When Ugly Ducklings become Swans

BY ANDREW GIOVINAZZI

August 25, 2024

Yo Pit Crazies,

The Yield Zone should get to Swan Mode this week after a crazy couple of weeks of volatility. Check it out here.

I had Friday off taking the boys to school. There are 6 more years at least of doing this for me, so it seems every Jackson Hole Fed event is around the time I have to take kids to school. Those events are yearly but trading-wise we want things more frequent. One thing that never seems to run out in 35 years of doing this is the Ugly Duckling phenomena.

Ugly stocks turn pretty

I like trading volatility because that happens on a frequent, rhythmic basis like a wave. Our latest Ugly Duckling to Swan should be the Volatility Shares -1x Short VIX futures ETF (Ticker: SVIX), was $19 on Aug05, now $31 and change. Check that out here and why you should learn how to trade it.

At one point in the 2021 heyday of all things Stimmy Check, Robinhood Markets Inc (Ticker: HOOD) was a $60 stock based on the premise that $0 commissions would change the game. For the most part it has as other brokerages followed suit after the success of HOOD grabbing users.

HOOD moved into crypto and more traditional asset gathering lately and earnings have started to grow. The recent market swoon pushed HOOD to below $15 and now back to $21 as of Friday.

1 year HOOD chart

HOOD was starting to tickle $25. I think HOOD will be a $40 stock if current trends continue into 2026.

Here is another more short term trade that was an Ugly Duckling and will be a Swan once again.

The Russell 2000 should get back to 2024 highs

The last time the Russell 2000 Index ETF (Ticker: IWM) was this high was 2021. The days of Teladoc and Gamestop pushing the index to new highs. Both of those stocks are in the basement now and IWM is moving higher on more solid fundamentals like earnings growth. There are other component reasons for liking them but I believe the Invesco NASDAQ 100 QQQ Trust (Ticker: QQQ) will slow down a bit going into the 2nd half of 2024 just on valuation. Remember 2022 QQQ was an Ugly Duckling that has doubled since the lows. Nvidia Inc (Ticker: NVDA) is up near 10 fold from the 2022 lows.

1 year IWM chart

While the broader market is back near highs, IWM should as well. It will make a nice companion with our SVIX Backbone Strategy this week for the Trading Desk.

To Your Trading Success,