Qullamaggie Stream Notes: 26 January 2023
A change in the market, strength in China names and a detailed look at Kristjan's portfolio
First stream of 2023 (Kristjan’s 36th birthday)! As requested, the notes now include timestamps and clearer data on Kristjan’s entries and stops. Please continue to provide feedback and share suggestions on how to improve — you speak, I listen!
An old stream, but I found this a very interesting one to look back on in hindsight, to get a sense of what was going on in Kristjan’s mind as he saw early indicators of a change in the market.
(I am currently on holiday, so it’s possible these notes are published on the same day as a new stream. If so, I’ll write up notes on the streams I’ve missed upon my return.)
Kristjan’s positions
CVNA (bought during the stream at timestamp 7:58, or 9:31 EST)
CWEB
FCX
GNS (short)
MDGL
PDD
TNA
YINN
We’ll go through his positions later in this stack.
Kristjan’s watchlist
BBBY
BILI
CVNA (removed at timestamp 9:51/9:33 EST; moved to portfolio)
ERX (removed at timestamp 24:53/9:48 EST)
JD (removed at timestamp 9:59/9:33 EST)
KWEB (removed at timestamp 9:56/9:33 EST)
NTES (removed at timestamp 9:55/9:33 EST)
SE (added at timestamp 13:00/9:36 EST; removed 30:26/9:53 EST)
Market outlook
At the time of the stream, earnings season was starting, and Kristjan thought we’d be seeing a lot of EPs. There were a lot of stocks that had been going down or sideways for years and, in terms of EPs, we haven’t really had a great earnings season for at least 1.5 years. That is, for mid and large caps — there had been a few select EPs in small and micro caps (and some exceptions in larger caps).
Kristjan thought this earnings season, at the time of the stream, was going to be different. A lot of stocks had been basing for a long time, and we’d been starting to get some plays. Momentum was starting to come into the market — very different from 2022, “the year of slim pickings”.
There had been a lot of good earnings reports, but it’s the reaction to those reports that’s important. A good report won’t help you if the stock goes down! Whereas stocks can make big moves following a mediocre report, as long as it’s a surprise. To quote Kristjan (17:32):
“It’s not about good or bad, it’s about better or worse than feared.”
At the time of the stream, we’d slowly been starting to see that:
Buying the dip was beginning to work again; and
Stocks were reacting well to bad news — e.g. $W reported news that it’s cutting 10% of its global workforce (but the news was also about saving costs longer term), and the stock went up 50% in just a few days:
In the two weeks after the stream, more small and mid caps were due to report. To quote Kristjan again (18:12): “That’s where your edge is, guys!”
The market on the day of the stream
The market gapped up, but by 9:44 EST (20:59) we were seeing the market fade.
Kristjan didn’t like $QQQ getting rejected off the 200 MA:
$SPY, on the other hand, was above the 200 MA:
$IWM was also above the 200 MA:
Later into the stream, at 9:55 EST (32:10), Kristjan commented that the Nasdaq stopped at a “very interesting level”:
China showing strength
In the pre-market, Kristjan showed that China and Hong Kong were “on fire”:
Kristjan also mentioned that Chinese stocks were gapping up again, e.g. $YINN (in his portfolio, discussed further later):
And $BILI (from Kristjan’s watchlist):
And $TCEHY:
And $NTES:
But not long after the market open, it was evident that all the China names were gapping and crapping — a viewer mentioned $IQ, for example, but Kristjan said (27:34): “Nah, it’s just gapping and crapping together with all the other China names.”
However, Chinese e-commerce platform $PDD (in Kristjan’s portfolio, discussed further later) is actually acting really well — a clear sign of relative strength:
Later in the stream (37:27), Kristjan did say that “if you haven’t traded China stocks over the past two months, you’re doing something wrong”, as there’d been so much opportunity in those names.
A large proportion of the charts covered in these notes are China stocks. For more examples of China strength (at least, at the time), I recommend you rewatch the stream from 37:27, where Kristjan flicks through a bunch of charts. He also pointed out that the “American Depositary Receipts - ADR” watchlist in TC2000 contains a lot of China names you can look at.
Portfolio charts
$CVNA
Online used car dealer; Kristjan bought it during the stream.
