This market is insane, going up nearly every day, and I must say, It’s kind of fun. We added about $225 in gains today, or about 1.4% of our portfolio value. This was thanks in large part to DraftKings (DKNG), which popped 9% and is now up about 25% in the 14 days since I called it a screaming buy.
That big down day on August 10 went a long way towards getting rid of the share owners who have no clue what DraftKings’ business is. They are not sports betting in the sense that you login and put down $50 on the Yankees to beat the Blue Jays. They are daily fantasy sports, a game of skill, where players who want to win money must spend a good couple hours a day researching and coming up with a lineup of players to compete via stats for a pool of money. They benefit hugely from people being home, and they are not impacted by things like college football potentially not being played. Why? Because nobody plays daily fantasy college sports. How many college football fans do you think know all the skill position players on all the 200 or so major college teams well enough to compete effectively? I’m a sports fanatic, and I don’t. So when DKNG falls 10% on news that college football was being cancelled in some places, that’s a false move. DKNG didn’t even MENTION college sports in their earnings call; that’s how little of a piece of its business it is.
Long term, I consider DKNG to be one of the best places in the market to put your money. And if it can get above the short term trendline below (which it should) $50 is in the near-term future.
Most of our other positions were just solidly positive. I did make three purchases during the CNBC Halftime Show, however.
I added PYPL as it broke above $200 at $200.44 per share. I make a lot of purchases as stocks cross round numbers, as it is psychologically key to many shareholders. In fact, earlier this year, I first got into PYPL as it crossed $100 and held it (trading around the position, selling some on the rips and buying some back on the dips) to $195. After being out for most of this month, it looks prepared to run again. You can see my next target for it below, around $261.
Next up, we added AMD at $84.82. I sadly took profits (lots of them, but not nearly as much as it could’ve been) when it was $62/share. Thankfully, I used some of that money to get into the NVDA options play that we quadrupled our money on, so that was fine. But after selling NVDA into earnings, I felt I needed a semi-conductor stock. AMD is the next best and it looks ready to go for more.
Lastly, we added a half-position in PETS stock at $35.57. It was only a half position because I like to keep my pets on a long leash. (Sorry.) Despite the massive selloff last month, PETS still has a 96 rating at Investor’s Business Daily, is in a great group with good EPS growth, and it seems to have digested its loss and is now above all my moving averages. That resistance at $42 might be a challenge to get through, and I’d probably take some profits if it got there, but if it does, $50 is next.
Market outlook is bullish, of course, but you might think we’re due for a bit of a pullback one of these days. I said a few days ago that the QQQ was likely headed for $300, but I didn’t mean it would happen in two weeks! Chill out, Qs. Remember, a fall back to my long term trendline below (which used to be the top of the channel, but should now act as support) would not be at all unusual. But it would be painful if you aren’t prepared. I will likely take some profits tomorrow on a portion of some of my older positions, especially if we’re up again. You can’t buy the pullback if you’re busy frantically selling it.
Here’s what that line looks like on the weekly chart: