Silicon Valley Spanked Shares

I posted a bunch of times on the formerly named Silicon Valley Bancshares. It collapsed this morning. I wasn't in the trade at the time, haven't messed with SIVB in awhile, but I expected it would evenutally makes its way lower because it is at the crossroads of technology and banking. Fitting that today's plunge comes hours after Silvergate (SI) announced it would liquidate, a stock I said could fall 80 percent a year ago. SBNY was another target that has recently come in for a pummeling.

SVB Financial stock plummets toward biggest one-day selloff in 23 years after stock offering, large losses on securities sales I'm going to keep digging in a post more over at the Substack later.

Capitulation Day 1 or Economic Collapse Incoming

There's not much to say because in these situations, the selling stops when it stops. Anytime is a good time for a low. Since the market closed near the lows, the final low might be as soon as tomorrow, or tonight in the futures. The first resistance area is 3820, once that falls then a low may be in. If the market goes lower, it could go a little lower and bounce at 3700 support line or it could go way lower to 3400. The Fed meets on Wednesday and that might mean bears don't press and bulls don't pounce until later in the week. Having said that, the three black crows on the daily chart is indicative of exhaustion coming at the tail of a long down move.

Individually, many charts look ugly. Here's my favorite bank because it is loaded up with crypto risk:

New 52-week low for Facebook.

FedEx, an important, economically sensitive stock, put in a favorable candle for a bottom.

Who's up for a 2008 or 2020 style collapse before the Fed even seriously tightens? Imagine those crashes without any bailouts and you have some idea of what is coming. Or imagine if those bailouts caused oil to shoot to $200 per barrel and gasoline to $10 a gallon, and you have some idea of what could be coming if they try a bailout before consumer price inflation drops.

I watch boring, stable stocks that invest in things like commercial and residential real estate. BXMT is the commercial side. It plunged 7 percent today, a massive drop that speaks of an economic calamity.

High yield bond spreads are surging towards the point where financial markets give up the ghost and implode. I think it speaks to why the market will probably bottom out fairly soon even if it means a quick 10 percent plunge first. Things are getting out of whack so to speak, and my sense is the faster moving markets will bounce a bit while the economy deteriorates and sets up the next leg down. Otherwise, if markets are accurately signaling a depression, then stocks are headed below the March 2020 low fairly quickly and we'll be talking about my 1500 target on SPX before year-end.

I don't have a good read on public sentiment. The public is upset about gas and food prices, but it seems like the ruling class' Trump obsession, declaring guns and Trump voters the enemy, the Roe vs Wade decision etc., are all giving the media good excuses for not covering the economic devastation unfolding in the markets. One can only imagine the non-stop apocalyptic reporting if Trump had been re-elected and something similar was unfolding. To some extent, the media is beside the point, but psychology matters for markets and the media can massage it for long periods of time.

At some point, the public will realize the depth of the economic destruction, but not yet.  

Cashed Up for the Week

I'm long GDX, TLT. Have some puts on AMR riding the Spruce Capital play. Otherwise mostly cash. Will be looking to add consumer finance shorts this week, DFS looking like my first choice. I keep going back to the well on MA, V, MCD, POOL those are all going to be beauteous shorts at some point. Eyeing XLE, SMH for sectors. Still like crypto carnage plays like SBNY. Also looking at adding ZN (futures) calls way out in December.

The S&P 500 could get to 4100 area. Not a forecast, but I'm watching to see how the market reacts. If the lows aren't taken out, odds of a bounce increase.

BTC could run to $40,000 in a general bounce.

The ES is lokoing diamondy this morning. The move out of this pattern should be a powerful one.

My read in the very short-term is the bears have to put up or shut up. They take out the lows and the bottom drops out on this market, or the bulls are going to meander this higher with or without a squeeze. It doesn't mean the low is in, only that this potential breakdown moment has passed.

Cryptop

The Bear is Back: What Goes Up, Must Come Down

I don't care what sends the market down, but if you make my guess, my hunch is earnings warnings.

Bye Banks

Rollovers

What a Day

I was down big on my held positions overnight and took on QQQ and SMH before dumping them in the morning at deep losses. Then midday I had a tip on the Russell 2000 failing at resistance and turned my day around with a big short on that, along with Amazon. Had I simply held I would have been fine, but this is why bear markets are hellish even for the bears. My only positions going into Friday are on AAPL, XLE and the starter position on SBNY.

The Russell 2000 makes me think we might get a rapid sell-off from here, but both the QQQ and SPY at least have potential for a much larger top.

Of course, now that I'm mostly in cash it's probably the best time for a crash.

Waded Back into Single Stocks

Bought February puts on this one.

Bearish BTC Puts

These two remain my favorite targets for bearish crypto.

These ones will trade in the same direction as the above two:

BTC\

SBNY

I went heavily short. It's a financial with a crypto chaser.

SBNY On the Line

I'm looking for big downside once there's a break.