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Will We Hold it Wednesday – Markets Forced Over Strong Bounce Lines, Now What?


The Dow finished up 547 points yesterday and that was AMAZING – almost as AMAZING as that day we fell 843 points, way back on…. Wednesday of last week.  But hey, 547 points is only 296 points short of catching up to a one-day drop so – RALLY TIME!!!  Right?  No, not right at all – especially when last Wednesday's down volume on the S&P was 275M shares and yesterday's up volume was 118M shares.  If the stocks were really so attractive – what happened to the other 157M shares worth of buyers?  

The thing is – those sellers took their money OUT of the market and yesterday's buyers decided to build things up with a MUCH WEAKER foundation than the one that collapsed last week.  So, while a bounce like we had yesterday is good progress on the way to a hopeful correction – it don't mean a thing unless we can spend two full days over the strong bounce lines which are:  Dow 25,700, S&P 2,800, Nasdaq 7,250, AAPL $226 and Russell 1,630.  

We're already having a bit of a pullback in the Futures and the Dow is below, S&P barely holding, Nasdaq way above, AAPL below and Russell way below – not exactly the stellar performance you would think we are having if you listen to the talking heads on CNBC and Bloomberg, who are paid by the investment banks that advertise on their show to tell you what a great idea it is to put your money in the market.

We balanced our Member Portfolios to ride out the storm so we really don't care whether the market goes up or down from here – but we do care that we give it enough time to make a decision – not just based on a one-day move that gets us back to less than 50% of where we started.  As usual, even when we don't like the equity plays, we find something to do and our long play on Gasoline (/RB) Futures above the $1.95 line paid off yesterday to the tune of $1,000 per contract!

Being balanced with plenty of CASH!!! on the sidelines gives you the buying power to make quick plays like this one, which we had been poking at ever since last Wednesday's Live Trading Webinar (and tune in for today's at 1pm, EST).  We took the money and ran on /RB yesterday as we didn't want to risk the inventories but they were pretty bullish with Oil (/CL) drawing 2.1Mb, Gasoline (/RB) down 3.4Mb and Distillates essentially flat.  

Nonetheless, oil and gasoline fell as the Dollar gained strength overnight so we may look to play them again around the EIA Report (10:30) or during our Webinar (1pm).   Contracts roll over on Monday and the NYMEX traders have just 4 sessions left to move all their fake, Fake, FAKE! November orders (133Mb worth) into FAKE!!! Dec (450Mb), Jan (194Mb), Feb (108Mb) and March (175Mb) orders but, surprisingly, it's "only" 1.06Bn barrels of fake orders so, other than the annual rollover pressure next month – there's room to pump even more fake orders (up to 1.2Bn) before they come under a lot of selling pressure.  

We'll see how low gasoline goes – hopefully back to our $1.95 line but we expect Brent (/BZ) to hold $80 and that's about $70.50 on WTIC (/CL) so those are our watch lines for the day and, oh yeah, we'll see if those bounce lines hold but still, as I predicted on Monday – it's a watch and wait kind of market this week but we do have Fed Minutes at 2pm and that will give the market an excuse to do something – also worth being at our Live Webinar for!  


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  1. Stone Fox Capital out defending IBM.


    IBM reported a solid Q3 hit by slight currency impacts.

    The initial stock weakness is due to the market obsessing on the wrong metrics.

    The tech company remains on track to start boosting EPS estimates in 2019.

    The P/E at 10x plus a 4.5% dividend yield continues to warrant holding the stock.

  2. Good morning, All!

    It's webinar day! Join us at 1pm!

  3. Good Morning.

  4. FU IBM!!!!!!!!!!!!!

  5. Phil / IBM – I have no position on this one…..  Any recommendation on something?


  7. Good morning and wheeee!  

    This is actually annoying because we have no clear direction and it's time to adjust our portfolios.  I guess we'll have to punt and stay neutral for now…

    Big Chart – Those 200 dmas need to hold up but good example of why we don't react to one-day moves – no matter how good they look!   The whole purpose of the 5% Rule is to teach a trading discipline so you DON'T react to quick market gyrations although the definition of quick used to be things that took weeks, rather than quarters to resolve.  These days, anything over 2 days is a long-term play!  

