Stocks Mentioned: Corn (ZC_F), Core Scientific (CORZ), Cameco (CCJ), Nvidia (NVDA), Neo Performance Materials (NEO.TO), MicroStrategy (MSTR), Grayscale Bitcoin Trust (GBTC), Marathon Digital (MARA), Kaspa (KAS), Bitcoin ETF (IBIT), Flex LNG (FLNG), International Seaways (INSW), D/s Norden (CPH:DNORD), Danaos (DAC), Nutrien (NTR), Grayscale Bitcoin Trust (GBTC), Hudbay Minerals (HBM), Western Copper and Gold (WRN.TO), Global Ship Lease (GSL), Biotech ETF (XBI), Uniswap (UNI), Southern Copper (SCCO)
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Highlights
June 03, 2024
Something is seriously messed up with GOLD
(Note: This turned out to be an exchange glitch).
Sold 1/3 of my Grayscale Ethereum Trust (ETHE) position
ETHE had become my second biggest position after Consol Energy, and the discount to NAV has narrowed down to ~1.2%, so I took down exposure. ETHE is now my 7th biggest position in the stock portfolio, while Ethereum is the second biggest position in my crypto portfolio. I don't want to see cross-portfolio correlation get too high. Crypto's volatility is best handled within the crypto portfolio, and with the ETH ETF getting approved, I don't see the need to have high exposure to ETHE.
June 04, 2024
Closed the Corn Trade
The December corn trade got stopped out at 468, for a loss of 0.9%.
My friend Jason(@JasonP138) likes to say 4 down days in stocks implies mean reversion, but 4 down days in commodities is likely to be the beginning of a trend. 4 down days, plus the trade coming back all the way down to my entry point, hit my trailing stop and I got out.
The summer driving season is here and gasoline prices haven't reacted. Biden released a million barrels of gasoline from reserves (remember 2022 when gasoline prices went down on SPR oil releases?) and the crude traders are crushing oil prices because OPEC+ is gradually phasing out production cuts starting in October.
The fundamental reasoning behind this trade has been invalidated. I am not looking to re-enter at this point.
CoreWeave saga continues
The company has offered to buy bitcoin miner Core Scientific (CORZ) for $1B. CORZ shares jumped 35% on the news. Converting bitcoin mining farms into HPC data centers allows CoreWeave to grow rapidly, which means more revenue for NVDA from this related party.
This game will continue until investors start looking at the balance sheet and realize how they are being played.
I went short a copper miner yesterday based on material news which the market failed to react to. The trade write-up has been uploaded to the Members' Area for paid subscribers.
June 05, 2024
Canada and Australia are shooting themselves in the foot by rejecting Chinese capital. The London AIM exchange is already dead, the TSX-V and ASX will die a slow death as miners seek alternative listings. HK is going to come back in a big way.
Sell the Grayscale Ethereum Trust (ETHE)
The CPI and FOMC decision come out next Wednesday. You usually see de-leveraging going into these events, but not this time apparently. Sentiment in crypto is ultra bullish, feeding off today's all-time high in the indices and Nvidia. Everyone is preparing to buy the bitcoin breakout.
Sell ETHE because this is a really good exit. We're up 63% in a month and a half. The discount to NAV is now just 1.7%. Going forward, this is going to perform in-line with ethereum. I like ethereum in my crypto portfolio, but it is no longer cheap, and I'd rather free up the capital to buy absolute bargains we're being offered in oil & gas and junior miners (I will be talking about my new trades in the paid newsletter).
Besides, a new moon cycle starts tomorrow. I think the market will top out today, and I want to make the switch from momentum to value. I've already sold my considerable bitcoin ETF (IBIT) long position and intend to let the MSTR short position run unhedged.
This was a great trade, and congrats to everyone who followed me on this.
X marks the top.
June 06, 2024
If you're caught up in the Jensanity, I highly recommend reading this book. Followed by Diane Francis' book on Bre-X.
New report live in the Members' Area, highlighting two non-consensus short trade ideas. With this, I've published 5 trade ideas exclusively for paid subscribers - two long and three short.
If you've profited from my content over the last 3 years, I highly recommend taking advantage of the early bird pricing and signing up now. In terms of offering value for your money, I'm just getting started.
June 07, 2024
When uranium miner Cameco (CCJ) signs long-term delivery contracts for $140/lb and the spot price drops to $16/lb, their customer walks away from their purchase commitment with no loss. When they commit to selling at $70/lb but the market is at $100/lb, they buy at $100 to sell at $70, locking in their losses.
