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Thursday Failure at 3,420 – Are We Heading for a Real Correction?

See how those lines work?

As we very accurately predicted yesterday, before the market opened, stimulus talk was enough to get us to our 3,420 line on the S&P 500 – but no higher.  In fact, right before the close and after our Live Trading Webinar, I said to our Members in our Chat Room:

Another chance to short at 3,420 on /ES with tight stops above.  Lined up with 28,200, 11,475 and 1,540.

This morning we're down to 3,380 on /ES and those Futures Contracts pay $50 per point when you get them right and, so far, we're right for 40 points so that's a gain of $2,000 per contract on our little hedge.  We're not greedy, we take 1/2 off the table and put stops on the other half at $1,500 to lock in gains of $1,750 per contract and, this morning, the breakdown lines we're watching are 27,800 on the Dow (/YM), 3,375 on the S&P (/ES), 11,250 on the Nasdaq (/NQ) and 1,515 on the Russell (/RTY).  

If 2 of the 4 indexes fail their line you can short either the 3rd using the 4th for confirmation or just wait for the 4th to cross and short with confidence and simply stop out if ANY of the indexes get back over the line again.  What that does is limit your losses to a good line of resistance without limiting your gains and that means, if you are wrong, you shouldn't lose more than a couple of hundred Dollars but, if you are right, you could gain thousands – that's a good game to play!

It doesn't work every time though, we can go months without playing the Futures at all but, when conditions are right, we love to play them every day.  Conditions now are a toppy market and worsening economic conditions, poor policy decisions and the driving force to the rally (stimulus) has met the point of diminishing returns – seems like a good short to me….

Congress remains deadlocked over a fresh stimulus package. On Wednesday, Senate Republicans said they would support a scaled-back $300 billion version of their earlier $1 trillion stimulus plan, including jobless aid, liability protections for businesses and school funding. Democrats oppose the bill, and it isn’t expected to clear its first procedural hurdle in the Senate on Thursday.

Meanwhile, tensions between Washington and Beijing continued to loom over markets. More than 70% of U.S. companies polled by the American Chamber of Commerce in Shanghai expect geopolitical turbulence to create operational difficulties for them over the next three to five years, up sharply from roughly half that said the same thing last year. 

We're all holding our breath (literally!) as we wait for the back to school data to come in as we crowd our nation's 50M children into virus incubators 8 hours a day before sending them home to infect their parents – BRILLIANT!  

Speaking of living with your parents, 52% (FIFTY TWO PERCENT) of adults between the ages of 18 and 29 are now LIVING WITH THEIR PARENTS - a level higher than the Great Depression!

If you think this is a sign of a healthy economy – you are as delusional as our President, who will be presiding over our nation's 200,000th death this month (6.4M cases this morning) – that's 50 9/11s caused by Trump's incompetence or whatever it is you call it when a President knowingly lies to the American people and causes immense harm and then lies to cover it up.  

 

We are having server issues today, back-up chat will be over at Seeking Alpha @ https://seekingalpha.com/instablog/6284-philip-davis/5495658-thursday-failure-3420-are-heading-for-real-correction

 

 


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  1. Good morning!

    We are having server issues today, back-up chat will be over at Seeking Alpha @ https://seekingalpha.com/instablog/6284-philip-davis/5495658-thursday-failure-3420-are-heading-for-real-correction


  2. What a massive slimeball that Kennedy is – how can people not throw all of these assholes out of office?  

    6.3M is now 2% of American's infected, 1/50 of everyone you see!  That means your average classroom has an infected student!

    India (4.5M) and Brazil (4.2M) are catching up with us.  Russia is the next most infected country, with 1M.  This is NOT what under control looks like (daily infections):



  3. How can you invest confidently when this administration is basically lying about important factors! Can we trust the economic numbers? The employment numbers? The COVID-19 numbers?

    What else are they hiding to prevent panic as Trump said? That huge caravans of migrants carrying the plague are coming to invade us? That Antifa is burning down our cities? That gangs will be moving in our suburbs? That an asteroid is on its way to destroy the earth and the human race? I might want to adjust my hedges.





