Episode 50 - Catalysts and Stock Research
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This is episode 50 of The LongVol Report Podcast – welcome back and for the new listeners, welcome. Make sure to subscribe to the Spotify/YouTube – we put this out each Thursday with the Pod/video out on Fridays, you can ask questions each week here and I’ll do my best to answer.
This week we’ve been chopping around in the broad market but there were some notable downgrades on shares of Apple and Tesla that I want to tie back to prior podcasts plus some other notes on Trump Tarrifs, DJT stock, some Biotechs making waves and other headlines from the week.
We’ll do our normal stock market sentiment check in with some charts then get into the topic of this weeks show: Catalysts and Stock Research. For new listeners here we publish a weekly Stock Monitor called The LongVol Report which is a research tool that monitors over 50 tickers so I want to cover that a bit to kick off 2025.
I am going to answer three questions this week:
- What catalysts do we monitor and why?
- What triggers the entry into a trade/investment?
- How can you research in less than 20 minutes a week?
This week we’ll talk about:
- Broad Market Update
- SPX & Other Charts
- Large Cap Down Grades (NVDA, TSLA, AAPL)
- DJT Stock
- Crypto Update on XRP and Bitcoin
- What Trump Tarrifs Mean for Novo Nordisk
- Argentina Stocks On Fire!
- Weekly Q&A
Now on Spotify
The Broad Market: Stock Market Sentiment
Some downgrades this week on some Mag 7 names, CES and Fed Minutes put pressure on equities. A few weeks back our views were that sell-side pressure would remain and that we would see selling into January, despite a bounce into Trump coming in.
Bonds are the big story and have seen pressure.
- Investors been dumping bonds with longer maturities, wallstreet predict
even higher yields ahead.
• Treasury Department is getting ready to sell $39 billion worth of 10-year
notes and $22 billion in 30-year bonds today and tomorrow.
• 10 year treasury notes at 4.695% today (highest since April) and 30 year
treasury notes at 4.919% today (highest in ~14 months).
This is from Episode #47 below on the SPX500 – the thoughts shared then apply today as we are in week two of January.
Let’s go around the horn and look at some updated charts like we do each week on the following names.
- SP500, Nasdaq, Gold
- XLE, XLF, XHB
Credit @RedFin – record high on housing affordability. Two weeks ago on Episode 48 we talked about $XHB and housing – a great short for report readers.
And here we go again, crowding into the large cap names continues. We’ve talked about our concerns with this for Q1 a few times.
This is a clip from Episode 47, start it at 27:00 – similar comments.
Large Cap Stock Downgrades
A few notable downgrades this week to cover ahead of earnings season and what is expected to be slower earnings growth in Mag 7 names.
Conclusion: same as last week – we believe Mag 7 names are set to reprice for various reasons as we head into Q1.
Catalysts & Stock Research
What do we look for in catalysts and how can you use the report in less than 20-minutes a week to expedite your research. Plus, a quick discussion in triggers – what gets an investment from thesis to cash deployed?
Let’s start with catalysts as we see them in our approach. A catalyst can be any variety of things and the most common ones for us are:
- Material changes on earnings (FCF/guidance/buybacks)
- Tailwind shifts from policies
- Corporate changes such as reducing debt by selling off non-core assets (VFC as an example) or even Advance Auto Parts.
Paying attention to companies buying back shares is an important catalyst to trigger the research process as are other things listed above. Once you have the catalyst you start the deep-dive and understand the why — and sometimes you’re going to do the work and it leads to nothing and you move on.
- Price levels for momentum ideas are the easiest thing you can do – they take less than 5 minutes each week and you really don’t need to change them. At a min. (even if you don’t believe in them) you have some sense of targets on order flow.
- For those not concerned with timing a market (we are) then ignore it and you can use: LEAPS, spreads or the equity with commensurate risk for your portfolio.
But what about a technical or chart catalyst? What about something that needs to: insider buying, buybacks or material change? Can there then be a catalyst or a trade made from just a chart? Yes.
But, knowing what is driving the Company or sector certainly helps and as we discussed above this week on Tesla and their downgrade that helps to paint you a picture.
Some notes from Michael Crest at Bluecrest (worth a Google).
Conclusion; The duration of the position matters for triggers (when you get in) and for us things can take anywhere from 3-18 months or in certain situations 1-2 days so that part is always a variable for each investor. The key as we see it is you want to know what you own and why you own it, use little to no leverage and exercise patience. Some ideas are going to take time and those changes (when a Company is growing or turning around) are not “7-minute abs” style they take time!
So, follow the catalysts and ideas that matter to you and your returns and that will help you narrow down ideas worth executing on and ideas worth taking a pass.
Final Word.
- Issue 2 is out on Sunday – make sure to get a copy we’ve made a lot of new adds to the report.
- Plenty of names to do work on for earnings season and from the report
- We’re lightly bearish the broad market names still
This is opinion, not advice. Please read the terms and disclosures.
Next Lesson
Patience Pays and Stock Market Sentiment
GXO Logistics and Stock Market Sentiment
