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Toppy Tuesday – S&P 2,440 Keeps Failing into Earnings

Here we are again, again.

We've been watching that 2,440 line on the S&P all month long for signs of an upside breakout and, while the Nasdaq is still making record highs, the much more reliable S&P 500 seems reluctant to go higher.  Earnings season is just around the corner but a week delayed because of the Holiday, with Big Banks (C, JPM, WFC) reporting on the 14th and then comes the flood.

It's hard to imagine how the S&P can go higher without solid evidence it deserves to have a p/e greater than 25 (now 24.6) to cross that 2,500 mark so all eyes will be on the 500 and how much they are actually dropping to the bottom line this quarter.

Unfortuately, that may be a bit of a snag as the Atlanta Fed has once again lowered their GDPNow Forecast to 2.9%, down 30% from the original 4.2% estimate that kicked off the 2nd quarter.  Yesterday's Durable Goods Report for May was a horrific -1.1% and April's (the first month of Q2) report was revised down from terrible (-0.7%) to horrific (-0.9%) as well.  

GDPNowThat caused the forecasts for contributions of real Nonresidential Equipment and Inventory Investment to second-quarter real GDP growth to decline from 0.15% and 0.76% to 0.12% and 0.69%, respectively, which knocked the overall forecast futher down the line.

Keep in mind Trump's budget is based on 4% GDP Growth and failing to achieve that adds Trillions of Dollars to our deficit yet they will ignore this FACT and cut the taxes anyway and your children and your grandchildren will suffer for it for the rest of their lives – enjoy.

Of course, those lives are much more likely to be brief – especially if they are in the bottom 90% as the newest version of the TrumpDon'tCare lack of Health Bill cuts 22M people off from insurance and will skyrocket costs for people who remain covered – including seniors as the famous "donut hole" in coverage is back with a vengance under the new plan.  4,000 people PER MONTH will DIE due to lack of coverage - that's what your Senators are voting for – a 9/11 per month for America's poor and massive cost increases for everyone else. 

Image result for deaths from lack of healthcareFortunately, we will be fine because we are rich and we will get tax breaks that offset the higher cost of our own health insurance and, for those of us with employees, we no longer have to cover them so we save there as well.  The Long-Term Portfolio trades we took for our Members back on March 14th to combat higher costs are doing great with our initial investments already paying for our health care costs (LLY never played):

  • $3,750 worth of Express Scripts (ESRX) is up $313 (8%)
  • $15,,250 worth of Gilead (GILD) is up $8,775 (57%) 
  • A $4,100 credit spread on Teva (TEVA) is up $1,125 (27%)

As noted in the 3/14 post, we have $30,000 to gain into Jan 2018 and that will pay for all of our health care so the poor are simply lazy if they can't be bothered to just make a few trades to offset the costs.  Why should our Government supplement their lack of trading, right?  That plus the tax breaks they are going to get will allow them equal access to Health Care and THAT, my friends, is what this great country is all about! 

Our Met Life (MET) play is also chugging along (same Report) as our net $40,250 entry is already $42,400 so up $2,150 (5%) and on track, despite MET flat-lining since our entry.  That's because we are Being the House – NOT the Gambler and our conservative style of option spreads doesn't need the stock to go higher to make money.  In fact, our target price for this trade is $52.50 – right where we are.  We also collected a $400 (1%) dividend on May 4th as a nice bonus.  

I mean really, we posted that trade in a free morning report and any poor person could have played along and made $2,550 already – I don't know why these people are so lazy!  

Hopefully you were not lazy and caught yesterday's long trade idea on Silver (/SI) at $16.45 as that blasted up to $16.65, where I called for taking the $1,000 per contract profit and running in this morning's Alert to Members (and we tweeted it out too) and we also took $1,400 per contract profits off our Nasdaq (/NQ) Futures shorts in a trade for our Members I called in yesterday's Live Chat Room

We also called a long on Gold (/YG) at $1,250 and we're right back there this morning after a $9 run up ($290 per contract) but the full reversal makes us nervous – the main premise was that silver didn't have a reason to be down as much as gold (still $16.60) and that's holding up but the gold trade was just for the bounce.  

Yellen is speaking at 1pm so we're not too anxious to do anything until that's over but we will short the Russell (/TF) below the 1,415 line with tight stops above as that's our best downside hedge at the moment as well as Nikkei (/NKD) below the 20,200 line (now 20,195) as it should be lower if the Dollar stays weak.  I'm surprised to see the Dollar (/DX) at 94.45, that's an interesting long as well but again – Yellen makes it a dangerous play! 

Be careful out there. 

 


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  1. It's really incredible that you have people like McConnell going around saying that they are happy about the CBO score. They talk about the fact that premiums will go lower but fail to mention that they will go up 20% first and then they will be lower because regulations will let insurance companies sell crappy plan with high deductibles. Long health insurance CEOs if this passes… And then they talk about the fact that taxpayers will save money but McConnell fails to mention that 1% of the taxpayers will save money! 

    Remember, they are gutting Medicaid now, but Medicare and Social Security will be next in that plan!

    They came for Medicaid but I am not poor so I didn't say anything!
    They came for Medicare but I am not sick so I didn't say anything!
    They came for Social Security but I am not old so I didn't say anything!


