iBankCoin
Joined Apr 14, 2016
25 Blog Posts

Gauging Election Expectations Through Sector Performance

With the presidential election sloppy swishing closer (video below), markets continue to ignite the exhilarating splendor and sublimity of double-black diamond coke sloped peaks (see $ACIA,  $TWLO, $SINA, $BABA, burritos, bios, or anything else OA alchemizes into gold). One may surmise the fate of the world’s most significant superpower over the next few years is in the hands of our deeply impressive and likable presidential candidates. Yet the markets don’t seem to care…yet.

At some point (I believe) the caprices of the election in the form of headlines will impact this market. As a result, I’ll begin scanning for shorts from the overextended pile over the next week for a potential tone-shifting September and VXX Halloween, which should fade rather quickly post election – Santa season once our great nation swallows the truth-telling, heightened email-conscious, non-media colluding Hillary; remember, it’s her-story, not yours. I’ll share prospective shorts as this window approaches. Expect Fly’s Ark to remain imperturbable, and for gold to make a volatile run near/above recent relative highs before fading into year end. Again, these are merely my expectations based on my engagement with the market over the last 11 years. We all have our own expectations, but through an aggregate hub for vetted quality here at iBC along with diachronically dynamic tools like Exodus, a dialectical mode of knowledge formation and actionability is produced. Months ago, I laid some market expectations for the May – summer months here, here, here and here some of which have actually come into fruition.) In the meantime, an ensemble of Caligula style decadence reigns over the market with a crescendo by Labor Day weekend potentially on tap.

Taking a look at sector performance during the latter part of Obama’s second term in office, has led me to consider the alignment of sector performance with the two major political parties and their candidates. The Cramer has his own Trump and Hillary portfolios to track how specific stocks might perform under either presidential configuration. From my own scans and reflections on the market within the context of a Democratic presidency looking at a repeat, here’s what I’ve noticed (mere observations):

  • KOL is trending: seems quite un-Democratic for coal to have doubled since the start of the year; maybe a dead-cat bounce after Obama’s second term effectively destroyed this sector? Or maybe commodity cyclicality? On watch.
  • Solar has been dumping ($TAN is masking the precarious action in the popular solar names and actually looks to be bottoming): seems quite un-Democratic for solar not to be at some highs here given the broad indices ATH status, no? Or has pro-alternative energy policies created too much competition and temporarily oversupplied the market? On watch.
  • Hospital stocks dumping: seems quite un-Democratic given the proliferation and expansion of Obamacare (and presumed continuation under Hillary) for this industry to not be in better shape as evinced by recent share price bidless pinaction. $HCA is holding an important level here, $UHS is trying to hammer out a bottom, but check out the action in $LPNT, $THC (scaled in long last 2 weeks), $CYH (got stopped out today for loss), and $ADPT (scaled in long last 2 weeks). Wage increases will definitely eat some profits, but the price action in some of these names is downright ugly. On watch.
  • $ITA $PPA (aerospace/defense) are trending with the market at highs: not sure what to make of this, but I’m sure a non-Democratic presidency is more bullish for this sector than a Democratic one. On watch.

Now are these mere price dislocations that could correct themselves once the frontrunner secures the presidency? If so, the current action in the aforementioned bulleted-names can be the market cleansing all late-participants to shorting $KOL into its January 2016 lows, or buying $TAN into its April 2015 highs, or buying $THC into its July 2015 highs. You get the idea; a rubber band stretch cleansing all market participants that were late to these Democratic theses trades hopping on board once Obama won his second term and policy direction was clear, which meant at the time trades were too obvious and chaseable, hence the resulting cleansing.

