Golden Summer Solstice

Weekly Update: A Strong Close For H1 2019 Anticipated

The week ended with the longest day of the year, marking the beginning of summer, and the market is poised for a very strong close for Q2 and H1 2019. This was the trend that seemed so distant when Q3 rolled into Q4 2018 but regular readers were reminded that it could happen - right before we wrapped up posts for 2018 in early November. Here we are, a new high for the S&P 500 index and we will see this reflected in this week’s updated notes. Let’s begin our review.

I ask that you be patient with this update and take the time to go over each chart.
It feels like a spigot has been turned on - many “unicorns” have gone public, creating liquid wealth in the billions, the price of the new coin of the realm - bitcoin - is now about triple from the lows of 2018. And this slow, plodding, boring trend following list of equity ideas begins to resemble how it looked last summer. The longest day indeed.

If only there was such thing as an “endless summer” in week but we know that isn’t so but let’s put that thought aside and get to work. On to the summaries.

As of this week, we have a roughly 50/50 mix of Long and short ideas - the difference is however that the notional profits in LONGS compared to short ideas is about 6 to 1!
I want to share the last few weeks of the top down summary, so that you can see the trend in LONGS rising above the SHORTS. Shared just below is last week’s summary.

As we see the top down total gains and number of ideas are the same, at 155K and 600+ ideas but the balance of notional profits has shifted heavily in favor of long ideas!
Let’s compare this to a March 2019 Top Down summary - which is when we began to cover the markets again after a long trend following slumber.

See what a difference the list was in March 2019? There were a lot less ideas, and the meager notional profits are on the SHORT side. What a sea change in just a few ideas.

And this week’s STOPPED OUT IDEAS is also very interesting. I have written in the past that the real information that could be gleaned from stopped out ideas that “fail” is a source of a watch list for bargains, for new trends potentially in the other direction, or just ideas to be wary of.

The LONG STOPPED OUT ideas summary chart as of this week include a buyout.

$ARRY has been bought out by Pfizer (PFE) for nearly a 100% return - an unexpected gift for a long idea which was part of the new list that was started in March 2019.

The other stopped out LONGS NCLH and RCL are BOTH cruise line businesses. This is often happens, groups of ideas will often move, or in this case sail together in the same direction.

The next list is the STOPPED OUT SELL IDEAS. These ideas are potential clues for H2 2019 that we should be mindful of.

ENERGY and Silver standout in this report. This could mark a turn toward uptrends.
I am not saying go ahead and buy raw materials but this is no surprise in a week when gold prices recaptured traders’ attention and the USD may be under pressure.

I would say be cautious but get ready for more. Let’s move onto the Top 20 lists.
First the Top 20 LONGS and charts, and then the Top 20 SELLS and charts.

Amazing how much has happened for these ideas - they may not be crypto or SaaS or unicorns but they have held their own.

Here is the link to a Koyfin dashboard of the Top 20 LONGS LIST for your notes.

Some charts from this list. Not every idea is alike - this is where human frailty dominates dispassionate mechanical process. Not every chart is “appealing”.

And now for the Top 20 “sells” list. The one thing in common that the TOP 20 SELLS list has with the TOP 20 LONGS is that it’s stunning to see how strength begets strength in both directions. They are equally stunning to record and update.

Here is the link to the Top 20 SELLS / SHORT leaderboard for your notes.

I can’t bring myself to share the charts. No point. It’s brutal. I will share a chart of an idea that would be listed as “# 21” in the SELLs/SHORTs ideas universe - as a reminder and lesson to myself that I want to keep sharing with all of you - new or experienced.

Let’s move on to another list of ideas that are outside the lists already shared. These ideas are just beginning to move as “longs” and I wanted to share them as a starting point for your notes. While the current ideas universe is running at about 600 ideas, I wanted to filter it down to a relatively smaller set of ideas to make it easier for you.
For your convenience, we have a “$RISK/share” and suggested “stop” loss exits.

I think it’s time for futures charts. GOLD. It has been quite awhile. Gold bugs rejoice.

BITCOIN.

S&P 500.

Russell 2000. As we see it’s not quite like other broader trends. On watch.

BUND.

DAX

China ( Shanghai Composite, A-Share and Shenzhen)

Eurostoxx 50. (random thought: what if the USD finally changes trend?)

The AUDUSD. Has an 18 month trend come to an end yet?

Introducing a Koyfin version of a list of very un-trendtrading like ideas which have caught fire. This was developed in late November/early December 2018 of interesting secular trends within a bunch of ideas which were under pressure at the time.
The “Lumpy Returns List”. The current leader at this time is Ferrari ($RACE).

Disney, Amex, Apple and Louis Vuitton round out the Top 5 Lumpy Return ideas.

It shall be interesting to see how the hot “SaaS”/”on demand” plays do over the next 18 months. We should build a list and watch the hot software platforms run. Regular readers are encouraged to say hello via email or on StockTwits. Updates coming with a larger end of Q2/H1 2019 report coming. A premium offering will be released either here to supplement the mostly free content or at some friends’ excellent platform.