  2. Phil, would like your take on VZ…..falling knife, or wait for the lazy analyst to downgrade with all the goings on with sprint/comcast rumors. I am looking at the 2019 $40 put for $3; scale in with 10 contracts and wait/watch for a DD. Thanks as always


  3. Good Morning.


  4. Phil, see you have the spinning earth back on PSW home page. Congrats!! 

    Enjoy your family's European and British adventure, sounds like fun and the girls will remember it always!!


  5. FU FTR!!!!


  6. from yesterday--what are your thoughts about this?

    NORWALK, Conn.--(BUSINESS WIRE)--June 26, 2017-- 

    Frontier Communications Corporation (NASDAQ:FTR) announced the early tender results of its previously announced cash tender offers (the "Tender Offers") for each series of notes described in the table below (collectively, the "Notes"). The Company has amended the terms of the Tender Offers to increase the maximum aggregate consideration (excluding accrued interest) to be paid by the Company in the Tender Offers (the "Aggregate Maximum Consideration") from $800 million to $1.15 billion. 


  7. ftr doesn't act like a company that is going bankrupt…

    but the stock trades like it..dangit!


  8. Good morning!

    Very quick $400 winner on /TF and, if you have /NKD too, I'd take the /TF money and run as /NKD hasn't moved so why risk both? 

    Big Chart – Nas tried to punch over and failed, let's watch that green line closely.  Everything else looks generally strong though – nothing to be very bearish about.

    Incredible/StJ – I don't understand how human beings can behave this way. 

    VZ/Jasu – Same as last time you asked:

    Submitted on 2017/04/25 at 3:40 pm

    VZ/Jasu – T and VZ are bleeding customers to TMUS, not an exciting time to get in on either of them.  $40 put not a bad entry though.  Even if they fight back, it will impact margins as people are wising up to low-cost data plans on smart phones.

    And I'm very consistent with my target:

    VZ/Maya – Well Dec $48s are $3.75 in the money and are $3.80 and the March $49s are $3.30 so you are paying 0.45 to roll up $1 and still you have good downside protection on the stock.  I'd put a stop on the exta 25% but wouldn't buy them back for no reason unless it's a margin thing. 

    Next time it dips top $46 and the long calls go near worthless – THAT is when you should be buying back the short calls!  And don't be greedy, once you have a nice gain, more conservative short calls lock in your gains – it's not normal for high-dividend telco stocks to go up 10% a year – if you keep raising the bar, you are guaranteeing you'll be burned when things normalize.  

    Spinning Earth/Newt – Congrats on updating your browser – it's been there the whole time!  cheeky

    FTR/Jabob – They are retiring more debt – that's good but I bet people are worried they intend to pay for it with dividend cuts.  Unless they get to 0.80/$12 and we have a chance to DD – I'd ignore it for 2 years and see what happens.  


  9. 2 years!!!

    FU PHIL!!!!

    ;-)


  10. UWT -Sold another 1/3 of this 3X crude oil ETF on the strength in /CL

    Keeping 1/3 for now.  Moved up stop.


  11. Pstas – I know you're following this company.

    ~~Arena Pharmaceuticals Inc. (NASDAQ: ARNA) was started with a Buy rating and assigned a $23 price target (versus a $15.08 close) at Citigroup


  12. CBI, any news!?


  13. CBI moves with oil, it appears….


  14. Jelutuck

    ~~CBI – CB&I shares trading higher by 8% in early trade; move attributed to favorable Court ruling in Toshiba's (TOSBF) Westinghouse Electric case. 


  15. CBI – court ruling – but can't find anything official…. there was a rumor that the del court would rule prior to jul 4th holiday


  16. CLF on the move with oil and an iron ore plant it seems.


  17. https://finance.yahoo.com/news/delaware-top-court-rules-chicago-144420536.html
    The Delaware Supreme Court ruled in favor of Chicago Bridge & Iron Co on Tuesday in its in $2 billion dispute with Westinghouse Electric Co that stems from cost overruns at a pair of unfinished U.S. nuclear …


  18. Albo- ARNA- thanks. 


  19. TOO – Up another 7% today.  Sold some more.  Keeping a small amount of stock and keeping the short puts.


  20. Four for the Road:  Time for my vacation but let's pick up 4 new stocks for the OOP and LTP as they can both use some new positions after a few cash-outs this month.

    FNSR has missed out on most of the tech rally after disappointing earnings in March (through 1/30), where they missed by 4.8%  but still made 0.59 and still on track to easily make $2 for the year, which is a p/e of 13.5 for a company that does fiber-optics and 3D sensors (for self-driving cars).  Well worth a long-term investment though they may get cheaper in a tech crash.

    In the LTP, our allocation blocks are $50,000 so no worries selling 10 2019 $25 puts for $4.80 ($4,800), which would net us in at $20.20 ($20,200) as an initial entry.  We'll also play 20 of the 2019 $23 ($9.20)/30 ($5.90) bull call spreads at $3.30 ($6,600) and that will make the net of the whole $14,000 spread $1,800 with $12,200 (677%) upside potential.  

    I'll be very surprised if the Nasdaq doesn't pull back and we "only" make $12,200 – hopefully it gets cheaper and we can roll down the long calls and sell more puts.  

