What’s the best way to explain what just happened in the stock market in the past couple months?
To say the S&P 500 (SPY) is up 45% in the last 50 days doesn’t do it justice.
To highlight the fact just take a look at lululemon athletica (LULU), whose market cap has increased by over $20 billion in that same time doesn’t move the needle. Isn’t that crazy?
The world’s economy is falling apart but trendy athletic gear valuations are at all time highs.
We have at least a 13.3% unemployment rate, US-China tensions are rising, and coronavirus cases are still climbing.
Yet somehow, some way, there is Euphoria in the stock market.
I know the Federal Reserve put the market on it’s back and Congress put everyone on their payroll but still…
If you look at the world, things aren’t good.
However, this isn’t the first time I’ve had this juxtaposition of thoughts/emotions about the markets.
Over the last month, I’ve found myself binging on a show on Amazon called Red Oaks.
The first season came out in 2015 but my Dad just told me about it recently. He rarely recommends things but when he does, he always nails it.
It’s about a 20 year old named David that lives in New Jersey and he’s trying to figure out what he wants to do with his life.
His dad wants him to be an accountant but he wants to make movies. He ends up working at a local country club.
Now this by itself hits home. I grew up in New Jersey. I wanted to go to California and become a writer but my parents encouraged me to try the stock market (I’m glad I listened).
But my favorite part of the show is that it takes place in the 80’s.
They have 80’s clothes, 80’s hairstyles and there is 80’s music.
The 80’s just makes me feel good.
Even 1987 beats 2020.
Presently, each day I trade with the news on in the background, and this week especially it was depressing. But then I put on Red Oaks and I go back to the 80's and I’m happy.
But there’s something more to it... and I still couldn't place it.
Until last week, when Elon Musk’s SpaceX had it’s big launch.
It was incredible.
My whole family and I watched with breathless anticipation as the rocket ship left the earth.
It was so exciting but I was also very nervous.
Then I realize what it is... That feeling.
It was 1986 and I was in 4th grade.
I had my first crush on a girl named Lisa.
I told my dad about it and he said I should ask her to go out for a movie.
I was too nervous, so he bribed me!
He told me that if I asked Lisa out, he’d take me to see the movie Supergirl and to a Mets game.
How embarrassing right?!
I used to like the Mets.
So I pumped myself up just enough to go for it.
The entire class is putting chairs in front of the television because we are going to watch a space shuttle launch live.
I sat next to Lisa.
“I have to ask you something,” I told her.
“What?,” she asked.
Was that a quick what? Is she annoyed?
“Nothing,” I say.
‘What?” she persists.
“Nothing, I was going to ask you out but it’s stupid, just forget it.”
The conversation pauses because the space shuttle Challenger was about to take off.
Then we watched in horror as the Challenger blew up.
It was terrible.
That wasn’t supposed to happen.
The teachers didn’t know if they should shut off the TV or leave it on.
People were crying.
They were scared.
And in the midst of all this, Lisa leans over and whispers, “I would have said Yes.”
Sadness all around and Euphoria.
That’s the feeling.
Everyone is sad, everyone is upset, things are happening that are just not supposed to happen but somehow, in the middle of all this, there is Euphoria.
Lisa and I never went out.
And... I have not fully participated in the stock market rally over the past couple of months.
Sure, I’ve made some good short term momentum trades but they are quick.
I’m making profits but not the kind you are supposed to make when LULU goes from $128 to $324.
Not the profits people dream of when Penn National Gaming (PENN) goes from $3 to $37.
But these aren’t the only 2 stocks that have seen wild volatility.
For example, I watched Genius Brands (GNUS) go from $0.20 on April 2nd to $11.73 this week. Then on the same day it hit $11.73, the stock was halted multiple times and it closed at $4.25.
But I did buy shares of XpresSpa Group (XSPA), a company that will offer temperature checks at their spas in airports, for $0.91 and it hit $2.21 the next day.
This volatility is extreme. Much of it just doesn’t make sense.
You can only call it Euphoria.
But it’s actually okay that I’m missing it.
You can’t have a 20+ year trading career chasing the market.
You see, I never went out with Lisa.
But, I married a girl that was completely out of my league.
It’s all about the long game.
Kind Regards,
Adam Mesh
CEO of The Adam Mesh Trading Group
Twitter: @adammesh
Instagram: @adammeshtrading
P.S. If you want to learn some of my absolute favorite option strategies, simply email me: adam@adammesh.com with the subject: Top Options. I’ll add you to my hotlist for options education and strategy sessions. You’ll also be surprised at my renown response time.
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SPY shares . Year-to-date, SPY has declined -0.20%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Adam Mesh
Adam Mesh started his career as a day trader in the 90's as electronic trading revolutionized the markets. After executives at the firm recognized his unique ability to breakdown and translate what's happening in the market, he quickly moved through the ranks gaining national attention. Mesh has been recognized by Fortune Magazine for an uncanny streak of successful trading and has appeared on every major financial media outlet. Mesh believes that the key to stock market success is to keep the strategies simple enough so that they can be repeated. "Consistency and Discipline" are always found at the base of every great success story. Adam can be reached via email at adam@adammesh.com.
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