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Will We Hold It Wednesday – Nasdaq 5,700 Edition

We're still using the same chart.

Our predicted range for the Nasdaq 100 Futures has been holding since last Monday (6/12) and, as you can see, it's been following our 5% Rule™ perfectly, which is why we were able to call the shorts for our Members in our Live Chat Room at the open, saying:

"2,450 still a good short on /ES, of course and 5,780 on /NQ and we even hit 1,420 on /TF again.  Dow is unprecedented at 21,450+ but below that line will confirm a move lower for the day."

This stuff isn't that hard folks, it's been the same range for 2 weeks and we play it until it breaks.  Notice how if we go long with tight stops at the red line and go short with tight stops at the green lines, we don't get burned too badly but we have several occasions where we make a nice sum of money.  This morning the Nasdaq (/NQ) hit the 5,720 line and that was good for one-day gains of $1,200 per contract along with S&P (/ES) 2,430, which gained $1,000 per contract, Russell 1,396 was good for gains of $120 per contract and Dow 21,400, which was up $250 per contract.  

That's a nice way to start the week and we needed the money to double down on our, so far, wrong-way bet on Oil ($44.50, now $43.50) and Gasoline ($1.42, flat), which we discussed in Monday's Morning Report.    As we expected, the contract rollover caused a sell-off though, if you listen to the TV analysts, you'd think oil was going to $20.  We see the holiday just around the corner AND, much more importantly, Saudi Arabia is taking the state oil company, Saudi Aramco, public and they are trying to get a $2 TRILLION valuation and the logic I laid out for our Members was:

Analysts are chasing all the sheeple out at the lows, methinks – then the Banksters can run in and BUYBUYBUY and take oil up $5 and make their quarter off of one trade.  Don't forget Aramco IPO is coming and every $5 is a $400Bn swing in their valuation.  Think the Saudis aren't motivated?  Let's say they currently sell 10M/day at $45 = $450M x 365 = $164Bn so it's worth it for them to cut 2 or 3Mb ($45Bn) if that's what it takes to get oil up 10%.

Image result for oil market manipulationSo we're expecting a shift in the narrative to drive prices up into the holiday weekend but, after that, we're going to be very skeptical of anything over $45 unless there are clear indications of another 1Mb/d of production cuts from OPEC because we still have too much oil sloshing around and taking another 180Mb off the market over the next 6 months is barely enough to stop it from getting worse.  

Remember, if you can't beat them (and we have tried!), you may as well bet alongside them and make enough money to cover your gas bill, right?  

Speaking of gas, Natural Gas got a nice pop this morning, back to test $3.  We're long there from $2.95 with /NGV7 but it's more of a long-term play into hurricane season (Fall) so we're not going to take that $500 gain off the table.  I'll be on Money Talk on BNN (Canada) this evening at 7pm and we'll be talking commodities, including our Trade of the Year on Silver Wheaton (WPM), which was (adjusted for BNN audience on 1/18):

  • Buy 50 WPM 2018 $17 calls for $6.90 ($34,500) 
  • Sell 50 WPM 2018 $22 calls for $5.00 ($25,000) 
  • Sell 25 WPM 2018 $17 puts for $3 ($7,500) 

The net cost of this spread is $2,000 and you are, of course, obligated to buy 2,500 shares of SLW at $17, so we're calling a solid floor here – this trade is the same risk as buying the stock right now but with a smaller cash outlay.  If all goes well, it will pay back $25,000 for a $23,000 profit for a 1,200% return on cash at $22 but anything over $17.40 next January will make money.

WPM (was SLW when we started) is trading at $19.15 and the short puts have dropped to $1 ($2,500) while the spread is $2.15 in the money and netting $2.10 ($10,500) for a net net of $8,000 which is up $6,000 (300%) already and right on track for our full $23,000 profit expectations so – you're welcome!  

We are, of course, liking Silver (/SI) Futures at $16.35 this morning but it's going to be a rough time over the summer as the Dollar rises, keeping pressure on all the commodities and we won't be surprised to see $16 tested again, so careful accumulation at these levels with tight stops below $16.  

