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Jeffrey D. Medwin

Is a BEAR Market for Stocks Continuing ?

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I had Novavax in 2013 at around $3.00 per share. It was one of two others I had  that quadrupled in 3 months. I sold them all before they quadrupled. Lost money then got out of the market. Never been back.

JJK

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I started this thread on May 4th, and the topic is :

 

" Is the bear market for stocks continuing "? 

 

At last, today I have a CLUE, just a few hours old,  I would like to share ASAP with you all, 100% pertaining to this thread 

 

My post today is based on the closing chart of one stock, TODAY, May, 28th. ...........I believe its market ACTION tells us something VERY INTERESTING!!!

 

 

 

The stock symbol is TZA, and it is a NYSE- listed ETF, or Exchange Traded Fund.  Here is what it looks like, updated as of this afternoon :

 

 

                                 1777533729_5-28-20TZAONEDAYREVERSAL.thumb.JPG.a0b09054b27583bdde1908cca412d12a.JPG

 

 

 

TZA is a "inverse" ETF,  based on Small Cap Stocks.   It drops when the small caps are rising, and vice versa.

 

TZA made an all time historic low this morning, since its ever been trading, and it closed UP for the day, on the second biggest volume day it has ever recorded.   Whenever a stock makes an all time historic new high, or a all time historic new low, and closes in the opposite direction on high volume, from the prior day's closing price, this is called a classic " One Day Reversal ".

 

To me, this is a truly great clue, based on market action, that the bear market may possibly be SOON starting its second leg down, perhaps like we had in March 2020. This "clue" comes not from people jawboning on a Forum, ( often with no real " skin in the game" ), but from what people trading 28.6 Million shares of TZA DID today, with their own money,....HOW they voted.

 

Notice the gray and red colored VOLUME bars, for each day, at the bottom of the main chart.  Yesterday, and today, were by far, the largest volume days this instrument has ever had, in its entire history.  The volume the last two days was about three-fold what the volume was, when the stock ran to 120 this year in March, as the market was declining.

 

28.6 million shares today, and a classic One Day Reversal.  What is this suggesting to you??   WHAT direction, and in what time frame,  are all these people in TZA today thinking this market will go??  WHY did it close so strong, near its high for the day ???

 

Of course, this is only a clue, and its not definitive.  But it is SUCH an interesting / unusual chart, that I wanted to post it, in a timely fashion, and share it with any of you interested in this thread's topic.  

 

Thanks for looking...and thinking about this.  We shall soon see !!!!

 

Jeffrey Medwin

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Here's another inverse index.  It has declined dramatically since it spiked in March.  It didn't do any of the things TZA did yesterday, except close up a little.  What does this suggest about people with skin in the game?

 

 

image.thumb.png.eff05ccc6a68ba4bd3b411bf95d96d0b.png

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Incidentally, what does it say about the stock markets when they are rallying despite the fact that 48 million people have become unemployed?  Is this just pure madness?  Or could it be possible the government is keeping its word?

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36 minutes ago, Jeff Matthews said:

Here's another inverse index.  It has declined dramatically since it spiked in March.  It didn't do any of the things TZA did yesterday, except close up a little.  What does this suggest about people with skin in the game?

 

 

image.thumb.png.eff05ccc6a68ba4bd3b411bf95d96d0b.png

 

 

I have already reported on TVIX. 

 

Last Wednesday, someone bid for 25,000 shares at $150.00 a share. That was the largest single transaction we have ever seen in the last several years of watching TVIX closely.  The buyer was eventually filled.   Jeff, that is a single bid of $3,750,000.......... to BUY TVIX.   Jeff, I would personally tend to SIDE with that buyer, because he is a MUCH bigger fish than me !!!   He has much more money than me, and has better information than me.  That bid, and other market action, caused me to go 100% short ( long inverse ETFs ) last Friday. 

 

I have pointed out TZA because yesterday it was HIGHLY unusual price action.   TZA made its ALL TIME HISTORIC LOW yesterday, after about a decade of trading, and then made a ONE DAY REVERSAL on huge volume, a classic price movement. 

