Updated: Apr 19, 2019
BotTrigger Trade Alert: We are both selling out right on some names & also reducing to 50% cash across the board on the following listed below, excluding our $XOP position which we are holding in full. The intent of raising cash from the following orders will be to go long on the SPY or QQQ via call options once we get sufficient evidence of the incoming reversal. There will be a giant bounce no matter the upcoming direction that the market takes, be it volatility, consolidation, downtrend, uptrend...either which way the direction unfolds, there will be a mega bounce that occurs. To effectively exploit the opportunity we want to be in a concentration of cash. CASH IS & WILL BE KING @ the opportune time.
FULL POSITION SELL ORDERS:
MEOW: Sold @ $76.19 full position
NIO: Sold @ $7.86 full position
ACBFF: Sold @ $10.30 full position
CGC: Sold @ $49.33 full position
ALB: Sold @ $95.68 full position
NVDA Dec $250 / $260 Vertical call spread sold @ $4.85 full position
ROKU January 2019 $65 Strike Calls sold @ $5.80 full position
TSLA JAN 2018 $300 / $320 Vertical Call Spread sold @ $6.10 full position
TSLA Oct 19 $300/$320 Vertical Call Spread sold @ $1.00 full position
50% REDUCED – SELL ORDERS:
NBEV: Reduced by 50% @ $6.03
FB JAN 2019 $160 / $170 Vertical Call Spread @ $3.60
*All the above positions both that are now closed out or reduced will be updated with their net gain/loss on each position in the "Closed Trades" section of the Members dashboard.
Let’s dissect this selloff. Market weakness has persisted since last Wednesday when the Dow closed 123 points lower than its intraday (all-time) high of 26,951. Then on Thursday the Dow declined 201 points. Friday the Dow dropped 180 points. Monday it mustered +39. Tuesday it dropped 56 and today it posted an intraday low of Dow -431. We've recapped some of the bearish concerns that have been brewing (perhaps fermenting, even) – let's quickly do a snapshot:
→Steve Mnuchin using the Treasury as a money printing hedge fund in order to influence political sentiment.
→Jay Powell using the Federal Reserve’s Asset Price Channel to protect market volatility from policy normalization.
→ Apple providing market leadership with stock buybacks and central bank support.
→Iran sanctions and other oil supply disruptions propelling the price of oil to record highs during the final cycle of this bull market.
→Chinese tariffs creating a constrained economic environment that fundamentally enables an eventual market crash.
→Rising interest rates impacting economic growth.
→ Trump’s legal woes leading to additional threats of a market collapse if he is removed from office.
→Emerging market weakness caused by a strong dollar and rising oil prices. -Contagion spreading from Turkey, Argentina, Indonesia, South Africa, India, etc...
So what happened last Wednesday to turn the tide? Jay Powell happened. The Fed Chairman was holding a Q&A session with PBS in which he went out of his way to trash Trump’s stock market. Powell was explaining that accommodative low interest rates are not longer appropriate when he dropped the following bomb: ‘We may go past neutral, but we’re a long way from neutral at this point.’ The market is interpreting that statement to suggest Powell is no longer data dependent. Rather, Powell plans to hike rates again in December and hike rates 3-4 times in 2019 in what could be an ‘over-shoot’ past neutral. Hearing the Fed Chairman suggest an ‘over-shoot’ is reminiscent of former Chairman Ben Bernanke’s hard core autopilot policy path prior to the Great Recession of 2008. We’ve seen this movie before. We know how it ends. The Fed deflates all bubbles. No bubble in history has ever endured. Powell said, ‘To anybody who has known our situation over time, this is just who we are and who we will always be.’ The Fed Chairman just declared war on the market. It happened on Wednesday, October 3, 2018. When asked what keeps him up at night, Powell responded, ‘basically everything.’ He’s publicly bashing the Chinese tariffs as well as the ‘unsustainable deficit’. Game on. Powell vs. Mnuchin is about to escalate.
