Trading in a Wildly Bullish Market
$NVDA, $AMD, $JD
None of this is investment advice. I share charts, and ideas that I’m acting on in my own process, and hopefully it’s of some use to you.
We’re at the point where basically everything is working. Strong charts everywhere.
I’m doing 3 things lately -
Managing winners (covered calls, rolling out options, even adding to positions where I think there’s still more to go)
Buying cheap insurance (VIX is low, Indices are mostly at highs)
Scanning for new ideas
The last point is what I’m speaking to now. I think you basically have three choices in the short term -
Ride the momentum of a blue sky breakout ( NVDA 0.00%↑ )
Find names that have the momentum, but haven’t yet cleared to new all-time highs ( AMD 0.00%↑ )
Look for names that are still meaningfully off their highs, that look to be turning the corner, but have an identifiable nearby price point on the downside that you can risk manage for when the market swings back the other way.
Enter JD.com
We have 3 separate instances in the past year where the stock has sold off without reaching oversold conditions. We have positive RSI divergence, and some meaningful recent up-volume. JD doesn’t report until March, so there’s time for a tactical trade without earnings risk, and a stop out at the October low of $24 is about 15% downside to todays closing price.
I’m finding myself attracted to these setups, because if the market strength turns out to be protracted, I believe the alpha will be in these types of names as market multiples expand.