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The Bear Is About To Hibernate, I Share 3 Emerging Trends And Stocks



  • I believe we are past the worst of it. We may have a bit of overhead resistance in a few days.
  • My plan was to select some high-quality, high-priced stocks that have fallen hard this past month, and build positions that will hopefully return 20% to 30% by year-end.
  • It's important to identify emerging trends as soon as possible. This is the way to find the winners before the crowd.
  • If you understand a trend you can identify, the factors that must come together for a trend to really become visible. A great example is the Space sector and the lower cost of getting to space.

Trends of 2021 concepts with text and business person

HAKINMHAN/iStock via Getty Images

Two Weeks Ago My Trading Plan Went a Bit Awry

The actual behavior of the market was completely opposite of what I predicted it would be. I thought we would get the dip buyers to boost the

This article was written by

David H. Lerner profile picture

David H. Lerner is an analyst with a decade of experience utilizing his professional background in software consulting and technology to identify market trends and provide long and short trade ideas. David employs a combination of technical analysis and market psychology to capitalize on narratives for outsized returns. He also utilizes “Cash Management Discipline,” a simple trading style to hedge against the volatility of today’s market climate.

He leads the investing group Group Mind Investing where he uncovers actionable trading and investing ideas nearly every day. Other features include: long and short swing trade alerts, daily macro analysis, weekly articles, and chat for community interaction and questions. Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SPT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (59)

Dave, now the bear has gone into hibernation! All good things going forward thru earnings season. My only comment on your stock recommendations is that you seem to be too heavy in “potential” stocks that have not fully proven themselves as long term winners. I think some MFST, NVDA, AAPL, LRCX, AVGO, GOOG and other mega tech companies need to be part of your overall portfolio to balance out your growth opportunities. Be safe and good luck investing!
Your investment strategy and stock selection is very bad. You need to have good luck riding with you to save you. For instance, crude oil/petrol prices are very hard to predict. Consequently relative stocks are better off the buying list. But once in a while, opportunity knocks at your door and you have to take advantage. A couple of months ago, I was convinced that price per barrel was on the rise. I bought CVX, EOG. MPLX. CLR. Goldman Sachs last month gave credence to my decision that the year will end at a price exceeding $90. Resultantly I put 3 more oil stocks on watch list. Almost all stocks I hold for a few weeks to a few months. Normally I hold 70 to 80 stocks at any given time. Even in the present turbulent times, I generate a good amount of money and am able to put healthy foods at the table.
Market Map profile picture
Since 1933, 4th quarter returns during 1st Presidential term years have been decent when the S&P 500 has resided above it's monthly basis moving average on June 30th * ( https://imgur.com/a/EQlZWxP )

As 2021 is a first Presidential term year and with the SP500 price residing "above" it's moving average value on June 30th https://imgur.com/a/aOpRvzY .

Further out, the moving average configuration mentioned has led to positive 48 month forward returns in 11 out of 12 instances ( 92% ) dependent on strategy conditions remaining "offensive" over the entire 48 months ( Table 2 Appendix * )

* see https://tinyurl.com/yyf48e4q
The author must have an extraordinarily high risk tolerance if this is his portfolio. I hope it works out.
helliott profile picture
Thanks for the article. A lot of information to unpack.

I think you are dead wrong on oil. In the last 18 months big oil has drastically reduced Capex. It takes a long time for new wells to become operational, and takes a lot of money. I think oil runs for the next 2-3 years based on the cutbacks all these majors had to make. Just my opinion, but I am betting heavily on it.
David, you wrote this at 12:50 am and unfortunately the market had an terrible day and hit yearly lows. I hope that today may have been the washout, but I just don’t know. I guess we will see what happens tomorrow. Good investing to you!
PrAcharya profile picture
Ouch! $SPT dropped 11.8%
thumb.ai profile picture
@Kasyap while the Quant SA rating was Very Bullish 4.90 out of 5. Yep.
There are more opinions as to where we are in markets than there are...... I don't know, you fill in the blank. One thing is certain - uncertainty is elevated.
I use a weekly chart (stock charts) of the SPX, the 15 WMA has held for all the little self offs. The 27 WMA is the bottom support on 4 big sell offs since March 2020. Both are breached. On the chart put up RSI (50/50 not overbought or sold) MACD (momentum on the downside is increasing and %williams. %williams is telling it’s only been this low in March of 2020. Build the chart and look.

Fundamentals are weak, debt limit, tapper talk, high cape etc. This bear might just arriving from hibernation.