Finally, also worthy of discussion tonight, is one of the victims of the AMZN/WFM merger – SuperValue (SVU), who we think were unjustly punished in plunging 25% since the announcement.  SVU has been re-orienting themselves as a wholesaler and people are worried that that's the space AMZN is going to be pressuring but, if that were the case, why would they buy the highest-end of the food chain?  They are paying $14Bn for Whole Foods, who have 500 locations while SVU has 2,000 much bigger stores for the bargain price of $800M at $3/share.  Maybe Amazon will ALSO buy SVU..

In any case, SVU made 0.13 last quarter and are on track to hit their 0.36 target, which makes them kind of a good deal at $3, and we can improve that price considerably using an option spread as follows:

  • Sell 50 2019 $3 puts for 0.45 ($2,250)
  • Buy 50 2019 $2.50 calls for 0.80 ($4,000) 
  • Sell 50 2019 $3.50 calls for 0.35 ($1,750) 

That's a net entry of $0 on the $5,000 spread and your worst case is owning 5,000 shares of SVU at $3.  The trade is starting out $2,500 in the money and you only need to get back to $3.50 to collect the full $5,000 with an infinity percent gain on cash!  We already have a similar play in our Options Opportunity Portfolio as well as our Long-Term Portfolio but this dip is a great chance to get in at very low prices.  

 


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  1. Good morning, Everyone!

    It's webinar day! Join us, 1pm (eastern) here:

    http://philstockworld.enterthemeeting.com/m/ZUPGCZJA


  2. Good Morning

    Phil—is  wpm still good for a new trade ?


  3. Phil/Oil

    Are going to hold your longs through EIA? Or lighten up if they run it up into the report? 


  4. Picked another KC at 123.5 for 2 long at 123.6.  Have 2 TF short 1400.15, that got away from me


  5. Good Morning.


  6. Phil// You recommendation on FTR or FTRPR.  FTRPR has a better yield than FTR.  Does it mean that FTRPR is riskier than FTR?  Thanks.


  7. All/Market  Sorry bears, Gartman just went bearish.


  8. cbi ouch


  9. GME now down 20% from where I bought it @ 25.79.  I think it was a PSW buy.

    Buy GME, sell the Jan19 20P and Jan19 23C.  

     

    I'm really wary of this one with how retail is fairing.  Is there any change in Thesis?  I understand it's a long time to go, but in that long time to go, GME could fall another 20-40% easy…..


  10. FTR about to hit a new low…dangit!


  11. Sorry could not post the lines today – been on calls for a while now!


  12. FU JO!!!!!


  13. FU FTR!!!!

    FU GNC!!!!


  14. Good morning! 

    WPM/Savi – As a new trade I'd sell the 2019 $17 puts ($2.25) and buy the 2019 $15 ($5.55)/$22 ($2.65) bull call spread for $2.90 to net 0.65 on the $5 spread – very reasonable.  

    Oil/Jeff – I'm liking my OPEC/Aramco premise but doesn't mean there can't be more pain ahead.  

    "Deepening the cuts of is now a very likely scenario if prices continue to tumble." https://www.bloomberg.com/news/articles/

    minister says considering deeper output cuts

    This month we are counting 3.5 million barrels per day leave the southern | port of Basrah. This is +6.5% above average.

     

    , non-OPEC compliance with cuts hits highest in May

     

    Global supply rose by 585 kb/d in May to 96.69 mb/d as both and non-OPEC countries produced more https://www.iea.org/oilmarketrepor

    At least TSLA is taking a dive.

    Secrets/Scott – People don't realize how quickly a country can fall apart when Fascism spreads.  Germany and Italy in WWII, Russia post revolution, China after 5,000 years of generally happy rule - they didn't start out that way but people come to power and change a law here and there to consolidate their base and, before you know it, you are stripped of your rights and denied the ability to complain – let alone change things.  Secret courts using secret evidence and secret bills being written behind closed doors and forced into law over the objection of about half the people – this is how democracies fall but no one seems to give a crap. 

