Fading Last Month’s Post-CPI Rally
Readers may recall I added some short bets after the big post-CPI rally last month (Fading The Post-CPI Rally). After noting that Carl Icahn was skeptical of the rally, I wrote:
I shared Icahn’s view of the rally, and used it to buy puts on a handful of stocks that spiked by double digits on Thursday. In the event Icahn and I end up being wrong about this being a bear market rally, I looked for stocks with poor fundamentals that might underperform even in a new bull market. These were the four names, along with their percentage gains on Thursday:
- Riot Blockchain, Inc. (RIOT): +10.62%
- Opendoor Technologies Inc. (OPEN): +26.49%
- Carvana Co. (CVNA): +31.62%
- Redfin Corporation (RDFN): +31.8%
Aside from their weak fundamentals and charts prior to Thursday, they were all in vulnerable industries. RIOT is a bitcoin miner, when crypto is being roiled by the FTX collapse; OPEN and RDFN are in real estate, which remains vulnerable to rising interest rates, even if the Fed tapers its rate hikes; and CVNA deals with used cars, the prices of which sank in Thursdays CPI data.
I’m currently talking with my developers about starting a site (or perhaps modifying this blog) so you can follow these trades in real time.
Fading The Post-CPI Rally, November 11th, 2022.
In a follow up post earlier this month (“After The Carvana Crash”), I noted that I had been wrong about Redfin so far. Not anymore. Even after its 12% bounce on Thursday, shares of Redfin were down 18.55% since I bet against them last month.
Shares of the other three names were down worse:
- RIOT: -35.96%
- OPEN: -45.67%
- CVNA: -62.54%
Tracking These Trades In Real Time
In my November post, I mentioned I was planning to start a site where you could follow these kinds of trades in real time. I have now done so on Substack. You can read about it here.
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