This Week in Episodic Pivots: October 8, 2023

We're on pace to make 47% this year while the median stock is down 3.7%

Friday brought the bounce we talked about last week. After an initial move almost 1% lower after a hot jobs report, the markets shot up about 2.5% on the session.

Now, the jobs report was better than expected. One would think that’s good news, but we’re in a bizarro world. Because more jobs were created, that means the economy is stronger and that wage inflation could continue to drive the dollar lower. So that means it’s likely the Federal Reserve will keep rates higher for longer.

The stock market wants lower rates because that means companies can borrow more money and pay less interest. That’s good for economic activity. Many market practitioners believe higher rates will lead to lower profits in the future.

It’s important to understand the way the market digests news. And right now that’s the predominant framework to look at any macro news release.

But a strong move like that tells me that the bears are likely exhausted. And confirms at least a short-term bounce from here.

That’s why we put on two new positions last week and we’ll put on a new position this week as well. We want to play this momentum higher in the markets.

Now I’m sure many are seeing the headlines about the Hamas surprise attack on Israel over the weekend. While that’s a terrible human tragedy, the markets don’t seem to care much. So we can ignore that crisis for now.

What the markets will likely care about is the upcoming earnings season. It kicks off on Friday with Wells Fargo, JPMorgan Chase, Citi, BlackRock, and UnitedHealth Group releasing earnings before the market opens.

Record Keeping

Everyone should have gotten into Sea Limited ( $SE) on Wednesday as it pulled back below $41 a share. So we have that in the portfolio.

We got stopped out of Marquetta ( $MQ) on Tuesday for a 3% gain.

We’re going to raise the stop loss on HighPeak Energy ( $HPK) to $14 a share. I think there’s a good chance we see a pump in oil stocks when the markets open because of that skirmish in the Mideast.

And I don’t like the way the Adecoagro ( $AGRO) looks. We have a hard stop of $9.25 on the position, but I may put out an alert to sell if things don’t turn around for the stock.

If anyone wants some portfolio stats, we hold our average position for 43 days and we average a 5.4% gain on each position. And we’re on pace to earn 46.5% on our portfolio this year. That’s impressive considering the median stock in the Russell 3000 is down 3.7% this year.

With that, let’s get on to the recommendation.

Nano-X Imaging ($NNOX)

Nano-X imaging is on the verge of its first major product release. They expect to have scale production of the 3-D digital x-ray machine starting this quarter. And on top of that, they have an artificial intelligence program that it uses to interpret the results of the x-ray. And those results are often better than an x-ray technician can do.

This is a promising product offering. And why this $7 stock just earned a $30 price target from Cantor Fitzgerald.

I’m excited about this company on a fundamental level as well as the technicals. That’s why I’m talking about it today.

But there is one big caveat with this pick… It’s headquartered in Israel. So we’re not sure how the market will react to the stock. So to enter the stock, let 30 minutes of trading go by and see what’s going on.

As long as it’s still above $6.90 at that time, we’ll add it to the portfolio. And we’ll use $6 as our initial stop loss.

And that’s all for this week.

Happy Investing!