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Thursday Thrills – A Chance to Short at Dow 21,000 Again!

Evolution of Atlanta Fed GDPNow real GDP forecastI love a good short!  

As you can see from the Fed's own GDP forecast, Q1 expectations are now down to 0.9%, down 0.3% from just last week on weaker than expected Consumer Spending Growth which went hand-in-hand with weaker than expected Retail Sales Reports.  

Nonetheless, on the same day the Fed was releasing a 25% downgrade to our GDP, they also chose to raise rates 0.25% and the market went crazy and rallied us all the way back to our highs, which you would think we'd be upset about but now we can (as I noted to our Members this morning) put on the following shorts:

  • Dow Futures (/YM) at 2,100
  • S&P Futures (/ES) at 2,390
  • Nasdaq Futures (/NQ) at 5,440
  • Russell Futures (/TF) at 1,390

These are dangerous plays and we need to be mindful that the markets are very irrational and could go higher so if any two are over the line, it's a no play.  At the moment, on the Nasdaq is at the line so that's our short for the moment (and we also have Nasdaq Ultra-Short ETF (SQQQ) as a hedge, see yesterday's post).  Those contracts pay $20 per point and a 25-point move in the Nasdaq is a big day so $500 would be a nice win but $250 is just fine on a pullback if the markets aren't looking too weak.

If the Futures start heading lower we begin using a strategy called "shorting the laggard" where we wait for 2 of the 4 indexes to cross below the next support and then short the others with tight stops (and out if either of the first two go back above). 

Aside from the Fed's downgrade to our overall GDP, we're very concerned with the effect Trump's Budget will have on the market as these spending cuts are effectively money that will come straight out of the economy and, as you can see from this chart, it's impacting every sector but Defense/HomeSec/Veterans and Transportation and before you get excited about Transportation – that's the wall-building budget!  

This is not austerity because the goal of austerity is to SAVE money but Trump's budget also gives out over $600Bn worth of tax breaks to people in his tax bracket (just looking out for the common man!) and, of course, Defense is more than half of all discretionary spending so a 10% increase in Defense alone requires 10% cut from ALL the other agencies just to cover it.  It is a good idea to beef up Homeland Security though, since President Trump has stirred the pot and angered the terrorists, effectively goading them to attack us – which would then prove the need for more security, etc – good strategy!  

As to the wall-building, Steven Colbert got a panel of actual construction experts together and they came up with more like $1Tn to build an actual wall – which would be a real budget-buster.  Of course, it's more likely to end up being a fence – THAT we can probably afford (but no electricity!).  Colbert also agreed with our observation from yesterday's chat that Trump released Trump's tax returns to prove he did pay some taxes once.  

Now that the Fed is out of the way, we can focus back on the wobbly Global Economy as well as Q1 earnings, which are right around the corner already.  So far, no good, per the Atlanta Fed's forecast, that GDP outlook was 3.5% in January, when the Dow was at 20,000 (down 1,000) and the S&P was at 2,280 (down 100) so the reality of the economy is falling very, VERY far short of the expectations yet dumb money keeps flying into the market as retail investors fear they are missing something – just like they do at every great market top!  

What if the rally continues?  Well, first of all, in yesterday's morning report, we noted that our Options Opportunity Portfolio was up 170.5% and we discussed our bearish hedges.  Yesterday the market blasted higher and our OOP finished the day up 172.5% – up 2% in a day.  Why?  BALANCE!!! It's all about balance – we have longs and we have hedges and we don't confuse the two.  The longs are investments and the hedges are short-term bets – in case the investments don't work out. 

If you are worried about the market getting away from you because you are too cautious, how about adding an upside hedge that will return 435% if the S&P hits 2,600 by Jan 2019 – up less than 10% in two years.  Surely you can't be bullish about your current positions if you don't think the market can gain another 10% in two years, right?  Well, if so, this is a no-brainer using the S&P ETF (SPY):  

  • Buy 10 SPY 2019 $230 calls for $24 ($24,000)
  • Sell 10 SPY 2019 $260 calls for $9 ($9,000)
  • Sell 10 SPY 2019 $200 puts for $9.40 ($9,400) 

That's net $5,600 cash and it pays back $30,000 for a $24,600 (435%) return on cash if the S&P is up just 10% in two years.  If it's down 10% (2,142), you lose the $5,600 and if it's down 20% (1,904), you would also have to pay $10,000 because SPY would be about $190 and you're obligated for 1,000 shares at $200.  The ordinary margin requirement is $20,000, which is what you would lose at $180 on SPY (S&P 1,800), which is 59 points (25%) below today's open (239).

Image result for risk reward profileIn short, a 25% drop in SPY costs you $25,600 (assuming you do nothing along the way) while a 10% gain in SPY makes you $24,600.  This is a very positive risk/reward profile and, if you are not bullish enough to make that trade – you might want to take a very hard look at your other positions and consider whether it might be time to take some profits off the table.  

At PSW, we teach our Members to maintain positive risk/reward profiles on all their trades and, if you win more than we lose on the bull side and win more than we lose on the bear side – that sets up many, many possible ways we can come out with a net win in almost any market situation.  We just reviewed our Options Oportunity Portfolio's postions yesterday and seven of them are still good for new entries and, on the whole, we're very pleased with our balance.  We also went over our Butterfly Portfolio Positions on Tuesday Night and our Short-Term Portfolio (STP) and Long-Term Portfolio (LTP) were reviewed last week so we are all ready for tomorrow's expiration day madness (hopefully).  

I encourage you to go through your own portfolio and evaluate each of your positions (we do it every month) as if they were brand new trades you were considering now and keep track of your risk/reward profiles on each one.  As you get used to doing it, it will become very obvious which trades are underperforming and need to be cut to make room for more productive positions.  The SPY example above is a benchmark, as you could cut any position you now have that isn't going to make 435% in a bull market and use that instead!

Until then, we're more comfortable shorting this silliness.  

 


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  1. /Phil/TSLA – GM

    Have 265 short March calls from our earlier bear put trade. Given the spike this week, take a loss and close or wait for expiration tomorrow? Thx


  2. /Phil/TSLA – GM. Have short 265 March calls, hold till tomorrow or close today. The reason for asking is the recent spike. thx


  3. You have to admire the balls on Trump:

    http://talkingpointsmemo.com/livewire/trump-claims-assault-on-us-auto-industry-saved-under-obama-is-over

    President Donald Trump on Wednesday claimed that he ended "the assault on the American auto industry," though the actions of President Barack Obama's administration are widely understood to have saved the industry.

    Let's recap real facts instead of alternative facts – in 2009 the GOP wanted to let the entire car industry go bankrupt but Obama and the Dems stepped in, loaned them money and they got back on their feet and paid the money back. Somehow it's an assault on the car industry. As usual with him, Trump is just rewriting history in the tradition of the old Soviet Union! The car  companies should build Obama statues in front of their HQ!

    In his small mind, the assault is probably the demand for higher mileage which his business acumen that lead to many bankruptcy does not realize that it's the path to being more competitive and also to energy independence for our country. What a buffoon!


  4. Phil, when you say, for example, Nasdaq Futures (/NQ) at 5,440, do you mean the price of NQ Jun futures? Or the actual level of underlying (Nasdaq index itself). The futures have not been at 5,440 when the report is published so I guess you mean the index?


  5. Painful:

    https://www.bloomberg.com/view/articles/2017-03-14/bill-ackman-is-done-losing-money-on-valeant

    By my math, based on public filings, Bill Ackman's Pershing Square Capital Management had spent a bit more than $4.6 billion on Valeant Pharmaceuticals International Inc. shares and options as of yesterday afternoon. Of that, Pershing Square had gotten back about $574 million when it sold shares at the end of 2015 and 2016, leaving it with about a $4.1 billion basis in its position. Yesterday it closed out that remaining position, selling the remaining shares, some 27.2 million of them, through Jefferies Group LLC for about $300 million (or about $11 per share). So out of a $4.6 billion investment, Pershing Square got back about $874 million.


  6. /Phil/TSLA – GM

    Have 265 March short calls from our put trade, hold till tomorrow or get out now?

    thx


  7. Interesting concept – and good returns:

    https://www.bloomberg.com/news/articles/2017-03-14/hedge-fund-sees-30-gain-by-betting-only-on-tomorrow-literally

    This hedge fund is only looking one day ahead.

    That delivered a 30 percent return in 2016 for the London-based Runestone Capital Fund, which crunched more than 700 variables to develop a quantitative model for trading U.S. equity index volatility.

    “We trade with a one-day horizon as predicting volatility long term is completely random,” Rune Madsen, founder and portfolio manager of the $17 million fund, said in an interview on Monday.