    FTRPR/Rookie – I don't like to play preferreds but, in theory, they should be more likely to pay than the common but, due to the mountain of debt FTR has, the preferred would be wiped out as fast as the common so there's really no net advantage.  The real game is that there are far fewer preferred shares and continuing that dividend is kind of a good-will gesture the company can afford to show they are not worried about their cash – merely conserving it to pay down debt before resuming dividends (which is actually the right thing to do).  Keep in mind the FTRPRs are mandatory conversions in one year, when you'll get 20 ordinary shares of FTR (now $24) for your $30 so $3 forward and $6 back at the current price is why I feel more comfortable just buying the stock and using options to hedge. 

    /KC/Latch – A bit of a falling knife at the moment.  

    Gartman/Hanj – Noooooooooooooooooooooooooo!  

    Image result for kirk khan animated gif

    Garrrrrrrrrrrrrrrrrrrtmannnnnnnnnnnnnnnnnnn!  

    CBI/Jabob – Cramer talking them down and insinuating they are responsible for $2.15Bn to Toshiba for the Westinghouse nuclear plant construction division they sold back in 2015.  It's a dispute over the working capital:

    CB&I has calculated the net working capital to be $1.6 billion, suggesting it is owed $428 million by Toshiba. The Japanese company has calculated the amount to be minus $976.5 million, indicating it is owed $2.15 billion by CB&I.

    The vastly different amounts stem from four changes that Westinghouse made to CB&I's calculations. Westinghouse reduced by 30 percent an outstanding receivable on the unit's balance sheet, it adjusted it to reflect the cost of design changes in its projects, it raised the estimates of the cost to complete the projects by 30 percent, and added back a $432 million liability that CB&I had deducted.

    Westinghouse argued that CB&I's methodology did not adhere sufficiently to Generally Accepted Accounting Principles (GAAP), while CB&I maintained that it has stuck to the accounting methodology it used before and Westinghouse previously accepted.

    The contract for the sale of the business calls for an independent auditor to resolve accounting disagreements over the value of the net working capital, and this is expected to happen in 2017.

    As is often the case with Cramer, I think he's spreading his crap to cheapen a stock for his hedge fund buddies who are going to BUYBUYBUY ahead of an infrastructure bill.

    GME/Burr – Well they are a retailer and specifically one in a protracted turnaround that's likely to go on into next year so not a play to stay in if you don't have the patience.  


  15. go GILD!!!!


  16. We got a 2.5Mb draw in oil and 600,000 draw in /RB but Distillates up 1.1Mb so not much different from API but anything down is a relief at this point and oil blasts up to $44 and /RB $1.44. 


  17. go oil!!!!


  18. I think ya jinxed oil jabo  LOL


  19. PHIL – RB – do you recommend entry here?


  20. FU willsons!!!


  21. ;-)


  22. Phil/Oil

    Any change in your position?


  23. /RB/Bulls – Well I liked it a lot at $1.42, not as much at $1.43 but I'm still holding my 2 long now (just cashed 1/2) into next week.  I am not a fan of chasing. 

    Oil/Jeff – Well I should have been happy to reduce at $44 but I'm being greedy at the moment – hopefully I won't regret it. 


  24. Thank you for holding me down before doing something foolish :) Last thing I want to do is end up holding the bag


  25. Is there any negative news on GNC?

    They keep dropping every day??


  26. Anybody notice TWTR  today ?

    ~~TWTR – Twitter on highs; hearing strength being attributed to favorable commentary out of Cleveland Research.


  27. Phil – /NGV7  - i know its a 'longer term hold and you don't want to take $500 off the table yet but do you have a predetermined price where you want to take a profit?   


  28. I am happy that I talked myself out of buying KC this morning as it looks like it wants to go down even further!


  29. Phil are you back in RB at 1.42ish?


  30. Or are you taking this weakness as a sign to wait?


  31. Pharm – SGYP is up nicely from last month's lows.


  32. CMG has been on a death spiral.  Watching it closely, hoping it gets down to 400 or close.


  33. You're welcome Bulls – $1.43 just failed too.  

    GNC/Jabob – Technical bearish move triggered more selling but it's generally flat and will likely remain flat for another year so "a watched pot never boils" and that sort of thing:

    GNC Holdings, Inc. breached its 50 day moving average in a Bearish Manner : GNC-US : June 20, 2017

    /ES rejected right at the 2,440 line.

