Before the Open (Aug 24)

Posted on by Jason Leavitt

Good morning. Happy Monday. Hope you had a great weekend.
The Asian/Pacific markets got crushed. The losses are what you’d see in high-beta tech stocks, not indexes of entire countries. China fell 8.5%, Hong Kong and India more than 5%, Australia, Taiwan, Japan, Indonesia and Singapore more than 4%, and Malaysia, New Zealand and South Korea more than 2%. Europe is currently getting crushed too. Greece and Belgium are down more than 6%, Netherlands, Norway, Denmark and Hungary more than 5%, London, Germany, France, Austria, Sweden, Poland, Finland, Spain, Italy and Portugal more than 4%, Switzerland and Prague more than 3%, and Russia and Turkey more than 2%. Futures here in the States are getting annihilated. S&P 500 down 70; Dow down 665; Nas 100 down 210.
VIDEO overview of the Leavitt Brothers service…here
The dollar is down 1%. Oil is down $1.60 (almost 4%), copper is down. Gold and silver are down. Bonds are up.
The market is in full-blown crash mode. Weeks ago huge sell-offs in China were pretty much ignored by the rest of the world. They were definitely ignored by the US. Not any more. China got crushed, and the rest of the world has followed.
Leavitt Brothers has had a bearish bias for a while. I’ve been very clear that every rally should be sold or shorted until the internals improve. We didn’t know exactly when the market was going to fall or how hard it would fall, but we did know that it was likely coming.
There are no excuses. Tops take time to form, and this top took several months to play out. One by one it issued warnings and told us to be very careful. You are either short or in cash. There is zero reason whatsoever to be long. The only traders who are long are long-term Warren Buffett-style investors, but those aren’t traders, they’re investors and they’re not reading premarket reports like this.
The character of the market has changed. The uptrend is over. A downtrend can last months or a year or longer. Along the way there will be big rallies (the biggest up days occur within downtrends) and perhaps a few mini uptrends, but the overall bias is likely to remain down for a while.
Regarding today, don’t be a hero out there. With an enormous gap down coming, you can throw out all technical tools. They are meaningless right now. Low TICK readings, extreme AD prints, plunging breadth indicators – none have meaning right now. Most traders would be wise to watch and manage whatever shorts they have.
We’ve been buying dips for years. That stopped within the last few months. The game has changed. More after the open.
Stock headlines from barchart.com…
Marathon Oil (MRO -2.48%), Noble Energy (NBL -0.82%), and Whiting Petroleum (WLL -7.04%) were all downgraded to ‘Neutral’ from ‘Buy’ at BofA/Merrill Lynch.
Bristol-Myers (BMY -2.62%) was upgraded to ‘Neutral’ from ‘Underweight’ at Piper Jaffray.
Valero (VLO -9.09%) was downgraded to ‘Underperform’ from ‘Neutral’ at BofA/Merrill Lynch.
Chevron (CVX -4.39%) was upgraded to ‘Neutral’ from ‘Underperform’ at BofA/Merrill Lynch.
Randgold (GOLD -1.37%) was upgraded to ‘Outperform’ from ‘Sector Perform’ at RBC Capital.
Grainger (GWW -1.87%) was downgraded to ‘Neutral’ from ‘Outperform’ at Baird.
AutoZone (AZO -5.06%) was upgraded to ‘Buy’ from ‘Neutral’ at BofA/Merrill Lynch.
Airgas (ARG -3.54%) and Fastenal (FAST -0.51%) were both downgraded to ‘Neutral’ from ‘Outperform’ at Baird.
Bank of America (BAC -3.71%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Keefe Bruyette.
Abercrombie & Fitch (ANF -3.74%) was upgraded to ‘Overweight’ from ‘Neutral” at Piper Jaffray ahead of earnings.
Nike (NKE -4.84%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Telsey Advisory.
DreamWorks (DWA +5.01%) was upgraded to ‘Buy’ from ‘Neutral’ at B. Riley.
General Motors (GM -4.02%) is recalling 59,474 Chevrolet Cobalt vehicles manufactured January 4, 2010, to June 23, 2010. The affected vehicles may be equipped with an improperly routed Side-Impact Sensor wiring harness in the driver side front door
Francisco Partners reported a 7.2% stake in Mitel (MITL -3.63%).
Emperey reported a 9.5% passive stake in BG Medicine (BGMD -3.41%).
Earnings and Economic Numbers from seekingalpha.com…
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Aug 24)”