    The absolute return fund, which targets an average annual return of more than 20 percent, is always directional, making bets that one-day volatility will either rise or fall, according to Madsen. The return for 2016 was 30 percent with a maximum loss from peak to trough of 5.2 percent.


  8. The webinar replay is now available! 

    Check it out here:

    https://youtu.be/LO0UCKUDo0Y



  9. Good Morning.


  10. Good morning everyone!


  11. Good Morning!! Big Money Thursday!!


  12. Good morning!  

    I'm only here until noon as my Nephew is getting married in Orlando this weekend.  I expect to put in half a day tomorrow as well, assuming connections are good and such.  I'll try to respond tonight to questions if anyone needs help adjusting or whatever into expirations.  I think I've covered all the portfolio moves that need to be made (see links above).  

    Big Chart – Setting up for a huge M pattern with the double top.  Note RUT is flirting with 50 dma – if they can't hold it, others may follow them down. 

    Autos/StJ – He was talking yesterday about how repealing the CAFE standards would revitalize the auto industry and the workers around him were like "Huh?"   What he's saying makes no sense and it's certainly not good for TSLA, who raced to grab another $1Bn before people realize Trump is trying to kill electric cars (and anything that saves fuel).

    Image result for tillerson exxon cartoon

    Nasdaq/Leo – Well it was at 5,440 when I started writing (4am).   Now 5,432 but /TF is 1,387.9 so that's still playable or /YM 20,966 isn't bad (stop over 21,000 would be a $170 loss) and /ES is 2,385, never made it (only the Nas did).  Of course the rejections are a good sign for the shorts so far.  

    Volatility fund/StJ – It's not too different from what we do, they are essentially selling premium on a daily basis. 

    France/Angel – So much like us I could just cry:  Assailant opens fire at high school in Southeastern France — IMF Chief: Explosion at Paris bureau injured staff member https://www.wsj.com/articles/imf-c

    Trump admits his health care plan would benefit rich investors, screw over people who voted for him

    Addidas says: "It's clear that the younger consumer engages with us predominantly over the mobile device" the end of TV is coming.

    About 19.6 million workers, or 12.1% of the total workforce, were in the US legally;about 8 million, or 5%, weren't

    Drug test/1020 – There should be.  According to some Senator, anyone getting government money should be drug tested – that should then apply to Congress and the President as well!  


  13. Hey, when Trump says he thinks drugs are too expensive – maybe he's just complaining to his dealer?  


  14. Maybe…. ;)


  15. TSLA usually holds the secondary price well for a couple weeks, sometimes a month.  Then you get the big drop.  Happened last 3 raises.


  16. or maybe  NOT.. ;)


  17. /RB Phil—long


  18. Is Gartman long M???


  19. jabo/M  not yet, but he must be thinking about it


  20. /RB I think you should wait to 1.58


  21. TSLA/Rustle – Can't wait to short them again.  

    /RB/Savi – Was a strange week, not sure we'll get the run up this time. 

    And what Kgabor said, at least. 


  22. Phil – FWIW, I think now is a good time to add to FCX positions.  Stock is down about 25% from it's January high.  Chart looks good to me as stock has broken back above the 200dMA line.

    Hanj, what do you think ?


  23. albo/fcx  Agreed.  However, for new stock only positions I would be out if it closes below 12.14ish.  Nice rew/risk.


  24. Phil – thoughts on FGP?


  25. Stupid retail of the day: REI  This is one of my core positions.  Great company and management.  Have been with them since the private and was with them for their previous oil co. where I bought at 5.50 and 10 years later, out at 45.  Look at today's price action – so stupid.


  26. Thanks, Hanj.


  27. FCX / Albo – They are certainly not expensive now and right in an area of support:

    FCX Freeport-McMoRan Inc. daily Stock Chart

    However, I am still not convinced by these natural resources guys! If GDP does slow down, my guess is that they will get hit again. 


  28. Phil/SBUX  What do you think about the stock here?  Great technical area to buy with a stop below 53.82.


  29. Thanks, STJ.


  30. TSLA/Phil

    I wrote calls for next week at 270 this morning on the open and 250 puts for next week.  Also wrote 245 puts and 242.5 puts yesterday on them.  TSLA giving me a big month.  Waiting to see if NFLX can get a bit higher and PCLN is way overbought in the short term.  Have calls at 1785 that expire tomorrow and if it can hold here, will write new ones for next week at 1800.


  31. FCX/Albo, Hanj – I do like them and no reason they should fall all the way back to $10.  In the LTP, we already have the 2019 $7/12 bull call spread with short $8 puts at net nothing (25) and that's on track but I suppose as a new play, you could use the following:

    • Sell 20 FCX 2019 $10 puts at $1.70 ($3,400) 
    • Buy 20 FCX 2019 $10 calls for $5 ($10,000) 
    • Sell 20 FCX 2019 $15 calls for $2.80 ($5,600) 

    That's net $1,000 on the $10,000 spread that's $5,500 in the money to start with a potential gain of $9,000 at $15 (900%) and worst case is we own FCX at net $11, which is still about $2 off (15%) the current price.  ToS says margin is $2,000 so it's a nice, efficient trade and FCX is back to being 73% copper and 20% gold/molly with just a little oil and gas left.  

    The reason I wouldn't add them to the OOP is that they just restructured and I'd want a better look at them before taking a big stand and a small stand (5-10) isn't worth taking up a slot when there are unknown factors in their valuation.

    FGP/BDC – No thoughts at all.  Propane and propane accessories are not my usual thing and these guys are $500M cap with $2Bn in sales (surprising) at $20M in profit (1%) so on any given day they are a a few rainy weekends away from having a bad year.  They also just acquired another propane supplier and I bet they didn't get them cheap (because propane is a HOT sector! wink) and F500 companies have trouble for 2-4 quarters after an acquisition, not sure how 77 year-old Jim Ferrell will be at integrating his competitors and I wouldn't want to pay to find out.  

    Image result for hank hill propane accessories meme

    REI/Hanj – What do you mean "retail"?

    SBUX/Hanj – I like them as a long-term hold but, Q to Q, it's very hard to say where they go as they are at war with MCD and DNKN – even with smoothies (my kids were comparing last week and DNKN won that battle) so maybe a good Butterfly candidate as it will be super-hard for them to justify busting over $60 this year while $50 should make a good floor.  At just over $2 a share, that's why I can't see $60 this year, they really need to get over $2.50 and, of course, even then, the multiple wouldn't thrill me. 

    TSLA/Rustle – I'm fine waiting for next week and hoping the usual slew of positive press (paid for by Musk) can pop them back to $280 where we'll essentially run the same play as last month. 

    Nice dip in the indexes, too bad I'm too busy today to follow my own ideas!  


  32. FCX – Thanks, Phil.


  33. SBUX – thanks Phil


  34. no real support for the dollar till 99, it looks like.


  35. Chelsea out with w new book "She Persisted" TOV

    No family has (YET!) monetized our dystopia so deftly

    I have a feeling Barry will be our first billionaire ex and that the Trumps will be in the 50 bil range in 8 years


  36. Dollar/Lunar – Only logic…

    Trump/Angel – If Putin got to $75Bn from nothing, Trump should be able to hit $100Bn given 8 years.  Oh sorry, not Trump, his blind trust.  What a pleasant surprise that will be when he retires! 

    Image result for trump blind trust cartoon

    Consumer comfort reading split along party lines

    • The Bloomberg Consumer Comfort Index edges up to 51.0% from 50.6 last week.
    • The buying climate index increased to 45.1 from 44.5
    • The Polarization Index (Dems – Repubs) came in at -10.0 vs. -5.9 prior and -2.4 two weeks ago.  LOL, the smarty money turns out to be the Democrats, who are bailing out while Republicans are BUYBUYBUYing – good way to transfer the wealth from right to left!  

    Philly Fed Business Outook measure falls in March

    Homebuilders outperform as housing starts top expectations

    • February housing starts rose 3% from January to a seasonally adjusted annualized rate of 1.288M. Estimates were for 1.26M. While permits dipped 6% in February, they're still higher by more than 4% Y/Y.
    • Of note, however, was an unusually warm February, and one wonders what gains last month may be taken away by what's become a pretty harsh March.
    • The major averages are flat on the session, but the ITB is higher by 1.4%, and XHB 0.8%.
    • Toll Brothers (TOL +1.7%), KB Home (KBH +1.8%), Pulte (PHM +1.3%), D.R. Horton (DHI +1.2%), Lennar (LEN +1.1%)

    Mortgage rates continue to spike, Freddie Mac survey says

    • Mortgage rates hit fresh YTD highs in the latest Freddie Mac survey, which has reported back-to-back weekly gains in anticipation of the Fed's first interest rate hike of the year.
    • The 30-year fixed-rate mortgage averaged 4.30% during the week, up from 4.21% a week ago, and the 15-year fixed averaged 3.50%, up from 3.42% last week.
    • A year ago at this time, the 30-year and 15-year fixed-rate mortgages averaged a respective 3.73% and 2.99%.
    • ETFs: XHBITB

    Pound moves higher after BOE thanks to one dissenter

    • As expected, the Bank of England kept policy on hold, but unexpectedly the vote was not unanimous. One member, Kristin Forbes, voted for an increase in the bank's benchmark rate.
    • The news has sent the pound (NYSEARCA:FXB) higher by about 80 pips, now up 0.4% vs. the dollar at $1.2236. The FTSE 100 remains up nearly 1% on the session.

