GDX - still trying to build a floor

With precious metals seeing significant monthly gains, the related mining stocks similarly followed. The ETF of GDX saw a net monthly gain of 3.8% @ $14.24. However, it is notable that GDX did break a new historic low of $12.40.


GDX, monthly

GDX, daily

Summary

To be clear... I still find it hard to believe Gold has seen a key multi-year floor - Dec'2015 @ $1045.40.

Instead, I'm still looking for another wave lower, at least to test the giant $1000 threshold, if not the 900/875 zone, which should be enough to capitulate the industry.. along with those remaining Gold bugs who still haven't sold.

If the metals do resume lower, then the miners will follow, and I'd imagine GDX will be vulnerable to <$10 by early summer.

QCOM - reasonable EPS, lousy revenue

Whilst the main market closed moderately mixed, there was rather severe weakness in Qualcomm (QCOM), settling -8.3% @ $43.58, the lowest level since Oct'2011 - back to the distant days of sp'1074. Near term outlook offers the 42/40 zone, with broader spring/early summer downside to the 32/30 zone.. if sp'1600s.


QCOM, daily

QCOM, monthly

Summary

Competition remains rather fierce in semi-conductor world, and QCOM is struggling to find buyers.

It is notable that (adjusted) EPS of 85 cents was clearly still a good number, but revenue was -18.7%.

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From a pure price perspective, QCOM has been increasingly weak since the July 2014 peak of $78.58. It would seem QCOM is headed for the low 30s across the next 2-4 months.

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*I would be very curious about QCOM in the 32/30 zone.. by April/May. For now.. its one to merely keep an eye on.

NFLX - remaining broadly weak

It was another rough day for Netflix (NFLX), settling -6.8% @ $91.20. Next support is the Aug'2015 flash-print low of $85.50. The bigger monthly cycles are highly suggestive of $70 by early summer... not least if sp'1600s.


NFLX, daily

NFLX, monthly (arithmetic scale)

Summary

*note the monthly MACD (blue bar histogram) cycle, set to turn negative at the February open.
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Suffice to add...

With recent earnings of 7 cents, that offers a PE of around 300.. which is clearly ludicrous.

I have a huge respect for the company, now a producer of some of the finest TV shows ever made. NFLX continues to expand its reach across the globe, and has had a huge effect on the TV and movie industry.

However, despite consistent growth, profits are razor thin. The business that NFLX operates within, is wide open to new competition, but for now, NFLX is still leading the way.

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If the US/world equity markets see a collapse into Q4, prime target for NFLX would be $40. Right now that understandably would appear to be a crazy downside target.

Ironically though, that would still make for a PE of around 120.. which is clearly still way beyond twilight zone territory.

F - broadly broken

With the broader market on the rise, Ford (F) was also on the rebound, setting +2.3% @ $12.26. Near term outlook is moderately bullish, with best case of $13.00-13.50 zone - where the 50dma will be lurking in February. If the main market implodes across the spring, Ford will resume declining toward the $8s.


F, daily

F, monthly

Summary

Suffice to add, Ford is struggling... much like the broader market.

Any short term bounce is arguably offering those still long an opportunity to exit, and/or go short.

The bigger monthly cycle is pretty clear... on resumed downside, first target is the $10 psy' level, after that... the low $8s..

CHK, SDRL - two on the brink

Whilst the broader market settled lower, there was very severe weakness once again in energy related stocks. Chesapeake Energy (CHK), and Seadrill (SDRL) settled lower by -15.4% and -9.8% respectively. Near term outlook is dire, with price action/levels suggestive that both companies are on the edge of filing for bankruptcy.


CHK, daily

SDRL, daily

Summary

First... I've no position.. with no intention to get involved. There is little point in shorting from such low levels, not least in terms of a bearish option position.
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If either company do implode within the next few months, traders/analysts really can't claim to be 'ohh so surprised', although no doubt many will.


In addition to coping with continued lower energy prices, both CHK and SDRL have an unsustainable level of debt.

Recent debt estimates

CHK: $11-12bn
SDRL: $12bn

Someone is going to have to write off those little mountains of debt. Further, there might well be a great many derivatives based off such debt.

In any case... CHK, SDRL, are just two from a list of companies that are seemingly headed for the abyss this spring/early summer.

TVIX, UVXY - mixed week for the VIX instruments

It was a very mixed week for the VIX instruments, as the VIX climbed to the 32s on Wednesday, but settling in the 22s. TVIX and UVXY both saw a net weekly decline of -15.9%. Near term outlook offers further cooling in volatility, before viable hyper upside in February/March.


TVIX, daily

UVXY, daily

Summary

*first, an update on the VIX, which saw a net weekly decline of -17.3% .

