BET AGAINST THE SEMIS — BET AGAINST THE SEMIS — BET AGAINST THE SEMIS

NAND prices in decline. China trade war menacing supply chain. Apple gravy train OVER. Bitcoin rigs dead. Stocks like NVDA trading 9x sales while historical median is just 3x.

STICK SANDWICH REGISTERED TODAY ON SMH

It’s over.

Long SOXS.

*** START OFF THE NEW YEAR WITH CLASS. GAINS ACCESS TO Exodus — FREE FOR 7 DAYS ***

I added to my gold position by buying JNUG today. Right now I have a 10% holding in NUGT, 5% holdings in EGO, and AG. In other words, ~25% of my portfolio is long gold/silver, with an actual exposure level of much more than that — given the levered nature of the ETFs under ownership.

On a 1yr scale, unsure if it’s all that meaningful to be honest, the 50 is about to cross the 200, producing a ‘golden cross’ for GLD.

I feel like I’m spinning my wheels, vacillating and meandering wildly as markets gyrate. My best positions are the ones that build steam and climb walls of worry. I do believe the market can break lower tomorrow and we’ll see resolution in many of the technical theories floating out there now. Apple has not rebounded at all today and semis are still on the mat.

On the plus side is crude, HYG, and SRLN — all higher. Under different conditions, I’d use those elements as purpose to go long. However, the overarching dominant factor, at least in my eyes, is the poor technical set up for stocks here. Additionally, should crude reverse lower and drag down oil stocks, that house of cards will collapse and we’ll have a full blown rout on our hands.

FOOD FOR THOUGHT!

The ark is loaded, brimming with wild giraffes, snakes, and also tigers. We’re adrift now, safely floating atop of the waters that aim to drown the rest of you.

I bought TLT again, increasing it to a max 15% position.

While the daily swings in stocks are violent and often severe, making fools of everyone — bonds of the government sort persist higher, uninterrupted.

Today’s breakdown will produce wretched technicals and that will affect investor psyche, causing stocks to tailspin lower for the balance of January.

This is my god damned channel and I’m sticking to it.

The fulcrum of losses will be enjoyed in semis and oil. As such, I am long DRIP and SOXS. I also took a position in LABD today, betting on a decline in biotechs.

Another area of concern is government bonds. We have US yields plunging lower, as people take flight into the ark. Unbelievably, over in Europe, the PIGS are diverging from stronger Euro countries like Germany and Switzerland.

Again, in the US, the 10yr bond is lower by an astounding 8BPS to 2.58%.

What does that mean? It simply is a measure of stress. There are liquidity concerns, as evidenced by last night’s 3% move in the Yen.

We’ll post a big ass black marubozu candle today, no doubt.

As such, I sold SLCA, BRZU, HUBS, and TNA and bought SOXS and DRIP. I booked gains in SLCA and BRZU, marginal losses in both TNA and HUBS.

THIS IS NOT A MARKET YOU BUY INTO. We are at the top end of a downward channel.

As you were.

Perma-bulls are taking victory laps on Twitter and in the Pelican Room this morning, based on the notion that stocks did not open up at zero this morning. This is what one might call ‘drawing for straws.’ This is not a victory fucked-face, but a realization of the horrible horribles we already knew existed.

I suspect this dip might be bought, at least for a while. But it doesn’t change the narrative, not one bit. Apple is the first of many to pre-announce and offer weak guidance due to China. About $158b in US sales are done in China, and hardly any of them have guided lower.

Will I sell my stocks as promised yesterday?

Perhaps.

This ultra-bullish behavior is indicative of denial and I don’t like the idea that people believe this Apple news is good, in any way shape or form. Get it through your skulls, fucked face — we’re barreling towards perdition.

Actually, this BMY for CELG news is more important. Even more important than that more important news, crude is higher by 1.5%.

Lads, there is nothing to fear but fear itself. I see Brazil is higher by 0.4% and gold stocks are jimmying higher in the pre-market. Why, we might have a good day today, a reversal of sorts that will roast shorts alive, grilled on their stomaches and then flipped over and roasted on their backs.

I was going to sell everything today, and I might still do that. But now I have hope, dreams of a better world than the bleakness projected last night. I envisioned myself waking up to multiple punches to the scrotum. This is fine.

Back in the old days, people would borrow yen, convert to dollars and buy stocks with it. The cheap interest rate on the loan, coupled with weak currency, made this an attractive trade. They’d, say buy Apple with money, or REITs, and profit handsomely from the spread.

