It’s been a very exciting month for all market participants and I dare say that we can even make reference to moments back in mid-2020 when almost every pre-market was a bullish one!
The momentum and ‘energy’ is now back into equities after one of the longest bear market occurrences in history!
In the first half of 2023, the market has seen impressive growth. We are now only 9% below the all-time highs that were achieved at the end of 2021 which is a remarkable feat. This shows how far we have come in terms of economic growth and stability, as well as how resilient our markets have been during times of volatility.
Amidst such bullishness, my analysis of the charts leads me to believe that we are currently trading at overbought territory. To fully capitalize on this, I’m now looking for more selling opportunities rather than buying opportunities.
(Author’s Note: I am always adding and trimming positions just that the focus for this June now shifted to trimming more than adding.)
Therefore this article, I’ll be sharing more about 3 positions that I trimmed along with 3 new positions that I’ve added to this June!*
*Disclaimer, all trades made by me are not recommendations for you to buy or sell! Do perform your own due diligence before you invest.
3 Sells I made in June 2023 – TTD, PLTR, NU
Position Trimmed????: The Trade Desk Inc (NASDAQ : TTD)
Main Reason : Technical Set Up
Having worked at The Trade Desk before (as a contractor), I’ve always been bullish about the company ever since I discovered it in late 2020.
This isn’t the type of company that you would regularly hear about in the news however the company has grown aggressively, having 3x their revenue from 2019 to 2022. The Trade Desk’s main business is in advertising.
The company operates a self-service cloud-based platform that allows buyers to plan, manage, optimize, and measure data-driven digital advertising campaigns across various ad formats and channels, including video, display, audio, digital-out-of-home, native, and social on various devices, such as computers, mobile devices, televisions, and streaming devices.
Yahoo! Finance
My bullish thesis for The Trade Desk is in their service offerings. They’ve always done great when it comes to targeting the right ads to the right customer segment, allowing for more effective engagements and conversions.
In my opinion, advertising is largely demand inelastic; despite economic conditions, companies will always need to advertise. Depending on which side of the fence you are on, companies may advertise more during slowdowns to either maintain their growth or to capture market share from their competitors.
While I continue to remain bullish on Trade Desk on the longer term, I’ve decided to trim my position at this point, largely due to its technical setup.
From the chart above, the range that TTD has been trading within is clear, given that support is strong at $40 and resistance at $75+.
While its present-day price action consolidation at $75 can be seen as bullish, I’ve decided to take some profits off the table at this point, due to the intensity of the run-up that we’ve witnessed in the past month.
Position Trimmed????: Palantir Technologies Inc (NYSE : PLTR)
Main Reason: AI HYPE
About 1/4 of my entire portfolio is in Palantir. Of this position, I actively trade about 10% of it in an attempt to capture the swing highs and swing lows of this stock.
Hence my reason for selling Palantir this time round is really to lock in some coffee money due to the AI Hype surrounding the market at present.
Overall, I must say that it has been immensely difficult to hold on to the majority of my Palantir shares as my current unrealized P/L% for this position sits at 70%. We come across many stories where investors collect 10x on a single position but how many of them were truly able to look at the stock and go “heck I’m just going to let it run”?
No analysis is needed for this stock to deduce that it’s severely overbought due to the hype surrounding AI rather than its fundamentals.
Position Trimmed????: Nu Holdings Ltd (NYSE: NU)
Main Reason: 2x, trim to recover capital.
Will be absolutely honest with my position in Nu. I bought this stock simply to copy Warren Buffett as clearly I am nowhere near as competent or wise as he is hence I followed blindly.
Thankfully my position in Nu has grown about 2x. It is in the “typical investor playbook” that once you 2x a position, that you should sell off half of it to recover the initial capital invested into it hence whatever you have left in the stock is simply gains.
I’ll only exit this position completely once I see Buffett sell his stake which is something that hasn’t happened. Happy to see how it plays out until then.
3 Buys I made in June 2023 – PYPL, U, KO
Position Added ✅ : PayPal Holdings Inc (NASDAQ: PYPL)
Main Reason: Oversold Technicals.
I continue to add to Paypal as I think that the sell-off presents risk-to-reward ratios that are indeed favorable to me. In my in-depth analysis of PayPal, I cite some of its weaknesses to macroeconomic circumstances that plague not just Paypal but other companies as well.
Fundamentally, the company is still growing (but at a slower pace than in preceding years), with its valuations at an all-time low. I do believe that the market moves in cycles and while the current cycle is large-tech + AI, perhaps payment gateways may see more momentum as the economy picks up.
Position Added ✅ : Unity Software Inc (NYSE: U)
Main Reason: Strong Move to the Upside + Apple Partnership
Unity has been on my watchlist since its fall from its $200+ highs. While I was unable to catch its lows of $20+ I find its current catalyst to be convincing enough for me to start a position in this company. Earlier this month, Apple announced that it would be working with Unity as part of the launch of the $3,499 VR Headsets.
Apple has successfully disrupted several segments, such as wearables, online music, and smartphones. If Vision Pro can gain traction in the upcoming decade, ancillary partners such as Unity are well poised to benefit.
How High Can Unity Software Stock Climb?
This new catalyst caused Unity’s price action to break past both its 50 and 200 Day moving averages, which to me is an indication that there are strong buyers coming in to prop up its share price.
$40-$45 remains a key resistance level for this stock hence if we are able to hold and in time to come find at support at such levels, then this may be an indication of a new bull run for the company.
Position Added ✅ : Coca-Cola Company (NYSE: KO)
Main Reason: Sector Rotation + 10% off All-time Highs
My decision to add to Coke at this point in time is more of a hedge than anything else as I believe that the market moves in cycles.
At present, while tech and AI is all the hype, we could see more rotation as investors to move into more “boring” and “safe” companies such as Coke, P&G etc. Coca-Cola has continued to pay an extremely stable dividend of about 2-3% despite market volatility.
What do experts say about active traders?
History has proven that investors who ride out volatility rather than seek to actively trade it tend to do better over the long run. I’m certainly not a fan of opening up my trading apps everyday but the energy behind this bull market is indeed thrilling.
For the first half of this year, I probably looked at my stocks once a week but given the AI hype of late, I find myself checking in more often (confession, daily). This is definitely not a practice that I would encourage over the long run but how you decide to trade is completely up to you as it is your hard-earned money.
In the meantime, I continue to look for selling opportunities for my other positions and will be happy to keep everyone updated on my trades!
