Mr. Market Down Both Escalators And Elevators
End of October 2020 Summary: Uncertainty and Selloffs
I wrote to myself in an earlier post that this quarter - after a long period that was both confounding and astounding - would bring something unexpected. Wish granted.
This may be the last detailed update for a while. A market dust-up has begun and we will see after the U.S. presidential election the market clear one way or the other. The change has been so sharp that I am reversing the usual order of how I cover trends. But I will try to keep it a fast read.
We’re going to cover the STOPPED out ideas first and share charts from a long list. This is not the week to focus on new ideas but on what’s happening to existing ones.
This list was so long that I have to put it in 2 parts. It seems an eternity that we had this happen - 9 months or so for many active traders and investors.
Some big names have been stopped out, based on the generous stops used here, and we should begin to look at them as taking pauses and breaks if they aren’t breakdowns.
Dunkin Donuts is gone just as quickly as it was added - courtesy of private equity.
Zillow Group, Wayfair, Shopify, Home Depot, Microsoft and my personal favorite, Domino’s Pizza are all stopped out for now. A lot of big names and brands are out.
Dunkin Donuts. The one exit that was a massive victory. We had it only one week.
Home Depot - homebuilding and household demand juggernaut - is under pressure.
TikTok USA’s new home, Oracle is under pressure.
Shopify is going on my shopping list.
A big Vanguard dividend fund VIG, is being tested too.
Wayfair has been getting discounts since the summer.
Zillow Group, another strong trend, is also out.
What next? More stopped out ideas, a second list.
The New York Times. (On a side note, please do check out Mine Safety blog’s post on NYT’s flywheel. It’s fascinating and a sign of the times, where subscriptions > ads.) Amgen which looked like it was rolling over in a prior post, has stopped out already.
Semiconductors are being stopped out -they are being tested in the short-term.
That’s more than enough stopped out charts. They should be put into 2021 watch lists.
What are the sell ideas that have done well this week? The usual suspects include energy related ideas. I must screen out the bizarre leveraged ETFs for plain ideas.
Occidental Petroleum (OXY) is but one of many energy companies that are down. Exxon’s displacement by Chevron as the biggest energy company and its layoffs tell the broader tale of energy. Random thought is to watch the other part of petrodollars, the USD.
What are the underperforming long ideas as of this week?
This week’s “Worst 20” include the following ideas.
Underperformers include the Germany ETF.
Datadog was running hot not so long ago. A good teaching moment.
Gopro used to be one of the high-flyers. Such a good reminder to be cautious about our “sacred cow” ideas.
And the Top 20 lineup has begun to change at last. This list is never etched in stone, it gradually changes. Nothing is forever.
There will be more changes to come. Reality and experience will remind us change is coming no matter what and it’s okay, it makes room for new things and experiences.
Etsy looks like it may join the stopped out list soon enough.
JD.com, the “Amazon of China”, along with other Chinese Tech, still here for now.
Nautilus (NLS), the Peloton back in the day, taking a break in its long run.
Square (SQ) and Fintech on review. Shopping opportunities may come in 2021.
Zillow like-wise may have moved out of a massive trend.
Tighten your stops is all I can say or lengthen your time frame AND lighten size.
The new ideas as of this week include the following.
It was a surprise to see recent IPO Snowflake in the new ideas line up - it may even be a glitch - but we see that sometimes ideas leave as quickly as they come in.
I wrote about Snowflake’s business a few weeks ago, during a brief window of time, when Dad was in the Hospital and visiting hours were limited. I had to escape the “monkey mind” and work on something. I think I shared it awhile ago, I don’t remember.
Another surprise is seeing a mining stock.
Dolby is an interesting chart to see at this time. It has been hiking its dividends for 5 years, not quite dividend royalty but nice to see that it’s from less than a third of cashflows. It’s all about home entertainment for those who can shelter from the storm.
That it’s for now, this update took too long to do and it’s longer than I prefer to post.
Have a good week, stay focused and stay calm. I will write again by Thanksgiving.
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Personal Note (not about markets or charts or trades, and no need to read):
The restless mind races, especially when the vessel containing it, our bodies, is stuck in place. It’s no wonder that solitary confinement is so punishing. It’s not just isolation, the silence, or the squalor in literal prison settings, it’s the lack of motion, and lack of physical range. The mind takes over: It can either take flight and free us or fights and bounces between four walls. Your brain is riding and grinding your brakes.
Dad’s ability to move has gradually shrunk since everything went wrong right before last Thanksgiving. His world is a converted room, hastily devised, when we extracted him from a physical rehab facility that printed money for nursing home residents, post-operative recovery and dialysis patients turned into walking ATMs for the facility’s owners. We did it right as our corner of the world shut down everything in March. We were already in isolation for months by then when things turned upside down, keeping Dad company and trying to keep him tethered to reality.
When we left in March, the world joined us indoors too, for different reasons. I had friends at a wonderful company all leave when had turned things upside down - just weeks before they had sent a care package when one of them found out what happened and wondered why I disappeared from the Internet since last November for months. I had one great friend, a writer who recently published an epic 1.5+ million word epic, who lives on a mountaintop retreat find me too. He has since retreated since May. Some of my tethers to the “outside world”, the metaverse of markets, were fraying.
At the same time I looked at the markets that March and bought. It seemed the thing to do. And now what is the thing to do? For me, it’s about looking past today and believing there’s more tomorrows. I have been investing in a variety of things with my eyes on 2030. No recommendations as I’m writing this to remind myself 2020 is mostly done with and for that I’m glad. My family is tired of it. I long for time travel away from the fray.
I don’t think Dad will make it to 2030. I worry about Mom. I worry about some loved ones and I want to be around in 2030, with new loved ones by my side and new “worries”. I want to get back to “building” - to believe and to start again. I envy my friends, not for their successes (which inspire me) but for having things to build with other friends. It’s not just about the “new new thing”. To paraphrase from one of my favorite stories, Halt & Catch Fire, these ventures and adventures are not the “thing” - they’re the thing that gets us to the “thing”. For me, the “thing” is a life with loved ones and comrades-in-future - the people who would look for you when you go missing and you do likewise. If you create the “new new thing” together (kids, proteges, friendships, relationships, ideas), that’s the bonus of life - the future.
Do your best as usual. The rest takes care of itself by itself.