When attempting to reverse engineer causality, there are always latent or tangential factors that are missed and/or willingly discarded, resulting in possible syllogistic fallacies, etc… But on the surface, it seems like the potential plays are to do the opposite of the above bulleted-points: short coal, long solar, buy hospitals, sit back, kick your feet up, and bathe in cash if the polls play out. Or is there something more sinister lingering in the background. Why does it appear that the media is working overtime to endorse and bless the candidacy of Hillary, even though the polls consistently show her comfortably leading? Enter the need for a dramatized election (Americans love this because we’ve been programmed to) that commences with polls tightening, nightly presidential and vice presidential debates heating up, and posting/tweeting content and activity throughout social media being dominated by the ‘genuine’ concern that the xenophobe wall mason monster of a candidate could actually win and pose a risk to our nation. A tense scene with time running out, the score closer than its been, maybe volatility kicks up in the market, and the tickers in the bulleted-points above are chased ($KOL continues to run, $TAN wallows at lows, hospitals struggle, aerospace/defense rips). Finally, market participants who accumulated early on dump supply onto these late to the party market participant chasers looking to position for a Trump presidency, and then WHAM, said tickers in the bulleted-points reverse and the price dislocations are reconciled.

Just some Friday afternoon thoughts from Brooklyn. Have a great weekend.

 

-StrictlyTrades

 

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Daedalus Was Wrong

Temper your flaps, for they usher in your demise. A passive gaze at heliocentricity was pre-designed for an absent expanse. Bystander viewership is acceptable. Displace and derive your aspiration within this construct; draw sustenance from this bank. Stay the course pre-laden by the ‘experts’; they have your best interest in mind. The signification chain and schemas that produce meaning within your mental apparatus are crafted as your own because you need to be told you are a ‘unique individual’. Do you know the language of non-uniqueness (I’m not alluding to the opposite of unique; wait, did they even let you learn that language? Semantics fail here). So, relish in the ‘autonomy’ and mind the rules of flight. Your own semblance of identity along with your wax essence’s intactness is at stake. Essence as Aristotle’s being, as Plato’s copy, or Sartre’s non-essence? We’re left with a mere proxy of essence upon birth.

‘Reality’ is constructed for us. We are trapped, and conditioned to relish, in the confines of our conscious minds; we are barred from any meaningful contribution to ‘reality’. On a microcosmic cellular level nano-finger banged to produce the response that perpetuates, aligns with, and condones Intended Direction (denoted by capitalization). What is Intended Direction? Figure it out.

Everything you empirically experience produces a mode of living, day-to-day, second-to-second. Mapping every behavior and decision to a thought pattern to a codified sequence has never been more coveted, and more possible. You can’t hide when there’s data. Outlier? Good luck.

Readership of mainstream financial news media is part of that data set. Narrative script formation – a rehashed story of Icarus and Daedulus – as a mode of self-definition and action. Assign values to the potency of financial texts – written, visual, auditory – and to sequences of price action. What moves participants? Impressed upon, think, synthesize, and behave. Repeat. Modification across all levels of consciousness – conscious, unconscious, and subconscious. Regulate. Imagine an aggregate sum of all financial media (mainstream, blogs, podcast, social, newsletters, classically revered, subversive, etc…), factor in user engagement, and analyze subsequent market participation through the attempted lens of causality. What triggers what? A financial reality with WHAT at stake? Oh, yes, you in the back. You have the answer to the stock market? Read me the number.

Escape the light beams. Darkness lies above the sun – a momentary glimpse where you sputter just above the stratum of a tiny window of the electromagnetic spectrum known as visible light. You embark on a journey littered with landmines, epic failures, impairments in functionality, torment, and self-destruction. But, if you wander, flail, fall forward, and combust the friction between your feet and the ground you fixate upon just long enough, you’ll spark agency/will. Seek the kiss the darkness moment – an inverted image from the The Matrix Revolutions when the Osiris must fly above the clouds to escape the sentinels, and subsequently glimpses the daylight of the sky (clip below). The anti-gravity ascent will take you to a place where you may unlearn shackling tropes and rise above ‘their’ sun. Shed syllogisms. Leave Plato’s cave of shadows? Fasten a new measuring device. The first step is doubt (Descartes). Enshroud yourself in darkness and then empirically ascertain reality.

