I sure feel a lot more calm right now than I did precisely one week ago. Last Thursday morning, of course, was the pre-CPI heart palpitations, and we were all facing an important fork in the road. Would the CPI be weak, sending the market ripping higher? Or would it be hot, sending the market on its way toward the direction of my 3200 target? As it turns out, it was the worst possible combination, which was white-hot inflation, sending bear hopes soaring, only to see the market move higher in what must be one of the most disappointing days of my entire life.
This morning, in sharp contrast, is no white knuckle moment. I’m heavily short, yes, but I’m very satisfied with my positions, and there’s no looming binary event. After a nice tumble yesterday, equity futures have just meandered all night long, going absolutely nowhere.
I will note, however, that Tesla might add an interesting change of psychology, since it’s such a hugely important cult stock. You saw yesterday evening the lunatic gambles that the /wsb crowd was taking on a Tesla “moon” (what a childish term………..), so there are going to be a lot of accounts zeroed out this morning. The stock is down about 5% (even in spite of Elon’s outlandish claim, which I listened to live, that the company would be worth more Apple and Aramco put together, which means about 1400% higher than it is right now).
If the stock ultimately gets below $200, that does two bad things for it. One, it breaks a psychologically-important Big Round Number, and two, it untethers the price from that Fibonacci level I’ve mentioned so many times and introduces the prospect of a trip to around $175 or so. Not a crash, but still, another “stair step down” is what has been a very steady demolition of the stock. I mean, let’s face it, even right now, the stock has already lost 50% of its value.
As I enter the trading day, I have 30 bearish positions (27 equities, 3 ETFs, all of them long put positions expiring in January, February, or March of next year) and only about 6% cash. If we have a smooth morning, I’ll probably deploy the balance of cash into augmenting some particularly favorite positions, plus I need to figure if I should take partial profits on my AA puts, which are going to be a bonanza.