    Natural gas futures go south on less than expected inventory draw

    Post-Fed gold rally continues

    • Gold traders continue to "buy the news" after selling the rumor of a Fed rate hike for the previous two weeks.
    • Advancing further this morning, gold is now up to $1,232 per ounce vs. $1,200 prior to the Fed rate hike yesterday afternoon.
    • GLD +0.85% premarket; the gold miners ETF (NYSEARCA:GDX+1.2%
    • Previously: Stocks, bonds, gold turn higher after rate hike; dollar moves south (March 15)

    Reuters: Hedge funds to reap big stock gains from Peabody bankruptcy

    • A group of institutional investors could reap hundreds of millions of dollars in gains from an unusual sale of discounted company stock when Peabody Energy (OTCPK:BTUUQ) emerges from bankruptcy next month, Reuters reports.
    • Six hedge funds, including Elliott Management and Aurelius Capital, and a state investment fund together own about half of BTU's unsecured bonds, and used that leverage to gain access to a private placement of company stock, which has become surprisingly valuable amid an unexpected coal resurgence.
    • The exclusive offering will be challenged in bankruptcy hearings starting Thursday by a group of individual investors who say BTU's reorganization plan should be rejected because it violates a bankruptcy statute requiring equal treatment for owners of the same securities.

    Nucor +3% premarket after guiding Q1 earnings far above consensus

    • Nucor (NYSE:NUE+3.3% premarket after issuing upside guidance for Q1 earnings, seeing EPS of $1.10-$1.15 vs. $0.69 analyst consensus estimate; Q4 EPS came in at $0.50, and Q1 2016 EPS was $0.27.
    • NUE credits the expected improvement to higher profitability in its steel mills segment, and says it is encouraged by renewed growth in demand in the non-residential construction and energy markets.
    • NUE says it recently resumed operations in Louisiana after an unplanned outage that began in early February caused by an equipment failure; NUE says it also completed planned maintenance that was scheduled for later in the year.

    Seadrill: The Trade Of A Lifetime Indeed 

    Maersk launches trial run of tanker using rotating cylinders as high-tech sails

    • The shipping industry is looking at ways to harness wind power as a means of reducing reliance on fuel, as Maersk Tankers (OTCPK:AMKAFOTCPK:AMKBF) says it will begin testing the use of rotating cylinders nearly 100 ft. tall to function as high-tech sails on one of its tankers, eyeing the technology for use on as many as four dozen ships.
    • Maersk’s trial run of the technology is a joint venture with Royal Dutch Shell (RDS.ARDS.B) and others.
    • Maersk does not yet have a cost estimate for the project, but believes the technology could cut its fuel consumption by as much as 10% and help it meet increasingly stringent emission standards; Maersk, which also operates hundreds of container ships, currently spends $2.1B/year on fuel costs.

    And the CAT Came Back the Very Next Day:  Caterpillar upgraded at Tigress Financial

    • The firm raised the stock to Neutral from Underperform, stating its fairly valued at current levels.
    • It views infrastructure spending by the Trump administration as a "tremendous opportunity" for Caterpillar (CAT +0.2%).

    Tesla powers higher after capital raise

    • Reactions to Tesla's (NASDAQ:TSLA) cash raise are pouring in from Wall Street.
    • Oppenheimer: "We would not be surprised to see the raise upsized as we expect the company could use the capital, especially as it enters full ramp of the Model 3."
    • Baird (Outperform, $368 PT): "We believe this displays Tesla’s confidence in the Model 3 timeline and anticipate shares will move higher."
    • CFRA (Sell, $240 PT): "The company plans hedging transactions to limit dilution of its common shares. The purpose of the transactions are to improve the balance sheet and support the investments to prepare for the mass-market Tesla Model 3. Lower than expected dilution is a positive, but in our view, risks persist."
    • Consumer Edge Research believes the equity offering removes an overhang on Tesla. The downside watch now turns to the Model 3 timetable and if suppliers will come in late.
    • Bernstein takes the position that the cash raise is less than feared, but that the company may be knocking on the door of capital markets again.
    • Shares of Tesla are up 3.12% premarket to $263.70 vs. a 52-week range of $178.19 to $287.39.
    • Previously: Tesla to raise $1.15B with new offerings (March 15)

    McDonald's Twitter account hacked

    • McDonald's (MCD +0.4%) announces that its Twitter account was hacked earlier today when a critical tweet was sent out about President Trump.
    • Company statement: "Twitter notified us that our account was compromised. We deleted the tweet, secured our account and are now investigating this."
    • POTUS is on the record as a fan of Mickey D's food.

    Junk food tax in India around the corner

    • Food and beverage heavyweigts are in strategy talks on how to deal with new proposals in India to tax and require strict labelling on food with high levels of sugar or fat. The new labelling requirements (red/yellow/green) are currently under review before heading to the ministry.
    • The so-called junk food tax is an effort by the Indian government to lower obesity rates in the nation.
    • Nestle (OTCPK:NSRGYOTCPK:NSRGF), McDonald's (NYSE:MCD), PepsiCo (NYSE:PEP) and Coca-Cola (NYSE:KO) are a few of the multinationals looking to expand sales in India where growth rates are still strong for the packaged food and beverage sectors.

    Guess to shrink U.S. business after weak results

    • Guess (NYSE:GES) falls in early trading after Q4 numbers trailed estimates.
    • The retailer's comparable sales dropped 7.8% during the quarter vs. +1.4% expected by analysts. The drop in sales pressured margins, with operating margin trailing off 270 bps to 7.9% of sales.
    • The company says it has "good" momentum in Asia and Europe, but faces pressing problems in the U.S.
    • Guess on the U.S. business: "In the Americas Retail, where the retail environment remains challenging, we are focused on profitability improvements. We will continue to negotiate rent reductions whenever possible and plan to close 60 stores in fiscal 2018."
    • Previously: Guess misses by $0.03, misses on revenue (March 15)
    • GES -15.78% premarket to $10.30

    Trump's proposed 2018 budget trims NIH budge 20%; healthcare stocks in the red

    • Healthcare stocks are under pressure in early trading on the heels of the Trump administration's release of its proposed 2018 budget that includes a 20% haircut for the National Institutes of Health (NIH) to $5.8B. Observers and legislators were expecting an increase of $1B – 2B.  Who the F made that call?
    • The White House's budget also includes a major reorganization of NIH's institutes and centers to "help focus resources on the highest priority research and training activities."
    • NIH funds ~300K scientists worldwide.

    Will Valeant Fail In 2017? 

    GoPro: Bottoming Signs 

    IBM raised to $212 target at Morgan Stanley, cloud cited undervalued

    Image result for star wars cloud city

    • Noting public cloud units at Amazon and Microsoft are generally modeled, and valued, in line with characteristic adoption cycle (base case), firm suggests IBM (IBM +1.2%) exists external of similar classification.
    • Expects IBM's public cloud operation to expand at 33% 2016-2020 CAGR, with gross and operating margins to trend in line with average industry figures by 2020, though notes calculations as prospectively conservative.
    • Price target from $187 (current price $177.90).


  37. Phil/TZA hedge adjustment in OOP

    Didnt really quite follow your TZA adjustment in OOP.  I am long Oct 10 and short July 19s.  If I understood you correctly, sell the Oct10 and get Jan 15/30 BCS.  What happens to short 19s?

     

    Thanks in advance


  38. WYNN – should have closed those expiring short calls.   I see no news that explains this profit killing spike today?


  39. WYNN is rallying on rumors that Sheldon corrupt Adelson is planning to buy it



  40. WYNN – WOW !

    NOK continue it's move up.  Covered some with the Oct $6 calls to bring in some cash.  Looking for a .30+ dividend in July.


  41. TZA/Rookie – Yes, the $10s are too far in the money and the trade-off gives us longer, bigger protection but only from a real correction (5%+) not from a dip.   Short July $19s are 2x covered by the Jan $15/30 bull call spread,  If the market drops quickly, we would begin buying back the $19s 1/4 at a time.

