Short Sells On Watch
24th May 2022 - Trading Journal
I have decided to move my Daily Trading Journal from DayOneApp to Commonstock. I hope that this may be useful to others in both it's format and the content. Writing a trading journal is a very good habit to get into and enables the writer to reflect on their thoughts, mood and bias. I will attempt to post this journal each day that I trade or study the markets in real time.
I have only just begun looking to trade actively again after a hiatus due to market conditions. I have spent all of this time studying styles that I hope will suit me. Mainly along the lines of Minervini, Weinstein & O'Neill. I have consumed a huge amount of information in the past few months and feel confident in my ability to weather this storm and be well equipped when the market eventually sees sunshine again. This is a generational moment in the markets and I want to be one of the bubble class of 2020 left standing.
- Situational awareness:
Situational awareness represents my feelings and awareness of the bias of the market going into the day. Clearly today that bias was bearish. We are in a strong bear trend, the SNAP results last night seemed to kick off a reverse to the downside. I suppose this was a bellwether or possibly some leveraged whale just blew up! Who knows...
- Pre Market Work:
I am in no rush to place trades and I have no intention of placing new trades each day. I will be selective especially in these conditions. I spent the morning doing the same routine I have for the past few days. Looking through charts on longer time frames and highlighting anything that came up that looked like it was ready. The only sectors primed for moves are Aerospace/Defence, Shipping/Transport & Commodities (Oil, Gas, Coal). I am reluctant to dive heavy into commodities as the trade is a bit long in the tooth and everyone and their auntie is trying to trade them. Once participation reaches peak then the trades will begin to fail. That said there are setups and they are worth considering with tight stops.
Mainly, I would like to spend my time identifying the stocks in Stage 1 that may move to Stage 2 as the market turns. Tech is still being decimated but there are a couple of very early signs of bottoming in $ZM also interesting bottoming forming on weekly charts in $AMPL & $JOBY. These could just as easily leg down again, only time will tell.
- Trading Day:
Once the market opened I used my sector lists to indentify what was holding up. $NOC was a clear RS name today and was already on my focus list with a nice VCP (Minverini) setup. My entry was more anticipation than breakout but I like the setup and the solidity in the name and sector. Also the Moving averages all converged suggest a strong setup in my favour. With a minimum 2.5:1 Risk:Reward I opened a 5% position which is quite small but I am starting slowly.
- End of day Thoughts:
I am still trying to structure my watchlists better at the moment they are a bit messy apart from the focus lists. I need to work on these. Also I have updated my TraderSync so that it is cleaner with better tags and settings. Long overdue.
I had several Shorts on watch today $COIN, $NET, $CELH all of which look like absolute manure and IMO will probably half from here but as volatility gets more crazy I am reluctant to press shorts too much and am uncomfortable holding them multiday and don't want to day trade much.
- Notes & Open Trades:
$NOG - June 17th Call $30
$NOC - 5% Stock Position : Entry $464.50, Stop $455.50
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This is so insightful! I don't really know much about a trader's routine so it's really interesting to learn what your daily actions consist of. I agree a journal is a great way to record your decision making and your thoughts at times. Really love the format and clarity of the first post. Look forward to next one.
$TTD Prediction 🔥🎯
From my previous post only using TA, I stated $TTD should trade under $45 in the next month. While most will attest this to the unforeseen news, the chart gave all indicators of further sell off on $TTD.
So many people are rushing to buy the dip, but we could see a much steeper slide on this name as my longer term projection is still $30 at minimum (most likely trading at $20 in the future).
While most of this platform is FA heavy which is great, TA is very powerful as well.
Zoom $ZM Earnings Preview
Zoom'ing into earnings this afternoon, $ZM is set to report its Q1 financials.
Analysts expect $1.07B in revenue and $0.88 in adj. EPS. Zoom has performed poorly this year, down 52%, but does it deserve this drawdown?
Let's take a look!
$ZM saw a spike in adoption during the pandemic, lumping it in with other "covid beneficiaries" in the eyes of investors.
However, $ZM has seen operating income increase over the past two years, whereas others in this group have been flat or declined.
Additionally, Zoom ZM generates significantly more free cash flow than some of the most popular SaaS stocks like $CRWD, $ZS, $NET, $SHOP, and $PLTR.
Zoom becomes an even clearer outlier when you look at its free cash flow relative to its market cap.
But everything has a catch!
Zoom has seen its revenue growth dwindle from a high of 368% to only 21.4%. Analysts expect this growth to slow again making it five straight quarters of declining growth.
At the end of the day, it's up to you, the investor, to decide if Zoom is undervalued.
What do you think?
15 VotesPoll ended on: 05/24/22
Portfolio changes - update 9
Hello friends, today I moved further with my portfolio consolidation process.
