Hurry Up and Wait
Jump To
This is the weekly article and Pod/Video Show 34 – Hurry Up & Wait
We’re a few weeks away from the September FOMC cut and the important jobs data tomorrow which probably indicates whether or not we get a 25bps or 50bps cut in rates which will be interesting to see given some of the consumer data we’ve seen as of recent. This episode I want to review some of the Swing Positions for August and then get into a discussion on housing stocks as we get into the end of this rate cycle.
Vancouver for Small Cap Conference end of Sep.
Any readers that are in undergrad and in Finance/Econ program and want an internship, message. We need someone to help with the AOTW and light research. Will get access to TLV Report and more.
- Q&A’s this week for this that want to skip
New Readers Here.
If you’re new here welcome, make sure to subscribe on YouTube and/or Spotify – you can get free daily market updates on LongVolReport.com.
We publish the article of the week every Friday here on TheLongVol.com and then the podcast/videocast is on Spotify and YouTube.
Three main topics for today’s show – as always, a life update then:
- Articles of Interest from This Week
- Broad Market Discussion
- Swing Trades for August
- Housing Stocks
- Q&A for The Week
Quote of The Week
Favorite Articles This Week
August Swing Monitor Review
The report tracks 4 stock monitors each week – if you’re not familiar with that idea there are sites like Insider Arbitrage that only monitor Event-Driven information/strategy.
I subscribe to his site for info relating to spin-offs/data that is easily accessible and it works for our information flow we need for some of the long/short strategies we run. If you’re reading/listening to this you might not need that but I created TLV to be a toned down version of a research report. I was told this week that the “report is a lot” – yea, it is. It’s a lot if you’re new to trading and don’t have it down yet and it’s a lot of you don’t have an investment portfolio to make it beneficial but to be clear, not all things are just options trading – or maybe they are, it’s your world and you can interact in it as you like.
But, we cover a Swing Monitor that combines three different frameworks all using what is called Top-Down Analysis. (Read: what is top down analysis?)
We track Macro, Fundamentals and Technically driven. Some ideas we just replace with fundamentals instead of macro then dive into a sector and some ideas are just technical trades. The point is, we track a lot of ideas there to watch for ideas to Swing Trade. Usually with a 7-90 day average hold time which is ideal to allow a catalyst/trend to play out. We then structure the idea with a deep-in-the-money call/put to allow the trade to have intrinsic value to work.
I know for some of you that might read this there’s an obsession with day trading and getting the entry exactly right – in fact, whether you want to admit it or not (most don’t) it’s extremely hard to do on a consistent basis – again, not that I don’t do it in my personal account from time to time it’s just very time intensive. Hence, a portfolio of long/short swing ideas.
To clarify more, most funds (or advisors) do this too but with different approaches – at the end of the day the concept is the same: you express a view shorter-term than a buy and hold (like $PZZA) and with smaller size.
- Optionality provides you with fixed risk/cost and leverage
- DITM gives you intrinsic value
- 90+ day expiration gives you time to let the idea work
- NEM/NIKE/PAYPAL and CELH (loss) and some other active ones
52-Week Breakout on this finally triggered
- Not a fan of this longer-term because they are basically going to be flat on EPS and FCF and hard to see what they can do to change that but served (and maybe again) it’s purpose for a trade.
Concluding:
- Good Q2 so far there on most of those names with some still open and likely to complete post September FOMC meeting
If you are a Professional and need multi-user access, please email.
Broad Market Analysis
The markets certainly did not like the highs this week and given last week was end of month to sell it to start made sense a bit. Right now this all seems like a shake out left and right but my views are the same as last week regarding the broad market (may change given the NFP data tomorrow).
- Sideways to lower/shakeout action
- Rally into Fed Cut but don’t expect much more
- The idea that is widely accepted is that pending the jobs number the rate cut BPS changes so we’ll see how we react tomorrow
- Gold getting very toppy but one more leg left maybe
Callaway golf announcing spin-off of Top-Golf.
Advanced Auto Parts: Check Up
- $1.2B Carlyle deal closes by end of Year – can be used to deleverage the balance sheet
- Poor margin guidance didn’t help need to see that improve
- Trading at a 15 P/E compared to $ORLY at 26 and $AZO at 19
What’s Up With Oil?
- WTI CL down nearly -19% in the last 60 days of trading – is there a bottom coming or more selling?
- CNBC article on it
- Opec to delay hike for two months
Taking an idea like this and making money from it starts with creating potential scenarios:
- If this happens then what?
- If that happens then what?
- Where do I think we trade in the next week?
- How do I execute on the idea?
I used to trade a lot of WTI Crude futures back 10 years ago but have not really traded it too much this year but given the selling and technical setup it becomes an interest. Usually trading the WTI options or a correlated equity is the preferred route but also some ETFs.
Final Word.
- Report out this weekend Issue 35
- Open Q&A for the Show this week
- For those trading part-time, learning or with less than $25,000 – active trader is open.
- If you are an investor with experience and meet requirements, apply for DeltaOne – the window is open
Opinion, not advice. Not a solicitation.
Next Lesson
Patience Pays and Stock Market Sentiment
GXO Logistics and Stock Market Sentiment
Ready for Take Off or Jet Lagged?
About the Author
Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital Management L.L.C., a multi-strategy investment management fir. He has over 15 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.
He is also the founder of TheLongVol.com, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.