Industry: Specialty retail
Sector: Consumer cyclical
Market cap: $1.3B (small cap)
ADR: 16.1%
Setup/edge: Anticipation
Entry date and time: 26 January 2023, 9:31 EST (7:58)
Entry price: Around $6.85
Stop loss: $6.31
Exit: Probably stopped out on 26 January 2023 (after the stream ended)
This was Kristjan’s screen at the time he purchased $CVNA:
Unfortunately, it’s hard to see the relevant bit of the chart, but he did talk more about it later in the stream (33:09), where it was easier to see:
Kristjan said he initially bought $CVNA on 11 January 2023, sold it on 19 January because he thought the stock was going to close below the 10 EMA (but it never did). On the day of the stream, he rebought a “little bit”, with a wide stop, and also pointed out that you can’t trade it with size, as it’s such a thin stock.
Kristjan believed the stock can double, pointing out that it has “a lot of room” while zooming out (see chart below). However, it needed to flag a bit more, and the 20 MA had to catch up.
As he says: “These are the ones that have been working lately, the ones that […] come off the lows.”
I suspect that Kristjan got stopped out of this stock after the stream ended, but he may have rebought it the day after (the vertical line is on the day of the stream):
We definitely know that he’s been continuing to follow this stock, and that it was in his portfolio on 1 June 2023:
$FCX
International mining company; operates diverse assets with probable reserves of copper, gold, molybdenum and other metals.
Industry: Copper
Sector: Basic materials
Market cap: $63.7B (large cap)
ADR: 3.7%
Timestamp: 33:52
Entry date: 5 January 2023
Setup/edge: Flag breakout
Entry price: Probably around $39.30
Stop loss: $40.69 (at the time of the stream)
This is a slower name, but made nearly a 20% move — “not too bad”. As for Kristjan’s exit, he presumably sold in late January or in February, as the stock broke some key moving averages.
At the time of writing, $FCX is in a multi-month base, potentially building a double bottom:
$TNA
ETF with 3x daily long leverage to the Russell 2000 Index.
Industry: N/A
Sector: N/A
Market cap: N/A
ADR: 5.3%
Timestamp: 34:01
Initial entry date: 6 January 2023
Setup/edge: Coming off lows
Entry price: Probably in the $34.40–$34.80 area
Add-on date: 20 January 2023
Setup/edge: Bounced off 10 EMA
Entry price: Probably around $36.45
Stop loss: $35.41 (at the time of the stream)
Kristjan initially bought $TNA as it came off the lows on 6 January 2023, then added as it bounced off the 10 EMA on 20 January.
At the time of writing, $TNA has been trading near its lows for multiple months, though last Friday (2 June 2023) it seems to have come off them (i.e. broken that range) on relatively high volume.
As for when Kristjan exited — this is a complete guessing game, since he didn’t stream again until 18 May 2023. But I think it’d be an educated guess to suspect he took some profits on the way up, then sold whatever shares he had left on 9 February 2023, when $TNA broke some key moving averages.
That’s definitely a good sign, though doesn’t change the fact that the stock still has a lot of work to do. Plus, by the time you read this, the chart may look very different.
$CWEB
ETF that provides 2x leveraged exposure to the CSI Overseas China Internet Index.
Industry: N/A
Sector: N/A
Market cap: N/A
ADR: 5.5%
Timestamp: 34:08
Initial entry date: 3 January 2023
Setup/edge: Flag breakout
Entry price: Probably around $55.00
Stop loss: $61.19 (at the time of the stream)
Add-on date: between 20–25 January 2023 (Kristjan couldn’t remember)
Setup/edge: Bounced off 10 EMA (probably)
Entry price: Probably around $67.00
Stop loss: $64.92 (at the time of the stream)
Exit: Presumably 30 January 2023, when both stops were hit.
Kristjan said he initially bought $CWEB on the flag break on 3 January 2023, then he added somewhere between 20–25 January (presumably either 20, 24 or 25 January) — he couldn’t remember exactly off the top of his head.
Because of the separate purchases, he has two different stop losses (thus the two horizontal lines on his chart).
