Newsletter - 5/18/2024
UPCOMING WEEK:
DOOM is still coming. But first I believe we will get a blow off top. Blow off tops are when everything gets bought and I knew it as the "Dash for Trash." I believe the following ingredients are in place: ongoing guerilla QE injecting liquidity into the market, earnings season often sets the trend for the remaining quarter and this earnings season was "good" according to the street (BS), rate cut expectations for July are at 33% and that will provide fuel. The only thing I am not sure of is how long it will last - weeks or months. Next week is when I think it starts.
Week in Review
Model Portfolio - since 5/9/2023
This Week:
Last Week:
Sectors
SPX and NDX
Price broke out to ATH's on Thursday and on Friday, which also happened to be the largest OPEX on record, price did not confirm the breakout closing instead above Thursday's close.
It is my opinion that Friday the institutions were active with OPEX and therefore will focus on the next market move starting Monday.
I would not be surprised to see a drop before the final blow off top and if that happens, I will get stopped out on a number of call positions. But that's the risk of trading - I chose a direction and supported that choice with trades in the same direction. Now we will see if I was right, wrong, or early, which is still wrong.
QQQ:
I am switching to the QQQs because I have an open trade in them.
The QQQs also broke to ATHs this week and show the same price pattern Thursday and Friday as the SPX. The Q's also share the possibility of a retrace before the final blow off top.
Small caps did not participate in breaking out and remain a long way from making new highs. To be honest, I don't think it's going to matter whether small caps rally or not. They will not lead the rally but they might be pulled by it higher.
Bitcoin & Miners
BTC is back to the breakout level that I set over 2 weeks ago. The strengthening USD vs Yen is also helping the price of BTC.
My trades on $IREN and $BITO were complete losses as their expiration was Friday. I think mistakes were made in the management of both positions driven by the fact that they were "not important" to me relative to the rest of the portfolio. Also, IREN was only half a normal position size.
This week I will be out of $BITF, one way or another.
As for $CIFR, it should be fairly easy to see the wedge formation. Which way it breaks decides what I do.
Doom Trades
Am I worried that the stock prices of my DOOM trades are going up?
NOPE
Why am I not worried?
Because NEWS WILL LEAD PRICE lower.
Price on these DOOM trades can go up 10%, 20% or even 100% and it will not concern me because the underlying fundamentals are deteriorating so quickly.
Until the market "breaks" I watch patiently until I get a reversal on the Weekly chart.
Also, I still have enough for two more scale-in trades which will lower my basis on the original trades significantly.
$KRE
$KRE price was rejected right at the 51.53 level which is the gap open from 1/31. This is major resistance and if it breaks into the gap I will add a swing trade long. And yes, it's still going to go down.
$BAC:
$BAC broke resistance and is headed to the 41 level. If that level were to break I would be interested in taking a swing trade long.
$TQQQ:
$TQQQs have not broken out yet on the weekly largely due to the structure of the investment - it uses future's contracts so there is always slippage. Nonetheless, price needs to break 64.20 and we get 70. I triggered off the daily break level of 63.95.
$VNQ
$VNQ broke out on the daily but not the weekly. There is a gap now below.
If price prints a HCD on the weekly I will add to my DOOM position.
$HYG:
$HYG also broke out on the expectation of an interest rate cut in July.
FROM LAST WEEK:
Am I worried that the stock prices of my DOOM trades are going up?
NOPE
Why am I not worried?
Because NEWS WILL LEAD PRICE lower.
Price on these DOOM trades can go up 10%, 20% or even 100% and it will not concern me because the underlying fundamentals are deteriorating so quickly.
Until the market "breaks" I watch patiently until I get a reversal on the Weekly chart.
Also, I still have enough for two more scale-in trades which will lower my basis on the original trades significantly.
Closed Positions
$GME CALLS :
We got lucky on this trade. While the reason we took the trade and what I consistently comment about was the possibility of a short squeeze, the fact that @RoaringCat guy tweeted for the first time in a couple of years was just a gift. The Model Portfolio returned 212% on the first scale and 478% on the final scale. @Hongulator got a 10X. But I, along with VIPs, got out on Monday. We also had a VIP Member who made $20k on the trade. And brand new VIP Member @DJAT made enough on the trade to pay for a Lifetime VIP Membership, and more.
Look, here's my point: I average one of these types of trade about one every quarter. And they aren't always VIP only trades.
$IREN:
100% loss. And now it breaks. Just the way it works.
$BITO:
100% loss. In addition to the price of BTC not cooperating the major mistake I made was under-estimating the decay in price due to the futures based structure of the asset. Will not happen again and in fact, I am looking to short it if $BTC fails to break out. $BITO has negative inertia.
By the way, this was the $GME Trade Idea shared with VIPs - over a week before price exploded higher.
