Don't Be A MoMo $FB $AAPL $AMZN $NFLX $GOOGL
When I was younger, there was a saying "don't be a momo." It was essentially slang pejorative for don't be silly, dumb, stupid etc.
Over the recent sell-off, you've definitely not wanted to be a mo-mentum bag holder. Whether it's FB, AAPL, GOOGL, NFLX, it's all got smashed, and it's been a cause of concern. Q3-18 earnings from such household names have been good, but that's literally old news. The forward guidance, though, has been disappointing. And, when you trade 84x EBITDA you're getting smashed.
The volatility complex has been uber active, and hedging costs following AMZN earnings are soaring. Traders are now paying twice that of upside calls for protection.
There has also a huge VIX of volatility (SKEW) blowout as the momentum index has cascaded 21 percent lower, rivaling most emerging markets.
The SKEW (orange; lower plane inverted scale) did reprice as much as the vol blowup in early February (which I warned of on Jan. 29). But, it's enough to give you heartburn.
As growth and inflation (via D-R-I-P) continue to get repriced going forward, there may not be much love left.
Over the recent sell-off, you've definitely not wanted to be a mo-mentum bag holder. Whether it's FB, AAPL, GOOGL, NFLX, it's all got smashed, and it's been a cause of concern. Q3-18 earnings from such household names have been good, but that's literally old news. The forward guidance, though, has been disappointing. And, when you trade 84x EBITDA you're getting smashed.
The volatility complex has been uber active, and hedging costs following AMZN earnings are soaring. Traders are now paying twice that of upside calls for protection.
There has also a huge VIX of volatility (SKEW) blowout as the momentum index has cascaded 21 percent lower, rivaling most emerging markets.
The SKEW (orange; lower plane inverted scale) did reprice as much as the vol blowup in early February (which I warned of on Jan. 29). But, it's enough to give you heartburn.
As growth and inflation (via D-R-I-P) continue to get repriced going forward, there may not be much love left.
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