US wants to tariff the world and its main target is China.  The technicals say that China has it much worse than we do. This will be a war where everybody loses. 

While I’m a pure technical trader, I find the news lately very interesting. People think that China can beat us at a trade war. After the move today in the SP500, even though China will be the bigger loser, we look like we’re setting up for a loss too.

I remember when Republicans were for free trade.  I remember in college debating a ton of liberals the benefits of free trade.  If we would have entered a trade war with China and we had entered the TPP, we would have the backing of other countries in Asia Pacific setting us up for a pretty big win and stifling China.  Instead, we decided to go the populist route and get out of TPP.  While China gets the upper hand in the global war games, they will feel the pain we inflict on them.  

If we look at the large cap ETF for China, we see that this week we broke the uptrend channel.  They’re dropping, and pretty hard.  We should hit the first blue line and maybe bounce from there, but I see us going to the lower blue line.  We’re already at a 24% drop from the highs and the drop I see coming is an additional 10%.  Holy shit, China is fucked.  China does have something up its sleeve that Wags and I were talking about in the chat today, and that is devaluation.  Those fuckers are going to devalue their currency and it will be their only option.  With a strong dollar and higher prices (due to tariffs), it looks like we’re out to fuck the rest of the world, so it may be a trick that has promising upside for the Chinese. Time will tell. 

As for where we are…

We broke the top half of the trend.  Funny how this is lining up as we are on the way to hit the blue line.  We should (0 guarantees in life) bounce up from there.  With that said, Wags was pretty enlightening today as he saw something I didn’t.  Sometimes I can be human and miss shit, but he saw a pattern in the works that many traders trade. 

Holy shit it’s a head and shoulders on the daily! Why is it traded? Because it’s a 55% chance of reaching it’s target.  Too bad for investors….its target is to the downside.  If you see the blue line, it not only acts as support, but it also acts as a neckline for the pattern.  We’re stupid for charging tariffs.  We’re stupid for walking away from free trade deals where we can exploit cheap labor and get quality products at a great deal.  For an administration that likes to tie itself to the market, it is stupid to do so. If the market is going to catch up to fundamentals…I would distance myself from it.  You cannot go up a few hundred points on the Dow and yell “MAGA!”, followed by steep losses and say, “We’re in this for the long run.”  It doesn’t work like that.  

I’m currently short looking to close a lot into the blue line.  I will be shorting into strength on the bounce.  Stops above the head.  The shittiest part about this is that the left shoulder was over 3 weeks of trading.  If the right should takes the same amount to form, it will be a choppy and boring 3 weeks.  It will also make sense because of the summer break in trading.  This will bring us to sell off just before Europe takes off for holiday in the month of August.  

Come join the chat and talk to Wags and me and a few other traders about the market and also grab some great shorts like I was giving out this afternoon. 

-RM 

Perception is all about time frames.  You may be right on a position, but it’s all about the time frame you trade in.  You may be right too early, and sometimes so early you can’t afford to be right.  

A lot of talk about the stock market going to shit has been happening for years.  You’ll hear a lot of shit talking and then when the market finally takes a shit, those that were short early on as the bulls ripped up will be saying, “I told you so.”  Some of them can afford it, but others can’t.  A good example of this is Bill Ackman and his short on Herbalife.  He had to close it at a loss as high as $740 million. 

So as I look at SPY/ES(futures) I see that we are obviously in an uptrend.  We’ve gone up ever since I called that I was looking for long opportunities. I was looking around the 2800 area on ES and we got close to 2796.  You can’t be too precise with targets because a lot of people see the same target and they try to get ahead of it.  The shorts got ahead of the 2800 area.  It was a good place to exit at gains, and now I’m looking to re-enter.  The direction is up for grabs. But let’s see the position we can swing on.  

As you can see on the daily chart above, we’re on the upper band of an uptrend.  The trend is your friend for the trend traders, so if you’re a trend trader, you should be BTFD!! (buying that fucking dip!) I’m a breakout trader…so I’m waiting for a break of a trend or range.  I know we need to go back to the blue line and look! It is at the top of the trend. My money is that we hit that that and from there, we breakout! Yay! New highs….

