Heads up people! The reformatted 1045 report will launch on monday. The main page will be formatted clearer to get what you want quickly and easily. The page that exists now will continue to exist as the blog addition to the main page.
Each day you will get:
1) What the Nasdaq will do for the next 3 days
2) Stocks that have a 90% success rate of movement in the direction I forecast
3) Bounce stocks list with more danger but with the possibility of bigger quick gains
In looking at the daily chart, the QQQ is throwing a temporary top signal. This means that the waves are about to rush back out into the sea for a day or two. Lets look at the chart:
See the latest candlestick above? It looks like a cross? This is a top signal in the current wave, and this means things are going to drop over the next 1-2 days. Now lets take a look at what is being shown in the weekly chart:
Looking at the above chart one can conclude that soon the doo is going to hit the fan. First of all, big signal that the RSI is steadily decreasing with the decreasing peaks one after the other. Secondly, the MACD is coiling up into a coiled spring formation. There was a step down in march and April of 2014 like there is now, but I dont feel that there will be a re pull to the topside direction without a big drop first. This is why I have my puts a bit out there.
How to Play This Dont enter into anything long right now and if the pre market is opening low in the morning, expect the day to be a down day.
So we wait for the next significant action of the QQQ. It appears to be in a coiled spring that is coiling tightly. You can see from the below screenshot that the candlesticks appear to be consolidating into a narrow range and the RSI is also doing the same thing.
When looking at the weekly chart, you can see what the underlying factors for the above are:
Looking at the above chart, you can see that the RSI is descending gradually. It is not so overbought at the tops, deflating in descending order.
A few people could argue that this means strength. How they would see it is, the stock is progressively less overbought and now is earning its trips to higher prices. I marked the descending peaks above as 1., 2., and 3. But I see it as a weakening of the Relative Strength Index. Because if you follow that same deflation downwards, you will see a stock that is dropping in price.
What this Means The Market is busy sitting around coiling its spring waiting for the first sizable piece of bad news. As soon as this happens, the coiled spring is going to blow, and its going to be to the downside. Watch yourself, and stay out of anything long. This may take a little bit longer than I called last week, but things are definately consolidating and things are going to blow south.
Hold the QQQ puts. Storm clouds on the horizon.
The cubes did not pop as I thought they possibly would, and I exited at .60 cents earlier in the day. However something has happened with the charts: The cubes went through the bottom support on our charts.
So hold on everyone for the big drop and here is why:
We notice that the bottom support has been breached. Thats like some of the sandbags failing during the flood and now water is pouring through and the entire wall is about to collapse.
More to come.
Besides the obvious things in the market today and the swiss meltdown that I will talk about in amy next post today, I feel that there might be an undercover opportunity lurking in the shadows. Today everyone is screaming that the sky is falling. Everyone is running around for shelter. Then there is the lone contrarian that is standing there in the street calmly as everyone is running around him, car horns blaring, tires squealing. And he then quietly says, "Purchase QQQ options at the money." Why would our contrarian say that? Lets first of all look at today's chart:
Something technically interesting has developed. A Resistance base. Resistance bases form as a defense, a safeguard made up by traders who are not convinced that a stock or an indicator is weak enough to be overbought. What this means for us is there is a chance that the QQQ could temporarily recover as it uses this base as a temporary bounce to go up a bit before it consolidates and blows through this barrier going south. Its like a group of citizens putting up a wall of sandbags to stop the flood waters rising in a town. So we are going to play this balls out: We are going to do an extremely dangerous option play. The reason for this is the more the risk the greater the potential for profit. And this chart and the resistance line says if this is going to bounce its gonna happen ttomorrow And this option expires on the 17th. So its bounce or no bounce. Here is the option:
Now this is either going to work or your option is going to expire at almost nothing, as you will have to sell this tommorrow either way. Work it man, and feel the adrenaline rush of risk, Mark
Good evening. I chose to stay on the sidelines and observe the market today watching the action from the bench. Everything is going as I had foreseen, and the market is still wobbling around on its edge, so stay out of your long positions.
