We may bounce some more but I got sucked back into the short side again today after watching the action on the IWM. I rolled my IWM put profit from last week into a lower strike and shorter expiration with more notional value. I also initiated a short on AMZN and AAPL.
AMZN: Fundamentals have been deteriorating all year long. AWS is bleeding money and Google just initiated another round of price cuts in their cloud business. The CFO announced his retirement which is always a red flag for me and cash flow continues to go the wrong way. The new phone is a disaster and they lowered the price to 99 cents which will add to the losses. The 200 day MA has rolled and the company is under increased competition. Some of my friends who run long only and are what I consider lead steers are gone from this name. Numbers will continue to be cut as their growth rate decelerates. If the market rolls this stock will not fare well.
AAPL: Margins have peaked and we know that to be true because the new phone now bends which proves they are skimping on quality. Plus you never want to own a tech stock after a product cycle release unless they are a secular growth company. That moniker has passed AAPL by and they are now a replacement cycle company thus a trading stock. Chart looks ready to roll to me and I expect some mean reversion back to the 200 day MA as the market sells off.
It is my contention we have possibly topped out and may be in a major corrective move. I will cover if we go to new highs. If this rally fails soon we will absolutely fall apart in my opinion. Just when I thought I was out the market sucked me back in. The market is a cruel mistress.
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Bluestar, this question is pertains more to your most previous post, but do you think the commodities market is giving us a signal that deflation (or at least the fear of it) is being priced in the market? I’m long U.S. oil stocks, particularly, the major shale players, and they’ve obviously been getting smacked around lately. Any insight here is appreciated. Thanks.
boyaj,
This is a tough one. I think we get bounces along the way but I really hate the market and I am bullish on the dollar for the next two years. My suggestion would be to sell the counter trend rallies. I think unless the Fed resumes QE oil stock will have a tough time. Also China appears ready to implode. China has been the marginal buyer of oil since 2000.
BlueStar – what do you see that indicates China is likely to implode? I’ve heard their infamous ghost cities will be full and properous before 2025.
Blue,
why not plat put spread on amzn or AAPl, in other words if you have to take spread which month and which strike will you take.
Charlie,
I like the sarcasm.
Bill,
When I managed money we never did derivatives. clients had zero interest. so i am an option ignoramus. please elucidate. I always love to learn new things.
Why not short YELP? You have given reasons why its a P&D, just check the laughable P/E
MTbigsky,
Once this market cracks I will short Yelp into the ground. However I would rather start with big liquid names with low short interest so that I don’t get my private parts blown off if I am wrong.
Blue,
Lol, I am no genious on options either. I was just thinking how long do you think it will take to get a 10 to 20 percent decline.
thanks
Bill
Bill,
BlueStar was talking about maybe the markets going down for a month then chopping up everyone… so maybe you should consider shorter term options and aim for just 3-5% in a few weeks or whatnot.
Bluestar,
Thanks for the response. I’ll probably trim my oil related plays in my trading account but stomach it out in my Roth. Short term, there will always be threats to oil but until our cars and jet streams run on frosting and we fight wars premised on pickle juice, I’ll always be a an oil man for the long term.
Bill,
I can’t tell you when there will be a 10-20% decline in AMZN, but if you look at the chart (I use FinViz), you will see that AMZN has clearly broken below the trendline for a couple of days. That may indicate that the probabilities are more in favor of a decrease in AMZN’s price. If you are going to play with options on this, be careful about your expiration AND the deltas of the options you select. Hope that helps
You can thank me later Bluestar 🙂
Bunk,
Muchos Gracias. You post made me wake up. Being right without making money is the gravest sin.
Congrats sir. Last couple of weeks have no doubt been a major win for you.
Your timing if it holds will be one for the ages
That was simply.. awesome…
Never got sucked back as I have never left.
Topping is a process, slow at times and it times not that slow.
It’s a bull market you know… TLT
matt_bear,
Thanks. we Shall see. its still early yet.
from gorby,
Thanks. Still too soon to tell. Its a good start.
Mr. Partridge,
Well done and thanks for your kind words along the way. If we are right we are just beginning. Not enough evidence yet.
Bluestar, unrelated, or maybe somehow related to current market action, but since you have said you love a good conspiracy theory, where do you stand on the possibility that the 1st Apollo mission, that being Apollo 11 only, was hoaxed, because we were in a race with the Soviets at that time, to get to the moon first and since we weren’t quite ready and wouldn’t be until a couple years later, that initially with the help of Werner Freiherr von Braun and Walt Disney, NASA was able to implement the greatest hoax of the 20th century.
Hypnosis, among other means was supposedly used among those involved. I’d never seen this post-mission Apollo 11 press conference before but if there ever was a smoking gun …. talk about body language giving up the ghost!
https://www.youtube.com/watch?v=ifx0Yx8vlrY&app=desktop
Congratulations on the call. I feel the market has turned, it has been bloody ugly out there.
I went 100% cash on 9/29 to protect my gains. A better move would have been to do it a month earlier.
Now I think the counter trade rally has begun
trend*
browneye33,
I think you are correct. Rally from here is key.
bluestar – what levels do you expect the market to rally to before it all unravels again?
Hi BlueStart- what are you thoughts on today’s rally? Was it strong enough to change your view at present? Guess action on following days will tell more, kinda want to get your assessment at the moment. Thanks
Big time outside reversal and bullish engulfing daily candle. This has gotta be the official start of the rally leg.
johnny,
we could rally for 5-10 days. if we go to new high i am wrong. however, the action we are seeing is very bearish. vol increasing is a sign of things to come.
LB,
Check prior comments.
matt_bear,
you are correct. stretched trading cycle low by a day. rally 5-10. good luck if you go long.
A new high would confirm that this downside was a-b-c of 4 and we are in wave 5 up.
If we roll over short of a new high then the speed is important as it would then signal the terminal move and beginning of bear cycle down.
matt_bear,
or new extention of wave 3.
Juice,
Four words: Van Allen radiation belt.
AJ,
Thanks still early.