Instead of doing the rational thing, i.e. cease the forward sales and take advantage of the higher spot prices, they come up with a justification as to why they need to keep locking in contracts that guarantee a loss.
When the gold miners hedge, they at least do so because the hedges are needed in order to obtain debt financing. Cameco just likes to stick to antiquated business practices and refuse to see that the market has changed since the arrival of SPUT.
I've been in the mining space for 8 years and I've never seen any company adopt Seppuku as a corporate strategy.
I have had CCJ on my avoid list for a long time now, and I don't see that changing even if uranium goes to $200. In fact, I'd probably short the stock if uranium goes to $200 since that means Cameco will go broke buying high and selling lower.
Futures portfolio update
Exited the gold futures position. From initial entry at $2062.8/oz on 1/17, accounting for roll costs and the small loss on the August contract, this trade netted $250.8/oz, a gain of 12.1%.
I had a good entry. I gave back about $100/oz, but given how long gold has stayed dormant, it could have easily kept running past $2500/oz. No fever like gold fever. I'll take the trade again post-FOMC, if I get a good entry. The stock portfolio is still heavily long the gold miners, no changes there.
This leaves 2Y notes and soybeans as the only remaining open positions in the futures portfolio. New trades will be posted exclusively for paid subscribers.
"When my hot streak ends (and it inevitably will), I'll be happy to sit with my fundamentals-driven trades in trending stocks and sectors."
My hot streak ended with the ARM short position getting stopped out. Everything is selling off today, including Nvidia, but Arm continues to pump. It's easy to squeeze a low float garbage stock higher, hence the stop loss discipline. And now that I'm no longer on a roll, I'll be more cautious in my trading.
Time to sit back and let current trades run their course.
June 09, 2024
June 12, 2024
Sell International Seaways (INSW)
The company has gone ex-dividend ($1.75/sh) and put in a rounded top. The current price of $58.54 allows us to protect more of our gains than waiting to get stopped out.
A trade update has been published in the Members Area for paid subscribers. I will also be publishing an initiation report on a junior mining stock by the end of this week.
June 13, 2024
Covered half my FCX short position for a 11% gain. The copper short position has been running for almost a month. I am looking to exit the trade, but I'm not in any hurry to do so since it's still working.
June 14, 2024
Closed the remaining half of my FCX short position for a 11.1% gain.
June 15, 2024
Neo Performance Materials
Neo Performance Materials (NEO.TO) continues to 'perform' since the gap up on high volume, followed by a band squeeze breakout in late May. The stock was up a further 12.7% yesterday on announcing a "Strategic Review Process". That's the stock market equivalent of putting up a giant For Sale sign in the front yard.
Both fundamentals and technicals signalled a move higher. I'm up 22.7% on my position in under a month.
On Breakout Trading
Closed my D/s Norden (CPH:DNORD) position yesterday (June 14, 2024).
Every technical trader knows to buy the breakout. That's the easy part. The hard part is what comes after, once you are in a trade. Will it test these levels and go right back up? Was this just another lower top in a primary downtrend? I don't have to stick with the trade and guess at the answers to these questions. I got out at 297 DKK. A mere test of the breakout zone wouldn't have triggered my stop, but the kind of price action we just saw would trigger it. Note the solid red candles indicating the stock is closing at the lows of the day, or basically going no bid. I don't want to stick around in a trade like this, but I will watch the price action and look to re-enter on a show of strength. A good trade may take multiple attempts to get the risk/reward just right.
My paid newsletter will be more about actual trading than just buy/sell recommendations. That's the analysts' approach. As a trader, trade ideas are important but trade management is even more important - and portfolio management is supremely important.
The same goes for Flex LNG (FLNG). Bought the band squeeze breakout at $27.87 on 5/9, held until it came right back down to my entry point and sold at $27.25 on 6/10. I am not convinced the fundamentals look bullish, but I took the trade regardless of fundamentals because the TA looked good.
There's a trade-off between giving trades room to run and taking on unnecessary losses. It is a discretionary decision. I developed my style through trial and error since I began investing 8 years ago and became a full-time trader 3 years ago. Trading is learning by doing. You can't learn this stuff in business school.
A new report on a junior mining stock is live in the Members Area for paid subscribers.
June 17, 2024
June is seasonally a weak month for gold and the miners. Use this opportunity to accumulate quality gold stocks.
A new report profiling a high quality gold stock is now live in the Members Area for paid subscribers.
