Bears Throw In The Towel

A Tale Of Two Bears

Back in the day during the dot-com boom, fund managers were throwing in the towel (‘value’ fund managers, if memory serves) because the markets as they said, “did not make sense anymore”.

Valuations were insane and managers with decades of experience decided the time had come to exit for good.

Of course, it was a contrarian indicator. Those lofty valuations and prices were at or near their peak.

It was not long after when the market cracked. There was a rebound of sorts but the stage was set for a long bear market.

History Repeating?

This is a brief update to document two bear managers that are quitting in separate ways.

One is shutting down his fund entirely. More information linked here.

The other has exited short positions which included getting out of Tesla (TSLA) just before it rolled over.

These types of high-profile events usually happen at or near a significant top.

If the overall markets continue to grind higher, there may be similar retirements and/or fund closures.

Gold (GLD) Update

Before a market can reverse to the downside, it has to stop going up.

Sounds obvious but with the bullish hysteria on gold, coupled with non-stop inflation talk, it may take a while for the bulls to exhaust themselves.

We’re still at the danger point for GLD as well as the miners GDX, GDXJ.

Items of note for the session:

GDX had a double top (same high as Friday) and the inverse fund DUST posted + 0.01, above its own Friday low.

It could mean we’re at the extreme(s) with no more directional thrust or just a pause before continuing with the existing trend.

Stay Tuned

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Tesla Turns Lower

5:29 p.m., EST. Updates in red

1:32 p.m., EST

It looks bad on the Weekly;

Even worse, on the Quarterly

Early this year, TSLA spent about seven weeks attempting to move significantly higher.

During the week of February 26th, it gave up and broke down.

Since then, its come up to test the underside of support … now resistance (around 740) before again, turning lower.

Down -37%, since the end of January sounds bad enough. However, it’s the quarterly chart that contains the real horror story.

TSLA has posted a huge 490-point trading range (when taken from support at 78, to current price).

A down move to support from today’s levels, is a decline of -86%.

Markets like to come back and test; better to count on it, than ignore it.

Not saying that will happen to TSLA.

Nearly simultaneous with this first post, we have this article on ZeroHedge about a huge short position.

However, if any real problem does come up like another high profile ‘incident’ (as if we don’t have enough of them already), meaningful support is a long way down.

Just a few hours later, we have this, also from ZeroHedge about a Tesla running over two police officers … in China no less.

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Good Short, Bad Short

Seems like Tesla (TSLA) is always in the news.

Now, we have ‘the big short’, as reported by The Money GPS, doubling down on a possible even bigger short.

Is TSLA a good short opportunity or just a high visibility gamble; or maybe at this point in our history, just another psy-op?

How many minions are flagellating themselves over TSLA, anyway?

From a trading standpoint, TLSA could reverse from here. It could also gap higher into a wedge throw-over. With the weekly MACD showing no signs of erosion, probabilities are about equal.

Bad Short

Now, let’s look at another chart:

Real estate, IYR is showing classic signs it’s about ready to roll over.

Its been struggling for months at the 85-86 area and just yesterday, posted a new weekly low.

Yesterday as well, bonds reversed to the upside. Pre-market activity points to a higher open … solidifying the reversal.

On top of that, the dollar shows a higher open having (downward) tested its up-trend at the last session.

The list can go on but we see the difference.

One is a gamble (or even a psy-op manipulation of followers) and the other is a trade with high probabilities.

Good Short

The table below has current positioning (not advice, not a recommendation):

Special Update: 9:52 a.m. EST. Price action in DRV pushed to stop level and has recovered quickly.

Position is being maintained (for now) with analysis to follow.

Update: 2:21 p.m. EST. IYR looks to be headed to a 38% retrace at approx 84.25, level. All DRV positions exited. Will look to re-enter shorts at higher level, price action depending.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.