SpaceX would be a great buy at $100.
I said it a couple of weeks ago, and I’ll say it again. If SpaceX came back down to 100 right now, I’m not sure I’d buy it.
It has nothing to do with SpaceX and everything to do with the marketplace. If SpaceX gets to 100, the S&P and the Nasdaq are going to hell in a handbasket, and there’s no way I’m touching that.
Intel Got Hammered And It’s Still Up 57% This Year
People keep asking me what’s on the menu. So give me one stock that’s a deal. I don’t see a single one, and if I did, I’d be in it.
Earlier this fall we found a few. We talked about McDonald’s when it was somewhat of a deal, and it rallied. Nobody wanted to touch Lululemon, and we went there anyway.
Now look at Intel. Everybody says it got beaten up, and it did, but at about $62 it’s still up 57% this year. Intel getting hammered would look like trading back down to 40.
Markets Crash From Oversold, Not From Highs
Markets don’t crash and burn from highs. They start a little waterfall, and then they accelerate. They crash from oversold, because a lot of people say it can’t possibly go lower than this, and then it does, and then they panic.
The Nasdaq-100 closed in correction territory yesterday, more than 10% off its October high. Retail was a net seller of about $1.4 billion, only the second outflow of the year, after buying something like $1 trillion of stocks and funds.
Nobody is barfing out of this market yet. People are still going to try to buy the dip.
Buy The Dip Only With A Spread
I don’t want to hear the phrase “buy the dip” unless you’re using a spread. You can get aggressive here. Don’t bottom fish, and don’t sell puts thinking this is the best share price you’ll ever get.
A spread means you buy one option and sell another against it. Options are expensive right now because implied volatility, the move the market expects, is high, and the option you sell offsets almost all of that.
On a Nasdaq spread I looked at this morning, it cut the volatility exposure from 23 to 3.
You’re never going to pick a high or a low in volatility. So before you buy anything, pull up the stock you’ve been itching to grab on this dip and check how much it’s still up on the year. If it’s anywhere near Intel’s 57%, it isn’t a deal yet, and if you still want in, cap your risk with a spread.
To your success,
Don Kaufman
P.S. The financials are the one group still holding this market up, and right now they’re my most hated product on the screen. Tomorrow at 9:30 a.m. ET, I’m going live at the open to show you whether that last pillar cracks once the election results are in, and where the money goes if it does.
