Fake Rally Friday – WTF Are People So Happy About?

As I walk on through this wicked world,
Searching for light in the darkness of insanity,
I ask myself, Is all hope lost?
Is there only pain, and hatred, and misery? – Elvis and Lowe 

Once again the Futures are up in the morning and once again we have to wonder why?  

Now, don't get me wrong, we love a fake rally as much as the next guy, especially when it gives us great shorting opportunities.  Yesterday, even as I noted in the morning post that our Wednesday morning Futures shorts made $6,050 in 24 hours for Members who followed those trade ideas, our new suggested shorting lines of Dow (/YM) 16,200, S&P (/ES) 1,845 and Russell (/TF) 1,150 all came in and, before lunch, we hit 16,150 on the Dow for a $250 winner, 1,835 on the S&P for a $500 gain and 1,141 on the Russel for a $900 win.  

So PLEASE Mr. Market – feel free to run us up again!  Actually, this morning I sent out an Alert to our Members identifying the Nikkei (/NKD) as the best shorting opportunity of the day, week and probably the month of April as well.  Testing 14,795 this morning, we're short below 14,800, which is the level I predicted we'd run to at 9:50 am on Wednesday in our Member Chat Room, saying:

Submitted on 2014/03/26 at 9:50 am

Nikkei/Eric – They are happy the Dollar is back up (80.27) and that means not a good short at the moment.  Over 14,500 has very little resistance up to 14,800 so not a good spot to short and maybe a good long, actually, but my heart isn't in longs at the moment. 

The long play was good for $1,500 per contract but, as I said, I wasn't into it.   The short play, from 14,800, I'm very excited about for reasons I have outlined in previous posts and that we went over extensively in this morning's Alert to our Members, so I won't get back into it here.  Once the market opens, we'll look for a nice short on EWJ ($11.21) as well.

Do you want to know something really funny?  I was also detailing in yesterday's morning post how we were focusing on TZA as a great market hedge and I laid out all 5 of our bearish positions and, with the Russell making the usual fake move up in the morning, any one of them were very easy to enter in the morning.  The aggressive TZA spread from our Short-Term Portfolio was up net $4,510 at the time and those same positions finished the day up net $6,100 – another 35% gained in a single day on just a 0.35% drop in the Russell.  

It's right there in the morning post folks – those are just the free samples!  

This is the main lesson we are teaching our Members this year, with our balanced Short and Long-Term Portfolios.  The highly leveraged gains in the $100,000 Short-Term Portfolio protect our $500,000 Long-Term Portfolio and allows us to maintain our Long-Term positions so we can BE THE HOUSE and just keep playing while the premium of the puts and calls we sell erodes for the people we sold them to.  

Even though it was a small pullback, on the whole, it was good enough for us to take profits on 4 position in our Short-Term Portfolio (see our afternoon Alert to Members).  As the quarter doesn't end until Monday, we don't expect a big sell-off until Tuesday the earliest.  Until then, there are tens of Billions at stake in keeping the markets looking pretty so that all those investment brochures with Q1 performance charts will have convincing reasons for Banksters to tell you why you should put more money into the market (through them, of course).  

After all, why is NFLX trading at $360 this morning when AMZN just announced they will provide a similar service FOR FREE – not just to their prime customers, but to anyone (ad supported).  If you think people won't want to watch TV shows with ads instead of subscribing to NFLX, I'll remind you that 80% of the US population still doesn't subscribe to NFLX.   Earnings are after April options expiration so the May $300 puts at $7.50 should hold their value fairly well, even if NFLX doesn't fall on this news.  If they go back over $365, the premise is blown and we can take a small loss – that's how you make a news trade!  

TSLA had news too, with Aswath Damodaran agreeing with my proper valuation of $115 for essentially the same reasons I have.  Also yesterday, we got word the Panasonic is not actually all that interested in partnering on the Giga Factory, which makes you wonder about TSLA's liability as it was one of the reasons they used to raise $2Bn from suckers just one month ago.  Here's the spin as TSLA was our raising cash with crooks like MS, who gave them a $420 price target while they underwrote the bonds for fat fees (as well as owning $1Bn worth of the stock themselves):

Tesla said it will commit $2 billion of its own money to build the Gigafactory and will raise $1.6 billion from investors and the rest from partners. It didn't name its partners in the project, but Panasonic is widely believed to be one of them.

"Panasonic has built a collaborative relationship with Tesla Motors, and are looking at options for strengthening that relationship," a Panasonic spokesman said Wednesday by email. "At this stage, nothing is decided."

Tesla and Panasonic, based in Osaka, Japan, have a strong partnership. Panasonic invested $30 million in Tesla in 2010, and the two companies in 2011 finalized an agreement for Panasonic to provide Tesla with roughly 640 million automotive grade lithium-ion battery cells, or enough to build more than 80,000 vehicles, over the next four years. In October, the scale of that agreement was nearly tripled to 1.8 billion cells.

So they don't ACTUALLY lie, it's just VERY MISLEADING to investors.  

IN PROGRESS