Why This August Is Tough To Trade…
This August Market Has Me Doing Backflips
=> One Stock is getting DESTROYED today… Keep reading for more on that hot mess!
I sat down at my desk this morning and I turned on my computer with hesitation…
Was the market up… Flat… Or Down Big?
Remember just a week ago - we got kicked in the teeth by good old Mr. Market.
Just look at the chart…
Source: Stockcharts.com
When you see the market fall like that it gives you pause. Honestly, it scares the crap out of a lot of people.
A big drop like that begs the question: “Is this a blip, or a precursor of what’s to come?”
I’ve been watching the markets since I was a teenager… I remember the 1987 Black Monday market crash… (I was still in school then!)
I’ve watched the market gyrate for years… decades really.
What’s funny is, like riding a rollercoaster - you still feel the ups and downs.
This week is no different.
August, in my memory, is always volatile. A lot of people are on vacation - and market volumes dry up… making market moves disproportionately bigger. That means MORE VOLATILITY!
Wednesday will be a big day - the CPI numbers will be out… a strong number means inflation is sticking around.
That implies the Fed will NOT cut rates soon… and the market will fall on that news.
A WEAK CPI number means Inflation is in check…and the market will probably rally assuming a rate cut will be showing up. What’s crazy is a soft CPI means we’re closer to a recession - or economic slowdown.
Which should be bad for stocks…
Welcome to the crazy world of the stock market and the Economy!
Thursday’s Announcement is HUGE
Thursday all eyes will be on Walmart…. Not just their financial numbers, but what they say will be critical.
They’ll be a great measure of the strength of the American consumer…
If they even hint that the consumer is weakening, the markets may rally on thoughts the Fed will be forced to cut rates.
Watch the Walmart Announcement - it could be a big market mover… and if you’re looking for a trade… Maybe buy some options around the earnings call.
Buy put options if you think the stock will fall… buy call options if you think the stock will jump.
Regardless of what direction you think Walmart will move, I hope you don’t own…
Today’s Big Loser
OK, this is ugly.
I hope you don’t own this stock. But if you do - shoot me an email and let me know if you’re selling, holding, or buying more…
Today’s big loser in the markets is B. Riley Financial (RILY).
The stock is classified as a financial company… but when you dig in, it looks like a baby conglomerate.
As I write this, the stock’s down 54%... YEP, More than HALF.
The company lost over $200 million in market cap in the blink of an eye.
What caused the dramatic selloff?
The company preannounced earnings… not good losing over $435 million
They commented on a former CEO and use the word “misconduct”
They announced a major writedown of assets
They canceled their dividend.
All in all, it’s not looking good.
I know sometimes you’ll be tempted to buy a stock that’s down big, anticipating a snap-back rebound.
I’d not touch this stock with a 10 foot pole.
You see when management has been up to “shenanigans” it often leads to future restatements of results… you don’t know what parts of the business are good or not. What other “Lies” are out there…
Just look back at Enron and their collapse!
If you like the stock and think it will survive - wait a tick and make sure things are moving from Really bad to less bad… before you buy anything!