This Week in Episodic Pivots: July 16, 2023

Time for Caution

We had another great week in the portfolio. We are amassing some big winners. But it would have looked even better if not for the ugly reversal day we saw on Friday.

Banks reported earnings. JPM, C, and WFC both opened higher and then drifted lower during the day. And State Street just crapped the bed. They had to lower their net interest income predictions in the face of rising interest rates. A terrible look.

But many large stocks like Google, Nvidia, AMD, and Netflix had similar patterns. And the indexes tried to go higher and then pulled back on Friday. No one wants to be long over the weekend.

So I’m hesitant to make any moves today.

Our positions held up relatively well. The only one I’m thinking about cutting is SWAV, but that it’s too soon to do anything.

And on the upside, I liked the action I saw in AEHR last week. But that stock has made quite a move. And if we see a pullback in the markets, this will get dragged down with it.

So with Friday’s poor price action, let’s be patient for a day. If Monday is a down day - which the futures are down right now - that will be confirmation of a reversal. And we’ll want to lighten up our holdings. But we want to wait for that confirmation.

Earnings seasons is here. And great earnings could keep the market going higher. Espeically with inflation numbers coming in light last week. Low inflation plus strong earnings would lead to the Goldilocks scenario the Fed dreams of. And send the markets to new all-time highs.

I doubt that will happen, but I try to not let my biases impact trading decisions. So let’s hold off until the market gives us some clarity.

Patience. For now.