Bear market rally #4?

Investment Analysis Clubs Where Angels Fear to Tread
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Bear Market Rally #4 continues (using QQQ as measurement stick)

I typically sell puts/calls for income. I’ve been selling puts and/or calls pretty regularly the last few weeks.

watching these names: crwd*, ddog*, abnb, usb*, wmt, vz (trying to be diverse here, *=active short put)

I prefer to sell puts over calls and I am ok to own these if I get assigned and then sell a call against the stock. But I don’t own them as core positions. I prefer weekly calls, but weekly not always available so then monthly.

This is a net long strategy overall, works when stocks decline not too fast, don’t move, or go up. Doesn’t work when stocks go down too fast. But it is a relatively conservative stock-option strategy with a goal to generate income. If you use more conservative stocks (wmt) it is more conservative, if used with risky stocks (ddog) then much more aggressive.

I like when people post specific stocks, so here’s a contribution.

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42

MSFT beats…and GOOGL slightly, and both go up. Market fades it.
META “beats” with paltry numbers, and market poised to go up. I expect a fade.

Apple next week…rinse/repeat?

Many of the stocks we track report in May after the big guys are done with their ERs, so while they can impact those individual stocks post-ER, they don’t move markets like MMAAAN does.

So I think May might be a fairly crucial “tell” in the indexes this year.
The next round of ER’s takes us into late July, which was a period of no-fun in a few of the 2016-2021 years. If a recession really is going to occur, my guess is that becomes evidently more clear with forecasts coming out of July/Aug ER’s.

Does the market collapse when a recession is sighted off in the distance, or only after the ship anchors at recession island? My guess is the former.

Just a prediction:
July/Aug - onset of forecast gloom and doom
Oct/Nov - weakening numbers as predicated by those previous forecasts
Jan/Feb 2024 - dismal numbers (but perhaps also signs of expectations of improvement by X point in 2024)

If the above comes to pass, where and when to push all the chips in, under the theory that the markets are future forecasting machines. I hear many say we should be 6 months early.

So a bottom closer to end of 2H 2023? Or too optimistic?

Either way, a retest of index lows likely has to occur before bears feel justified that a recession is/has been priced in.

You don’t have to catch the absolute bottom to do well in your port by, say, end of 2024, from a CAGR perspective. Hardly long-term. But it would be nice to catch a 20-40% entry level discount from today’s prices, if you can. (when I say “40%” I mean individual stocks…not indexes, although I can see the index dropping 20% still).

In the meantime, enjoy the META rally.

Dreamer

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