Stocks The market stumbled on Friday when this news came out: "They're Just Unreasonable": Debt Ceiling Talks Collapse As Republicans "Abruptly" Walk Out Of Negotiations Expect politics to move the market up and or down right into the resolution...or none...of raising the debt ceiling. I've been scanning potential trades taking this into consideration, but this one in particular looks ripe for a Sell Signal no matter what: KBH Daily Trend Model Minimum expectation is for a 50-62% pullback into the $33-36 Fibonacci retracement zone, taking the $40P to a value of $4-8. The Oct 20th $40P is trading at about $2.00-2.10, allowing for a return of 100-300% over the next 155 days. That gives the trade a lot of time to unfold, removing time as a risk factor for any entry from the next few days to the next few weeks. What's missing from the set-up is the red down arrow signifying the triggering of an Intermediate Term Sell Signal. In anticipation thereof, a close below $44 on successive days should do it, so we label this trade as "Pending" but be ready to jump in as soon as the model triggers, even if it means paying up a little for these puts. A More Aggressive Option Alternative The Jul 21st $44P is trading at about the same price as the Oct 20th $40P, at around 1.95-2.05. If the drop occurs in the next 64 days, this put is destined to climb into the double digit range, $10+ for a 5X increase. You are giving up time, for amazing leverage. If KBH closes under $44 in the next few days, this is a preferred bet. KBH 120 Minute Trend Model - Ideal for Short-Term Trading Tale of Two Channels IWM has been the weak link across market indices, three months of net sideways price action. A breakdown now, especially below the early May low (168.78), begins multiple Wave 3's as per the chart labels below. QQQ - Waiting on Fresh Sell - 100 pts lower probable Save some capital for the next down red arrow. The last second wave down was good for 100 QQQ pts in 60 days and this one is setting up for at least as many, but in a shorter period of time. Bonds TLT - Daily Trend Model Four of five days last weeks Bonds (TLT) closed below the upward sloping trend channel up from last November's lows. You can see an acceleration down into Friday's close, highlighted on the 120 minute chart below: Bonds heading lower equates to interest rates higher, and that would probably be too much for the stock market, especially IWM and XLF to bear in light of a pending debt crisis taking over the headlines in the weeks ahead. The market rally has been narrow and won't take much in terms of economic disappointment for the entire house of cards to come tumbling down. Key levels will again be our focus in the days ahead. TSLA Watch - One Bright Spot But for the big picture view, this chart and EW count shows TSLA is on a path to $300 by September options expiration. TSLA Daily Trend Model Longer Term: The TSLA/AAPL Analogue = Exponential Growth The TSLA analogue to AAPL and its introduction of the iPhone from the early 2000's continues as a guiding light looking into a 5-10 year window into the future. All of the price appreciation to the right of 2013 for AAPL is yet to come for TSLA. Cybertruck is coming into full production over the next 12 months, and Elon Musk has hinted at activating full self driving for a free month to all Tesla owners, the final step into a future that will logically and legally lead to mandating full self driving for all vehicles, or else be sued mercilessly by the personal injury bar and their stats that Tesla's artificial intelligence saves lives, dramatically reduces injuries and minimizes property damage. All auto manufacturers will be licensing Tesla's FSD intellectual property, with a close to 100% profit margin per vehicle. This is not even close to being priced into TSLA's market capitalization, not even 5 -10 years out, yet. Count on the chart above how many times AAPL doubled in price from 2013 to 2023. That's whats coming for TSLA, market meltdowns along the way, notwithstanding.
