For those of you BTFD’ers who came rushing in sans February 9th…I think you will learn soon that yesterdays pigs are about to become tomorrows bacon. To add a little color and context here – consider the following:
- January 26th 2018 All Time Highs (yet again) – SPOOS: 2872.87
- February 9th 2018 VIX Volcano Panic Lows – SPOOS: 2532.69
- The leg of this viscous and short lived panic was 340.18 SPOOS points – the most dramatic leg since February 2016. Nearly an 11% +/- haircut.
- The fact of the matter is we only recovered 221.83 of those points or roughly < 66% of the range. Only to hit checkmate.
Now then, Lets Go To The Video Tape!
- Four consecutive trading sessions – every time the S&P has crossed the 50 MA – it has been sold down. This is somewhat remarkable when you consider the high to low ranges have exceeded 30 to 35 SPOOS points in each session. And it has been the same pass the peanut shuffle daily – highs made shortly after the cash open – lows made at or very near the cash close. This is textbook bear market behavior.
- Note Money Stream – It did a complete U-Turn back on February 26th – even though prices looked to be moving higher. Luring the unsuspecting in to the illusion that we could get back to January 26th highs. Good luck wit dat! Money Stream is further confirmation that The Five White Guys Who Run Wall Street are selling that 50 MA every time we even kiss it.
- For now it is the 100 MA that has caught support – emphasis on “for now”. Should this level fail, and it shall – we would not see meaningful diatonic support until the 2597 levels, and the 200 MA near February 9th lows.
- Short term VIX which is a 9 day forward gauge as opposed to notional VIX – is well off the vix-plosion highs and now back in the mid 19’s. That may feel low but it is 90% higher than where it spent the better part of 2017.
Long story SHORT traders? The Fed is dead, and they have taken the Plunge Protection Team with them. No more free money, no more NIRP. Trump nailed this coffin shut when he fired Yellen. Expect a retest of the February lows sooner rather than later. And you can forget about the January 26th highs for at least the next 2 1/2 years. Shiver me timbers!
I am KingCAMBO…smoke em if ya got em…and that’s how I roll!
Thinking you might want to try a little day trading on your own, eh? After what has been the most “pass the puke bucket” week in nearly 9 years, I came across a really interesting article today. It says in a nut – that historically the market on a monthly basis likes to hug a 21 period moving average. And that when it gets too far away from it – either above or below it – it will always do a mean reversion to it. This is a chart I just built going back the past 15 years or so. The arrows from left to right are marking:
- The October 2007 final top a year or more before the Lehman disaster
- The March 2009 Great Financial Crisis lows
- The February 2016 panic low and “Shanghai Accord” central banks agreement – to engage in direct market rigging
- The extreme highs above the mean for the past two years. It is quite the distance above mean, no?
- And remember this is a MONTHLY chart. Notice often the candles always seem to gravitate back to the mean like a magnet
Bottom line being – if the hypothesis is correct – SPOOS must come down to roughly the 2369.58 area just to be where they “belong”. And NO…it is NOT different this time. Imagine how many weak hands will be flushed out if this were to occur? We have had a 352 point range highs to lows since January 26th alone. Another -300 down will bankrupt a lot of pikers. Ponderous man…Ponderous
SELL MORTIMER, SELL!
I was amused once again, to be subjected to the shock and dismay of the talking heads over on CNBC tout television; agonising over 9 straight down days on the S&P 500. Something which has not occurred in thirty some odd years. Allegedly.
The culprit? Donald Drumpf of course! He and Russian hackers, the FBI, the right wing coup and tightening polls. Well…blow me down.
At the risk of appearing a bit pedantic – as the chart and bullet points will illustrate below – “smart money” has been leaving the market since the week of September 2nd. And it has nothing to do with the election. That is just the excuse du jour:
1. S&P has clearly violated strong support leading all the way back to late fall 2015
2. First possible Diatonic support (minor level) suggest an initial speed bump this week will be tested near 2065.81
3. Based on the leg established by the January and February double bottom and central bank induced vertical rally – to the week of August 19th all time highs; a 50% retrace suggests that real support comes in near 2002.41. At this level we have an equal amount of winners and losers. This is where the battle will be fought and decided.
4. Volume is increasing but has not yet cracked the 40 week (200 day) moving average. It is going to take much higher volume to put in a “real” bottom.
5. MoneyStream Index indicates that institutional money flow has been leaving the market since the week of September 2nd. Albeit quietly at first, and we did not really see the true effect until this past week. Note the accelerated death spiral and flat line that occurs leading in to November 4th.
