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Update on LK – Squeeze to 30s

Dear Gio,

I noticed you’re a little hyped over this stock pick. Remember the rule: you will always regress to mean. Its just another day at the office, so while you have a nice win here, somewhere down the road you will face an equal loser. What will you do then that would be different from now? Perhaps, you wouldn’t share it to the world, since its easier to publish our wins. Will an aversion to loss cause you to hold on? Will you abide by your trading principles to cut losses and admit defeat? Well, that’s something to keep in mind. But going into this trade you must realize the possibility that the herd will take profits and leave you behind. Are you willing to admit a mistake there? Or will your bias rationalize your trade and cause you to hold on to the trade thinking you’re in control, when only chance or luck will make either humble you or make you look like a genius, the latter being even more dangerous as it would embolden you to make a patter of bad trades.

So while the trend is in your favor, remember you are not playing the market, but the players. The market is unbeatable, and it should stay that way. If everyone could beat the market, then there would be no game. Respect the market, and continue to short the greed, buy the panic, kick those who are down, and pull on the capes of stock traders blinded by their so-called superhero power analysis.

From the heart of a contrarian…


Its time to put fundamentals aside, and just attack LK from short term technical perspective. Stock is heavily shorted, and its high r/r for bears. Take advantage of those chasing the top, ride this to the 30s. Expect dips, which should make good entry points. For example, a morning pop to 29.80 showed high rate of exchange of covering, buying, and profit-taking. These uncertain and panicky exchanges usually mean the stock will continue in its short-term trend.

Adding to longs here.

Looks like I’m not the only one in on this trade.

Bullish on Luckin (LK) Aggressive Growth

LK seeks to overtake Starbucks by 2020, and a lot of traders are betting against it. What we need is more negative news, and some bad reviews ghost-written by bears to bring in more shorts. This stock just attracts so much rookies I had to take a long position pre-earnings. Looking to add this on a confirmed rally about 24/25 area.

Time to Go to Work! Slack On the Buy List

I’ve been waiting for slack to hit $17, but with its base forming here right at the low 20s, it has jumped way up on my to-buy list. You can show further patience and buy under 20, but when it comes to timing capitulation, its usually better to just make an entry and average in instead of timing the bottom. If the company is healthy, like Slack, has a great product, like Slack, and is under the radar by giants, as Slack is with Microsoft, then investing in it for the longer term is smart.

My stop-loss plan is to mirror something that of PDD chart. I’m anchoring the trade according to PDD 1-year chart… if this isn’t the bottom, I’ll buy more aggressively in 16-18 levels.

PRICE CHART OF Pinduoduo Inc (PDD)

Cut Losers Today – CRON / VFF. Exit ZM. Added to ETSY YETI shorts

I refuse to hold CRON into their earnings. Small upside (shorts covering) versus big downside to $6. I think it drops, and trickles down, offering a new swing trade entry.

Covered all ZM shorts, shorted 10 points ago around 78. This is one heavily shorted stock, and its due for a rally.

ETSY looks weak all over. And YETI is set up for a bull trap. Added to short position on both. ETSY is for a trend down, YETI looks like its beginning a nice long term trend down. Fancy water bottles belong in Ross, and these extreme coolers- just don’t see the growth here. There’s growth, but nothing to get this excited over. YETI to teens.

CARVANA (CVNA) Putting Bears to the Test

I’ve been going to battle with Carvana for quite a while now. And every time it gets knocked back, somehow it manages to rebound. I’ve been short through the 60s, tried again a few times in the 70s, and my currently play is the retracement from the mid 80s, through post-earnings to the low 60s. Right now, its not looking too good.

I’ve been in and out through stops, whenever the stock refuses to break through my target floors, and each set up I seem to get a good entry, only to be fooled and trapped by the bulls. I get the sense, that the textbook rallies from 10-15% above the 200MA are shaking out a lot of shorts which is really testing my patience on this play. I refuse to add to shorts above 78, and will only add on a break down to the 60s, with all those June-July tops (triple).

With a VIX this low, getting long here does not present a good risk:reward setup, hence the long-term play on the short. Let’s see how this gumball car machine company turns out when growth gets slammed and their stuck with excessive overhead costs. It just seems like a step back from shopping for cars on the internet. But what do I know, I’m just trading the greed.

TL/DR CyberArk (CYBR) Cashing in on Security

I am short CYBR. Here are my TLDR thoughts:

  • Financial statements looks healthy. Way better than FEYE which gets more attention and air-time. I don’t even think FireEye has made a profit yet. I should be short FEYE
  • I did the tutorial videos on YouTube for CYBR security software. The training videos completely bored me, but it seems they solved the problem of user access security and admin abuse.
  • CYBR short has nothing to do with fundamentals, because its just a good company filling a business need.
  • Why are you still short? Probably because I’m still in the green, been short near the 52-high, and even though earnings blew investors away, the response was a conservative 8% pop… reflecting more of a reaction by traders both long/short. I feel the price needs to retrace back to the 80s before forming a long-term base.
  • Stop loss on short is $130 for anyone wondering.
  • Adding to short under 100.

… even Noah’s Ark had its volatile fun. But eventually the rain stopped.

Pinterest (PINS) Problem with Making Money

Pinterest is a forum of endless creativity, and while it does get the traffic and heavy usage, monetizing is rather tricky. Many investors are pulled in with the illusion that PINS does well. What can you expect from a company that specializes in images. And the image Pinterest sold in claims of high profit potential, was a myth told with empty promises covering a real landscape of challenges, expenses, and the problem of scalability.

Adding the ability to buy products directly from the app seems like a good idea, but I believe in the future it will turn out to be a bad idea. The typical Pinterest user likes the app because of the personal creativity of the contributors, like a craft fair. Adding the ability for direct sales from the app has invited generic products promoted by commercialization, quick market penetration. The creative contributors that give Pinterest’s appeal will be diluted by dollar-sign-eyed, greedy, drop-shipping, made-in-Alibaba vendors. Try it, I dare you! Look up something you’re interested, you’re bound to be flagged for a product that looks innovative and something you think you need in your creatively ambitious life, and it will come with a price tag saying you have two days left to get it at 60% off, and that there are only 10 items left in stock. A classical play on exploiting human emotion. Well, fight that urge and look up that product on Amazon, and you’ll see the EXACT product photo, with a different vendor or branding, and at 20% cheaper price.

So, Pinterest is first an advertising company (and it does this well), and secondly, a waste of online e-commerce which uses the large net casting technique to make a sale to suckers. Instagram, SnapChat, FaceBook, and Pinterest are all following this same model, using user data to bring the mall to you. There’s a serious flaw in this revenue stream design, and investors need to pin this in their minds, and tame their expectations and view these social media companies as what they are- a shiny advertising platform.

Disclaimer: I am short PINS, FB, and soon to be SNAP . Target for PINS is $16.