It was interesting the other day how the dow suddenly jumped 200 points as some trading computers made the incorrect call that it was time to go long. That almost seemed like it was a bunch of flashtrading systems. They may want to take a look at that because the market is not going to be going up soon.
Traders are bracing for it
The weekly QQQ chart shows a very big underlying crack forming in the foundation of the cubes, and the daily is showing the QQQ teetering around right about to drop. I have also set up a series of puts for the QQQ.
The first main drop that occurs I am going to let go of my Feb puts and I will hold on to my March QQQ puts waiting for yet more of a drop. Take a look at marketwatch.com or some other big trading sites, people know it is coming.
A drop is really no problem as long as you know its coming and you shore up your investments accordingly. Kind of like knowing a hurricane is on its way a few days out so you put up the storm bracing, nail up wood over the windows. and raise up everything in the basement. There is nothing worse than waking up in the morning, turning on the news and seeing the stockmarket down 400 points as the lead story on the news, then running over to your computer and seeing your portfolio down 12%. Weaker men would sell thier stocks at a loss fearing further loss. That by the way is how you lose money in the stockmarket. Most people buy a stock when it is hot in the news when the stock is already way overpriced. Then when the stock deflates, they lose money and freak out and sell it. That is how people buy high and sell low, the exact opposite thing that makes you wealthy. Just dealing with Fear and Greed and using a logical stock trading contrarian system will eliminate these constant losses, and instead you will be making money long term in the market. Like me.
Every now and then I hear a story about a guy who got in a stock at the right time and it always makes me shake my head in wonder. I have this cool teacher at school that just so happened to sink a couple of g into amazon in 1997 who is now sitting on quite a bit of money. At the time people were telling him it was a stupid move and to take his money out while he still can. 3 years later people started to shut up about him taking his money out and instead were amazed at his investing genius. Then I started to think about myself and what I was investing money it in 1997. FFTI. I had a few grand and I decided that I would look at the stock list in Investors Business Daily and find a good solid stock with ratings of 99 98 99 and purchase it and start writing covered calls on it. Sounded like a solid plan. I was pretty stoked about it...stocks that had that kind of rating in the back of IBD were pretty much gold. So I put my money in my account, purchased the stock, and started writing covered calls. The first month I got a 15% return. Pretty solid, I thought. The second month suddenly the stock started to drop. I couldn't write a call because I was below my cost. The third month the stock had an earnings call and suddenly there were a few announcements about thier core operations and the stock started to drop even further. Grimly I watched as the stock suddenly dropped to 50% what I purchased it at and then went out of business, only to have its pieces gobbled up by another company at a fraction of the price. I then learned that Investors Business Daily and the Wall Street Journal had about as much knowledge about stocks as any other guy on the street. They only had information that was public and were working with information that was released by companies that was carefully looked at before released. FFTI knew that was coming. The only people that were privy to it were officers in the company. My friend was investing in a finance company whereupon suddenly they were beset by an accounting scandal. Turns out they were keeping two sets of books so the CEO and another officer were personally bleeding the company: building mansions in Florida, cars, personal accounts, and the company was suddenly found to be bankrupt. Even though it was illegal as all hell and the authorities went after the officers of the company, my friend still got screwed with worthless stock notes at pennies on the dollar. To this day? Sorry dude. Investor beware. Everyone that held stock sued and everyone basically ended up with blue note (IOU) certificates that paid almost nothing. This is why I tend not to own stock or options for more than 3 weeks. If I did invest, I would try to be like Warren Buffet and invest for the long term..decades. Instead, I invest between a window of 3 days to 3 weeks only due to this chaotic uncertainty. How could you really ever get in bed with a stock without really being able to do an in depth background check and find out information that only truly an officer of a company would know? Such as really knowing what is going on with WorldCom or Enron in 1999? Millions of investors lost money. Some their life savings. Never put it all in one basket. This is why I like the QQQ or other indexes, such as SPY. They are a mixture of lots of different stocks.. So every now and then while I am waiting for something big to go down in the market (such as the drop thats about to happen) I like to play the time machine game. If I had a time machine, what stocks would I go back and purchase and when? For this game, we will need one simple tool here in 2015: hindsight. And we will be using yahoo finance and its chart plotting widget.