At the time of writing, $CWEB has been in a big downtrend, even if it has shown some signs of improvement in the last couple of trading days (1 and 2 June 2023). This is not surprising though, considering the general weakness we’ve seen in China names, and the Friday gap up across all China names.
$YINN
ETF with 3x daily long leverage to the FTSE China 50 Index.
Industry: N/A
Sector: N/A
Market cap: N/A
ADR: 5.0%
Timestamp: 34:18
Initial entry date: 3 January 2023
Setup/edge: Flag breakout
Entry price: Probably around $50.30
Stop loss: $60.03 (at the time of the stream)
Date of add-on purchase: either 19 or 20 January 2023 (Kristjan couldn’t remember)
Setup/edge: Bounced off 10 EMA (if 19 January) or breakout (if 20 January)
Entry price: Probably either around $63.00 (if 19 January) or $66.30 (if 20 January)
Stop loss: $67.61 (at the time of the stream)
Kristjan bought $YINN on the same day as his initial purchase of $CWEB, 3 January 2023, then added on either 19 or 20 January (he couldn’t remember off the top of his head).
Kristjan’s exit is another guessing game: his stop as of this stream was hit on 3 February 2023, but the ETF had been showing poor action in the days before, so I suspect Kristjan sold earlier — 30 or 31 January, when the moving averages were breached.
At the time of writing, as another China name, $YINN is a similar story to $CWEB, though with a better bounce these last few days:
$PDD
Third-biggest Chinese e-commerce platform operator.
Industry: Specialty retail
Sector: Consumer cyclical
Market cap: $121.4B (large cap)
ADR: 4.3%
Timestamp: 34:28
Initial entry date: 28 November 2022
Setup/edge: Earnings EP
Entry price: Probably around $75.50
Exit: Stopped out the same day — probably around $74.00
Second entry date: 23 January 2023
Setup/edge: Range break
Entry price: Probably around $94.00
Stop loss: $93.96 (at the time of the stream)
The first time Kristjan bought $PDD, on earnings on 28 November 2022, he got stopped out the same day — after which the stock went straight up. That’s life (as a trader). As Kristjan put it: “Classic.”
He then bought it again on 23 January 2023 (which were the shares he was holding at the time of the stream), as it broke out of a range and bounced off the 10 EMA.
His exit is another guessing game — I’d say one of the red days between 30 January and 3 February 2023, when key moving averages were breached. I doubt he waited for his stop (as of this day’s stream) to be hit.
At the time of writing, PDD — like the other China names — had experienced a multi-month downtrend since the stream, but then gapped up on earnings on 26 May 2023, mostly filled the gap in the days following that, and now looks like it could be forming a new range to either break out or break down. Because of that gap up on earnings, however, it is looking better than quite a few other China names.
$MDGL
Biotech that develops and commercialises therapeutics for treating cardiovascular, metabolic and liver diseases.
Industry: Biotechnology
Sector: Healthcare
Market cap: 5.2B (small cap)
ADR: 5.4%
Timestamp: 34:40
Initial entry date: 19 December 2022
Setup/edge: News EP
Entry price: Around $210
Stop loss: $258.26 (at the time of the stream)
Exit: My guess is 27 January 2023, because the stock broke the 10 EMA, which up to that point it had been surfing nicely. Kristjan probably sold some on the way up though, especially on the initial explosive move.
$MDGL was probably Kristjan’s best EP trade in a while, which gapped up on huge volume on 19 December 2022 following news about positive clinical trial results, carried on its explosive move for a few days, then continued to grind higher while building higher lows and getting tighter.
Looking at the chart at the time of writing, $MDGL never closed that huge gap, which is a very positive sign. It looks like it’s building a big base, which it’ll hopefully break out of at some point. (Though having said that, it did recently lose a support zone around $269.70 as well as the 65 EMA, which are less hopeful signs. As always: wait and see what price does.)
$GNS (short)
Global e-learning provider.
Industry: Education and training services
Sector: Consumer defensive
Market cap: 73.5M (micro cap)
ADR: 35.6%
Timestamp: 34:53
Kristjan initially shorted $GNS on ORL on 20 January 2023, after which the stock went down 45% on the same day. Kristjan covered most of his position that day, then covered the rest on 23 January 2023 on the short squeeze.