    WYNN/Tangled – Very obnoxious of them.  Maybe we'll have to play a higher range going forward.  


  42. Dow is pretty much back to pre-Fed level but CNBC is still calling this a Fed Rally.  


  43. Went long on /RB at 1.58 


  44. Phil, I am sure there are a few of reflecting on the market's reaction to the hike. It's obvious many of us, not you, had the premise wrong. Hiking means a stronger dollar. Actually that is not wrong, what was wrong was our timing.  Dollar strength had already occurred. The reaction also bolstered the adage – 'Buy the rumor, Sell the fact'.  In the case for SI/GC, which is a market short, the adage is reversed.  As to why the dollar dropped, I read that 3 hikes were baked in the cake, and Yellen only talked about 2. ? Seems as good as any other reason. 

    Finally, on kicking yourself on SI. At least take some satisfaction, that you were training us.  I went from planning to short SI/GC before the FED, to understanding your premise and math. My guess is that myself and the other nervous nellies, weakened your resolve to shoot for a higher limit?  In any event, thanks for yesterday. I am staying away from them until they reach hi/low of channels.


  45. TGT – Orders in for a bit more.. 2019 buy write: buying shares, selling Jan2019 55 calls and selling Jan2019 50 puts for a net entry of 43.10.. a 21% discount on entry, which boosts the dividend up to 5.5%. If you get called away, is a 27% return.  Now, will Target still be around in 2 years? I expect so, unless Eddie buys them when he is done with Sears…


  46. OK, now I'm late.  Looks like weak bounces so far on the indexes, I'll check in later. 

    /SI/Latch – I agree with your logic.  As to why I sold, combination of having what I thought was a good profit at the time into the Fed uncertainty and the fact that there was no way I'd be able to watch it during the webinar on the announcement so more prudent to take the sure win off the table and, by the time I looked again – it was way too late to buy back in.  Of course, it could have done the opposite and I'd be down $20K and in a terrible mood for the weekend instead of having $3K in my pocket and being slightly annoyed it wasn't more…

    The number of times I'm slightly annoyed at missing out in no way come close to the number of times I'm glad I took my profits when I could!  

    OK, later team!  


  47. Latch / Market > Agree with your analysis and your cautions. I was long /SI and short /NKD, both were very bumpy rides - my thinking was that the NKD had got ahead of the USD move. Fortunately it did pan out … eventually


  48. Latch – some discussion about rates and money you may enjoy, here: 
    http://www.futuresradioshow.com/guest-tax/prof-steve-hanke/


  49. ISCO – popping and…no news?


  50. kgabor—-out of ?RB in the pop—--tx


  51. Phil,

    I have -5 TGT Apr 2017 $65 Puts and

               -4 TGT 2018 $65 Puts

    How would you deal with them. I'm down a lot on my total TGT position (13K) which includes the Butterfly. Speaking of which, I only have TGT and GIS positions from the butterfly as those are the only ones that have been added since I started getting into it. Could you recommend a strategy for moving 


  52. Phil, 

    Sorry. What I was trying to ask, is how to move into the Butterfly Portfolio to make it the majority of my overalll portfolio. As noted in my last post, I only have GIS and TGT at present. 


  53. StJL – Ackman's Pain – "So out of a $4.6 billion investment, Pershing Square got back about $874 million."

    Proving that even so called accredited "experts" can get drunk on their own punch bowl. We covered Ackman's bankrupt investment philosophy and felonious folly in Platform Value: The Fall?  Along those lines, re my latest, just had some PHD question my "credentials" and ask why he should believe me? The nerve, I don't know, but I'll tell ya… double entendre?

    My rejoinder was: I never asked you or anyone to believe in anything, other than yourself. Due diligence is incumbent upon the investor and the information presented is worth the consideration given. Double entendre? Credentials, meh, I know far too many CFA Can't Fucking Account or Author, MBA Master Bullshit Artists and PHD Piled High and Deep, that can't figure their way out of a paper bag, or explain what a eurodollar is, or how bonds work. Which I have on ample occasion, my body of work speaks for itself. Try reading it.  Get in the car, and Out.


  54. Naybob – love it. old co-worker of mine used to say it took him 2 years to get his MBA and ten years to get over it. ;-)


  55. ISCO – Scott, there was this :

    ~~•International Stem Cell Corporation (ISCO) announced the third patient in the clinical trial for Parkinson's Disease was successfully transplanted with ISC-hpNSC cells and is already discharged from the Royal Melbourne Hospital. The operation was successfully performed without complications by the team of the RMH neurosurgeons.


  56. ISCO – thanks albo…i see that from a couple weeks ago (2/28/17 on my feed). maybe some fund just finished their review following that and decided to buy with fat fingers. ;-)


  57. I put one short /TF at 1385


  58. Hubris is the explanation I think Naybob!


  59. futures contract naming reference:
    http://www.currentcrudeoil.com/symbols.html


  60. Fragmentation is the Solution, Not the Problem - 
    http://www.oftwominds.com/blogmar17/fragmentation3-17.html


  61. ftr…go!


  62. I am still at RB from 1.58 with only one contract. 


  63. President Donald Trump is proposing to shift oversight of the U.S. air traffic control from the federal government to an independent group, according …


  64. Documents detail Flynn payments from Russian interests

    WASHINGTON (AP) — Documents released in a congressional inquiry show former national security adviser Michael Flynn was paid more than $33,750 by RT, Russia’s government-run television system, for appearing at a Moscow event in December 2015. Flynn had retired months earlier as head of the U.S. …


  65. A Fox News poll released Wednesday indicated some Americans have unfavorable opinions about the Trump administration, as well as some congressional Democrats and Republicans.<p>Trump’s overall job approval rating has dropped five points compared to a February poll from the network. As of March 15, 43% …


  66. <i>Submitted by Paul Brodsky Of Macro Allocation, Inc.</i><p><b>Stagflation on the Horizon</b><p>Logic and current trends suggest that declining output growth …


  67. <i>A funny thing happened on the way to a low-risk environment: loans in default (non-performing loans) didn’t suddenly become performing loans.</i><p><b>If we</b> …


  68. Nope, these experts argue, your online presence isn’t helping your career — it’s hurting it.<p>If the regular patterns of Inc.com readership are anything to go by, chances are excellent that you found this post via a share on Facebook, Twitter or LinkedIn.<p>After all, not only are these sites often …


  69. How Fed hike will affect mortgages, car loans, credit cards

    WASHINGTON — Are mortgage rates going up? How about car loans? Credit cards?<p>How about those nearly invisible rates on bank CDs — any chance of getting a few dollars more?<p>With the Federal Reserve having raised its benchmark interest rate Wednesday and signaled the likelihood of additional rate hikes …


  70. With stocks soaring briskly around the globe following Yellen’s “dovish” hike, and futures set for a sharply higher open with the Nasdaq approaching …


  71. here comes the index push higher…


  72. Washington (CNN)The speaker of the House, the Senate Intelligence Committee chairman and the ranking Democrat on the committee said Thursday that they’ve seen no evidence of President Donald Trump’s accusation that he was wiretapped last year by his predecessor.<p>Senate Intelligence Committee chair …


  73. WASHINGTON — It was déjà vu on Wednesday: President Trump traveled to Detroit and Nashville for campaign-style rallies, sat down for an interview with Fox News and criticized a federal judge for blocking his travel ban.<p>Through it all, Mr. Trump repeated a series of misleading assertions and …


  74. Here are the things Donald Trump says the government should stop doing forever.<p><i>By</i> <b>Alan Pyke</b> <i>and</i> <b>Bryce Covert</b><p>In his initial budget document released on …


  75. Trump admits to Fox News’ Tucker Carlson that “a lot of things aren’t consistent” with his campaign promises<p>Facing a barrage of scrutiny from what he has deemed the “fake news,” President Donald Trump turned to Fox News’ Tucker Carlson Wednesday for refuge and attempted to repair some …


  76. According to an October 2016 Pew poll, only about half of Americans believe that climate change is due to human activity. The U.S. remains home to a considerable number of “climate skeptics,” who clearly impact the politics around the issue, as they are unlikely to support costly actions such as …


  77. Google Assistant now does advertising<p>Today some Google Home owners are hearing something extra when they ask for a summary of the day ahead from the smart speaker: an advertisement for the opening of <i>Beauty and the Beast</i>. Several users on Reddit have noticed the audio ad and Bryson Meunier posted a …


  78. When I was in my late twenties, I was diagnosed with stomach cancer. Doctors operated and told me to hope for the best. I returned to Japan, where I was working, and tried to forget about it. The tumors returned a year later, this time in my liver. After a long search, the surgeons found a new …


  79. Warren Buffet knows great financials are critical to the success of any business, they are really just outcomes from having a strong “machine” and an impenetrable “moat” for your business.<p>When you ask most CEOs about their vision for their business, they usually give you an answer built around …


  80. Phil/All/FTR

    Why is it a good idea to wait for the reverse split to happen and not double down on an existing position? Ideally I should have done it before the ex-dividend date but anyways.

