SELL EVERYTHING. AGAIN.

David Stockman’s infamous “Sell Everything” call back in early November was another classic 2016 scrapbook entry in my collection of dogshit analysis from experts and pundits this year. However, he came out to defend his call citing “Sucker’s Rally” and urges listeners to sell everything yet again.

“This 5 percent eruption is meaningless. It’s some robo machine trying to tag new highs,” Stockman said Tuesday on CNBC’s “Fast Money,” in a dismissal of the S&P 500 rally.

“I see a recession coming down the pike in 2017. The stock market is going to go down and it’s going to stay down long and hard because, for the first time in 25 years, there’s nothing to bail it out.”

This echoed the initial call Stockman made Nov. 3, when he urged investors to sell stocks and bonds before the presidential election.

However, since the Nov. 8 election, the Dow Jones industrial average has gained 4 percent en route to surpassing 19,000. Additionally, the S&P 500 and Nasdaq also hit record highs in the same time period, gaining 3 percent and 4 percent, respectively.

Yet Stockman, who was director of the Office of Management and Budget under President Ronald Reagan, reaffirmed that markets are heading for disaster.

“My call stands. Sell the stocks, sell the bonds, get out of the casino,” Stockman explained to CNBC in an off-camera interview. “Bonds have already cratered by nearly $2 trillion worldwide and have miles to go. This isn’t a rotation into stocks, either. It’s the greatest sucker’s rally ever.”

I bought $TEAM calls and going after $GOOGL at $770.

In closing, I’m mostly thankful to those of you who still drop in to read my nonsense and contribute to the cause. Enjoy the time with family and I’ll see you on Monday. Happy Thanksgiving.

IN STOCKS, I GIVE THANKS

I’ve made my bets this morning for this seasonally bullish week. I sold some $AAPL calls and picked up $YY, $DATA and $TSLA calls. Really tempted to take $ACIA as well.

For the week, I figure we’ll meet today and tomorrow for After Hours with Option Addict. After that, let’s celebrate market greatness by leaving each other alone for the remainder of the week.

Anyone take on any positions here this week?

JOIN ME FOR IBC’s 2016 END OF YEAR BOOT CAMP

The Final Boot Camp of 2016 has been launched.

Save the date; Monday December 12th-Friday December 16th, 7PM ET.

If you’ve yet to attend a Boot Camp, this is a great time to insert yourself into a great line-up of content. As usual, we’ll spread this out over a week’s time. We’ll meet once a week for 60-90 minutes with a firm agenda for each day. Each session will be recorded and sent to you, including slides, in a downloadable format.

These Boot Camp’s have been a great opportunity for readers to get solid investing themes throughout the year. Here are the highlights of 2016:

  • Q1 Theme: GLOBAL PANIC: From the February lows I discussed buying a select List of High Yield Value Stocks ($NOBL) and utilizing covered calls ($BXM). The $NOBL went to ATH’s in March, months before the $SPX.
  • Q2 Theme: My Guide to Picking Stocks: Since my 2016 call was for the market to trend against the popular opinion, I laid out all the analysis necessary (market/sector/stock/sentiment/risk) to pick stocks in a trending market. Those methods worked fantastic this year.
  • Q3 Theme: August – Short Gold against an oil long, short Bonds, and gave out a solid list of Trump stocks including infrastructure and biotech.
  • Q4 Theme and Outline:

Session 1: A Review of My 2016 Themes and How They’ve Come to Fruition

Session 2: A Trumped Up Market- An Overview of Which Stocks Will Flourish in 2017

Session 3: A Crowded Trade Unwinding: A look at Rates, Safety and Yield.

Session 4: The 2017 Pain Trade: Inflation

Session 5: My 2017 Outlook and Predictions

We’ll also highlight dollar strength, bond market collapse, gold collapse, strength in the banks, the yield curve blowing out to 121bps, up from 70bps (unbearish), a market without crude, sectors that might benefit from Trump and sectors to buy next year that have sold off.
Click here to sign up for camp. Hope to see you there.

