A few weeks ago I talked about The 5 Hindenburg Omens that had been spotted. Well today we can see the Hindenburg over Manhattan on its way to potentially blow up. The market has started to wobble and today we lost the 200 day Moving Average. Additionally, not all is well in credit land. Notice the nicely sloping advance of widening credit spreads. We are now almost back to the December and October highs but yet the averages are barely down in price.
The China situation is a big deal. The crash will definitely affect Global liquidity and a scramble for cash. The fact that the Chinese authorities are banning short sales and long only sales for certain holders is a deflationary disaster that will be sure to spread to other markets. My game plan assumptions are we get a low sometime before month end and then we rally for six weeks into September. By then it will be apparent that the fundamental wheels are coming off and we get our Hindenburg Correction of 15% or greater.
I am operating under the assumption that we have seen the Bull Market Top in May. I have been short since the Highs in April. I am also of the belief that the crash potential is very real due to the unprecedented manipulation of the Bond and Stock markets in both Price and Time. Picture in your mind a rubber band stretched to the max about to be snapped on your little brother’s leg. You know it will make him cry. Well I am afraid all of us will be crying soon. This will sound insane but my ultimate target is below 2009 low. Mother Nature will exact her revenge and expunge the excesses from the system. I hope to God that I am wrong.
The omnipotence of Central Banks and the Era of Extend and Pretend is over. China is showing desperation and so far losing the battle. The ECB has lost Greece and the Euro is in doubt.
Semis are acting like death and missing numbers and the Trannies are telling us that something is off with the economy. Guys the signs are here.
I leave you with this thought. AAPL last quarter had 29% of their revenue come from China which was 70% y/y growth. Do you think the Chinese Bull Market had something to do with this? I hear the watch is a disaster and now iPhone numbers are way too high given the sudden wealth destruction in China. APPLE under $121 is in a downtrend and so goes AAPL so goes the market.
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You’re right, I think. However, don’t get too cute looking for that last rally to fail – it may not rally at all. I’m mostly short now w/ a lot of dry powder. I’ve been adding to select longs only as v bottom hedges. I think this churning near the 200sma is very bearish. Also, this is beginning to “feel” like a bear market – gov’ts scrambling for solutions, crazy overnight swings in both directions, slowly going lower almost daily.
Below ’09 lows is a scary scenario. Would take longer to get there; fed would throw the kitchen sink at the market before we reach those levels.
dyer440,
its a game plan not a belief system. I am going to be very flexible.
are they REAL hindy’s though? the mass amount of inverse etf’s can skew now.
Reports going around the I Watch is burning people’s wrists. Not good.
Consolidating for the next leg higher to S&P 2300-2400. Load up, this guy has been crying wolf for a year and a half now. This guy was calling to short Amazon in October saying “the wheels are coming off”, it’s up 50% since. Next week Amazon will have their own Black Friday on July 15th and people will be buying hand over fist and paying $99/year for the privilege to do so.
larry,
i covered amazn. and made a tone of dough. last year stock went from 420 to 280. also the wheels are coming off fundamentally and i will re-short on the break. Also i have only been here about a year. so you are actually wrong. 2300-2400 lol. you are cracked good luck.
matt_bear,
that does not matter. but remember the Hindenburg is just one tool in tool box. it does not mean crash it means the conditions are here for a crash. I am short for other reasons but the omen gives me confidence.
Bluestar, appreciate the insight as always. Could you explain to me whether that graph shows the widening of the credit spreads? To go along with that, which averages are you referring to when you say that the averages are barely down in price? Thank you in advance for your response.
boyj,
higher is wider. The SPX, DOW, NASDAQ
Hanging out in the most beautiful place on Earth for a while. Blue, your top three things to do/eat here? #jealousofyou
Thanks for the response, very useful chart tool to utilize.
GTFO,
Golf at the Blue Course in Wailea, Hana, Haleakala, Mamas Fish House and or course beaches.
How did the market do the last time AAPL was in a downtrend (from Sept 2012 to April 2013)?
john v,
much bigger weight now and no QE to prop up the whole market.
Actually, relative to the market, AAPL was worth more back then. It went to $100 while the S&P was only at 1,400. Right now the stock is at $120 while the S&P is almost at 2100.
Jon V,
Good catch You are correct I was thinking $750 billon market cap and did not actually check to verify. Basically in 2012 we had QE so liquidity was over the top good. So when apple dived their was rotation into other stocks. The question is this does that happen right away or not. But I don’t think aapl is the only tech company with earnings issues. The global economy overall is decelerating whereas aapls issues in 2012 were aapl specific. I think this China thing will have knock on effects. As I said semis are bad. Orcl missed. Intel looks like Death etc.
Actually Larry guy above is spot on. Your speculations have been more wrong than tossing a coin. You said: ” I see clear sailing to the low $200’s over time.” about AMZN and it literally double that now.
Doesn’t matter how much dough you made, you were clearly wrong about that one for sure. I also don’t think you’re making a strong point about any of this either. Apple is just one of S&P500 companies on NYSE and even if they suffer in China (which they already do due to Huawei and a bunch of local cheap brands), this won’t do much for NYSE’s strong up-trend.
There were plenty of omens around October of last year that appeared in sequence and nothing happened to the stock market, so just like a lot of other speculatory nonsense that goes on with stocks, this is becoming one of them. Even though there was a strong correlation between stock market crashes and Hindenburg Omen in the past, it’s not become moot
Bob,
Oh boy. You are an angry Man and just wrong. The omens were in September and the market fell 10% so I don’t know what you mean by nothing happened. I was shorting AMZN in January of 14 before I was here. Shit changes. 420 to 280 is what I call a win. And if you could read correctly then you would understand what an omen is. I said it is not a timing tool but a necessary condition for a correction. I have plenty of other reasons for being short. The omen just gives me conviction.
Blue,
We will be proven right. The top is in and I need look no further than the comments on this blog to validate my own conviction. What the clowns above don’t get is that it’s not about being right, it’s about making money. Ultimately though we will be right and make a load of money selling into these trolls.
I missed the $DB short. Hope you caught that move down.
When the markets putter out after a Greece deal I’m sure the Bulls will be the most surprised since that was “the only thing holding us down.”
Quality,
I was waiting for the Greece solved pop to short on DB. Its looking ripe. Lets talk about this one some more. I think its a zero shot eventually.