    /NQ back to 5,770, where we began a nice short the other day (over 5,780 is a stop)

    TWTR/Albo – Still a good deal below $20:

    Still good for a new entry on our LTP trade, which is fairly conservative.  

    /NGV7/Jeff – We're talking end of summer but if we hit $3.20 soon and it looks spikey, I'd get out and hope to get back in rather than risk it.  

    /RB/Craigs – Stopped out at $1.42, wasn't going to go red on my last two contracts.  I have plenty of oil – let's see if I get my money back there first. 

    CMG/Rustle – Yes, I'd like another shot at them but this low VIX makes it way less fun than last time.  


  34. Here are some valuations of millennial focused enterprises… 


  35. Media: Vox +1B, BuzzFeed 1.7B; Vice 5.7B; Pinterest 12.3B; Snap 34B and the old school NY Times drum roll please… $1.8B. 


  36. Uber 70B;  2016 Total US Taxi Revenue drum roll please… 11B.


  37. Oil, big WTF!


  38. I just put up some of the poster children.


  39. CMG/Phil

    With a low vix and an even more oversold CMG, I'd probably go long calls and not write anything to take the risk for not much money.  Bull call spread no puts.


  40. By common sense metrics, all 245 Unicorns (valued at $850B) are unprofitable, unstable and have massive cash burn rates.


  41. TA and fundamentals serve a purpose to illuminate when investors like moths are blinded by the light and Out.


  42.  FCX/Phil – any love for them or other miners at these levels, at this time?


  43. Bonus points quiz time:  How many unicorns dot com?


  44. Here is the current list with valuations and VC invested.


  45. Phil – "AMZN can't get past that $200M mark in on-line sales and, if they didn't have 80M prime customers paying them $50/yr ($4Bn) and their AWS revenues – you'd see a Retail Operation that is simply hemorrhaging cash at an alarming rate.  That's why companies like AMZN and TSLA can't afford NOT to make a deal every year.  If they don't make large deals, then their books are static and people start to figure out their real operating financials. "

    Thanks for provoking that "valuation" Nattering.


  46. KATE/LTP – FYI I was short 2019 15 Puts. Got nothing.  But I was just able to cover with 2019 17 Puts at .05. 


  47. P – I was fortunate two days ago to pick up stock at a good price.  Phil, thinking about what you said about it taking two years to get profitable, I decided to cover the position with July 7 calls at .58 for a 10%+  one month return. Or if the stock is below 7, it lowers my cost significantly and I'll write again.


  48. Advill – Novo Banco in Portugal, Popular in Spain. Hope your not holding deposits or invested in Liberbank or Cajamar, as the wheels also came off their bonds and stock. Pimco took a nice hit in this Iberian scare. There seems to be a bit of a lid being put on this in MSM, what's the word?  And I know much like some commodities at the moment, it ain't this and Out.


  49. Oil back to $43.50 – bummer.  

    Exxon’s Guyana Play Could Be As Price Competitive As The Permian

    If it wasn't for quick money, I'd have no money at all!  

    VICE/Naybob – Someone is going to have to sit down and explain that to me.

    CMG/Rustle – Yeah, I'd do a bull call first and then sell puts if they go below $400.  I like PNRA much better though but they are getting bought.

    Common sense/Naybob – Sorry but you'll have to take a ticket and wait your turn.  Your number is 1999.

    Image result for 1999 market bubble

    Actually, you would have done quite well with that 2011 list but, then again, the whole market was way low then.  FB now $444Bn.  

    FCX/Scott – Not sure they are cheap at $11.24 when we were buying them at $5 less than two years ago but I do like them.  Doesn't seem like the best time to be buying a commodity stock though.  

    They will earn MAYBE $1 this year so cheap but not unbeatable yet.  I think if metals go up, the miners will lag and you can jump in with confidence or, if metals go down or stay flat, then the miners are cheaper and you can jump in with confidence.  Either way, waiting seems sensible. 

    P/Albo – Looks like you might have nailed the bottom.


