The peak of the mountain is in view. When the bonds finally start weakening, you know you are in the last innings of the rally. The bear market rally is in its final leg. The next rally towards SPX 2950 will be the one to hammer down. Bears always want to see bonds weakening before stocks top out. It was the signal for the topping phase in spring of 2000, summer of 2007, summer of 2015, and fall of 2018. This time, you are not getting much of a selloff, with the Fed massively distorting markets, but even this obnoxiously dovish Fed will take its foot off the pedal a bit after seeing a 30% stock rally.
Last week's FOMC meeting was notable in that the now uber dovish Powell didn't promise an unlimited QE program like Bernanke would have done, instead, he left that little bit of extra ammo for when the market weakens. And there is no doubt that an unlimited QE program that monetizes all the debt that the Treasury issues will be coming down the pike at the first signs that the SPX is back in a downtrend.
That doesn't make me bullish on stocks, because the Fed put is way out of the money at this point, and its been well telegraphed, so a lot of the Fed dovishness and action is priced into the hard to believe overvaluation in the face of an economic depression.
The lack of Fed action and growing economic optimism is showing in the bond market, as the long bond has sold off for 6 straight trading sessions. I know that the Treasury auction announcement made people suddenly worry about all the extra coupon supply, but it wasn't that MUCH supply. What it is a growing fear that the Fed will not be buying up enough Treasuries in the coming months to keep yields as low as they have been for the past month. The Fed doesn't meet until the middle of June, that is a lot of time for the bears to jump on the opportunity to do some damage while the Fed is relaxing and content with what they have already done.
The time to put on long term shorts is very close. I can feel the bulls overplaying their hand and as I've mentioned before, the shorts who fought this rally in April have mostly thrown in the towel. A very weak economic backdrop, where earnings will be impaired for several quarters, is significantly reducing the amount of stock buybacks, the fuel which has driven this 11 year bull market.
Now the bears have almost all the advantages here. Yet I am waiting, for that exquisite shorting moment, when the bears are all on the run and scared, like last Wednesday. There should be one more moment like that coming within the next 2 weeks. I will grab the short at that time and keep it for a long swing.
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Selling QQQ Puts at the open. Small loss and I'll take it. SPX going to 3000
Shorting a bit on this gap up here, looking for a pullback in the morning.
Long LUV at 25.35 Looking to get out around 28
Out of the short for a small loss. I will hammer this sucker at 2950.
Actually earnings arent that weak because the market is focusing on the stay at home and essential biz stocks like amzn goog fb hd sbux etc and those are good. I get that 30 million people are out of work but their stimulus money doesnt end till end of july. Too early to bring on the doom and gloom. And i think the market is pricing in 3q and 4q today. Most economic forecasts are predicting flat yoy growth by that time. The market has by and large reacted negatively to the hit on the economy with the dip to 2185. Its all in the rearview now.
Its a gawd dang runaway freigh train dawg. You gotta get long some of these beaten down stocks and get long 20k shares and make 75 cents. Its stupid wide fawking open out there dawg.
Nasdaq has to reach the old in february. It's too close now. I don't think we have meaningful sell off until this happens. It's only like 5% away. LOL
I actually wouldn't be surprised if the old high of february is just the left shoulder. So we have to make a head now higher than that. Maybe we'll make the head by the time Donald wins the election than sell off to make the right shoulder next year. Fed buying PPT ALL DAY FOMC
Who is going to be buying stocks? Fed? Not at all time highs. Stock buybacks are going to be down at least 50% this year. Corporations have been the biggest buyers of stocks for the last 10 years. Big tech stocks are also economically sensitive, its a joke to think that MSFT, AAPL, GOOG, FB won't take big earnings hits when economy sucks. GOOG and FB depend on ad dollars, which are going to shrink bigtime when in recession. Same for software sales and tech infrastructure spending. QQQ will take a huge hit in the 2nd half, the bubble valuations are set to pop.
MAGA. The Donald probably backed by the deep state by now. They'll figure out a way to get the spx at all time high by Nov 4 so he can proclaim what a great economic president he is and inspire people to keep it going. KAG
Just get long. I used to always fade moves. It killed me. Then i learned to trade stocks long that were up 20 to 50 percent in one day. So much easier with the wind on your back
Your still fading the trends right? Going long LUV, buying QQQ puts, etc. Can’t teach an old dawg new tricks. LOL.
