$SPY #Options – #DayTrading calls on a FED day

The Federal Reserve announced its actions Wednesday in what was going be a foregone conclusion – nothing new, more to come.

So call that bullish.

CLOSING FIRST HALF:

CLOSING DAY TRADE:

#MarketTiming – Adding #Banks to the #ShortList

I have already outlined the obvious stock sectors that are no-brainers for shorting largely because Covid-19 has put them either out of business for the immediate future or has severely hampered profit prospects for this year.

The most obvious are the cruise companies – NCLH, CCL, RCL – since it’s going to be a long time before they can pack a liner with either customers and crews. And now several of the key destinations have so enjoyed being tourist free there is talk they are not even going to allow the ships to dock and disgorge passengers like they were doing before the pandemic.

Next on the list movie theaters – AMC, CNK – since even if they open with social distancing they will at reduced audience capacity. Can they make profits on half a house or less?

It’s the same in the airline sector – AAL, UAL, DAL, LUV – less flights, less passengers, more trouble with the virus every hour of the day. Throw with BA too. No need to buy passenger planes when there are so few passengers and you have a fleet of excess airliners in storage.

I always have coal stocks – BTU, ARCH, SXC, CNX – on the short list because the coal sector always a short. It is not the fuel of the future and is becoming more and more not the fuel of the present.

Now I’m going to add banks as short prospects — JPM, GS, BAC, C, WFC – largely because they have lagged the rally from the March low for too long. That spells trouble not only for the sector but for the market as a whole. If the economy is going to tank and take the stock market with it (any day, week, or month now), it’ll probably, seriously, start the drop in the banks.

I’ve included DB on the chart panel below bacause it is a bank but it’s a somewhat separate case. Its price action is news driven since it has been the primary conduit for the money laundering between the Russian Oligarchs and the Trump Organization. Whether it is or is not going to have to pay for those illegal activities bats its stock price around more than banking fundamental alone.

The market sell off may have begun today with the NYMO putting in a high below a high on short-term breadth and the all important NYSI turning down (my key triggers) but with the FED meeting tomorrow, the timing is still a bit of a crap shoot.

(click on the chart panel for a larger view)

$TSLA slams into an “outside day”

And it hit that wall on the day after its earnings report vaulted it into the airy realm of irrational exuberance.

All over stock market social media, Elon Musk fans and TSLA shareholders were ecstatic as the monster stock, in the midst of a world-wide pandemic and facing the prospect of a dire economic downturn, virtually doubled in no time at all. TSLA has boundless prospects long-term – long-long-term – but its recent rocket ride was crazy. Even Musk said so some time ago.

CRAZY!

So no surprise today as one of the oldest of Wall-Street adages strutted on stage yet again – “Buy the rumor, sell the news.”

The stock plummeted 163 point from its open today and 77 points lower than its close yesterday on higher than average volume, in other words the very definition of an outside day.

So what next?

Actually outside days are somewhat up in the air. In an up trend (and TSLA certainly is in one), it can be a mere bump in the road so to speak, but whenever violent action like that a happens, particularly on good earnings news, one has to see if anyone has been killed in the crash.

Today’s low, me thinks, is the line to live by. If TSLA rises above it, tomorrow, it’s a long with the today’s low as the stop loss. If it continues to drop, the low becomes the protective stop for the shorts.

(click on the chart for a larger view)

$SPY #Options – #DayTrade on call Monday

The option day-trade play was the at-the-money 321 call for a 53% profit on one half and a 170% profit on the second half.

See tweets below for time stamps.

TRADING STRATEGY:

Buying SPY Puts And Calls

PROFITS ON HALF:

END OF THE DAY TRADE:

(Click on chart for a larger view)

#MarketTiming three tweets today from a yawn to the scream

THE YAWN TO THE SCREAM

END OF THE DAY

(CLICK ON THE CHARTS FOR A LARGER VIEW)

$SPY #Options – #DayTrading a day to “put” on the record

A day in the SPY 317 put, expiring Friday, 7/10.

