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Follow-Through Thursday – 5% Correction or Just the First Step?

Related imageDOOM!!!

That's what I said would happen on Tuesday morning so this is certainly not surprising.  Even from my vacation on Monday I could smell the BS of the move up, as Team Trump's Trade Triumph was not at all confimed by their Chinese trading partners and, as I said in the Morning Report:

When you think about it, of course, not only has NOTHING changed since last week but now we know for sure there will be no trade deal until March at best.  Trump showed real weakness backing down on more tariffs since that was the only leverage he had in this negotiations and China's tariffs have always been retaliatory – so Xi has given up nothing at all and Trump has stopped fighting – how is that worth $500Bn of stock advances?

All pretenses of improving US-China relations were dashed yesterday evening as news spread that the CFO of Huawei was arrested in Canada on Dec 1st, at the behest of US Authorities over "Iran Sanction Violations" – something the company claims to have had no notice of and no one was more shocked (or insulted) than China's President Xi, who was pretty much sitting down to dinner with Donald Trump at the time and was embarassingly clueless that this was happening.  Making a Chinese leader look clueless has historically been a big mistake….

The United States is “resorting to despicable hooliganism,” China's Global Times wrote in an editorial published Thursday. “Anybody can see that the United States is maliciously picking holes in Huawei, trying to give it a hard time using the American legal system,” said the paper, which often reflects the foreign policy views of the ruling Communist Party.

The “persecution” of Huawei is “clearly contrary to the spirit of the consensus” forged between Trump and Xi, it said.

Image result for zte china cartoonEarlier this year, ZTE was sanctioned by the US but all was forgiven after they paid a record $892M fine in what China widely regarded as a shake-down.  Huawei has not been formally accused of breaching the sanctions and Meng Wanzhou is the daughter of the company's founder, leading to many Chinese essentially viewing this as a kidnapping and any "fine" the US decides to levy will be seen as a ransom demand.  

Huawei employs 180,000 people in some 170 countries and earned $92.5 Billion last year. It is the world’s third-largest seller of smartphones, after Apple and Samsung, and expects to sell 200M handsets this year.  Recently, the company was accused of installing spyware in their phones and network devices but no evidence of this was ever uncovered – just a lot of accusations by right-wing news sources in the US.  Nonetheless, Trump signed a bill in August banning Government agencies from using Huawei and ZTE devices. 

Related imageMy jaw dropped when I saw this news,” said James McGregor, chairman of the greater China region for APCO Worldwide, a business consultancy. “This is so different from anything we’ve seen before. Serious legal action taken with political timingI’ve never seen China take something like this lying down,” said McGregor, who has lived in China for nearly three decades. “For now, China seems to be taking a measured approach. But this could get ugly very quickly.”

Technically, things are already very ugly.  Yesterday and today's move have greatly strengthened the "Death Cross" patterns we talked about yesterday morning and there is nothing more bearish on a stock chart than a failing "W" pattern, especially when you break through the floor you've tested two times before while making lower highs on the bounces – DOOM!!!

I'd say watch the Russell but the Futures have /RTY already at 1,460 but it held 1,455 and we have been playing for bullish bounces in our Live Member Chat Room this morning.  I guess we'll watch the NYSE at the 12,000 line as that's obviously DOOM!!! if we fail there but this is nothing more than the 5% correction we expected, only briefly interrupted by complete and utter BS from Team Trump while they stabbed President Xi in the back as the President distracted him with dinner and false smiles – do you really think there won't be repercussions from this?

Image result for trump policies cartoonNot since Bush Jr's war on Iraq and Afghanistan over the attack on the World Trade Center by 19 Saudis has America had such a screwed-up foreign policy agenda and we all know how that turned out for us in 2008.  Trump won't need to wait 6 years for his idiocy to come back to haunt us and we're already seeing the rumblings all around but, like people who live on a fault line – we're happy to deny it all until our house is under the ground and then we'll all beg for bailouts because "we didn't see it coming."  

You don't have to look hard to see things coming – you just have to be willing.  The UK's FTSE is down another 2% today and that brings them back to the levels they last hit at the end of 1999 – wiping out an entire century's worth of progress.  The US Market would have to fall 50% to catch up to that mark.  Of course the UK has their Brexit issues where they are leaving a Trade Aliance and the US is only breaking up an aliance with their largest trading partners – so it's totally different, right?  In fact, the whole European Union is down around where it was in 1999 and well below their 2007 highs as well as their even-higher 2000 highs and failing the 3,000 level on EuroStoxx is DOOM!!! for them as well:

It's interesting because those are Global Companies and our own S&P 500 is an index of Global Companies so SOMEONE is wrong about their valuation and you'd better hope it's Europe because, if they are right and our companies aren't actually worth more than they were in 2007 (the last time we were irrationally exuberant about future earnings) then you ain't seen nothin' yet as far as a US correction is concerned:

As I noted above, my comment to our Members early this morning was:

/NQ at 6,666 – maybe a sign?  24,600 is a good spot to play for a bounce on /YM but so will 24,500 be so tight stops below.  2,650 on /ES is a good bottom too and 1,455 on /RTY would be nice if they hit 1,450 but no luck yet.  

We're goiing to be looking for a 1% (weak) bounce off the lows and the indexes will have to get back to flat for the day to make the strong bounce lines.  Anything less than that and we will remain fairly bearish and, to be clear, we're just lookng for Egg McMuffin money on the longs so quick profits will be taken if the indexes are rejected as lower is just as likely as higher at this point.  Tomorrow, at 8:30, we get the Non-Farm Payroll Report and it's not likely to be too market moving but at least it will provide the bulls an excuse to try to salvage the week – if they can. 

So far, it's simply been pathetic:


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  1. DOOM!!! It's about time

  2. Same chart I posted yesterday. A future's chart might be more telling now!

  3. Maybe we should simply try him for treason right now:

    The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the national debt in the not-too-distant future. In response, Trump noted that the data suggested the debt would reach a critical mass only after his possible second term in office.

    “Yeah, but I won’t be here,” the president bluntly said, according to a source who was in the room when Trump made this comment during discussions on the debt.

    And his advisors are simply the dream team of supply side:

    Stephen Moore, a conservative economist at the Heritage Foundation and an economic adviser to Trump’s 2016 campaign, recalled making visual presentations to Trump in mid-2016 that showed him the severity of the debt problem. But Moore told The Daily Beast that he personally assured candidate Trump that it could be dealt with by focusing on economic growth.

    “That was why, when he was confronted with these nightmare scenarios on the debt, I think he rejected them, because if you grow the economy… you don’t have a debt problem,” Moore continued. “I know a few times when people would bring up the enormous debt, he would say, ‘We’re gonna grow our way out of it.’