  50. i hope gnc could hold 7..

    every bid seems to be getting hit today

    hate this dog


  51. Market feels very heavy to me.  Not sure if you follow the hindenburg omen, but there are some good charts here, and a few signals firing.  

    https://www.facebook.com/groups/54543878174/


  52. Advill – With the 1st and 2nd tier subordinated debt holders getting wiped out in Spain, this brings more concern for bail outs or ins with Italian banks Banca Monte dei Paschi, Veneto Banca and Popolare Vicenza.  At the moment I am writing this, Banca Intesa San Paolo has offered to buy the latter two Venetian banks for 1 Euro, if they are stripped of all NPL's and legal risks.  This is comic tragedy unfolding. 


  53. FTRPR knocking at $29


  54. I think 42.5 will be a bottom in oil


  55. scottmi—POS!


  56. Phil/CL – are you adding more /CL here at 42.50?


  57. FTRPR/Jabo – I don't have a mortgage, but if I didn't hate dealing with banks/bankers so much I'd be tempted to go in and see about putting on a mortgage and get a bargeload at this price…  


  58. NAT – exciting little bump this morning.. but lost steerage


  59. Holy crap, oil flying down to $42.50 now.  /RB down too, what a mess. 

    Seriously this trade has kicked me into coach on my trip!

    The energy sector should start selling off now as well and that should take the indexes lower and, with that – it's Webinar Time.


  60. scottmi--i have a ton of this drek. fortunately i stopped adding after it went under 1.30. Wish I never heard about this dog with fleas company.


  61. the shorts are crushing ftr and gnc


  62. jabo – I hear ya. meaningful dent in account values because of FTR here too. 


  63. FTR – As we've discussed, the primary reason that companies reverse split their stock is to attract institutional interest.  Doubt very seriously that will be the case with FTR.


  64. new low for JO again today.

    New low for M soon?

    Man, the FU portfolio is getting clobbered this week (M, F, GNC, FTR, XOM, TGT, TEVA, LB, TSLA, AMZN) dangit!


  65. at least GILD is up for a change ;-)


  66. JD - Oil, big WTF!  Phil – Holy crap, oil flying down to $42.50 now.  /RB down too, what a mess. 

    Oil is just at the price seen in November, when OPEC and 10 other oil producing countries agreed to production cuts to combat a growing supply glut and push the market up.

    And today's action? What do you expect when the Iranian oil minister opens his mouth about production cuts of 1.8Mbp, and says "reaching an accord to deepen the cuts would be difficult".  Why did he say that?  

    Today's appointment of new Saudi Crown Prince Mohammed bin Salman, a man famous for his combative political and economic policies against fellow OPEC member Iran, has placed the future of the supply-cutting plan under increased uncertainty.

    Dissension in the OPEC ranks and they should know better, this axiom always holds true and Out.


  67. Started an initial position in UWT (3X Crude Oil) at $10.22.


  68. Jabo – "new low for JO again today. New low for M soon? Man, the FU portfolio is getting clobbered this week (M, F, GNC, FTR, XOM, TGT, TEVA, LB, TSLA, AMZN) dangit!"

    Whats covered in that FU list? Oil (Energy); Coffee (Discretionary or Staple?); M – Luxury Retail; F – Automotive/Manufacturing; GNC – Discretionary Retail; FTR – Telecom; XOM – Energy/Exploration; TGT – Retail/Grocer/Transport;  TEVA – Pharma; LB – Discretionary Retail.  F ME, aside from Healthcare and Insurance, what's not covered? 

    Online Retail (AMZN) and Electric Cars (TSLA), really necessary, can't live without it shit there. So excepting those tulip crazed stocks that list is on the same trajectory as oil and coffee since late last year.  Sure one can take nibbles on the dips, but where's your sign?  Does this not tell one, perhaps everything might be slightly farkakte and meshuggeneh?  Many have commented here as much, and Phil has been diligently beating the drum of reality, along with moi…

    "When PG (tampons and toothpaste) which are essential non discretionary start heading down, anything that requires discretionary spending is going to get its head lopped off in short order.  Just sayin, I've seen this movie too and out."   

    Ladies and Gentlemen, before the event starts, a moment of reflective silence and Out.


  69. Nat— you are good…


  70. FU JABO!!! Smiley!!!


  71. Jabo – "Nat— you are good…"    That's what she said…. BIG Smiley!!!


  72. Bottom line, just be careful out there folks and hedge baby hedge. I'm smellin something nasty out in the woodshed and I don't mean to be this, and Out.


