Coiled Spring Capital Mid-week report 7/19/23

The stock market has continued its winning ways and so far, has pierced all of our upside resistance levels. Markets that run on momentum sprinkled in with quite a bit of chasing tend to run hotter for longer than anyone can accurately predict. While we have been constructive on the market all year, we are of the mind that the market is starting to run a little too hot. Last weekend we thought it wise to start putting the defense back on the field, which means to tighten stops, be less aggressive, raise cash, etc. This does not mean we were actively looking to short.

The short sellers who continually think that every reversal candle defines the next large drawdown have been shown the door quickly as the market continues to press forward. Staying on the right side of the market is important, and sometimes that means playing defense is just watching from the sidelines. While we have kept on a good number of our long trades that we’ve discussed in previous reports, we are starting to peel those back.

Most notably selling $SCHW for +20% into yesterday’s strength. We posted this trade publicly on Twitter:

We also closed out $PYPL today for +12% as it hit our precise target at $75. We presented this idea on 7/3. Here is an excerpt:

We also closed out $SQ last week, albeit a tad early, for another +12%. Here is that excerpt:

We sold our $BAC today for +9% that we presented back in March along with other bank stocks ($JPM, $XLF) that we have since closed for nice gains. Here are those excerpts:

And this one is our favorites recently, as it bends all sorts of traditional technical analysis rules: $KRE (regional bank ETF) we presented back on May 7th when everyone else was running for the hills. Keep in mind we come from a fundamental background, so the combination of technical and fundamental logic helps us more accurately assess when things are overdone. We are currently still long but our price target range is $49/$53 so we will be trimming/selling into that range. Currently the position is up +25%. 

Here are the excerpts:

We closed out our oil long position for +9%, but holding our single stock longs in the sector.

We will be also be closing out the $IWM portion of our pair trade (IWM vs QQQ) that we added back on 6/28. This is now up +7%. Here is that excerpt:

Thats quite a lot of alpha produced, which we share as a courtesy for our premium members. We offer a unique way to interpret, trade and invest in the stock market. We also present a number of single stock, commodity and index ideas to consider when we see the risk/reward being skewed to the upside. Most of our ideas we hold for weeks and months, so you do not have to be an active trader to benefit from our analysis. We will update a few residual positions below.

This all for $24.95/month, and no contract. Quite a lot of value when compared to other subscriptions.

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