    Also if I sell a put option now instead of double down then won't those options lose liquidity after the reverse split and it will be to my advantage? thoughts..?

    thanks as always

    regards


  81. I decided to try a short call spread on SPX.  I sold the April 2400/2415 call spread, for about $5.50, basically betting that the market will not be above the all time high, in 35 days.  I did 10 contracts, which paid me $5,500.  Max loss is a little less than $10k.  This is the first time I have done this kind of play, so I am by no means an expert.  The risk to reward just seemed really good at this juncture.  


  82. FTR/Pat – the reverse split is still unknown what it will be.. kind of like an earnings event, might be good, might be bad. the potential for bad is why wait. I'd rather not see a reverse split at all, let alone between 10 to 25…!   Sold put options will ABSOLUTELY lose liquidity after the split and is not to your advantage. The price will go up for you if you try and buy out of them (illiquid=high cost, usually higher than just taking assignment) which will leave you stuck with them for good or bad until assignment. MAYBE Frontier will find a split-adjusted higher price by then, but…hmm…i'm still looking/waiting to hear from anyone if any stock anywhere at anytime has recovered positively from a reverse split. You know any?


  83. scott – thanks will download the app/podcast tonight


  84. Politics – looks like a fair sitrep to me:
    http://www.theamericanconservative.com/articles/a-soft-coup-or-preserving-our-democracy/

    and PSW adverts ALL OVER this page, top and bottom!


  85. /DX down 1.6% in the last two days, and we're closing red! Nice to have some hedges!


  86. Palotay – all the best – certainly a useful addition to the toolbox. You may want to consider selling more premium; the May 2300/2285 put spread can be sold for about $2.40 – and at least one of the spreads will be a winner. I have found that more often than not with SPX, it pays to play both sides.


  87. I agree Winston although I was going to say that it might be a good thing to establish one leg first and see where it goes later. If we do go down, Palotay would have a nice chance to have a wider spread for as much money. And if we melt up, he can sell the put spread then to pay for the roll. My only change would be to go one month further because my one experience in rolling spread close to expiration is not very good and I would rather close them early than have to worry.


  88. Here is what Chevron says about our ability to balance economic growth and energy consumption.   http://paidpost.nytimes.com/chevron/how-the-us-has-cut-pollution-while-growing-the-economy.html

    As a reminder no animals or reporters from NYT were harmed in anyway and all safeplaces were maintained. :)


  89. StJ – absolutely! It goes to show the flexibility of SPX options. It helps that as European style options they can not be early exercised.


  90. …and whatever happened to Peter D and his Strangle Strategy?


  91. Thanks guys!  

    STJ, what happened when you tried to roll the spread closer to expiration?  Wide bid/ask?


  92. Scottmi/FTR,

    Thanks for your inputs. It is much clearer now though I am still not sure of the selling puts issue. maybe an example might help. I understand that cost will be high if I want to buy it back but why would I,

    thanks for your time.

    regards


  93. 2019 Options – I have, perhaps, more faith that TGT will still be around than I do the country…good lord!
    Just one week (last week): https://www.rutherford.org/publications_resources/john_whiteheads_commentary/rule_by_thieves_one_week_in_the_life_of_the_american_kleptocracy


  94. Strangles- don't know where Peter went. His commentary and advice was spot on. I have been using his short strangle strategy for years now for a very steady income. I tend to play very wide/conservative strikes- if you recall, Peter's initial look at selling the next month is +9% and -12% for SPX. So, compared to that, the call and/or put spreads are tight. Another of Peter's rules was to allow approx. $20.,000 available margin (portfolio margin of course) per strangle to allow for adjustment. 

    What are the margin requirements for your spreads?


  95. Global warming poses an increased risk for asthma, lung illnesses, Lyme disease, Zika virus and anxiety, among other things.<p>One morning in July 2011, Samantha Ahdoot’s 9-year-old son, Isaac, grabbed his clarinet, trekked up the hilly road to the bus stop and set off for another day at the band camp …


  96. Smartphones that fold out into a tablet are one of the many awesome inventions the creators of <i>Westworld</i> promised we have to look forward to in the future. But according to a new rumor, Samsung might make them a reality in 2017.<p>Samsung is working on the final steps of development for its foldable …


  97. WASHINGTON — A retired United States Navy admiral and eight other high-ranking officers were indicted on Tuesday in a widening bribery scandal in which prosecutors say a foreign contractor traded luxury travel, lavish gifts and prostitutes for inside intelligence.<p>A total of 25 military officers and …


  98. The housing crunch doesn’t look like it will be getting better any time soon, according to the latest report on new construction.<p>The number of …


  99. Where do rich people hang out? We’ve identified 51 locales, and calculated for each an average upper-bracket net worth and proposed Trump tax cut.<p>We define a millionaire hot spot as a zip code or cluster of zip codes where the average income, among taxpayers earning $200,000 or more, is at least $1 …


  100. A market research survey found that Chipotle regained the top spot among Mexican food chains. Here’s why that could lead a recovery in sales.<p>More …


  101. Did India just pull off a monetary and political miracle?<p>Consider the sequence of events in its demonetization saga. In November the government made a high-risk, high-stakes economic intervention in the world’s largest democracy, with an objective to reduce corruption. Overnight, 86% of cash in …


  102. Now after pondering a bit, the SPX spreads – if sold on both sides are iron condors. Anyone here long enough to recall the fiasco which ensued one month when the market moved dramatically ? 

    I swore off them after that experience as the spreads became very difficult to adjust out of trouble. 


  103. FTR/Pat – no problem.. example:

    Say you sell 2019 FTR $3 puts today for $1.10, giving you a net entry for $1.90 if you get assigned (remember, you will need to come up with $300 at the time of assignment so don't spend that $1.10 yet!).

    Assume the best case of the suggested split: 1:10. Your puts then obligate you to still pay $300 if assigned, for now for just 10 shares. Shares right now closed at $2.51.  Suppose they manage to float up to $3 to go into the split (whenever that will be "later this year")…(and what would cause them to rise at all between now and then?)…Split happens. You have puts that have strange symbol and obligate you for 10 shares at $30/share. They price for these (and I've been through it more than I really care) will be something that is a) typically not very clear and b) almost immediately priced to cost you a few pennies or nickel or more than the "net" of the trade…seems the time value evaporates away and/or even gets in some way reversed. Basically, you are the sucker stuck for the duration. No one wants them, and if you NEED to dump them, you'll have to pay a steep premium. Meanwhile, that fat $30 price for FTR now has all that room below to continue a downward glide….   If it goes up of course, you still are stuck with them, but no problem there, right?   So, find any examples of a reverse split that led to a nice recovery yet?


  104. Spread / pstas – That was really one bad month and exactly why I would go 60 days rather than 30 and sell early. If I recall properly, it was a meltup that month that killed us and Kojo that was running that portfolio disappeared for days when we needed the guidance to roll.


  105. Scottmi/FTR,

    good example!! appreciate the time.

    regards


  106. The World’s Most Reputable Companies 2017

    For the second year in a row, Rolex has topped the list of the most reputable companies on the planet. The Swiss watchmaker’s retention of the top position comes on the back of strong scores in various categories but most remarkably in the perception of its performance, and products and …


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  108. Have you ever wondered how the toughest competitors in the Ultimate Fighting Championship would stack up against the military?<p>Well, you can stop wondering. A YouTube video called “UFC Fighters Experience Marine Corps Martial Arts” gives a look at what happened when five fighters — Marcus Davis, …


  109. One of GoPro’s biggest challenges is competition.<p>The action-camera maker is striving to return to profitability, and on Wednesday announced its third round of layoffs in just over a year.<p>GoPro cut 270 full-time and open positions in the latest round. Last November, it laid off 200 people, or about …


  110. There are “no indications” anyone in the government surveilled Trump Tower at any point.<p>The Senate Intelligence Committee has seen no evidence to …


  111. US equities failed to hold on to a second day of gains as momentum sparked by the Federal Reserve’s pledge of a gradual pace of policy changes faded …


  112. <b>The INSIDER Summary:</b><p><b>OpenTable has released a list of the 100 restaurants in America with the best ambience.</b>• <b><br>The list was curated from over 10 million user reviews, and includes restaurants all over the US with lively bars and entertainment.</b><p>Going out to a restaurant isn’t just about the food — it’s …


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  115. White House press secretary Sean Spicer said Thursday that President Trump “stands by” his allegation that former president Barack Obama ordered wiretapping surveillance of Trump Tower last fall, despite statements from the leaders of congressional investigations that no evidence had been found to …


  116. March 16 (Reuters) – Nearly half of President Donald Trump’s 2017 $30 billion supplemental defense budget proposal – $13.5 billion – would go to buy and modernize warplanes, warships and missiles.<p>Although Congress must approve the request and is likely to make changes, Lockheed Martin is one of the …


  117. Spreads / Palotay – The bid/ask are one of the problems and you have to roll 2 legs. Not saying it's impossible, but not something I would recommend for fun. A bunch of us read a nice book about condors then (and you are selling 1/2 of one here) and that was the advice from the writer – sell 2 expirations ahead and close after one can collect your profits then. And watch your deltas! Don't let yourself get overrun. 

