Excluding BBBY the market appears to be rolling over

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
This week is the critical week for the market. The market all across the board was hitting extreme resistance. Bitcoin appears to have been rejected for a fourth time at 24,000. I put my put on MSTR again for Oct. If the market can hold and bust through it will be off to the races, but if this downside starts breaking 5 day and 13 day moving averages, things could start to get ugly in a hurry. The charts I saw said 4300 was the top for the S&P and we pretty much hit that on the button. I think the likelihood of going down is much higher that pushing higher but a lot is going to come down to the FED. My bear case for the market is we have run too much, the individual has continued to spend but this has been fueled through credit card, that will have to slow, I think gasoline prices may level out here, but natural gas prices are going to skyrocket this winter. Putin is going to try to put the screws to europe to stop supporting Ukraine. I also think core inflation is going to remain sticky and the FED is going to continue to push the pedal on increasing rates. They come out with a statement tomorrow. We will see what happens but this was a good bear market rally from my viewpoint.
 

Sooner-Be-Dead

HR Heisman
Sep 2, 2003
9,589
2,837
113
Agreed but none of the negative factors are likely to take hold in the next couple of weeks. The next big turn will likely come from a higher than expected inflation print.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Agreed but none of the negative factors are likely to take hold in the next couple of weeks. The next big turn will likely come from a higher than expected inflation print.
I think this meme fueled rally is going to be the undoing. It shows there is still way to much money flowing through the system. If BBBY sells stock to put towards debt, the meme trade will start to deflate. Market craziness right now.
 

seminole97

HR Legend
Jun 14, 2005
18,968
19,323
113
At least the Big Short puts his money where his mouth is... or rather pulls his money as the case may be.

After blasting the latest stock market meltup as "silliness" and claiming - correctly - that the US economy is facing a gruesome crash in tweets which he then promptly deletes (conveniently, another accounts snapshots his tweets for posterity)...


... Michael Burry - who runs the smallish Scion Capital hedge fund - has done something few of his peers would consider doing: he has traded in line with his statement, and according to his just released 13F, the famed investor has liquidated his entire portfolio which as of March 31, had a notional value of just over $200 million (including $35 million in AAPL put notional), and instead held on to just one stock: private jail operator GEO Group, which he had previously invested in but had dumped all of his holdings at the end of 2021 only to sport a modest $3.3 million, or 501K share position, as of June 30. More notably, and as shown in the chart below, this was the only security he held on to as of the end of Q2.



The news that Burry's Scion only held shares of the Boca Raton, Florida-based Geo Group, sent its stock surging 12% to $7.68 extending its gain since the end of the second quarter to 14%.

Among others, the hedge fund exited positions including Alphabet, Facebook parent Meta Platforms, Bristol-Myers, and also unwound Apple puts tracking some $36 million in notional value.

To be sure, Scion's 13F disclosure, which is required for all money managers overseeing more than $100 million in US stocks, only shows holdings in stocks that trade on the nation’s exchanges. It doesn’t reveal non-US traded securities or short positions. Such filings are also historical, providing a snapshot of a fund’s holdings at the end of a quarter which ended 45 days ago, and may not reflect current investments.

It's unclear when during Q2 Burry liquidated his entire portfolio. The 51-year-old investor rose to prominence after a winning wager against mortgages in the run-up to the 2008 financial crisis; the outspoken anti-liberal has since become a cult figure on social media, with ominous predictions of a looming downturn. In a May tweet, he raised the specter of a crash similar to the one 14 years ago.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
You have a major divide, but the majority are stating we have much more downside. JP Morgan is all over the place saying we are in a hurricane to then saying possible upside is positive on the market. Art Cashin, Fast Money Chartist, Blackrock and several other individuals think there is much more downside. Here is my opinion, valuation are still 1 standard deviation above the norm. We have been in an environment where the only place to put your money was in the stock market to make money. My father in law is now making 2.5% in a money market account and that could get up to 3-4%. The ability to save or put money in other investments should create another potential outflow of funds. I feel the market is priced to perfection currently, and resistance is all over the place. 4324 on the S&P - It hit that and immediately rejected. If any negative news starts to roll out, we are due for a pullback. Then the question becomes is this a pullback or something larger. Not sure, but I would lean towards something larger. The major pullbacks can last well over a year and we are not there, we also didn't have the historical flush of the market, and the fact we still have this much exuberance shows there is still too much money sloshing around. The market at these levels gives the fed cover to continue to increase rates. If earnings start to come in due to less spending and inflation that will also impact the PE ratio. I could be wrong, but feel comfortable with how I am positioned.
 
