Bonus Shorts

I cut the screen to 20 percent higher volume. Another chemical company was in the mix:

ALso: SHOP,NVDA, MPWR (I sold my puts on Thursday) and AMD. Also HRL, JBHT, TEAM, PSNY, HUBS, ZI.

Purple Crayon for Nvidia

Three things.

1. Bubbles return to their start. Nvidia is a bubble and the chart looks like crypto

2. This is not a crazy forecast for a full blown bear market. This only requires a replay of the dotcom bust.

3. Companies can go first to worst very quickly in tech.

Nvidia Uh-Oh

I hate this spot. Bullish case: already quite a decline, another support level not far below, two bullish candles (tails showing strength off lows). Bearish case: gapped through longt-erm uptrend support.

Another issue is pricey options, which is why it can be better to play it with ETFs such as SMH or maybe correlated stocks...

Market Becames More Reliant on Apple

The stock market has spent the past three months becoming ever more reliant on Apple. As a result of Apple's relative strength, it is now 24.15 percent of SPDR Technology (XLK) and 11.64 percent of the QQQ. Microsoft is 21.91 percent of XLK and 10.09 percent of QQQ. The next largest holding in each fund is Nvidia 3.76 percent and Amazon 6.76 percent.

If Apple plunged to $110 this summer, it would't violate the uptrend in place since 2002. Microsoft could be cut in half and it wouldn't violate an uptrend in place since its IPO in 1986.

BTC and SMH Break, Amazon Loses 2008 Trendline

The two strong horses are broken, semiconductos and BTC. Apple is broken. Nvidia. Facebook. Microsoft. Paypal. Google is rolling over. Amazon broke its 2008 trendline. Nvidia. The stocks below are the top-10 holdings in the Nasdaq 100 ETF (QQQ). Previously, this setup was almost always a bear trap. It feels like the bears know this, so I believe the risk of a major plunge today is higher than normal. Right now, I plan to be back in cash by the close. I am currently at 67 percent cash.

Apple, Tesla, Nvidia

These three stocks may determine the direction of the markets the next few days. Apple looks weak to me, Nvidia is near support. Tesla is like crypto to me. It could drop 20 percent in a day for no reason and that wouldn't surprise me. It can also go up 10 percent and it wouldn't shock me. I am thinking of playing Apple directly, chips via SMH and Tesla via XLY. Both SMH and XLY are sitting on support lines.

Imagine Buying Tech with Central Bankers Cheering on Double-Digit Inflation

Then compare to the relative price of financials, energy and materials.

The only question is when, not if, the tech bugs find their windshield.

Nasdaq 2000 vs Google 2021

It's not an apples-to-apples cmparison, but I think Google is showing the same type of blow-off move as the Nasdaq in 2020. Since Google is a major component in the Nasdaq and S&P 500 Index and I believe a break of this trend will be as significant as the March 2000 Nasdaq top and subsequent trendline break.

For context, it is about 40 percent down to Google's long-term support line. Apple would need to drop 40 percent to lose its long-term uptrend.

Facebook has massive downside if it goes. There is support, but assuming a bear market, it will break it. Media companies typically collapsed in recessions because revenue collapses. No forecast, but it would make sense for Facebook to be one of the bigger losers of the FANGs.

Netflix already broke support and is trading at the underside of its trendline back to 2012. I have been shorting it (with puts) when it tags the underside of this former support line.

Nvidia could drop 50 percent and still be in a long-term bullish uptrend.

Amazon along with Google will ultimately depend on the cloud. Blockchain is misunderstood as mainly a financial threat. It's actually a massive threat to the entire cloud concept because it fulfills the vision of "the network is the computer." The political censorship carried out by these firms, particularly Google's retarding of their own search engine, will make for a powerful alliance between blockchain developers and a new wave of reformers who will eventually take power in Washington, D.C. I can only see the hazy outlines of it, perhaps it fades to mist, but there is a powerful threat that the market doesn't even realize exists. Imagine what happens to Amazon if regulators bust up its retail business at the same time blockchain and other developments wreck its AWS division.

The poster child for excess is Tesla. The last touch of long-term support was around $5 in 2012. A return to that line would take it to around $80 in 2023, still a 16x from 2012. The market would still be saying the outlook for Tesla is positive at that point, but the price in 90 percent lower than Friday's close. Worth recalling that time Amazon fell 95 percent.