FIRST TRADE HALF UP 53%:

EXIT SECOND HALF OFF 230%:

SECOND TRADE ENTRY:

FINAL EXIT HALF UP25%, SECOND HALF 12%:

#MarketTiming – To short the usual suspects…

The general market has had a dandy little bounce the last two days and may continue to the upside into the holiday weekend.

But sometimes in the endless quest to detect “what happens next” it is not what is happening, but instead it is what is not happening.

Since most stocks in most sectors rally with a rising mass market those that don’t usually get hit the hardest with the market turns.

Since I think all of the market’s rallies now are bounces to be sold until the biggest reward comes when the realization sets in that there is nothing supporting this supposed bull market except the fumes in the Fed’s liquidity tank, I’ve taken a look around to what is not bouncing.

Really took just a glance around.

Didn’t have to look much past the usual suspects, the airlines, cruise ships, theater chains, and coal. Those first three sectors are severely distressed by the pandemic in this the worst of times. Coal is always a short even in the best of times.

Take a look at the two-day charts below to see the lack of bounce these last two days in all of these stocks.

AIRLINES — AAL, ALK, DAL, LUV, UAL, and most importantly, BA. Hope springs eternal in this sector but it does not fly. ALK has canceled 130 flights so far and mothballed 30 airliners. AAL and UAL, in desperation, have said they will fill their flights to capacity while others have said they have eliminated middle seating in an attempt to social distance, but it is doubtful the hordes of passengers they packed in previous to the pandemic will return any time soon. They are going to lose money, maybe on every flight. BA rallied yesterday on news of 737 MAX re-certification tests as if anyone is going to want to order that plane anytime soon, especially since most airlines are in the process of canceling orders (Norwegian Airlines canceled 97 orders today).

CRUISE LINES – CCL, RCL, NCLH. What’s there to say further? Can cheaply offered luxury cancel the memories of being trapped on cruises of contagion and death while the charlatan President of the United States, no less, says he would rather have passengers die there than muck up his Coronavirus positive case counts on shore? And what’s it going to cost to hire crew members for those voyages, if any crew can be hired at all?

THEATER CHAINS – AMC, CNK (which now owns Regal, the largest chain in the US). These movie theaters have a chance to make adjustment to cope with social distancing but still…even for the biggest blockbuster offering it will be irresponsible to operate at more than 50% capacity (if not illegal in some states). How much profit margin is there in half a house?

COAL STOCKS – BTU, ARCH, SXC, CNX. Coal, no matter how many times Trump says he loves it, has no sustainable future. Just compare the stocks in the sector to the solar stocks. On the next leg down, it looks as if BTU particularly may once again wipe out shareholder equity with yet another bankruptcy filing.

It’s going to take some market timing to pick the entries for when these stocks break down again. For me that’s watching what NYMO and NYSI, as my prime measures of mass-market psychology, are doing, but I assume anyone capable to shorting has their own indicators to rely on.

Regardless, when the time comes, I’m looking to take the slide down in what has now become the USA’s continued botched-coronavirus-response carnival.

(click on the chart for a larger view)

#MarketTiming – six days up and what now? – UPDATED

UPDATE: What now?

As suggested in the post below, I expected the market to move up this week, not as much as it did, but no matter.

Anytime one is on he right side of a six-day swing, either up or down, one cannot complain.

In this case, it’s six days up.

TQQQ, the 3x-leveraged and preferred trading ETF for the Nasdaq, gained 22% on the swing. Some major bellwether stocks have powered the six days, AAPL, MSFT, NVDA, AMZN FB, all up six days in a row; TWLO up six days and 73% on the move is by far the most spectacular example I follow.

Swing trading…what more can you say?

But what now?

