Monday’s Closing Market Stats
Closing Volume
– NYSE volume 10% below its one-month average
– NASDAQ volume 7% below its one-month average
– VIX index: down 7.45% to 18.50
Breadth
S&P 500 Sectors
% Movers
Heat Maps
Position: None
Regrets I Have Had a Few… Recently
Regrets, I’ve had a few
But then again, too few to mention
I did what I had to do
And saw it through without exemption
I planned each charted course
Each careful step along the byway
And more, much, much more
I did it, I did it my way
– Frank Sinatra, My Way Frank Sinatra – My Way | Live from The Main Event at Madison Square Garden (1974)
Few in the business take ownership of their losses and missed opportunities (long and short).
Every day I listen/view the B.S. of guests and panelists in the business media — as if they never made an investing or trading boner. Their insistence of buying lows and selling highs is disingenuous.
But I do take ownership of my screwups.
As I have written, I am often wrong and always in doubt (and I mean that, as they are just not words).
Over the last four weeks I have had my share of blows — most recently in cannabis and Glass House ($GLAS) (which I will be discussing after speaking to management). After profiting and selling near the 52-week high, I sold my PepsiCo ($PEP) prematurely (after buying back near the 52-week low) — missing the last five-day advance from my sale price.
I failed to take advantage of excellent opportunities on the long side — specifically Microsoft ($MSFT) and Amazon ($AMZN), which I was poised to buy, but my ursine predilection held me back.
I also failed to take advantage of the opportunity set of individual short names. I saw “no broadening” and I took a quick and profitable trade shorting the Russell Index ($IWM) right at the highs, but I missed the big move (from $305 to under $280). I took a series of short-term gains in trading $SPY and $QQQ but missed the big (and playable) move down in the Nasdaq.
So…
My national anthem… but you need not rise!
My friends I have made it clear and I have stated my (bearish) case of which I am certain.
I have travelled each and every highway.
But more, more than this I did it my way.
Regrets I have had a few recently.
I grew tall through it all and did it my way.
I’ve loved, laughed and cried
I had my fill, my share of losing.
And now, as the tears subside.
I still don’t find that it’s all so amusing.
I took the blows but did it my way.
Position: Long GLAS (S)
Another Divergence
Bond prices at the low of the day.
$TLT -$0.60.
The dead cat bounce might be over.
Position: None
Homewreckers
I have been researching the homebuilders as a possible contrarian (and long) investment.
But the increase in materials/supplies and labor costs coupled with ever-higher mortgage rates, which serve as a detriment to “moving up” purchases and, in general stretch affordability (pricing out first time buyers) makes it impossible for me to bottom fish at current levels.
I see rising homebuilders’ incentives and forward weakness in the top and bottom lines.
Position: None
Tweet of the Day (Part Trois)
Position: None
Too Busy to Short
I should be shorting the indices on today’s ramp but am too involved in flushing out $GLAS and undertaking other research projects.
Position: Long GLAS (S)
Boockvar on Housing
From Peter Boockvar:
The housing recession gets even tougher
The October NAHB home builder sentiment index fell to just 29 from 32 vs the estimate of 31 and well below the breakeven of 50. Both the Present Situation and Future Outlook components slipped and Prospective Buyers Traffic declined to just 18 which is the lowest since 2012 not including Covid.
On the demand side, something we are clear on, “Mortgage rates have climbed well above 7% in recent weeks, and higher gas prices and inflation have further weakened buyer traffic across much of the country” said the NAHB.
With respect to delivering homes, builders are contending with “higher costs for construction loans, building materials and diesel.” Also, “Nationwide, more than one-third of builders reported immigration enforcement activity in their market areas during the past month, causing construction delays and discouraging legal workers from reporting to work.”
And what are builders doing to drive sales? “The latest HMI survey found that 43% of builders cut prices in October, the highest share during the 2020-2026 period. The average price cut remained at 6% for the seventh consecutive month. Meanwhile, 65% of builders reported using sales incentives in October, the 19th straight month at least 60% of builders have done so.”
Bottom line, the housing recession is getting even more difficult with the rise in mortgage rates. Unfortunately I see time as the only cure. The time needed for income growth to advance during a period of time where home prices flat line or fall to improve affordability that can allow the buyer better withstand higher rates.
NAHB
Prospective Buyers Traffic
Position: None
Tweet of the Day (Part Deux)
Position: None