  • Like
Reactions: Sooner-Be-Dead

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113

The Fed meeting minutes will be released tomorrow. I would assume the market will react to it poorly. BBBY got knocked down at the end of the day. I would assume we will see a gradual decline, but I cannot guess the market that well. In regards to BBBY if I were to play it I would buy the stock then I would sell January 2023 call and then by a short dated put, but not worth it to me. I will go after a stock that has gone up over 30% with no increase in bitcoin price. If Bitcoin drops to 21k as the article states it will begin to put immense pressure on the stock, if bitcoin price gets down to 16k will my put position should do very well.
 

luvmyhawks

HR Legend
Mar 22, 2005
20,601
17,424
113
At least the Big Short puts his money where his mouth is... or rather pulls his money as the case may be.

After blasting the latest stock market meltup as "silliness" and claiming - correctly - that the US economy is facing a gruesome crash in tweets which he then promptly deletes (conveniently, another accounts snapshots his tweets for posterity)...


... Michael Burry - who runs the smallish Scion Capital hedge fund - has done something few of his peers would consider doing: he has traded in line with his statement, and according to his just released 13F, the famed investor has liquidated his entire portfolio which as of March 31, had a notional value of just over $200 million (including $35 million in AAPL put notional), and instead held on to just one stock: private jail operator GEO Group, which he had previously invested in but had dumped all of his holdings at the end of 2021 only to sport a modest $3.3 million, or 501K share position, as of June 30. More notably, and as shown in the chart below, this was the only security he held on to as of the end of Q2.



The news that Burry's Scion only held shares of the Boca Raton, Florida-based Geo Group, sent its stock surging 12% to $7.68 extending its gain since the end of the second quarter to 14%.

Among others, the hedge fund exited positions including Alphabet, Facebook parent Meta Platforms, Bristol-Myers, and also unwound Apple puts tracking some $36 million in notional value.

To be sure, Scion's 13F disclosure, which is required for all money managers overseeing more than $100 million in US stocks, only shows holdings in stocks that trade on the nation’s exchanges. It doesn’t reveal non-US traded securities or short positions. Such filings are also historical, providing a snapshot of a fund’s holdings at the end of a quarter which ended 45 days ago, and may not reflect current investments.

It's unclear when during Q2 Burry liquidated his entire portfolio. The 51-year-old investor rose to prominence after a winning wager against mortgages in the run-up to the 2008 financial crisis; the outspoken anti-liberal has since become a cult figure on social media, with ominous predictions of a looming downturn. In a May tweet, he raised the specter of a crash similar to the one 14 years ago.

Sounds like someone is pouting due to all the money he has lost. That monstrous short position he took on apple is costing him dearly right now.
 
  • Like
Reactions: HawkRCID

Bank of Hawk

HR Legend
Gold Member
Feb 24, 2007
10,378
12,337
113
I think right now, it’s best to be in total stock market funds, like VTSAX . Overall I believe things are trending up, but trying to pick between sectors and individual stocks will be a guessing game.
 
  • Like
Reactions: Hawk_4shur

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Agreed but none of the negative factors are likely to take hold in the next couple of weeks. The next big turn will likely come from a higher than expected inflation print.
I disagree the fed minutes from July come out tomorrow. more likely they are going to be more concerned about excessive inflatiron and it has the potential To spook the market. If the downturn occurs it happens in the next 5-8 sessions.
 

dgordo

HR Legend
Gold Member
Nov 15, 2001
25,348
35,138
113
Chicago
Sounds like someone is pouting due to all the money he has lost. That monstrous short position he took on apple is costing him dearly right now.

burry has always been more interested in proving how smart he is rather than making money for his few remaining clients.
 
  • Like
Reactions: luvmyhawks

DogBoyRy

HR Legend
Jul 28, 2006
10,680
7,355
113
I think right now, it’s best to be in total stock market funds, like VTSAX . Overall I believe things are trending up, but trying to pick between sectors and individual stocks will be a guessing game.
Had a group call with blue horseshoe last week.
We’re still in a storm - all boats look for a harbor.
This harbor is cash flow and dividends.
 
  • Haha
Reactions: Bank of Hawk

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Crypto is fully rolling over and the rest of the market isn’t much behind. As to bbby you have an opportunity to sell stock and instead you are meeting with a lawyer about possible bankruptcy, absolute pure lunacy. Bitcoin has broke the 23k mark and looks like it’s on its way to 21k. My puts have done well, I anticipate tomorrow should be a very bad for mstr.
 
