As is so often the case with thrilling Sunday night action, by the time we wake up to see what Monday holds, the movement is wholly or partly gone. For example, crude oil last night was on an absolute tear, moving up to about $120:
During the wee hours of the morning, however, that monster move weakened by half. Remember, crude being up over 10% would normally be earth-shaking news, but in this case, I’m sure there’s a sigh of relief out there that “well, hey, this will be over real soon now, and it isn’t so bad after all.”
Likewise, moves like the quadruple-point plunge in the Dow and the 4% drop in the small caps have been cut by half or more. Looking at the NASDAQ, for example, the plunge petered out six hours after the open and since then has been recovering to a far more modest 1% slip.
I’m typing this an hour before the opening bell, but I’m feeling grateful for two reasons:
- It’s not green. I was seriously concerned I was going to wake up a headline like “IRAN SURRENDERS WITHOUT CONDITION; DECLARES TRUMP TOTAL STUD” and the markets would be raging higher. As a practical matter, I don’t think Iran is really inclined to such a headline, but we live in strange times;
- The bounce, as I’ll soon illustrate, actually sets us up for a MUCH bigger fall.
Still, those dripping-with-juice gains I saw last night are already sorely missed, as plenty of my individual shorts resemble Salesforce (CRM) below – – that is to say, yes, down a little bit, but nothing like Sunday evening.
Looking at the /NQ to include the last few hours of Friday’s trading, you can see where the price gap is, which we’ve been climbing back toward. Paradoxically, this kind of “everything’s going to be just peachy” recovery is prospectively healthy for the bears longer-term, because we aren’t getting the kind of huge flush that compels D.C. to, umm, “help.”
An even longer-term chart makes this plainer. This is a gargantuan top. We cut below support briefly last night, and we’re recovering to the gap, but the damage is done. It’s quite obvious what tremendous potential a fall from a gap this well-formed has.
I am not trading anything related to energy at all (with the mild exception of a short position in HAL, which is virtually unchanged at the moment), but the move in oil is tremendous. The breakout from the 60s to about DOUBLE that amount is extraordinary, although I’m staying miles away from this thing, since the width of possible price is wider than the Strait of Hormuz.
Regarding Bitcoin, the futures are essentially unchanged for now. I’ll probably just grit my teeth and hang on to this one, since the long-term price target is tens of thousands of dollars lower.
As I mentioned yesterday, I am entering the day neither light nor heavy, but with a commitment level a little over 100% spread out among 43, count ’em, 43 positions. My one zany trade, those SPY puts that expire literally hours from now, look likely to produce triple-digit percentage profits (although closer to 100% than 300% right now!!).
Good luck out there. It’s going to be mayhem.