Yup. Looks like my teacher was in the right place at the right time with Amazon in 1997.
THE MAIN THING YOU SHOULD DO IF YOU TIME TRAVEL
There are two time points you should be aware of: 1986 and 1997. The first will require that you have 2 thousand dollars to invest in 1986. So lets say that you go back to 1981 and you are say, 12 years old. Time to start hustling, kid. Start mowing lawns, and start carrying golf bags for middle aged guys wearing bad plaid golf pants. Start saving that birthday and bar mitzvah money. Because you have a couple of years to come up with 2-3 grand which shouldn't be that hard. I knew one guy who was double bagging 18 holes as a caddy earning about 60-100 dollars a day as a caddy in the early 90s. That figure due to inflation will probably be 30-60 dollars a day in the early 80s, but that will do. Get out there and hustle. Microsoft had their IPO in March 1986. I remember being on a college tour while I was looking for the college I was going to attend in spring '86 and when I was looking in one of the laundry rooms there was a tech magazine with a young guy on the cover: Bill Gates. He was about 26 years old and how he had big plans. Just another geeky tech guy I thought. Had no way of knowing that his operating system would take over the planet. What did I know. Well the second time through with my time machine, I now know everything. So this is what to do when you are looking around for this stuff. Go to Yahoo Finance, type in the ticker symbol of the stock you want to look at and then on the left column look under charts, where it says 'interactive'. Click that. Right above the stockchart there will be things you can click like 1 day, 5 day, 1 month, etc. Click 'Max'. This will display the stock growth from the beginning of its IPO until the present day. It will also display the price and percentage change adjusted for its current stock price after splits, etc. So take your mouse and hover it over the chart without clicking and you can see that the interactive chart as you move the mouse will go like an x-y axis and display price at whatever time you hover over. As you move all the way back to the beginning, it will adjust the stockprice in relation to the stock price as it is now after splits, dividends, etc, so even though say Microsoft had an IPO price of 21 dollars per share, it had split 9 times, so looking at the chart you will see that it on the chart has an adjusted starting price of .089 per share. Adjusted, that's like a micro penny stock.. now drag the mouse on over to its peak in Dec 99 and you can see that the interactive widget chart says that the stock has grown 61,347% since its IPO. That would mean whatever money you put in during that first day of trading, multiply it by sixty one thousand three hundred forty seven percent for a stupidfying return rate. Now grant you when you were 18 like I was you were just concerned about going out with your friends and scraping together some gas money for your car and going to concerts. But that's what the time machine is for. We purchase in this example, $2000 dollars of Microsoft stock on its IPO date in March 1986. The second stock that we are going to Parlay this with is Amazon. Amazon had its IPO in April 1997, so we are going to have to sell our Microsoft stock before the peak in '99 in order to be ready to plug the money into Amazon. Remember, after 1999 Microsoft's main growing period was over, and things just kind of walked sideways through the two stock market meltdowns of the 2000's. Amazon on the other had had one of the largest growth periods in IPO history. So we would exit Microsoft in April 1997 with a 15, 887% return. Lets plug our $2,000 dollars into that: After holding Microsoft for 11 years while it takes over the planet we now have in our trading account $316,000. Not too shabby. But the magic is just beginning. We roll our 316 grand into Amazon where we get in at 23 dollars per share at the end of the trading day. Here is an article about the first trading day of amazon. We then hold amazon until its current peak (as of this writing) at Dec 2013, where we have a return since inception of 26,486%. We then do the math with our $316,000 and we now have $83,424,000. MSFT (1986) [2,000]>AMZN(1997)[316000]=83424000. Hindsight is easy. Building a time machine is hard. Makes me think of how I would have lived with that kind of money, how hard I would have partied. Better yet, what kind of things could I have accomplished freed from the banal constraints of being forced to work for my nut 8-10 hours a day? Not only are you working towards these hours, but additional hours of your day are also requisitioned toward support for these main work hours that you are actually working. You have to factor in travel to and from work. Getting ready in the morning.
