The Stock Dip

hey everyone kevin here wanted to touch

on briefly why this market feels like it

just can't crash it's like impossible to

get this freaking market to go down so

we could buy the dip

it is so difficult we've got so many

uncertainties right now the ever grand

and the potential for contagion coming

out of china we've got the fomc meeting

the bank of japan meets this this week

to talk about rates we've got the taper

talk we got the debt ceiling the

infrastructure talks we've got so much

inflation economic growth slowing down

everything that we could want right now

bundled up into a pile of doo doo and

and uh people are smelling the doo doo

and they're like that's all right i'll

hang out here anyway it's like not

leaving the market you just can't get

this market to sell down it's crazy uh

and i think i know a reason so i've been

looking at this because

i've got a a pile of cash that that i

hoarded up here and i was watching the s

p kind of trend down throughout the day

here and i'm like this is what i was

expecting dead cat bounce which dead cat

bounce is literally the well

figuratively imagine a dead cat that um

it's already dead it's okay we're not

killing it it's already dead it died of

natural causes and uh you threw it off a

building uh because you know there was a

very nice soft grave at the bottom or

whatever and

the the cat falls

uh hits the ground like yesterday we

fell in the stock market right this was

uh here was your yesterday here's your

fall

uh and then you

bounce because

even dead things when they hit the

ground really fast they bounce up a

little bit and then they come right back

down right and so that's kind of the

argument here it's like fall a little

bit of bounce and going back down

right uh but the thing is

it just feels like every time we get a

little bit of this pull down we just by

the dip and kind of bounce back up uh

and so i had the same thing happen on

end phase to me so this morning

i sent out an alert and i literally

bought in face right here uh it was

perfect i was watching this on the

minute sticks i saw it turn green and i

put my order in and i'm like i'm ready

if i see that next candlestick go green

boom went green put the order in sent

out the alert buy an end phase threw in

six figures into end face here sent out

alert to everybody in stocks and

psychology and money as i usually do but

but then i'm like

dang it i should have bought even more

which is always like the problem with

stocks like you buy something and you

time it well then it goes up and it's

like should have done more you do a bad

job and you're like should have done

less

but you got to break that psychology you

got to get over it you move on you

always got to look forward in

investments and so this is what i'm

trying to understand why is it that we

could sell down 4 on tesla but then

we're immediately up one point five

percent the next day why is it that we

can go down ten percent on matterport

and then we're immediately up seven

point seven percent the next day you

know why can we go down eight percent

and lucid and then literally go up eight

percent on lucid again the next day

right

and the the reason that i believe we're

seeing this happen

is pretty simple i'm going to pull this

up really quick uh what you want to type

into google is fed reserve

reverse repos there's a reason for this

okay look at this so you type in fed

reserve reverse repos and you get this

chart here

this chart tells us how much cash

banks and institutions have

and uh if you really look historically

here it's it's the highest it's ever

been in its existence you've seen this

massive amount of cash being hoarded and

this line here is a representation of

how much cash banks are parking at the

fed because they have too much they

don't know what to do with it they have

too much cash and personally i believe

that even though we have a lot of these

uncertainties in the stock market i

believe that

we get these short dips where it's like

oh we're red oh that's pretty red that's

pretty red and then we we bounce up

pretty quickly because there is so much

money and there is so much of an

appetite for buying the dip that it is

actually frustratingly difficult to get

a meaningful dip

and so part of me believes that there is

this potential of just trading sideways

because all of these dips tend to get

bought up pretty quickly to where maybe

it makes more sense to just uh to just

again uh sell calls like buy the shares

and then sell calls

or

or just sell puts and try to get in a

little bit cheaper to increase your

yield a bit

are we actually going to see a larger

run that's the downside though about

selling puts and this is kind of where

you get to this this moment where it's

like ah if you sell puts and then it

runs you miss out like for example

let's say on uh matterport you sold puts

when it was uh you know trading back and

forth over here and uh and it fell a

little bit and you sold puts at 14 or

whatever well cool you would have gotten

maybe a buck or two dollar credit or

whatever that'd be like net net selling

it for 16 but then it runs then you miss

out right and if you own call options

well great call options are really sexy

like if you buy a call and the next day

it runs like today's call options for

october 15th i bet you were way up yeah

look they're way up they're up 48

because the stock's up eight percent

right that's amazing that's the leverage

of these short-term calls so this has

kind of left me thinking to myself okay

so i don't want to do leaps in this

market because i do believe that leaps

will end up getting chewed up by theta

decay so leaps are not something so

desirable right now

i do like the idea of selling calls

when something has run

when running

but the danger of this is it could

continue running so for example you

might sell calls on matterport at 18

and then it runs to 24 dollars right and

it's like ah right then your your cell

calls actually hurt

uh

selling puts is something that uh i

would like or and generally do like

doing on stocks that i don't necessarily

need to own more of but i'm not opposed

to owning them so i wouldn't sell puts

on something i did not want to own but

i'd consider selling puts on things i'd

be willing to own

and i think the best thing and it's

boring but it's just buying shares

and really what we're trying to do with

buying shares is we're trying to prepare

for

a broader rally once all of these

negative catalysts go away evergrand

goes away the debt ceiling limitations

go away the

uh what's it called uh

the issues with the fed taper go away

inflation and flex downwards the supply

chain shortages uh flip to the other

side and this is something where all of

these things i personally believe will

have a very large benefit uh on

particularly stocks like end phase uh

end phase is a is is affected by the

chip shortages substantially uh holds it

back

end face is a company that uh is is part

of the the solar revolution and with

less competition from solar now with the

solar leasing from tesla i actually

think you've got even more room to run

on end phase than when when tesla was a

bigger competitor with their their

active solar leasing

so um

yeah

i think the big

bottom line message here

is

the market has so much cash right now

that only sitting around waiting for the

dip

is is something that gets bought up so

quickly that you end up frustrated now

the downside is or the risk is that you

end up just

throwing all your cash into the market

and then you actually get a real dip

right

then it's like dang should i had some

cash but

there is a risk to being

too cash heavy potentially and that's

because everyone's cash heavy so every

dip kept

keeps getting bought

and that's a frustrating thing in the

market right now so

what's the big bottom line of all of

this big bottom line of all of this is

look i'm a big fan of holding cash i

like holding cash like the rcc i like

trying to time some trades

but with how much money people have this

is a very frustrating market to wait for

dips on

and to expect those dips to be super

deep it's just something i'm realizing

it's because so many people have so much

money all the dips get bought up right

away so worth keeping an eye on when

there's a dip potentially pull the

trigger a little bit earlier if you are

trying to place money and you're getting

a little bit too

cash heavy anyway hopefully this was

helpful for you and folks we'll see in

the next one thanks

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