The 3s Report: QQQ All-Time High
ROAR Score weekly update
Our "Reward Opportunity and Risk" (ROAR) score remains at 40 for the 7th straight week.
This means a 2-ETF portfolio that can only be allocated to SPY and BIL would now be 40% SPY and 60% BIL.
A more growth-oriented version of that SPY-BIL mix, one which allocates 50% to SPY and the other 50% using the ROAR Score approach, would remain allocated 70% SPY, 30% BIL.
3 Quick Thoughts on markets
World War 3 is out, artificial intelligence and stablecoins are in. Apparently that's what's driving the stock market currently.
But the bigger item is the bond market, as it usually is. Signs are growing that rates could finally dip, which could bring relief for consumers, especially homeowners.
Yet as shown below, this excitement is more of a continued gyration within existing price ranges, rather than a new era. More on that in the charts below.
3 ETF (or index) charts I’m watching
Nasdaq 100 (QQQ) looks ready to break out. Just like it did in February. But it failed back then. As I see it, $550 or so would add fuel to the argument that we've started a new leg higher, and that risks are brushed off for now. I continue to believe that September-November is the bigger risk to equities.
Here's the 10-year yield, and there's that hint of a drop in rates on the far right side. 4.1%-4.6% has been the range since February, so that's the marker until shown otherwise. 4.3% currently.
I am not a gold bug, but I'll own it for a trade or via an option collar. This is why: it can go from the favorite son to the wicked son (latter is a Passover reference) in a flash. Like as soon as the market stops panicking for week. IAU (gold ETF) looks very toppy here.
3 stock charts I’m watching
This is what a "dog collar" trade looks like. That's a label I use to explain my approach to collaring stocks. The collar involves buying the stock, buying a put option to protect the downside, and selling a call option to pay for some/all of that protection, while allowing for a lot of upside. In the case of INTC, I like it here, but don't trust it. Thus, the collar. I do that with all stocks I own in "size" these days. And I just can't understand why more people don't use that approach.
I don't usually chart stocks selling for $1.125 a share, though that price brings back memories of when stocks were priced in eighths of a dollar increments, not hundredths as they are now. PLUG is a name that came across my desk as part of a list of currently buzzworthy stocks. I guess when the price goes from $70 in 2021 to just above $1 now, that's buzzworthy?
Regardless, I checked it out. Meme stocks and penny stocks are fun to look at and chat about...I suppose? However, this one has little technical appeal to me. I'll let others take the mantle on this one. Fun fact: I routinely pay more in premiums on call and put options than the dollar price of PLUG. The mighty can fall.
And, to follow up on a $1 stock chart, how about NFLX, which might be on its way to $1,300 a share? This chart looks a lot like that of QQQ. Translation: rally from here quite possible, but the more parabolic it gets, the more likely it is to look like a steep mountain. And when you get to the top of the mountain, they tell me you can't go any higher. You can only come back down. Just saying. Enjoy the rally, while we have it.
Final thoughts for now
The constant talk I hear is that with all the risks surrounding us (tariff deadlines in 15 days, war threats persist, job market weakening, housing market already weak, inflation stubborn, Fed not moving, etc.), the stock market keeps going up.
Yes it does, if you look at the headline indexes and ignore the fact that the S&P 500 is trading today just below where it peaked 4 months ago. In other words, some see all-time high, others see 4 months of flat. Take your pick, I just chart 'em and manage risk.
But remember that this chart is still "a thing."
That's the 1,000 largest US stocks, and since 11/5/2021 they are flat. OK, up 1.76% in total, over more than 3 1/2 years.
That might mean that the rest period is over and the broad market is now getting activated. Or, that a narrow group of popular stocks are all we really need to focus on to grow wealth in the US stocks. I'm studying this carefully, because I think if one or the other ends up dominating, it will have a significant impact on wealth for many years ahead.
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