If this articulation sounds clouded, it’s because you need darkness.

 

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The Oil Middle Finger Trade

Lethargic. Dripping. Steady, consistent price exploration lower. Friday’s swift late day push/squeeze in crude – inducing momentary excitement among bulls and leaving hammer candlesticks across the interpretative frameworks of technicians to hang hope on throughout the weekend- has proved fleeting in this morning’s gapdown and subsequent creation of a new relative crude low. Given oil’s retreat from near 50 in the last month, dip buyers have been met with repeated frustration as rallies fail and price continues to work lower.

Given the relentless upswing in global markets since the rearview mirror Brexit bear trap – an upswing few folks were positioned to profit from morphing into a lack of buyable dips (OA all over this) – will this pullback in oil lay yet another bear trap, before oil makes it move back to 50 and doesn’t look back. In a market where prices levitate incessantly and most participants are sidelined, onlookers scour for every reason to get short this market, to catch the rising knife.

The market pitches a tent in its pants from frustrating participants (extra teepee). Bears may be hanging their hat on oil weakness as yet another reason to not hop on board the bull express, and remain sidelined or take a stab at shorting this market. The short into the hole play at the moment are lines of $DWTI nose candy. I’d be wary of that. Conversely, if oil trades higher, frustrating bears once again, adding more euphoria to a stockpile of ecstasy already collected from the global market rally in equities, then overall market participant sentiment can swing to much higher (extreme) levels, that will then warrant the contrarian short bias. Either way, risk looks manageable here with a quick stop at the low.

Disclosure: Long $COP, $UWTI, $CVI

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Dip Buying Porn

Orderly. The moves though May and June for all intents and purposes have been orderly. Despite some recent VIX spikes in response to the looming Brexit vote and markets still grappling with the implications of negative interest rates, we see nothing of the August 2015 variety, nothing of the January/February 2016 sort; just orderly, healthy price action. This is a notable departure/shift from the backdoor fuckery participants have been conditioned to expect.

Now, this week could trigger a nasty ‘lulled into complacency’ reversal especially if Monday was a bull trap (although I tend to agree with OA’s compelling analysis regarding how today’s and last week’s action has participants presently positioned). So, will Brexit live up to the hype and ransack markets back to the Middle Ages? European banks ($HSBC $BCS $CS $DB $SAN $UBS $RBS) are already pushing historically significant lows (could be a long term buy opportunity in a consensus-labeled disease space; they sure were bought up fervently on Monday).  For European banks at these levels, can Brexit already be priced in, or is the event too black swan-ish to translate ramifications in price action terms? Or, does Brexit even fit with the high stakes geopolitical, global economic ‘too big to fail’ narrative we’re running (wait, there’s a script?…ok, I’ll put the single malt down). How about Japanese banks ($MTU $SMFG $MFG) in the face of negative interest rates – more examples of foreign financials at historically significant lows. Even take the US banks ($WFC $GS $C $BAC $MS) near current swing lows. Or can we conjure up more headlines, like will the China (weekly $FXI $ASHR $CAF charts on support) ‘thing’ start becoming a cyclical market harbinger of panic like the Greek ‘thing’ has been throughout this global central bank mandated bull market since March 2009? What news flow will generate the market chop and visceral, unforgiving price action that has conditioned hedge funds to position into their highest portfolio concentrations in years? And, this just gets me thinking, what if this hedge fund concentration means headgies missing out on a rally for being long the wrong stuff OR if higher conviction bets in bigger size mean being easy targets for what Ackman describes as the ‘Pershing Correlation’ . There’s a regulation happening, an incessant exchange colonizing participants’ minds and actions under the auspices of free will – both in its exercising and in its self reinforcing illusory (good)will. We are tuned like instruments.