This could stop right here. The NYMO was down today (see the chart below). How many times have we seen that mark the end, or at least a pause, after a four or more consecutive days up?

However, the all-important NYSI continues to rise so, unless this is going to drop right out of the sky, it’s probably a pause or a stall — it takes time to work off $2 trillion of Federal Reserve funny money spent in all the wrong places.

This has been a long spectacular rally since March, a fast up characteristic of bear-market rallies. If this is the end bullish traders and long-term investors who believe the bull market lives on will be in great danger.

If the market drops here and takes the NYSI negative, watch out…

An always remember there is no profit until you sell.

(click on the chart for a larger view)

#MarketTiming – one more hiccUP before the plunge?

The bear market rally isn’t quite over yet…

I’m not one for fundamentals but in the current market environment that doesn’t matter since there are none other than the FED throwing in a couple of trillion dollars to replace a bubble that burst with yet another bubble.

A couple of trillion dollars…and not even going to the small businesses and everyday people who need it most (and can spend it to fuel a recovery) as an incompetent businessman slash so called President goes on babbling about what a good job he’s done killing 70,000 Americans so far and sinking the entire economy while blaming everyone and everything else for his personal incompetence. Up until now Herbert Hoover was the biggest historical disaster of a President in the last 100 years, but Donny Trump who brags about being best at everything may be only best at this.

So if you’re long-term investor and you are not selling into this good-luck rally, all I can say for the longer term is “good luck.”

However, NYSI is still rising and the NYMO, which is so far pulling back, probably needs to hiccup to one more high below a high before this is done.

That hiccup appears to have begun as today’s general market price action climbed out of the today’s opening gap down to finish positive.

The tweet Friday:

Cruise lines stocks cruising to zero

I thought it strange this last week when the cruise-stocks had a bounce because, according to the news, NCLH (Norwegian Cruise Line Holdings) reported it was cutting crew, cutting expenses and had enough cash to last a year before going completely broke.

That lifted the entire sector?! Are investors paying any attention to this stuff?

At the moment, this sector, as everyone knows, as been in the pandemic news a lot. It is down 60% or so in the last three months.

No wonder.

Passengers and crew were trapped with a lethal virus in quarters nearly as tight as prisons and meat packing plants. There was the “celebrated” moment when President Trump stopped a Carnival Cruise liner from disembarking and made its passengers sit in a ship off San Francisco because he thought infection and death numbers would go up and hurt his his re-election chances.

Early on it was not known what the full implications of that was but now we know.

The Trump Administration, on orders from the boss, was botching the nation’s entire response to on-charging tragedy big time. The cruise companies, maybe more than any other industry, has been truly stuck between the most despicable President ever and the unforgiving deep blue sea. Even Joseph Conrad could not write this sea tale as disastrous as it is.

Right now, the stocks are basing (going sideways) to see what happens next. There is a lot of optimism they can recover once the economy reopens. That hope is so misplaced all I have to say to that is “Good Luck, fellas.”

Two massive problems currently rule the industry’s fortune.

Given all the bad news, customers are going to be a long time coming. Who wants to pay $5,000 to be on a floating death trap? At best, the cruise operators are going to have to give away the trips. At the risk of obvious understatement – let’s just say that will not be good for profits.

But the bigger problem might be who’s going to crew these ships?

Not only were the crews being infected and in some cases dying, but in addition, there are more than 100,000 still trapped on those ships worldwide who can’t get off, who can’t get transportation back to their home ports, who can’t see their families. These are people who have now have been quarantined for two months or more. They have long since realized nobody – not their employers, not the Trump incompetents, not the people they dutiful served — give a damn about them.

So the question arises are these companies ever going to hire any crews again, let alone experienced ones?

What a mess…

So just over that flat ocean horizon bankruptcy and the loss of all shareholder equity looms. Are investors paying any attention to this?

NCLH, CCL, RCL… Cruising to zero.

(click on the chart for a larger view)