November 27 Premarket

There is a new very detailed post here, using LHBLs, supp, res, and specific setups within there with the SPY and QQQ discussed along with AAPL.

The debt obsessed world has been 100% intoxicated by the low/falling rates since September 1981. Everyone under 37 years of age hasn’t even been alive during a bond bear market. Almost everyone on the planet believes it is normal to have these low rates – and the huge problem is so does EVERY SINGLE government, virtually all businesses and consumers. No one is doing any planning for higher rates of even a few percent. The debt ATM/rollover/window is believed to be always open and easily accessible for most types of loans/credit/debt.

I am long-term bearish on everything directly tied to (low) interest rates. I have been very early and prescient about bonds, with specific trade ideas to boot, including entry price levels, exit levels, and sit on the sidelines advice. If you have not been really studying this stuff and planning ahead, I do not even know what to say at this point. We will all be affected in a major way. I personally have no idea what a bond bear market is, but I have done years of in depth study on them, and have discussed over and over and over what my education has been.

An example of where we are going with the effects of a multi-decade bond yield rising world – the relatively minor increase in mortgage rates so far, it is destroying the mortgage business. I have long believed that RE is moving (very) slowly to a cash transaction business. All that leverage built into the price THANKS TO MORTGAGES, wow. Yes inflation and rising overall asset prices will certainly dampen/mitigate a lot of the potential price drops.

We have around a 5% handle on mortgages. It has been six years since a 5% rate, ten years since 6%, twenty eight years since 10%. The average rate over the last 50 years is over 8%. What in the world will RE be like with just the 50 year AVERAGE rate being here. And what about with 10%. That is coming next decade. And RE (and the Earth) is quickly cooling, the top has been in with many global markets, in the US it is here also, but of course people are going to do what they always do and say and react. It’s cheaper so it’s a bargain and it’s time to buy. They are elated to get a “bargain”. It’s basically my dip buy type setup mentality but used totally incompetently by RE buyers. I DO NOT dip buy in a downtrend. These folks are buying, not shorting, on the RIGHT side of the move. 90% of people will never understand, recognize, or even know what a TREND even is. And this all fits in with my very big concerns of combining a COOLING planet with RISING interest rates in a wildly DEBT-OBSESSED world with zero PREPARATION PLANNING for – maybe the Earth is not warming? So let’s at least consider not throwing all our “climate-capital” into one basket. And all this fits in…..

From Bloomberg:

Ram Konara, a real estate broker in suburban Dallas, is raking in freebies this year: trips to Lake Tahoe and Santa Barbara in California, Cabo San Lucas in Mexico, and a dude ranch in Wyoming. The homebuyers he represents are cashing in, too. They’re winning price cuts of more than $100,000, on top of free upgrades such as media rooms, cabinets, and blinds.

This generosity flows from increasingly desperate homebuilders. Hot markets are cooling fast as interest rates rise. In the great housing slowdown of 2018, shoppers are reclaiming the upper hand, after years of soaring prices that placed most inventory out of reach for many families. “Everybody is hungry for the buyers,” Konara says.

………with what I have been saying, discussed it in detail numerous times – if you do not know how to TRADE, you will be lost in the world ahead. Also have discussed that I expect this area to stretch out well into next year in the stock market. Remember, in 2014-2016, the DJI went NOWHERE for 2 years, but had great TRADING opportunities. So far the DJI has been in this range overall for a year. And with that trading topic, I discussed my SPY option trade, in that link above, held a 1/4 position from .68, a new day today, will give that position a 10% loss exit.

On 11/7 I discussed VCEL in detail, it has become one of the strongest stocks, and I want to again explain something, as VCEL broke out again to more new multi-year highs highs, VCEL has become one of the strongest stocks out there:

“I did catch VCEL yesterday, 10% on 1/2 scratch on the other, the stock broke out, and 1,2 dip, outstanding earnings AND GREAT GUIDANCE. Guidance is more important than the earnings, on a short-term trading basis.

VCEL VCEL

• Total net revenues increased 58% to $22.5 million compared to $14.3 million in the third quarter of 2017;
• Gross margins of 64% compared to gross margins of 50% in the third quarter of 2017;
• Net loss of $1.1 million, or $0.02 loss per share, compared to net loss of $5.4 million, or $0.16 per share, in the third quarter of 2017;
• Non-GAAP adjusted EBITDA of $0.9 million compared to a loss of $2.9 million in the third quarter of 2017;
• As of September 30, 2018, the company had $97.8 million in cash and short-term investments compared to $26.9 million in cash at December 31, 2017; and
• Full year 2018 revenue guidance raised to $87 to $90 million compared to previous full year revenue guidance of $80 to $83 million.”

Original chart:

Current chart below. Many ways to go after a stock in this type of situation – a bigger stock, multi-year highs, BUT the break out came from too low in the reaccum area. So you wait and watch for that first solid support area formed on the gap day, or the next day. In this case that area formed on the first day, look at all the trading it did there. Then, make sure there is at least 10% parameter back to the high, therefore at a minimum you can trade it for 10%+ in and out, or sell 1/2 and hold with a scratch stop. You can short-term trade it, plus longer-term hold it. I do that ALL THE TIME. So then you would enter into a SPRING of that – and wait, it will work or not, you did your job.

I want to explain something else – learn to use AND respect huge daily and weekly res areas. Yes sometimes things can blow right thru those areas, but know the probabilities of something having a sustained move thru those res areas. Do the work to understand what a quality setup would need to be to make you believe that a res area will not hold, very important with daytrading small stocks. AEMD came out with very bullish news today, here is the daily chart. I did not trade this in either direction, but certainly short sellers were waiting for this one. One of my friends had a great quick 15% long-side trade in it also. So many ways to trade small stocks. The high in pm trading was 2.30, right now around 1.60. People shorting over 2.05 doing great, probably already covering some, or all. But look at that daily chart. What are the probabilities that the bko over the huge daily res will be sustainable? It’s hard to fathom how someone could even buy that above 2.05 period, yes fine scalping people, but even then?