Ooooooooor we go back down from that spot, and the bulls get caught in a trap. Let’s not forget that next week is the start of earnings season, AND quite a bit of economic news is coming out in regards to trade and whatnot….soooooo we can go anywhere.  

Why time frames are important is that on the weekly, we have a rising wedge.  This has been a pattern that Wags and I have been capitalizing on lately.  Wags introduced me to shorting these shapes and I’m loving the new revenue stream.  On the weekly, you see that we’re getting close to the tightening area and it is right at the blue line on the daily chart where it should get tighter.  Most rising wedges end up in a nice short position and rarely, but sometimes, it shows a turn to the upside.   

I’m looking to go long above the blue line and to short of the rising wedge pattern on the weekly.  In the meantime, I’m riding the trend.  Keep in mind your timeframes and what you’re trading.  Don’t get too short too early or too long too early unless you can afford to be wrong for the timeframe.  Be flexible, be nimble, and most importantly, be profitable.  

-RM

TSLA reported earnings, BA got a stellar review this afternoon by Jim Cramer, and I’m getting ready to press my foot down on this market’s throat. 

This market continues to bore me.  I’m so fucking bored.  If you’re trading this shit and aren’t buying the dip, and selling the rip like I told you last Friday morning, “For now, just keep buying the dip and selling the rip.” then you’re experiencing lingchi (death by a 1000 cuts). 

I just realized today is Wednesday…wow these have been 4 of the longest fucking days ever!  So I almost never play earnings and how bored am I? Well today I decided to gamble a little on TSLA earnings. 

Let’s try a little here.

So apparently, TSLA shares are hard to locate and I could only get in on the small position.  Everybody wants to short TSLA, and it’s so crowded that when I want to stick the knife in some more and twist…I can’t. 

I then make my call like a batter going to bat and predicting where he’s going to hit the home run to.  

TSLA 15 Chart

Just another home run.  1-0 RM. 

I was driving and I pass up CNBC on my XM radio.  Jim Cramer is on.  I listened to him talking about BA and how it’s going to go to $400.  $400 is his price target and it’s a BUY BUY BUY!  I remember looking at BA earlier this week and thinking…this is a good short.  Today REALLY looks like a good short, which is why I was wondering why this idiot was telling people to buy.  Let’s look at the chart! 

We have a rising channel on the daily and today it broke.  That’s why I said it’s a good short.  It might go to $400, but with the way the market is going right now…I say it goes to that blue line you see there first.  You can buy this stock $24 cheaper and that may be a good entry.  It’s not my kind of trade, but if you want to try to buy there for a few, that’s a good entry.  I rarely show my hand this early, but here it is.  Short here at $324, 1st tgt $300 and then evaluate from there.  Stops are a set at re-entry of the channel. I guess I’ll be selling to people that listen to Cramer.   Let’s go 2-0 RM.  

Last but not least.  I thought earnings would do it.  It didn’t do shit.  I thought the Fed today would do it.  It didn’t do shit.  This market is converging.  It’s making higher lows, but no higher highs.  We’re tightening up and where we go is where you should go to.  The action the last few days had my Spidey senses go off.  I’m no longer bullish and I think we go lower.  I won’t make my move until the market says where it’s going, but I’m more inclined to say short than long.  

There are two trendlines going on here.  The bigger ones on the outside, and the smaller ones on the inside.  The smaller ones are on the shorter time frame and it looks like we’re resting on the bottom of that line. As that trend has gotten tighter, that’s why I’ve been suggesting to sell the rip and buy the dip.  It hits the top of the line and goes right back down.  EZPZ.  It is getting so tight, it will have to pick a direction and from there it will go to 2 other lines.  Since I’m thinking it will go down, it will hit the infamous 200 day moving average which is that light blue line.  It either bounces off of that, which after hitting it 3 times, we should go through it and then we hit the bottom purple trend line.  Where we go from there? Based on price action. 

You’re welcome. 

-RM