2,099.73
That's where "THEY" closed the S&P yesterday. Now, when I say "THEY", I'm not referring to any sort of shadowy market-manipulators who herd retail investors like sheep to the slaughter by triggering the technical breakouts they've trained them to obey by pushing TA like crack to traders who, frankly, are weak-willed and looking for an easy fix because they aren't willing to do the work it takes to understand the true complexities of the market.
No, I don't mean that at all – I'm not a conspiracy theorist. When I say "THEY" I mean the perfectly natural random action of millions of Traders making Billions of trades that just so happen to keep hitting the exact same spot – no matter what crisis took the markets down – for 2 full years in a row. Nothing at all to see here folks, move along…
We're fully trained at PSW to short the S&P at 2,100 (so now, in case you are one of those sheep who find my analogy too vague) as well as Dow 18,000, Nasdaq 5,000, NYSE 10,500 and Russell 1,200. At the moment, the Nasdaq Composite is at 4,859, so way short and the Russell is even shorter at 1,147 while the Dow is at 17,918 so the S&P is suspiciously high and makes a great short – with tight stops if it breaks over and then we'll see if the rest make their lines. See – now you know how to day-trade the tops.
As you can see from JackDamn's Dow chart, we really peak out at 18,200 but we don't always make it there and we hate to miss a reliable short so here is where we like to start positioning for another sell-off. Though we've had an incredible recovery (as in NOT credible) since June 27th's Brexit panic – that was only our first fear of summer (see other posts as I'm in too good a mood to go over it again) and there's still 60 days to go (my kids keep me informed of the count).
As I said in yesterday's Live Trading Webinar, IF we survive the summer, THEN I'm willing to consider a move over 2,100 but, unless some major fundamentals change drastically – I'm very much stuck in skeptical mode. That did not, however, stop us from adding 3 bullish positions in yesterday's Live Member Chat and I'd love to tell you but it's July, so I can't (Members Only during earnings months).
I can tell you that we called a long on the Nikkei Futures (/NKD) right in yesterday's morning post at 15,250 and we caught a nice 150-point move for our readers to 15,400 (where we called it out in our Live Webinar) for a lovely $750 per contract gain. Remember, I can only tell you what is going to happen in the markets and how to make money trading it – the rest is up to you!
The Dollar is 0.6% off yesterday's high this morning, back at 96 and the Nikkei doesn't like that and they are stuck below 15,400 but we're also expecting BOJ action by their meeting on the 29th and we've placed our bets accordingly – the Futures trade was obvious yesterday, more tricky today so we'll have to keep an eye on it and made a call later in Live Chat.
TLSA is holding up surprisingly well with all the bad news recently and I certainly don't want to bandy about any manipulation theories and I'll just say it could go much lower. Don't forget, it was me who told you on April 5th, when the stock was breaking out to new highs and all the other analysts were screaming BUYBUYBUY, who said:
As I said, I already posted about all that this morning for our Members and what I want to emphasize this morning is DON'T BUY TESLA (TSLA)! That's right, I'm going to try to stop people from making a terrible mistake and following the lemmings pouring into this overpriced auto company using (gasp!) LOGIC!
$250 is our shorting line for the stock though we haven't made an official play yet as it's very dangerous and goes up for irrational reasons and the CEO tends to manipulate the stock by tweeting out well-timed disclosures and, of course, people like Jim Cramer steer the sheeple in like a carnival barker so they can get fleeced at the top by his hedge fund buddies looking for the exits.
Speaking of other analysts, here's my friendbuddypal Jim Cramer on CNBC the same day literally telling viewers "it doesn't matter" that they can't actually make the cars in his rebuttal to my morning post:
The official play, in our Live Member Chat Room, was:
As a short right now on TSLA, I like shorting the June $270 calls for $13.20 and buying the June $275 ($35.70)/250 ($20.70) bear put spread for $15.50 so net $1.80 on the $25 spread that's 80% in the money to start. The Jan $320 calls are $11.50, so that's the rolling plan and, if you are worried about shorting TSLA at $320 – then this is not a trade for you!
TSLA hit the close of June expirations (17th) at $215.47 putting the spread $25 in the money and so, for each $180 set of options contracts, you got back $2,500 for a $2,320 profit PER CONTRACT in 12 days (1,288% on cash). We were frankly hoping TSLA would trade higher so we could short them again but I just want to warn YOU not to get sucked into going long on them for all the same reason I outlined at the time – we don't want to have to take YOUR money on the way down…
Making 1,288% in two weeks is the kind of fun you can have when you have plenty of CASH!!! on the sidelines (as free margin is necessary too) – especially during earnings season, when Fundamentals come around to bitch-slap TA people on a regular basis. Please keep that Cramer clip in mind when you are hearing about all the "bargains" the MSM is trying to get you to buy – even as we revisit this well-worn market top – could a person sound more sure of themselves while being totally wrong?
Keep in mind that banks lead off earnings season and, according to the Wall Street Journal, our top 20 banks have lost $500,000,000,000 in market cap so far this year but please, whatever you do, don't be concerned. These are the same analysts that told us not to be concerned about the same thing in 2008 – how quickly we forget!
The biggest market-value losers, in dollar terms, so far this year: Italy’s UniCredit has lost nearly two-thirds of its value; Royal Bank of Scotland has fallen around 56%; and Credit Suisse, Deutsche Bank and Barclays have all about halved. Those who have lost the least: J.P. Morgan Chase and Industrial and Commercial Bank of China, which are both down about 10%. In local-currency terms, share prices for all 20 banks are down year to date, except Standard Chartered, which is flat. The latter is where we'd want to short if things turn south.
For the European banks, the EU has rules that curtail the Government's ability to bail out the banks (see yesterday's note on Italian Banks) and that can plunge us right back into another liquidity crisis while we wait a few months for the ECB to finish debating the issue – fun, fun, FUN!
Needless to say, be careful out there!