Price action for the aforementioned foreign and domestic banks at these levels may be likened to the following 20/20 hindsight reverberations echoed by sidelined market participants today: “Wow, oil was just in the 20s? $FCX was under 5? $BHP was under 20? $SLB under 60? $X around 6? $AG around 2.50? $JOY around 8.50? $WYNN under 50?” Will we look back 3-6 months from now to say, “Remember _______ (fill in any of the aforementioned banks at current levels)? If indeed the beaten up, left for dead, diseased spaces in this market follow this bottom fishing trend, then commence dip buying porn.

The scary thing is this may be bears last chance to take this market down before we break out to new highs, and dip buying really becomes porn when markets incessantly trend in the face of disbelief. Within this context is the scarier prospect that if market participants’ conditioning to buy breakdowns and sell breakouts over the past 2 years of rangebound action in the indices gets gutted- where disembowelment becomes the entrails of those shorting the pop and those closing positions on the pop from lower prices or for breakeven, then said camps see the market rip without them, and FOMO chase syndrome ensues.

Last item to keep on the radar: We get an update on the state of the homebuilding recovery with $LEN and $KBH earnings due out this week. Last month produced some of the best homebuilding numbers in many years. Can this serve as a proxy of further evidence of domestic economic momentum and fuel bullishness OR even help perpetuate rate hike talk? This space has been dead for the past couple of years, and still remains an elusive feather in Obama’s hat to tout economic recovery and disseminate success in the eyes of (delusional) liberal mainstream financial media.

Stay nimble.

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Long Watchlist (Week of June 6)

Pardon my absence. I’ve been attending to obligations that have kept me from writing. I am going to make a push to ramp output and contributions to the best financial blog community in existence. A belated birthday wish to the Uncaused Cause (equal parts Aristotle and Aquinas) of the iBC institution.

Ran scans and marked up some charts for potential long setups for the week. From a technical standpoint, refiners are looking interesting here. Watch shippers and ags, and a few others below. Will be more regular (no bowels) this week.

Stay nimble.

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The Exchange

So that was it, huh? The big bearish head-and-shoulders top, the red (now green) May, the iron/copper meltdown in relation to China’s imaginary growth and many woes, the foreboding, brooding flattening yield curve, the fuckery within the oil and gas space (see $CHK  and $BCEI), the struggling retail space, looming fed hikes, Brexit, and the sleuth of other bearish headlines (c)overtly wafting about. We get some of the best housing numbers in recent years yesterday within the continued backdrop of improved unemployment numbers, within the macro context of central bankers’ fully bought-in commitment to stimulating/easing in one form or another (sans Grandma Yellen and co.), and it’s dip buy city all over again…and again.

Over the last week, I significantly lightened up longs in anticipation of a fed-induced trigger for the May selloff I’ve been discussing. I played some $VXX and expected post-Fed weakness to continue into this last week of May leading up to Memorial day weekend. The stage was set, supply was clinging to a potential floodgate level, volatility kicked up, and like clockwork in this multi-year bull market (I’m not in the ‘bear market has begun camp’), we briefly probed levels lower, and what do you know…found buyers and reversed higher (I adjusted accordingly, but remain cash heavy). Poof! There goes the bear bent! So is the headline wheel stuck on bear? Are the daily spins through the market news wasteland only to lure (at this point of the bull run) lobotomized sarcophagi out from the incessant short squeeze purgatory to engage the short side of this tape? Who is left?

And yet, here we are. Same old formula, the way we seamlessly went through the May chop, to neatly hammer a timely bottom, reemerge green soldier candlesticking right back up, gapping, cocaine’d and staring at ATH’s. So sanitary. So clean. Was that really it?

Remember, there is always a cost, an ongoing conditioning in the tape. The price action is designed to posture and position participants. For everything we gain, there is something exchanged. In light of the recent movement, I am reminded of Chapter XIV (no inverse volatility) of Hemingway’s The Sun Also Rises – the shortest chapter of the novel situated nearly halfway through the text.

