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Manic Monday – Saudis Cut 600,000 More Barrels and it’s Still Not Enough!

As we predicted on Friday, the Saudis have unilaterally cut production.

It was less than we recommended, however – 600,000 barrels vs. 1Mb needed to make enough impact to get Brent Crude back to $50 so we'll be back to shorting oil once the bulls get done reacting to the headline.  At the moment (8am), US Oil (/CL) is trading at $46.06 and hopefully we can short it at $46.50 but we'll take a short under $46 with tight stops above as they may not get there on this half-assed effort.

The Saudis have to act in loco parentis at these meetings but it was hoped by oil bulls that holding the OPEC meeting in St. Petersburgh meant Russia would be joining in with more cuts.  Not only didn't that happen but both Nigeria and Lybia have room to INCREASE their production under today's agreement, which offsets most of the Saudis' new cuts.  The success of this deal rests on the rest of OPEC complying with November's production cut – something they are notoriously bad at.  

Long-Term, the OPEC nations face a disaster of biblical proportions as their oil-dependent economies are running headlong into the end of the oil era.  According to a new book. Burn Out: The Endgame for Fossil Fuels takes the view that oil prices will not just be “lower for longer”, as BP chief Bob Dudley predicted, but lower forever.  The evidence for author Dieter Helm’s case rests on plentiful supply unlocked largely by the US shale revolution, “unstoppable” global action on climate change, and technological advances.  

My view is that oil prices will probably carry on falling forever, and $50 is a high price for oil, not low,the University of Oxford professor told an audience in London.    

Helm described his book as “very bleak” about the fate of the Middle East’s oil producers, who he warns face challenges “at best uncomfortable and at worst close to existential”.  Of Opec, he writes: “The popular narrative … assumes that these countries still have the power to move the price, and hence assumes that, eventually, Opec will restore order and return to the good days of ever-higher prices. This narrative is profoundly wrong.”

This does not bode well for long-term tensions in the Middle East as many of the oil-producing nations face very rough economic times ahead and even Saudi Arabia, who have been the richest from oil production – may not have time to execute their planned pivot to a broader-based economy before sustained low prices unbalance their budget.  In a desperation move, the Saudis are IPO'ing their state-run Aramco Oil Company but, with oil hovering around $45 a barrel in the US – who's going to want to buy a $2Tn oil IPO?

Speaking of economies, the EU has been growing at a much slower pace this past Quarter so maybe Draghi was not crazy last week when he said he felt it was too early to withdraw stimulus.  The Regional PMI dropped to 55.8 for July from 56.3 in June indicating GDP is growing at a 2.4% annual pace – not very exciting and those same low oil prices are keeping inflation under the target 2% rate the Central Banksters like to see.  

Image result for japan deflation 2017Over in Japan, the BOJ is still worried about deflation and their new projection have cut CPI estimates this year, next year and for 2019 as well.  8 of the Governors see risks “tilted to downside” for their price forecast for fiscal 2019 — the year when the BOJ currently hopes to reach its inflation goal.  Put another way, the chances of prices dropping below forecast are way higher than beating it.

The chart on the left shows you what's happening with Japanese Household Spending and it's NOT pretty.  Frankly, US and European spending isn't that different but the numbers tend to get propped up by the spending of the Top 1%, making us look healthier than we are.  

In fact, one trend I'm noticing now that didn't even happen in the recession is nursing homes in Florida are emptying out as people can no longer afford them and parents are moving back near their kids (who can help them out) or even into the homes of their children – which is a dream for some and a nightmare for others!  Either way, it doesn't bode well for the nursing home industry nor for the overall economy as we are shrinking the number of households yet again.  

Related imageIt's coming at us from both ends as new households are not forming with a 5% increase in 18-34 year-olds living with their parents as well.  That's why home sales are still generally on the low end of the scale and also why consumer goods are not doing so well – without household formation, a lot of things fall apart.

Once upon a time we would have expected immigants to fill that gap and come to this country and form households but the Trump Administration has put a stop to that as well, so it's all on our shoulders to fix the economy and get things in gear – I'm sure they have a great plan to do that…

Well, maybe I'm not sure but the markets sure are sure as we maintain that record-high pace into the end of July.  People are willing to buy Amazon (AMZN) stock at 200 times earnings and Netflix (NFLX) for 250 times earnings so why shouldn't the market keep going up?  We've been defensively bullish recently but we just added money to our hedges last week – just in case we get an August collapse (as predicted by Hussman and others). 

We're getting into the heart of earnings season so we'll see what's what as about 20% of the S&P 500 report this week (see last week's analysis of the S&Ps Top 10 for more details):

It's a low data week but that doesn't matter as we have a Fed Meeting on Wednesday and another look at GDP on Friday, so the week is all about those two data-points.  Germany's Business Climate will be out tomorrow, followed by our own Consumer and Investor Confidence Reports.  UK GDP is on Wednesday morning and we have Durable Goods on Thursday ahead of our own GDP report Friday morning.  

