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Trading With Waves pioneered the Decision Support Engine which has been featured in multiple publications and media outlets such as CNBC. The Decision Support Engine combines multiple insights into a company ranging from the businesses strategy, to who is investing, to timing of those... More
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  • Time To Get Bearish 0 comments
    Sep 15, 2013 11:49 AM | about stocks: AAPL, TSLA

    On Tuesday we announced that we were moving to a mostly bearish position in the various portfolios we track. Our Nasdaq futures portfolio will be live soon for everyone to track along with us, but most will remain reserved for WaveBOOM members. We also continued to warn about the Apple (Nasdaq:AAPL) reversal (which we had been warning was coming for some time). So we weren't surprised when the stock plummeted. Our Decision Support Engine (NYSE:DSE) still shows the 550 +/-50 zone as our previous target since the sub 400′s in April and June. Once this rise ends, likely in a more sober 525 +/-25 zone, 300 remains the target, if not lower, in the next 2 years. Remember, it fell from 703 to 380 in only 7 months. DSE got us out of longs/into short above 600, and out of shorts/into longs below 400...not a bad play. Then, toward 470, DSE again warned of topping action, and it still does; only louder and stronger. Tesla (Nasdaq:TSLA), the new Apple, as we showed today, is in trouble, as once it's parabolic curve is violated, it's "katie, bar the door" for an avalanche of selling.

    Wednesday we discussed the Apple decline of course but also discussed a similar warning from DSE regarding the Spx. After the June low, DSE projected a rise above the May 1680 peak in a 5th wave. As 1700 was tested in July, DSE warned to exit all longs/enter shorts, as the forecast was fulfilled. Since then, what appears to be a 5 wave decline took Spx from the 1710 high to the August low near 1628, where it warned that shorts should be temporarily exited, as a 3 wave rise was expected to correct that decline, giving 1675 +/-10 as the likely bounce zone, and the presidential address regarding Syria would likely be the high point +/-a day. Tuesday's close into that address saw Spx close at 1684, after six straight days of rally. DSE now warns to exit all longs/enter shorts again, as the next expectation after 5 down and 3 up is for another decline to below the low of the prior 5 wave decline. Our increased short exposure should play this well, if we're read the waves correctly. Otherwise, the DSE's previously suggested, but abandoned due to market action, 1730 +/-13 extension target will come back to life IF, and only if, 1710 is broken above. WaveBOOM members can see how we are entering and exiting based on the DSE.

    M.O. is peaking now in historically overbought levels. The anchor for the 2013 rally, housing, is wavering as mortgage applications plunge on surging interest rates, and the latest bi-coastal bubble appears to be ready to burst, in another forecast DSE began pounding the table about during last Summer's 'historic' rate environment. Now, after the herd has become 'certain' of immediately higher yields/lower Treasury prices (DSI's bullish reading on price now only 6%, meaning 94% bearish on price), DSE warns of at least a multi week bounce in price (decline in rates). Our long bond ladder available to WaveBOOM members should benefit from this.

    Disclosure: I am short TSLA, AAPL.

    Additional disclosure: We are also short bonds

    Themes: SPX, Bonds Stocks: AAPL, TSLA
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