“…That only delayed the presentation of the bill. The bill always came. That was one of the swell things you could count on.

I thought I had paid for everything…No idea of retribution or punishment. Just exchange of values. You gave up something and got something else. Or you worked for something. You paid some way for everything that was any good. I paid my way into enough things that I liked, so that I had a good time. Either you paid by learning about them, or by experience, or by taking chances, or by money. Enjoying living was learning to get your money’s worth and knowing when you had it. You could get your money’s worth. The world was a good place to buy in. It seemed like a fine philosophy. In five years, I thought, it will seem just as silly as all the other fine philosophies I’ve had.

Perhaps that wasn’t true, though. Perhaps as you went along you did learn something. I did not care what it was all about. All I wanted to know was how to live in it. Maybe if you found out how to live in it you learned from that what it was all about.”

The bill is always coming. It comes not like a thief in the night, but like a repetitive, coaxing silent wind through your window  – pneumonia by a thousand cool breezes. It comes in the form of conditioning, shaping, and molding your mode of engagement with the market. There’s an exchange of value happening. You willingly dine in mother market’s den, forced to comport with how and when to order, how and what to eat, the modicums of reward parsed out through fellow dinner guests’ cues. We (un)consciously take an inventory of rewards and punishments – and their derivations. Our mind’s obsession with pattern unearthing where only transient arrangement syndication exists. Ruled by self-fulfilling prophecy, confirmation bias, and deeply programmed primal reactions to stress (See an eye-opening exploration of behavioral finance in “The Hour Between Dog and Wolf”), we are colonized by the market and emboldened to crave it. Even when we are mindful, our mindfulness is mindfucked.

I agree with Hemingway when it come’s to buying in (if you’re plugged into this trading endeavor, you probably do, too). The market is a worthy place to park oneself in the casino of life, and buy in, exchange your time, energy, and aptitude for some chips, in size. Zooming in to trading practice, what approach are you stacking chips on? How monolithic and fixed is that approach? Is it responsive to market conditions? Does it take into account the binary disguise? And finally, like Hemingway, in a given (indeterminate) amount of time, will that approach be the worst strategy to engage the market? Hemingway’s conclusion: shelf the why, focus on the how. While the music still plays, they say..

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This One’s Gonna Hurt…Either Way

Showtime across all the indices. Make or break inflection points, no doubt, from the ‘experts’ to financial media to surviving trader to newbie. But drift away with me briefly to consider a crude rendering of a mode of living.

You are young and taught principles by which to live; iterations of value systems ingested and regurgitated from momma bird to baby bird – systems largely reflecting dominant ideological structures. You adopt appealing formulaic methods to approach issues/moments in life, and fight for said approaches as if they had a stake in your success. You infuse palpability into frameworks that exist to organize, standardize, and regulate thought and behavior. In a drive for stability and validation, you stake your identity on them.

You grow up and begin to experience asymmetry. Why didn’t this add up like it was supposed to? What happened to linearity? You question the dominant frameworks. Why didn’t the time-tested, expertly disseminated method work? In a huff of angst, you do the expected: polarize. You embrace the opposite and suffuse the oppositional binary pervasively across all modes of engagement. You are the rebel with all the answers privy to an alternate existence concealed from the masses. You thrive on the exclusivity, and mock the sheep.

You later become cognizant of the interplay between dominant conceptions and their opposites. You recognize instances where one mode modifies and informs the other. You gesture toward the understanding of scenarios that call for reinforcement of the standard and others where you can take advantage of that predictability and manipulate the sample to advance personal goals for profit. You play the players.

You finally see life as a mechanistic Multivac reduction, inputs and outputs within a system perpetuated by parties of survivalists with varying degrees of clout and stake in its maintenance. You’re left disillusioned, tightening your readership base, trusting fewer sources, seeking elemental bricks and mortar fused into a foundation on which to stand. The playing field is littered with broken participants plugged into a broken system.