Coinpocalypse Begins, Bear Market for Stocks

In September: Crypto Selling Resumes, Monster Topping Pattern on Ethereum, Watch Out FANGs

Finally, cryptocurrencies were the bleeding edge of speculative activity. The breaking of topping patterns in majors such as Bitcion and Ethereum will be a signal that stocks, particularly the FANGs, are on thin ice. Here's Alibaba (BABA), for example, sporting a topping pattern similar to Ethereum. Not as massive a topping pattern or with as low a target, but it will cause far more losses. Ethereum has a $20 billion market cap that could go back to $1 or $2 billion, an $18 or $19 billion loss. Alibaba's market cap is $417 billion. A measured move off its topping pattern would cause $117 billion in losses.

In August: The Coinpocalypse

Finally, this is a classic collapse of a speculative bubble. It might benefit stocks in the near-term, but it strikes me as bearish, and not only because the stock market was tracking with cryptocurrencies earlier this year. Consider a stock such as Nvidia (NVDA) that sold the GPUs used by cryptocurrency miners...

NVDA lost 20 percent on Thursday last week and 12 percent on Monday, and down another 6 percent this morning in pre-market trading. It is down 53 percent off its high in about 6 weeks.

There is very little support for alt-coins and even some that appear to have support levels, such as Monero (XMR) will probably be pulled lower by the undertow. The targets for Ethereum (ETH) and Litecoin (LTC) are in the single digits, if not below $1.

As for stocks such as NVDA, well the pain may have only begun. Support for NVDA is below $50. Initial support is 77 percent below the current price. If this is a bear market and not a deep correction, there is a lot of selling to come.

The Coinpocalypse

There might be another stick save for the cryptocurrency market because every time it seems like Bitcoin will make the final backbreaking drop, someone steps in to prop it up. That said, with Bitcoin losing $6000 again and many charts already turning ugly, it looks like the "shitcoin" apocalypse is underway. Previously, many alt-coins would also hold above key support levels, but this time some alt-coins are in full collapse (I don't think it is a coincidence this is happening the same time as the Turkish lira is tumbling). The coins below are a mix of coins I know little to nothing about, as well as some that have strong networks or development teams, and some that I think will survive. I'm putting them all together because the market was blown up by speculators and the dumb money doesn't know the difference, as evidenced by the same chart patterns over and over. Consolidation will take place as some coins gain developers and others lose them, but the charts will all look the same for awhile during the panic phase of the bear market because speculators flee everything.

Sentiment is turning, as it always does. Reddit: HODL is dumb as rocks.

The horizontal I have drawn on Bitcoin is at $5968. Cryptos are so volatile that the lines are more like guidelines. What's interesting to me is Bitcoin could easily slip into the rising channel that started in 2015. Current range is $3500 to $6500. If it manages to hold in that channel, that is still an extremely bullish trend and should be celebrated as a huge victory for Bitcoin long-term. The run-up to $20,000 in the meantime means many people have suffered large losses and the sentiment shift is extreme, but Bitcoin is still far from being a failure. If you're an optimist that's a great way of looking at it. If you think it's all a scam, then that leaves plenty of room for even more losses.

Some of the charts are already starting to retrace their breakouts, such as Ripple and OmiseGo. Some are still well above support such as Decred. Some have businesses behind them, such as Golem (though I haven't checked on it recently) and the BAT is part of the Brave browser.

Many people think technical analysis doesn't work, but it's based on human psychology. It works well with cryptocurrency because it's a market filled with amateurs. The more emotional the market, the better it works. Also, there may have been manipulation by people who understood TA. Whatever the reason, the charts are already breaking down or on the cusp of the last line of support for many coins.

I usually don't include the volume, but it helps illustrate why TA can be effective. Many of the alt-coins have sharp run-ups on low volume. Those HODLs, if they're still HODLing have a profit. Litecoin might be the best example given its size and popularity. There's an area of support around $40 to $50, from July to November 2017. Volume is higher and there could be many HODLers in that area. If Litecoin stays above $40 many may hold. If they sell, then there are very few HODLers left. That's why the price could waterfall decline and retrace the April to July 2017 run up. Then it may stabilize in the single-digits assuming it is a survivor.

Finally, this is a classic collapse of a speculative bubble. It might benefit stocks in the near-term, but it strikes me as bearish, and not only because the stock market was tracking with cryptocurrencies earlier this year. Consider a stock such as Nvidia (NVDA) that sold the GPUs used by cryptocurrency miners...