    Proven not to work multiple times but these guys don't believe in facts. they believe in beliefs!

  4. A funny take on the Brexit train wreck:

  5. Good Morning.

  6. HOV – Beats by $.11.  Misses on revenues.

  7. The decision to extradite Chinese executive from Canada was made by US national security apparatus. To fully understand the seriousness and meaningfulness of this action, it is important to know who these guys work for, and who gave the order. Was Trump in the loop?

  8. Yes the market is down again. But I have been eyeing a stock for a while now, and it hardly has gone down.

    PEGI for me a good armchair trade.I would have prefered the stock at 17.00 but no go. I have put in an offer to sell the Jan 19 22.5/20 strangle for 1.30 and buy the stock for 20.50. Shows a combined monthly return or 5.1%.

  9. Today might be a good day to sell some callers on ABX, if you have the cover.

  10. ARR possible a good place to start buying again

  11. Short /YM – Scalped 1/2 for 100 ticks.  Stops at entry.

  12. CTL now yielding 12.6%.

  13. I appreciate the NLY discussion RE selling ATM options along with stock. Implemented some of that on my own positions this morning.

    Covered some more short /NQ from earlier this week and added some short /ZB with tight stops.

  14. SBUX an other stock which does not bend to easy, but regret still too high

  15. go LB!!! 

    please no tease!

    great posts winston/yodi!

  16. SKT an other one steady as she goes

  17. STX even up today

  18. T down to 30 again!!!

  19. FTR 3.35 Yodi too…yikes!

  20. Phil's choice TOL even up today 2% !!!

  21. Jabo I did not mention the stock!!!!!!

  22. WFC possible good for a pock again at 50

  23. WMT losing feathers today

  24. Even WTW picking up some wheight today!

  25. Covered second 1/2 of /YM.  + 40.

  26. oil…ouch!

  27. CTL- Albo- I guess CTL has not been promoted to "safety stock" status just yet :)

    What do you think about adding to position here?

  28. Pstas – I would.  Still believe the dividend is safe.  CFO said on the last conference call that they were comfortable with the current dividend.

  29. Uh-oh, heading down? 

  30. Good morning!

    Not much bouncing so far, I'm not feeling too brave about a second try at the longs so far but 24,500 is a good line to play for a bounce on /YM.

    Treason/StJ – Well we voted in a guy who bankrupted 6 companies – what's the surprise that he bankrupts a country too?  When he opened the Taj Mahal in Atlantic City, people said it was nuts because he had to clear $3M/day on the floor to break even (previous record was $1M) and he surrounded himself with the same kind of BS economics saying the building would be such a draw that they'd make the money and, of course, all his numbers were crap and the investors lost everything.  Same thing now just with a bigger group of suckers investing in his BS. 

    LOL StJ – I love this:

    Good morning. You may have noticed that everything is on fire.

    Looks like Elmo has turned to Satan…

    That article is great, first new guy I've followed on Twitter in ages, thanks!  Anyone with this as their twitter pic can't be all bad! 

    Alan White

    Loop/Den – How screwed up would it be if Trump wasn't in the loop when the US arrested one of China's top executives WHILE he was having dinner with the Premier of China?  This is late stage spy novel crap…

    ABX/Yodi – We sold those last review.  ARR makes me a bit nervous with rising rates but good for the long haul.  SBUX we cashed in last review.

    LB/Jabob – Sales up 26% over last year justifies a bit of a bounce, I think.  

    • L Brands (NYSE:LB) reports sales increased 26% in November to $1.6B.
    • Comparable sales rose 9% for the month, and 4% on YTD basis.
    • Comp grew 2% for Victoria’s Secret and 18% for Bath & Body Works.

    L Brands Reports November 2018 Sales


    COLUMBUS, Ohio, Dec. 06, 2018 (GLOBE NEWSWIRE) — L Brands, Inc. (LB) reported net sales of $1.596 billion for the four weeks ended Dec. 1, 2018, compared to net sales of $1.267 billion for the four weeks ended Nov. 25, 2017.  Comparable sales increased 9 percent for the four weeks ended Dec. 1, 2018 compared to the four weeks ended Dec. 2, 2017. 

    The company reported net sales of $9.980 billion for the 43 weeks ended Dec. 1, 2018, compared to net sales of $9.077 billion for the 43 weeks ended Nov. 25, 2017.  Comparable sales increased 4 percent for the 43 weeks ended Dec. 1, 2018, compared to the 43 weeks ended Dec. 2, 2017. 

    To hear further commentary provided on L Brands’ prerecorded November sales message, call 1-866-639-7583 or log onto for an audio replay.

    It's exactly what was supposed to happen as last year they killed two major lines, causing low comps that are now being beat this year as they are done rebalancing the merchandise – AS PLANNED.  It's only been a problem for impatient people who didn't understand the nature of the investment premise and had unrealistic time-frames.

    Up today/Yodi – Finally people run back to VALUE stocks. 

