Here's My Strategy as Bubble Action Develops in Secondary Stocks
On Monday, I saw the longest list of small stocks with big moves that I can recall. This is how I'm reacting.
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There has been "bubble" talk for quite a while, but Monday was the first day that I saw some signs of it. The business media and most pundits focus only on big-cap technology names and the Magnificent Seven in particular. That is the group that they target as being bubbly.
When a real bubble does develop, however, it is most evident in secondary and "junk" stocks. It is the names with the best stories and the worst fundamentals that heat up when bubble action starts to occur. On Monday, I saw the longest list of small stocks with big moves that I can recall, even though the S&P 500 was only up about 1.5%.
This sort of action can easily persist for a while, but it was a signal for me to take some profits in the most extended names and increase my flexibility. I want to have more cash on hand so that I can be more aggressive at trading in increased volatility.
A few names I reduced this morning are CoreWeave (CRWV) , Nebius Group (NBIS) , Perpetua Resources (PPTA) , Ondas Holdings (ONDS) , and Terra Innovatum (NKLR). I’m not calling a top in any of these names and may rebuy, but at this point, I like having increased cash and the ability to buy deeper pullbacks should they develop.
I actively avoid trying to call market tops and bottoms, and pay no attention to anyone who predicts market turns. I watch individual stocks and adjust my market exposure to maintain flexibility and avoid letting significant gains slip away.
We already have a good-sized bounce after the poor open, and my sales may prove to be poorly timed, but I’m not worried about that. I now have more cash and can watch for buying opportunities rather than focus on controlling the level of losses.
At the time of publication, Rev Shark was long PPTA, ONDS and NKLR.