You channel the Descartes approach and restate what you know: dominance acts as a standard reference point, a proxy of expectation you synthesize to base your decisions – to comply or deviate, and in what capacity. When was the last time a classic head and shoulders topping pattern actually worked? Are hammer candlesticks following pullbacks/downdrafts oversignalized? When should the ‘major’ levels be traversed or not? Who’s trapping who? You go to church and throw money in the tithe basket whether you believe or not. Don’t you?

You look at oil. Why so many sketchy headlines at the highs of this range? Why haven’t such conditions pushed this thing to/over 50? Why does this structure feel like a pump and dump (used to trade pennies)? Is the correlation between oil and the market breaking? What happens to the market if oil drops 5%?

Quick, you say. The axioms. The AXIOMS. Where are the AXIOMS!?!?! “Don’t trade the patterns, trade the patternists.” “Don’t trade the fundamentals, trade the fundamentalists.” “Don’t trade the psychology, trade the psychologists.”

Fibers winding up. Tension. TENSION.

We hold the rope on both sides.

P.S Get processing power that algorithmically adapts to market conditions with Exodus, traders successfully grappling with price in the TradeLounge, and expert training from OA in next week’s Boot Camp. iBC professional learning community is handling this market context better than anyone out there. Tune in.

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Frustrated and Reflective

 

How does it feel position/swing trading the action out there? Daily triple digit reversals, market speed starting to force participants’ hands, spurring reactions to reactions to overreactions. Throwing on longs and baskets of longs only to be stopped out the next day, only to reenter the following day, etc… Shortening of time frames to 1-2 day holds. Scouring charts and scans for setups to yield sustained directional movement (can’t position/swing trade without sustained directional movement). For me, having a short bias on the month of May  since mid-April, shared some compelling short market entries and individual setups, and thus far have underperformed by shorting some of the wrong stuff; commence chop. Note to self: choose better short setups, or better yet, short the damn index.

 

So how do we view recent price action going forward? Here are some lingering reflections to consider:

  • Monday, in hindsight, was a gift to sidelined participants waiting to get short (that few, if any, took advantage of). Did participants chase this Tuesday move down to initiate shorts? The midday reversal in the Russell was ugly.
  • If the indices are selling like this with oil trading up, what will the market do when oil trades down? We know the correlation between the two has been high of late but not today. What happens when Canadian fires and Nigerian supply disruptions disappear from the headlines? Crude is overbought staring at $50. Folks seem convinced we tag the $50 mark before any sort of retracement. Kind of makes me think we come up short of the mark. Given the crude ascent, tomorrow’s inventory number will need to be flawless to maintain this run. What about the correlation between $UUP and $USO?
  • Note the nature of this price action on this multi-week pullback in the indices. Following the mid-February through April thrust higher, what does the slow motion start to this pullback do to market participants? It causes those who are long to hold through the seemingly benign price action, watching in slow motion the drip-bleed. Longs are slowly walked down, fairly unphased, and lulled into holding or even adding to longs. Recently, speed and volatility has started to budge. At some point, the severity of pain escalates to increasingly filter out participants, and release that supply/volume that held on through the early slow phase of this pullback. Within this logic, there’s a flush lurking that’s used to purge the remaining clingers before resetting the bottoming/accumulation process. Looks like this plunge will be through the neckline of the head-and-shoulders patterns developing on the indices. Increased speed and volatility will release that supply into the market, remove longs from their shares, and lead to lower prices.
  • When the narrative deems necessary, ever-present headline risk warrants credence through market price validation; otherwise, no one would pay attention. Look at how Fed heads’ jabbering affected trade today.
  • Last thought/question: Who has more to lose at this juncture, bulls or bears? The camp with more to lose and caught leaning, will get poleaxed.

 

Conclusion: Better prices are coming. Stay nimble.