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As for TVIX and UVXY, it was indeed a very dynamic week.

TVIX closed last Friday at $10.58, but saw a peak on Wed' (with VIX 32.09) at $12.91. The Friday close of $9.30   was a very significant -28% lower from the intra week high.

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Yours truly tried a TVIX-long trade late Wed', but closed out within 45 minutes, as the market saw renewed strength into the close.

For the moment, I see no reason to be long TVIX/UVXY until at least sp'1970s with VIX 18s, and that will likely equate to TVIX back in the 7s.
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As ever, such instruments are for short term holds only, as there serious inherent problems of statistical decay.

TWTR - annoying to use, and too much spam

With the US broader market closing somewhat higher, Twitter (TWTR) was similarly on the rise, settling +2.5% @ $17.81. Near term outlook offers upside to the 50dma around $22. If the market resumes implosion mode into the spring, TWTR is set for the $12/10 zone.


TWTR, daily, 1yr

TWTR, weekly

Summary

*note the IPO of $26 of Nov'2013, and the hyper spike to $74.73 in Dec'2013.

Now THAT was real market hysteria.
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TWTR remains a real mess. The problems started with a leaked earnings report in April'2015.

Since the Dec'2013 peak of TWTR has imploded by an extreme -79%.

Considering the broader market looks on track to break new lows into the spring, the recent low of $15.48 is very unlikely to hold. There looks to be valid downside to the 12/10 zone. The only issue is whether TWTR will go single digits, before a viable rally in the latter half of the year.
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Annoying to use

Twitter is a rather messy website to interact with. For instance, just trying to get a direct URL for a specific tweet is still overly difficult.

Then there is the spam, not least from corporations who are paying TWTR to spam user accounts. Its not in the form of direct private (non tweet) messages, but often as simple as a 'follow'.

I had a personal example just today...

I had sent a message to a user, and I made a reference about 'wine and chocolates'.

Within an hour I had a notification of a new 'follow' from 'unWine'.

unWine - paying TWTR to spam?

That was clearly a corporation, and I naturally hit the BLOCK button.

I guess unWine might just have their own automated program to spam anyone who mentions 'wine', but I'm guessing it was Twitter themselves who are promoting companies to specific users.

If that is the case, I can't blame Twitter for trying to make a profit from marketing, but I consider it nothing less than spam. How many people spend their time deleting dozens, hundreds.. even thousands of spam accounts each year?

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Where do I think TWTR is headed?

Clearly, the company is not going to disappear. It will no doubt innovate in the months and years ahead, but it is inherently limited.

TWTR itself has already announced it is looking to loosen the current 140 character limit. I'm unsure if they will want users to pay an annual member fee for such an option. There was also the rumour that TWTR would charge a fee to users for having a 'verified account'. Personally, both such ideas would make a lot of sense to me.


Takeover in latter half of 2016/17?     

TWTR is clearly a prime takeover candidate. The usual suspects would be GOOG and FB. From a pure price perspective though, any offer wouldn't be much above $45. I just can't see anyone paying more than $50, not least if the stock is trading in the $12/10 zone this April/May.

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*no position, not least as TWTR remains one of the momo stocks.. and I really try to resist getting involved in that kind of nonsense.

AAPL - offering a short term floor

Whilst equities closed very mixed, there was notable fractional strength in Apple (AAPL), which settled +0.1% @ $96.70, having rallied from an intra low of 93.42. If the broader market can stabilise from sp'1812, AAPL has viable upside to at least the 105/107 zone.. where the 50dma will be lurking for earnings.


AAPL, daily

AAPL, monthly

Summary

Suffice to add, despite another rough day in market land, AAPL was one of the stocks that is arguably warning that a short term floor is close.. or has been achieved.

Regardless of any short term bounce into Feb/March, there remains viable downside below the Aug'2015 low of $92.00, to the 85/75 zone, and that would equate to sp'1600/1500s.

CHK, FCX, RIG - all on the disappear list

The underlying weakness in the energy/mining industry continues. Chesapeake Energy (CHK), Freeport McMoran (FCX), and Transocean (RIG) settled lower by -13.3%, -9.1%, and -5.6% respectively. All three are on the 'dissapear' list, as there is yet to be industry capitulation.


*rather than highlight the daily charts, I wanted to put things into perspective, via the giant monthly charts...

CHK, monthly

FCX, monthly

RIG, monthly

Summary

There are literally dozens of smaller energy and mining stocks on the verge of implosion.

Yet... the mid tier names are far more important.

Until we see a few of the bigger companies STOP digging up iron ore, and quit drilling for Oil/Nat' Gas, commodity prices will naturally continue to decline.