  73. Long /CL @ 42.29


  74. Phil/CL- are you holding for a bounce before July 4th or stopping out?


  75. Burrben – Nice pick up.


  76. Saw a good LABU (3x Biotech) idea in the Webinar for the STP:

    • Sell 5 LABU Dec $45 puts for $5 ($2,500) 
    • Buy 10 LABU Dec $55 calls for $19 ($19,000) 
    • Sell 10 LABU Dec $70 calls for $12 ($12,000)

    That's net $4,500 on the $15,000 spread that's $11 ($11,000) in the money with $11,500 (255%) upside potential at $70.  


  77. Burr, very nice on the patient entry. I wish I could say the same. 


  78. Banks/Naybob – Amazing lack of reporting in the US on this.  This is exactly what happened in 2007 as we ignored bank failures because they were far away.

    $42.50/Burr – I consider that a good bottom call – ignore silly spikes below that quickly reverse.  

    Also in the Webinar, we called a long on /TF over 1,400 as long as /NQ is over 5,780 as well – still there.  /YM 21,350 if we get back there is a good line.  Also /KC, of course, at $122, /SI over $16.50 with tight stops and /NG over the $2.95 line with tight stops.   

    FTR/Albo – Also to maintain listing requirements. 

    JO/Jabob – It's not a good instrument, too much decay.  

    Prince/Naybob – I think Mohammed is in because the other guy couldn't get things done and the future of the kingdom hangs on this Aramco deal.  It's like getting a new CEO and I don't think they'd have done this without a plan.

    UWT/Albo – Interesting play, I like it.

    Good timing on /CL Burr! (2:15) – Nice patience play.   

    /CL/Rav – I got burned earlier as I was having lunch ahead of the Webinar and lost a quick $15K so I'm holding and hoping (not a valid investing strategy) at the moment.  


  79. Where do we stand on FTR?  Are we still waiting to buy back the short $4 puts for $2.25?  Do we know yet when the reverse split will take place?  I apologize if I've missed it, just been so much talk about FTR I lost track.  I have my net down to $1.73 on 1,500 shares, which will translate to 100 shares after the reverse if I'm not mistaken.


  80. FTR Reverse split July 15th


  81. FTR/Rperi – Supposedly they reverse split on 7/15 and after that we will be repositioning.  Silly to make moves with contracts that won't exist (or be thinly traded) in 3 weeks.  And yes, it's 1 for 15.   Only if we get a chance to DD at 0.80 would I be inclined to trigger early – that's been our target to DD since March (63 FUs ago).  


  82. Correction  FTR  The reverse stock split will be effective as of the beginning of trading on Monday, July 10, 2017. 


  83. Naybob – war machine stocks are doing great.


  84. okay, thanks, so just buy back those short puts before that point, even if they don't reach our goal of 2.25


  85. FTR – Maintaining a listing, also important.  Good point, Phil.


  86. Maintaining listing not an issue, SEC gives 30 days notice which at this time is far beyond the reverse split


  87. FTR/Rperi – Yes, we may as well kill them in advance, just in case they get illiquid.

    Listing/Albo – Probably that would be a loan covenant-buster.  That's to be avoided at all costs when you are $17Bn in debt!

    By the way, have I mentioned how much I like Tidal now?  Listening to music for 2 straight days but you have to pony up for the hi-fi subscription ($20/month).    


  88. Clanson2 – But that's a reason to effect the reverse split in the first place, to avoid the possibility of the stock trading below $1 for an extended period of time and losing their listing.


  89. important lesson to myself—never buy a stock that announces a reverse split…

    very expensive lesson.


  90. How's this for a sign that the market is way too bullish (from Stock Twits):

    This is an actual shirt they are selling!  


  91. Another weak finish (except the Nas).  


  92. Nothing really changes.  Written by Matthew Arnold in 1886 about America:

    “a benighted , vulgar wasteland, noisily braying its greatness while awash in mindless pursuit of the dollar, and uninterested in ideas.”

    and by Mark Twain in 1869:

    Individual friends and whold families of old tried friends are widely separate yet don't visit and don't hold any dialog with each other.  If you give a dinner party invite Democrats only or Republicans only.  Even church congregations are organized, not on religious but on political bases"


  93. Here's the official PSW tee-shirt design for this bull market:

    Image result for bull fighting picasso

    Or, for the shorts:

    Spanish Matador Juan Jose Padilla!