Sell containership lessor Danaos (DAC)
Both the ATR and pSAR stops have been triggered, even after adjusting for the 80 cent dividend. I think this stock could be worth $150 a year from now, so I will be watching for a re-entry point.
Sell Nutrien (NTR)
I've held on to the fertilizer trade in one form or another for the last 9 months. All the rallies have been met with heavy selling. At this point, I'm giving up on this sector. Long time subscribers will recall when I did the same with the containership lessors in 2022 - the timing was just not right. I don't know what's holding the fertilizer sector back, since fundamentals are extremely bullish, but the trade is just not working. There are two types of stops - price stops and time stops. Fertilizers have routinely triggered my price stops and I've re-entered on rallies. I'm now using a time stop and exiting this sector for good.
June 19, 2024
June 20, 2024
Stopped out on the Soybeans trade for a loss of 6.3%.
June 21, 2024
I'm no longer short MicroStrategy (MSTR). The perpetual money machine raised another $800 million in debt, bitcoin dumped, but the share price barely moved. The trade returned approx. 20%, far below my expectation of at least 50%.
Grayscale Bitcoin Trust (GBTC) used to trade at a premium for a long time, then at a discount for a long time, until the redeem GBTC crowd succeeded in converting it into an ETF.
MicroStrategy's premium isn't worth the arb anymore. Once bitcoin enters a bear market (down 80% is the norm) the stock is a short all the way down to zero as the Martingale strategy meets its inevitable doom. For now, I'm neutral.
Incidentally, the comments on the quoted post, which coincided with the top in bitcoin, are worth reading.
The comments illustrate why most crypto market participants end up exiting at a loss even as crypto continues to grow in market cap (or alternatively, holding a losing position and doubling down until they go broke).
Jack Schwager's book Market Sense and Nonsense delves into this phenomena as it affects even professional investors.
Futures Portfolio Update
I got back into gold futures today, buying the Feb 2025 futures at $2415.4. I'm bullish on gold long-term, and paying a 4% premium to avoid two futures rolls (Aug - Dec - Feb) is worth it.
I also went short September 2024 Nasdaq futures at 20,256.75 and took starter positions in platinum and wheat yesterday.
I continue to hold my 2Y Treasuries position.
I'm in India for two weeks and don't have the time to write a detailed report so I'm posting my trades in Telegram for all subscribers
June 22, 2024
I expect the 2% inflation target will be revised higher as "sticky inflation" becomes a household phrase.
June 23, 2024
I covered half my Hudbay Minerals (HBM) short position for a 13.3% gain. The copper short is a counter-cyclical trade, so my holding period is short even though the trade is working.
June 26, 2024
Sell Western Copper and Gold (WRN.TO)
My position got stopped out yesterday on high volume selling.
I am in India right now and won't be re-entering until I get back to my desk in Dubai and catch up on what's been happening. I will most likely re-enter, but future updates on this stock will be exclusively for paid subscribers.
Sell Global Ship Lease (GSL)
We're up 54% on this trade in a little over 4 months. The chart shows we're right at resistance on the weekly chart. Time to bank the gain.
Can this stock continue to do well? Sure. Do I want to hold on to it right as the US economy enters a recession thanks to the Fed's bullheaded insistence that they won't cut rates even as the economic data shows they should? Not really.
I made that mistake in 2022, being long the container shipping sector even after the first rate hike. I'm not keen on betting on the spending power of US consumers when credit card interest rates are at 24% and delinquencies are rising.
Sell the Biotech ETF (XBI)
While the trade is working as intended, this is a non-core holding for me and I want to clean up the portfolio. I see much better uses for my cash right now.
Sell Uniswap (UNI) at $9.5
Going forward, I want to keep my crypto picks exclusively for paid subscribers. The crypto market is exhibiting weakness and I want to close out this trade out of prudence rather than due to any change in the fundamentals. I will re-evaluate once I'm back at my desk and am fully focused on markets.
Covered half the Southern Copper (SCCO) short for a gain of 13.1%. I'm harvesting gains in the copper short trade, slowly but surely.
June 27, 2024
Kaspa
Bitcoin miner Marathon Digital (MARA) has diversified into Kaspa (KAS). Kaspa is my 4th biggest holding, behind ETH, SOL and AVAX. I added more on this news. The momentum behind Kaspa is bucking the correction in bitcoin and related L2s. Chart says new highs imminent.
June 29, 2024
June 30, 2024
This is a sneak peek of the Members' Area. As you can see, I've been hard at work on behalf of paid subscribers. I recommend taking advantage of my introductory pricing of US$1500/yr.
Good Trading!
Kashyap