What you saw in AAPL on Thursday will be a recurring theme as earnings are revised lower in the coming quarters. Blame China for earnings misses. These CEOs are a lot like Trump. Taking all the credit for the good times, and blaming others for the bad times.
Earnings are a much better gauge of the real economy than lagging economic indicators or pulp fiction Chinese data. We had Fedex and Micron a few weeks ago. Now AAPL this week. As the nonfarm payroll report and ADP reports show, the employment data is still strong, because companies are still not so willing to so quickly adjust to a change in economic conditions.
But there are cracks starting to seep in as the ISM numbers came in much worse than expected. The problem with looking at the economic data is that you are looking at the rearview mirror. December was a game changer. You had the biggest stock market drop in many years on a monthly basis. And the Fed still raised rates. When have you seen that before?
It is not about the Fed's rate hike path or pause anymore. It is about how late they will be to cut interest rates, waiting to see weakening employment data which is always a lagging indicator. Powell showed no urgency to react to financial markets, which is always the first to warn about changing economic conditions. He doesn't want to feed that crack addict, giving him more crack after the crash, trying to regain the high. Powell got my respect in that December meeting, even though it cost me money, because I thought he would fold like a cheap lawn chair. Instead, he had some backbone and decided not to be the tooth fairy. In the short to medium term, it is bad news for stocks. But it prevents another extended bubble and crash scenario, which will be good for stocks in the long run.
China did a 1% RRR cut overnight. They will be doing more stimulus, because they are addicted to debt and cheap money. And it will not be enough. With overflowing debt levels, they are going to have to do a mega stimulus like 2008 or 2016 to turn this ship. Problem is that it just makes the situation worse for their next downturn as the debt keeps growing. China seems reluctant to pull out their often used big bazooka this time, partly due to their effort to support the yuan, and also because there is already so much bad debt in the system.
After a bad day, we are getting that gap up, thanks to the RRR cut. Its probably a chop day today, and then a rally on Monday. So I will be waiting for that rally to put on short positions. The AAPL earnings bomb messed up the timing for the short, so just waiting for the right moment to strike.
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6 comments:
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I fucked up and didn't listen to my own self and let the doubters and the bears scare me out again. Fucking sold at 133, then got long UNG when it was 25.55. LOL I'm such a loser.
Anyways I think I was right here and I think we have another 2 to 3 percent left to go.
Might be good to wait till higher prices. I mean it's possible the market retests the lows but what if this was just another BTFD opportunity like the last 200 times and we proceed to retest the old highs? What if?
Think the coldest of the winter is yet to happen and nat gas will have a good run back to mid 3s which I believe will coincide either with 1) an opportunity to short IWM at much higher prices well above the mid 140's to 150's or 2) an opportunity to buy IWM back in below 135.
There is uncertainty now in the market that can cause a psychological positive shift in sentiment including the resolve of the govt shutdown and china trade talks. 4Q earnings likely can also cause a bump especially if retail shows strong results which I believe they will.
Don't get blown out in case the bull was just playing around and decides it still has more room to run and actually was just setting up to go even higher, much higher. That's what I'm saying here. It's clear now that the market manipulators basically orchestrated a false sense of recessionary fear in order to shake everyone out and swoop in at much lower prices. Now they are going to do the opposite and come up with BS stories and say the recessionary scare was overblown and use that as an excuse to blow up the bears.
I think the older I get the more I realize that I know I'm not buying into the wisdom of the crowd affect and let the headlines and the media and blogger sentiment affect me because it's a virtuous reinforcing circle and effect that affects my own psyche. I know that there needs to be a disconnect between my own beliefs, my own experience, and my own judgment, and that of the "crowd". Yet even though I know there is a divide between the two, I still let the judgment of others, who in turn were/are influenced by other judgments, affect my own decision making. When I can completely detract my own actions from the beliefs and actions of others. When I learn to be in my own sphere of independent influence, then I know I can master this game of stock trading.
I think when things got bad during Christmas and the last days of the year, I think the bears basically psyched themselves out into believing the end was finally here. They bought in to the greater crowd theory too much and therefore erroneously believed any bounce was an opportunity to get short.
Yeah, I sold way too early, but did have a chance to get back in after the bad AAPL news on Thursday, but I was waiting for a lower level on Friday, and it just went straight up. Now that SPX is close to 2600, there should be a lot of resistance here and we should trade back and forth in a range, from 2460 to 2600.
Its hard to ignore the noise from the crowd and what they say, but I am still sticking by the view that we are in a bear market, no matter how many people are saying that this is like 2016 and the correction is over. A lot of this is buying hoping for a US/China trade deal to rally the market even more. I think most people are expecting a trade deal, so I don't think the pop will last for long as traders sell into it.
As for UNG, you are betting on the weather, so its not easy to predict. There are only a few more weeks of winter left, so I don't know how much of a rally you can expect before spring time prices come to the market.
The algos are having a party, at the expense of human traders. Its a tough market out there.
How could there be a few weeks of winter left? Winter didn't start until December 21st.
Today is the 18th day of winter. There is close to 3 months of winter left around the world given spring starts on March 20th. There is a polar vortex coming up and its split into 3 so it's 3 headed monster. It's going to be cold in the mid to end of January well into the end of February. I was in NYC in Thanksgiving and it was 0 degrees fahrenheit so there is definitely possibility to get cold as shit this winter given that real freezing temperatures have not arrived in the winter season so far. And it's been in the low 40s here in Long Beach at night for weeks now so there is definitely a cold system floating around the globe right now it just hasn't hit that part of the country where the nat gas pit traders are physically located.
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