    • Crude oil prices remain sharply lower in volatile trading after OPEC members say they agreed to production cuts but must await Russia before making a final decision on the exact amount and the allocation: WTI -3.9% at $50.79/bbl, Brent -3.2% at $59.56/bbl.
    • Russian Energy Minister Novak flew to St. Petersburg from Vienna earlier to consult Pres. Putin and will return to the OPEC meeting for talks tomorrow.
    • Saudi Energy Minister al-Falih sent prices plummeting as much as 5% earlier after saying a production deal had not yet been reached.
    • potential 1M bbl/day cut "may disappoint many but should the cut be from a September or October baseline, rather than November, the net impact would be sufficient to limit storage builds," says Pimco's Greg Sharenow. "It is unlikely to spark a meaningful price rally but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution."
    • Energy stocks trade broadly lower: XOM -2.4%CVX -2.4%RDS.B -4%BP -4.2%COP -1.2%PXD -3.5%EOG -2.9%DVN -2.8%APA -3%APC -3.2%NBL -3.1%MRO -4.8%HES-2.7%SLB -3%HAL -3.6%BHGE -3.3%KMI -2.4%EPD -2.1%.
    • UBS maintains a Buy rating on Apple (NASDAQ:AAPL) but cuts the target from $225 to $210.
    • Analyst Timothy Arcuri says iPhone purchase intention is "down across the board" with particular weakness in the U.S. and China.
    • The firm's proprietary survey showed U.S. buying intent dropping to a five-year low, matching the iPhone 6S. Only 18% of respondents planned to buy a new iPhone in the next year, down from 21% last year and the 17% of October 2015.
    • China intent hits a new low at 23%, down 6% from last year.
    • The survey included 6,900 consumers across five countries and happened after the XS and XS Max were launched.
    • More action: Rosenblatt lowers its Apple target from $200 to $165. The firm has dropped its CY19 Q1 iPhone shipment estimate twice in as many months.
    • Apple shares are down 2.9% to $171.54.
    • Previously: Apple supplier shares sink on latest news (Dec. 6)
    • The Federal Reserve should be gradual and patient in tightening monetary policy further, Dallas Fed President Robert Kaplan, who isn't a voting member on the central bank's interest rate committee this year.
    • He sees a "good possibility" that the economy will look very different in H1 2019 as the tax reform-driven economic stimulus wanes.
    • Also the flattening yield curve indicates expectations for future growth "are sluggish," he said.
    • U.S. 2-year Treasury yield declines 11 basis points to 2.71%, as the 10-year Treasury yield slips 6 bps to 2.85%.
    • The U.S. dollar index -0.3% to 96.68.
    • Previously: Fed describes growth as modest to moderate, for the most part: Beige Book (Dec. 5)
    What a F'ing crook!  Lampert takes final stab at Sears
    • Eddie Lampert has submitted a new bid to acquire Sears Holdings (OTCPK:SHLDQ +11.5%) through his hegde fund.
    • The $4.6B "total consideration" offer includes debt to be issued by Sears, a credit bid of about $1.8B and the assumption of some liabilities.
    • "Sears is an iconic fixture in American retail and we continue to believe in the company’s immense potential to evolve and operate profitably as a going concern with a new capitalization and organizational structure," says Lampert.
    • The Lampert approach is being looked at as a last hope for Sears to survive.
    • Barrick Gold (NYSE:ABX) is seeking to sell its AuTec research and development company and is cutting staff hired to lead what executives once called a digital reinvention, WSJ reports.
    • ABX's merger with Randgold Resources is set to close next month, and incoming CEO Mark Bristow has said he plans to sell various non-core assets, cut costs and shrink head office management in an attempt to delegate more authority to regional mining operations; AuTec will be one of the first assets to go on the block, according to the report.
    • In recent months, ABX reportedly has disbanded or shrunk technology based teams at its head office in Toronto and at its mining operations in Nevada, and Sham Chotai, the miner’s chief digital officer and a former Silicon Valley executive, is said to have left the company.
    • MoviePass (NASDAQ:HMNY) introduces its new tiered pricing plan for 2019.
    • The company will offer customers Select (starting at $9.95/month), All Access (starting at $14.95/month) and Red Carpet (starting $19.95/month) plans. The exact pricing of each option will depend upon what geographic zone a customer resides in.
    • "We view the model as the foundation to reach new members and regain positive momentum in the marketplace," says Helios CEO Ted Farnsworth.
    • HMNY trades at $0.177 in premarket trading vs. the split-adjusted 52-week range of $0.0110 to $3,000.00. During that same time period AMC Entertainment (NYSE:AMC) has traded essentially flat, while Cinemark (NYSE:CNK) is up 10% as both chains have seen solid U.S. traffic amid the MoviePass developments.
    • Atlantic Equities downgrades Macy's (NYSE:M) to an Underweight rating on its view that investor expectations are running too high for the holiday quarter and 2019.
    • The investment firm slashes its price target to $28 from $39.
    • Shares of Macy's are down 2.37% in premarket trading to $31.65.
    • Q3 Productivity and Costs: +2.3% in-line with consensus, +2.2% previous.
    • Unit labor costs +0.9% vs. 1.1% expected, +1.2% previous.
    • The Federal Reserve rejects Wells Fargo's (NYSE:WFC) reform plan to prevent further consumer abuses at the scandal-plagued company, saying it needs to strengthen checks on management, Reuters reports, citing three people familiar with the talks.
    • WFC -1.7% in premarket trading.
    • The bank must develop a robust plan to improve its governance and risk management controls before the Fed will lift an asset cap that was imposed on Wells Fargo in February after a string of scandals related to its sales practices.
    • Previously: Banks fall premarket after Citi, JPMorgan note weak trading (Dec. 6)
    • Previously: Wells Fargo fires dozens of retail-bank regional managers: WSJ (Dec. 5)
    • Lyft (LYFT) says it has filed initial paperwork to go public confidentially with the SEC.
    • The number of shares and price range aren't yet determined.
    • Lyft is working with JPMorgan on the listing process, according to an earlier FT report, with support from Credit Suisse and Jefferies.
    • Lyft is heading towards the IPO gates around the same time as competitor Uber (UBER). Lyft has a valuation of around $15B while Uber is aiming for $100B.
    • Risk of a no OPEC deal? "It's real," Saudi Energy Minister Khalid al-Falih told CNBC, as OPEC delegates and Russia gathered for a meeting in Vienna.
    • Oil prices have now extended their decline to 5%, risking tumbling below the $50 level.
    • Earlier, Saudi Arabia signaled the group could cut less than expected, saying an output reduction of 1M barrels per day may suffice. Besides that number, the cartel has to figure out how to divvy up the cuts.
    • OPEC has made a planned cut in oil output effectively conditional on the contribution from non-OPEC producer Russia, OPEC delegates said as the group gathered for a meeting in Vienna.
    • The likely outcome is a production cut of around 1.2M-1.4M barrels per day to shore up prices and curb excess supply.
    • As always though, the hard part is not figuring out a number, but rather how the cartel divvies up the cuts.
    • Crude futures -2% to $51.87/bbl.
    • Update: Oil is now down 3.2% at $51.20/bbl after Saudi Arabia said that a cut of 1M bpd would be enough for OPEC and allied oil producers.
    • Theresa May has refused to rule out the idea of scrapping next Tuesday's House of Commons vote on her Brexit deal amid speculation that she could postpone the date to try to win over Tory rebels or attempt a renegotiation with Brussels.
    • Gavin Williamson, defense secretary and former chief whip, has reportedly tried to persuade May to reschedule the vote, however, some believe it's problematic since it would require a vote to authorize the delay.
    • More Apple (NASDAQ:AAPL) woes? Supplier shares took a beating overnight after Taiwan's Largan Precision (OTC:LGANF), a leading lens supplier of smartphone cameras, reported a more than 25% Y/Y decline in its November revenue.
    • The Tawainese company plunged 10% on the news, triggering a sector selloff across Asia.
    • Apple's share price has suffered since its Q3 earnings, with analysts maintaining the company's "iconic hardware unit growth is broadly over for now."

