One Current Market Observation:
Stocks continue to trek higher, and most recently, we’ve seen a huge surge in the most speculative names. This euphoric price action in sectors with no meaningful revenues (Quantum, Nuclear) has raised talks of the market being too frothy. On a scale of -10 (maximum bearishness) to 0 (neutral) to +10 (maximum euphoria), I’d only put us at maybe a 7. For many long momentum swing traders, the more extreme side of bullish is when the most profits are made.
One Nugget of Trading Wisdom:
Every bubble is always built upon a kernel of truth. The theory that AI will unlock a whole new world of productivity is the current kernel of truth that I believe to be fueling the current market. AI is likely to change many aspects of our lives, but with markets, it is always more about the second derivative question of whether the price investors are willing to pay for relevant stocks ends up justified over time.
One Reflective Question:
If you are riding the momentum higher in stocks, how do you gauge when we might be getting overdone?
One 1%-Improvement Idea:
This market is reminiscent of some of the euphoria going into 2021. Study the best breakouts of 2021 and compare them to the breakouts we’ve recently seen in $TSLA, $OKLO, and $IONQ. Build systems to find more of them in the current market!
One Reading Recommendation:
One Reading Recommendation: Interested in studying previous market bubbles more deeply? I found this book, Boom and Bust: A Global History of Financial Bubbles, to be a fascinating read.
Forget outcome. Let’s get better this month.