I am a fader at heart, that will never change.
Yeah I'm still a fader at heart. I means that's where the biggest moves are.
If you buy stocks up on earnings after the close in this market the probability is it will be up much more the next day. Also the gap up the morning after the earnings are released the stock continues the run for a few more points or so.
But you should learn to get long the trend of stocks going up. I realized from a pure probability perspective, and I'm not sure why I just thought about this now, when you are fading a stock going one way, the chances of you being wrong is way more higher than the chances of you being right going with the trend.
It's so common sense but I had to train and teach myself to do what was counterintuitive to me since that's they only way I knew how to trade and get over my own fears and limitations.
If the US Treasury just pumped the economy with $9 trillion dollars in a matter of two months, and the annual US GDP is $21 trillion (2019), then wouldn't 2020 be a record year for GDP consumption? SPX 3500 on deck?
The money supply has gone up huge, which is helping the market. But unless Fed is buying stocks, it will just be sitting there in cash and equivalents. It seems like its retail traders who have been opening brokerage accts in record numbers that have been buying stocks. Their unemployment benefits run out when they go back to work, and it will be a pay cut for many. These bonus unemployment benefits will only last a couple more months and it will be back to the lower usual uneployment benefits.
Extra 600 bucks a week goes away on 7/31 but there's still the trillions gone to companies to essentially keep workers on payroll for free known as the paycheck protection program, there's the loans to businesses, then there is the unlimited QE program. Now there is talk of another round of stimulus like 2K a month for the rest of the year per person.
I'm really amazed at how much money the treasury is willing to print into the economy this time around. In 2009 they gave everyone 1 year of extended unemployment and 300 dollars as a stimulus check.
I'm wondering what is the reason for so much liquidity being pumped into the system this time? Is this the beginning of some scheme to crash the dollar and get everyone into a one world, vaccinated, crypto society?
Anyways, there are 30 million+ unemployed people but it's not 30 million people with no job and no money like in 2009. This time it's 30 million with no job + money.
How could an extra 50% of the annual GDP not filter into companies, consumption, earnings, and stock valuations?
I think we will correct just to correct, and it will be a shakeout as usual to get all the retail and buy back at lower prices. But I have no idea if it it will happen Monday or 3 months from now. Might be better to short into a correction rather than short into strength. They ramp up the futures every night using some buy program up .25% than 1% by the open. Can't sleep with an overnight QQQ put position.
You know the reason they are printing so much money and its for one person and his goal in November. If you look at the polls in the swing states and Trump’s low approval ratings, odds are high that he is going to lose to Biden, no matter how much money he gets Mnuchin to tell Powell to print and give away. The Democrats are idiots and playing right along doing whaever Trump wants, because they only care about satisfying their lobbyists with stimulus money and keeping the gravy train campaign finance rolling along.
They are not renewing funds for PPP even though a bunch of small businesses applied but didnt get any money, because stocks are going up. Unemployment benefits will likely get extended but probably only after the stock market corrects.
You overestimating the effect of the stimulus. Most of it will end up being used to keep zombie companies alive, not to boost corporate earnings. None of these small businesses getting PPP will get rich off it.
You need to reduce your overnight position size if you can’t fall asleep. Or develop a higher risk tolerance. Its not worth making your life miserable and overstressed to try to make money quickly. I have a high risk tolerance so I don’t mind holding big overnight positions.
Look at a monthly chart of VTI. Looking extremely bullish.
Hey Owley, you're too smart for your own good. Fundamental analysis won't help you make money, in fact it will keep you from making money. I learned to stop following all economic news years ago and I finally started making money.
Here are some quotes from you from 2016.
Feb 17, 2016 "I sold my longs and I am now back in waiting mode. The meat of the up move has been made"
April 5, 2016 "nearing a top"
Dec 19, 2016. "Not a long lasting trend"
Look at a monthly chart of the market when those quotes came out. Stop trying to apply fundamental analysis to the market and you'll make good money, it's not that hard.
Thanks for the advice, but 2016 was a good trading year for me. You don’t need to catch all the moves or be right even 50% of the time to make good money. You follow your strategy and I will follow mine. Even if you make money with your view, I may not believe in it enough and have the conviction to make it profitable for me. Anyway, good luck.
Will get short soon, may wait till Powell speech tomorrow to short.
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