Index Overview: Yellow Jacket Edition

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It’s 7:10 p.m. as I begin typing this, which means it’s beddy-bye time for a lot of folks on the East Coast already, and here I am just beginning my end-of-day wrap-up. The time is just slipping away from me lately, largely due to the sheer quantity of positions I am managing (one hundred and sixty equity shorts). Mojave has also gotten into the habit of getting me up at 4 in the morning, but I’ll try to make use of this tonight by looking at the lunar eclipse. When life gives you lemons, right?

I was originally going to do a video for this post, which is about one-fifth the work of a typed post, but I ran out of time at home and now, a la Dick Cheney, and am in a remote, undisclosed location.

I want to address the drama that took place recently with respect to banning. I do not ban lightly. There are times, however, when I find it necessary. There are other times when I ban someone and, upon reflection (and discussion), I change my mind. This is what happened today.

Let me use a metaphor: I have a number of beehives in my yard (I really do; this isn’t the metaphorical part). I am very fond of the hundreds of bears that swarm about all day, roaming the neighborhood and gathering nectar. They are sweet creatures. I can be in their midst, and they don’t bother me. What they do, however, is create marvelous honey which my family enjoys. It also helps out the flowers of Palo Alto. So it’s a beautiful thing all around.

I noticed, however, sometimes yellow jackets come around. These are fearsome-looking creatures, and they’re also downright mean. This became clear to me after I saw them attacking my beloved bees. They pin they down and stab them until they are dead. (Even more touching, other honeybees will later cart the bee corpse away – – – one on each side, they will somehow hold on to the legs of the deceased, and whoosh, they fly away with their departed bee buddy.


I don’t like bullies, and I decided I don’t like yellow jackets. They match my definition of evil (“that which destroys life or liveliness”). And they sure look the part, too. I thus take great pleasure in whipping out a large can of chemical spray specifically designed to kill yellow jackets on contact. I have become the Rambo to the yellow jackets in my yard, and none of them live to tell the tale.

Likewise, I don’t like the occasional yellow jacket ruining the delighted place which Slope usually is. Some people are just plain mean. Maybe it’s immaturity; maybe it’s a hateful nature; who knows. But I don’t like it in the confines of the blog I’ve worked nearly ten years shaping, and in the midst of Slopers (ahem, especially Slope Plus members) whose company and camaraderie I cherish.

These are emotional times, however, and I can assure you, as the market continues to unravel, the emotions will continue to rage. The bulls are going to fight tooth and nail, with Yellen at their side, to keep this market charting its natural course downward. Let me be insanely clear on this point: Yellen is the anti-Christ, and she will re-introduce QE once the market starts getting seriously damaged. At some point, her money-printing will stop artificially lifting the market, and at that point, we can slice her ugly throat. But until then, caution, sometimes to the point of terror, must rule the day.

The pathway to that throat-slicing, however, is going to be marred by a lot of fighting between bulls (who have had criminal support for half a decade now) and bears (who, few in number, possess a righteous indignation and a thirst for vengeance). This will manifest itself in ways large and small, and one “small” way it did today was a ban……….but Slopers are a democratic lot, and I received a number of passionate emails that stated bans should be an act of last resort. Thus it is undone.

Now, having that drama behind us, I’ll share a few thoughts about indexes.

Succinctly stated, the advantage is getting more and more tilted to the bears (and I’ve been emphatic on this point for a solid two weeks). Might the market rally tomorrow? I dunno, maybe. Do I care? No, not really, so don’t bother pointing and laughing. My 160 shorts are ungody beautiful, and until the VIX reaches the target I’ve mentioned a billion times, I’m being strong. If I wasn’t feeling strong, I wouldn’t have have penned my Gift From the Gods post last week. I am strong, I am confident, and in the end, I will be what I most deeply yearn to always be: right.

The Dow Jones Composite will soon threaten its summer lows, and in doing so, it might snap that long-term red support line.


The NASDAQ Composite likewise is approaching the 4325 level (approximately) which was the summer’s dip, and if it breaks it, keep an eye on those lower levels beneath (blue and then red).


The Dow is a kitten’s whisker away from breaking its own support level, which is terrifically exciting. Even a modest down day would do the trick.


The S&P 100 already has broken its support, as has the S&P 500, not shown here.


Now, most exciting of all – – the grandfather of the indexes which has me dancing like a cat on a hot tin roof – is the Russell 2000. I’ve already shared with Slope Plus members my target on this. It, ummm, isn’t very close to here.


The Dow Transports (the domain of insane stuff like LUV) has utterly and completely shattered its trendline.  It is in the same pristine and unsullied state of a stack of Playboy magazines left in the room of a lonely 15-year old boy during a long, unattended weekend.


When will I decide to take profits and get out of the way of the risk of the man-beast Yellen? When VIX exceeds 22. My blue-tinted circle awaits. And I shall be steadfast until that day is at hand. Thus are the words of the Prophet. Amen.