Sleeping early so that you can get up in the morning. Looking at it, it almost gets to 11 hours a day. Being feed from this can let you go up higher on the self realization ladder to do the things that will make you a better person (in theory) rather than doing the things you have to in order to survive, to support your Maslownian hierarchy of needs. Looking at the hierarchy people are lucky enough to reach the love/belonging level, and few go above. Where are you on the above chart, and what can you do to climb higher? For most people this involved the freeing factor, money. Money increases options and opens channels, freeing you to work on your higher levels. Time Travel would sure be a great way to kick that in high gear. Just be careful when the time police come after you. Keep the safety off, Mark
Yes. I fucked up. I recorded 2 calls when I actually recommended a call and two times the put with Jan calls and Feb puts. You would still be ahead a bit. Hold on to that put however and do not sweat the call, because the QQQ is about to drop like a rock.
As a matter of fact ahead of the drop, I am going to recommend more QQQ puts. I am going to do 1 put contract for Feb and 2 for march.
Timing of the Upcoming Drop We know its coming. The question is when. To answer this question, we go to the technical charts. First we observe that the coiled spring that I told you about yesterday is actually tightening The more energy that it puts into the coiled spring the more its going to blow:
As you can see, the spring above continues to tighten. And from looking at the past price history of this coiling spring by looking at the candle chart day by day I am going to estimate that this drop is going to start next Monday or Tuesday.
So hold on to your friggin hats, because its going to be a doozy and all over the financial networks for about two weeks before things start to steady out.
Lets get ready for this. 3 sets of puts, 1 in Feb and 2 in March.
It is always good to learn technical and fundimental analysis to see which way the market is going. It does no good to know that an asteroid is coming and to go about your daily business with a smile on your face looking toward the future with all your longs and calls. To quote the movie "The Dead Zone": "The Ice is Gonna Break!."
Caution is in order for this week because storm clouds are coming. Lets take a look at the daily QQQ chart which will tell us what is happening in a day by day view:
You can see that there is a large coiled spring situation forming here. When a coiled spring forms, it is either going to blow to the bottom or topside. And I happen to know from the weekly chart that its going to blow to the bottom side. Also the MACD indicator above is also a strong signal of weakness.
We have a straddle open out there at a 2:1 ratio. We are pretty much save with the 2x being on the downside for any big drop that will be coming up in the next month or so. So with this coiling up, the question is when can I exit the calls? The answer is any time I can. The next time there is a push up that doesn't violate the upper channel as I drew of the screen, I am going to get out of the calls. If it does violate the upperchannel that I drew with the coiled spring on the candlestick chart, then all bets are off and I will hold the call. I would calculate the chances of that to be less than 15%.
How to Play this: Get ready with your puts and your shorting. This is not the time to go long, buy stock, or anything betting that the market will go up.
I just read a statistic: Most people are one paycheck away from being broke in the United States. Yes, I can tell you that is both sobering and depressing. Are you one of those people? Then that means that you will be completely unprepared for any emergency or if there is a big global event or if the stock market crashes or if the dollar crashes. The dollar crashing would be about as bad as a zombie apocalypse. This is roughly how it would go: You would be sitting there watching tv and they would break into your programming with a special bulletin. They would show you images of the stockmarket, of the crowds at the market floor all staring up at a screen with thier mouths open, then a few shots of times square with everyone looking up at the monitor, then a few talking heads. A shot of Bernake walking hurriedly with his advisers, then a shot of Obama walking quickly with his advisers. The next day stores would be getting rushed and cleared out. You wouldn't be able to move around in the stores because they would be clogged full of people. Then gas would start to rapidly rise in cost at the corner station....3,4,5,6 dollars per gallon. More stuff on the news. More speeches by the president to remain calm and what measures are being taken. Meanwhile, the stock market despite all the brakes, continues to crash hard. They turn the machines off for another day of trading. By day three, it is dangerous to get in your car. The cars that are on the road are driving like lunatics. Now when you go to any store, it is cleaned out with 30-20% left. People are fighting over food and water. No one is paying for anything, they are just running in and out. Employees have given up, cops are not bothering to show up as they have more important things to do. You are freaking out. How much water and food do you have? How long will you make it on your supplies? You hear