A Down December?

The candle on the monthly SPY chart is rare. I went back looking for more. Some are within an uptrend, but three notable examples came after run-ups and had spectacular results: July 1998, April 2010 and January 2020. Now there is one from November 2021. I left out the July 2000 one because it wasn't the terminus of an uptrend.

Long the Dollar, Short the Euro and Yen

Here's the chart of the yen and crude oil I posted earlier. Simple argument: Japan's balance of trade weakens under inflation.

The core of the Eurozone is Germany. That country is trashing its energy market which will ultimately drive up demand for imported replacement energy.

Watts Up With That: “Slow Disaster Playing Out” As Germany Moves To Shut Down 8.5 GW Of Baseload Nuclear Capacity

Insanity.

Shorting Strength Worked

SIVB and SBNY had relative strong charts, but both broke similar support lines today. SIVB from March 2020 and SBNY from November 2020.

Apple doesn't have an insane chart like say POOL or INTU, but it notable went to a new high today.

Selling strong bank charts worked today because the market expectation reversed with the Fed Chairman sounding hawkish on inflation. The crowd and momentum buyers end up stock in position when the tide turns against them. If the market rallies here (hopefully not since I'm not positioned for it), a stock like Apple could become a tantalizing short in a few days or weeks. As would any other stock that the bulls pile into during a relief rally.

Return to Pattern

There are a lot of stocks that climbed above resistance lines I had drawn and have now come back. I don't know if they're the best shorts right now or harbingers, but if they did lose that former resistance now support area, they could descend to the next support area. Some I have shorted because I think the market will start hitting overpriced stocks. It is my "the stocks are too damn high" short thesis. Here is SMG as an example.

Another Sign of the Top

Something can be both a good idea, representing a new growth market, and also be a sign of the top.

Monthly Candle on SPY

Looks like January 2020.

Energy Still Symmetric

The one-to-one candle relationship hasn't kept up, but still looks symmetrical.

Amarillo Spinco for $4 million

Amarillo is being bought out for 40 cents cash. Trades at 41 cents. That values the assets being spun out at $4.07 million based on fully-diluted outstanding shares. Seems like a deal, but I haven't investigated it and have't taken a position beyond what I already owned. Risk is the deal doesn't close.

Update: I should add, another risk is there's no info about a U.S. listing. It would be risky to buy on OTCBB if it takes a long time for a listing, or one never comes. I think one would follow at some point, but it's another thing to consider.

Inflation is Bad For Stocks

I have been waiting for this moment for most of this year. The market has finally realized higher inflation equals higher interest rates equals the Federal Reserve taking support away from stocks.

What I expect now is one of two scenarios. First is more of the same: a panic and the Fed backs off in a few days or weeks, depending on how fast it happens. Rates go down, inflation dips. A secular shift in inflation happens further out in time. Or the bull market is over. Inflation will remain elevated, the 40-year bond bull maket is over, the commodities bull market is getting started and so on.

Semiconductors Down

Might get a bearish engulfing candle on AMD the way things are going.

Oh BABA

ALibaba filled its gap. Next move in either direction will be a doozy. Secdon chart is inverted to show how it looks like a cup-and-handle that I'd be up for buying...so in this case I think the next big move is lower. Shorter-term, a bounce is possible.

TWLO

Chirping Birds

In the past week, the Baizuo admin has doubled lumber tariffs, restarted Trump's remain in Mexico policy and announced an African travel ban.

WSJ: Biden Joins the Lumber Trade Wars

Yahhoo: Biden restarting Trump's "Remain in Mexico" policy

The Hill: Biden reignites debate over travel bans

President Trump was pilloried in the press as a racist xenophobe destroying the global economy for having the same policies. Many people look at the hypocrisy and double-standard in the media, but the deeper truth is that racism and xenophobia aren't problems in the USA. The propaganda works because people believe in the words. Once you accept that the words are empty, it stops working.

It's also true that Trump and Biden implemented the same policies. There's no substantial argument against these policies in the mainstream other than name calling. There isn't any credible institutinoal opposition to most policies because the left and right have atrophied into name-calling kabuki. Trump cut through the opposition because no one is in charge. No one has the support of the people. The first person who takes charge will find there is no real opposition. Popular support will be his. Trump succumbed to the attacks because he needs to be liked. The eventual "great" leader who will assume power is the one who doesn't care what the ruling class and media think of him. If he is comptetent, he will be unstoppable. The current regime will turn into a flock of chirping birds. Sometimes you stop to listen to the birds, but most of the time you go about your business without having single thought about them.

Interest Rate Volatility

Jay...What did you do Jay?

Pfizer

Omicron Fears Reignite Overnight

Maybe this will fade by the AM, but crude is near its lows from Friday so maybe not... FT: Moderna chief predicts existing vaccines will struggle with Omicron

Stéphane Bancel said the high number of Omicron mutations on the spike protein, which the virus uses to infect human cells, and the rapid spread of the variant in South Africa, suggested the current crop of vaccines may need to be modified next year.

“There is no world, I think, where [the effectiveness] is the same level . . . we had with Delta,” Bancel told the Financial Times in an interview at the company’s headquarters in Cambridge, Massachusetts.

He added: “I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to . . . are like ‘this is not going to be good’.”

The Moderna chief executive’s comments come as other public health experts and politicians have tried to strike a more upbeat tone about the ability of existing vaccines to confer protection against Omicron.

See the first two links in this post to get a worse-case scenario: ADE. There's speculation that the omicron variant uses the antibodies made by the vaccine to evade the immune system. Nt worst case because so far cases are mild, but it could panic markets and the nervous nellies to find out the vaccinated are more at risk of infection and the vaccines don't work at all. a sane, ratinal person would look at mild cases and end everything immediately, but we have insane, paranoid neurotic ppower-mad cowards in charge. Who knows what the poolicy response will be, but odds are the policies will range from bad to worse.

There's about 100 points for NQ to slide before a challenge of the Friday lows comes into the conversation. Powell testifies tomorrow and Wednesday. He probably will say something dovish, but who knows how the markets take it. As I've discussed before, if the Fed does hint at easing, are investors going to panic this time, or will they front-run the inflatin? Gold is currently up a bit...

Cheaper VIX? MXN

Charts of All My Current Option Positions

I'm going to start off with one that I want to re-enter, SMH. Popped today, but I see about 10 percent downside to the gap. I would not short this one now if I didn't expect a resumption of selling soon.

Here are three long positions (calls). A new low on GDX will get it kicked out. ditto for AEM if it loses support.

My largest position thanks to today's return. XLY is my largest notional position. A modest drop will make it the largest again.

The rest.