- I sold out of $S, there's nothing specific wrong there, but I stay stunned by just how Microsoft's position throughout all kinds of enterprise software is strong. Crowdstrike, Microsoft and SentinelOne usually score the best in all sorts of 3rd party research, therefore it makes sense for me to consolidate.
SentinelOne is great, but we are entering a very unkeen environment for companies heavily spending instead of bringing cash flows, which I'm fine with, but when looking at the optionality, profitability and growth, I'm very much fine with $MSFT here. Many maybe don't know, but $MSFT is growing its CyberSec division by 50%, or at least did YoY, pulling about $15B in sales last year, which is just INSANE! So, from now on my coverage of CyberSec will be through $GOOGL (soon to likely buy $MNDT), $NET $DDOG $MSFT $ZS and $SNOW.
- I also sold a position in $SE as I'm beginning to be very concerned about their tempo of cash burn (about $1,9B in Q4 and additional $1,6B in Q1) despite management's encouraging comments regarding coming profitability. So for now, no $SE for me. $MELI in this condition looks like a better R/R now to me.
- I added significantly to my $MSFT position, should be visible by tomorrow. I also added to my other favorites such as $AAPL $TTD $TSLA and $NVDA.
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I like the stable growth companies with a long track record of success. So I’m definitely with you on the $GOOG, $MSFT, and $NVDA. Analyzing the newer companies is out of my wheelhouse. I like the valuation of Microsoft and Google especially, but bought Nvidia for both kids’ custodial accounts. Personally, I don’t think there are two better companies on the planet than Google and Microsoft to own. When my safety of principle is considered. Especially after they were the sole two companies standing after last weeks research. Impressive.
Portfolio changes - update 8
Hey friends, there's a lot of cleaning I'm doing, for real. It's getting tricky, as there's basically no companies I view as weak in my portfolio, now it's reaching a point where I have to consider just how much the position covers what I want it for and whether there's others that can do so instead, so I can consolidate further. I tend to prefer optionality over specialization. So:
- I sold $ENPH - it's simply hard for me to pass on $TSLA at $700, I also sold $ASML as I see $AMD $NVDA and $QCOM more lucrative when looking at valuation vs revenue and earnings growth. Again, this all is about personal preferences and there's a lot of bias and other nuances of data points somewhere in my head that get me to those decisions.
- On the other hand, I initiated positions in $SNOW and $ZS, as mentioned previously. I like this pricing.
- I added to my positions in $ABNB $DDOG $MDB $NET $COIN (although I'm staying cautious there) $TEAM and $TSLA.
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When I was studying Solar in 2015-16, I was screaming at the top of my lungs for people to buy Enphase ~$3. All the experts said avoid, while dropping their fancy acronyms and useless info. Meanwhile, our college entrepreneur program was installing Enphase on literally 100% of our residential installs. Was obvious to us they were going to be the leader in the space. Definitely been crazy over valued for a while now, wise to get out.
$NET Prediction Using TA
Cloudfare is a strong company fundamentally, but the chart suggests more downside.
Reminder: It does not matter how strong your FA truly is when the charts suggest more downside, its not time to buy.
STOP BUYING DOWNTRENDS!
Prediction:$NET will be under $45/share on 6/17/2022
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Went with disagree, I’m going to bet it drops a little more than where it’s at now ($52.15) but not quite to $45. We’ll see. Man these are big drops!
Top Losers Today @ 11am
Top Losers Today @ 11am: $SHOP, $TEAM, $SE, $DDOG, $DASH, $EXPE, $ZS, $NU, $NET, $TWLO, $MDB, $OKTA, $COIN, $XP, $BILL, $HOOD, $TREX, $RNG, $S, $SAIA, $CFLT, $FRGE, $ESTC, $DLO, $SMAR, $MNDY, $BROS, $PAGS, $GDRX, $NEWR, $AZEK, $AAON, $NKLA, $VCSA, $SPT, $CRCT, $CIXX, $WEBR
Visit highsandlows.substack.com to see more
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My Portfolio: Rebalancing and De-Risking
Howdy all! After going back and forth on this and with most of what I owned already reporting ER, I have decided to exit the following positions: $U, $UPST, $NET, $SOFI. The reason is based on what I view as high risk, slowing growth, and re-evaluating what I want to own in this current environment focusing on FCF and profitability (current and future). It was tough to take these massive losses as I bought them way too high and rather use that capital on other more higher conviction and/or more companies that fit my criteria and can weather this current inflation storm. I will still have these 4 companies on my watch list (especially $SOFI and $NET), as I think in time will re-evaluate when the time is right. Cash position is now at 10% which gives me flexibility in adding to something like $ABNB and $TTD. Still want to ensure my Cash position does not drop below 6% so when we hit bottom will have sufficient funds to re-deploy (plan on adding to this each paycheck). Open to all suggestions on approach and hope this helps someone who maybe in a similar position. Cheers!
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