Bitcoin and its buddies on the blockchain

If ever there was a bubble that was obvious it was Bitcoin and its buddies – the other cryptocurrencies and finally the blockchain stock mania that lasted what…a week or so?

Every time someone would pump Bitcoin or whatever other Oreocoin someone dreamed up the night before last, I’d ask “Can you buy a snickers bar with that?” I suppose you can somewhere but I’ve yet to find anyone who has.

I thought this pseudo money would crash when it was reported that New Orleans lap dancers were having bar codes tattooed onto their breasts to be able to accept crypto-scans as tips.

Then along came the blockchain stocks (see the wild charts below), which is to say companies like Kodak (KODK) changing its name and tripling overnight, or Riot Blockchain (RIOT) which looked as if it was the brain child of two or three guys smoking weed in Colorado who became multi-millionaires almost as a drugged-out joke. Everyone tells me cryptos may go bye-bye but blockchain technology, stringing together each and every financial transaction, is here to stay. Of course, a million computers all over world grabbing and archiving when someone (say, in Latvia) finally gets to buy a snickers with a Bitcoin.

How much electricity goes into that single candy bar?

And of course, as history would have it (always), the obvious became utterly obvious when it all finally crashed.

These is just a nutty time, typical end-of-a-bull-market craziness. Keep that “end-of” in mind. It takes a while and it’s virtually impossible to pick a market top of significance but bit by bit the history of how it happens keeps showing up. AAPL hit a $1trillon market cap probably because the company has enough cash on hand to buy that prize for itself. Then AMZN hit $1trillion too – for one day.

One of these bellwether stocks — AAPL, AMZN, FB, good heavens GS –is going to take a tumble that matters and actually follow through to the downside while no one is really paying attention.

When that happens a bear will be here. Maybe tomorrow. Or maybe today.

(click on the chart panel for a larger view)

An $AMZN trade that was a coulda, shoulda, but not a woulda…

Shared the chart below of AMZN around the internet after the close last night with the suggestion that this was an obvious setup to buy puts or sell calls.

It was prompted by this post here yesterday:

$AMZN – a leader stumbles?

The idea was that the stock would continue its stumble today (and maybe for a week or so). See the blue boxes marking the spots on the chart when that has happened before as it comes off overbought (the yellow color coding on the chart).

Since long-term breadth had just turned down after a long run up and everything in the market was pretty much overbought, it was likely there would also be market pressure on the stock besides it being overextended on its own. Then there was that history thing in play again – the best indicator of all since it repeats or rhymes or whatever but it mostly whispers what’s going to happen next again and again.

It was a trade for today’s open. The most aggressive and least expensive entry would be an in-or-at-or-just-out-of-the-money put expiring Friday.

I coulda and probably shouda but I did not trade this. In general I don’t like stock options, don’t like the spreads, don’t like the lack of liquidity when it’s time to close it out, don’t like the complications (all those Greeks and spread strategies). I like my options trading plain and simple – it either goes up or it goes down, it is either a call or a put. I trade SPY options.

I threw this out there last night for entertainment purposes primarily, and, as it turned out, it turned out to be quite instructive for anyone who does like stock options. To each his or her own way to play these money games…

AMZN had a big move down (as history whispered it would). The 1995 Put, expiring Friday, from the open peaked during the day up 260% and ended the day up 161% (see the companion chart below). That’s somewhere between $26,000 and $16,000 on a small $$10K capital commitment. Not bad for a day trade? This could drop more tomorrow making that put even more profitable but come on…it’s a home run with no need to risk an overnight reversal.

And besides, moves like this happen again and again, nearly everyday, somewhere in the market.

I didn’t even notice TWTR. Market-timing, options-trading bears must have made some serious money there today.

(click on the charts for a larger view)

$AMZN – a leader stumbles?

What if AMZN, after all the hoopla, only spends one day at a $1Trillion market cap?

As noted back on July 1, halfway through this year, in this link:

THE MARKET WALKS THE EDGE OF A LONG-TERM CLIFF

If a leading stock like AMZN stumbles…how mean will a reversion to the mean be? The stock’s 50-day moving average is nearly 150 points below today’s close (see chart below). Hard to believe in this the oldest of bull markets can end but a serious decline always begins with just one day down.

AMZN and AAPL have been the leaders. They both have had moves that resemble blow offs on this last upswing. Not often stocks as big as these run up 25% virtually out of nothing more than a buying panic. Now if AMZN follows today’s decline with more down to come, how long can AAPL alone hold up the market?

Just speculating here on a bit of market timing since it’s damn near impossible to call a market top, but more and more signs appear and one of these days one or the other of the signs will be telling.

Bear markets can come out of the blue. Out of the fog of complacency. Just when everyone believes the leading stocks and the bull itself can go up forever, they and it won’t.

(click on the chart for a larger view)

#MarketTiming – Pot stocks partying like it’s 1999

Canada legalizes marijuana and the stocks get high.

In the past ten trading days, with confirmation from long-term breadth as a market-timing signal, sector newcomer TLRY is up 200%, CRON up 97%, all up, CGC 50%, the sector ETF MJ (this might be the more reasonable way to play the sector), even long-term steady, GWPH, which actually makes money in medical marijuana is up nicely. The cash/percentage gains per $100K invested are the white flags on the lower right of the charts below.