    Check that book - https://www.amazon.com/Profiting-Iron-Condor-Options-Strategies-ebook/dp/B004K1F7HG/


  118. Merkel Says Netherlands Election Provides “Clear Signal”: Investigating the Coalition Math

    In the wake of the Dutch election yesterday, let’s review coalition math and possibilities.<p>For starters, that headline is a bit over the top. Support …


  119. DETROIT (Reuters) – California, the largest U.S. car market, plans to allow testing on public roads of self-driving vehicles without human backup drivers by the end of the year, state officials said Friday.<p>The state’s Department of Motor Vehicles is seeking public comment on proposed regulations …


  120. U.S. Treasury Secretary Steven Mnuchin repeated his view that the long-term strengthening of the dollar is in best interest of the economy and that …


  121. One of the world’s hottest and most expensive holiday destinations could soon become a little more expensive.<p>Overwhelmed by a record number of …


  122. BERLIN (Reuters) – Carmakers and suppliers gave widely differing timelines for the introduction of self-driving vehicles on Thursday, showing the uncertainties surrounding the technology as well as a split between cautious established players and bullish new entrants.<p>Chipmaker Nvidia (NVDA.O), …


  123. Falling food prices will soon be history, and restaurants could get crushed as prices rise, according to Morgan Stanley.<p>”As a percentage of company-operated restaurant sales,” said an analyst team led by John Glass, “food costs declined ~40bps in 2015 and another ~70bps in 2016.”<p>The fall in food …


  124. Rising U.S. oil production isn’t the only thing getting in the way of OPEC’s efforts to drain a global glut. American drivers aren’t helping …


  125. | Mar 16, 2017 | Opinion<p>The unequal distribution of costs and benefits across society is one of the hottest topics in the regulatory arena—and one …


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  127. Uber Technologies Inc. did something out of character in France recently. It sat down to negotiate with drivers over work and pay conditions.<p>That’s …


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  129. On Fox News’s <i>Outnumbered</i> today, the panelists took umbrage at the classification of <b>Donald Trump</b>‘s travel bans as Muslim bans.<p>After sharing that, …


  130. by Cognitive Dissonance – Mar 16, 2017 1:02 PM<p>So….who’s the loose cannon? Trump? The CIA? Or maybe the Deep State? I propose it’s not who you think …


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  132. On the heels of yesterday’s McCain meltdown exclaiming that Rand Paul “is now working for Vladimir Putin,” the Kentucky Senator released a short …


  133. Let me be clear: I do not trade bitcoin, but I do write about it often.<p>Before going into journalism, I spent my days trading. I learned a lot about technical analysis during that time, and right now, technical analysis spells huge trouble ahead for the cryptocurrency.<p>Let’s recap what has been going …


  134. Fewer than one in eight banks expect a change in the way they account for bad loans to wipe more than 0.5 percentage points off their core capital …


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  138. President Trump’s Office of Management and Budget has proposed a 14.1 percent cut in funding for the Internal Revenue Service. If made permanent, we …


  139. ScotchedTheresa May holds back from triggering Article 50<p>The Brexit process is delayed by a fortnight, narrowing the negotiating period by nearly a …


  140. Sen. Inhofe is glad the Environmental Protection Agency will be downsized 30 percent.<p>Sen. Jim Inhofe (R-OK) is probably best known for bringing a …


  141. scott what are you talking about RE ads?

    You do realize those are specific to your own internet activities right?


  142. All of this FTR and VRX discussion: glad I dumped these a both a month ago and never looking back.


  143. LL – finally time for a perma-push back into the 20's??


  144. The NFLX  march 2017  spread is resulting in a 50% loss…


  145. Did the CL contract change? K or J7


  146. Latch ToS always switches 2 or 3 days before expiration and they did tonight switch from J to K. I have been doing pretty well trading CL this week and today was a $1k winner for me as I was short overnight and then went long this morning when it approached 48.50 and short as it reached 49, rinse and repeat. Tomorrow we will see what the contract situation is and how it moves overnight tomight. The fact that we went from 232k to 180 so easily in less than 24 hours says that we may not see a huge drop and depending on the BS from OPEC we could get back to 50. As I said we shall have to wait and see.  Also made a few bucks shorting TF today as it hit 1388 and going long NG as it dropped below 2.90. 


  147. Latch /CL > /CLK7 (Exp May) is active in TOS. I have been caught out a number of times so built the expiry dates into my Excel trading log.
     
    Note: TOS will switch the active trade approx 1 week before expiry which is (Per CME) - Trading in the current delivery month shall cease on the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month). i.e. /CLJ7 expires 3/21/2017 and CLK7 will expire 4/20/2017

    The CME calendar > http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude_product_calendar_futures.html


  148. TOS always switches when the options on that contract expire. You can use that as a guideline. 


  149. Thanks for the advice guys. Will keep in mind the option expiry marker and put in an Outlook calendar reminder. I did well with CL and NGV7. Rinse Repeat. 


  150. Phil/ PYPL butterfly candidate?

     

    It's been pretty much in a channel for the past year between $34-44.

    No dividend and a PE of 36, so an expensive stock, for sure.

    The July $40 puts can be sold for $1.20 and the $44 calls for $1.50 for a credit of $2.70 with 4 months  to expiry.

    If put to us, will be at net $37.30.

    If they sneak up higher, the Jan $47 calls, which are now $2.07 should be worth  $3  or greater with plenty of  room to adjust in between.

    What do you think?


  151. Comment content omitted because it is too long.


  152. Happy St. Patrick's Day!

    Sorry but apparently my family had a whole day planned for me the minute I landed.  Been a while since we had a big family event like this…

    Looks like Asia was flat except Shanghai with a sharp drop at the end (1%) and Europe is flat and we're looking flat so apparently this is where we'll drift into expirations.

    Not much news either, with is perfect as I will only be on until about noon today.

    Friday's economic calendar

    So the 10am data might make a difference.  

    Stocks end mostly lower, giving up early gains

    • Stocks slipped a bit, weighed down by declines in shares of utilities, health care and energy companies.
    • “The markets have priced in a lot of very good news – better economic growth, a big fiscal package, deregulation and lower taxes," says Michael Arone, chief investment strategist at State Street Global Advisors, suggesting a pause with stocks trading near all-time highs should not be a surprise.
    • The pullback left all but two of the S&P 500’s 11 sectors in negative territory for the day, with the rate-sensitive utilities sector (-1.1%) tumbling to the bottom of the day's leaderboard followed by health care (-0.9%), after the House Republican plan to replace Obamacare barely survived a committee vote.
    • The energy sector ended -0.6% as WTI crude finished the day just above its flat line at $48.75/bbl.
    • However, the financials and tech sectors, which together comprise ~35% of the broader market, offset most of the negative influence with respective gains of 0.3% and 0.2%.
    • Selling pressure in the Treasury market left yields modestly higher; the benchmark 10-year yield added 4 bps to 2.54%.

