Friday I Recommended IPOs: CrowdStrike, Zoom, Fastly, Revolve, Slack; What To Sell/Buy

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Includes: ANET, CLDR, CRWD, CZR, DOMO, ERI, ETSY, FSLY, IBM, MDB, MPC, MTCH, NEWR, NTNX, PBF, PSX, RDFN, SPLK, SQ, TSLA, TWLO, TWTR, WORK, Z, ZM
by: David H. Lerner
Summary

The G20 meeting is a binary event, be prepared.

High beta names like the IPO names I recommended Friday and other tech names I mention here should produce alpha.

Keep an eye on Slack which I like as a long-term speculation and a short-term trade.

The S&P is already at nearly 18 times 2019 earnings. If it runs up more, it will be unsustainable, just be vigilant.

Please know what you trade. This summer it will be more important than ever.

Faster trades this week

My usual trading style is more stately than this, but we need to keep the time scales on a short leash because of the events coming up, events that could spark a sell-off.

If you haven't already read my Sunday piece, "Markets Climb Walls of Worry. Here's the Wall and What to do," please read to get the background.

We are very well priced as we continue to break all-time highs in the S&P. In the past, we have seen the value of the market go way higher than what any reasonable person would see as fair market value. Currently, we are at 17.6 times estimated S&P earnings. The historical average is 15, but interest rates are really low, raising the value of those earnings is justified. However, in my opinion, we are very well priced indeed. At some point, the music stops and we are going to see another whoosh down. So let's trade more than speculate for now. I use the word speculation in a particular way because I can't think of a word to describe a longer term transaction than a trade. In any case, in my Friday afternoon piece, "If you regret not buying IPO names, consider buying a little now," I selected the IPO names: CrowdStrke (NASDAQ:CRWD), Zoom Video (NASDAQ:ZM), Fastly (NYSE:FSLY), and Slack (NYSE:WORK) to be bought Friday afternoon and now I want you to trade them this week. Whether you decide to sell 30% today and tail it out the rest by Thursday, that's up to you. In fact, you may want to add to ZM, CRWD, etc. early this week, or take the opportunity to pick up other names today to sell over the next few days as well. I am still looking at WORK as a name to go long on since it is falling below $36, which was my upper limit to buy. Here is the key question for you, do you believe that Trump and Xi will find a way to shake hands at the G20 meeting? Or is there so much pressure on Xi that he will need to look like the all-out winner. Already there was a statement this morning from China: "The US and China must find areas of compromise in the Trade Negotiation" (paraphrase). What does that mean? It means that the US must throw China a bone so that Xi can save "face". What if the US doesn't? It'll be whoops! So to me, the G20 is a 50/50 event, and I don't want to be cash poor if that event goes against the longs.

So if you want to look for names that should jump going into the G20 meeting that you can trade this week, I would look at WORK, Arista Networks (NYSE:ANET), Domo (NASDAQ:DOMO), Splunk (NASDAQ:SPLK), Cloudera (NYSE:CLDR) (see below for news), Etsy (NASDAQ:ETSY), Match (NASDAQ:MTCH), Redfin (NASDAQ:RDFN), Zillow (NASDAQ:Z), MongoDB (NASDAQ:MDB), New Relic (NYSE:NEWR), Twilio (NYSE:TWLO), Square (NYSE:SQ), Twitter (NYSE:TWTR), and Netflix (NASDAQ:NFLX). Also Nutanix (NASDAQ:NTNX), for a trade if it starts to bounce this week (I like it for a long-term spec), and Tesla (NASDAQ:TSLA); I know that I told you to take profits at $230, it's now at $220ish, and if the market is going to float up, I think TSLA could go up sharply with it. I see $190 downside for TSLA and maybe $245 on the upside in the next two weeks if the G20 goes well. You decide, actually, you decide on all these names. Don't just throw your money at a stock because you read a random article on Seeking Alpha. Please know what you are trading. This is especially true this summer. Your faith will be tested at some point and you might panic sell at the worst moment. Count on the volatility, plan accordingly, this is what I am trying to do.

IBM disclosed a partnership with Cloudera

IBM (NYSE:IBM) will resell the Cloudera Enterprise Data Hub and Cloudera DataFlow. Cloudera will start reselling IBM's Watson Studio and BigSQL. While IBM already had a long-term relationship with Hortonworks (NASDAQ:HDP), the merger of Hortonworks with CLDR makes this announcement important. I am not a fan of IBM, but they still have a super sales team and Cloudera is the beneficiary of this relationship. Like I said above, CLDR is a BUY.

Insider Corner

Eldorado Resorts (NASDAQ:ERI) Buying Caesars (NASDAQ:CZR) for $17.3 Billion

Is it possible that today's acquisition explains the strong insider buying at MGM Resorts (NYSE:MGM)? Is further consolidation going to happen in the future for casinos? I think this is a confirmation that MGM is a BUY (even though I don't know much about casinos).

In the last few weeks, you may recall that I flagged insider buying in Marathon Petroleum (NYSE:MPC) and PBF Energy (NYSE:PBF) to go long refiners. Now buttressing my assertion that the refining names are a good speculation, Phillips 66 (NYSE:PSX) was upgraded by analysts at Citigroup Inc. from a "neutral" rating to a "buy" rating.

Good luck on trading this week. It will call for your best skill and attention. I think it will be worth it because there are a lot of participants who still have not gotten back in the market since December, and we may get some FOMO. Try to get as close as you can to 25% cash by the end of the week.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.