Last edited:

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
What’s the play here, coach?
Personally I think there is more downside. But that is up to you to decide. Is this just a pullback or is this the start of a more significant pullback. If you have individual stocks and you are not sure I would say to sell calls. You can capture some upside while hedging some downside risk, or possibly sell a little bit and raise some cash. If we are going to have a true flush of the market you are looking at another 800-1000 points to the downside on the S&P500 or about a 25% downside. Growth and speculative is something to stay away from especially after the run up. We are still extremely overvalued compared to the Buffett Indicator. As interest rates rise other investments will begin to take additional market share of investments. The stock market has essentially been the only game in town for almost a decade. This is a fundamental change that may take some time. As much as this could get a flush, I also would not be surprised at an extended down turn bear market that takes several years to resolve. There is minimal upside in my opinion. Otherwise look for stocks that have extremely good cash flow with low valuations.

I took a short position on a bitcoin stock for 2 reasons. Bitcoin has violated multiple moving averages and violated its uptrend. It actually seems to be a leading indicator to the market. It is now in a downward trending trade cycle. In a stock like MSTR it is trading at an extreme premium to its value in my opinion thus has more downside than even the downward price of bitcoin. However, this is not a trade many should take due to the volatility of bitcoin or coins in general. I feel comfortable with my position, not only the fact I am comfortable with the position but I now have a decent margin of safety now. Bitcoin would have to jump back to the 23,500-24,000 for me to get to my breakeven point.
 
Last edited:

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
It is very clear, all support lines have been violated. The strongest companies I have been watching violated their 13 day support lines. 2 individuals I watch essentially state once the 5 and 13 day moving averages have been violated there is over an 80% chance there is a reversal in the move which I think has fully occurred in this case and todays movement just confirmed it. The issue with the S&P500 and Crypto is the move to the downside is massive. Its essentially a 25-40% move from the recent tops that is going to occur if it is going to match with the charts. Crypto is in an odd place right now, but if bitcoin gets below 17,000 things are going to start to break down and some companies will be going bankrupt. At that point I will completely reverse course and buy and I may even sell off a couple of my puts here in the next week just to lock in some profits. Right now the major resistance line is 19,700, that gets violated and it will likely go in freefall. If I were to guess I think crypto prices hold until Wednesday with the Merge then will sell off for 1 of 2 reasons, the merge goes poorly for Ethereum, 2 buy the rumor sell the news. I really don't see an outcome where it pops when many think it will. Ethereum has bounced hard since being 800 on the recent downturn. It moved over 200%. We also have Jackson Hole coming up. There isn't much that I can see that will cause a reversal of course.
 
Feb 9, 2013
19,849
55,346
113
It is very clear, all support lines have been violated. The strongest companies I have been watching violated their 13 day support lines. 2 individuals I watch essentially state once the 5 and 13 day moving averages have been violated there is over an 80% chance there is a reversal in the move which I think has fully occurred in this case and todays movement just confirmed it. The issue with the S&P500 and Crypto is the move to the downside is massive. Its essentially a 25-40% move from the recent tops that is going to occur if it is going to match with the charts. Crypto is in an odd place right now, but if bitcoin gets below 17,000 things are going to start to break down and some companies will be going bankrupt. At that point I will completely reverse course and buy and I may even sell off a couple of my puts here in the next week just to lock in some profits. Right now the major resistance line is 19,700, that gets violated and it will likely go in freefall. If I were to guess I think crypto prices hold until Wednesday with the Merge then will sell off for 1 of 2 reasons, the merge goes poorly for Ethereum, 2 buy the rumor sell the news. I really don't see an outcome where it pops when many think it will. Ethereum has bounced hard since being 800 on the recent downturn. It moved over 200%. We also have Jackson Hole coming up. There isn't much that I can see that will cause a reversal of course.
In short, downturn dead ahead?
 

HawkMachine

HR All-American
Jul 6, 2020
3,352
5,610
113
IOWA
89630828abac7e946236387a87f67030.gif
 

onlyTheObvious

HR Heisman
Jan 3, 2021
6,837
7,973
113
I buy and hold Apple on the dips. It’s worked well for 15 years and counting.

Gamestop BBBY and seem like games the mob picks up on and have no value when compared to the company dynamics. Looks like fun but it would probably end badly for me.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
He has no clue.
The markets are a crapshoot. I like to try to match up valuations, with the macro (the big economic picture, or picture of the company) along with the charts. to make this simple, the markets are a mess. They are and have been massively overvalued for a long time. This has been primarily from the Fed put. Now that the fed is no longer willing to protect the stock market and is willing to increase interest rates, it leads to a market that is downturn.