  31. I think It's Here. This feels like Sept. 30th, 2008 to me. I'm out of everything long as of today. Even college 529 automatic allocations – nope. Bonds, cash and shorts.

  32. Big draw in oil so worth a toss crossing back over the $51 line on /CL

    Word from OPEC later too so maybe a good one today.

  33. Let's not forget Trump bankrupted a whole football league as well by moving it into direct competition with the NFL with the plan to sue the NFL with anti-trust allegations and then "winning" but in name only - they got $1 which tripled to $3 under anti-trust laws and the USFL was destroyed.

  34. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.3 million barrels from the previous week. At 443.2 million barrels, U.S. crude oil inventories are about 6% above the five year average for this time of year. Total motor gasoline inventories increased by 1.7 million barrels last week and are about 4% above the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 3.8 million barrels last week and are about 5% below the five year average for this time of year. Propane/propylene inventories decreased by 1.3 million barrels last week and are about 3% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 8.3 million barrels last week.

  35. Once again, we can only go down 800 points 30 more days so everybody relax! 

    • EIA Petroleum Inventories: Crude -7.3M barrels vs. -0.9M consensus, +3.6M last week.
    • Gasoline +1.7M barrels vs. +1.3M consensus, -0.8M last week.
    • Distillates +3.8M barrels vs. +1.2M consensus, +2.6M last week.
    • Futures -4.42% to $50.55.

  36. Bots are going start triggering some buying very soon! We are approaching the next set of support lines. Look at 1450 on the Russell, 2640 for the S&P, 24,250 for the Dow and so on!

  37. I think you're right stjean – still net short in the short term portfolio, but a bit lighter than I was last week… although I do remember falling out of formations like this 'W' REALLY hard in the past… 2009 or 2010?

  38. I meant buying for today… Long term, there is no much of a bullish scenario really. I don't think that we done going down but there will be rallies in between the selling.

  39. Spot VIX is at 25 now so a bit of worries it seems.

  40. Buying/StJ – I don't know, we're breaking nasty technicals and oil failed and is testing $50 – looks like everything is getting dumped.  Another 800-point down day for the Dow – yikes! 

  41. OPEC not giving a press conference so people think there's no agreement.

  42. True, Phil – I guess if they don't start buying soon, we might get a 1000 points drop!

  43. "I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. "

    Larry Kudlow

  44. Phil,

    GIS, seems like bottom of channel; 2021 Put $35 sell for 3.75-3.90 and 

    WFC 2021 PUT $42.5 sell for 4.50-4.75 if you can get it…..your thought appreciated.

  45. of course, TSLA is up again…unreal!

  46. Agreed about the selling, Stj – I was still short some /NQ from a few days ago, covered some more at 6660. Watch and wait time. Long term I do not know, but short term I'm happy to cover!

  47. Jasu1 As a bave man you can sell the WFC 45 put for 5.10 and the GIS for 3.50. If it makes you more comfortable I even hold the Jan21 45 Put of GIS!!!

  48. Yodi, Thanks

  49. TSLA just cannot be kept down it seems.

  50. U.S. factory orders post largest drop in more than a year

  51. Phil my point concerning Trump is that if he was in the loop, then the move at ZTE was a shot across the bow. This action is a dead shot on the hull. We are officially at war with China if this is the case.

  52. It is for now an economic war, but war none the less. This will have a crippling affect on trade and investment.

  53. There you go… bots on the move.

  54. Hello Phil and the Gang.  Phil when you have a second could you review the 5% rule for today.  Tuesday you mentioned if we closed below 2700 you thought S&P 2640 would come next which we did today. We hit 2620 so 2700 to 2620 is 80 points and a weak bounce would be 16 points so 2636 and strong would be 2652.  Did i calculate that correctly?  Trying to follow the math. Thanks in advance!

    Phil from Tuesday 3:54p

    That means, on /ES, which matters most – that 2,780 x 0.95 is 2,641 so call it 2,640 and that's a 140 drop so call it 30-point bounces to 2,670 (weak) and 2,700 (strong) so today we are bouncing off the strong bounce line of a 5% correction but anything below 2,700 means we're almost certain to go for 2,640, which is a $1,200 drop on /ES so we certainly want to take a short below 2,700 with tight stops above.

  55. 24,256 was the low on /YM but it's a spike so we'll throw it out.   I guess we could use 24,400 but 24,600 seems to be the consolidation point and 24,700 is 95% of 26,000 so I'm more comfortable using that as our watch line and we can call the next 260 a 20% overshoot (24,430) and look how neatly we bounce off that (ignoring quick spike):

    So, strictly speaking, we're still in the downtrend towards 10% if we can't take 24,700 back and, above that, it's a 1,300-point drop so 260-point bounces and, since it's the Dow, call it 25,000 as the weak bounce line but then 25,250 would be strong (as we won't round up 40 points twice).  The exact strong bounce would be 520 over 24,700 so 25,220…

    Looks far away, doesn't it? 

    GIS/Jasu – Fine to take a poke but this kind of action does not put me in a buying mood today!  

    TSLA/Jabob – That's why I'm done playing with them.

    No earnings until early Feb, until then, they can BS all they want.

    Tesla's China Factory Could Be Running in a Few Months

    California cops invented a new maneuver to pull over sleeping Tesla drivers on Autopilot

    Moving Average Crossover Alert: Tesla, Inc.

    Tesla Advances China Push With 2019 Shanghai Production Goal

    The Tailwinds Keep Getting Stronger for Tesla Stock

    Tesla’s Biggest Bull Says Its Factory ‘Mess’ Is a Sign of Good Things to Come

    Apple Will Buy Tesla and Other Wild Predictions for 2019

    Tesla Analyst Ferragu Says Factory 'Exceptionally Efficient'

    Tesla Near $360 a Share Could Let It Pay Off March Debt in Stock

    CFRA raises price forecast on Tesla to Musk's now-infamous target of $420 a share

    The PR machine is running full tilt on them, all their problems are now "features".    That last item is the key, if they can keep the stock at $360, they get to shove it to their debt-holders to the tune of $920M.  That makes it well worth spreading the shekels around now to generate some bullish press and and analyst reports – a game Musk has played many times in the past. 

    China/Den – I agree, I don't think people understand the potential ramifications of what is happening.   Well, some do – that's why the market is down.

    5% Rule/Robert – Well, see above for the Dow but yes, we just hit 2,640 – exactly as predicted and a bit extra but, as you can see from an hourly chart – if you ignore the quick spike it was nailed to the penny:

    That indicates a machine-driven sell-off but that doesn't mean it's meaningless, machines trade 80-90% of the market these days.  What it really means is enough people threw the "SELL" switch on their machines to cause a 5% correction and, inevitably, some machines are programmed to buy on a 5% dip so the sell programs run into automated selling and the bounce rules tell us whether the automated buying is significant enough or simply just enough to cause a pause in the selling momentum.