We have enjoyed an over 22% faux money, central bank “three card monte” rally over the past 9 months. And now? It is time to bend over and grab your ankles Bullwinkle’s…
I am KingCAMBO, smoke em’ if ya got em’…and that’s how I roll…heading in to election week 2016.
PLAY OF THE DAY: HD
*click on chart to zoom in
How to survive a CAT 4 hurricane and live to talk about it… Step one: move far inland and do so quickly! Step two: run, drive, or fly as fast as you can, and as far north as you can. Don’t look back and bounce the check to the undertaker.
Once you have secured your new location in a heavily fortified compound – protect thy portfolio. How, you may ask? Why with savvy investment in plywood, hammers and nails of course. Home Depot: HD
Considering the chart above – here are your five reasons why:
- Today’s monster “bozu” candle has taken out three levels of resistance – defined by the August 1 2016 high to the September 26 2016 low. These levels all “blown out” in a single trading session.
- Uptrend line anchored at the June 27 2016 low and the September 26 2016 low. This suggests there is very strong support now in this stock near the $125.62 area.
- A clear and striking break out in volume today – well above it’s 50 SMA. To wit…about 3 million shares above average volume.
- Money Flow – beautiful angle of attack and climbing. No where near overbought territory. Earnings do not release until November 15th – but it looks like due to the storm, heavy hands are moving in early. *(Nov 15 announcement will not reflect any hurricane sales)
- Based on the trading range from August through late September $132.25 is a very reasonable upside target – which I expect we can meet or beat on Monday’s open.
And there you have it. To all of my southeastern brothers and sisters, rednecks, goobers, second cousins, ex-wives, former employers, barmaids, beer buddies, miscreants, scoundrels and cretins whom I have known…please be safe. Find yourself some high ground – mix up a pitcher of “Hurricanes” and crank up the Jimmy Buffet music!
And you can bet your ole grandma’s gold fillings that Home Depot will be banging the cash register for you shortly.
Smoke em’ if ya got em’…and that’s how I roll…on HD
BLOW ME DOWN!
PLAY OF THE DAY: NFLX
*click on chart to zoom in
Netflix is reporting earnings on Monday October 17th. Stock is up over 7% already, this week alone. Part of this is attributable to rumours on Twitter that Disney wants to make an M&A play for NFLX? Amusing as this may sound…and as much as it nauseates me to even acknowledge Twitter…rumours on both Twitter and StockTwits.com seem to take on a life of their own these days. With “credible news outlets” (eh?) relying on Twitter as “unnamed sources”. Well blow me down… In any event, let’s go to the video tape here and crack this bad boy open:
- On Monday of this week, NFLX broke through top heavy resistance established back on September 6 2016
- During today’s session NFLX smashed through even heavier resistance established on May 26 2016 in the $103+ area
- Today’s high on NFLX has pierced the mid point of the down leg which originated during the week of December 11 2015 near $133.27 and bottomed near $79.95 the week of February 12 2016
- Volume over the past 3 sessions has smashed through it’s 50 day average volume. There is something going on here.
- Last and certainly not least – Money Flow Index – (Money Flow was the indicator developed by Don Worden back in the 1970’s) which gave birth to Money Stream. That is a topic for another post, lest I digress. But the clue here is Money Flow is CLEARLY rising and has not reached overbought levels yet. We can deduce from this last bullet, that strong hands are coming in – not just retail pikers.
So to wrap this hideous screed here, some final thoughts…I think the whole DIS (Disney) big buy out rumour sounds pretty Mickey Mouse to me, at best. The play here really is – the inflow of money in to the stock ahead of earnings.
And on the subject of earnings, you can expect several things. Count on the fact that NFLX like every other FANG component has guided expectations “under” for analysts. Why would they do that? So they can beat and blow out expectations. They, like all their other peers will use NON GAAP (a/k/a “cooking the books” or “fucking the dog”) accounting methods. Bottom line, earnings surprise – the algo’s that fire off on news headlines will pile on the buy triggers w/o reading the actual earnings statement. MOONSHOT followed by many bag holders a few days hence.
Based on weekly trend diatonics – I see immediate upside to $111.85 followed by $115.64 heading in to earnings 11 days from now. From today’s close near $106.30 – As far as post earnings? That is a lottery ticket…and should be treated as such. At the end of the day…it is bound to be a good flick!
I am KingCAMBO…or used to be anyway..smoke em’ if ya got em, and that’s how I roll…on NFLX