CTAS Back to the Top, MCD to Resistance

Illuminating Shorts

If you're bearish right now...ILMN could be headed for a breakdown.

Goldman Sachs is more liquid a target for options and has a great chart, but I like Blackrock a little better because it has been underperforming.

I posted Cintas over the weekend too, and it cracked. Ready to go if the market goes.

Although it needn't fail right away, if this is a bear market, the h-pattern seen here in Domino's should reliably complete.

Ready To Go

CTAS New Target

Prior target was hit. I don't know if the bounce will get that far, but if the bear continues I'm looking for a drop to long-term support.

Most Targets Broke Down

Still waiting on XLY, but ALGN, CTAS, MPWR, INTU, RH, MSCI, POOL, IDXX all broke down. Usually this is when the football gets pulled away. I added CMG and ISRG on possible breakdowns. NFLX also broke down. Aside from these, I see a lot of bearish setups. Mainly wading through them looking for the best setups. There are so many in the tech sector alone that no doubt many are out there.

The two next shoes might be SMH and BTC Bitcoin.

UUP tagged its 50-day MA today. I don't think the dollar matters much for the stock market right now, but down would be better for inflation trades and tech weakness, and up better for more general bearishness.

I'm going into Monday with guns blazing, but I'm here for the day the market doesn't bounce. There is growing bearish sentiment, but a lot of its is cautious from my reading. Looking for a 10 percent pullback tops. Fearful of the Federal Reserve, jawbone or policy shift. I don't sense much confidence or risk taking on the bearish side. History and support levels say maybe this dip was it. There's a case for a bounce and there have been face-ripper run ups from the support area the Nasdaq bulls defended today. But...if that support doesn't hold...there is nothing but air below. The risk-reward is heavily skewed in favor of bears thanks to VIX remaining suppressed. the 10-year yield held its breakout too. If the Fed opts for dovishness, they will probably ignite crude oil and the 10-year yields, and then the Nasdaq and all the ARKK trash will walk into an empty elevator shaft.

Cintas Stochastics

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.

Cintas

Oh man what happened it was such a strong stock. /sarc

Cintas

I like the action today. I drew a "possible H&S" horizontal line at the shouler top and so far it has held. Not a forecast ine, only there for reference.

CTAS Update

CTAS formed a bullish reversal candle today. Could be back to neutral tomorrow. The 50-day moving average is at $434 per share.

A lot of these patterns have relied on the overall market given the broad bullishness in prior years. Similar to many other targets I covered, I think the market action the past week shows that when the market finally turns, these stocks have nearly zero support. These stocks have tipped their hands.

Bombs Away on Cintas

Earnings are past. A beat, yet the stock drops and takes out support. I took a starter position expecting earnings wouldn't be hot, but wanted to wait until after earnings to fill out my position. I'm greenlighting this one. I like Spruce Point's case against this stock and also Avery (AVY). It's also why I have puts on POOL. I think these grow by acquisition, big conglomerates are great targets in bear market even if they are well-run companies (I haven't seen any negative report on POOL), but if there is a a whiff of financial chicanery or imprudent use of debt, they are as close to a guaranteed bear market "winner" as one can get in the markets.

Spruce Point's Hit List

Spruce Point Management publishes research on short targets. Some of their picks have paid off, but tended to be small caps. the larger targets have climbed higher and higher. In my opinion, this doesn't invalidate their work. "Zombie" companies that are dead at higher interest rates or tighter credit markets have been some of the best performing stocks. The Federal Reserve and USG lfooded the markets with liquidity and as a result, taking on insane risk to the upside was the best stratery. Now I think the reverse will play out: taking insane risk to the downside will pay off.

Every chart below has a report on their site. Some research is a couple of years old, in some cases may no longer be valid. In other cases, I believe the thesis is intact, but requires a recession and bear market to reveal underying weakness. Notable: Cintas reports earnings in two days.