    So now we look for the bounce to 2,670 (weak) and 2,700 (strong) to see if there are significant enough buyers to cause the owners of the SellBots to flip the switch to BuyBots but then you have to remember the chart and our death crosses – as that now adds a very bearish weighting on the indexes and 80% of trading decisions are TA based and the death cross is occurring right at the 2,760 line (two more 30-point gains) - these things are not all coincidences.  2,750 is the 25% line on our Big Chart – has been since Nov, 2016…

  56. It's very likely, even if things go well, that 2,475 – 2,750 – 3,025 (10% range) could become our new trading range and that would be great as it's nice, healthy consolidation near our highs.  It might disappoint some people but it would be long-term bullish to form a new base that high.  

    Without a trade deal with China, however, we'll be lucky if 2,475-2,750 is the top of the new range that goes down to 2,225.  

    Speaking of going down – did anyone actually pay attention on Tuesda when I said:

    December 4th, 2018 at 3:54 pm | (Unlocked) | Permalink 

    Looks like an ugly close.  This is why you REALLY need to see at least a weak bounce before making any kind of bullish play and then confirm at strong.  With /ES, we said 80 points down to 2,700 meant 16-point bounces so 2,716 was easy (weak) and 2,732 (strong) is where we failed.  

    When you see our 5% lines hit on the button like this, across all 4 indexes, you KNOW this is a completely bot-driven sell-off, which means it should be predictable so now we know that the -5% line (off the same tops) should be significant as should the weak and strong bounces from there.  

    That means, on /ES, which matters most – that 2,780 x 0.95 is 2,641 so call it 2,640 and that's a 140 drop so call it 30-point bounces to 2,670 (weak) and 2,700 (strong) so today we are bouncing off the strong bounce line of a 5% correction but anything below 2,700 means we're almost certain to go for 2,640, which is a $1,200 drop on /ES so we certainly want to take a short below 2,700 with tight stops above.

    I was wrong on the math because /ES pays $50/point ($3,000 per contract), not $20/point (that's /NQ) but the 5% Rule is never wrong!  

    And that's all you have to do to trade the Futures… 

  57. Phil/TSLA-Did you close the bear put spread 450-420?

  58. AVGO reports earnings tonight

  59. Comment content omitted because it is too long.

  60. TSLA/Ravi – No, that's just silly high.  At that point I would short again! 

    • Tesla (NASDAQ:TSLA) is up 1.3% on the day, despite a day of broad market declines. A positive note from Wolfe Research on margin potential and price target bump on shares to $430 (18% upside) could be helping to bring in some buyers.
    • Wolfe on TSLA: "Tesla’s volume growth opportunity has been clear for some time, but persistent cash burn made it impossible for the broad investor community to evaluate the margin profile and the company’s ability to self-fund capital growth. In turn, substantial external funding needs made the risk profile unfavorable. This has limited the investor pool to essentially 'true believers', driven persistent short interest, and kept the market cap largely range-bound for 4 years."
    • Previously: Tesla to start Chinese production late next year (Dec. 6)
    • Monetary policy ought to "be taking a more neutral position," given the U.S. economy's current strong growth, low unemployment rates, and inflation close to 2%, says Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta, at the Georgia Economic Outlook series.
    • But he's not predicting what the FOMC will do at December's meeting on Dec. 18-19. He says he'll keep an eye on data to see if they warrant actions in either direction.
    • "We're within shouting distance of neutral," Bostic says, as he sees no signs of overheating or material weakening.
    • Says "there's a lot to like" about the U.S. economy, with GDP growth on pace to exceed 3%, the first time since 2005.
    • Still, he sees growth slowing over the next few years, partly because of capital expenditure trends. According to an Atlanta Fed survey, firms said tax reform wouldn't affect their capex plans.
    • Bostic is a FOMC member in 2018, but not next year; the next time the Atlanta Fed president will be an FOMC member is in 2021.
    • Previously: Kashkari: Rates shouldn't be raised during strong job creation, tame inflation: CNBC(Nov. 30)
    • The Atlanta Fed's GDPNow model estimates Q4 real GDP growth at 2.7%, down from 2.8% on Dec. 3.
    • Contribution of net exports decreased to -0.50% from -0.42 due to international trade release data published this morning.
    • Next GDPNow update is Friday, Dec. 7.
    • Previously: Trade deficit edges higher to $55.5B (Dec. 6)