 

I reported it for all here on this Forum to consider - within hours of it happening.   Think about the time frames, a decade of trading VS a few hours of trading. !!!    Jeff, IF ( a big word my Daddy used to say ) the market collapses, it would be like buying TVIX at about $39.50 a share, a day after TVIX's all-time-low was made.  Don't you see that?   Are you simply wearing mental blinders, unconscious as to the possibility of what I have posted yesterday ?  No offense at all meant, but its a good question to pose to you, given my report !!

 

Jeff  Medwin

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1 hour ago, Jeff Matthews said:

Incidentally, what does it say about the stock markets when they are rallying despite the fact that 48 million people have become unemployed?  Is this just pure madness?  Or could it be possible the government is keeping its word?

 

Jeff, Its not a question of the Government keeping its word, or any " reasons" people ascribe.  

 

The REAL question is, can the Government successfully intervene, with the MOST overblown stock prices ever seen, and keep it afloat ?  None of us know what the outcome will be.  I personally suspect............. " You can't fool Mother Nature ".   I will tend to position myself for a super big BEAR Market, following the super big BULL Market.

 

That said, I let the MARKETS tell me when and how to act,.................... not my opinion, or hopes. 

 

My post on TZA's action on 5-28-2020 is a great example of the Market itself, technically giving us a clue.  It has little to do with each of our respective opinions.

 

By the way, I just checked,..............fact is TZA is up 5.41% today, part way through the morning trading, and the Dow is down 200 points.   Could today be the precise start of a BEAR Market LEG TWO down ?  I don't know,  but we will know, maybe sooner than later.  That is what this thread ...........is all about !

 

Respectfully submitted to you,

 

Jeff Medwin

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51 minutes ago, Jeffrey D. Medwin said:

That said, I let the MARKETS tell me when and how to act,.................... not my opinion, or hopes. 

 

You are not letting the markets tell you.  You are ignoring the rally and second-guessing the markets based on a few "signals" from a minority of investors.

 

You are of the opinion that big players who buy $3 million TVIX in a single transaction have more insight than you.  Could be.  Could also be that $3 million is chump change to them - a mere lottery ticket purchase.

 

Yes, I acknowledge you might possibly be right.  Do you acknowledge you might be wrong?

 

 

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Short is a tough game to play.  Buffet's been playing that game unsuccessfully for the last decade, and it cost his investors a bundle in opportunity lost.

 

By the way, do you know what his arrangement is for his wife when he passes?  A simple S & P index fund.  If rich people's strategies are insightful at all, consider the errors he's made and his plans for his widow.

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1 hour ago, Jeffrey D. Medwin said:

Jeff, I would personally tend to SIDE with that buyer, because he is a MUCH bigger fish than me !!!   He has much more money than me, and has better information than me. 

 

Not to argue but just because that person might have more funds than you doesn't mean he has a lick of common sense.  Maybe he inherited it and is just gambling like a madman.

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15 minutes ago, Jeff Matthews said:

You are of the opinion that big players who buy $3 million TVIX in a single transaction have more insight than you.  Could be.  Could also be that $3 million is chump change to them - a mere lottery ticket purchase.

 

Well, seems Mr. Johnny on the spot beat me to it!

 

(I swear I didn't see what you wrote prior to mine.....  must be something about great minds.....)

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13 minutes ago, Coytee said:

 

Well, seems Mr. Johnny on the spot beat me to it!

 

(I swear I didn't see what you wrote prior to mine.....  must be something about great minds.....)

Ha ha!  Also we have no information at all on any other holdings and transactions by this investor.  If he or she has any savvy at all, this TVIX is part of a well diversified mix of things - not "all in" on anything.

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Might be (but I would doubt it) a combined order.

 

Years ago, when I managed a (small) local brokerage firm, we managed accounts.  We might decide that the stock folks might need to buy some JNJ or something.  We'd tally their funds and go to the FIRM's investment account and buy say 10,582 shares as a single transaction.  Then, we would allocate those appropriately from the house account to the individual accounts.  So "the market" saw a single trade for 10,582 shares when in fact it was a combined order for 35 people.

