October 4 Premarket – The Multi-Decade Bond Bear

How many times over the last few years have I discussed “bonds are the biggest top I have ever seen”? Probably 100x. And I have given price and yield levels to short into originally in September last year (arrow) for subscribers only then with this post really in detail setting the stage for all of this and to use “above 128 on TLT” (arrow) to short, price and yield levels to cover as I discussed using 116.50 on the very low day on May 17 (arrow) and said that it was a substantial supp so let it rally for a few months. Discussed that 116.50 will give way, but it needs to build the power to do that. Point and figure counts and targets on a short-term and long-term basis discussed, times to let them rally back so be careful if you are short after a big drop in price discussed, and repeated to use “above 122.50 as a shorting level”. Numerous discussions about how the :short-term yields surging higher will lead to the long-end also surging, but with a lag, discussed how the bear market will last decades. For years I had warned people over and over to get their mortgage to a fixed rate immediately.

So now we have broken all the levels again, stories all over the place people freaking out about bonds, jobs day tomorrow, good place for another bounce as 114.50 another supp area.

I wrote this a few days ago, was going to post soon, the market moved sooner:

With Japanese bond yields at 2 1/2 year, Italian yields 4 year highs, German yields, and US yields hanging around more 7 year highs, except for Germany, they have all done only a phase #1 bko. We are in the first inning, away team still up, in this multi-decade bear market in govt bonds. Also, with the “strong handed” institutions having once again shown their incredible incompetence back in June when yields were smack into their lows – another stupid article from the clowns at Bloomberg about negative yield debt. For years, and right into the secular lows in yield with global bonds in late June/July 2016, I have said to ignore the negative yield hysteria, it will be laughed at, hysterically, within a few years, at the wild incompetence of these institutions buying that crap. Also, yes institutions are part of “strong hands”, and again why it took me many years, and with constant studying to boot, to start to get a decent understanding of “strong hands vs weak hands”, it is very tricky. So then what to do with that early on – make it as simple as you can – like using an EA system with 3 of them completing the process, it is not at all perfect but much better than most people will ever get to – and a more thorough understanding sinks in over time.

From June 2018 on Bloomberg:

As the U.S. and China move closer to a trade war and the European Central Bank prolongs stimulative rates, traders are piling into the safety of government debt and enlarging the stock of bonds with below-zero yields. In just six days through Tuesday, the world’s pile of negative-yielding debt surged almost $1 trillion to $8.1 trillion, according to data compiled by Bloomberg.”

Two stocks discussed multiple times, big deals for them. First the stories:

Arrowhead Pharmaceuticals Inc said on Thursday Johnson & Johnson would develop and market its gene-silencing Hepatitis B drug and pick up a minor stake in the company in a deal that could be potentially worth more than $3.7 billion.

Under the deal, J&J’s Janssen Pharmaceuticals unit will obtain a worldwide license for Arrowhead’s ARO-HBV drug and an option to collaborate on up to three new RNA interference (RNAi)drugs, which use gene-silencing technology.

J&J will make a $75 million equity investment in Arrowhead at $23 per share, a premium of about 24 percent to the company’s Wednesday close. Arrowhead will also get $175 million upfront, the company said in a statement.

Arrowhead is also eligible to receive up to $1.6 billion in milestone payments for the Hepatitis B license agreement and about $1.9 billion in option and milestone payments for the collaboration agreement related to up to three additional targets.

AND:

Cloudera Inc. and Hortonworks Inc. shares both soared in the extended session Wednesday after the competitors announced a merger to combine their strengths in big data and cloud computing.

Both Cloudera and Hortonworks shares were up 24% after hours.CLDR, +1.07%   closed up 1.1% at $17.08, and Hortonworks HDP, +1.77%  closed up 1.8% at $21.88.

 

 

I am giving a ton of opportunities for you guys, are you taking advantage of any of these, a couple people apparently are, but I hear almost no replies/comments, so I will make an assumption. Is there anyone putting out this quality of content. Two stocks which I have posted over and over and over have deals today and huge rallies – ARWR and CLDR. The “accum, bkos, uptrends, angling-up” were all discussed with them again and again. Discussed this with ARWR on 4/11, at 6, now 22 and back into res. And I discussed the bko and my belief it is in a big uptrend several times – July 4, 7 in depth in a conf call, July 23, Aug 8 in a pm video, Sept 7, 10, 12, 13, 19. When CLDR broke out in Sept, then discussed that 6x. And both CLDR and ARWR are into resistance in PM trading-remeber about selling into strength.

 

From 4/11 ARWR:

ARWR big accum, shorter-term has a shot to get back into resistance.

From 4 weeks ago CLDR:

CLDR bko, stop moved to scratch.

And this:

I discussed CLDR on 9/6 in premarket, plenty of opportunity, discussed the last few days as a “bko” stock. It was already up 20% when I bought it on the 1,2 dip on the bko day, exited 1/2 for 10% on Friday. Again, I love strong stocks, the stronger the better, weak stocks will kill your account.”

 

Yesterday – before the market opened – discussed VTVT, with the exact setup details to watch for – above the opening range, then look for a dip buy setup. I have explained that thing, setup, 100x at this point. To repeat, much more often than not I trade the #1 stock of the day, but again that says nothing about me, it is just because “I love the strongest of the strong”, they, to me, are the “simplest” things to trade. VTVT, for most of the day, was the #1 stock of the day. And what did I say yesterday – before the open?

VTVT, did not trade it, but to discuss again, when even a crappy stock, blasts off, AND goes above the opening range for the day especially if it trades into the first range not gaps into it, then, TO ME MY WORK MY ANALYSIS MY DISCOVERY, someone else wants to use that fine, the trend is up, and am looking for a buy setup.

 

Then during trading yesterday, that exact early morning setup, it went to a new high, I caught a dip, and yes sold wildly too early like usual, but 15% OK with that trade:

 

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About traderscott 1071 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

4 Comments

  1. Hi Scott, yesterday you mentioned a stock in a “third phase Bko” and today one is a first phase Bko. How much importance do you put on how many bko phases a stock has had? It would seem if too many bko’s then the run may be getting tired and the probabilities of a reset increase. Do you factor in the phase in your setup rating? Maybe around phase 4 bko time to be cautious? Thanks.

    • Dave good question and yes insightful, it is just a matter of terminology (phases vs stages) and technical position/situation. My reference to phases is when something is still in accum area. And remember there does not need to be 3 accum phase bkos in something, but it just helps to build confidence to see the more recognizable pattern emerge. For instance, with AMD, a stock I’ve discussed numerous times, as well as the premarket before the day of the THIRD PHASE bko when I got long the first time on 7/26. Notice the 3 phases, and notice when the volatility UP/bko really kicked in on phase 3. So this is a trading tool/analytical tool all in one.

      With stages, I am referring to once the full bko thru all of the accum area has occurred. And yes, the #3 stage, the probabilities of a big reset do occur. LULU to me in there. And again, does not mean it has to go by the script. But trading is about recognizing and understanding patterns, we need to follow rules and a solid approach. Understand the probabilities.

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