    IBM/Albo – That one I am sure of wanting more.  

    IBM/Batman – See yesterday's note after earnings.  We need to see where they settle but I'll be going over again when we adjust the LTP.

    Calm down Soma, this is a PG-rated site!  blush

  8. hilarious!

  9. If you love BJO, then you just gotta freak out when you're long /KC

    And that reminds me, don't believe anything you read about coffee. Ignore the BS on the Brazilian real, as for the people who think they can call a bottom – forget it, and when GS says they're worried about NFLX subscriber numbers, be very very worried. Also the people who call tops can now go to the naughty corner. Pivot points on futures are irrelevant. Keeping losses small is great, but the laws of mathematics still apply;  many small losses make a humongous loss. 

    … but hey, making money is still big fun.

  10. Oil up 6.5Mb, Gasoline down 2Mb – not good so we'll wait and see what holds.  /RB will be oversold, now $1.942 – as they had a draw and oil build was likely due to storms and refinery shutdowns.  

    /KC/Winston – We nursed that one for ages.  /KCN9 just hit $130!  

  11. Trump says he "doesn't want to walk away from Saudi Arabia" – despite the fact that a guy "accidentally" died while they were torturing him, which seemed to include chopping his body into pieces – something that is surprisingly fatal to some people….

    I'm disgusted and appalled but maybe I'm just too liberal for the room?

    What have we become?  What does America represent these days?  

    Image result for trump saudis

    Image result for trump saudis

    The Saudi Prince is in the middle but the guy on the left is Abdel El Sisi, the Military Dictator who overthrew the Egyptian Government and pledged to step down once they could make a "peaceful transition" – that was in 2013…

    During the August 2013 Cairo sit-ins dispersal, the Egyptian military under el-Sisi's command was involved in assisting the national police in dispersing two sit-ins held by Muslim Brotherhood/Morsi supporters from sit-ins in Rabaa el-Adaweya and Nahda squares. This action resulted in rapidly escalating violence that eventually led to deaths of 638 people, of whom 595 were peaceful protestors with at least 3,994 injured (according to the Ministry of Health) in addition to several violent incidents in various cities including Minya and Kerdasa.[46][47


    Also in September 2013, the interim government removed detention limits without trial for certain crimes, allowing certain unconvicted political dissidents to remain in detention indefinitely. In November 2013, el-Sisi's government banned protests in an attempt to combat the growing pro-Brotherhood unrest; the police arrested thousands of Egyptians using the new law.[53]

    On 24 March 2014, an Egyptian court sentenced 529 members of the Muslim Brotherhood to death,[54] following an attack on a police station in 2013, an act described by Amnesty International as "the largest single batch of simultaneous death sentences we've seen in recent years […] anywhere in the world".[55] The BBC reported that by May 2016, approximately 40,000 people, mostly Brotherhood members or loyalists, have been imprisoned since Morsi's overthrow.[56]

    Well, he's Trump's kind of guy!

  12. Oil maybe bottoming out at $70.  We can play /CL long over $70 with tight stops below but REALLY – tight stops!  /RB at $1.925 – same thing.  /BZ bounced at $79, so watch that line and Dollar at 95.11 for reference.  

  13. Being a Human Being is not Too Liberal…..

  14. Don't want to walk away from Putin who kills opponents and journalists, ditto Erdogan and Duterte… But we play tough with Canada, South Korea, Germany and others. 

    It's really sickening! 

  15. And BTW, it's not America that is becoming this way – it's a minority that keeps on changing the rules to stay in power!

  16. stjean – The good news is there is eventually a day of reckoning for them all.


    Think about it. Life never ends well for the villain…. :)

  17. Minority/StJ – Well shame on us for letting it happen then.  As you note, the minority changes the rules and seems to now find murderous dictatorships acceptable and Trump himself has explicitly said he's pro-torture and anti-press freedom and, of course, his sycophants love to chant "lock her up" if any woman tries to stand up to him.  We're marching right down the path to Totalitarianism one sad step at a time….  We're only a step or two away from Trump locking up one of his political opponents to the cheers of his followers.  