    • BHP (BHP -2.9%) slides after J.P. Morgan downgrades shares to Neutral from Overweight, saying the stock has outperformed Rio Tinto (RIO -2.7%) by 10% YTD and is now trading "within range of our valuation."
    • "The prospect of six months of negative China data (before potentially stabilizing in the second half of 2019) presents a difficult headwind for the sector," JPM analyst Lyndon Faganwrites, prompting him to take a more neutral stance on the mining sector even as the companies sport strong free cash flow and balance sheets.
    • But the pessimistic view is not shared by Goldman Sachs, which adds the stock to its Conviction Buy List, saying shares are undervalued despite China weakness and foreseeing further upside from share buybacks, superior margins and non-core divestment potential.
    • Bank of America Merrill Lynch says Yum Brands (YUM +0.1%) didn't make any changes to its long-term growth expectations yesterday at its investor meeting, but laid out its scale advantages across QSR brands.
    • "YUM’s model is not driven by any one segment. When we look globally, KFC represents half of profits and we model 10-11% ongoing EBIT growth, with 5.5% from units and 3% comps. Taco Bell is a third of profits and we model 7%-8% growth driven by 3%-4% units (2%-3% U.S.) and 3% comps. Pizza Hut represents a smaller 15%-20% of profits and we model 4%-5% profit growth including 2%-3% units and 1% comps," notes BAML.
    • "We see the biggest risks to the model as the concentration of KFC store growth (China, Russia and Thailand are 58% of unit additions) and soft AUV growth in global Pizza Hut markets, not specific to the U.S. We see upside from Taco Bell Int’l, although we do not expect it to be a material driver for several years," adds the firm.
    • The 2019 EPS estimate on Neutral-rated Yum is dropped to $3.80 from $3.85.
    • Previously: Highlights from Yum Brands' investor conference (Dec. 5)
    • Facebook (FB +0.2%) is testing a shopping mode during live streams that let viewers purchase a product or message a merchant.
    • The feature is testing in Thailand, which Facebook says has one of the most active Marketplace communities.
    • Sellers displaying merchandise during a Live broadcast currently have to either call out a buyer or message the buyer with payment information.
    • The new feature streamlines the buying and selling process. Facebook says it isn't taking a cut of the transactions and hasn't said whether the feature would roll out to more markets.
    • Microsoft (MSFT -0.6%officially announces that its Edge browser will get rebuilt on Chromium, the open-source backbone of Google's Chrome, and make its way to Macs, Windows 7, and Windows 8.
    • The move is a bid to increase its Edge browser market share from the 2% it held in November, according to StatCounter data. Chrome held 62% and Apple's Safari had 15%.
    • Microsoft also plans to become a major contributor to the Chromium project. The company has worked to deepen its open source commitments following the $7.5B acquisition of GitHub.
    • What does the change mean for current Edge users? The browser will simply render more consistently across webpages after the change.
    • The tech giant expects to have a beta build available for developers in early 2019.
    • Previously: Microsoft said to ditch Edge browser for Chromium (Dec. 4)
    • Johnson & Johnson (JNJ -1.5%) unit Actelion Pharmaceuticals US has agreed to pay $360M to settle claims that it used a foundation as a conduit to fund co-pays for thousands of Medicare patients taking its pulmonary arterial hypertension drugs, a violation of the False Claims Act.
    • Under the Anti-Kickback Statute, a drug maker cannot pay or offer to pay any money to induce Medicare beneficiaries to buy its products, including co-pays.
    • Bank of America Merrill Lynch weighs in on the implications of the new Walgreen Express national next-day Rx delivery service.
    • "This announcement expands Walgreens' mail capabilities, an area where historically it has been less focused than other pharmacies due to its primarily retail base," writes the BAML analyst team.
    • Also: "This announcement expands Walgreens’ mail capabilities, an area where historically it has been less focused than other pharmacies due to its primarily retail base."
    • Despite the positive uptake, the firm keeps an Underperform rating on Walgreen Boots Alliance (WBA -1.4%) due to concerns over core EBIT and gross profit growth.
    • Previously: Walgreens launches next-day prescription delivery service (Dec. 6)
    • Kinder Morgan (KMI -2.7%maintains its Q1 2019 startup target for the liquefied natural gas export terminal it is building in Georgia and expects a boost to volumes across its North American transportation and storage network.
    • KMI supplies 42% of the current U.S. liquefaction capacity with feedgas that moves through its pipelines and hopes to increase its share as more terminals come online, including the Elba Island facility near Savannah, Ga.; CEO Steven Kean says contract renewals and the ability to command higher rates have been strong.
    • "We are benefiting from the growth in both supply and demand, on both ends of our system," Kean says, adding that forecasts showing continued strong demand in Mexico for U.S. supplies of natural gas are good news for KMI, which is positioned to capitalize on the growth with its existing network and planned projects.
    • Earlier: Kinder Morgan sees 10% growth in distributable cash flow next year to $5B (Dec. 3)
    • Costco (COST +2.7%) trades higher on a bruising day for the market overall as investors give the retailer credit for another strong month of comparable sales.
    • Costco's +10.2% comp in the U.S. more than doubled the consensus estimate for a 4.9% gain.
    • Previously: Costco updates November sales (Dec. 6)
    • Amazon (AMZN +0.8%opens Alexa Answers to let select users help the voice assistant answer questions.
    • Amazon has run an internal beta of the program for the past month, according to Fast Company. Employees added responses to more than 100K questions, which have since been provided to Alexa users more than 1M times.
    • Invites to Answers are going out via email today. Selected users can log in and see a list of questions that have stumped Alexa and provide the answers. When Alexa provides that answer, she will start with "According to an Amazon customer…"
    • Guggenheim initiates Alphabet (GOOGL +0.1%) at Buy with a $1,330 price target.
    • Analyst Michael Morris says the company has a "unique" combo of IP, employee talent, and financial resources that position Alphabet for global growth beyond expectations.
    • The firm expects Alphabet to continue strengthening customer engagement next year.
    • Homebuilders and timberland REITs are bucking the downturn in the broader U.S. stock market.
    • The iShares Dow Jones US Home Construction REIT rises 0.8% in midday trading vs. the S&P 500's 2% drop.
    • With mortgage rates pulling back--the 30-year FRM averaged 4.75% for the week ending today, down six basis points W/W--homebuilders are rising and with that lumber producers are also getting a boost.
    • Housing affordability concerns have been weighing on homebuilder stocks, especially since September, as mortgage rates and home prices continued their upward march.
    • As homebuilders report their fiscal Q4 earnings, though, many have shown average selling prices falling from the previous quarter.
    • As for individual stocks in the homebuilder universe, Hovnanian Enterprises (HOV +7.7%) rose the most on better-than-expected Q4 earnings; also on the rise, KBHome (KBH +2.7%); PulteGroup (PHM +2.7%) (after boosting its dividend); Lennar (LEN +1.9%), TRI Pointe Homes (TPH +3.4%), NVR Inc. (NVR +1.7%), D.R. Horton (DHI +0.8%).
    • Timberland REITs: Weyerhaeuser (WY +2.6%), Catchmark Timber Trust (CTT +3.7%), Rayonier (RYN +1.1%), and PotlatchDeltic (PCH +3.2%).
    • Previously: PulteGroup declares $0.11 dividend (Dec. 6)
    • Previously: Hovnanian +9.1% after Q4 beats (Dec. 6)