In 1999, it was the dot-coms gone crazy with no more than hopes and dreams of massive monies to be made. With, most notably AMZN, the hopes and dreams have come more than true. So it’s likely to be with cannabis too in the fullness of time, but like in 1999 with the dot-comes, it is now no more than party time.

If anyone rolled these up ten days ago, congratulations! If not, they will correct, probably any moment now with the market but, no matter, these stocks will be obvious prospects for the next market upswing.

(click on the chart for a larger view)

#Bitcoin – Don’t follow this crypto mania much but…

But I took a look today to see what’s going on lately.

Are you kidding me? There are people out there claiming this will replace the dollar? Replace gold?

Can’t anyone spell T-U-L-I-P-S?

I thought this would end when lap dancers in New Orleans started putting bar-code tattoos on their boobs to collect bitcoin tips.

Now that the drug dealers and money launderers have made a market a few notable institutions (like Microsoft for heavens sake!) had gotten sucked into, and computer nerds in bedrooms with potato chips are “mining” in their spare time, and even more than a few suburban crazies have gone crazy over, what is the real future for this crap? It is in market history (duh, the tulips), and it is not good.

Does anyone actually want to put their savings in this for a buy-and-hold overnight?

That this stuff is priced in U.S. Dollars should tell everyone everything that needs to be told.

(click to enlarge)

$BID And $TIF – What do the rich folk do?

They buy stocks, and spend money on all sorts of luxuries – second, third, fourth houses, paintings, baubles, antiquities… Just about anything that can be had at auction or in blue boxes.

And when they quit… Let’s just say they pull the BID (see charts below).

As bellwethers of the future market action BID (Sotheby’s) and TIF (Tiffany’s) are always worth watching. The timing is not precise but when they are long and strong the bull market is strong also but when they fall they tend to fall ahead of time. BID particularly.

Just bringing this up since I happened to notice BID seems to have had quite a sell-off lately, and it appears TIF could follow with a lot of downside space to drop into.

Just a cautionary note to remind anyone used to bull-market stock moves that whatever goes up can also go down.

(click on the charts for a larger view)

#MarketTiming $QQQ – tomorrow the bounce…

After three days down in the Nasdaq, two of them hard downs, it is very likely time for a bounce tomorrow.

All of my bellwether stocks, as suggested yesterday (see posts below), followed through with losses today, led by NFLX down 5.5%. With the exception of AAPL and GOOGL they are all oversold. In addition forty of my nifty-fifty stocks are on sells with 34 of those oversold. Forty or more sells usually means we are at the bottom or the beginning of a swing bottom before a bounce.

Most likely he Nasdaq Composite Index has gone down too far too fast (see chart below). Focus on the chart and note that each time the blue histogram pierces the green lines, what happens next is a bounce, sometimes a substantial bounce. That is the most compelling technical case for timing a bounce for tomorrow. Also note if there is a bounce, it will likely not be a bottom. Bottoms and subsequent rallies come after retests.

This time could be an exception of course since the market can do anything it wants any time it wants but for now, I’m watching tomorrow open primarily for some play on the long side.

(click on the chart for a larger view)

#MarketTiming – a surge that falters…

A couple of weeks ago as long-term breadth turned up in the midst of an on-going bull market suggested that the bellwether stocks that have so long mattered would move up again.

That didn’t happen.

My “bellwethers” are TSLA, NFLX, AMZN, GOOGL, TWTR, BIDU, AAPL, FB, NVDA, BABA.

Long-term breadth turned down the next day and scattered the bellwether cluster — some up, some down, some going huh, what’s happening. Four days later they again tried to rally (see the chart panel below) but Friday they were hit harder than ever. With exception now of AMZN, they are all falling apart, led by the 20% disaster in FB and now the equivalent in TWTR. This usually does not happen in bull markets.

Chart by chart they look vulnerable to more decline. If they follow through to the down side this coming week, one will have to question if this is still a bull market or is the bear market beginning to emerge.

(click on the charts for a larger view)

$SPX $SPY – walking the edge of the long-term cliff…

As we end another month and the first half of the year, I thought I’d take a quick look at a long-term monthly of chart of the SPX/SPY, the S&P 500 index and its primary ETF.

Someone (probably the great trader, Linda Raschke) once said if the short term is confusing in the stock market just back to a longer term view and all will become clear.

So what is clear in the here and now?

The bull market is still in progress (see chart below) although that progress has been stalled for this year to date.

The current upswing is completing a three-month rally so a sell-off could come any day now.

The technical indicators MACD and CCI are lagging, setting up as in the past (see the red rectangles on the chart) for a possible sell-off. But at the moment the pattern this time is not complete.

If the SPX had closed lower this month than it closed last month and its volume finished higher than its volume last month, I’d have to say the sell-off is likely right now. But that didn’t happen.

Obviously, the market in general is walking along a cliff (see the blue trend lines)… But until it falls off that doesn’t matter.

So is it going higher? I hate to but I have to shrug on that. Could be but with that cliff edge so close better to be be alert, and best to put in place some protections like trailing stops on any long-term investments.

Buying this? Okay, it remains a bull after all. But, me thinks, only for the short-term while standing every day next to the exit door. If the market charges higher, the short term will have you in, and if it goes screaming lower the short term will take you out.

(click on the chart for a larger view)