Gaps Now Filled – Apple And Tech Stocks Maxed

Depending on your general trade knowledge, you may or may not consider “gaps in charts” as being significant but….

You need to understand this.

Let’s have a look at Apple for an example:

Gaps Get Filled So Order Book Reconciles

Gaps Get Filled So Order Book Reconciles

You can cleary see the small “gap” in the price chart back in Feb.

Gaps are areas on a chart where the price of a stock (or another financial instrument) moves sharply up or down, with little or no trading in between. As a result, the asset’s chart shows a gap in the normal price pattern.

Orders that have been placed in this general “price zone” are essentially caught up in the system so when a stock price gap is observed, by a chance of 91.4% it will get filled in the future. In layman’s terms, 9 in 10 gaps get filled; not always, but pretty close.

Now that the gap “has been filled” in both Apple’s chart as well the Naz in general….the door is essentially “totally wide open” for prices to “now fall”.

This “bounce” has been epic but make no mistake….now that Naz gaps are filled, these 5 big stocks( FAANG)  that are essentially “driving this bounce” ( thru buy backs / not true retail investing ) can roll over on the realities of coming earnings news. = the most horrible print any of these will ever report.

Every investor group on the planet knows that global GDP, is gonna print some of the worst numbers in our lifetimes in the coming quarter. The stock market is now just machines, as essentially 80% of America is flat busted…let alone the government.

Hold or sell? You know where I’m at. If you’ve weathered this storm or even better…made good on this bounce – my hat goes off to you. Truly incredible you all should be very proud.

If you want to hold on to any of the gains…..now would be a good time to do so.

 

 

 

 

Get Macro – The Wilshire 5000 Index

Have you ever followed / watched the charts on the Wilshire 500?

What the hell “is” the Wilshire 500?

The Wilshire 5000 Total Market Index, or more simply the Wilshire 5000, is a market-capitalization-weighted index of the market value of all US-stocks actively traded in the United States.

As of December 31, 2019, the index contained 3,473 components.

The index is intended to measure the performance of most publicly traded companies headquartered in the United States, with readily available price data, (Bulletin Board/penny stocks and stocks of extremely small companies are excluded). Hence, the index includes a majority of the common stocks and REITs traded primarily through New York Stock Exchange, NASDAQ, or the American Stock Exchange. Limited partnerships and ADRs are not included.

It can be tracked by following the ticker W5000.

A look at the current status:

Wilshire 5000 Index

Wilshire 5000 Index

It’s fair to say that “stock picking” during this tenuous time can be “extremely difficult” whether you are looking to get short OR remain long…..

Sometime a wider view of “macro markets” can give you a better idea as to “where we are at”….as traders have a tendency to get “tunnel vision” on a specific stock or two…then grow frustrated in not understanding the “broader market trends”.

At this point it’s fair to say that the macro damage to this chart will take considerable time to repair. We’ve now retraced a good 50 – 68% of the entire fall, and things finally appear to be stalling out.

Bulls are gonna need “a whole lot more squiggles” to even consider this a “V Shaped Recovery”.

Most of the “good news” is now cooked in with the Fed in full effect, and the tech companies first quarter earnings done ( short of Apple’s miss tonight ).

I would encourage longs / bulls to again “seriously think about taking some profits here”.

I’m popping in short for a few days here.

 

Hopium Is Not A Plan – Case For New Lows

You all know I trade with a very keen eye on the technicals, “coupled” with an “extremely keen eye” for the fundamentals.

I think we can all agree……the fundamental picture is clear. The bubble has been popped ( as foreseen many MANY months ago ) and the “recovery” will be an arduous journey spanning months ‘n months “if not years” if we consider the sociological and even cultural impact.

Do you honestly think things will simply “get back to normal”? Do you really think you’ll be shaking strangers hands / interacting in society “as per usual” in coming days / months? If ever?

Perhaps you’ve already second guessed your “humanitarianism” walking by a stranger in a mask? Or if I dare suggest…”someone from China”??? ( oooooooooooh ) = ridiculous. He he he….caught you. Shame on you really. Shame on us.

You don’t even exchange eye contact…and god forbid you actually “touch”.

You think you’re gonna get all “warm ‘n snuggly” a few months from now? Common…….yet expectations are that the ENTIRE WORLD just gets back to “normal”? Please.

Technically – here is a look at what a “typical” next wave down would look like, considering the severity:

Next Wave Down - One Scenario To Consider

Next Wave Down – One Scenario To Consider

Take it for what it is. We COULD rally a touch further, as its impossible to nail it exactly but..

If you don’t have a plan ( whether it is the right plan or not ) you stand zero chance of effectively trading this.

“Hopium is not a plan”.

 

 

Prepare For The Next Leg – Lower

Ya ya….I get it. You don’t want to hear it.

“Sunshine, lollipops and rainbows..Everything that’s wonderful…blah blah blah. Yes yes well…..such is not the case – currently.

Social Distancing From Kong

Social Distancing From Kong

I can go on and on with a million “technical reasons” this market will roll over ( and take another leg lower ) then I could spend days ‘n days outlining the “fundamental reasons” this market will roll over ( and take another leg lower ) – but you don’t want to hear that.

I guess a firm recognition, and solid understanding of “what we’ve just witnessed” is necessary, in order to formulate a reasonable idea of “where we’re headed next”.

You get it…obviously.

We have just witnessed the largest economic / market “TURN” of our lifetimes.

You would honestly have to be living under a rock to even “consider” this a “passing concern” or a “blip”.

World governments throwing everything / literally “everything they’ve got” at keeping populations calm and assured that monetary relief will come, and that everything will be fine.

Small businesses will die and never come back. Earnings reports over coming quarters will puke, mortgage market may implode, dollar printing will accelerate at such a pace as to “keep up” with the flood of bailouts / defaults / support programs etc…..take your pick.