    Like the LTP, the OOP is swimming in CASH!!! (have I mentioned how much I like CASH!!! lately?) – $204,000 at the moment and our allocation blocks there are $25,000 so, essentially, we'll take half as big a position:

    • Sell 5 FNSR 2019 $25 puts for $4.80 ($2,400) 
    • Buy 10 FNSR 2019 $23 calls for $9.20 ($9,200)
    • Sell 10 FNSR 2019 $30 calls for $5.90 ($5,900)

    That's net $900 on the $7,000 spread with $6,100 upside potential (677%) and the worst thing that can happen is we end up owning 500 shares of FNSR for net $25.90 – still cheaper than it is now.  

    TGT is already bouncing off the $50 line but such a good deal down here I don't mind chasing $2.  AMZN buying WFM is freaking people out but $50 is a bit silly for TGT as that's $27.5Bn and they made $2.7Bn last year, which is a p/e of 10 and last year wasn't even a good year.  They are certainly good for $4/share but with SHLD and others closing stores – I think they'll have some beats ahead just from picking up shoppers who have nowhere else to go.

    In the LTP, we already sold 10 2019 $57.50 puts for $10.60 and they are still around that price but let's add 30 2019 $50 ($6.65)/60 ($3) bull call spreads at $3.65 ($10,950) so that's a great price for a $30,000 spread and our net with the short puts is just $350 to make $29,650.  Who needs jobs?  

    In the Butterfly Portfolio, we can roll our 20 TGT 2019 $55 calls ($4.50) down to the $50 calls for $2.15 – let's do that too. 

    In the OOP, the same trade as the LTP but smaller and from scratch:

    • Sell 5 TGT 2019 $60 puts for $13 ($6,500)
    • Buy 15 TGT 2019 $50 calls for $6.65 ($9,975) 
    • Sell 15 TGT 2019 $60 calls for $3.00 ($4,500)

    That's a net credit of $1,025 or $2.05 per short put so our worst case is owning 500 shares of TGT for net $57.95, which is a 10% higher than it is now, so we're being aggressive there but let's say they fall to $40 and we double down, then we'd have 1,000 at net $48.95, which wouldn't be so terrible.  On the upside, there's another $15,000 to gain at $60 or above and that would be net $16,025 and up a Bazillion percent on cash (because we had a credit to start).  By the way, margin on the short puts is just $2,911 so it's a super-efficient way to play.  

    GE used to always be in our portfolio but I got mad at them when they spun off their finance division.  Back down at $27 I'm ready to forgive them and so is Barclays, who agree with me and just made them a Top Pick to go with our Top Trade.  

    GE does pay a 3.4% dividend, which makes them attractive to own so, for the LTP let's:

    • Buy 2,000 shares of GE for $27.40 ($54,800)
    • Sell 20 2019 $25 calls for $3.70 ($7,400) 
    • Sell 20 2019 $28 puts for $3.05 ($6,100) 

    That's net $41,300 and we have no intention of being called away but we'll worry about the adjustment in 18 months.  "Worst" case is we get called away at $50,000 and make $8,700 (21%) in 18 months plus $2,880 in dividends (7%) for 28% in 18 months and all GE has to do is be over $28.  If under $28, we get more stock cheaply – boo hoo.  

    And yes, it's an aggressive block – because it's GE!  

    In the OOP, we'd rather be more cash-flexible but we don't ultimately mind owning them so we can get very aggressive with the put sale:

    • Sell 5 GE 2019 $30 puts for $4.30 ($2,150) 
    • Buy 15 GE 2019 $25 calls for $3.70 ($5,550) 
    • Sell 15 GE 2019 $30 calls for $1.34 ($2,010) 

    That nets us into the $7,500 spread for $1,390 and we will be overpaying for 500 shares if they are assigned to us at $30 but a lovely $6,110 profit (439%) if GE is over $30 and that's just asking it to go up 10% in 18 months.  If you don't believe in that – you should be cashing out all your longs!  

    CSCO is another long-time favorite we don't happen to own at the moment.  I've given up on $30 and again we have an attractive $1.16 (3.6%) dividend that would be nice to add to the LTP but, in this case, I'm going to do it like the above OOP play and we can sell high puts aggressively:

    Sell 10 CSCO 2019 $32 puts for $3.80 ($3,800) 

    Buy 20 CSCO 2019 $28 calls for $5.30 ($10,600)

    Sell 20 CSCO 2019 $35 calls for $1.85 ($3,700) 

    That's net $3,100 on the $14,000 spread with $10,900 (351%) upside potential at $35 and our worst-case is owning 1,000 shares for net $35.10 – we can certainly live with that after we double down, sell calls and start collecting our dividends, right?  

    In the OOP, that trade is so good we'll just cut it in half:

    • Sell 5 CSCO 2019 $32 puts for $3.80 ($1,900) 
    • Buy 10 CSCO 2019 $28 calls for $5.30 ($5,300)
    • Sell 10 CSCO 2019 $35 calls for $1.85 ($1,850) 

    That's net $1,550 on the $7,000 spread with $5,450 (351%) upside potential at $35 and our worst-case is owning 500 shares for net $35.10 – we can certainly live with that after we double down, sell calls and start collecting our dividends, right? 

    Well that was hard work – I need a vacation!  

