Hey everyone, now that we’re coming to the end of November, following almost a seven week slide since the beginning of October, I thought it might be good to take a step back and see where is the market overall and what can we expect this week and over the next couple of months.  We are starting to approach points where we may get a capitulation event inviting 2 opportunities. 1) to ride a fast short-term sell off and 2) position ourselves for entries in long-term swing positions.   It will def be important to practice good risk management and make use of the option flow monitoring in Black Box Stocks.

So to do this I’m going to use weekly charts and take a look at tech names, indexes, and china names.    As you go through this, review my opinions and formulate your own.  Figure out where would big money buy and sell, how can you tell if they are buying? What are they looking for to start or add or leave positions.

Be sure to reply on twitter.  Would love to see what you’re thinking.

Tech Names (FANGish)

FACEBOOK (FB)

PROS: Roughly at 32% retracement level from 210.  May get some buying for a near term bounce, BUT we did breach the 200ma.

CONS:  Lots of headwinds including data ethics, stated shift from growth and need to fix the company.

Overall FB has left the pack in terms of reaching and breaching the 200ma.  Given the gap down from last week, if we see buying come I do think a weekly close over the 200ma at 134 could bring some buying back with a near term test of 155-160.  I like dips under 130s toward 128 as a nice risk/reward for Mar calls. Next key support levels are 120 and then 105-110 area.

CATALYSTS to watch for:  FB to take strong action to address their various issues including firings, new hires, and ad sales reports.

AMAZON (AMZN)

We’re basically at a 25% discount, think we still have some more downside.  ideally we get a bounce of the 100 linear regression around 1380.  We should find support in 1200s otherwise we could be looking at something ugly with a dump under 1000 with an attempt to test the 200ma.  I honestly find it really hard to believe we get 1000, but if it does dump under, that would be a rough 50% discount off of recent highs and will more than likely invite buyers.   The interesting thing is we did make lower lows on less volume last week and the weekly candle does show some support.

CATALYSTS to watch for:  Black Friday Sales Results, Alexa echo sales, any info that shows ad sales generating significant more revenue.

APPLE (AAPL)

Talk about some panic selling on rumors of iPhone units sales drop.  I’m a little surprised we broke 180.  The truth of the matter is that AAPL is still growing revenue like a beast, the increase in price is making up for unit sales drops, and they are diversifying revenue.

I expect some short covering / dip buying to come in early this week for a 180 retest.  If push and test fails we could be looking at a pull back to test support at 160/165 and then 142.  155-160s should bring strong support but if that fails, I want to be ready with puts for a fast panic sell into 140s.    IF we see a 200ma test(currently at 140.75) in coming weeks, I will likely be a long-term call buyer.

If we get a reclaim of 180 I think we’ll be in for a choppy climb back to 190-195 — I’m not expecting a fast bounce back over 200 in the next week or two.  To get that to happen, we need some positive news/catalyst or large volume buying coming in.   If we do get that pop into 195-200, I’d like to get some puts — I expect to see the initial dip value buyers to exit as well as long-term holders who missed take profit stops over 200.   I am definitely keeping an eye out for a big volume candle like we saw on the 3 candle drop earlier this year that led to lead to a strong reversal.

CATALYSTS to watch for: Increased production order news, black friday sales results, surprise announcements of new products/categories(very unlikely), accelerated buyback.

ALPHABET (GOOGL)

Amazing to see GOOGL back on 1000 support so fast.  Given all the technology and opportunities with Google, I just don’t understand why it didn’t get the run up like other tickers did.   Given its recent headlines and headaches if this 1000 support level gives out I we should see 880-900 and a bounce from there.

CATALYSTS to watch for: If reports of Amazon taking more search ad revenue, more downside likely.  If Google Home sales results show strong and some sort of announcement where Google becomes an affiliate of AMZN and gets a piece of the sales — that could be huge (unlikely event)

NVIDIA (NVDA)

I don’t even know what to say.  Talk about an incredible fall from heights. we’re at roughly 50% of recent highs.  I like these levels of a dip buy for a pop/move into 180s and then possibly more selling.  So dips toward 130 that then get higher lows are probably good risk reward long entries. weekly chart is still weak overall but near term I think these price levels are attractive.  That said, Citron alerted a long last week indicating he thinks 160s vs 120  when it was in 130s.  So if 135-133 area breaks, we could see some panic selling into the 200ma around 120.  if we see 118s-120, and a higher low, I’d probably have to take monthly calls for a bounce.

CATALYSTS to watch for:  general strength in semi conductors, news/reports of upbeat card sales into data centers for machine learning

NETFLIX (NFLX)

I like these levels for an interim pop short-term into 280-300 and if that fails for selling to come in for a dump into 180-200 and then get some long.  245-250 will be a key level to watch for support this week. if that fails 200-220 is around the corner to get us to a 50% discount off recent highs.  I don’t see us getting to 160 in the near term, possibly mid 2019 if the quarterly reports don’t turn things around.

CATALYSTS to watch for:  news of improved subscription growth internationally with monster profit margins, some sort of controls on the spending.  Results from theater first releases on revenue.

Market Indexes

S&P 500 (SPY)

I’m not really an index trader but have been dabbling a little bit.  Overall I’m a bit concerned with the lower high formation. if we break this 258-260 support area, I think it’s not unreasonable to expect a dump into 240.  That said, we could get some sideways consolidation and a pop back higher from here but until we see closes over 280, or basing/consolidation on 260, I think chart looks heavy.  So any rallies without a catalyst should be considered opportunities for shorts near term, while big gap ups will probably draw in some gap fill and pops on short covering. I’d love to get long 258-260 for 270-272 and then flip short for 258 break and then add size for the 240 splash.  I don’t have it on the chart but we are at the lower line on the LinearRegressionChannel 100 line on daily and 3 yr weekly.

Overall I don’t think anything has changed significantly in the economy, it’s that investors are concerned about pace of revenue growth and the shift of investor focus from growth to value is causing these pull back.  When you look back at the overall picture, this pull back after 10 years of sustained growth is healthy for setting up moves for the next 10 years.  As traders we need to figure out short-term plays and well as setups in a much bigger time span for any swing accounts we may have — these golden entry points for long term positions after a long steady grind up doesn’t happen often.

CATALYSTS to watch for: Fed rate news (halt to hikes may be positive with initial negative reaction or vice versa),  China trade deal.

QQQ

More or less same idea as SPY except I think this could dump harder and faster given the weight of tech names.  I also think the rally can be pretty strong so expecting lots of range and volatility over the coming weeks.

China Names

Sorry I ran out of time so no charts but will be posting thoughts on BABA, JD, etc ont he Daily Watchlist.  Overall I’m eyeing for any weakness to get some long on potential positive comments heading into G-20.  Also any big strength, I’m open to getting some puts to ride into next week since I’m expecting no major deal to be announced.  There might be some deescalation news which could give china names a bounce but I’m not hopeful (waiting for the proof).

Summary

Key takeaways:  near term, I’m expecting some bounce that will then get sold.  watch for current support levels to break to give us the capitulation dump down.  The question in my mind is will this be a sudden drop or will it be a slow and steady drop with fast rallies.  That only time will tell.

Hopefully you found this post helpful, please send me a direct message on how I can make it better.  I ran out of time and had to rush through it more than I would have liked.

If you aren’t a member of Black Box Stocks, you should be.  We discuss trades and ideas regularly there and I’m a moderator in the chat room as well.  We have some incredible opportunities presenting themselves both long and short and I hope I can help you develop your own skills as a trader and take advantage of daily trade setups.

 

 


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