How much room are you giving yourself in case the market breaks the trendline as a fake breakout like it did in august on the same trendline on the qqq?
Honestly, I don’t know where I’d take profits yet. What I know is until a weekly candle closes over the trend I’m staying short. The market isn’t going to run 10% in a week so we will see if/when that happens. Right here though the upside is very limited if one wants to be short with a close as I mentioned,there is 1 day left this week
Agreed this is the time to go short. This rally has been lead by industrials, materials, and financials, all the "value" stocks. Seems like everyone has been searching for safety in these value names but the prices are getting crazy. New bull markets should be lead by growth names and the Nasdaq to show an appetite for risk, with valuing following, not the opposite that is happening right now. With 4%, soon to be 4.5% rates a 38 PE on COST, 35 PE on MCD is crazy.
I have a little out of the money puts for March, April and May in MCD, COST, GS, CAT, BLK, and APPL as well as VIX calls that I have been scaling into the past 2 weeks.
Fun to see this side of you. Very different from what came before.
I'm very curious about your thoughts on Wednesday's explosion. Powell's talk had virtually nothing new. So, what happened? It makes no sense to ignore that giant green candle. Better to try to understand it.
My thought is that people are tired of this bear market and want so much for it to be over that they grab onto anything to buy. If lots of people have that reaction at the same time, triggered by Powell's talk, Wednesday is what you get.
Trendlines, moving averages, they all function like magnets. Look at this post I made when Tesla was 250 I called it going to the 200 DMA far lower. I didn't short it bc Tesla is the kind of equity that pumps on literally nothing and elon himself is constantly pumping it
my point is, that trendline was a magnet, whether we were gonna hit it here at 410 or 2 months later at a lower level since it was sloping down. One way or another we would get there and the last couple weeks I kept saying I was holding off going short until we got there. We did and now we face this battle of is the bull market back, is it not. The only confirmation we will have of a bull market returning is a weekly close over that trend line. Even then it could be a headfake. You have to really see building ontop of it. Me, I stated I would short until I got 1 close on the other side, so I'm willing to risk some money that because that trend hasn't broken all year, it certainly wont here as data gets worse.
This whole world we're in where good news is bad news and bad news is good news is getting crazy to me. Powell said we're going to have higher rates for a longer period, that means all these DCF's have to be adjusted and the risk free rate has fallen, it's still not 0 which is where we were last year. I think people are really itching to se rates cut, that's not happening soon, at a minimum we're going to get 1 more hike, then probably a pause for a bit. If they do cut it will be at least 6 months from now. In the meantime earnings will continue to deteriorate, as I mentioned Apple. that is the largest SPX component and the math on 6 million less phones is just not bullish for earnings.
I see comments like "everyone is bearish" I don't know who is seeing that, the VIX is sub 20, that suggests we're in full euphoria if I'm honest and truly the time to be long is when the vix is over 27 or so, not here.
It just makes me laugh we have the worst pending home sales, worst consumer savings, car sales plunging, PMI showing we're in a recession and people are just dying to front run equities. I always sold puts on individual names and those names like SPLK you saw today, WIX 2 weeks ago, and PINS are going to do fine in any tape bc they're undervalued and the activists are pushing change. So I'm going to shoot my shot here and if it fails, I'll know within a few percent because of where I'm putting this on. This isn't me going short at 370 and saying I will close at 415. It's right here at 407 and with the sloping downtrend, if its not this week, and its not next week, its probably not happening and I will be right.
I hate making money on the pain of others, but when we look at SPY 350 just 45 days ago, the data hasn't improved to where a 20% move higher is justified, it happened, but I don't see the catalyst for it to sustain.
Just my take. We will see, not like markets have been efficient or rational in years anyways haha.
Thanks for that. Makes complete sense.
Where would you take profits from these shorts ?
How much room are you giving yourself in case the market breaks the trendline as a fake breakout like it did in august on the same trendline on the qqq?
