Quick Update: Inflation, Markets, and Momentum Portfolios – What's Ahead?
Jan 15th, 2023 - Update
Very quick update for this shorter-than-usual week.
As you probably know, the CPI reading for Dec 2023 was higher than expected (3.4% vs. 3.3% expected).
Looking at most economic data, I cannot find anything truly concerning regarding an impending recession.
The most concerning aspect is geopolitical, with the Suez Canal crisis that might bring inflation concerns in the short term if a solution is not found shortly.
Still, the forecasted inflation reading for January, to be released on February 13th says that we should get a 2.95% YoY inflation.
As mentioned many times, the economy goes into recession via credit tightening, which is caused most of the time by monetary tightening and higher interest rates set by central banks.
Well, when looking at liquidity measures like M2 or the Net Liquidity I see improvement and not clear tightening.
Looking at the SP500, we are in a clear uptrend and testing new ATH:
While the Equal Weight SP500 has been trading mostly sideways because of a lack of participation in the SP500 rally from most stocks:
The market is somewhat extended and I have been expecting a correction or retest of the top-of-the-box area in the chart above.
Let’s stay open and flexible and see what we’ll get.
Now to my momentum portfolios.
10X SMALL CAP PORTFOLIO
Well, the time for ML 0.00%↑ came last week as it sold off touching my stop loss. After some months I am out of the trade for a combined gain of about 140%!
Also, this week my ESPR 0.00%↑ order was triggered and I am up 16% in the first week. Let’s see if I’ll get one more strong stock. it looks promising, yet biotech stocks are very very volatile.
Below is what my small-cap portfolio looks like today:
Some interesting stats from this portfolio:
I have closed 26 trades since inception 1 year ago.
20 trades were losers (77%) and 6 were winners (23%)
The average gain was 88% and the average loss -16%
It took only a few big winners to compensate for so many losers
Looking at what happened to the stocks I sold after I sold them… on average they are up 11%, with VIRC 0.00%↑ that I sold for a 14% loss that is up about 180% since I sold it one year ago!
After one year, this portfolio is up 48% (worth 14.000 USD vs 10.000 USD which was the starting investment)
The return is great, yet lower than the 54% I got from my “buy and hold” 2023 Portfolio!
What am I doing this week?
I am creating a LIMIT BUY order for YMAB 0.00%↑ in the Biotech sector for 300 shares at 8.25 USD which is about -10% from the current price (I don’t want to chase a too extended stock, so I’ll try to get my shares at a better entry point if the market allows me next week.)
If triggered, I’ll place a stop loss at 6.97
I am creating a LIMIT BUY order for ACMR 0.00%↑ for 125 shares at 19.9 USD. If triggered, I’ll place my stop loss at 16.9USD
10X LARGE CAP MOMENTUM PORTFOLIO
I have not been doing much here. Let’s try to get back into the SMCI 0.00%↑ train again. here is what I am going to do:
Create a BUY LIMIT order for 8 shares of SMCI 0.00%↑ at 320 USD.
If triggered, I’ll place a stop loss at -10% from the entry point.
SMCI 0.00%↑ is a strong name within the #AI theme.
That’s all for this week!
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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.