Current Open Positions
$FNGR Jun 4C for .68 - VIP Only
This is a Lotto trade and I gave it a wide stop. It closed Friday with a mid price of .50 so I am down 30%. If the market pops next week like I think it will, then $FINGR should join.
$INMD Jun 19C for 1.00 - VIP Only
Not at the 17.98 stop yet. This also was a smaller than normal position at 2% of total.
$ENVX Jun 8P for .59 - FREE Trade
Price moved very strongly Friday due to, in my opinion, immediately after Greg Reyes posted on X about the possibility of a second Development Agreement. I will be stopped out Monday for a 60% loss. More than I usually allow but that's one of the few downsides using daily closes. If a stock moves against you there is little you can do. I've tested using absolute price stops - as soon as price hits the stop I got out - and it actually significantly reduced return because often price also reversed intraday.
$TRIP July 20C .80 - VIP Only
Price broke into the gap but failed to hold and worse, printed a HCD. So stop hit and unless I get a green first 5 - 10 minutes of Monday I will take my loss. Also another 2% position.
$TQQQ Jun28 Weekly 65C 3.30 - FREE Trade
I am using the QQQ for the $TQQQ trade. Helicopter Blades. So sort of like a big doji made up of 2 days price action. Monday or Tuesday will be the day: either price closes above the Blade high or below the Blade low.
$BROS Jul 40C 1.50 - VIP Only
Even though price is not yet at the stop If price closes below Friday's low i will exit the trade.
$CPER Jul 40C .68 - VIP Only
Lotto size trade that is up 87% in 1 day. Perfect break to new highs coupled with a strong macro and the chance of another short squeeze.
$NU Jul 13c .26 - FREE Trade
Even though the stop is much lower, I am not going to wait - price needs to move sideways to up on Monday or I am out for a loss.
$CFLT Jul 13c .26 - VIP Only
While earnings hosed this trade, me being cute and not respecting the stop and just taking the loss compounded the loss. Instead of a 40% it will be 75%. Stupid.
Doom
And just when I started to think that DOOM 5 was becoming less likely, the idiots in power decided that they had a great "new" idea: sending up to 40,000 NATO troops into Ukraine, but only as advisors.
Ok, let's forget that all of that is a bunch of malarkey, the entire "just as advisors" statement, because it absolutely is a lie. But what's going to happen if one of those "advisors" is killed on the battlefield? Will NATO do nothing? Exactly.
Also, the sheer lunacy of this plan is that Russia is currently massing 1 MILLION fresh and better troops to the front line. NATO will be a mere speedbump. Is this the plan? Absolutely. Because the powers that be are not going to give up on their obsession with Putin.
Add to this the news last week that Germany is seriously considering bringing back the draft, and they won't be the last European country to do it.
How High Can We Go?
In the event of a melt up how high could we go? Well I use 2010 as an example. In 2010 unemployment was high and real estate was suffering largely due to the financial crisis of 08. And yet when the market broke in 2010 it went for 12% in 6 months before giving twice as much back. Of course, then it started the current bull run - all back when the SPY was just 120. Today it closed at 529.
I think IF a blow off top comes it could go for between 5 and 10% before finally succumbing to reality. And IF it happens, I will look at it like a gift - perhaps one of the easiest profitable trades in my history - when I will be able to short the DOOM trades for ridiculously high prices.
Here's How It Could Play Out
The market could top here but I see too many ingredients for an up move and a possible blow off top which I shred at the beginning of the Newsletter. But the one factor that I didn't comment on was this: at the end of bull runs, not all of them but enough of them that it's a possibility for the current bull run, there is this last gasp for returns as the market knows the end is near so it goes for broke so to speak. This time it could be faster and larger than normal because the market has been so drugged on stimulus for so long. Couple that with the possibility of an emergency rate CUT and you have all the ingredients for a spectacular price blow off.
I would be surprised if the Fed did NOT cut in July. I think it is driven by the election. I think that if they can keep the market elevated into November and then let it crash if Trump wins.
The question is: will a couple of bank failures ruin the plan?
Yes, BTC is Being Manipulated
Some of you weren't around when the BTC community was celebrating the approval of the ETFs. Even more weren't around when the first BTC futures were approved. While the BTC community was of course celebrating the news as a vote of credibility by the financial markets, I knew what had really happened.
BTC as a a free market decentralized structure - was over.
By allowing the value of BTC to be hypothecated via a derivative, they had given the institutions a beachhead that I believed would eventually lead to full manipulation of the price of BTC. I just didn't think it would be this quickly:
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Thankyou Family!
theBoss
Nothing above is investment advice nor should it be construed as investment advice. It is offerred for entertainment purposes only. Always consult your advisors before investing any money. Do not "follow" or "mirror" any trade ideas provided. Mr.NotAdvice is not a licensed or registered investment advisor. Do your own research.