Loving your insights!
Honestly, I don’t know where I’d take profits yet. What I know is until a weekly candle closes over the trend I’m staying short. The market isn’t going to run 10% in a week so we will see if/when that happens. Right here though the upside is very limited if one wants to be short with a close as I mentioned,there is 1 day left this week
Agreed this is the time to go short. This rally has been lead by industrials, materials, and financials, all the "value" stocks. Seems like everyone has been searching for safety in these value names but the prices are getting crazy. New bull markets should be lead by growth names and the Nasdaq to show an appetite for risk, with valuing following, not the opposite that is happening right now. With 4%, soon to be 4.5% rates a 38 PE on COST, 35 PE on MCD is crazy.
I have a little out of the money puts for March, April and May in MCD, COST, GS, CAT, BLK, and APPL as well as VIX calls that I have been scaling into the past 2 weeks.
It’s really gotten out of hand.
Fun to see this side of you. Very different from what came before.
I'm very curious about your thoughts on Wednesday's explosion. Powell's talk had virtually nothing new. So, what happened? It makes no sense to ignore that giant green candle. Better to try to understand it.
My thought is that people are tired of this bear market and want so much for it to be over that they grab onto anything to buy. If lots of people have that reaction at the same time, triggered by Powell's talk, Wednesday is what you get.
What's your explanation?
Clearly it didn't dissuade your from going short.
Trendlines, moving averages, they all function like magnets. Look at this post I made when Tesla was 250 I called it going to the 200 DMA far lower. I didn't short it bc Tesla is the kind of equity that pumps on literally nothing and elon himself is constantly pumping it
https://twitter.com/amazonholder1/status/1577794323835396097?s=20&t=L_b3yDWz6sSA7_Z_wmM7_w
my point is, that trendline was a magnet, whether we were gonna hit it here at 410 or 2 months later at a lower level since it was sloping down. One way or another we would get there and the last couple weeks I kept saying I was holding off going short until we got there. We did and now we face this battle of is the bull market back, is it not. The only confirmation we will have of a bull market returning is a weekly close over that trend line. Even then it could be a headfake. You have to really see building ontop of it. Me, I stated I would short until I got 1 close on the other side, so I'm willing to risk some money that because that trend hasn't broken all year, it certainly wont here as data gets worse.
This whole world we're in where good news is bad news and bad news is good news is getting crazy to me. Powell said we're going to have higher rates for a longer period, that means all these DCF's have to be adjusted and the risk free rate has fallen, it's still not 0 which is where we were last year. I think people are really itching to se rates cut, that's not happening soon, at a minimum we're going to get 1 more hike, then probably a pause for a bit. If they do cut it will be at least 6 months from now. In the meantime earnings will continue to deteriorate, as I mentioned Apple. that is the largest SPX component and the math on 6 million less phones is just not bullish for earnings.
I see comments like "everyone is bearish" I don't know who is seeing that, the VIX is sub 20, that suggests we're in full euphoria if I'm honest and truly the time to be long is when the vix is over 27 or so, not here.
It just makes me laugh we have the worst pending home sales, worst consumer savings, car sales plunging, PMI showing we're in a recession and people are just dying to front run equities. I always sold puts on individual names and those names like SPLK you saw today, WIX 2 weeks ago, and PINS are going to do fine in any tape bc they're undervalued and the activists are pushing change. So I'm going to shoot my shot here and if it fails, I'll know within a few percent because of where I'm putting this on. This isn't me going short at 370 and saying I will close at 415. It's right here at 407 and with the sloping downtrend, if its not this week, and its not next week, its probably not happening and I will be right.
I hate making money on the pain of others, but when we look at SPY 350 just 45 days ago, the data hasn't improved to where a 20% move higher is justified, it happened, but I don't see the catalyst for it to sustain.
Just my take. We will see, not like markets have been efficient or rational in years anyways haha.