    Nothing changes/Tangled – Yet strangely we got to the moon in the next 100 years.  That's why I always have hope, though the current administration makes me feel like the picture above. crying


  94. Phil/CBI

    What if Westinghouse is right? What affect will it have on CBI, or is it already priced in?


  95. CBI/DC – If they are right then CBI will be an $8 stock in short order and it will take several years to work off the debt.  We started with CBI on 9/22/16 by selling $25 puts for $5 so net $20, call that our entry on 1,500 shares and add the $4,500 loss on the spread so net $23 is our entry on 1,500 shares ($34,500).  

    At the moment, CBI is $13.15 and we can sell 15 of the 2019 $12.50 puts for $3.60 so that's our DD and we can sell 15 of the $17.50 calls for $2.60 and now our net drops to $16.80/17.15 and it's 3,000 shares if assigned at $51,450.

    So assuming CBI goes to $8, we DD again by selling $8 puts for $2 (guessing) and $12.50 calls for $2.50 and then our net would be $12.65/12.58 on 6,000 shares (if assigned) for $75,480.  With the stock at $8 we'd have a $25,000 loss, which is one allocation block and by now it's 2023 and we'd want to sell 60 2025 $12.50 calls again (no puts) and, even if we only get $1.50, that's still $9,000 back on our $75,000 (12%), which is a pretty good dividend while we wait for the stock to rebound.  

    So, unless CBI actually goes BK (even $4 is recoverable), as long as they are around until 2035 we have an excellent chance of recovering all of our cash and whatever our 6,000 shares of stock are worth at the time would be a bonus.

    And that's on a stock that dropped 66% on us!  That's the key to long-term value investing – if you start at a good price with stocks that will ultimately stay in business (and the ones making actual money tend to do that), then you'll eventually get your money back – even on the dogs.  


  96. Phil I'm confused as usual. I only caught the beginning of the webinar where you said this oil move could take it down to 138 if panic set in. Did the move up change your mind or is that still a distinct possibility when Asia wakes and sees what we did?


  97. CBI…the next BTU


  98. Holding 4 shorts KC at 123.15. Need a bounce.  Nat — I am with on oil, but you think coffee is also in a depression due to oversupply/low demand?


  99. Phil – I don't want to "break even" by 2035…! that is dead money, that leads to dead 'investors.'


  100. Nasdaq was the sole survivor in a "flight to safety".  Heed Phil's lines.

    Latch – "you think coffee is also in a depression due to oversupply/low demand?"

    So far, it would seem that way. Robusta in backwardation, Vietnam is a concern.  Arabica in contango,  Recent lows could have triggered stops and caused liquidation. Net shorts doubled in the last three weeks. Brazil entering Winter, cold snaps can damage the crops and cause abundant Arabica supplies to diminish.  One can't predict or control the weather.  10/30/16 – 171, now 121, around -30%, 110 @ 35%; 100 @ 40% either could be Fiballicious or Ful-Phil-ment.  Phil channels Leonardo Pisano Bigollo you know.  LU2 Brother.

    Tangled –  Twain and Arnold, fat and happy, divisiveness conquers, cogent, astute and prescient. 

    Scotty – "Naybob – war machine stocks are doing great."

    Par for the course even on the dogs and Out.


  101. Thanks Nat — I had no idea….



  102. ORCL – well, hello there sunshine!


  103. The Saudis foiled an attack on an offshore oil field




  104. 5 eye-popping charts that explain Apple’s dominance


  105. Deadly heat waves becoming more common due to climate change





  106. This is crazy.  ETH flash crashed down to 0.10 due to stop loss MARKET orders…. some people lost accounts totally.

    https://blog.gdax.com/eth-usd-trading-update-5d8142b5bdc1


  107. ETH flash crash savage beyond belief!


  108. On 21 June 2017 at 12:30pm PT, a multimillion dollar market sell was placed on the GDAX ETH-USD order book. This resulted in orders being filled from $317.81 to $224.48, translating into a book slippage of 29.4%. This slippage started a cascade of approximately 800 stop loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10.