    Actually, these are the top 4 trade ideas we've liked after a week of looking at hundreds of ideas - it really was hard work…


  21. Oops, I think we already did one on TGT for the OOP so ignore today's new one if you have it already.  


  22. CBI – Wow – i've never had a stock i own move up 28% in one day….  


  23. I need a little help here regarding CBI

    I have long 2019 10 calls (yay) but just last week I sold August 15 calls @ 1.50 to try to lower my basis 

    This explosion in CBI today has put those underwater at $4.50 (so I am down 3.00) on that position.  How can I roll this forward?

     

    Any advice appreciated


  24. Phil, Big pop in crude oil at the moment. Would you short on the 5th if it stays this high? Thanks. Strether.


  25. Jeffl -re: CBI, I would wait a few days to do anything.  Let this initial excitement die down a bit. 


  26. Phil

    Did we look at

    BlackBerry Limited BBRY

    http://www.citronresearch.com/blackberry-next-nvidia/

      Thank you for your time,


  27. Out of CBI….


  28. CBI – ROFL!  

    http://www.philstockworld.com/2017/06/18/philstockworld-may-portfolio-review-members-only/

    • CBI – Is $15 finally the floor or are they teasing?  Let's roll the 2019 $27.50 calls ($1.50) to the $15 calls ($4.45) for $3(ish) and buy back the short $37.50s (0.70) and see what happens.

    Well, I never lost faith!  

    Delaware top court rules for Chicago Bridge in Westinghouse dispute

    I love those legal sell-offs, people who don't understand the law, never worked in the industry, can't do math and don't understand Corporate Finance seem to feel free to give their expert opinions on companies involved in the disputes and, thanks to the Internet – every opinion seems to have equal weight to investors.  That's how things get ridiculously mis-priced.

    Submitted on 2017/06/23 at 11:29 am

    CBI/TX – One of my top picks at this silly price.  

    CBI/Batman – $3.50 per $14 share is their worst case?  I guess I'll stick with them then!  

    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.  

    Submitted on 2017/06/21 at 10:24 am

    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.

    Submitted on 2017/06/21 at 7:21 am

    CBI/Batman – So silly at $15.  They are international infrastructure players and yes, they had two down years but last Q they made $42M so on track for $200M with a $1.5Bn valuation, even if things don't improve (which they already said it would).  

    CBI/QC – We're watching and waiting for the moment but the gist of it was we're going to roll the 2019 $27.50s ($1.45) down to the $12.50s ($5.75) for about $4.30 and buy back the short $37.50s at 0.65 and we are looking to sell the $25s (now $1.70) for $2.50+ on a bounce.  

    CBI/DC – That is the kind of play I would like to do.  

    An analyst at Macquarie Group lowered its price target for Chicago Bridge & Iron from $18.00 per share to $11.50 per share and kept an underperform rating. The reduction in price target was based on an assumption that management is drawing down the maximum under its revolver rather than just using the end of quarter number. Companies often clean up their balance sheets at the end of the quarter to make them look good for investors, and a disclosure that said the drawdown had hit its max led the analyst to the change in valuation.

    Also, from Cramer last week:

    Chicago Bridge & Iron (CBI): "No, no. Way too much infrastructure and perhaps on the hook for some tough, big construction projects in the South. I do not want to touch that one."

    CBI/Jeddah – This is a good overview article on them.  I like them for the long haul but there's no immediate catalyst that's going to take them higher.  As I think oil will once again fall in the fall – I certainly don't see CBI suddenly having a great year but $20 is stupidly cheap.

     

    That's what we call "banging the table" on a stock!  

    TOO/Albo – Can't play them, I'd never be able to search for the symbol. cheeky  GE doesn't work either, finds every word using ge in it.

    CBI/Jeff – You can sell the 2019 $10s ($10.50) and buy 2x the 2019 $20s ($5.70) and then you can roll the Aug $15s ($5.20) to 2x the 2019 $25s ($3.30) and then you have 2x the $5 spreads.  If you want to be more aggressive, you can buy 1x of the 2019 $20s now and put a stop on the $10s at $10 (and then buy more $20s cheaper to replace them) and that way, if CBI pops $20 and goes higher, you will have 1x uncapped longs and you can still roll the short Augs along.

    Oil/Jeff – Damn, got back to our $44.50 target.  Should have stuck with them.  I can't say now that I'd short them a week from now, a lot could happen and $44.50 isn't that high, we were hoping for $55+ to short down to $45 – we never expected much below $40, even in the fall. 

    BBRY/QC – I just don't like them.  I read a bunch of stuff and they just seem like some old-timers team people are rooting for but they know they can't really play in the majors anymore.  Maybe I'm underestimating them but I couldn't get my head around what they are doing now.  

    Oil/Hanj – Ah, so many experts…

     


  29. Sold CBI Jan'18 12.50 puts for $2.40, that will pay for Christmas :)

    TY Phil


  30. TF – darn gave up to fast on them from 1420 to 1415… My DX is not going well at 96.585


  31. Yellen not doing the indexes any favors in London.  

    God, I hate CNBC – you wouldn't even know Yellen was talking if you were just watching them.  How can you be considered financial news if you ignore the most important thing going on during the day.  And what are they talking about – "Is a Housing Bubble Brewing?"

