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  • kennethkohwk

Taking a long break and parting trade ideas

Hi folks,

I'll be taking a break to the end of the year.

I'll be focusing on consolidating skills in finance and quant while on other projects like a Christian book on victory over long-suffering in the meanwhile.

I'll leave you with an update on the markets in the meanwhile and wish all ofyou the very best!

The last few turning points captured by our smart trader model has been spot on. It's not perfect, but it works to add probabilities to you side.

It turned "risk on" at the end of Oct 2023 which was good timing. It turned risk off (consolidating) at the start of Jan 2024 and back to risk on with caution towards the second half of Jan 2024 which was also good timing. It turned risk off near the end of March 2024, which was great timing, nailing the decline. the middle of January 2024 which was spot on.

Now, we have a minor signal of risk on again.

I think that so long as my signal line stays under the black line on the momentum panel (last panel), we should be looking at a decent May 2024. Note that in terms of probabilities, I still think we have one good correction before a year end run up that should take out the highs. That's what I think now based on the information I have today.

As a seasoned trader, I was hoping for a larger pullback, but sometimes it does not happen. I use sentiment to gauge my risk-reward in those times. From,

The "perfect" major tracement would be when both my Smart Trader indicator hits over the extreme zones before momentum turns it around and The Smart Money / Dumb Money are at extremes. This only happens sometimes. Other times, the signals are fuzzy.

Now it's fuzzy. It's "bullish" but the "sentiment discount" is neutral.

The momentum has turned bullish, but in terms of "sentiment" the bargain is so-so.

This makes me favor stocks where companies has already issued good guidance going forward at reasonable valuations.

My last parting gift are these two ideas that I think are worthy of looking deeper into at this time.

Some companies worth a deeper look include:

  1. QCOM (an AI-related stock only at 18x fw PE that hasn't been totally price discovered in terms of AI as well as new verticals into PC, and improving auto).

  2. OEC (sells carbon black, both ICE or BEV cars need them. The stock price is at good valuation <11x fw PE. Next year looks like both demand improvement + supply shrink because russia's carbon black is banned. It's debt is below 2.5x debt/EBITDA and management has already stated they will prioritize free cash flow that will go into either debt reduction, share buybacks or high growth investments).

Both of these have catalysts that is more than "the economy will improve", so hopefully, there will be alpha found here.

Thanks all for being a part of these posts, and I hope this msg finds you well.



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