What Goes Up ...



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Lowering TVIX 2nd Position Buy Stop

We're lowering the buy stop for a 2nd position in TVIX by more than $1.00, to $6.20

We'll not utilize a stop on this position, considering it a lottery ticket that will not expire.

Our belief is that it shouldn't be too long before we see a rapid 50-100% appreciation in the price of TVIX.

However it's a highly levered instrument so keep your individual needs and risk profile in mind if considering it.



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Update: Bitcon vs. Stocks, Tesla El Camino?

On September 26 we showed what seems to be an established correlation of the bitcon [sic] leading stocks:

Today we offer this 3-month look at bitcoin vs. the DJIA:

As can be seen, stocks dropped in early October, shortly after we posted the observation above.

Bitcoin then recovered dramatically, as did stocks.

Since early November though, bitcoin's been tanking, offering a compelling non-confirmation that, if history is any indicator, will soon resolve.

That would mean stocks drop significantly, soon.

It's different this time?  Perhaps, but that's never how smart money bets because...

History repeats.


Speaking of cons, enjoy fresh Tesla hilarity via this 1-minute video on YouTube.

The video is from a big event Tesla held yesterday, and in this segment Elon Musk was bragging about the "unbreakable" glass (which must be to trap people inside in case of an accident).

Tesla stock is down over $20, nearly 6%, today because of it.

In case you're wondering, that thing is the new Tesla pickup truck they'll (supposedly) soon produce, which the company forecasts will be a big hit with consumers.

Looks familiar?

 
Wikipedia: Chevrolet El Camino is a vehicle that was produced between 1959–60 and 1964–1987. Unlike a pickup truck, the El Camino was adapted from a two-door station wagon platform that integrated the cab and cargo bed into the body.

It was a laughing stock and commercial flop.

History repeats.

We are comfortably triple-short Tesla.



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35-Year Trend of Resistance In Effect, Adding TVIX

In 2008 the DJIA returned to lows it hit 6 years previous, and 10 years previous.

That's shown by the blue horizontal line on the chart below.

A few years of gains, even a decade's worth, being erased in a quick reversion is not historically uncommon.

Losing 6 years of gains now would require a 46% drop to the pink horizontal line on the chart below.

That'd be remarkable, but not surprising in a long-term context.

Losing just 2 years of gains, or only about 20%, would revert the DJIA back to the orange horizontal line on the chart below, which also corresponds to a 10-year up-trend shown in green.

Are any of these scenarios impossible?  Unreasonable?

No.

35-year trend of resistance (red) in effect:

Many think stocks will never drop again.  We've heard that before, usually at major market tops.

They may finally be right but we're always happy to bet against the lemming herd, especially when they seem to be stampeding off a very high cliff.

We'll do so by adding a 2nd TVIX position once it rises to $7.70

Earlier this year we traded TVIX for a gain of 43% in just few days.

We entered it again earlier this week.

TVIX last traded at $7.35


History repeats, because human nature never changes.

It's not different this time.



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SJB Chart

SJB chart:

We hold a lot of SJB, to effectively short junk bonds, remaining completely comfortable doing so.



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S&P 500 Breadth Divergence

S&P 500 Breadth Divergence



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Shorting TSLA & Buying TVIX

We're still double-short Tesla at an average of $358 and will now add a 3rd position, with no stops in place.

And why not?  Nothing has changed fundamentally for this company, and even if CEO Musk were responsible, credible and honest, and the company had nothing at all suspect with its operations or accounting, and taxpayers weren't being totally scammed to the company's considerable benefit then it'd be very generously valued around $75 with a tsunami of more respectable and reliable competition hitting the market at the top of an epic global credit bubble.

The Buffalo News: Tesla's Buffalo plant gets $884 million write-down

Bloomberg: Elon Musk’s Solar Deal Has Become the Top Threat to Tesla’s Future

Anton Wahlman:  Tesla Lost Market Share In Q3 To BMW, Mercedes, Audi And Volvo

TSLA traded as low as $177 this year, about half of the current price and of our average short entry.

Its low was posted on June 3rd.  The day before, on June 2nd we noted that Tesla "is at a confluence of technical support shown in this chart [below] by the blue lines.  A bounce is not a given though if it occurs it should not surprise."

What a bounce it's been!  

Many times this year we stated that we'd consider adding a 3rd short position if the stock managed a material rally, and we consider being able to sell it above $300, much less around $350 (Tesla closed today at $349.35), as a great gift.

Try to keep a straight face as you read this; Tesla is currently the most valuable car company in the United States.


Like Tesla, stocks overall are ridiculously overvalued and the current bull market is exceptionally long in the tooth:

We'll add to our existing general market shorts via TVIX once it trades above today's close of $7.83

We'll not utilize a stop on this position, considering it a lottery ticket that will not expire.

We traded TVIX once before per this blog, in late July of 2019.

We closed the position for a gain of 43% just a few days later.

It's a highly levered instrument - great gains can easily be, or become, great losses - so keep your individual needs and risk profile in mind if considering it.

MishTalk: Household Debt Climbs to Record High, Delinquencies Rise

MishTalk: Recession Warning: Freight Volumes Negative YoY for 11th Straight Month



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Buying JNUG and TZA

A month ago we bought JNUG and TZA.

A week later we sold the JNUG position for a 26% gain.

JNUG continued much higher, to 61% above our purchase price.

It subsequently plunged and is now at $55.00 which is 12% below where we last bought it, and almost 29% below where we subsequently sold it shortly thereafter.

We're now buying it back. 


TZA traded as much as 25% higher shortly after our last purchase, linked above, however now it's a little lower than what we paid in September.

We'll add another position once it trades back above $41.20

It's currently trading at $40.40



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