Your Almost Daily Bit of Wall Street Wit & Wisdom

I view each day’s trading as a struggle between buyers and sellers for the advantage in price direction. 

The character of the behavior of market price movement tells us whether a particular day is positive, negative, or indecisive.

Though yesterday’s stock market session closed little changed from Monday, its character was decidedly negative (sharply higher open only to close near the low, producing the largest give-up of gain since 2008).  This sets short-term resistance and implies the likelihood of lower prices to come.

The struggle is on now with the Fed desperately printing and pouring money out (inflationary) in an attempt to quell a devastating economic decline (deflationary), spreading like a wildfire, ignited by Covid-19.

We shall see which side prevails.  Until proven otherwise by price, bears retain the edge.

Be well,

Steve

 

Your Almost Daily Bit of Wall Street Wit & Wisdom

UCSD Geisel Library

UC San Diego’s Geisel Library, h/t sandiegomagazine.com

“You will come to a place where the streets are not marked.
Some windows are lighted. But mostly they’re darked.
A place you could sprain both your elbow and chin!
Do you dare stay out? Do you dare go in?
How much can you lose? How much can you win?

And IF you go in, should you turn left or right…
or right-and-three-quarters? Or, maybe, not quite?
Or go around back and sneak in from behind?
Simple it’s not, I’m afraid you will find,
for a mind-maker-upper to make up his mind.”
— Dr. Seuss, Oh The Places You’ll Go!

Your Almost Daily Bit of Wall Street Wit & Wisdom

William O'Neil warning about bear markets

h/t Joseph Fahmy, @jfahmy

“Be patient, keep studying, and be 100% prepared.  Later, at the least expected time, when all the news is terrible, winter will ultimately pass and a great new bull market will suddenly spring to life…So get prepared and do your homework.  Create your own buy and sell rules that you will constantly use.”

That’s some bear market investing wisdom from William O’Neil.

Jobsmacked

jobless claims

h/t Yahoo Finance

job·smacked
/ˈjäbˌsmakt/
adjectiveinformal•American
adjective: jobsmacked; adjective: job-smacked
 

Economists and markets utterly astonished; astounded by skyrocketing U.S. initial jobless claims data

This morning’s release of weekly initial jobless claims, by the Department of Labor, was double economists’ estimates.

The pre-market no likey.

h is for holy $#*!

Micron stock chart

Chart by Steven Sarnoff h/t stockcharts.com

Options Hotline reco update, FYI: +35% in a single session on our Micron puts!

Sensible speculators seek to buy options that will move from “out-of-the-money” to “in-the-money.”  That’s where the greatest gains are made and that’s what our most recent recommendation (see 03-31-20 Options Hotline) did today.

The Micron June $40 put triggered at $3.75 and subsequently traded as high as $5.05, +35% in a single session, with an always known and strictly limited risk!

As you can see on my daily candlestick chart above, Micron, appears to be tracing out a potential “h” pattern. That’s where price has a sharp decline, followed by a bounce that rolls over and points to a likely test of the recent lows.  This bearish price pattern closely resembles a lower case “h.”  It’s counterpart is the bullish “y” pattern.

We recommended puts on Micron, because the character of the behavior of MU’s share price turned negative at resistance (supply).  We are looking for a move toward secondary support (demand) in the low-$30s.  The price action moving forward will tell us a lot about who the stronger force (buyers or sellers) really is.

I can’t guarantee all my recos will get triggered on the low or go on to reach multiplier status, but I do promise to continue to do my best to find options winners for my great subscribers.

If this is the kind of options action you are looking for, subscribe today to stay a step ahead of the crowd.

Best regards,

Steve

Say Kaddish for this Feline Bounce

dead cat bounce

h/t J.C. Parets @allstarcharts allstarcharts.com

“Even a dead cat will bounce if it falls from a great height.”
— Wall Street adage

We’re skeptical of the staying power of the market’s recent rebound.  It resembles a “dead cat” bounce more than a market bottom.

Time will tell.

Subscribe today to see how Options Hotline subscribers are staying a step ahead of the crowd, positioning for fun and profit.

Stay well, stay strong, stay home.

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

Tom Hanks

Tom Hanks in Cast Away, h/t Reuters

Successful speculation is as much about honing your survival skills as it is about finding winning trades.

You hone your survival skills by applying sound principles of money management.

Here are a few for traders:

Speculate based on what you can lose, not what you can gain.

Don’t overbuy or add to a losing position.

Remember to take your original stake out, so you can play with “house’s money.”

Do stay well,

Steve

That’s Gold, Jerry! Gold!

The Midas metal is poised to do well, as central banks and sovereign nations open up the monetary spigots to full.  The classic Seinfeld moment above came to mind.

As you can see on my daily candlestick chart below, gold has roared back from a test of the positive influence of its longer-term moving average line.  Recent forced selling was met by demand.  That is shown by the long and strong red candle lines.

gold chart

Chart by Steven Sarnoff, h/t stockcharts.com

Neel Kashkari, Minneapolis Fed head, whose name reminds me of “cash and carry” futures trades, who gained fame/infamy for his role in the bailout from the 2007-2009 financial crisis, said the quiet part out loud near the conclusion of his segment on 60 Minutes this past Sunday.

Scott Pelley: To the person who is about to grab their car keys and go to the ATM and take out $3,000, you say what?

Neel Kashkari: You don’t need to. Your ATM is safe. Your banks are safe. There’s enough cash in the financial system. And there’s an infinite amount of cash at the Federal Reserve. We will do whatever we need to do to make sure that there’s enough cash in the banking system.

Cue the flight to gold.

Stay well and safe.

Best regards,

Steve

Jobsmacked

Reaction to seeing the coming jobs data,

“You’re gonna need a bigger boat.”
Jaws (1975)

jobless claims

Initial jobless claims and recessions

When they look back to add the shading for this widespread economic downturn, they should make it a darker shade of gray.

The other recessions were mere minnows.

But know that the seas will calm and the sun will shine again, at some point.

Be kind, compassionate, patient, and positive.

Best regards,

Steve