On Wednesday of last week (What A Game, Eh?) I set out the case for being cautious over the near term. Then on Friday, I posted a special situation short in MAGS (Into The Close). Consider this Weekend Update a continuation on the bearish theme, with the charts below building the case for what I can best describe as something wicked this way comes. We won't cling to the dark side much longer, because if this market turns up with any momentum, there are plenty of stocks well off their highs that are just begging for a bid. Nonetheless, for now, there is a clear path of least resistance and its for lower prices and possibly much, much, much lower prices. The bearish case is set out in the charts that follow, but before we go there, two fundamental factors that add to the downside projections. First, geopolitical uncertainty surrounding the mess in Iran. One only need look as far as one of our blockbuster winning trades to see this particular worst case scenario: What's good for our calls, bought a mere 10 days ago, is not good for the stock market. The tension, or war is more like it, is driving up the price of oil. This is bad for inflation, which is bad for interest rates, which could be the trigger that finally knocks the legs out of market indices. Which is in fact, my second fundamental factor, bonds: TLT "Wave 5 Sell Signal "- Enough Said TRADING CHARTS With war, oil and interest rates hanging over the equities market, let's take a look at the structural deterioration that has taken place in our charts over the past few weeks. SPX On Friday, the S&P 500 broke the uptrend line up from the March 30th market low. This in and of itself is reason enough to take aggressive short positions. Best part of this trade is a recovery back above the trend line turns everything around for a fresh leg up and a quick exit from those shorts. In other words, for this particular short trade, the stop is very close, just above Friday's highs, SPX 7,500-7,600. QQQ This QQQ chart above is more bearish than it looks. I've moved the blue support line, which was cleanly broken last week, to tag Friday's low tick. There is a method to my madness, i.e., if QQQ closes below this new support line, below about 685 any time next week, buy more puts. Speaking of which, this is our current position: In other words, after a couple of weeks of holding these puts, the trade is about break-even, but there are still 30 days to expiration. A lot can happen in four full weeks of market action. The Q's have already fallen about 30 points in the first two weeks of holding these puts, but most of that decline has come in the past three trading days. If that downside momentum continues, these puts could be in the money by the time of our next weekend update. If so, we need a trigger to buy more and that trigger is a close below 685. MAGS A break below Friday's low tick @ 66.33 remains our trigger for MAGS puts. These can be in addition to or in lieu of adding more QQQ puts. One change though, on Friday I set out the Aug $65P as the option of choice, today I want to add the Sep $65P as well positioned for a longer term trade and my option of choice should this trade trigger. MAGS Sep Puts Note: The price target for MAGS is the mid-$50's, making the Sep $65P a 5 bagger and two full months to get there. Silver We were early with our purchase Silver calls, my bad, but, it may have finally bottomed last week. The next big up day will confirm a new uptrend and whether stopped out or not on the recommended SLV calls (currently -40%), we will be buying SLV calls again on any such confirmation. BTC Last week's low print was 61,761 - See below for new trigger Short IBIT The July IBIT puts went out at between +211% and +168%: New Trade: On any Bitcoin break below last week's low print, 61,761, buy the Sep $35P Active Options PRO Service Premium Service