  1. this is only the first crash to come of many over the next year
    never the less intraday today from begining asia to now in europe we may have hit levels relevant to
    wave 3 down of 3 and a few day bounce for wave 4 intraday reversal may come today then wave 5 down to finish wave 3
    closed my shorts from begining trade asia and watching for a long on dax and ftse
    counter trend rules will apply

  2. any trader not buying today’s cash market opening tick should hang his hat and do something else. a gigantic gap down in a multi-year bull market. the gap will close in no time.

    1. In theory yes, but in practice no. Retail traders were locked out this morning. They could sell, but they couldn’t buy. Market orders in highly liquid stocks sat for long periods of time without executing.

  5. good old jase, always intolerant of different opinions. afraid to be wrong and called out on it. so worried that you don’t publish my contrary opinion here on the blog despite nobody even reads or cares about it. that’s why you and your business never amounted to anything, and never will, despite your technical knowledge. don’t forget that differing opinions are what make a market. i am sincerely wishing you good luck and lots of profit. best regards to aaron the bond king and all other friends on the board. signed, srhn.

    1. All legit comments are published.
      But mean-spirited, sarcastic, smart-ass comments that are only meant to ridicule me or anyone else are not.
      It’s pretty simple. Engage in a legit conversation about the market or take comments elsewhere.

  6. jims
    no idea
    todays lows realy put things out of perspective [pos a hedge fund in europe going bust or margin’ed
    as the nas 100 was stped first it was probably dax related
    so was that it for that particular move down and we have a ‘V ‘ bottom and reverse h/s
    or was this the end of a wave 3 and now a 4 up with a retest of lows wave 5
    interday i always just let the flow take me with no bias

  7. i am not a mean person and i don’t make fun of anybody. there is a difference between ridiculing and making a joke. i am a humorous person by nature and i approach trading and fellow traders the same way. i guess the extreme volatility in markets after years of steady trend made everybody a bit anxious and intolerant. having a couple of losing trades can make people that way, i have been trading for a long time and i have been on that end of things before so i can appreciate that. if anybody feels ridiculed by me, i apologize wholeheartedly as it was not the intention at all.
    i just wanted to post something here in a timely fashion for fellow traders because, imho, this morning’s opening marks an important instant in the markets that will shape the next couple of years. i post on a couple of other boards anyway and people who are interested in my trading opinions follow me there. so i will leave this platform alone so you guys can have your peace. i may come back in a year or two at another point i deem important.
    until then, have a great trading and time and profits. don’t forget to have your fun, it will help your trading too.

  11. the german dax is the thing that is flash crashing
    it tried it a few minutes ago,but luckly i was fast enough to close my short at close to bottom
    and as it is after hours for the dax it didnt effect the nas 100
    the dax is a green grocer and trades apples

  12. this feels like a abc corrective wave 4
    with A up finished –B down but not to lows,then a C up to about yesterdays close
    then a wave 5 down to marginally new lows

  13. Jason is a swing trader.
    I am a bottom fisher.
    Our strategies diverge in points like these.
    I believe this drop can only last one more day. (My models were wrong in early Sept 2001 but I think a lot of people knew something was going to happen)
    I also believe that we are very likely to see a double bottom similar to 1987 (October to December) or 1998 (August to October)… 2011 Feb and March are also examples.
    I find calculating tops impossible. I guess that is why Donald Trump is richer than I.

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