This is not a bottom – this is a “dead cat bounce”, which looks to be in jeopardy of rolling over “even sooner” than I might have expected.

Do what you will….but do yourself a favor.

This is the beginning – not the end.

I am LOOKING SHORT and will plan accordingly over literally………the next 48 hours.

 

 

 

 

USD Double Top = Change In Direction

Scary Thought: the Fed just injected in one week almost the entire amount of liquidity it did in all of QE2 and it is barely enough to keep stocks from plunging.

The mass selling of stocks = massive amounts of U.S Dollars coming into the pool no? Sell your shit….what have you got?

Cash yes. Dollar index rises. Eezy Peezy.

All those margin calls and portfolio liquidations ( of whatever is still left ) have to go into “something” right?

= Cash. Yes.

= U.S Dollar and Japanese Yen as……these are the currencies that are so rapidly printed and used to fuel these bubbles, as they can be borrowed at near 0% interest.

When shit hit’s the fan….everybody sells stocks….and these two currencies rise “dramatically” in the wake. Kapeeeeesh? It’s call “repatriation”.

 

The U.S Dollar Double Top

The U.S Dollar Double Top

This “Dollar Double Top” is effectively “done”.

USD now to be printed to the degree we’ve never seen before….

Scary Thought: the Fed just injected in one week almost the entire amount of liquidity it did in all of QE2 and it is barely enough to keep stocks from plunging.

 

The Bounce Cometh – Closing Shorts

There is divergence everywhere……the down move has been historical.

It’s getting close to “bounce time”.

I assume we make a short term bottom here in coming days….then bounce thru April. This could very well be an “epic” bounce – but please keep in mind – a bounce all the same.

Hot Air Kong

I’m closing shorts, and keeping a very close eye on The U.S Dollar as we now know the Fed will begin formal QE operations once again ( hmmm…….I remember saying something about that months ago )

You know what that means right? Printing more confetti = US Dollar Down. Stocks will bounce and USD will fall. Thursday’ish?

This trade is setting up 100% totally classic Kong.

We bounce before the “real downturn” begins.

Bitcoin Becomes Digital Gold – May 18th

Well….not May 18th “exactly” but right in / around there somewhere.

With May’s Bitcoin halving event drawing ever closer, Coinbase recently took to pushing the “Bitcoin as digital gold” narrative. In a tweet-storm to promote an accompanying blog-post published Feb. 7, it covered the key reasons why the halving and subsequent supply rate reduction will further cement that link.

btc gold

btc gold

Scarcity creates value

Since the gold standard was broken in 1971, the dollar’s value has declined and gold’s value, in dollar terms, has risen over 4000%. Gold has more value than similar metals such as copper due to its relative scarcity and difficulty to acquire.

Bitcoin has been designed to be scarce like gold and is very difficult to acquire through the Proof-of-Work process of mining. However, it also has an advantage over gold in being transferable through a communications channel.

Coinbase concluded:

“Armed with a myriad of technological advantages, accelerating development, and maturing global market, Bitcoin is a store of value to rival gold in the digital age.”

Halving increases scarcity

The supply of Bitcoin is limited by design, with new tokens being minted as a reward every time a block of transactions is mined. The initial reward level of 50 BTC per block has already undergone two halving events, bringing it down to the current 12.5 BTC per block.

After the May 2020 halving, mining rewards for each new block, mined approximately every ten minutes, will reduce to 6.25 BTC. This will bring the supply issuance of Bitcoin to a rate of around 1.7% per annum.

Stock-to-flow (S2F) is a measure of new supply rate over total supply, and post-halving, Bitcoin’s S2F scarcity will be on a par with gold’s.

“Gold’s stock to flow is higher than any other metal commodity, and bitcoin is set to soon follow,” notes Coinbase.

Why Bitcoin Has Value

Why Bitcoin Has Value

No value without demand

S2F forecasts for the price will fail if there is no demand, and this holds true for fiat money, as much as any other commodity. As central banks increase the money supply, economies can sometimes prosper. However, if money supply overwhelms demand then hyperinflation events can occur.

Such events drive demand for safe havens such as gold and Bitcoin, and recent economic fear is reaching all-time highs, according to the Global Economic Policy Uncertainty Index.

This, along with Bitcoin’s myriad of technological advances and accelerating development, justifies Bitcoin’s title as digital gold, according to Coinbase.

Me? I couldn’t agree more.

Ask yourself this……how many millennials will “ever” “EVER” consider buying Gold?

 

Recession Is Already Here – Prepare For Disapointment

I don’t know what all the doom ‘n gloom is about. Considering the “12 year run straight up” –  doesn’t it just makes sense ( as we’ve seen repeated time and time again ) that things take their “more than expected” turn lower?

This is far to early in the daily cycle to consider “a bottom” and we’ve also got to take into consideration the weekly, monthly and yearly cycles now in play.

There are millions of ways to play down turns via Vix purchase or short U.S.D trades….there’s inverse ETF’s and crypto currency which is now expected to rise moving into the Bitcoin halving. One could even consider gold but as you’ve recently seen –  Bitcoin is the new gold. 

forex_kong_ashamed

               forex_kong_ashamed

Most overvalued stock market ever

Tavi Costa and Kevin Smith of Crescat Capital presented their updated macro model in a recent YouTube video. This is a good article: https://www.zerohedge.com/news/2020-03-02/these-recession-signals-are-flashing-red

Based on fundamental measures they track, the stock market is the most overvalued it has ever been. They describe it as a “speculative mania,” adding that the measurements are higher than the tech bubble.

But people still think this time will be different? Isn’t this the definition of insanity? Doing the same thing over and over with expectations of a different result?