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My guess is that at least 1 of the above trio will not be around by end 2016. If I had to guess... FCX, since its overly leveraged in both the oil/gas AND mining sector.
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*I've no position in any energy/mining stock. Would only consider after capitulation starts to occur this late spring/early summer.

The survivors of the commodity collapse from 2011 are going to be well positioned for the 2020s, as commodities are going to begin a multi-year up wave at some point.

TVIX, UVXY - surprisingly low net weekly gains

Despite the sp'500 breaking a new cycle low of 1857, the VIX never did show any hyper upside, and the 2x lev' bullish VIX instruments of TVIX and UVXY saw relatively moderate net weekly gains of 11.2% and 11.3% respectively. There is clearly threat of an equity bounce into the next FOMC.


TVIX, daily

UVXY, daily

Summary

*first, an update on the VIX, which saw a surprisingly weak net weekly gain of 0.04%

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As for TVIX/UVXY.. the Friday closing 'black-fail' candle bodes against further VIX upside.

However, the broader equity trend remains powerfully bearish, and considering global equity weakness, VIX looks set for the 35/45 zone in the weeks ahead.

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*I bailed early on TVIX on Monday, and have since been extremely cautious, waiting for an equity bounce that just didn't occur.

For the moment.. I'm not chasing the market lower, and would only consider TVIX again if sp'1943/69 zone... and that might equate to VIX still above the key 20 threshold.

GDX - miners continue to struggle

Despite the broader market seeing rather powerful net daily gains, the gold/silver mining stocks saw significant weakness, as the precious metals lost their 'fear bid'. The ETF of GDX settled lower by -3.5% @ $13.13. The Sept' low of $12.51 looks set to be broken under.


GDX, daily

GDX, monthly

Summary

Today was a classic example of how the gold/silver mining stocks can still fall, despite an advancing broader market.

Broadly, the precious metal mining stocks remain within the downward trend that began in Sept'2011.

GDX looks set to lose the Sept'2015 low.. .and will probably lose the $10.00 threshold by early summer - not least if Gold is <$1K.
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*I continue to watch over a dozen individual mining stocks, and considering the continuing commodity carnage, not all the miners can be expected to survive.

Those that do survive though, they are clearly already at incredibly attractive buying levels.

yours... watching and waiting.

F - technically broken

Whilst the broader market imploded after opening moderately higher, there was particular weakness in Ford (F), which settled lower by a very severe -5.1% @ $12.20. The bigger monthly cycle is highly suggestive that Ford will lose the $10 threshold, and possibly floor once again around $8.


F, daily

F, monthly

Summary

Suffice to add, I do like the company.. far better than GM.. or the loss making TSLA.

From a price perspective though, Ford is utterly broken...and looks vulnerable to a further 35% lower.

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*no position, would consider buying in the $8s.. but that looks out of range for 3-5 months.

AA - the market is not falling for accounting tricks

Whilst the broader market saw a day of swings, Alcoa (AA) saw severe weakness, as the market simply isn't falling for the latest set of accounting tricks, settling -8.1% @ $7.27, the lowest level since April 2009. The March'2009 low of $4.63 now looks set to be hit within 3-5 months.


AA, daily

AA, monthly

Summary

Along with CHK, CNX, FCX, Glencore, RIG, and SDRL, Alcoa is in the group of companies on the 'might disappear list'.

There is simply a glut of supply in the energy/mining industry, and Alcoa is part of the problem.

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re: accounting tricks.

Dozens of other websites have covered this, and I'd always recommend just browsing the official full earnings release from the Alcoa website anyway.

Suffice to note... Alcoa posted an 'adjusted' EPS of 4 cents ($0.065bn) for Q4, but the non-adjusted 'reality' is a net loss of around $0.5bn.

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*I've no position, but this stock bears watching, as it is an important reflection of the industrial economy.

FCX - at serious risk of disappearing

Whilst the broader market closed moderately mixed, there was severe weakness in Freeport McMoran (FCX) which imploded, settling -20.4% @ $4.30, the lowest level since Nov'2002. With commodities set to remain weak, FCX is clearly being priced as in danger of 'disappearing'.


FCX, daily

FCX, monthly

Summary

Suffice to add, the market is currently pricing this company as though its in serious danger of imploding to zero.

I would be sad to see FCX disappear, but then... they have only themselves to blame. They made a number of purchases of Oil/gas companies when Oil was >$100... and leveraged themselves up in mining.

By early summer... will FCX be on the pink sheets?

Right now, the probability is arguably at least 30%.
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*I've no position, and will not get involved in ANY of the mining stocks.. as there is simply yet to be any capitulation within the industry.