    Never ends well/1020 – Small solace to 6M Jews who were murdered in Germany waiting for Hitler to get his comeuppance…

    Image result for jews killed in germany chart


    Image result for jews killed in germany chart

    Related image

    Image result for jews killed in germany chart

    Related image

    We are in very early but very recognizable stages.  Let me know when something happens that DOESN'T check another box on the march to Fascism…

  18. Why we get what we deserve:  NBC the other day going to college campuses and asking crowds of students to raise their hand if voting in Nov.  ZERO hands went up.

  19. Phil/Jews  Even though I'm not Jewish, I get it.


    A Holocaust is not the best example for what we are currently going thru…. :(

  20. Image result for kavanaugh angryIt wasn't the best example in 1934 or 1935 either – just some "minor inconveniences" that would surely pass once "things calmed down".   As Hitler said (and Mein Kampf is famously on Trump's very short reading list) "In this way, the people will not see their rights and freedoms being removed until past the point at which these changes cannot be reversed."  

    Not to make a big thing of it but my Great Grandfather was a Polish Jew and he could see the writing on the wall and got the Hell out of there and went to England long before Hitler but then there was a Depression and it was never the right time to send for others in the family – and then they were dead because they didn't get out in time.  While it was happening all around them, they still didn't see the urgency because they kept imagining that there were rational people who would not let this happen and there were, in fact, many rational people – they simply didn't have any power.

    Also interesting, when Jews do family trees you usually get to a point where it says "town burned, records destroyed".  Sadly, those points aren't very far back in the family trees…

    Bow down before the one you serve. 
    You're going to get what you deserve.
    God money's not looking for the cure. 
    God money's not concerned with the sick among the pure. 
    God money let's go dancing on the backs of the bruised. 

    Meanwhile, nice rebound – Dow green! 

  21. I don't like the huge volume sell-off followed by a low-volume move up – seems like manipulated BS to lure in the suckers.  

    Too crazy to do anything ahead of the Fed though.

    Almost Webinar Time!  

  22. …lure in the suckers in before the FED speak…

  23. No speaking – just the minutes.  Shouldn't be a big mover but an excuse in case we're going to move.

    Took money and ran on /RB and /CL – nice pop for combined $500/contract.

    Want to start fresh in Webinar…

  24. Good Webinar Phil – Thank You.

  25. Hey guys!  

    Well we made $1,500 trading Futures in the Webinar – not bad for 2 hours' work…

    Still a chance to long /CL over $70 again and /RB over $1.92 – tight stops below.  

    /ES can be shorted yet again at 2,815 (tight stops above) – so you didn't miss anything – that's how we made our money!  

  26. I'm going to be tired and cranky for the next two days because I have to review all of our portfolios and we added a dozen positions to the LTP since last time.  Good time for a purge, I think, as we near the $1M mark.

  27. Nothing like having an internet outage 15 minutes into the webinar.  

  28.  That’s why we sell the replay for a mere, $499.  8)

     Back to a bit of selling into close but at least all our Futures are working.  

  29. I mean wow… Just when you think this administration has reached bottom, they find a way to dig deeper:

    At last count, Interior Secretary Ryan Zinke was the subject of 14 separate government investigations. (A new record!) But that number could soon be zero. That’s because Zinke just fired the Department of the Interior’s acting inspector general. 

    I guess it's a prelude to Trump firing Mueller! You don't like the results of investigations, fire the investigator. The party of law and order…

  30. Step by step they consolidate their power…

  31. Could Weed Be Federally Legal in 2019?

  32. Russia: Student gunman kills 17, wounds 40 in Crimea

  33. Trump says he won’t accept blame if GOP loses House

  34. /RB – now down a pretty $0.10 from topping yesterday. I’ll take a chance at that and look for a $0.02 weak bounce with tight stops in place. 

  35. Good morning! 

    Indexes down a bit but not too exciting.

    Lots of portfolio reviews to get through today.

  36. I agree with Buckeye, taking a long on /RB at $1.895 but tight stops below.

    /CL over $69 also a fun play.