That's a Win!

Brit Ryle

Posted September 15, 2023

Last Friday, September 8, I told you I was adding Lithium Americas (NYSE: LAC) to my “recommended buy list.” A big reason was the recent discovery of what could be the world’s biggest lithium deposit. I wrote: 

The McDermitt Caldera lithium deposit can help make the U.S. lithium independent. And Lithium Americas has a foothold in this region, potentially one of the richest lithium deposits in the world. 

At around $18 a share, Lithium Americas is as cheap as it’s been in 2 years. Its all-time highs came back in early 2022, at $40 a share. The stock is a pretty good bet at current prices. That’s why I’m adding it to my recommended buy list today.

The stock closed at $17.82 a share that day. It opened Monday at $18.42. Today it hit a high of $21.14. 

I’m gonna call that a win, especially since I traded call options on it twice during that nice run. 

On Monday, I told you that I was buying call options on Fisker (NYSE: FSR) because the stock was acting frisky, breaking over its 200-day MA at $6.36. The stock hit $7.05 today. 

Another win, and a pretty entertaining article too, at least I thought so.

Wednesday, I made the case for two earnings growth plays: Carnival Cruise Line (NYSE: CCL) and Las Vegas Sands (NYSE: LVS).

Carnival closed at $15.02 Wednesday, and then launched 4% higher to close at $15.63 the very next day. It’s backed off to $15.34 as I write today, but I don’t care: I’m calling that a win, too, even though I didn’t trade it. 

Las Vegas Sands is right back where it was Wednesday, I didn’t trade it and I have no comment – except that I thought I made it pretty clear I liked Carnival better anyway. 

All in all it sounds like a pretty good week, right? And it mostly was – except I couldn’t keep my grubby mitts off of AMD calls. I did well with an AMD trade last Friday, so of course I went back to the well, not once, but twice. In my defense, I thought a rally to the 50-day MA at $110 looked like a lock. 

A Day Like Any Other Day 

The indices don’t look all that bad after yesterday’s moonshot post-inflation data rally. Unless you wanna count the fact that both the NASDAQ and the S&P 500 are dropping below their 50-day moving averages. Of course that can happen when big tech like Meta (NASDAQ: META), Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT) are getting whacked by 3%-4% each. Oh and AMD, wouldn’t won’t leave the shellacking that stock is getting off the list…

Strangely, Apple (NASDAQ: AAPL) and Tesla (NASDAQ: TSLA) are holding up pretty well so far…

For all the hand-wringing about how awful stocks behave in September, declines have been minimal – so far. But I gotta say, it looks like that’s changing. I’m looking at the low from August 24 at 4,376 on the S&P 500. That was the day after Nvidia reported second quarter earnings. Everything launched higher, reversed and closed at the low of the day…

The decline didn’t extend, stocks rebounded pretty quick. Still I won’t be surprised to see the S&P 500 drop to that level – a bit less than 100 points lower – over the next couple of weeks. 

But here’s the thing, it sure looks to me like there’s a very good scenario for a powerful end of year rally. There are a few economic data points you can nitpick if you want. Slightly hotter inflation data, rising oil prices, maybe even the UAW strike that started last night at midnight…

But I’ll argue that today’s weakness is more the algorithmic trading that dominates today’s trading environment. These trading programs are more attuned to paths of least resistance than they are to the macroeconomic data. If the machines can push stocks lower (or higher) then that’s what they do. Best to just stand out of the way…

Combine the expectations for a weak market with the lockstep march of the machines, and I don’t see much percentage in fighting this battle – at least not for another couple weeks.

Let the machines drive prices lower, that only sets the stage for more upside when the worm finally turns. 

That’s it for me this week, take care, have a great weekend, and I’ll talk to you on Monday.

Briton Ryle
Chief Investment Strategist
Pro Trader Today