    It's a good thing, when I was a kid, this left an impression on me – to this day I watch multiple TVs and listen to the radio and play with my computers (not when Tina or Maddie are around – it drives them crazy but Jackie sits right next to me with her multiple devices).  

    Image result for man who fell to earth tvs

    /TF hit 1,420 and game on again below 1,415 – that's why we take the quick profits – then we get to play twice!  

    Nas making new lows all the time.

    /NKD still in position:

    CBI/Mkucs – Merry Christmas indeed.  

    10 Amazing Things Scientists Just Did with CRISPR

    A Tale of Two Studies: Poor Research Leads to Poor Findings on Minimum Wage

    Stocks Slammed After Fed Williams Warns "Market Rally Running On Fumes"

    FACEBOOK COMMUNITY OFFICIALLY 2 BILLION PEOPLE, ZUCKERBERG SAYS

    When it comes to health care, America is a sick country.

    DEVASTATING IGNORANCE:Next 5 years,U.S.Muslim pop. grows from 1% to 1.1%. But U.S. public believes it's 17% to 23%!

    Nestle plans $20.8 billion share buyback after Third Point pressure:

    Friggin' Jersey – There's a tornado and these guys stand there filming it like it's a bear or something less likely to kill them.  

    Research conducted across 37 countries shows a median of 22% have some or a great deal of confidence in Trump to do the right thing when it comes to international affairs. Almost three-quarters (74%) have little to no confidence in the Republican leader.  By contrast, in the final years of Barack Obama’s presidency, a median of 64% expressed confidence in Trump’s predecessor to direct America’s role in the world.  For the first time in Pew research history, most Canadians no longer regard America as a force for good in the world.

    null

    Enough Republicans have come out against the GOP health care bill to make even a vote uncertain

    Trump pretends to care in National HIV Testing Day statement, while cutting funding for treatment

    The stealth nature of Trump's free trade rollbacks makes them potentially more pernicious, since they could lead to a slow erosion of America’s competitive advantage and, with it, the job market.

    The US is protecting domestic sugar producers for the sake of a few wealthy political donors, says Jeffrey Frankel

    Rising prices help British supermarkets to their strongest sales growth in 5 years

    Reading the CBO Report on the Better Health Care Reconcilation Act (BCRA)

    Sorry there is no press release it was internal data, CNBC had horrible numbers http://www.valuewalk.com/2017/06/fnc-fb

    In NYC, Uber has been quietly funneling poor & immigrant drivers into subprime car loans

    European stocks end in red, bonds hit after Draghi remarks

    9 places in the US you can earn 6 figures and still be broke

    Solar pv, wind and battery storage technology is cost effective now, compared to fossil fuels


  32. Man, that woman loves to yap!  I like her though, she's great at explaining what she means and then following the threads for how one thing affects another.  

    /TF/Latch – Never regret a profit, just look for whoever is lagging behind and focus on them. 


  33. Janet saying another crisis is unlikely in our lifetime seems dangerous.


  34. Minimum wage studies/Mrmocha,Phil – very interesting. I look forward to UWs defense of their study as they sure were battered. I like this comment from a Seattle Weekly article: "Seattle is getting an object lesson in weaponized data."
    http://www.seattleweekly.com/news/seattle-is-getting-an-object-lesson-in-weaponized-data/

    CSCO, GE, TGT, FNSR/Phil – great list..!


  35. Phil NQ hit 5685 from 5765 so what are the bounce lines from here? I still can't get that completely right. I know we use a longer term than just that 80 point drop, so can I ask once more to show that calculation?


  36. Losers – my 'Losers' screen of companies rolling down below their 5dma has been steadily growing all day.. and a short while ago just about doubled in length all at once.  


  37. Phil   USO    What's up with  July 9 calls,did I miss something? Close with loss or pray


  38. M – looks like found some interest and support today.


  39. So the Republican strategy is to tell you that Obamacare is going to destroy the World and their plan only kills 45,000 people a year – so it's much better.  Trump is threatening not to kill 45,000 people a year and let Obamacare destroy the World but the GOP leaders will have none of that because they know they are lying about Obamacare and the worst thing they can do is leave it alone and watch it not destroy the World – where will the tax cuts come from then?

    What a depraved bunch of psychopathic liars we have elected into office!  And, of course, THAT gets full coverage on CNBC and not one second of time for the Democrats.  What happened to the old Equal Time law?  

    Ah, here's Schumer.  "Republican bill is rotten to the core."  It's not going to change with any little tweak that pleases this Senator or that.   

    Yellen/Tangled – How can she say that after meeting with Trump?   Maybe she's dying of something and she means her lifetime.  

    Wages/Scott – It's certainly not what I hear on the ground in Seattle.  Help wanted signs in the windows, very low unemployment, vibrant economy.  

    Nasdaq/Craigs – Arrrrgh!   Didn't we just do a whole thing on that?  

    Here's one:

    5% Rule/Jeff, Latch – What's key is to look at the 5,000 line and the 6,000 line and, if we're bullish, then retraces from the 6,000 line should hold and 10% down is, of course, 5,700 and then you can do the math between 5,700 and 6,000 (or the so far high of 5,900) to figure out lines.  If those aren't working, you have to consider the 15% line from 5,000 (5,750) and work in 1.25% (72 but call it 75) moves from there so 5,825 and 5,675 would be the lines to watch.  Since those don't seem to be working and 5,700 does seem to be holding up, it's more likely this is bullish consolidation on the way to 6,000 than a bear move.  