 

Again, I doubt that's what happened there......but you don't know.

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Day to day fluctuations are what many consider "noise."

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8 minutes ago, oldtimer said:

Day to day fluctuations are what many consider "noise."

It's pretty much noise to me.  But then, there are day traders.

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On 5/29/2020 at 2:58 PM, Jeff Matthews said:

A rally in the last half hour!  The market speaks.  Go long!

 

image.thumb.png.c0834c9b28eae1c6ef0099255899c51f.png

 

 

So you wished you had bought TVIX below 50, ...........you have, I think, more than once stated. 

 

I just discussed the action in  TZA, a inverse ETF, which made its all time HISTORIC low on Thursday, and closed UP for the day Thursday, on huge volume.  ( A classic one-day reversal ). 

 

You posted a one day Dow Jones  chart of Friday, shows a big sharp rally, on news, when Trump spoke at 3 PM, and went easy on China,. 

 

Did anyone, or everyone, or did YOU Jeff Matthews, notice............. what TZA did in that UP day, Friday ?

 

TZA traded on Friday, and closed UP for the day, ( and its an INVERSE ETF )....................... on the biggest volume it has ever had. 

 

One of my trading group's threesome, the one I identify with the most, tells me " If the market has a 60 percent sharp correction  (sharp as in taking only 30 days, not 18 months ) , TZA could possibly trade at 300 to 400 dollars a share in his opinion.    It is now one trading day off of its all-time low.

 

What I may do, or other members of my trio may discuss between us, is NOT meant to be taken as stock advise for others

 

Jeff, when I was a stockbroker in the late 1960s, I liked to tell my clients, " Why don't we buy some PRD,  Poloroid, Corp.,  and see what develops". 

 

Have fun, we shall all see, in the months ahead, what happens.   

 

Jeff Medwin

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TVIX - this is from the VelocityShares Prospectus:

 

The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage daily trading risks.

emphasis is mine.

 

https://2deaa804a6dc693855a0-eba658c6bc03668a61900f643427d64d.ssl.cf1.rackcdn.com/Documents/product/velocityshares/prospectus/prospectus-velocityshares-us-volatility.pdf

 

This NOT something you buy, and hold, not even for a short term (IE: a week or more).

 

It's an ETN. Hopefully you know how these instruments are constructed before you get involved with this.

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TZA - Similar to above.

 

The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day.

https://www.direxion.com/product/daily-small-cap-bull-bear-3x-etfs

 

This too is NOT something you buy, and hold, not even for a short term (IE: a week or more).

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20 hours ago, artto said:

TVIX - this is from the VelocityShares Prospectus:

 

The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage dailytrading risks.

emphasis is mine.

 

https://2deaa804a6dc693855a0-eba658c6bc03668a61900f643427d64d.ssl.cf1.rackcdn.com/Documents/product/velocityshares/prospectus/prospectus-velocityshares-us-volatility.pdf

 

This NOT something you buy, and hold, not even for a short term (IE: a week or more).

 

It's an ETN. Hopefully you know how these instruments are constructed before you get involved with this.

 

 

Hello Art,

 

You are posting the obvious.

 

When I suggested TVIX, (which I can not and will no longer do ), it was on January or was it February 27th as I recall, in the mid 40s. It went to 54, 38, and then in March, went to $1,000 a share.  My suggestion on my initial stock market post was VERY clear, unambiguous..........immediately go 95% into cash, and 5% into TVIX.   

 

This would have allowed someone to possibly double their money during the March 2020 decline, while being 95% in cash. 

 

You have to hold it, to get that to happen. 

 

Can you think of a better suggestion, portfolio allocation, as of January or February 27th, 2020?  I certainly can not. In honest retrospect, it was possibly the single simplest, best thought-out thing to do. 

 

Jeff Medwin

 

 

PS. ART:

As you and I would expect,  no one on the Klipsch Forum followed me then, as I had advised.   Since then, I have been told, no more specific advice allowed, for legal reasons.   I agree, understand, and will only occasionally express my market thoughts. 

 

I am willing to take more heat, cooly, have bigger equity draw-downs, take more risk, than an average person.

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