TVIX, UVXY - extreme net weekly gains

With equities severely net lower, the VIX built gains across the week. The 2x lev' bullish VIX instruments of TVIX and UVXY saw net weekly gains of 50.2% and 51.0% respectively. Near term outlook offers threat of a brief, but severe Monday equity drop... and that might equate to a further 40/60% higher in TVIX/UVXY.


TVIX, daily

UVXY, daily

Summary

*first, an update on the VIX, which saw a net weekly gain of 48.3%.

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As for TVIX and UVXY, despite opening lower on Friday... with the VIX rebounding powerfully higher in the late afternoon, it was a very strong weekly close.

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*I remain holding TVIX-long across the weekend.

I am seeking an exit in the 11/12s next Monday morning, and that would more than suffice for a trade that I only took late Thursday.

It is my intention to trade TVIX (long side only) across the weeks/months ahead.. until the sp'1600s.

TVIX, UVXY - screaming higher

With equities continuing to fall, the VIX was naturally on the rise. The 2x lev' bullish VIX instruments of TVIX and UVXY saw powerful net daily gains of 21.9 and 21.6% respectively. Outlook is bullish for Friday and possibly Monday, but from there.... an equity market rebound is extremely probable.


TVIX, daily

UVXY, daily

Summary

Suffice to say, strong gains.... and further gains are likely tomorrow.

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What should be clear though, the equity market is set to floor either on 'jobs Friday'... or very early next week.

In either case.. those long the VIX, whether via call options, VXX, or TVIX/UVXY should be mindful of an inevitable strong rebound in equities.. but not >sp'2040.
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*I am long TVIX from the Thurs' closing hour. Seeking an exit in the 10/11s.. Fri/Monday.

AAPL - a long way to fall

With US equity indexes closing significantly lower, Apple (AAPL) was similarly on the slide, settling -2.0% @ $100.67. Near term outlook is for further downside. More broadly, AAPL looks set to test and eventually break below the Aug'2015 flash print of $92.00, after that.. next support is the 38% fib retrace (from 2009) of the $85s.


AAPL, daily

AAPL, monthly

Summary

Last week I noted that price structure for AAPL didn't look so pretty. The bear flag played out, and AAPL is seemingly headed (at least) to the Aug' low of $92.

If you believe the sp'500 is headed for the 1600s this summer, then AAPL is on track for next key support around $55. I realise that is a long... long way down though, and for now, it is in the realm of 'crazy talk'.
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*I've no position, and at these levels, shorting AAPL looks a somewhat more risky idea that just shorting an index.

DIS - torpedoed in the exhaust port

Despite Star Wars VII on its way to becoming one of the biggest and most profitable movies of all time, Disney (DIS) continues to decline from the Dec'16th high of $114.75 (a black-fail daily candle no less), with a Tuesday net decline of -2.0% @ $100.93 (intra low $99.89).


DIS, daily

DIS, monthly

Summary

*DIS was particularly under pressure today after a downgrade from Macquarie
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Suffice to add, it remains a twisted market, one where the better stocks will often get under-valued, relative to the momo nonsense - like NFLX, AMZN, or FB.

DIS is unquestionably a superb company. Yes, there are concerns about ESPN, amid a potentially weaker economy in 2016, but broadly, it remains one of my top Dow stocks.

From a pure price perspective, DIS is seriously struggling, and looks set for continued weakness into the late spring/early summer.


Summer downside?

A simple fib' retrace from the 2009 low...

.. offers the 80/75 zone this summer. That would likely require the sp'1600s though, and that is a clear 20% lower.
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As for those torpedoes...



I would imagine that by the end of 2016, DIS will be surging back upward, as 'Rogue One' is due for release in December.

TVIX, UVXY - strong gains to begin the year

With US equities closing severely lower, the VIX was naturally screaming higher, back above the key 20 threshold. The 2x lev' bullish VIX instruments of TVIX and UVXY settled with sig' net daily gains of 10.4% and 10.9% respectively. Near term outlook offers higher levels in volatility.


TVIX, daily

UVXY, daily

Summary

*the closing hour saw equities spike into the close, and that sure cooled the VIX, resulting in TVIX/UVXY losing around half of the gains from 3pm.

TVIX'5min

TVIX loses half the gains in the closing hour

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Suffice to add, the third net daily gain for the VIX instruments, and considering the broader equity outlook, it would seem the VIX will indeed continue to push higher across the next few days.

VIX 30 is a viable target, and that would likely equate to a further 35/45% upside in TVIX/UVXY.

As ever though... such instruments are for very short term holds only.

Even if the broader market cools all the way to the sp'1600/1500s this late spring/summer, higher volatility in itself will only increase the problem of 'statistical decay'.

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*I have no position in the VIX, but with the Dec' equity close, I will consider trading VIX again in the weeks ahead.