1. We have markets and stocks overvalued evidenced by the Buffett indicator showing we are 1 standard deviation above fair value. For reference sakes, the buffett indicator we are still well overvalued.

2. Macro, we have 2 issues, inflation is still extremely high, there is no quick fix for inflation, meaning the Fed is going to have to continue to increase the Fed rate. Secondly the increasing interest is going to cause a pullback on growth. So far company reports haven't reflected it, but the income revisions are coming. Add in we are going into Sept and October the weakest months for the market historically especially prior to an election.

3. For the charts, they are again showing that the markets should be going down, matching with the vix chart that I quoted. Essentially they are all showing the potential for a large decline over the next 6-8 weeks.


Whether there is massive downturn in the market who knows. Right now my call has been right. It doesn't mean I haven't been massively wrong in past calls or that this one could go sideways on me. So far have gotten hit pretty good on a couple investments. The biggest is investing in China stocks specifically Xin, baba and a couple others. Baba wasn't terrible, but I took a good 25-30% hit on XIN. Whether it is big picture or stock specific, things don't always go your way. The game is to get more things right than you get wrong. At this point, it is looking like I will be down 10-20% overall from my highpoint, to redeploy at much lower valuations. Overall to me this is a massive win if this works. That I could preserve the majority of my capital to potentially get much more reasonably valued investments is a good deal any way you slice it. I will admit though in general the active investor generally gets beat by the passive investor. We will see if I beat the market for the 5th year in a row.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Tomorrow appears to be another volatile date in the markets due to Jackson hole. Many that are bullish want to hear that we are beginning to get to the end game on rate hikes as inflation is beginning to slow. Those with a negative view will state the inflation is still incredible high and the Fed will continue to increase rates to avoid persistent inflation issues similar to the 1970's. Essentially history tells us its better to go too far on interest rate hikes that to lay off the gas similar to 1970-1971 and run into massive problems. The inflation story is not resolved even though we may have peaked. This issue along with rising Dollar are going to continue to cause issues on risk assets. I have seen two different projections that show the euro may get as low as .80-.85 this fall winter as Europe goes into a recession and will be dealing with incredibly high energy costs due to natural gas and liquified gas skyrocketing costs. Maybe the euro bounces but comparatively speaking the US is in such a better position that almost any other economy. The rising dollar will also have the adverse affect of lowering profits for international companies. We will see how this plays out but I am still negative on the market.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Powell came out saying they will need to continue to increase rates and they will continue to do so as long as there is inflation. Stated growth needs to come down. This statement alone should bring down earnings and also PE ratios. Effectively this shows should be downward pressure for the next month or two at minimum.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Well I closed my outs when Mstr was at 190 a week ago Friday, played for a bounce which we got. I reset the puts but earlier This week there appeared to be solid support so I sold calls and bought some very cheap puts as insurance. There is a ton of negativity. I could easily see a rebound but also a continuation to the downside (I have no conviction at the current prices).. I make 28% through January with a possibilty of 12% loss through October. But then much more cash on sideline to redeploy.
 
Last edited:

hawkifann

HR Legend
Gold Member
Oct 5, 2001
38,535
16,692
113
I think investors need to understand 2 things:

1. Their timeline for money invested.
2. Their goals for the money that is invested.

If someone in their 30s is looking at their 401k, there’s no reason to freak out over losses. Keep investing and pile up cheaper shares for when the markets (almost) inevitably go back up in the future. That’s not to say that people shouldn’t re-balance or get out of a bad fund/stock/investment, but on the whole, don’t freak out.

If, on the other hand, you’re playing the market for short-term earnings, then stay fluid and hop in/out of what appear to be good buys. Play the volatility and don’t fall too in love or in hate with any given stock.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
I think investors need to understand 2 things:

1. Their timeline for money invested.
2. Their goals for the money that is invested.

If someone in their 30s is looking at their 401k, there’s no reason to freak out over losses. Keep investing and pile up cheaper shares for when the markets (almost) inevitably go back up in the future. That’s not to say that people shouldn’t re-balance or get out of a bad fund/stock/investment, but on the whole, don’t freak out.

