The Stitch up

As we said several times in the past, it looks as though the Brexit situation is becoming more unclear and more difficult by the day. This is not how it should be, for two reasons. First off, the British people’s verdict is clear: they do not want their country dictated and run by unelected old men in Brussels. The British want to be a normal, self-governing nation that control their own laws, policies, economy and defense. Secondly, a no-deal situation is far worse for the EU than it is for the UK so the British should be in a strong negotiating position and walk out of the EU with their head held high. The only reason why this is not happening is the treasonous career politicians which seem absolutely determined to spit on the will of the people and turn Brexit upside down. Their lies and sheer duplicity is truly something else, have a look at this little video as a review of how we got to the point we’re at right now. https://1drv.ms/v/s!AjwG7T1LDQ9QgcQwMSZ2zvJZtsxeAw

The markets are telling us there’s a last-minute stitch up that will happen. I am not sure how successful it will be but I am sure they will try. If you are going to make bets in this environment make sure you do it near juicy points and make sure you know what your stop is. Open-ended commitments can be very counterproductive in a news-driven environment like this.

The only thing I can add about the S&P pattern this week is that the move to new highs last week appears corrective. If I told you I have a clear opinion how that poke to new highs integrates in the larger wave structure I’d lie to you. The only thing I can do this week is show some supports and resistances while of course still pointing out that in the big picture the market is quite vulnerable. If I was going to speculate, I’d say this: there will be a Brexit stitch up, stocks and sterling will briefly rally then there will be some unforeseen consequences or massive backlash in the UK and everything will fall apart. From a wave personality standpoint, the establishment blown out of the water on a failed Brexit stitch up attempt would be an almost perfect scenario for a declining C wave in stocks. Naturally, something like that looks plausible now but may be not so plausible just a few weeks down the road so we’ll see how it all plays out. The best we can do in the meantime is to remind ourselves that overall stock market upside potential is considerably smaller than downside risk at this particular point in time……

WEEKLY STOCK PICKS

MTN

DIRECTION BUYZONE SELLZONE RISK/REWARD VEHICLE
LONG 208-210 233-235 -2/25 OPTIONS

Part of the gaming industry group, MTN was one of a couple (BYD and WYNN being the other two) that are setup nicely coming into the week. Wedging lower into an area of support I think this sees higher prices in the coming months. Notice here I say months… This turns out to be a fairly low Beta name so give it some time. May calls will be my play.

BOOT

DIRECTION BUYZONE SELLZONE RISK/REWARD VEHICLE
LONG 27-28 30-31 -1/4 OPTIONS

BOOT is a member of my high short interest scan. It is setting up here as it consolidates and looks to breakout of the wedge leading to further price discovery higher. As it climbs look for price to get fast as shorts are forced to cover – and there are a lot of them.

LW

DIRECTION BUYZONE SELLZONE RISK/REWARD VEHICLE
LONG 70-71 82-83 -1/12 OPTIONS

LW was on the list some weeks ago, and it did in fact make a break to the upside. Now that the stock is buyer controlled we will want to enter a new trade with more time or perhaps add to the existing position on any pullback. We have support from initiative candles as well as the VPOC just below. I think we retrace in the coming days and should get a chance to enter lower for a target up near $83.

YY

DIRECTION BUYZONE SELLZONE RISK/REWARD VEHICLE
LONG 77-79 88-90 -3/11 OPTIONS

YY is following a simple trend thus far in 2019, respecting a series of higher lows. As it wedges back into this trend line we want to be long this China internet name for a move back toward $90.

CRC

DIRECTION BUYZONE SELLZONE RISK/REWARD VEHICLE
LONG 23.50-24 28-29 -1/4 OPTIONS

CRC is a main stay on my stocks to trade grid. It is a volatile stock with a short interest that generally remains above 40%. It is capable of making massive moves and should be handled with care. We can see that it has respected a trend this year the play would be to get a long position as close to this trend as possible. Price is currently leaving a lower shadow at a HVN here so I would expect a bounce in the next several sessions.