This Week in Episodic Pivots: September 4, 2023

Last week was great!

As we suspected, this pullback was short-lived. I know we got a little unnerved last week, but the overall thesis was the pullback would be short.

I’m not saying we can’t go lower, but with the S&P 500 and Nasdaq back above all their moving averages, the path of least resistance is higher.

And a couple indicators I look to see if there are stresses in the markets are showing an all-clear signal. Option dealers are back in positive gamma. That just means the options markets provides a mean reversion, or calming effect, on the markets.

The other indicator is a VIX futures curve. This shows what traders believe the VIX will be at future dates. Right now, this curve slopes upward in a normal fashion. That means the VIX is higher the further out in the future. If the short-term VIX levels are higher than the long-term ones, that means the market sees trouble ahead. But we don’t see that right now.

We can continue holding our positions and remain invested.

And last week was great for our portfolio. All our positions were up on the week. And MoneyLion ( $ML) was off to a great start with a 28% gain on the week. It had another day that would have qualified as an episodic pivot this week as well. And so did Infinera ( $INFN). We’re seeing a lot of buying power heading into these companies.

Patterson-UTI Energy ( $PTEN), completed its all-stock merger with NexTiew Oilfield Services last week and that shot the stock up 5%+ on Friday. They also received an investment grade bond rating from S&P on Friday. That shows increasing confidence in the future of the company after the merger.

We have a lot to be excited about.

In bad news, this week I didn’t find any episodic pivot setups that I liked. The risk-reward ratio was off on just about every one I got excited about.

Part of our strategy is to find setups with a tight stop so we can exit our losers quickly and unscathed. And then we let our winners run. This is the way to making more money in the markets.

And we still have 8 open positions, which is a full book and a lot to manage. So I feel OK waiting out this holiday shortened week.

Plus we never know what kind of trading we’ll see on these weeks as the big traders take the week off for one last trip to the Hamptons. So liquidity is tight. And we can see some strange movement. Perhaps some of those pivots from last week will come back and retest key support levels giving us a better entry…

So this’ll be a short one. I hope you all enjoyed the long weekend and had some fun grilling. I did!

And that’s all for this week.

Happy Investing!