    So the big move from 5,000 to 6,000 expects a weak (20%) retrace to 5,800 and a strong (40%) retrace to 5,600.  We had some consolidation at 5,600 on the way up and it held on the first test so, if it holds again – chances are we make a break to 6,000.  As noted, we're looking for 5,740 on the short-term bounce and 5,750 is the 15% line off 5,000 so that area is going to be hyper-critical and, if we blast through it – that's very bullish.

    So, where are we?  5,675 is the line we're watching now for support, then 5,600 but, if not, 5,400 becomes likely.  

    TSLA $365!  

    Losers/Scott – Seems to be a bit of rotation to value but hard to say as the volume is so low this week. 

    USO/490 – Dead money almost certainly but may as well see if there's a holiday miracle.  

    M/Scott – Another one that's very under-valued. 


  40. Phil – "the Atlanta Fed has once again lowered their GDPNow Forecast to 2.9%, down 30% from the original 4.2% estimate that kicked off the 2nd quarter.  Yesterday's Durable Goods Report for May was a horrific -1.1% and April's (the first month of Q2) report was revised down from terrible (-0.7%) to horrific (-0.9%) as well. "

    I was generous in upping the TNN Q2 GDP from 1% to 1.75%.  Trump and Atlanta Fed 4%????  I want some of what their smoking.  The largest imputation in the GDP accounts is that made to approximate the value of the services provided by owner-occupied housing.  That imputation is made so that the treatment of owner-occupied housing in the GDP is comparable to that of tenant-occupied housing, which is valued by rent paid.   Where it not for rising imputed rent, GDP growth would be negative.

    In the UK 11% of GDP is imputed rents, here in the US it is 12.1% or $2.3T of "income", mostly benefiting the rich, being counted as national product or output.  Some wags in the UK have a beautiful grasp on the fraud in this statistical connivance. 

    Now I'm going to blow your mind, in the Netherlands, Iceland, Slovenia, Luxembourg, and Switzerland, home owners actually pay imputed rent as a tax. Why? The rich guy living in the $4K per month house is getting a tax favored status vs the poor slob in the $1K per month slum-dominium.  In those countries, taxing imputed rent fully eliminates the tax favored status for housing which the rich benefit from and shifts that money back to the lower quintiles and Out.


  41. FNSR – tiptoeing into a modified position here, choosing a Jan2019/Jan2018 $28 call calendar for net 2.76. seeking a few more fills at lower entries.  Also looking for lower before selling puts.


  42. Thanks for the refresh Phil. Don't know why that is so hard for me to remember. Also Phil if I may ask, with everyone saying they expect a bounce in oil from inventory data  and the holiday, do you think it might be a setup to sucker people in ?


  43. Everyone being all those people on CNBC and Bloomberg 


  44. This rotation into value has been fantastic for my portfolio.  Funny how that works out.  I hope it continues!


  45. HOV/Phil – not a bad day for them.. something happening out there?


  46. IRBT now down 10% in the day..


  47. ~~CBI -CB&I: Hearing Deutsche Bank suggesting shares could rerate at $28 following Westinghouse Court ruling.


  48. Rents/Naybob – Good point!  Owner Equivalent Rent is one of the biggest examples of economic nonsense in history.  

    FNSR/Scott – Good adjustment.  The strikes we call tend to get crowded anyway. 

    Oil/Craigs – Time for Holmes again?  There's no thinking here – oil didn't do as we thought so we need more data if we're going to play.  If this is all they could muster for July 4th weekend – it does not bode well for the rest of the summer or the fall but, of course, the Saudis could declare war on Qatar and oil will be $60 in the morning – so who knows?  That's why I took the loss and stopped playing – way too difficult to call with any degree of confidence.  

    Value/Palotay – That's the fun part of being a value investor, watching people slowly start to realize they need the stocks you already have!  cool

    LTP is up $38,000 since our 6/18 review (now $1,437,607), that's 7.6% (of our original $500K) in 9 days on our CONSERVATIVE positions.  That's how slow and steady wins the race – we just keep plodding along collecting premiums and then, every once in a while, people realize some of the stocks we have are too cheap and drive the prices up for us.  

    STP is flat thanks to the NAS popping our SQQQs (and /TF still weak, which is good for TZA and TSLA calmed down) so it's all profit at the moment.

    HOV/Palotay – Good housing numbers and this:

    K. Hovnanian Enterprises, Inc. Announces Tender Offers and Consent Solicitations

    HOV is another one I simply got bored banging the table on last year:

    That's how long people can completely ignore the value of a stock.  

    Nas down another 100 – ouch!  

    Don't know what's holding /NKD up, Dollar 96.055.

    IRBT/Scott – No news.  

    CBI/Albo – That seems about right.  $30 would be where I'd look to sell calls but DB is lazy, calling the 200 dma.

    Wow, bell already.


  49. Interesting take from Scott Galloway on AMZN/WFM.. https://www.l2inc.com/daily-insights/no-mercy-no-malice/amzn-wfm-1t

    I'm mulling selling 2 2019 $800 puts on AMZN, and buying 2 $800/900 call spreads as a hedge to my overweight retail position.  Which would be about $2,000 net on the $20,000 spread.  I must be insane.