emergency vehicles outside going by and people beeping and some yelling. Helecopters going overhead. You turn on the news that night and you are met with scenes of chaos: Empty store shelves, looting, jammed expressways with no one moving, stories about the national gaurd being called out to restore order. Trucks have stopped running, food isn't being restocked on shevles in stores. What is to happen with you and your family? Its like its finally winter and you havent been storing any nuts. Now what? Several days later the power goes out. And after waiting for a couple of hours, it doesnt go back on and you guys are starting to get cold. People are out wandering the streets. Gangs are breaking into houses. Then the water goes out, you turn the handle, and you hear pipes banging and moaning and nothing. With no money people start leaving their posts at the electric and water companies to tend to their immediate family. The police after a week start doing the same thing. You are going to starve if you dont die of thirst. And what about the gangs of people wandering around looking for food breaking into houses? Forget your credit cards. Electricity is off. Banks are closed. All you have is the paper dollars you have in your wallet. And it looks like those are pretty much useless. You look out the window at the chaos, and you hear over a loudspeaker as a tank rolls by to remain in your homes. You will be given instructions. Remain in your homes. More helicopters overhead. Yes, this is the worse case scenario and if you Google "US Currency Collapse" you will find several websites that will play this scene out step by step. Most of them are preparedness websites looking to sell you something, but the underlying message is the same. Are you ready in case something rocks your carefully constructed cocoon? Most people are not. A few things: - Why are you living from check to check? You need to have more of a cushion than one check away from zero. What if you lose your job? What if an emergency comes up, such as a car repair or a furnace repair or an unexpected medical emergency? This shows that you have been living in a complacent fog. Get up, go to work, do the bare minimum, come home, watch big bang theory, eat dinner and go to bed. You have got to expend more energy. Climb that ladder, go back to school, Google salaries for careers that are high paying and get training for those jobs. In my other post, Why you must make more than 12-15 dollars per hour, I outline how $50,000 is the bare minimum you have to make as a single person to get by in this country. Anything less and you are going to be burning through your resources and the ship is going to sink. - Most of all you have to learn how to make money like the rich: You have to invest. Investing is a way to make your money work for you at a ratio of 1:1000, 1:10,000 or more instead of you making money 1:1 of you working at your job. The higher ratio means other people in factories and companies are making money for you. Its really the only way to get ahead, because if you work for other people they are going to be making money off of you and paying you the least they can get away with. -WAKE UP. The world is falling apart. Are you ready? What if all the above that I wrote happens? You do not want to be living in a city or a suburb when this goes down because besides the no food and water the most dangerous thing will be OTHER PEOPLE. People are all nice and civilized when everything is ordered and the flow is constant. But when it hits the fan and there is no money, structure, food or water, they turn DANGEROUS. People will kill to survive, to provide for themselves and their family. People will break through your windows of your house armed and hold you up for food. They will steal food and supplies from you, effectively screwing you and your family over. I suggest that you have a cabin ready and a quick way to get there. Have the cabin say in a remote area of Montana or North Dakota or in western Canada all stocked full of supplies: Several years worth of food kits and water, guns, ammo, and supplies. You will need a hydroponics system that will enable you to grow fresh vegetables, and you will need to learn how to hunt. Besides guns and bullets, you will need crossbows for when you run out of ammo and learn how to hunt with that. You will have to research an electrical generation system on the internet so that you can have power. Also you will need a functioning fireplace for heat in the winter. You will have to learn how to defend yourself and your family from intruders, which shouldn't be that often because you will be in the remote hills. With power in your cabin you can watch the chaos in the united states and all the civilized countries. - In short, you will have to learn to be self sufficient without access to electronic money. -Also, right at the beginning, like several hours into the dollar collapse, you will have to have transportation set up to get you and your family to your cabin. Its a harsh world out there, you have to be aware of all the possibilities. Before you think I am crying that the sky is falling, take a look at what is going around you. Google Rex 84 Ronald Reagan and the detention camps that are springing up all over the united states. Also Google FEMA camps. They are all huge detention centers with barb wire around them empty and waiting