Last week, I was at the end of my proverbial rope. It seemed that every possible hope for the bears had been blown to oblivion, and I said as much. I was prepared to basically go into financial hibernation until such time as things seemed not quite as rigged against short-sellers.
Well, things changed, and they changed in a powerful fashion. I was profitable all five days in a row this week, and I had the best week I’ve had in the last five months, and maybe even for the entirety of this ridiculous year. I wanted to say a few words about some charts to point out some aspects that I believe have changed for the better (if you’re the ursine sort).
First off, the Dow Jones Financial sector not only failed to break out, but it is executing the “slumping out of the pattern” action I was hoping might transpire.
The NASDAQ Composite was at a multi-year high just a couple of weeks back, but it has sputtered its way beneath its breakout level.
Of course, my utter salvation this week was Utilities (XLU) whose puts are up about 70%. I trimmed 20% of my position near the end of the day, just in case this sucker bounces. If it does, I’m pushing right back into my full position.
Perhaps the biggest news of all is bonds, which have completed their right triangle top. I was actually thrilled to see the bond rally on Friday, which may continue Monday, because I think bonds are setting themselves up for CATASTROPHE.
A week ago, the small caps scared the holy hell out of me. They could still break out, it’s true, but they’re taking their sweet time, and my fervent wish is that this experiences the same “slumping out of the pattern” limp-a-matic action that we witnessed in the financial chart at the top of this post.
I’ll close with Amazon, which had spectacular earnings and an explosive move higher. Why is this bearish? Because the good news is out, and all it could muster was a shooting star. Want to keep an eye out for something? See if the high for AMZN on Monday is lower than today’s low. If so, we’ve got an island reversal pattern, which for the bulls would be more gross and disturbing than Lauren Sanchez’ bare legs.
I thus end the week with:
- Every position profitable, some of them wildly so;
- A decent amount of ‘dry powder‘ for the week ahead in case there are more opportunities;
- Radically improved spirits
And, as always, my deepest thanks goes to the paying subscribers of Slope who not only keep the lights on here (and I mean that literally) but also keep my spirits buoyed during the darkest hours.