OA BUY: TWLO

Per our discussion last night in After Hours with Option Addict, here’s the set-up I laid out for a day trade.

A few months ago, this stock went on a string of 7 or 8 consecutive Friday rallies. It would show strength early, give it all back on a move to days lows, then rally all the way back and take out days highs into the close.

Here’s the charts on a lower time frame.

2016-11-18_8-34-37 2016-11-18_8-35-20

This is my third trade in this stock this week. I bought December calls right at the open on Tuesday, then I bought calls expiring next week near the low yesterday. Caught a nice gap up and a fade to take out days lows – in which I put on this day trade.

Let’s see if I’m right about a rally from here.

OA

#TBT

My Throwback Thursday shoutout goes to Keith Parker of Barclays.

The S&P 500 could potentially fall 11 to 13 percent if Trump wins the election, Keith Parker, global equity strategist, said in a Nov. 1 note. If Clinton wins, the index could rise 2 to 3 percent.

“Stocks will crash 11-13% on a Trump election.”

Lol. Up.

FIRST SOLAR SINKING MY IRA

I’ve been laid up in this stock since fall of 2013. Three buys at $36, $38 and $43. I reduced the position earlier this year, but still remains a +10% position in my LT account.

I Couldn’t find one person yesterday that was bullish heading into that call, and looks like they were right. $FSLR was a beast at the start of the year, one of few stocks trading to 52 week highs while the market traded to 52 week lows. On analyst day earlier this year, CEO wouldn’t offer guidance due to too many variables. Naturally, the stock has been in a tailspin since. Guidance is the main concern, and the near term has looked cloudy for solar. This is why I’ve told folks to wait on any buys down under $35.

I wasn’t sure how people would react to this news. Couldn’t predict whether or not you’d see buyers that believe in a 2 year story. I love the stock fundamentally, but the thought of waiting for 2 more years for a stock to produce seems daunting. Normalized earnings for $FSLR in 2019 will be $3-$4 and they have $20 per share in the bank. However, this move today represents a crossroads. You’ll likely have to endure a couple ugly quarters in the near term, but this stock still remains a valuable long term prospect to me.

I’ve rode the stock from $40’s to $70’s many times over, but am more interested in cheaper energy as a long term theme. With that said, I am buying some $FSLR here and am sticking to my LT script.

While I caught some comments in other blogs yesterday pertaining to my misfortune, this is a good opportunity to remind you all that I’m simply stating my actions and opinion. For all you know, I could be dry humping a solar panel over here in my $FSLR t-shirt. I would hope that at some point you’ve done some degree of due diligence in the process.

That said, I am only a crazy asshole you read and pester on the internet. We might not both speak in a solar tongue, so please consult your best judgement, your spouse, God, or Mark Whidmar himself before taking risk in this stock.

DALIO SPEAKS OUT ON BOND BULLS GETTING HARAMBE’D

Ray Dalio thinks bond markets are on the brink of a significant shake-up.

Dalio, the billionaire investor who created Bridgewater Associates, wrote in a Linkedin.com post on Tuesday that “there’s a significant likelihood that we have made the 30-year top in bond prices.” When these extreme moves happen, some investors will be shaken out of their positions, “making the move self-reinforcing” for a while, he wrote.

I’ve been saying some very similar things over the last year. Bonds embarked on a multi-year trend that took prices as far removed from their longer term trend as they tend to get. Last I spoke about this, I referenced my 1998 analogue, and a similar trend structure. Here’s a recap of those charts:

2016-09-16_14-20-52-768x58025 Year Chart of 30 year Treasury Index

2016-09-16_14-27-26-768x5723 Year Chart $USB: 1996-99 Momentum Trend Reversed

2016-09-16_14-33-37-768x582 3 Year Chart $USB: 2013-2016 Momentum Trend Top

As I’ve said most of the year, this is the most crowded long I’ve ever seen. As it should be. It’s a 30 year trend. However, this year, I’m curious as to exactly how popular this ticker symbol became to the unwashed. It reminds me of my first ever $GLD trade. I bought $GLD for $62.50 in 2006 in my long term account, and added multiple times on the way up. At the time, I had a significant audience via my blog, podcast, and through work at Investools/thinkorswim. The concept of trading Gold was so foreign to retail traders back then, but 5 years later, I couldn’t go a day without being asked about it. Same seems to be the case with $TLT over the years.

