Bulls keep charging to end 2023?
12/10/23 Prospero.Ai Investing (82nd) Edition (Weekend)
More major events this week! Prospero.Ai (check out our new website) will be ringing the closing bell at NASDAQ on Monday 12/11 and I’ll be interviewed by Jill Malandrino about AI and Investing, as well as our partnership with NASDAQ on Tuesday 12/12 at 1230 EST.
The best place to get the Live info on those events will be to follow our X or YouTube as well as TradeTalks on X or NASDAQ on YouTube.
Our Sector analysis paid off; we are back up to a 51% beat of the S&P 500 on our 2023 picks, with a 60% win-rate per pick against S&P 500 benchmarks.
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Bulls keep charging to end 2023? Outline:
Market/Macro Update
QQQ and SPY Net Options Sentiment
Sector Update / Portfolio Strategy
Now the Sector analysis will be roped into our allocation!
Longs
Adds —> No Keeps —> Drops
Shorts
Adds —> Keeps —> Drops
Portfolio Summary
Market Update
For Tech: QQQ Net Options Sentiment > 40 = Bullish. < 30 = Bearish.
For Non-Tech: SPY Net Options Sentiment > 25 = Bullish. < 15 = Bearish.
QQQ returned .57% this week vs .24% for SPY; and another week of looking smart on IWM, we’re up 1.02%.
We continue to be Bullish on both indices (and have been for a while), so the ongoing Bull performance is right in line with where our Net Options Sentiment indicators have been moving.
Unless we see a shift, there isn’t much new to say here; same levels and no need to re-evaluate, as long as we stay at these Bullish levels.
Always good to keep up with us during the week for changes! Back to our regular times: 1st: YouTube livestream is tomorrow 12/11 at 11 AM EST and 2nd: Wednesday 12/13 at 3 PM EST. And never a bad idea to keep tabs during the week with our trading letter that we now write close to every day!
For Tech: QQQ Net Options Sentiment > 40 = Bullish < 30 = Bearish.
For Non-Tech: SPY Net Options Sentiment > 25 = Bullish < 15 = Bearish.
Sector Analysis / Portfolio Macro Strategy
One of the reasons we started tracking these sectors was to tell us if we were going to see a broad change in Sector returns, or just a correction. Based on, especially Tech and Comms, going back towards the behavior they’ve had for most of the last year, we’re leaning towards this being a correction. However, we don’t want to overcorrect based on a short reversal to the other side. That’s why we aren’t targeting any specific Sectors, but we do want to make sure and diversify.
Going with 4 Bulls (1 of them IWM) and 2 Bears.
Long / Bull Adds - Link to Below Picture
In lieu of any kind of sector directional conviction, we’re going back to our bread and butter! Highest in the filter and best technicals.
Long / Bull Drops
GWW is dropped due to it losing momentum in the technicals. Covered 11/26-12/08 and it finished -1.02% and a Loss, Losing to the SPY benchmark by 2.09%.
EQIX is dropped due to it losing momentum in the technicals. Covered 12/03 - 12/08 and it finished -2.75% and a Loss, Losing to the SPY benchmark by 2.99%.
EXP is dropped due to our change in Sector movement conviction. Covered 12/03 - 12/08 and it finished +2.12% and a Win, Beating the SPY benchmark by 1.88%.
ELF is dropped due to our change in Sector movement conviction. Covered 12/03 - 12/08 and it finished +3.94% and a Win, Beating the SPY benchmark by 3.71%.
Short / Bear Adds - Link to Below Picture
MGEE is the only stock on this list with good technicals and metrics for a Bear, so it was the obvious choice.
Short / Bear Keeps
CRMT is a keep, and returned -19.73% vs .24% for the SPY. While it didn’t perform all that well in our filter, something we've been thinking about going into 2024, is not to be too quick to drop Bulls or Bears if our original thesis remained intact. Additionally, we like CRMT as a Bear, due to personal credit potentially impacting spending and credit returns. CRMT reported a BIG markdown on bad loans, which is why it had such a bad week. So, did our thesis change? I think not! It was only reinforced.
Short / Bear Drops
VNET was dropped as a Bear due to technicals, completely changing directions on us. Covered 12/3-12/8 and it finished +13.75% and a Loss, Losing to the SPY benchmark by 13.52%.
Portfolio Allocation
4 Longs: IWM, META, LLY, BKNG
2 Shorts: CRMT, MGEE