  4. Good Morning.




  5. GameStop is closing hundreds more stores







  6. Even With 190,000 Dead, There’s a Lot Voters Don’t Know


  7. Senate GOP’s virus relief bill expected to fall in vote


  8. The US Is a Failed State



  9. Exclusive: Russian state hackers suspected in targeting Biden campaign firm – sources


  10. test


  11. Yikes, rejected at 3,420 yet again!

    Big Chart – Looks like we're testing those 50 dmas, which is bad news for the Dow as it's way over (27,200) so /YM makes a nice short below 27,850 with very little support for a good 500 points.

    Seems like the site is working OK.

    Trust/StJ – It's like living in a Dystopian movie.

    As evidenced by the news above!

    • Nikola (NASDAQ:NKLA) says the negative report issued by Hindenburg Research this morning contains misleading information.
    • "Nikola has been vetted by some of the world’s most credible companies and investors. We are on a path to success and will not waver based on a report filled with misleading information attempting to manipulate our stock," reads a statement provided to Financial Times.
    • Nikola founder Trevor Milton, who was the subject of many of the Hindenburg slams  and allegations, is also out with a response.
    • Shares of Nikola are down 8.26% on the day, while OEM partner General Motors (NYSE:GM) is off 2.49%. Those marks compare to Tesla being up by more than 8% off of positive news from Berlin and Austin, as well as both Ford and Toyota trading flat.
    • Now read the key points from Hindenburg's report
    • Nikola (NASDAQ:NKLA) is the target of a short report from Hindenburg Research.
    • The firm claims it has gathered extensive evidence on false statements by Nikola founder Trevor Milton over an extended period of time.
    • Some of other key points from the report.
    • "We have gathered extensive evidence—including recorded phone calls, text messages, private emails and behind-the-scenes photographs—detailing dozens of false statements by Nikola Founder Trevor Milton."
    • "We have never seen this level of deception at a public company, especially of this size."
    • "A spokesman for Volvo spin-off Powercell AB, a hydrogen fuel cell technology company that formerly partnered with Nikola, called Nikola’s battery and hydrogen fuel cell claims hot air."
    • "Nikola’s much-touted multi-billion dollar order book is filled with fluff. U.S. Xpress reportedly accounts for a third of its reservations, representing ~$3.5 billion in orders. U.S. Xpress had only $1.3 million in cash on hand last quarter."
    • The conclusion stated that General Motors (NYSE:GM) did not do its homework before inking its high-profile deal with Nikola.
    • Shares of Nikola are down 2.05% premarket to $41.51.
    • Seeking Alpha authors are also leaning to the bearish side on Nikola. Read the latest articles.

    Oil with terrible post-holiday demand. 