    Our comment on /KC above – "Recent lows could have triggered stops and caused liquidation."

    Burr/Scotty – Nice catch ETH hit nice spike down to $271 on larger exchanges then bounced back,  but the circumstances re:comment above warrant attention, as this can happen on an exchange especially when thinly traded.  800 stop loss orders is NOTHING, imagine the NYSE or CME and Out.






  109. Sensex hits record high; banks, auto stocks up



  110. Good morning!

    Things are generally flat so we'll see what happens.  

    NYSE declining volume was 2:1 yesterdays, 2.4 actually so we're back to one of those situations where the index-moving stocks are being held up to mask the exits in everything else.  That was clear from that heat map we looked at during the Webinar – a sea of red with just a few areas in the green (notably Biotech).  

    Oil and Gasoline improving somewhat on OPEC talk – better late than never, I guess..

    Confustion/Craig – I said "panic" – that means at $38 I'd be buying a lot but it doesn't mean it's likely to happen.  I think a 10% pullback in oil was plenty and, in the very least, I'd expect a weak $1 bounce and, hopefully, a strong $2 bounce to get me back even (but still not in first class as I'm punishing myself for overplaying).  

    2035/Scott – Yes but one position is not a portfolio.  That was a worst-case (outside of BK) and we break even over time (and still end up with a dividend-payer at zero basis, which is our primary goal) and, as long as that's not happening to half your positions – the rest of the portfolio will do great.  As Burr notes, we have had failures in the LTP, like BTU and ARO but, in the grand scheme of things, they were just speed bumps on the way to our 40% annual average gains.  

    You can't play a strategy to avoid all failure – you end up betting against yourself.  Baseball players who practice their swing don't abandon their strategy every time they strike out and pitchers don't change their pitching style every time they give up a home run – these things happen – it is statistically ridiculous to think that they won't.  The trick is to make sure no single trade drags you down significantly and your focus needs to be on the overall portfolio performance, more so than any individual stock.  

    As I've noted (and, sadly, it takes years to illustrate) our goal in the LTP is to turn our current $24,000/year dividend-paying stocks into $48,000 in year 6 and $96,000 in year 9 and $200,000 in year 15 and those stocks (as you can see by our $1.1M in cash off a $500,000 start) will be FREE so we can still build our wealth while getting enough dividends to live on (for a person starting with $500K) so that wealth can build exponentially into your retirement.

    Unfortunately, the strategy requires PATIENCE and working a system over time.  Not every trade will be a winner but there are lots of trades and all we need to do is have a decent winning percentage while hedging well enough not to give back our gains in a correction.  Just like we've been doing for the last 3 years.  

    Predicting the weather/Naybob – I'd say "hotter than normal" is a safe bet going forward.  cool

    Ethereum/Burr – That's why I treat the whole thing as just a "fun" side venture.  It will take at least a decade for me to trust these crypto-currencies.  Imagine seeing it go from $300 to 0.10 in a day?  That's going to sour a lot of people on those "investments" although it does make me want to put in silly buy orders on Ethereum for $1 and see if it happens again.  

    At least with the Dollar, it doesn't go off-line on you! 

    The crash appears to have been catalyzed by seller submitting a market order to dump roughly $30 million worth of ETH (96.1k) in one go, which obliterated the order book.

    So now, even though the Status ICO is over, there are still a huge number of transactions clogging up the network and the only way to get transactions in is to pay huge fees (which most of the exchanges probably don't want to do). Until it clears out, people are going to be missing ENS auctions, unable to withdraw from many wallets and exchanges, etc. etc. etc.

     "badly designed ICOs, plus selfish and foolish miners = major delays and maybe even substantial losses for everyone else." Judging by the ensuing flash crash, this was an accurate assessment.

    The problem is you are trading with rogue traders on amateur exchanges – recipe for disaster from the start.  

    Man bun/Scott – Yeah my daughters are NOT allowed to bring one of those home.  Hard to say if that ranks higher or lower on my list than meth addicts…


  111. Now we know where BioD has been, dumping 30MM of ETH! hahah