Trump is livid. Over the last week Trump has interjected multiple criticisms of Powell. Trump doesn’t like the decision to continue hiking interest rates, he doesn’t think we need to go that fast, he thinks there are other things we should be worried about, etc… You can only imagine what he’s telling Mnuchin behind closed doors. The stock market barometer means everything to Trump. Maintaining republican protection in the House and Senate might be the only thing that keeps him in the White House. Mnuchin won’t give up. On a quiet day when the 10-year yield takes a rest (currently trading at 3.23%), the Dow will spike higher. The market is heading towards a civil war of its own between the Federal Reserve and the Treasury.
Economic data in auto’s, housing, and retail are beginning to show signs of cracking due to tariffs and rising interest rates. Ford stock is trading at 2009 levels. The price/sales ratio for the S&P 500 is more than double its valuation at the dotcom peak. The S&P just broke below its 50 day moving average. The Nasdaq just broke below its 100 day moving average. Is the longest bull market in history coming to an end? Individual, corporate, and sovereign debt are at all-time highs. Emerging market weakness threatens contagion. China’s economy is reeling which just forced a $175 billion stimulus. United States Ambassador to the United Nations and Trump confidant Nikki Haley just announced her surprising resignation in order to distance herself from whatever happens next. She may have timed her exit perfectly. With Jay Powell now acting as the first reliable market moving variable since February 2016, it is officially time to transition strategy. Prepare first for a return to volatility, then a bear market. In between there could be a surprise or two coming out of the Middle East. It’s time to sell Apple. Portfolio cash is now at 55%.
OPEC is watching Venezuela as a test case for oil-backed crypto. The Petro launches on November 5th one day after Iranian oil sanctions go into effect on November 4th. Good timing :) The hope is that Petro can serve as a fiat replacement which will eliminate Venezuela’s debt burden. Over time, we expect it could work. The higher the price of oil, the more valuable Petro will be. Venezuela recently announced passports can only be purchased with crypto. Additional regulations can be implemented over time that force a shift away from the hyperinflation-infested bolivar. This marks an important introductory moment for nationalized digital currency. After Vladimir Putin met with Ethereum’s Vitalek Buterin, Russia announced plans for crypto-ruble in mid-2019. Oil backed fiat in the form of petrodollar has been a boon for the United States since 1974. We expect oil to continue to play a major role in supporting next generation currencies as well. All countries will want to take part in the emergence of crypto as a fiat (debt) replacement. The reason why I bring this up is because we believe the advent of crypto is the next big innovation that will change the world. It will rid commerce of middle men and more importantly it will change the way that labor participates in an economy. BotTrigger is specifically structured to take advantage of the eventual transition into crypto. At the appropriate time, BotTrigger will be able to seamlessly diversify into crypto assets as other, more traditional money managers are trapped without recourse. When is the appropriate time for such a transition? It will likely happen during the next downturn when debt defaults cause financial contagion which diminishes confidence in establishment institutions. Digital currency is inevitable in a digital world. Putin knows it. As the former head of the Federal Reserve action committee on cryptocurrency, Jay Powell knows it. Gary Cohn knows it. Lloyd Blankfein knows it. Steve Bannon knows it. Mike Novogratz knows it. The Yale endowment just allocated $400 million to a crypto fund. Bitcoin’s stability at the $6,000 level has helped to eliminate the froth in crypto that developed during 2017. This isn’t going away. Ethereum has dropped from $1400 to $225. Asia’s top crypto Tron is down to $0.02. Steem is down from $8 to $0.87. Mobile data exchange DENT is below a penny. NEO hovering around $18, ICON around $.70 cents, Ontology around $2.00. Exciting Blockv technology is down to $0.01. And a possible answer to universal healthcare, Docademic, had declined from $0.50 to $0.03. When crypto re-emerges, the multiples will be breathtaking. Timing is everything.