Markets - What to do now? BUY,SELL,IGNORE,HOPE & PRAY - Trucharts.com Weekly Blog Update - week ending 8/21/2015
Well we finally are getting some excitement in the markets.. Before we get into the gist of our discussion today after the amazing week we had - where the DOW plunged over 1000 points and VIX (volatility index) moved up finally, we would like to list the key viewpoints we have been discussing in our past blogs regarding the market action:
- There has been sideways movements with triple digit moves every week (9-12 weeks)
- Markets have been exhibiting very clear topping action
- Narrow Breadth, narrow leadership, New Highs and New Lows ratio skewed to the downside
- Oil and commodity complex crashing (we said oil dropping was a big deal)
- China - China - China - over mired in debt and capacity in all sectors
- WE HAD STATED THAT CHINA WILL HAVE NO CHOICE BUT TO DEVALUE AND THAT IS EXACTLY WHAT THEY DID - IT WAS THEIR DEFACTO STIMULUS AND WE EXPECT FURTHER DEVALUATION OF THE YUAN - headed to 6.7-6.8 to USD range
- Transports sector down
- We have been saying sell into any rallies, take profits and hedge your positions
- DO NOT listen to the talking heads on TV - it is all BS
- NASDAQ was being buoyed by the biotech stocks and these were going to breakdown and were the new darlings of Wall Street along with the big internet names
- Earnings and Revenue forecasts were lower for the next qtr from many sectors -specially the tech sector
- Valuations in many internet stocks like FB,PYPL,etc were at ridiculous and lofty levels along with the valuations being given to companies like UBER etc in the private placement
- INTC and MU earnings were key and we had stated that the semi-sector was headed for a major slowdown. We said short INTC,AMBA,SWKS,HAL and MU
- We had hedged our longs with covered calls to reduce cost basis
- IBB ETF closed below 13 week SMA the week ending 8/14 for the first time in over 15 months
Well now everyone is wondering what next - what are you going to do with your portfolio - Well guess what - we are staying on the same viewpoint and thesis - Sell into rallies, take profits and short IBB (could be the best short). Markets will bounce - but these will be short lived - you can expect more volatility in the next few weeks. You will see clearly below in the charts below that major trendlines have been broken for all indices and the close below major moving averages is a big concern to us. We still like the INTC,MU,AMBA short and are shorting IBB/GILD. We were long NFLX - but with a covered call strategy. We will close half our position and wait for a better entry point. We will look to buy some index ETF on any bounce - target range for DOW is first support 16000 and then around 15000. We think PYPL could be another great short - we are short PYPL.
You can also use our BUY/SELL automated trading strategies on the stockview page to see where sell signals were generated and try to see which stocks in your portfolio are on a SELL signal - do this on weekly and daily charts for your stocks.
Here is the page: www.trucharts.com/StockView.aspx
Here is the image of trading strategy box on the page above: You have to click to expand the box:
Here are some charts we would like to show this week - look at the trendline and averages - these are weekly charts - please look at RSI and MACD - these are headed down:
We love documentaries and our recommendation for this week is an amazing documentary on smart meters and why you should not allow these in your neighborhood - we live a world of tyranny and corporate corruption and power: You can see this one on AMAZON or YOUTUBE.