But what would happen if Apple warned, tanked, and REITs for fucking annihilated?

Why, THIS WOULD HAPPEN.

A massive 1.2% dislocation, largest decline in the dollar vs yen since 2009.

This only places more stress on an already illiquid market. Look for gold and bonds to benefit from this chicanery. Beware of buy the dipFAGS in the AM.

Dow futures are now off by more than 350 points and Chinese stocks are getting hammered to the tune of 1.1%. Over in commodity land, oil is plunging — lower by 2.3%. Rest assured, today was a day that will live in infamy — the day the party ended and Apple confirmed our gravest fears.

What is that, you ponder?

How about ZERO growth at Apple?

Stocks like NVDA, trading at 9.9x sales versus their historical median of 3 will warn too and get decapitated by 75%.

So what are we to do?

Frankly, run.

You cannot win, so you will need to liquidate early and hope some assholes with small brains buy the early morning dip, for once that occurs the real drop will happen.

Analyzing today’s moves, I stand to shed a good deal of money tomorrow. I’ll need to sell TNA, BRZU, SLCA, HUBS, CLF, CC, OSTK, and RNG — most likely for a collective loss of 5%. That represents 40% of my trading account. I have another 40% in TLT, DRV, NUGT, AG, and EGO — which I’m hoping will offset some of the losses in the aforementioned stocks. I see gold is up 0.3% in the overnight session and the 10yr is lower by 3bps to 2.63% — which mean TLT will be nicely higher.

With the Yen spiking higher and markets collapsing, I might make an additional 8% in DRV — which is a 10% position.

My pivot will be most important. Will I short into the hole and get raped on a reversal? Or will my shorts catch a wave lower, one that cracks and breaks, and ruins 2019 from the beginning?

Stay tuned for tomorrow’s episode in Fly fucking with his trading account in the bear market of 2019.

I ended the day happy to be long, feeling okay about something driven by emotions and not logic. Now I feel like shit, after Apple warned about their business sucking cocks. We already knew it — but now the box has been opened and we can all see the cat is, in fact, dead.

Here is part of Tim Cocks letter to shareholders. Happy fucking New Year.

To Apple investors:

Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following:
Revenue of approximately $84 billion
Gross margin of approximately 38 percent
Operating expenses of approximately $8.7 billion
Other income/(expense) of approximately $550 million
Tax rate of approximately 16.5 percent before discrete items

We expect the number of shares used in computing diluted EPS to be approximately 4.77 billion.
Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.

While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates.
When we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter. As you may recall, we discussed four factors:
First, we knew the different timing of our iPhone launches would affect our year-over-year compares. Our top models, iPhone XS and iPhone XS Max, shipped in Q4’18—placing the channel fill and early sales in that quarter, whereas last year iPhone X shipped in Q1’18, placing the channel fill and early sales in the December quarter. We knew this would create a difficult compare for Q1’19, and this played out broadly in line with our expectations.

Second, we knew the strong US dollar would create foreign exchange headwinds and forecasted this would reduce our revenue growth by about 200 basis points as compared to the previous year. This also played out broadly in line with our expectations.

Third, we knew we had an unprecedented number of new products to ramp during the quarter and predicted that supply constraints would gate our sales of certain products during Q1. Again, this also played out broadly in line with our expectations. Sales of Apple Watch Series 4 and iPad Pro were constrained much or all of the quarter. AirPods and MacBook Air were also constrained.

Fourth, we expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected.

In addition, these and other factors resulted in fewer iPhone upgrades than we had anticipated.
These last two points have led us to reduce our revenue guidance. I’d like to go a bit deeper on both.

Emerging Market Challenges

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.
China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.

Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world. Our products enjoy a strong following among customers, with a very high level of engagement and satisfaction. Our results in China include a new record for Services revenue, and our installed base of devices grew over the last year. We are proud to participate in the Chinese marketplace.

iPhone

Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

Bottom line: Nasdaq futures are -1.6%. I know spreadsheetFAGS are punching numbers in now, suggesting that even at $11.00 for 2019, AAPL is cheap. That’s not how this works. This is slope that is slippery and it might be the first of a series of earnings revisions. The downside to AAPL, in my estimation, is 50% EPS cuts and a price target of $110, based off a 16 multiple. Let’s not forgive this company for borrowing $115b to buy back shares either. One can only hope markets ignore this and rally anyways. I’d have a very hard time believing it will be possible, due to the notion that Apple is only the tip of the iceberg here, in what should be expected to be a dreadful Q1.