 

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Got Identity Issues Right About Now…

Been talking about this May short setup for a bit now (those reading are probably tired of hearing about it), but last Friday’s bullish reversal and continuation through Tuesday is beginning to resemble a bull trap. I was able to play some $VXX and throw on a few shorts I discussed Tuesday night in what felt like a week worthy of the short attempt.

Based on the price action recently, the mood seems to be setting up for a doubting bulls (no Thomas) scenario, where recent memory clings to the big run from mid-February, a contained pullback during Passover week and the first week of May, that was reversed and bought Friday and catapulted into the big Tuesday move, leaving the cocaine eyes of bulls fixated on a run back to the highs. However, Wednesday’s price action seemingly came from nowhere; a sudden, unexpected, reversal whose implications the processing speed of bulls may not have caught up with. Doubting the credence of Wednesday, we gapped and crapped today, chopping around sloppily with a late day recovery – end of day price action that may have lured more bulls. Something over the past couple of weeks has felt different, and that looks to be translating in the increased chop and waning fortitude of bulls.

Last thing to point out is the non-textbook, upward sloping neckline, head-and-shoulders pattern setting up across the indices (I’ve annotated the ETF versions below). Have bulls run up prices since mid-February into this famed distribution pattern? Does this pattern get factored into a bear thesis over the next few weeks/month to lure bears into shorting into the hole? What does the market narrative need to reinforce/norm the behaviors of market participants only to later take advantage of that predictability? Headline risk is palpable, June Fed tomfoolery looms, Brexit referendum lurks, and oil’s correlation to the market and its increasing holdout as bulls’ weighted claim that the market can’t go down if oil is running (dangerous thinking) all seem to warrant a cautious stance going forward.

Stay nimble.

 

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Markets rip. Shorts?

Market continues to defy gravity and drift higher. Today was a bit more than I had expected, but necessary if there is an imminent short to be had. Bulls need to be drawn in to chase a move higher. Over the past few years, the best setups on either side have come from the binary disguise; bullish setups that turn bearish for the flush, and bearish setups that turn bullish for the ramp. You buy red and sell green. Lows are bought, tops are sold. Rinse, repeat.

Shorts come in many shapes and sizes. I like to vary the types of short setups I play, because the ‘bearish’ setups to which classical technicians/chartists subscribe do not always work in all market conditions (nothing does). There is no silver bullet setup that will work all the time. This is what makes trading so challenging. Your reference point is an impermanent proxy for the engagement of market ideologues. You can look for the quick parabolic short (worked textbook with gold/miners recently), the pops/shoulders within a toppy distribution pattern, the bear flag move back up into supply, the broken trendline, failed support, etc… Over the past couple of years, some of the best short setups have come from failed bullish consolidations (binary disguise).

I’ve organized some of the potentially actionable short setups below along with their corresponding annotated charts. My plan is to scale into a basket of shorts in the near term as a play on the May bearish thesis I’ve been sharing. In my position/swing account I’m currently net long, but am starting to put some shorts on: $PE (currently underwater, avg. 24.20s), $O (64), and small size $VXX to go along with some longer dated long holdings.

Admittedly, I’ve been preempting bearishness and have little price-action based pretext to initiate broad-based, index-wide shorts. Without the price-action trigger, all of the thesis-building regarding seasonality, fundamentals, psychology, headlines, and narrative will stunt adaptability and drag against successful trading. Again, I’m not looking for a crash, but I am looking for a pullback – healthy within the context of this global monetary policy mandated bull market. I will continue to hawk this development and update accordingly.

Stay nimble. Setup bias can be transient. Reaction and flexibility. Shadows and dust.

 

Bear Flags: $HW, $HYH

Parabolic Shorts: $MLM, $IRM, $CONE,

Toppy Distribution: $WY, $GIL, $HDS, $LPI, $TSE, $ZLTQ

(Potential) Lower High: $FBHS, $CUBE, $ABMD, $USG

Just watching, just because: $COT

 

 

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