Another week, another media freak out.
Now, I know that it’s the job of financial news to attract our attention and direct it.
But for once — just once — I wish they would attract our attention to something constructive.
Today, they’re apparently concerned with making us get FOMO over Dogecoin…
They want us to get all worked up about tech stocks falling today…
And they want us to all be ridiculously scared that Treasury Secretary Janet Yellen thinks interest rates may have to go up.
First off, I’ve said all I’m ever going to say about Dogecoin… I just don’t care enough about absurd speculations like these to elaborate further.
Secondly, we’ve talked about what to look for when markets fall — trends in volatility.
Today’s “big” spike in volatility, its second derivative (the volatility of volatility) looks like this.
Source: Seawolf Research
Doesn’t look scary at all to me. And it’s certainly not as dramatic as what we saw from January to March during all those short squeezes.
But the interest rate thing — that kind of sets me off.
Interest rates may have to go up?
Seriously? Just look at the darn chart, for crying out loud.
I hate to break it to the esteemed Secretary Yellen — the Greatest Dove of All™ — but interest rates already went up.
They’re even down today, so I’m not even sure why this is much of a story.
Well, other than pictures of Janet Yellen tend to spark outrage amongst the grizzled, bespectacled, wannabe anarcho-capitalist value investor types.
But seriously, this head fake likely gives us one of the last chances to pick up shares of our most promising names while they’re on sale.
So let’s go down the list.
The game is pretty simple — buy low, sell high.
Today, all the hedge fund laxbros happen to be doing the opposite — they’re selling low.
The first opportunity I see is to pick up another quarter stake in the Invesco QQQ Trust (NYSEArca: QQQ), currently in the process of making a higher low within a bullish formation.
The second opportunity I see is our sneaky play on next year’s number one EV producer — Volkswagen.
And that stock just went on sale, so this is a great time to pick up another quarter tranche.
And finally, the small-cap names represented by the Russell 2000 (NYSEArca: IWM) have been in a consolidation pattern for some time now, as investors have recently eschewed them for mega-cap names.
If any momentum builds up underneath this part of the market, we could be in for a rally that would just melt the faces off near-term bears.
If that happens, we’ve seen the result… Algorithmic trading systems will just pile on and literally everything will go up.
And then it’ll go right back down.
It’s difficult to say how long any push will last. But whatever the duration, I’d like to have some upside leverage, and I’d like to pick it up on sale.
Last time around, we used the Direxion Daily Small Cap Bull 3X Shares (NYSEArca: TNA) as our short-term leverage vehicle, and it performed just fine. It’s down 5% today, so it’s a good opportunity to put those wading boots on and jump in the water with a quarter tranche.
And if financial media’s Janet Yellen pictures trigger some more selling on Thursday… Then we’re going to wade in some more.
All the best,