If, on the other hand, you’re playing the market for short-term earnings, then stay fluid and hop in/out of what appear to be good buys. Play the volatility and don’t fall too in love or in hate with any given stock.
Now is the time to start to get excited. That’s why even though I think there is more downside, as I stated at the beginning the risk reward ratio was not in favor of the bulls, however, the, reward to risk ratio is beginning to flip. my gut feel is once the midterms are finished we will see a bounce into the end of the year. However we will be in a slower growth environment. What will cause a bounce is a massive short squeeze. However I wouldn’t be surprised at a bit of a decline afterwards. This is the time where real money is made. 3400 and the market is cheap, 3200 it’s on sale, anything below 3000 it’s on clearance and pick up as much as you can.
 

luvmyhawks

HR Legend
Mar 22, 2005
20,601
17,424
113
Now is the time to start to get excited. That’s why even though I think there is more downside, as I stated at the beginning the risk reward ratio was not in favor of the bulls, however, the, reward to risk ratio is beginning to flip. my gut feel is once the midterms are finished we will see a bounce into the end of the year. However we will be in a slower growth environment. What will cause a bounce is a massive short squeeze. However I wouldn’t be surprised at a bit of a decline afterwards. This is the time where real money is made. 3400 and the market is cheap, 3200 it’s on sale, anything below 3000 it’s on clearance and pick up as much as you can.

Don‘t forget earnings season that is ramping up. Should be an interesting month to say the least.

I figured September and October would bring us the worst of this, but I didn’t expect the 10% drop we saw in September. Brutal month. Not sure what to expect this month, but likely to see some more downside with earnings growth being revised downward and election uncertainty. Should get a little bit of a bounce in November and December though.

About a week ago I read an article about the volatility this year. Almost 90% of the trading days this year have had a 1% or greater swing one way or the other during the day with over 47% of the trading days having a 1% or greater loss by close. That is the very definition of volatility my friends.
 
  • Like
Reactions: bunsen82

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Don‘t forget earnings season that is ramping up. Should be an interesting month to say the least.

I figured September and October would bring us the worst of this, but I didn’t expect the 10% drop we saw in September. Brutal month. Not sure what to expect this month, but likely to see some more downside with earnings growth being revised downward and election uncertainty. Should get a little bit of a bounce in November and December though.

About a week ago I read an article about the volatility this year. Almost 90% of the trading days this year have had a 1% or greater swing one way or the other during the day with over 47% of the trading days having a 1% or greater loss by close. That is the very definition of volatility my friends.
There is a lot of volatility in the market and massive swings. We have had a huge 2 day move. I've made a few dollars so far on my stock and call, which I am fine with. Now the decision comes do I let it ride or do I think there is 1 more push to the downside. Honestly still trying to decide what to do. I have hit on all my decisions in the last month. Getting to only down 16%, so made up most of my losses earlier. I am about done swing trading. At that point won't even sell calls for a while. Will wait for 30% or more run up then set long dated calls likely to 2024 at what I hope is 20% or higher annual return and then let my crypto run. It will either massively fail or massively outperform.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
I think the bottom is in for the crypto market. If it goes a little lower thats fine. I think the stock market as a whole may still have some ups and downs as it tries to handicap the correct P/E ratio for the future. I have removed all puts, and I think some small caps are interesting at these levels. I think the market was overly positioned for an extremely negative report, and when inflation came in close to expectations, you had a short squeeze. The swings have been really good to me, but I think I am fairly set to go long and just purchase some puts to cover tail risk, unless something crazy happens like Russia using a nuclear device. Beyond that have good luck.
 

bunsen82

HR MVP
May 6, 2004
2,199
2,215
113
Wow, what a week so far. Bitcoin is up to its resistance level of 19,700 if it breaks above 20k you are going to see a quick move to the upside as the shorts liquidate their positions. I am going to keep an eye on this because if this breaks the bottom is in. The crypto stocks are appearing to show the bottom is in by already rally 30% from the bottoms, and most up over 10% today. I may be above break even by the end of the week at this rate for the year.
 

HawkMachine

HR All-American
Jul 6, 2020
3,352
5,610
113
IOWA
I've lost probably $50k in crypto. Hell maybe more.

I'm a little gun shy to invest more.

I know the stock market will come back, I'm 99.99% sure of it.

Crypto?

I have zero confidence in it currently.
 

OrlandNole

HR Heisman
Nov 29, 2003
5,649
11,858
113
Nashvegas
Wow, what a week so far. Bitcoin is up to its resistance level of 19,700 if it breaks above 20k you are going to see a quick move to the upside as the shorts liquidate their positions. I am going to keep an eye on this because if this breaks the bottom is in. The crypto stocks are appearing to show the bottom is in by already rally 30% from the bottoms, and most up over 10% today. I may be above break even by the end of the week at this rate for the year.
I have no idea what you just said, which reinforces my belief that I have no business investing in bitcoin or crypto.