Very Dead Cats

Some of the tech funds have almost no bounce, Meta among them. Here are four others, familiar names here. They should implode once the bear market resumes.

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.

Crude Oil Closes in on $91 $93 Per Barrel as Federal Reserve Abandons Taper Plan

Market Manipulation Goes Viral

Note: The headline is hyperbolic. I don't know if the Fed has unofficially abandoned their taper plan. All I know is they aren't tapering.

The Federal Reserve's balance sheet data is published weekly. It is available at the Federal Reserve website (it is in section 5) and at FRED. The Federal Reserve should have bought around $45 billion in treasuries and MBS the past month. Instead, it purchased $116 billion. At the peak, it was buying $120 billion. It bought less in December, but had to sell (or roll off) $33 billion to get down from a ridiculous $140 billion monthly increase in December. Crude oil is closing in on $91 per barrel and there isn't much resistance up here except for the psychological level of $100 per barrel. The Federal Reserve claims to fight inflation, it claims to be tightening, but there is absolutely no tightening as the economy and middle/lower class families suffer under high inflation. It won't be long until the bond market starts suffering too, and that's when mortgages will become more expensive and economic activity will quickly swing into a recession.

We have a crooked, corrupt, sycophantish media staffed by journalists whose understanding of economics only slightly exceeds that of a cave dweller who recently emerged from the primordial morass. The politicians in Washington are corrupt criminals probably selling hand over fist along with the Wall Street banks propping up this sham market. Why is it that almost every moment the Nasdaq is ready to break lower, miraculous dip buyers arrive in force to push the market higher? By itself you could argue it's the Pavlovian dip-buyers who have been trained by the Federal Reserve for the past 12 years, but then riddle me this: why are a litany of second-tier growth stocks like ROKU, TWLO, W and so forth, exemplified by the ARK Investment ETF (ARKK), getting blasted by near double-digits the past two days? Who is furiously dumping technology stocks while the major stocks and the indexes, via futures trading, are propped up so as to keep the bottom from dropping out on the market? All while the Federal Reserve is jamming crude oil higher with it's non-taper?

As a trader, their efforts allow me to get more and cheaper put options by dragging out the process. The Federal Reserve's actions will cause greater stock market damage when they suddenly stop buying assets in March or April. Or if they don't stop, they'll unleash inflation that will sink stocks by at least 50-percent before adjusting for that inflation. The more damage they do, the more the assets I've purchased will outperform. I expect some level of disaster because they've already made such a mess.

Yet I wonder, why are they continuing these policies in direct contradiction of their policy statement, reducing the Fed's credibility to zero? They can do the same thing with interest rates by the way. They set the rate when they transact with banks. They could say "we're raising rates 5 percent" and continue giving banks zero-percent loans. There's nothing stopping them from doing that, particularly when they said "we'll reduce asset purchases by $15 billion per month" and they're not doing it, and nobody calls them on it.

There are no pleasant answers. The "good" explanations are some variation of "they have to do it to save the market," but that also argues for dumping all your financial holdings now, before something nasty comes crawling out of the woodwork. The "bad" explanations are worse because it leads to a total loss of faith in the central bank.

If you've been reading here awhile, you know I've been looking for a drop in crude oil tied to the taper. Except there's no taper. So now we're at the point where the charts I follow are screaming breakout. And to get a breakout in something like offshore oil drilling takes much higher oil prices. To get a surge in fertilizer stocks takes much higher natural gas prices, and it will be followed by much higher food prices. Yes, many people have been predicting those moves and yes, the fundamentals argue for it over the longer-term. Which again raises the question: why is the Federal Reserve risking an explosion in these prices by undermining its own credibility? What made them turn their policy statements into toilet paper? It isn't the stock market, too small. The problem we are looking for is probably in the bond market.

Facebook Misses Earnings, Destroys NQ Breakout

I'm genuinely shocked. Netflix was destroyed by its growth estimate. Facebook missed wide on earnings, though they beat on revenues.

Facebook dropped a nuke on the NQ too, as did SPOT and QCOM who also must have delivered poor reports. SPOT is the #8 holding in ARKK. That latter stock was pummeled today as old favorites like ROKU, TWLO and CGEN tanked.

In 24 hours we've gone from bull euphoria and to bull pain again. Amazon will report tomorrow after the bell. A strong report could salvage the bull rally, while a bad one could be the fuel that takes out the lows. I went short Amazon today via XLY.

Update: Here's how I see the Facebook trendlines now. Major support coming up.

Bear Trap or Next Leg Down Incoming?

Biotech was green earlier today and then reversed.

Biotech was a decent short at the horizontal yesterday, but who knows how it will finish the year. More interesting are some of ARK's holdings that haven't gotten off the mat. I already posted SQ earlier today, that is one. TWLO and SE are two more. roKU and U don't look particularly strong either. The question is bear trap or weakness? Given I think the rally will run out of steam, I lean bearish.

This one isn't in Cathy's portfolio, but looks ready to go.

Cathy Loads Up on Twilio

TWLO has gone from about 2.7 percent of ARKK in November to 4.0 percent.

Wayfair Plunges Tomorrow

I think Tesla could get to $900 too, if Biden has hinted at a higher-than-expected CPI number.

Reuters: Biden says inflation data due Friday will not reflect recent drop in some prices

President Joe Biden sought to reassure Americans on Thursday that rises in consumer prices were easing somewhat, saying that inflation data for November due out on Friday would not reflect a recent drop in some prices including energy costs.

Maker forecast is 0.7 percent. I don't know if it is worse or not. That would raise the 12-month, but it'll take 0.9 percent to get a 7-handle.

Wayfair and Tesla are at support. The Russell 2000 futures crosses below the 1-year moving average again. IWM hasn't yet. If CPI comes in high tomorrow, I'm expecting a big down day for tech and related growth/momentum.

BTC looking ugly too.

This could be a bear trap. Maybe it's a dip and stocsk rip higher tomorrow or next week. I just want that caveat there to anyone taking on risk. I take on risks I can live with. I can reverse position at any time and do. But right now, I am betting the correction resumes tomorrow. XLY, TWLO, AAPL, UUP (calls) are my 4 largest positions. I have weekly options expiring tomorrow on ROKU, W, and XLE because I do think tomorrow could have some fireworks.

Another Crack at Twilio

Bought January puts.

I bought 1 Jan put in SQ to keep it on my radar.

ARKK Holdings Still Sinking

I still have puts on these two, I loaded up on Monday's rally. I also added XLE as per the last post, once it got the violet line. Will exit if above.

TWLO