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Madness:

Cramer Thinks Netflix’s price bump means Amazon, Apple’s stocks are bargains

Saw that dumb headline and I couldn’t believe it. The FANG pumper is at it again.

“Every month I pay Apple to back up my photos and insure my phones. Don’t you? Every month I pay [for] Apple Music,” Cramer said. These are services that will decline in cost rapidly if Cramer took an economics class in high school. Its a consumer attitude like Cramer’s that makes me shake my head. Why should consumers give in? Why should someone give toxic advice to accept whatever the vendor charges. You don’t say, company X did this therefore company Y is this. Netflix created value, and is taking a RISK in raising prices. Price wars don’t happen in the opposite direction. Soon, users of NFLX will flock to Hulu and networks can drop prices on their streaming service or add package deals.

As for the stock, all I see here is Cramer being late to yet another rally, a relief rally at that. With earnings a few days from here, I’d stay far away from NFLX since rallies like these tend to have the price increase already baked in, and if they disappoint on the conference call, then the downside is much more powerful.

As for the other FANGs… AAPL is fat, and will look attractive when it breaks 10-15% from its low of 142. FB trying to be a hardware company makes me puke. And Google, is basically a utility stock, quite boring and probably not worth trading long or short.

The real winners will be content makers, since now those with pure talent (a rare and valuable intangible asset) will be in such high demand services like NFLX will just dump money in their lap. We simply have peaked in the streaming service market, and though it will continue to prosper, its growth and popularity will normalize.

VIX Major Break Down Setting Up Sharp Drop Soon

Market showing false rally last week with a trickle up. A dip below 18 into 16 would verify that the VIX is “broken”, and is normalizing back to its 20-25 range. Good entry to short here, with VIX heading into complacency levels. Market is just waiting for any news item to trigger the event, so careful with longs here.

Fade the Gap: 1/2/2019

The play: short morning gaps as long as VIX continues to decline. Need to understand that a weakening VIX in a bear market create intraday bull traps. A proper squeeze in bear markets start with opening gaps and rise up throughout the day.

The setup: find imbalanced bid/ask stocks that overpriced the stock within the first 30 mins. Short stocks that rise a little then return to the morning open. Stop set to 1% above the pivot point of decline.

Stocks to short:

SaaS profit takers $MDB and weakness $SVMK.

Weakness: $ARLO $FIZZ $CRON

Momentum cool off: $SHOP

Tipping Point: $EA $FIZZ $FATE

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WAVE RIDERS:

Stay short $TVIX

Buy dips on gold/oil. $DRIP $NUGT

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SPEC PLAYS (1/2 Position with wide stops)

$UMRX (watch $LABU)

$YINN $MOMO

Rise of the Red…

Melt up to 20s, then rally to 34. Big gap to fill.

No, not red as in our current and fierce bear attack. Rather, a quiet emergence of Chinese burritos hails forth from the horizon. Usually when the markets are extremely volatile, you need to look elsewhere. It can be crazy trading right now, and unless you are timing your shorts right, you are swimming upstream and the pros will sweep in and take your money from your shaky hands.

Buying up $YINN here and plan on averaging up. Also grabbed $MOMO.

And for a spec play, there’s the short squeeze candidate of $IQ which can rip to the 30s.

Trades for 12/26/2018

Day Trades in Play! $EDIT $MDB $CRON

Swing Trades Set Up // SHORT: MDB, WWE

Swing Trades LONG// $CVNA, $GOOS

On watch: Oil is due for a reversal. Gold as well. Might short gold for day trade.

It’s going to be light volume tomorrow. Allowing for imbalanced bid/asks and other manipulation. Take advantage by manipulating the price yourself with limits. Keep entries in 3s. One per pivot level, with 3rd add being smallest.

Small – Large – Small

FED Tells Investors to Take A Hike, Dow nears 52 Low

Get your money outta here!

Going back to June 22, 2011, the Fed has now raised the rates nine times in a row, and their fourth hike this year. Government doesn’t trust you with their money. Good one. I think the Fed is trying to make up for their Operation Twist experiment, with their Quantitative Easing. Watch out as inflationary pressure bleeds over to the broad market.

Looking at the week chart for the Dow does not look healthy. Low volume rallies getting wiped out by weak dip-buyers who sell at every news reel. If I saw that chart above and thought it was an equity stock, I would short it hard as a swift drop would be on the way.