    • EIA Petroleum Inventories: Crude +2.0M barrels vs. -1.3M consensus, -9.4M last week.
    • Gasoline -3.0barrels vs. -2.4M consensus, -4.3M last week.
    • Distillates -1.7M barrels vs. -0.6M consensus -1.7M last week.
    • Futures (CL1:COM -1.3%)
    • 30-year fixed-rate mortgage averages 2.86% for the week ending Sept. 10, 2020, down from 2.93%, and another record low, according to the Freddie Mac Primary Mortgage Market Survey.
    • That's down from 3.56% at this time a year ago.
    • "These low rates have ignited robust purchase demand activity, which is up 25% from a year ago and has been growing at double digit rates for four consecutive months," said Freddie Chief Economist Sam Khater. "However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity."
    • 15-year FRM averages 2.37% vs. 2.42% in the prior week and 3.09% a year ago.
    • 5-year Treasury-indexed hybrid adjustable rate mortgage averages 3.11% vs. 2.93 a week earlier and 3.36% a year ago.
    • Homebuilders shares perk up, with the iShares U.S. Home Construction ETF (BATS:ITB) up 1.2%, adding on to a 3.3% jump in trading yesterday.
    • By name: D.R. Horton (DHI +1.3%), KB Home (KBH +2.3%), PulteGroup (PHM +1.6%), Toll Brothers (TOL +1.2%), Lennar (LEN +1.6%), Beazer Homes USA (BZH +1.0%).
    • While iShares Mortgage Real Estate Capped ETF (BATS:REM) manages a 2% rise; mortgage REITs are mixed.
    • Annaly Capital (NLY -0.1%), AGNC Investment (AGNC +0.5%), Chimera Investment, (CIM +0.3%), Two Harbors Investment (TWO -0.3%), and Armour Residential (ARR +0.6%).
    • Harmony Gold (HMY +0.8%) says it expects to report a headline loss for the full year, largely driven by the weakening of the South African rand against the U.S. dollar.
    • The miner expects a headline loss for the year ended June 30 at 139-169 South African cents per share, compared to EPS of 204 cents in the year-ago period.
    • Harmony expects earnings per share to improve to a loss of 148-180 South African cents per share, vs. a loss of 498 cents per share for the previous comparable period.
    • In U.S. dollar terms, the loss per share is expected at $0.09-$0.12/share, vs. a $0.35 loss a year earlier.
    • In a new post on Seeking Alpha, Taylor Dart offers a neutral take on Harmony, viewing any dips below $5.25 as low-risk buying opportunities.
    • SunPower (NASDAQ:SPWR) -1.8% pre-market after unveiling financial guidance for Q4 and FY 2020 to reflect the recently completed spinoff of Maxeon Solar Technologies.
    • For Q4, SunPower sees revenues of $330M-$370M, in line with $356M analyst consensus; GAAP net income flat to $10M; adjusted EBITDA of $20M-$30M; and megawatts recognized in the range of 150-170 MW.
    • For the full year 2020, the company expects revenues of $1.06B-$1.1B, below $1.38B consensus; GAAP net income of $30M-$40M, adjusted EBITDA of $20M-$30M; megawatts recognized in the range of 465-510 MW.
    • Shares have been trading near 52-week highs since the completion of the Maxeon spinoff in late August.
    • Net loss for the quarter totaled ($15.3M) compared to a net loss of ($5.3M) for the quarter ended July 31, 2019.
    • Revenue fell 18% Y/Y to $18.7M. Revenue by segment: Generation -13%; Advanced Technologies +20%; Service and License -38%.
    • Issued 25.1M shares of common stock during the quarter via FuelCell's new at the market offering program, at an average price per share of $2.56, resulting in net proceeds of $62.3M (after deducting commissions) that provide additional liquidity to support projects underway, working capital and corporate liquidity. Subsequent to July 31, the company issued an additional 3.2M shares, resulting in additional net proceeds of $7.8M and bringing the total net proceeds raised under the at the market program to a total of $70.1M.
    • Backlog of $1.33B as of July 31, 2020, a $54M (or 3.9%) decrease from the previous quarter.
    • FCEL -6.8% premarket
    • FQ3 results
    • August Producer Price Index: +0.3% vs. +0.2% consensus and +0.6% prior.
    • -0.2% Y/Y vs. -0.3% consensus and -0.4% prior.
    • Core PPI +0.4% vs. +0.2% consensus and +0.5% prior
    • +0.6% Y/Y vs. +0.3% consensus, +0.3% prior.
    • Bank of America is confident on RH (NYSE:RH) after the retailer posted a much stronger than expected outlook for the second half of the year and another increase in long-term targets.
    • "In addition to a big inflection in sales (total demand comps up nearly 40% in 3Q QTD from 16% in 2Q), gross margins continue to significantly outperform (533bps above est) which is a positive sign of the health and pricing power of the business. RH continues to prove that it is a premium, aspirational brand and together with impressive earnings growth, this should support continued multiple expansion."
    • RH is also seen being a big beneficiary from the urban exodus and BofA continues to have high confidence in the sustainability of growth over the next few years.
    • The firm keeps a Buy rating locked in place and hikes its price objective to $450 from $352 (15X the 2021 EV/EBITDA estimate).
    • While Wall Street is bullish on RH, the Seeking Alpha Quant Rating is Neutral.
    • Shares of RH are up 17.50% premarket to $377.27.




  12. How a retail options craze fuelled SoftBank’s ‘whale’ trade




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  14. How Covid-19 sparked a dividend drought for investors


  15. The first vaccine that proves to safely protect people against Covid-19 disease will be a breakthrough moment but is unlikely to be the sole answer to curbing the coronavirus pandemic.8

    Elon Musk’s Payday Could Cost Tesla Shareholders Dearly

    The accounting effect of options awards for Tesla’s CEO could push it into a loss and disqualify the company from S&P 500 index inclusion for a long time.4


  16. Phil \ YM super bouncy off the pivot line.  Stick with her?


  17. Well that comment didn't age well. Hahah thanks for the 3k


  18. Phil / SPWR – what are your thoughts on the guidance / presentation from them?  do you think 15 is a fair price ?