    Goldman: Yesterday's action the equivalent of a rate cut

    • The team at Goldman for years has pretty consistently been among the more hawkish on the Street, and that's not changing.
    • The big decline in yields across the Treasury curve following yesterday's Fed rate hike eased Goldman's Financial Conditions Index (FCI) by a full 14 basis points – roughly 2.3 standard deviations and the equivalent of nearly one full cut in the Fed Funds rate, says Jan Hatzius. Based on the FCI, conditions today are "considerably easier" than in December, despite two 25 point rate hikes since.
    • This means the Fed needs to get even more hawkish, he says – the FOMC will have to deliver more tightening than what markets are currently pricing in.
    • The 10-year Treasury yield today is regaining some lost ground, up 3.7 basis points to 2.532%. TLT -0.45%TBT +0.9%

    Bank of America cut to Sell at Compass Point

    • What's likely to be a strong Q1 is already priced in, says analyst Charles Peabody, and his outlook for the rest of the year is for very little EPS growth.
    • The stock's nearly doubled over the past nine months, but a lot of that was thanks to higher interest rates, and that's been priced in as well. Interest rate normalization affects costs as well, and those might double under the new regime.
    • Helping to support shares could be aggressive buybacks.
    • His $20 price target suggests more than 20% downside from the current $25.33.
    • BAC +0.6% today

    U.S. considering Eni's request to drill in Arctic waters north of Alaska

    • The U.S. Interior Department is considering a request by Eni (NYSE:E) to explore for oil in waters north of Alaska, Bloomberg reports, giving the Trump administration a chance to reverse course from former Pres. Obama’s attempt to end Arctic drilling.
    • Eni’s exploration well would be in an area it already leased from the federal government, so it is not covered by Obama's December executive order blocking the sale of new drilling rights in large areas of the Chukchi and Beaufort seas, but the Trump team may believe that approving Eni's request could encourage more oil companies to consider Arctic exploration.
    • Eni already uses a man-made gravel island to extract oil from leases in state waters hugging Alaska’s coast, and it wants to use the site as a launching pad for extended-reach drilling; lead operator Eni owns 40% of the project, with Royal Dutch Shell (RDS.ARDS.B) also holding 40% and Repsol (OTCQX:REPYFOTCQX:REPYY) owning 20%.

    China, Saudi Arabia agree to $65B in potential deals

    • Saudi Aramco may deepen investment in China’s oil industry as part of $65B worth of potential deals signed today between the two countries involving areas ranging from energy to manufacturing.
    • An MoU with China's state-run Norinco will look into building refining and chemical projects in China, while Saudi Arabia's SABIC, one of the world's largest petrochemical firms, and Sinopec agree to develop petrochemical projects in the two countries.
    • The countries also are said to be in talks for China’s sovereign wealth fund and largest energy company, CNPC, to invest in Saudi Aramco's coming IPO.
    • “It is a win-win if China can take a sizable stake in the Aramco IPO,” says Nomura analyst Gordon Kwan. “China needs to ensure oil supplies from Saudi Arabia, given the structural decline of the country’s aging mature fields. Saudi Arabia can ensure market share in China, which might want to insist Aramco be listed in Hong Kong instead of London or the U.S.”
    • Relevant tickers: PTR +1.7%SNP +1.4%CEO +1.4%.

    Canadian Solar signs PPAs for solar projects in India

    • Canadian Solar (CSIQ +2.4%signs 25-year power purchase agreements for 80 MW of solar power projects in the Indian state of Maharashtra with the Solar Energy Corp. of India, the government’s corporate solar arm.
    • CSIQ says it was awarded the projects under a 450 MWac solar capacity tender in the state of Maharashtra through a competitive auction process; the projects are scheduled to begin operations by late 2017.
    • CSIQ’s Indian pipeline now stands at 110 MWac, which CEO Shawn Qu says represents a “significant milestone in one of the world’s fastest-growing renewables markets.”

    SunPower signs project supply deal with Next Era Energy

    • SunPower (SPWR +2.4%) signs a project supply agreement with Next Era Energy (NEE-1.5%) to sell 125 MW of its P-Series modules, in the first deal of any significance for the P-Series.
    • SuPWR says it will deliver the P-Series modules, whose unusual design consists of overlapping rows of cells, between June and October for the unnamed NEE project.
    • SPWR has said P-Series would target underdeveloped areas of the world, but the deal with NEE suggests a project in the U.S. or Canada.

    Bloomberg: California utilities see solar providers take more share of local load

    • California utilities are losing business to "community choice aggregators," local power authorities that were created to deliver green energy to residents, Bloomberg reports.
    • Pacific Gas & Electric (PCG -0.5%), California’s biggest utility, expects to lose 7.3% of its electric load this year and as much as 21%by 2020 to the groups, while the eventually may account for 40% of the total load at San Diego Gas & Electric (SRE -0.5%) and Southern California Edison (EIX -0.3%).
    • “Right now, it’s the part of the state that’s pretty wealthy opting out” of traditional utility service, but as the community aggregators become more common, "it may become more difficult for the utilities," says Moody's analyst Lesley Ritter.
    • But losing electric load is not the same as losing revenue, SDG&E notes, saying it "does not make money from the power it purchases on behalf of its customers, but rather from building, maintaining and operating the power grid."

  153.  

    Barrick Gold, Goldcorp upgraded while Newmont cut at RBC

    • Barrick Gold (ABX -0.4%) is upgraded to Outperform from Sector Perform with a $23 price target, and Goldcorp (GG -0.3%) is raised to Sector Perform from Underperform with a $17 target at RBC, which also downgrades Newmont Mining (NEM -3.5%) to Sector perform from Outperform with a $38 target.
    • The firm forecasts an improved production and cost outlook for ABX, generating strong free cash flow in 2017-18, placing the company in solid position to pay down debt and advance its organic growth projects.
    • RBC sees GG’s recent pullback offering attractive returns, and expects Q/Q operating improvement in 2017; the market likely will start pricing-in a successful turnaround as the company delivers on its guidance and production development.
    • But NEM is cut, as benefits from the new Merian and Long Canyon mines have been priced-in and somewhat offset by maturing mines; NEM is expected to generate significant free cash flow, but the firm thinks this is priced-in.

     

    Metals prices may continue rally in Q2 with zinc top pick, RBC says

    • RBC Capital analysts remain bullish on non-precious metals, saying their strength could continue into Q2 "driven by improving leading economic indicators and strong seasonality."
    • RBC says zinc still has the best fundamentals and remains its top pick, and based on 2017 price forecasts its preferred commodities are zinc, coking coal, iron ore and copper; in its five-year forecast, the firm prefers nickel, uranium, copper and zinc.
    • Its 2017 metal price forecast changes vs. prior estimates include: iron ore +25% to $84.50/metric ton, alumina +16%, copper +10%, aluminum +10%, zinc +8%, spot coking coal -18%.
    • RBC's favorite stocks in the group include: Fortescue (OTCQX:FSUMF), Anglo American (OTCPK:AAUKFOTCPK:AAUKY), Glencore (OTCPK:GLCNFOTCPK:GLNCY), Rio Tinto (NYSE:RIO), South32 (OTCPK:SOUHY), Teck Resources (NYSE:TECK), Arizona Mining (OTC:WLDVF), HudBay (NYSE:HBM), Ivanhoe (OTCQX:IVPAF), Labrador Iron Ore (OTCPK:LIFZF), Lundin Mining (OTCPK:LUNMF), Nevsun (NYSEMKT:NSU), Platinum Group Metals (NYSEMKT:PLG).

    I want to add these guys to the LTP and OOP:  Allegheny Tech upgraded to Buy at Seaport as selloff overdone

    • Allegheny Tech (ATI +3.3%) is upgraded to Buy from Neutral with a $22 price target at Seaport Global, which says the stock's selloff since an initial big bump that followed better than expected Q4 results is overdone.
    • Seaport says ATI long has been strongly correlated to the price of nickel, but in the past two years the company has meaningfully reduced the size of its flat rolled segment; the firm thinks the aerospace-dominated high performance segment will be the key driver of future earnings growth, decoupling the stock from nickel prices.
    • The firm also sees potential upside for the stock given that guidance assumes only 42 of Boeing’s 737 aircraft are produced per month, while Boeing has already said it will go to 47.

    Cemex opts out of border wall, still sees strong growth in cement demand

    • Mexican cement giant Cemex (NYSE:CX) rose 2.6% in today's trade despite deciding against bidding as a supplier to Pres. Trump’s proposed wall between the Mexico-U.S. border, giving up profits in the face of a potential backlash in its home country.
    • CX has cement plants on both sides of the border and had been seen by analysts as potentially one of the biggest beneficiaries of the wall, but it could still benefit from a boost in general demand for cement, which would help all suppliers indirectly.
    • According to a company presentation today, CX sees cement demand growing 4%-6% on public works such as the 2015 Fixing America’s Surface Transportation Act, Trump’s infrastructure plan and the potential wall.
    • CX fared much better today than U.S. cement supplier stocks: SUM -3.4%VMC -2.1%MLM -1.7%HEI flat, USCR +0.4%.

    Caterpillar hires former U.S. AG Barr for help with federal probe

    • Two weeks after U.S. officials searched Caterpillar (NYSE:CAT) facilities (IIIIII), the company says it has hired former U.S. Attorney General William Barr as outside counsel to help address the ongoing government investigation.
    • Barr served under former Pres. George H.W. Bush during 1991-93, and CEO Jim Umpleby says he has no prior connection to CAT.
    • CAT's Swiss subsidiary has been the subject of government inquiries into the company’s offshore tax strategy to reduce its U.S. tax bill, and a Dartmouth professor’s recent report - said to be commissioned by the FDIC’s inspector general – accused CAT of tax and accounting fraud.