  50. /CL – This doesn't seem to bode well for those of us looking for an oil pop into the holidays: http://www.marketwatch.com/story/oil-prices-fall-as-sources-say-api-data-show-an-unexpected-rise-in-us-crude-supply-2017-06-27


  51. AMZN/Palotay – I still prefer them short.  This will be a massive spend to integrate and I can't imagine a coherent plan that will make any sort of margin.  Once people start calling AMZN/WFM WebVan – it's over for them.  Oh, wait a minute, AMZN bought WebVan too!  Still, I call dibs on "WebVan 2020"…. 

    The company's investors pressured it to grow very fast to obtain first-mover advantage.[8] This rapid growth was cited as one of the reasons for the downfall of the company.[9]

    Webvan placed a $1 billion order with engineering company Bechtel Corporation to build its warehouses, and bought a fleet of delivery trucks.[10]

    In 2000, Webvan bought HomeGrocer, a competitor that was also losing money, for $1.2 billion in stock.[11][12]

    At its peak in 2000, Webvan had $178.5 million in sales but it also had $525.4 million in expenses.[1]

     

    Benchmark CapitalSequoia Capital, and Borders each invested $3.5 million in the company in a Series A round in 1997, buying shares for 9.58 cents each.[13] Sequoia later invested another $50 million, Softbank Capital later invested $160.3 million, and Goldman Sachs' venture arm invested $50 million.[13] E-Trade and Yahoo! each invested $10 million.[13] In total, venture capitalists invested more than $396 million in Webvan.

    The company raised an additional $375 million in an initial public offering in November 1999 that valued the company at more than $4.8 billion. Up to that time, the company had reported cumulative revenue of $395,000 and cumulative net losses of more than $50 million.[14]

    The company lost over $800 million and shut down in June 2001, filing for Chapter 11 bankruptcy protection and laying off 2,000 employees.[16][1] As part of its shutdown process, all non-perishable food was donated to local food banks.[17][18]

    LOL – A recent addition has been put in by AMZN on Wikipedia, they are already positioning:

    Commentators point to several reasons for Webvan's failure:

    • Aggressive expansion to many cities without proving its business model in its first market[19]
    • A business model targeting price-sensitive mass-market consumers rather than upmarket consumers who would be more profitable[20]
    • Building its own warehouses and fulfillment infrastructure from scratch,[20] like the also-failed homeruns.com and in contrast to services like Peapod which survived the dot-com bust and used the infrastructure of existing supermarkets (as would the later successful Instacart)

    So convenient that all those reasons for failure are being "corrected" by the AMZN/WFM deal.  

    WebVan 2020!


  52. API/MrM – Ahead of a holiday – that's double-plus ungood! 

    Crude: +851K Gasoline +1.351MM Distillates: +678K Cushing: – 678K

    So net almost +3Mb.  We're likely to beat that tomorrow so would be nice if oil really crashed.  At some point, gas stations need gas for the weekend so next report should have a nice draw and, if not, then demand is dropping way faster than I projected.  


  53. When you say likely to beat that tomorrow, does that mean a bigger build or do you mean beat it by being less? 


  54. Phil – i have the following positions and would like some advice on next steps on CBI the litigation looks like at will be capped at $70M max, and the sale to veritas should be announced this month.  With these out of the way – i believe  the low end of the stock should be at 15 to 18 ( assuming 3.4 EPS) and the high end maybe 30.  They will have better FCF after the sale towards back half of year.

    I currently have:

    30X '19 $15 puts (4.89 ) now 2.6 – This is a 50%ish gain in 1 week, and i'd like to close these out and role to

    30X '19 $17 puts for 3.8 

     

    I have 20X of the '19  $20 puts (6.3) that i'm looking to keep 

    I also have 45X the '19  $25/$32.5  ( net 2.3) the result of an adjustment ( when i was taking a bath on this position and i was just looking to break even) i'm looking adjust this to possibly a 25 / 35, but that doesn't look very appealing.  I'm also looking for advice on some short term callers to partially cover the 50X short puts – Maybe the Oct 25 Calls (1.2), ?

    Thanks for your help.


  55. That would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

    https://news.slashdot.org/story/17/06/27/1959211/the-app-economy-will-be-worth-6-trillion-in-five-years

    In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and — crucially — more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the average app spend — including app-store purchases, advertising spend and, most importantly, commerce — to increase from $379 per person to $1,008 in 2021. The 800-pound — or $6 trillion — gorilla in the room is mobile commerce.


  56. CBI/Phil Advice on CBI here as well. I have 10 of the 25/35 Jan18 BCS and short 10 of the 30 puts, also Jan18.


  57. Do we follow through tomorrow? about 8 points more on S&P to have a loosing month… won't that be nice for us bears… took some profits, my longs were all good too! Love it when a plan comes together.


  58. The dollar dropped $1 today and gold and silver barely reacted. WTF? Commodities really are struggling right now. Weird though isn't it? Anyone have thoughts on this?


  59. Indices are selling off – NAS/NQ …  

    Strangely oil is back above $44 -

    somebody must think the EIA report tomorrow might give better numbers.

     

    CBI advice line – Phil -

    Planning to continue and hold on to my 40X 2019 $20/$30 BCS… unless you suggest otherwise ? 