Here’s the updated chart of the last 3 years:

2016-11-16_10-26-14

Perhaps this is the spot for a technical bounce, but with this trend getting faster the lower it gets, I’d rather watch others play with fire here. The unwinding of these trends gets very messy, but they unwind nonetheless.

The most important element I discussed in this topic was not bonds themselves, but how stocks reacted after these selloffs. This was another staple to my bullish argument over the longer term.

Thoughts?

OVERSOLD SIGNAL IN SMALL CAPS TRIGGERS BARBARIC RALLY

Small caps are up for the 7th consecutive day for only the 4th time in 5 years. The last signal I referenced in 2012 triggered 8 out of 9 days of consecutive gains, but 5 months of nearly uninterrupted gains before pulling back.

Watching the experts circle their wagons now is so painful to watch. This has all been so predictable, yet the pundits are so fucking retarded. I’ve broken this market down in so many ways since fall of last year to show not only why this was going to happen, but also how this would all be made possible.

Now that everyone has additional clarity or “confirmation”, they are all free to adjust and postpone their market death sentence until further notice. Lol.

What’s going to happen next year will require more attentiveness and focus than this year. It was easy to buy when nobody else bought. Now that we are supposed to welcome in the unwelcome, I think there will have to be an element of creativity to take positions after this new found crowd gets slapped around a little. In other words, I want to be more open to the pain trade process for individual stocks going into next year. Buy failed rallies, wait for breakdowns, etc.

I jumped on some $GOOGL, $WYNN, $SBUX calls and $CBI stock yesterday. Today, I booked some $LABU and bought up some $TWLO, $AAPL and $NFLX calls along with $GOGO stock.

I have a John Holmes sized watchlist here, but am waiting for respectable prices.

I’LL LET THE MARKET DO THE TALKING

So much to say here, but by now you’ve seen and heard it all. More importantly, those that spoke out so much on the outcome of pending events are now in quite the predicament.

I suppose the top FAQ I’ll get from here is… “Hey Jeff….should I chase (Fill in the blank)?”

Biggest things to point out are the leadership breakout in transports, copper and financials. For the second phase of this years rally, those are still early cycle indicators. All things I headlined in my last boot camp.

Speaking of which, I’ll be doing one last boot camp for 2017 in early-mid December. There are a lot of details about next year that need to be sorted out. This is where I’ll put out my 2017 predictions and such. More details to follow.

For now, I’m nibbling on some of this tech selloff with $GOOGL. Booked gains in $CARA and $CVI and stalking $WYNN.

Expecting the unexpected to be expected

I can’t recall a market situation like this. Ever.

Trying to follow the real news flow about this election made me physically ill. Nonetheless, change is upon us and from a trading perspective, uncertainty is about to be removed from the market place. Markets dislike uncertainty.

While most pundits out there are singing the same tune about what markets will do depending on who wins, I always like to see those that choose to speak out sharing the same opinion. When an opinion is popular, it’s usually wrong.

This year has unfolded quite similar to how last election year unfolded. In 2012, markets bottomed about a week after the election on a similar oversold signal. This year, that same oversold signal came last week.

spxcomp

In both years, the prior year (2011 and 2015) were a volatile mess. In each election year, we established a trend. Volatility to start the year. Volatility in the middle of the year, trend higher into October, then come in a bit heading into the election.

Last election year, markets bottomed about a week after the election. In this year, we hit the oversold signal ahead of the election.

One thing is certain, the last few days reflect money on the sidelines waiting to be deployed.

I feel any dips you get after the election ought to be bought heading into year end.

…any dips you get after the election ought to be bought heading into year end.

Last week I started this process. I established a new account for the new Long Term oriented service that I am beta testing, and also picked up a few short term swings in my trading account.

I’m looking forward to putting this behind us to start planning for year end, as well as 2017.

Get out there and vote!

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