    France is investigating Airbus alleged fraud already under scrutiny by U.K.

    • Airbus (OTCPK:EADSFOTCPK:EADSY) says French authorities have opened a preliminary investigation into allegations of fraudulent practices in commercial plane sales overseas and the misuse of middlemen to secure contracts.
    • Airbus says the French Parquet National Financier is probing the same alleged missteps already under scrutiny since last year by the U.K.’s Serious Fraud Office.
    • Airbus faces potentially big financial exposure from the corruption investigations; its ADRs fell as much as 2.6% following the announcement before closing -1.5%, after shares closed little changed in Paris.

    Lack of positive sentiment for Boeing could help add to gains, analyst says

    • Don't hold your breath waiting for Boeing (BA -0.4%) shares to tumble, Barclays analyst Carter Copeland says, reiterating his Outperform rating and raising his price target to $190, believing that the stock can keep climbing if the company can avoid the sort of quarterly performance missteps that plagued much of 2016.
    • After ~25% outperformance vs. the S&P in the last six months, Copeland senses broad investor doubt over how much more relative outperformance realistically be expected from the stock, indicating that "while a great deal of the negativity we thought was priced into BA shares has faded, this hasn’t reversed to positive sentiment and broad-based ownership demand."
    • As such, Copeland believes that if Boeing can keep executing well and avoid last year's slip-ups, "shares are apt to hold onto and extend recent gains rather than revert as so many expect."

    Avian flu hits second Tennessee breeder farm

    • The Tennessee Department of Agriculture says a second commercial chicken farm in the state has been hit with the highly-pathogenic avian influenza
    • The flock at the location tested positive on March 14.
    • The breeder farm is a supplier for Tyson Foods (TSN -1.9%).
    • Tennessee Department of Agriculture statement

    Strong demand for smokeless tobacco

    • British American Tobacco (NYSEMKT:BTI) said demand for its "glo" device overwhelmed supply in its Japan test marketing, as global cigarette giants shift focus to the "heat but not burn" category amid declining smoking population.
    • Philip Morris (NYSE:PM) announced earlier this month that it had more than doubled the supply of its IQOS tobacco device but it was still not enough to cover demand.

    Valeant Pharma jumps AH as ValueAct adds 3M shares to stake

    • Valeant Pharmaceuticals (NYSE:VRX+4.3% AH on news that ValueAct Capital bought another 3M shares in the company, according to a 13D filing.
    • The purchase brings ValueAct's stake in VRX to nearly 18M shares, or 5.2%, making it the company's second largest shareholder after Paulson & Co., which owns 5.68%.
    • ValueAct purchased its shares on March 14 at $10.81-$10.88 and follows Bill Ackman's recent liquidation of his position.

    Grocery store stocks extend post-CPI gains

    • Grocery store stocks continue to rally after yesterday's report on consumer prices showed a drop in food prices (-1.1% Y/Y).
    • A larger gap between grocery store prices and restaurant menu prices helps stoke demand for the chains.
    • Gainers include Weis Markets (WMK +1.7%), Whole Foods Market (WFM +1.3%), Sprouts Farmers Market (SFM +5.6%), Kroger (KR +1.7%) and Ingles Markets (IMKTA+0.9%).
    • Previously: Core CPI rises in-line with forecasts (March 15)

    Wynn +3% on takeover chatter

    • Down earlier in the session, Wynn Resorts (WYNN +2.9%) has spiked higher amid some Twitter chatter about a $120-$125 per share offer from Las Vegas Sands (LVS +0.6%).
    • UPDATE: Shares of Wynn have peeled back after the company says there is no truth to the M&A speculation making the rounds. WYNN +1.77%.

    Domino's eyes voice technology

    • Domino's Pizza (NYSE:DPZ) is seeing its big bet on digital pay off, with 60% of its sales now coming through digital channels.
    • Almost two-thirds of that revenue arrives through mobile devices, CEO Patrick Doyle told CNBC, saying the next big thing will be voice assistance.
    • Domino's recently announced customers can place orders through Amazon's Alexa, as well as through Google Home.

    GoPro upgraded from Sell to Neutral at Citi

    Bernstein sets Netflix at Outperform

    • Acknowledging the polarizing nature of sentiment involving Netflix, firm takes a stance of confidence on the long-term (10+ year) story.
    • Subscription video on demand [SVoD] is highlighted as the commanding model for delivery of professionally-produced video entertainment content, with Netflix projected as the "anchor" of such service worldwide.
    • Forecasts 291M global subscribers for 2030, while considering current market price to be discounting approximately 245M. Nearer-term (12-24+ months) subscriber estimates are noted as well over consensus and what's to this point priced into shares.
    • Price target $178. Netflix (NASDAQ:NFLX) $144.99, +0.42% after hours.

  154. Dollar right on that 100 line – watch for the bounce to put a bit of pressure on things but, on the whole, the markets are looking strong still.

    TGT/Kevin – Are there other legs to TGT?  That matters.  On their own, the $65 puts are not the worst thing with TGT just under $55 so 9 short is down $9,000 when the premium washes out, less whatever you sold them for – keep that in mind.  You're $13,000 "loss" is all on paper and only gets realized if you lose faith and sell it.  Of course, you have no choice on April and those $65 puts are now $10.50 and the 2019 $55 puts are $8.25 and I would roll all 9 of your short puts there so about $10,200/825 = 12 or 13 of those should cover it if you want to do an even roll.

    Keep in mind though, you don't have to add more risk because, if you sold those puts for $5 ($4,500), for example, you only need to roll your loss so you can eventually (hopefully) get even.  I'd stick to the original 9x exposure and see how things go.

    Now your second part is saying how to move it to the Butterfly Portfolio and I'm not sure what that means.  Do you just have the short puts and want to build a full position around it? 

    /RB/Kgabor – Good entry, working out now. 

    Dollar/Latch – A lot of it is a resurgence of strength in Europe and Japan because they are now seen as possibly tightening more than the Fed – it's all relative in the short run but, in the long run, Japan is a catastrophe and people will eventually lose confidence and the entire EU may fall apart down the road which would make the Dollar the last currency standing (unless Trump manages to destroy us first).

    Having a lunatic (from the World's point of view) as President doesn't exactly encourage Dollar strength either and the fact that Trump's budget blows the debt up rather than reign it in is another major factor in this week's Dollar decline.  As I said earlier in the week, $25Tn at 3% is going to be $750Bn in debt service alone vs less than $250Bn currently – that puts us another $500Bn in debt each year on top of the insanity of the Trump Budget.

    Have I mentioned how much I like gold and silver lately?

    LOL on Eddie/TGT Scott.

    Advertising/Scott – We just pay Google to place adds and they then decide where they go.  Not sure I'm pleased sponsoring sex scandal pages!   Actually, if I understand Google correctly, it's not about the pages, it's about the viewer (you) – the ads are targeted to you and simply show up wherever you browse where there is an empty space in our price range.  They can't know you are already a Member but your browsing history (obviously) indicates this is the kind of thing you would enjoy, so they display our ads to you.

    FTR/Pat – You can DD on the stock but the old (current) options will be a pain in the ass to work with.  I have plenty of confidence in FTR down here around $2.50.  You can also sell the options and wait if you are committed long-term but they will be illiquid and you'll pay a steep penalty if you change your mind – for a small portfolio like the OOP, I prefer to stay flexible.

    SPX/Palotay – I can't see us going higher but this market is nuts – almost Nas 6,000!

    Sitrep/Scott – Well, if you actually follow the links, they don't actually support what the author is saying.  He says "the Times says" and then links to the Guardian vaguely stating something instead – it's dishonest spin from a professional GOP apologist (see his other work).  Anyway, I just generally hate people who build suppositions so they can conclude "If the FBI was involved (no evidence) and if the Obama administration targeted (no evidence) a server in Trump Tower (rumor, thinly connected, nothing to do with Donald Trump himself but a tenant) THEN there MIGHT be a conspiracy to overthrow the Government coordinated by the previous Government who thought their best strategy would be to say nothing about it during the election, lose the election and THEN try to oust Trump after the fact based on stuff they knew could destroy him before he was elected."  Well, sure – that all makes sense then….

    Strangles/Winston – Like many strangle players, one big loss can wipe out a whole lot of gains and a couple of losses in a row can devastate a year of good trading.  The trap of the strategy is, obviously, it works 3 times out of 4 or even 9 times out of 10 so people play it and get religious about it and THEN it blows up in their face and wipes out all their prior profits (and a lot of people start small, get confident, go big and then get whacked).  As Pstas notes, don't get cocky, you have to keep wide strikes and pull the plug before things get too ugly and, most importantly, don't let your risk get out of control.

    PYPL/Maya – Very good call, remind me next week and we can look towards adding it officially.