    • European markets closed pretty close to the lows today, with the Stoxx 600 shedding 3.1%, led by roughly 3.5% declines for the U.K., Germany (NYSEARCA:EWG), France (NYSEARCA:EWQ), and Italy (NYSEARCA:EWI). Spain (NYSEARCA:EWPdropped 2.75%.
    • Germany's DAX is now down 16.8% for the year. It's 10-year Bund rate fell four basis points today to 0.239%. Italy's 10-year rate rose 14.5 bps today, now up to 3.21%.
    • BYD (OTCPK:BYDDF) plans to list shares of its battery business before the end of 2022, according to a Bloomberg report.
    • The company hasn't decided yet on which exchange to list the shares.
    • Berkshire Hathaway (BRK.ABRK.B) will have a piece of the action through its 24.6% stake in BYD.
    • BYD and Contemporary Amperex Technology are the two biggest providers of EV batteries in China and are poised to challenge LG Chem (OTCPK:LGCLF) and Panasonic (OTCPK:PCRFY) in the future. The push by BYD into EVs is also of interest to automakers such as Tesla (TSLA-0.1%), Nio (NIO +2.8%), BAIC (OTC:BCCMYOTCPK:BMCLF) Kandi KNDI and Great Wall Motors (OTCPK:GWLLFOTCPK:GWLLY) looking to compete in varying EV segments and price points.
    • Guggenheim starts Twitter (NYSE:TWTR) at Buy with a $39 price target.
    • Analyst Michael Morris thinks Twitter's platform improvement efforts through fake account deletion will "continue to bolster the user experience, increasing usage and attractiveness to advertising partners."
    • The analyst sees Twitter reporting sustained mid-teen revenue growth through 2023, which would support about 25% annual earnings and FCF growth.
    • Twitter shares are down 3.3% to $31.50 on a generally rough day for tech.
    • Apparel manufacturers are having a rough day after G-III Apparel (GIII -15.3%) misses Q3 sales estimates and a broad downturn in the market hits the clothing sector hard on more tariff anxiety.
    • Notable decliners include Canada Goose (GOOS -9.3%), Vince (VNCE -8.7%), PVH (PVH-3.8%), Ralph Lauren (RL -3.1%) and V.F. Corporation (VFC -3.2%).
    • There could be some relief in the AH trading session, with Lululemon (LULU -4.6%) expected to post strong numbers.
    • BlackRock fixed income chief Rick Rieder doesn't see the  recent yield curve inversion as a sign of an imminent recession this time, he told CNBC.
    • Rather, he sees slower economic growth ahead.
    • "I don't think we're going into a recession in 2019, and I think it's questionable if you're going into a recession in 2020, but we are tangibly slowing," he said. "The interest sensitive part of the economy is slowing — mortgages, housing, small business lending are all slowing."
    • The flattening yield curve has unnerved markets in the past two sessions as part of the curve inverted this week, with the 5-year Treasury yield falling below the 3-year and 2-year yields.
    • Though historically the yield curve has been the "only barometer" of a recession, "now it's a function of the Fed that has the front end at elevated levels, and you're issuing a lot of debt."
    • Rieder sees mortgage as at or near peak levels. The slowing economy and lower rates for longer duration Treasuries should bring down mortgage rates, he said.
    • The 30-year fixed-rate mortgage averaged 4.75% for the week ending Dec. 6, 2018, down from 4.81% a week earlier.
    • 2-year Treasury yield is down 13 basis points to 2.70%, while the 10-year yield is down 7 bps to 2.84%-- the spread has widened to about 14 bps, compared with a 9-bp difference earlier this week.
    • Previously: Mortgage applications continue to trend higher as interest rates fall (Dec. 5)
    • With stocks down another 2%+ this morning, short-term rate traders are quickly bailing on the idea of a continued Fed rate hike cycle. The two-year Treasury yield is down a whopping nine basis points to 2.71%, and December rate hike odds have slimmed to less than 70%.
    • Even with today's big move, traders continue to expect at least one more rate hike in 2019.
    • Over at the long end, the 10-year yield is lower by 7 seven basis points to 2.84%. TLT +0.95%TBT -1.9%
    • Should tomorrow's November employment report print strong, might the Fed be forced to hike this month in the face of plunging markets?

    • Thinly traded financial news and information company, TheStreet (TST +34.2%agrees to divestits institutional B2B business units, The Deal and BoardEx to Euromoney Institutional Investor
    • The deal is valued at $87.3M; the businesses reported revenue of $23.8M in FY17.
    • The company says that it continues to explore strategic alternatives for its consumer business.
    • The company also announces management changes, with CEO David Callaway to resign once the transaction is completed; current CFO Eric Lundberg will serve as CEO and Margaret de Luna, current president of the consumer business, will become President and COO.
    • Untuckit has hired Morgan Stanley to help it raise funds, sources tell CNBC.
    • The men's clothing upstart is looking to bring in new investors at a level that values the company at more than $600M.
    • Untuckit has about 35 stores open in the U.S. after starting off as a online operation in 2011 specializing in shirts that can be word in an untucked fashion. The company is reported to generate about $150M per year in sales and is profitable.
    • Weak results from Thor Industries (THO -9.2%) is creating some extra anxiety in the RV sector amid a down overall day for the market.
    • Thor reported 21% sales drop in its towable segment during Q3 and 24% decline in the motorized segment.
    • On watch: LCI Industries (LCII -4.7%) Camping World (CWH -5.9%), Patrick Industries (PATK-4%), Winnebago (WGO -0.5%) and Camping World (CWH -5.9%).
    • Previously: Thor Industries -3% after soft quarter (Dec. 6)
    • According to Bloomberg's weekly survey, gold traders and analysts are the most bullish since at least April 2015 (the start of the data series).
    • "I expect the price of gold to rally off of a slowing economy and with the Fed being handcuffed from raising rates due to the unfavorable economic data that will be in front of them," says Dillon Gage's Walter Pehowich, nicely summing up the conventional wisdom.
    • Of 15 surveyed, 13 were bullish, 1 bearish, and 1 neutral.
    • With stocks down another 2% this morning, gold is higher by 0.4% to $1,248 per ounce.
    • Citi initiates LG Display (NYSE:LPL) at Buy with a KRW28,000.00 price target.
    • Analyst Peter Lee cites the company's "sold" OLED position and attractive valuation.
    • LG shares closed down 3.4% to KRW16,900 on the Korean exchange.
    • LPL shares are down 4.2% to $7.54.
    • Previously: Apple supplier shares sink on latest news (Dec. 6)
    • Crude oil prices remain sharply lower in volatile trading after OPEC members say they agreed to production cuts but must await Russia before making a final decision on the exact amount and the allocation: WTI -3.9% at $50.79/bbl, Brent -3.2% at $59.56/bbl.
    • Russian Energy Minister Novak flew to St. Petersburg from Vienna earlier to consult Pres. Putin and will return to the OPEC meeting for talks tomorrow.
    • Saudi Energy Minister al-Falih sent prices plummeting as much as 5% earlier after saying a production deal had not yet been reached.
    • potential 1M bbl/day cut "may disappoint many but should the cut be from a September or October baseline, rather than November, the net impact would be sufficient to limit storage builds," says Pimco's Greg Sharenow. "It is unlikely to spark a meaningful price rally but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution."
    • Hovnanian Enterprises (NYSE:HOVjumps 9.1% after fiscal Q4 EPS beat consensus as average price of homes delivered rose at a faster pace than the number of homes delivered.
    • Q4 EPS of 30 cents beat consensus by 10 cents and compares with 8 cents a year ago.
    • Q4 deliveries, including unconsolidated joint ventures, increased 2.4% to 1,829 homes from 1,787 a year ago; average price of homes delivered rose 8.1% to $462,254 vs. $427,741 a year ago.
    • Q4 homebuilding gross margin of 16.5% increased from 13.7% a year ago.
    • Q4 contracts, including unconsolidated joint ventures, declined 12% to 1,179 homes from 1,344 a year ago.
    • Q4 adjusted EBITDA increased to $89.9M from $81.1M Y/Y.
    • Q4 total revenue slid to $614.8M from $721.7M a year ago.
    • The company, though, is optimistic that housing sales will pick up as the home buyers adjust to higher mortgage rates. "Given the overall demographic trends and the strong U.S. economy, as home buyers become adjusted to the higher mortgage rate environment, expectations will likely adjust and the housing market should resume its path of recovery,” says Chairman, President, and CEO Ara K. Hovnanian.
    • Conference call at 11:00 AM ET.
    • Previously: Hovnanian beats by $0.10, misses on revenue (Dec. 6)


