Sandbagging son of a _!
9/19/24 Prospero.Ai Investing (156th) Edition (Midweek)
Sandbagging - “Sandbagging is a strategy of lowering the expectations of the strengths and core competencies of a company or an individual in order to produce greater-than-anticipated results.”
This volatile market has some new tricks up its sleaves apparently. Sandbagging was the first thing that came to mind when we took a first glance at the market this morning. This is the kind of response you’d expect from the market yesterday after the .5% rate cut announcement. But we think, in a volatile market like this, there were many looking around and taking a quick look to ensure that others weren’t going to turn this good news into a “buy on the rumor, sell on the news” type of event. But a big rate cute like this has every reason to impact the market in a positive way on a longer time spectrum so this market hesitation we saw seemed to have been just that based on the price action this morning.
Indeed it is not uncommon for institutions to place options bets on an event before timing the right entry point. Pre and post market is a good time to get the entries you want as well because volumes are lower and it looks like we saw many well timed entries at the start of the morning given what has followed. QQQ Net Options Sentiment stable mid 50’s levels certainly said that good days for Tech were ahead so we can’t say we are suprised by this. But as we have recently, we caution against over-exhuberance because turns from Bullish to Bearish have been both sharp and sudden since Mid-July when Donald Trump’s morning comments on Taiwan sent the market spiraling downward. You could say until we are past the election it is fair to expect sharp turns. So if you are Bullish, enjoy the morning but not too much and keep your eyes on Net Options Sentiment!
A WORD FROM OUR CEO
We have remained cautious due to volatility and stayed fairly even long-short and have been slowly climbing back up to beating by 80%. We are currently beating the S&P 500 by 78% annualized, with a win rate of 61% against SPY benchmarks.
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