Qullamaggie Stream Notes: 2 June 2023
The best market since November 2021, but we now need consolidation
Kristjan’s positions
AI
APLD
ARQQ (bought after yesterday’s stream ended)
CVNA
DNA
GSIT (bought after yesterday’s stream ended)
IMGN
IONQ (sold during this stream; stopped out around 9:47 EST)
IOT (bought during this stream, at 9:43 EST)
MNDY
PLTR
QBTS
RGTI (bought after yesterday’s stream ended)
Kristjan mentioned he’s got a lot of s**t small-cap names in his small tax-free Swedish account.
Kristjan’s watchlist
FTCH (added at 9:32 EST)
LI
RXRX (added at 9:37 EST; removed at 9:56 EST)
UCAR
WLDS (removed at 10:04 EST)
Market outlook
In the pre-market, Kristjan mentioned how there are a lot of gappers today. However, by 9:49 EST, he mentioned that a lot of things were starting to fade — a pattern we continued to see throughout the rest of the stream. There wasn’t much going on today, except perhaps for $UCAR (discussed later).
Kristjan believes a few weeks or perhaps a month of basing would be great, as so many names are extended, especially software and semiconductors. Now isn’t a time to be aggressive on the long side. We need solid bases, considering that we’ve just had several months of essentially solid rally. We’ve basically had a bull market — a narrow one, but nevertheless a bull market.
For example, look at $QQQ:
The 20 and 50 MAs need to catch up a bit, either through price action or through time. We need consolidation. Today we’re seeing a lot of software names gap up and fade, as they’re extended.
Sector observations
China gapping up
In the pre-market, Kristjan specifically mentioned that all the China names are gapping up “lots” — see $KWEB (China Internet ETF, 2.7% ADR) below:
Remember: it was only yesterday when Kristjan was commenting on the weakness in China names. Which is when he was commenting on the relative strength in $LI. Remember the question I wrote?
“What do you reckon is going to happen to $LI if China names generally turn around and go higher?”
Well, here’s the answer:
(Kristjan did mention, during this stream, that he was “a little bit annoyed” at being shaken out of $LI two days ago, 31 May 2023.)
Software bouncing back from gap downs on earnings
This earnings season, we’ve been seeing a pattern with software names gapping down on earnings, then having a significant bounce back. For example, $NET gapped down on 28 April 2023 after reporting earnings the day before (after the close):
And $SNAP, which reported earnings on the same day, 27 April 2023 after the close:
Here’s another example: $SNOW, which reported earnings after the close on 24 May 2023.
These are all signs of a strong market. As Kristjan says:
“Best market since […] November 2021. Definitely. Because things are having follow-through. And there’s a lot of sectors participating, too.”
EP charts
$IOT
IoT company; develops a connected operations platform for tracking fleets of vehicles and other equipment.
Industry: Software — infrastructure
Sector: Technology
Market cap: $10.0B (small/mid cap)
ADR: 4.5%
$IOT reported earnings yesterday (1 June 2023) after the close, and gapped up on big volume as a result. Here is the daily chart from Kristjan’s screen at 9:43, when (I believe) he bought it:
Here’s a 1-minute chart from my own screen, so you can see Kristjan’s entry (the blue arrow) and stop (the white horizontal line) more clearly. (Not because he or I trade off 1-minute charts!)
$DDOG
SaaS-based monitoring and analytics platform.
Industry: Software — application
Sector: Technology
Market cap: $30.4B (large cap)
ADR: 3.7%
$DDOG had an earnings EP on 4 May 2023, which Kristjan reckons was his biggest miss this earnings season, saying that he would’ve traded it if the volume had been a bit higher (it only traded at around two times the average daily volume):
$MDB
A database for storing data in flexible, JSON-like documents.
Industry: Software — infrastructure
Sector: Technology
Market cap: $20.4B (large cap)
ADR: 4.1%
Someone in the chat asked Kristjan why he passed on $MDB today, which gapped up on earnings:
Kristjan responded that it’s a slow name. When you zoom out, you can see that the stock has no history of making really big, clean moves, apart from in 2020, when every stock did.
$UCAR
Chinese vehicle sourcing services provider looking to become an EV player.
Industry: Auto parts
Sector: Consumer cyclical
Market cap: $155.5M (micro cap)
ADR: 21.1%
Kristjan commented on how $UCAR had huge volume yesterday, 1 June 2023, before breaking out of its ORH. It had a catalyst: news that the company had entered a strategic cooperation agreement with Quantum Solutions.
Below is the 5-minute chart, with the entry point marked in blue (ORH). It had huge volume coming in, before it finally took out the ORH at 10:20 EST (on even more volume).
As Kristjan says:
“Volume is key. It really is.”
A personal note
I’ll be honest: I wasn’t expecting such a big readership in mere days. When Dr. Mansi tweeted to ask about who’s doing stream notes now, I thought I was the right person to take them on. In my day job, I work as a technical writer and ghostwriter (i.e. I specialise in explanatory writing), and have been trading and following Kristjan for a few years, so figured I had the right skill set for this.
In any case, I’m passionate about trading as well as good writing, and like to help people where I can. If I can combine all those things by doing this Substack, and in the process help traders all around the world improve — myself definitely included — well, fantastic! It truly is humbling, and I’m very grateful for all the support you’ve shown.
However, rather awkwardly, the timing of this happened close to my first holiday of the year, starting next week. So, I won’t be able to post stream notes on the stream days themselves, assuming Kristjan does stream then. Instead, I promise this:
This weekend, I’m writing up other, less time-sensitive stacks — expect a combination of notes from older streams and a write-up about my quantitative analysis techniques, intended to be used for Excel-based trading journals. There won’t be daily posts, but I’ll make sure the posts don’t dry up completely while I’m off.
When I get back, from Wednesday 14 June, I’ll catch up on the streams I’ve missed, writing and publishing notes as quickly as I can.
I will always prioritise quality over quantity. So I’ll be as quick as I can on point 2, but can’t promise a specific time frame, since I don’t know whether Kristjan’s streaming on the days immediately upon my return, which would obviously double my workload (on top of catching up in my day job) if he did.
Since quality and continual self-improvement are so important to me, if you can think of ways I can improve this Substack, please do let me know! Leave a comment below, message me on Twitter, or simply email me at kayklingson@yahoo.com. I welcome all feedback, in whatever format you’re comfortable to share it with me :)
More stream notes
All my Qullamaggie notes are available here, including the notes from yesterday’s stream, 1 June 2023. If you want to learn more about EPs, the stream from 18 May 2023 was essentially a masterclass.
If you want to support my work, please like and share it! You can also follow me on Twitter.
More about Qullamaggie
To learn more about Kristjan Kullamägi, aka Qullamaggie, and the way he trades, visit qullamaggie.com.
All past streams are available on Kristjan’s YouTube channel.
KK is a great executer and sharer of knowledge. Dr Mansi is a great teacher and explainer. These are great notes of the greats doing great things. You are helping many folks!
Thanks so much, love this.
Would be amazing if you can add the strategy Q is trading next to the ticker (ex: CVNA - Breakout, IOT - EP)
Thanks.