  61. Back in /YM short.  Only risking 20 ticks.

  62. Out.

  63. Restrained Inflation Reduces Urgency for Quarterly Rate-Increase Pattern 

    Under an evolving “data dependent” strategy, the Fed could step back from the predictable path of quarterly raises

  64. this is pumping it up to close

    Federal Reserve officials are considering whether to signal a new wait-and-see mentality after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year.

    Officials still think the broad direction of short-term interest rates will be higher in 2019, according to recent interviews and public statements. But as they push up their benchmark, they are becoming less sure how fast they will need to act or how far they will need to go and want to assess how the economy is holding up under moves they’ve already made.



  65. Closing earlier short /ZBs for a few points – really thought they'd get crushed more than this if we rallied. What a day.

  66. Fed/Batman – Good way to end the selling for now.  Got the Nas to go green and others now down not too much.  It's all based on the assumption that the Fed thinks it's important to keep stock prices high but that's not their concern at all.

    Well I can't wait to see what happens tomorrow.  Don't forget, Non-Farm Payrolls at 8:30 to kick off the day.

  67. Wow, powering up all the way into the close – that's impressive!  

  68. So loose Fed overpowers Trade War – got it!  

  69. WOW!!!

  70. ANGO – solid Quarter beats on Rev and earnings – issues outlook for 2019 above consensus 

  71. Broadcom Inc. AVGO, +7.17% shares rallied in the extended session Thursday after the chipmaker's quarterly results and outlook topped Wall Street estimates. Broadcom shares surged 5% after hours, following a 2.1% decline to close the regular session at $227.24. The company reported fiscal fourth-quarter net income of $1.12 billion, or $2.64 a share, compared with $532 million, or $1.25 a share, in the year-ago period. Adjusted earnings were $5.85 a share. Revenue rose to $5.44 billion from $4.84 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of $5.58 a share on revenue of $5.4 billion. "Looking forward to fiscal year 2019, we expect another year of double digit revenue growth," said Broadcom CEO Hock Tan in a statement. For 2019, Broadcom expects revenue of $24.5 billion, while analysts had forecast revenue of $22.58 billion. "Sustained demand within our semiconductor segment will be augmented by the newly acquired mainframe and enterprise software businesses to our infrastructure software segment," Tan said. In November, Broadcom closed its acquisition of CA Inc., an $18.9

  72. Phil / AAPL – 5% rule…..   Since 184 did not hold for AAPL, what are the new lines of support / resistance?

    230 – 170 = 60 25% drop

    60* .25 = 15   so are we now looking at 140 / 155 / 170 / 185 / 200 / 215 / 230 ???  Or something else ?


  73. AAPL – on the above we hit 170 as a close this week

  74. Happy Pearl Harbor Day!

    AAPL/Batman – Those lines are good.  I was going from $230 down so 95% = 218.50, 90% = 207, 85% = 195.50, 80% = 184, 75% = 172.50, etc 

    Of course, once you drop that much you need to zoom out and think about where the upside support was so that's about $175 but then we go back further and say AAPL consolidated around $100 and then broke up which means $150, $200, $250 and $300 should be the big numbers but those don't fit so we should check our premise (keeping in mind the reverse split probably screwed up the lines anyway).   

    So now let's assume AAPL never should have been to $230 and that was an overshoot.  We did get consolidation at $150 so that's a clean line and $180 is 20% up from that then $210 is 40% and $225 is 50% so it looks more like we got a pullback off the 50% run from $150, which was 75 so our retrace lines would be 15 points back to $210 and $195, where it certainly had trouble on the way up – so it's likely to be a good line.  Also, we always expected to see a pullback at $1Tn ($204) – that's the level I based my original assumptions on which led us to shorting the Nasdaq at the top and they served us well. 

    We did get a little consolidation at $210 and very little at $195 but those failed so we're back to looking at the 5% lines off $150 so $7.50s are $157.50, $165, $172.50, $180, $187.50 is the 25% line off $150 so likely an overshoot from $180 there so that now (assuming we consolidate around here) makes $180 the new center of our expected trading range for AAPL and we still use the 5% lines from the bigger consolidation at $150 but now we calculate the series from $180 which is +/- 9 so $162, $171, $180, $189 and $198 so now we will look to see which series AAPL seems to obey and if it's the $150 series, then, sadly, that is likely to be where we're going but if it's the $180 series, then we can expect it to stabilize around here.  

    That means, if you are bullish, you'd rather see AAPL finding support at $171 than $172.50 as $172.50 is coming from the $150 set and $171 is from the $180 set.  So, when I begin to see AAPL obeying the $180 set in the short term, I become more bullish at $171 than I would be at $172.50 if I saw it obeying the $150 set. 

    This is how much work I do every time you guys say "So what do you think AAPL is going to do today."!!!

    You can't just apply the 5% Rule right away unless you have very clear lines, you have to first observe and make sure you are working with the right series first.  

    /YM down 100 and the others off 0.5% as well.  Same old, same old as we wait for NFP.

  75. Meanwhile, if we're AAPL bullish, then we'd love to see a "W" form at $171 and $180 is the middle of the W and then the next leg would be $189 and then on to $198. 

    So, if $171 holds today, the AAPL Jan $190 calls at $1.85 are fun since we expect at least a $9 move up in 2 days (the time in which it fell $9) which should put them into about the price of the $180s, which is $5.   Since the downside delta is 0.20, you risk just 0.80 pulling the plug below $170 vs the potential $3.15 reward.  

    And, of course, if AAPL is going to pop $9 then the Dow and Nas Futures will get some good support too – so we'll look at those lines for a possible bullish play.

  76. Phil AAPL thanks for the detailed on this really appreciate it…. I spend lots of time last night, but I did not look at the long term / 100 deal.  I have no idea if this has bottomed but will look at the 2 points points with interest….