For the last month I’ve trimmed to near nothing all high p/s stocks looking for value and dividend payers in rising rate future. 85% invested in stocks or equivalents. Im looking for fundamentals too improve, looking at the chart for 4318.84 to hold we closed below that. If we close below that this week I need to draw a new support line lower.
Tao Jaxx profile picture
"Whatever happens tomorrow we are at the end of this phase of selling.

I am in fact looking for Friday's action to continue tomorrow."
The only thing more difficult than long term forecasts are short term forecasts.
Tao Jaxx profile picture
@Tao Jaxx Just saw that the author added: "I am getting out of the short term market prognostication business. Clearly the volatility is not over."
Smart move!
@Tao Jaxx based on what? The weekly RSI is 50.66 not oversold. A weekly Chart will bring you back before the crash. Build the chart I describe above and we broken both support lines.
@Tao Jaxx I tried got in after the first wave from selling high p/s stocks put it in VOO, got stopped out. Bought the dip tentatively. This very shaky, Twain, China tech, China housing, tapper talk, debt limits………
Clauser1960 profile picture
Inflation has arrived, interest rates will go up and stocks will go down. Stop whistling "singing in the rain" and get defensive!
Tulip hoard profile picture
Thank you for your work great starting off point to conduct d/d, however your early on most of these names here however I would like to roll some of my commodity profits into one or two specs. ty. Agree with another member looking like 2018 again😁
The bear just about to get out of hibernation lol
Diesel profile picture
At this rate we'll hit the 200 day MA in a matter of days. This is looking more and more like the 2018 correction that lasted until Christmas eve.
@Diesel we got hit the 150 first it’s a ways down. Remember in March 2020 we blew through the 200 dma like a knife in warm butter.
Diesel profile picture
March 2020 was an exceptional time though. We literally had the entire world economy shutdown with tons of uncertainty.
I just don't know. I fear that none of these high tech names will work until and unless the long bond gets a bid.

More and more it is looking like a sea change in inflation is taking hold and that could mean a whole new change in leaders.

What to do? Energy names are very strong. Also very difficult to play as you pointed out because of unpredictable factors.

If I add to anything in here it has to be a value name that pays me something because this could go on for longer than I would like.
Hi David -
I continue to enjoy reading your stream of consciousness like articles on trading volatile names.
Thoughts on GTE as an energy play?
Kanikoski profile picture
Thank you for the eVTOL coverage. I had done a little research on this trend already, but you have turned up a couple of names that I must have missed as they went through the SPAC process. Food for thought. Maybe I'll dip in with a couple of shares as a sort of enhanced watch list.
I don't know how much the stocks you highlighted reflect your overall portfolio, but no one over the age of 50 should be concentrated in such small cap technology names. Wipeouts like today are hard to tolerate.
cdgingrich profile picture
@dalerb So, you are only planning to live to age 55???
@cdgingrich How many of those stocks do you think will still be around in 5 years? Historical trends would suggest very few. Very high beta, high risk, speculation only, and for those with a strong stomach.

If you’re a new reader, this author keeps a “trading account” and a “buy-and-hold account” with traditional dividend payers.

There is a column he wrote back in Nov. 2019 about traditional investing as opposed to trading which I sort of wish would be linked to at the bottom of the columns so people understand this is a very “boutique” way of doing it.
I am betting the hunt for yield is still alive and bullish. I believe the current volatility is not driven by a rush to the exit but by de-risking (banking gains) ahead of an anticipated hike in interest rates which will increase the discount rate on future cash flows reducing the pv and consequently the mv of equities, particularly growth stocks. In addition to that I feel there is a move towards increasing cash levels to prepare for a rotation into a bond bull run - hence the sell off in FAGM all highly liquid stocks that have done well this year. Bond yields are more likely to rise than fall over the next twelve months. The question then is what happens as the overhang of share sales decline and prices stabilize. Will investors view lower prices as a buying opportunity or will they sit back and hope for further falls. This is a process than can go on for some time making it difficult to call the bottom of the market. Bob Farrell (often quoted) certainly said that markets tend to revert to the mean. He also said "exponential rapidly rising or falling markets usually go further than logic suggests, but they never correct sideways". Another way of putting this is at any point in time you have to decide whether you are a bull, a bear or a pig (we all know what happens to the pigs).
David H. Lerner profile picture
I bought more SNAP, AFRM, ASAN, PYPL, and SPT today... I am not backing off my plan.
@David H. Lerner Great - but u should qualify for those that are not regular readers , that these stocks are your “boutique basket” of stocks and that u have a separate portfolio of dividend/value stocks. Importantly some great stocks mentioned in this article if bought 3+ Months ago - but not at current prices
@David H. Lerner
Afrm hahahah
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