for something. A few talk shows such as Jessie Ventura tried going out and talking to officials there and they were shut down. The united states is busy arming. The US has been buying billions of rounds of bullets. Now Google FEMA coffins. They have stacked and are getting ready 100,000's of coffins. What is the US getting ready for? I would say this is a pretty big red flag that something is on the way. If you rely on other people or your government for help look at what happened after Katrina, or any hurricane in Florida. For two years, people still had blue tarps over their houses and insurance companies dragged ass because they didn't want to cough up a billion dollars. Have the resources and money ready. - Speaking of money, when the dust settles down, you are going to have to have something to trade or barter with. And since the US dollar will be like the German Mark in 1927, you will need PHYSICAL GOLD and PHYSICAL SILVER. to buy things with. Gold and silver in themselves have intrinsic value due to their rarity. The US dollar used to be backed on Gold and was taken off the gold standard in the early 70's and this caused massive inflation. The reason this happened was so the bankers could loan out more money and just print and print so they could loan more and more. While all systems are still online, start to purchase gold and silver. But just don't do it electronically, you must physically own it, ship it to you and have it in your possession. When all the computers turn off and the phones stop working, you will actually already need to be holding it in your hand. Well, thats all for today. Take a look at where you are and what you have and what you can prepare. Mark
Good afternoon. Today the QQQ did something interesting...it threw a bullish signal. Look at the chart below:
What does this mean? When you have two candles next to each other both with the tail going opposite directions, one being up and one being down, this means that there is going to be upward momentum coming up. However, this is usually more weighted when the QQQ has been coming down for a while and it looks like its at the bottom. Another bullish signal it threw was the other day with the "w" double bottom. Now both of these signals together definitely has my attention and I will be watching this to see how it shakes out. We are in the right position with our spread and if things take off our calls will cover our puts. On the other hand as I pointed out before, there is a fundamental weakness in the weekly QQQs so that is our factor weighing things down. What it comes down to is this: Will the two bullish signals trump the foundation of the weekly chart? I honestly don't think so. I think that things are going to spike up a bit and then they are going to fall. This is why I bought the 103 dollar puts, and didn't go deeper...this is interesting and we will see how this plays out on Monday. For now hold your QQQ calls and puts, Mark
So in taking a look at the markets action this morning, I am looking heavily at the fact that the cubes have just made a w bottom on the daily chart.
This hasnt happened recently and it is a powerful bull signal. However, as I mentioned in yesterdays post I do think that there is problems brewing in the underlying foundation of the stock market as shown in the weekly chart:
You can see, the market is having a longer term problem with the RSI gradually deflating and the MACD winding down. It does look like there is going to be a temporary push up in the northern direction but I thing that there is going to be overall problems. While considering my spread I had to heavily weigh in on the problem that there was a double bottom on the daily chart for the cubes. In most situations this is usually a very bullish signal, especially when a stock has been dropping for a while and is looking for the bottom before it resumes its climb. However in this instance, there was no big drop that lasted for weeks or months. A double bottom usually occurs when a stock has been crashing for quite a while, has come in for a landing, and there was two bounces at the bottom then it resumes its course back up. For this reason I am not attributing that much wieght to the mid or high level double bottom. However, I am going to be cautious with it. So in this light I am not going to issue a 1:3 options ratio, but a 1:2 options ratio. I am going to recommend a straddle with the call being half of the put, or the put being twice the size of the call. With this excellent configuration we are covered on both ends: If the double bottom does do something crazy and really meant the bottom and now the cubes are off to the races, it will cover our 2x puts. If what I think is going to happen, the puts are gonna make bank, but not until we get a little pip upwards with our calls that we can sell off. I will be watching the upward action carefully. And now for the orders:Here is the call...and remember this is 1/2 the size of the next order.
So if you bought the call for 500, the put you spend 1,000 on. 1g, then 2g. 5 g, then 10 on the put. Double check these: The call is for Jan and the Put is for Feb. I decided to go out a bit to feb because the call will occur first based on the chart and that protects us from erosion. Thats all for today. If you are in the midwest like I am, try to stay warm. Mark
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