At the time of the stream, Kristjan was short again from 24 January 2023, but he mentioned that volume was dying off, so he’d likely cover soon.
My focus is on the long side, especially in the current environment, so am providing less detail on this one compared to the others.
Other charts
$VIPS
Chinese online discount retailer.
Industry: Specialty retail
Sector: Consumer cyclical
Market cap: $9.6B (mid cap)
ADR: 3.4%
Timestamp: 25:29
A viewer asked about the flag in $VIPS, to which Kristjan responded that he thinks it needs to go sideways, but that it had been pretty explosive, and “kinda looks good”:
Looking at the chart at the time of writing (the vertical white line is the day of the stream), the stock has basically continued to form a multi-month base. (It hasn’t been a great environment for flags and other breakouts.)
$TME
The largest online music service provider in China.
Industry: Internet content and information
Sector: Technology
Market cap: $21.7B (large cap)
ADR: 4.2%
Timestamp: 26:43
There was a similar situation with $TME at the time of the stream:
At the time of writing, the chart looks like this:
Again, I added a vertical line on the day of the stream. As you can see, this stock has basically been drifting down since the stream. It could be building a multi-month base.
$MELI
Uruguay-based operator of online marketplaces dedicated to e-commerce and online auctions.
Industry: Specialty retail
Sector: Consumer cyclical
Market cap: $55.9B (large cap)
ADR: 4.4%
Timestamp: 36:31
$MELI came off the lows and had a nice EP on volume on 12 January 2023, on news that its biggest competitor imploded. Kristjan didn’t buy it as he was out of buying power, but mentioned that this is a great stock for longer-term holding, as the company is just “killing it” in South America.
Looking at the time of writing, Kristjan wasn’t wrong — the chart looks great, continuing to build higher lows since that EP:
$MELI also came up in the 19 May 2023 stream.
$COIN
Online platform for buying, selling, transferring and storing cryptocurrency.
Industry: Software — application
Sector: Technology
Market cap: $12.1B (large cap)
ADR: 9.1%
Timestamp: 39:36
Kristjan almost bought $COIN on 9 January 2023, when it broke out of a range, but passed. Bitcoin broke out of its bottom flag on the same day.
$AEHR
Designs, engineers, develops, manufactures and sells test and burn-in equipment used in the semiconductor industry worldwide.
Industry: Semiconductor equipment and materials
Sector: Technology
Market cap: $934.8M (small cap)
ADR: 9.0%
Timestamp: 40:16
Small account edge at play in this one, if you bought the gap up and range break on 6 January 2023, after the company reported earnings. Very nice EP on big volume, with a lot of follow-through:
$TOUR
Leading online leisure travel company in China.
Industry: Leisure
Sector: Consumer cyclical
Market cap: $298.2M (small cap)
ADR: 11.5%
Timestamp: 47:57
$TOUR, another China name, had a nice breakout on 20 January 2023 on huge volume.
However, like all the other China names, it’s taken quite a tumble since:
$POWL
Leading supplier of custom-engineered solutions to manage, control and distribute electrical energy.
Industry: Electronic components
Sector: Technology
Market cap: $471.2M (small cap)
ADR: 3.2%
Timestamp: 52:12
$POWL had an earnings EP on 6 December 2022, with big volume and nice follow-through:
In fact, $POWL had another earnings EP more recently, covered in the 18 May stream notes.
Extraordinary $CVX buyback
Multinational energy corporation.
Industry: Oil and gas integrated
Sector: Energy
Market cap: $354.0B (mega cap)
ADR: 2.0%
Timestamp: 21:09
Kristjan was amazed by the news on $CVX, which — having a $354B market cap — announced a $75B buyback. How many companies even have a $75B market cap? Never mind a $75B buyback!
More stream notes
All my Qullamaggie notes are available here, including the notes from 18 May 2023, which was essentially a masterclass on EPs.
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And just for the record: my Qullamaggie stream notes are not, and will never be, paywalled. No matter how long it takes me to put them together, and even though I do add value — according to many of you, a lot of value — Kristjan generously streams for free, making me feel that notes based on those streams should also not be paywalled.
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.