Friday's Bashed

These are stocks that fell on heavy volume on Friday and have good looking bearish setups. I put Google and Amazon in here and then stopped with BigTech like Adobe, Meta and Nvidia because so many of them showed up in my screen. BigTech is a bears' shooting gallery again if this market is going down. Cloud companies such as Docusign, Salesforce, etc. all look headed for new lows.

What the h?

The h-pattern is hell for bears in bull markets and hello new lows in bear markets. Some h-patterns are at their moment of decision right now. Others are at various stages, some bounced where a bull would want them too, some broke, some are still early in formation. The most important and imminent two are ARKK and FB. Both are near their 52-week lows.

Mushroom Cloud Software

Technology advances such that what was once expensive becomes so commonplace one doesn't even think about it. If you are of a certain generation, you may recall "Game & Watch" versions of Super Mario or other popular games that were simplified versions on cheap LCD screens:

Today, there is a "Game & Watch" with Legend of Zelda games, the complete versions that ran on game systems such as the Nintendo and Super Nintendo.

In software, what was once expensive becomes cheap or even free. Nintendo's games and characters survive because they are copyrighted, but more importantly, popular. If another could make Mario games, Nintendo would be in deep trouble.

In the case of productivity software, the most important function is the task itself, which cannot be copyrighted or patented. "Paying a bill" is not a patenable function. Some have tried, like Amazon patenting "buy with one click," but that is more evidence of USG corruption than a repeatable busines model. Moreover, the shift to the cloud makes switching software easier than ever. If blockchain realizes its potential, consumers will gain more control over their data, forcing companies into greater competition for customers.

Many software and platform companies are valued on their platforms. Their growth is a function of the customer base growing into the future and collecting more dollars from their users. Instead, most are headed into a future similar to Docusign. Innovative to start, how much should it cost to digitally sign a document? What's to prevent competition? This is the classic case of a company built on a feature that will ubiquitous and free. The market has already figured out that day is coming:

I haven't done a deep dive into software companies. That is for after the decline, when picking the survivors will deliver great profits. For the foreseeable future, most companies will suddenly be valued as if Docusign's fate is their future.

Bounce or Breakdown

A bunch of stocks I've covered before and have puts on many of them. I included a bunch of cloud stocks that I don't currently have puts on such as former targets HUBS and COUP, but I wanted to highlight their breakdowns. I have no idea which way the market will break. Previously the horizontals some of these are hitting offered support. HUBS and COUP are beaten down and could bounce. My only caveat is that when the market finally decides to have a sell-off it is going to join these bear leaders. The market is bouncing right now after hitting these support areas, I see a kind of unity, all-one-market across the charts. Even stuff going up like XLE is at resistance, and I've tossed that in here. Also a channel play on NWL. Long story short" every time we get to this point, dip buyers pour in and bears get hosed. Sometimes there are breaks like in late November, but even those are reversed. It only needs fail one time though, and that's the time the bears will feast, and the profits I will make on that break will dwarf whatever losses I take in the here and now.

Netflix also broke a long-term line.