    What would be good put levels to sell now.. ? perhaps – Batman's suggestion on $17…?

     

     

     

     


  60. Good morning!

    Indexes are coming off the lows, generally flat with /TF most bouncy off 1,400.

    Nas is least bouncy:

    Remember, 5,675 was supposed to be support if this is a bullish retrace.  If 5,675 turns into resistance – than this is probably a weak bounce that will fail  From yesterday's 100-point drop to 5,650, 5,670 is the weak bounce line, 5,690 is strong with the bigger-picture 5,675 in between so that's the zone to watch.

    /NKD finally gave us a 100-point dip

    And notice EuroStoxx is bouncing off 3,500 so of course that's going to be good for at least a weak bounce:

    If we zoom back, it's a 100-point retrace (ignoring spike) from 3,600, which was a 20% run from 3,0000 but the weak retrace of that run is 3,480 and the quick air-turn there looks like bullish consolidation for EuroStoxx so nothing to be internationally bearish about if 3,480 is holding and now that 120-point drop has it's own 25-point bounce and I'd watch 3,525 and 3,250 (rounding to the whole number for the 25 and using the even-number support at 3,500 in favor of the 3,480 yields a conservative target for going bullish again). 

    VIX is still a little worried:

    Oil has come down a lot but it's not too likely to hurt the market as XLE and OIH have already taken a big hit:

    In fact, OIH is getting attractive as oil still has to be drilled and that's how OIH firms make money.  Over the very long run, they tend to be good investments on pullbacks.  $20 was the spike low in 2016 and we took longs around $22 so we're very close again.  And this is what I mean by PATIENCE, by the way – we have a buy point and we waited 18 months for another opportunity and since we KNOW what the value is – we don't change our mind just because the chart looks ugly.

    Look what Yellen did:

    Despite the Dollar weakness, the Yen is still weak against Global currencies, which is why /NKD isn't giving us a very satisfying pullback (they love a weak Yen):

    And the winning currency is:

    Fed Alert & TrumpCare Turmoil Slams Tech Stocks, Bonds, & Dollar

    Yellen Fed Ramps Up Attention Over `Somewhat Rich' Asset PricesIt’s not an alarm bell, but Federal Reserve officials are suddenly talking more about rising asset prices. Fed Chair Janet Yellen, Vice Chair Stanley Fischer and San Francisco Fed President John Williams on Tuesday all acknowledged that valuations in equity and other asset markets had risen noticeably in recent weeks. “Financial arguments are starting to take more life,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “While you will never hear the Fed say they have lifted rates because of this, it is certainly weighing on the decision calculus in a way it wasn’t six or nine months ago.”

    Yellen: "I Don't Believe We Will See Another Crisis In Our Lifetime"

    Short on Backers, GOP Delays Vote on Health BillSenate Majority Leader McConnell tells lawmakers vote wouldn’t happen until July 4 recess.

    Trump tells GOP senators: 'We're getting very close' on passing health-care plan

    Cyberattack Reaches Asia as New Targets Hit by Ransomware Demand. (videoA new cyberattack similar to WannaCry has reached Asia after spreading from Europe to the U.S. overnight, hitting businesses, port operators and government systems. The Jawaharlal Nehru Port Trust, the facility near Mumbai which is operated by A.P. Moller-Maersk and is India’s largest container operation, was affected, according to a report by the Press Trust of India. One of the three terminals is now at a standstill because the computer systems were disabled. The attack is being carried out by the Petya virus, with users being told to pay $300 in cryptocurrency per infected computer to unlock their systems.

    China Suspends Fuel Sales To North Korea

    WTI/RBOB Tumble After Unexpected Inventory Builds


  61. CBI/Jet – Well, it's a shame you didn't roll down and uncover when it was cheaper but the Jan $25s are $1.80 and the 2019 $20 ($5.30)/$30 ($2.30) bull call spread is $3 and I'd certainly spend $1.20 to buy a year and $5 in position.  The short Jan $35s are 0.40 and you can buy them back now or put a stop at 0.60 (the delta is 0.11 so another 10% move up in CBI would trigger it).  As to the short Jan $30 puts, those are $11 and the 2019 $22.50 puts are still $6.50 so if you roll to 15 of those ($9,750) it will cost you $1,250 but way safer and the assignment potential, which was $30,000 for 1,000 shares becomes $33,750 for 1,500 shares.

    Since your spread was a little aggressive, I assume it was near net zero to start so really you are just spending $1,250 and maybe $600 for the short calls so $1,850ish on the $10,000 way better spread is very nice for an adjustment, right?  

    I think CBI is simply pausing at $20, it may blast higher from here.

    Follow-through/Mkucs – I think the window-dressers come to save us because they don't want "The Great Market Pullback" to be the topic of weekend barbecues.  

    Dollar/Craigs – That's because the Dollar was pushed down by Euro (mostly) so it's down for things that are not it's fault and that puts less pressure on gold/silver, who already pulled back and are bouncy.  

    CBI/Learner – See above, I still like it.  I like those short $22.50 puts too.  $6.50 nets you in at $16. 



  62. Is Yellen gonna jump? Put that quote on the cover of Time and see what happens… END THE FED!!!!!


  63. "Nobody could have seen it coming…"