We pulled back across the board today, but that wasn't really a surprise. Tech and growth were getting pretty overheated from earlier in the week and inflation jitters are still lingering about. I do no believe that this is anything to fret about unless you have short term options; I still think that we are going to head higher into, at least, the end of the month.
"People are very nervous and concerned about inflation, tax rates and the (2022 midterm) election. Those three things are very much on people's minds," said 6 Meridian Chief Investment Officer Andrew Mies.
While this is all true, we have to put it all into perspective. All of the major indices are sitting right around all time highs. Sometimes it feels as if people think cool off periods never happen, and as soon as the S&P drops by a percent it means the markets are crashing. Ever heard of Chicken Little?
The most interesting part is that even with inflation, transitory or not, as high as it is, the 10 year bond keeps falling. If you haven't figured it out yet, bond prices are the single most important thing in relation to stock prices because during periods of economic expansion, bond prices and the stock market move in opposite directions because they are competing for capital. Selling in the stock market leads to higher bond prices and lower yields as money moves into the bond market. As the yields keep falling, stocks keep rising. Investors are seeing more opportunity in more risk, more reward stocks than in the safer bonds. Just imagine, the MSM was talking about a more than 2% 10 year treasury yield not to long ago.
If the 10 year can stay below 1.3%, that is a very good indication that tech and growth stocks will appreciate.
New Alerts Added
$KLR has broken its 180MA on the day chart and is on a big volume shelf. Next support is a trend dating back to July 2020. Kaleyra, Inc. provides mobile communication services for financial institutions and enterprises of various sizes worldwide. Through its proprietary platform, the company manages multi-channel integrated communication services on a global scale comprising of messages, push notifications, e-mail, instant messaging, voice services, and chatbots. Its technology manages billions of messages monthly with a reach to hundreds of MNOs and approximately 190 countries.
$KLR just acquired communications provider Bandyer. I like the fundamentals on this stock, but I'll be going small if there is a confirmation on a bounce. $13 calls a few months out; or commons both suit me.
$DG, Dollar General usually does well in August and September while other indices, tech and growth are pulling back. Overall, I like this play for transitioning out of some tech stocks and setting up for a winter run. $DG has excellent management and has done a really good job with expanding its business in rural America.
However in the short term it looks as if we can score on puts when the price reaches resistance. It would be ideal if we can ride them back down to the 20/50MA, or even lower support.
Last, I've set an alert for $EMKR pulling back all the way to the 180MA and then settling into LEAPS around a $10 strike. EMCORE Corporation, together with its subsidiaries, provides advanced mixed-signal optics products in the United States, Canada, Asia, Europe, and internationally.
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Current Weekly Positions
$NAIL -6.2% (Ongoing Swing Trade)
$DIDI +95% +$550 (Sold Put)
$BIDU -6% (Calls)
$COIN -8.8% (Shares)
$TASK +1.1% (Shares)
$RIG -15% (Calls)
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All trades are going decently this week, although we are at ATH's across the board and bound for a cool off. $RIG and $COIN getting hit pretty hard but I'm not in a rush on these trades and can DCA later if needed.
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