillow down only 1.9% after earnings ah

$SHOP down 7% but wishy washy ah earnings

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Show Notes

Link to Bill Cara quote

After the close Fitch downgrades US credit rating from AAA to AA+. Hasn’t downgraded since 2011. 

10 yr yield still 4%$DXY (USD) up still above 100Fewer job openings than last mo

At 10am mag 7 all redAll builders green 10am

Market in a nutshellOpen Door $OPEN outperforming NVDA

YTD $OPEN 386% YTD $NVDA 226%

$BZH outperforming $AAPL $TSLA!

Watch $TLT. If bonds do go down, then Yields will rise to attract buyers. Then USD will also rise, pressuring risk assets like stocks, gold and silver. If yields rise then more options like 4% yielding savings account will keep popping up at $AXP and $JPM and $AAPL / $GS, offering real risk free alternatives to risky a$$ equities.

$TBT #BONDS

Strong

$CAT up 9% on earnings

$AMD up 2.7% AH on earnings. Revenue falls 18% as PC market shows continued weakness. Earnings down 40%/ Sales sown 18%

Weak

$UBER down 4.9%

$LYFT down 6% sympathy. Reports next wk

$COIN down 7%

$NCLH down 13%

$JBLU down 6.6% on soft guidance

$DASH down 3%

$ETSY down 3%

$NIO down 4.38%

$WD 40% drop in sales. Worst loss ever. But not being punished down 2.4% AH 

What to watch

USD, 10 Yr yield, Bonds, TLT, TBT, Yen, AAPL Amazon

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Show Notes

The day can be summed up in the last 10 minutes going into the last day of the month! Miraculously the indices clawed back the entire sessions losses. Like magic. We truly are in Oz.

The bullish impulse will not be at risk until prices back test and fail 4185. If it does expect a quick move to 4000. But we have a long way and it seems unfathomable at this point.

Range within a range

1:19pm. Dow sp and nq went red. 

Vix green

Breadth showed weakness all morning

Strong

ROKU up

ADBE up 3%

SG up 8%

CAVA up 6%

W up 6%

WIX up 6%

Weak

Home builders were soft

EXTR down 2.3%

What to watch

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Show Notes

5 straight months up for S&P 500

End of month paint the tape in play?

It has been the tale of two markets:

I. Backed by liquidity 

* Inflation reduction act

* Banks

* Govt spending

* Fha programs

* Employee retention credit programs

* BTFD

https://www.federalreserve.gov/financial-stability/bank-term-funding-program.htm

The Bank Term Funding Program (BTFP) was created to support American businesses and households by making additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

II. The rest of us

* 20% credit card interest rates

* Average interest rate for new car buyers hit 7.1% in Q2. @Cardealershipguy

* *highest since Q4 2007

* Highest amount of revolving credit ever

* My gut says the student loan payment start date will be kicked down the road to next administration

Strong

$BZH up 22%

$ROKU up 31.43%

$PLTR up 10.25%

$EXTR July 19 - Surprising Increase: Mackenzie Financial Corp Boosts Holdings in Extreme Networks, Inc. by 47.3%

$CAVA up 6.21%

Weak

$SG down 8.67%

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Show Notes

I didn’t want to go over 20 min so I forgot to cover two important items.

* The Volatility Index. It has been very very profitable to short the $VIX through any number of ways ie, sell options and using the options premium to go long, or buying calls on bearish volatility or puts on bullish volatility. However, The $VIX as it sits now, is arguably and nominally zero. If you are bullish equities, this is a very cheap time to buy hedges on your bullish portfolio.

Whether VIX is 14, 12, 9.99 or 5, it is nearing the floor. It reminds me when Oil went to zero! remember that nonsense?!?! many Billionaires were made during that time!

* $ENPH reported and they threw up solar panels. I tweeted that I was baffled why a solar panel company is having trouble selling amidst the hottest year on record. And it was brought to my attention by @BasedQian and @BertinBertin that both $SPWR and $RUN were also doing horribly.

9:50am 10 yr Treasury yields up. Meant $USD was up. Stocks were swimming up stream as usual.

But as early as 9:55am the sell off began. 20 min after opening bell. 

at 12:45pm the selling accelerated

Breadth intraday

$AAPL Choose your own adventure

As it unfolded Apple Computer was carving out a balance area. I knew there were only a few likely outcomes possible.

1.

2.

3.

What was Strong?

$ABBV - This is a leading Pharma name. Pays a 4.17% dividend and did you know they own BOTOX!!! They beat and raised guidance. Stock was up 4.9%

Look at the balance area from May through Jul, and. now breaking out initiatively higher.

$META up 4%. Was up more but you have to give credit and watch stocks that swim upstream like Meta.

$ROKU up 8% after earnings after hours. Lets see how it opens. Keep in context this stock is down from its highs of $463!

What was Weak?

$CROX -14.6%

$CMG -9%. Down two days in a row

What to watch?

Friday Economic Data

Next Week is $AAPL earnings on Thursday Aug 3 after the bell!

Financial Freedom is not free but the pursuit is worth the treasure. Building a community with that goal. Let's go get it!

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Show Notes

A record 13 straight up days for the DOW!!!

Federal Reserve

* Jerome Powell and team raised rates by .25 basis points.

* Forecasts No Recession

* People are still getting too many good jobs. 

* Not enough unemployed

* Inflation is still too high

* Wants to decrease security holdings

* It will take time for what they have done to impact inflation

3:00pm ET Screenshot

Once Jerome Powell finished speaking

$META Facebook reporting after hours and I must say it was impressive.

* Beat revenue estimates by 3% & beat guidance by 4.1%.

* Slightly beat user growth estimates for Facebook & its Family of Apps (FOA)

* FOA revenue beat estimates by 3.8%.

* Beat ad impression growth estimates of 17.8% Y/Y with growth of 34% Y/Y.

$CMG Chipotle was down -8.76% after earnings

Financial Freedom is not free but the pursuit is worth the treasure. Building a community with that goal. Let's go get it!