Be careful out there, 

- Phil

 

 


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  1. Phil CNBC news feed says Saudi's are cutting exports in August by "almost " 1m barrels to 6.6 million barrels per day. You said 600k is the number. Are we talking about the same thing when using term exports vs production? Just trying to sort out this news. Thanks as always 


  2. Had to add new lines and maybe more needed!


  3. Was that just me of that Friday press conference by Scaramucci was just bizzare. It sounded like a bad parody of a Kim-Jong-Un press conference – Trump can throw a tight spiral through a tire (with these hands?), he swiches free throws at will, sinks 3 ft putts… And the Mooch loves the president! Apparently Trump loved the press conference – I wonder why. Must have taken some time off from working on cold fusion to watch it. Scary!


  4. Good Morning.


  5. Oil  -  Can I assume that its the September contract we are talking about. tnx


  6. Maybe a good article for Jabo:

    http://theirrelevantinvestor.com/2017/07/14/ten-rules-for-catching-a-bottom/

    Catching bottoms are extraordinarily tough to do, but nobody can convince you not to do it. The only way you’ll learn that it’s an expensive waste of time is by trying it out for yourself. So hopefully some of these rules will help you the next time you try to catch a falling knife.


    • Rule #7: Keep your trades small. Prepare as if everyone who sold before you is right and you are wrong. Risk no more than 1% of capital.
    • Rule #8: Don’t tell anybody. Battling your own emotions is hard enough, and when you tell others what you’re doing, pride and ego cloud your judgment and you’re less likely to admit defeat and move on.
    • Rule #9: Lengthen your time horizon. It’s rare that something gets cut in half and rebounds in two weeks. Bottoms tend to take a while, so make sure that you understand what you’re getting yourself into. When hunting for value, frustration abounds.
    • Rule #10: If you’re committed to the name (good luck) step in slowly. It’s unlikely that you’re going to buy the bottom, so make a plan, and spread it out. For example, buy 1/8  of the total amount that you want to purchase every two weeks for the next four months.

  7. Interesting downgrade with a +57% target. 

    ~~Chicago Bridge & Iron Co. N.V. (NYSE: CBI) was downgraded to Neutral from Outperform with a $28 price target at Credit Suisse.


  8. CBI / Albo – I guess they expect the market to go up a lot more than 57% then!


  9. STJ – They must have some big winners in mind.


  10. stjeanluc 

     

    what are rules 1 to 6 

     

    thanks


  11. CMG – whew…testing.  Earnings are after close tomorrow.  


  12. maybe a good article for someone else…


  13. FU TSLA!!!!


  14. Good morning!

    Donald Trump asks lawyers about powers to pardon himself and his …

    Wow, we're already up to that part?  

    Saudis/Craigs – The number I saw was 600,000 but also I noticed it was EXPORTS, not total production, they always cut exports in the summer as electrical use goes up at home (oil-powered plants) as 125 in the shade gets a bit uncomfortable, even when you are wearing a picnic blanket on your head!  

    Big Chart – Just when we think we'll need a bigger chart, they pull it back down…

    Image result for just when i thought i was out gif

    Scaramucci – Yet another prediction by Freddie Mercury comes to pass.  I was actually impressed by the guy, he's laser-focused on message and never misses a chance to pump Trump up.  You're right, it was like a "dear leader" press conference but it's perfect for the yahoos who voted for him – as they already think he can walk on water.   

    Oil/CDn – I was looking at whatever TOS's front month is now but Aug expired already so it must be Sept. 

    June home sales down 1.8%.

    CMG $340 but no new bad news – just Cramer and Co scaremongering:

    Chipotle Is Doomed Unless It Takes This One Dramatic Measure

    In the STP, we have 5 short Dec $370 puts at $29.50 ($14,750), now $47 ($23,500) and we can roll those along to 7 of the 2019 $300 puts at $33 ($23,100) for $400 out of pocket and we're about net $20 on the 7 short $300 puts for $280 entries, worst case.  The new short puts go into the LTP and we'll take the loss in the STP (a way of transferring cash between the portfolios).  The 10 Aug $370 calls at $14.25 ($14,250), now $5.50 ($5,500) and again we'll take the loss in the STP and, in the LTP, we'll open 10 2019 $320 ($68.50)/$420 ($28.50) bull call spreads for $40 ($40,000).

    So, in the STP, we take an $18,000 loss and, in the LTP, we make a new net $25,750 spread that pays back $100,000 (almost 300% profit) if CMG can get back to $420.  Good for a new trade, of course.  

    TSLA/Jabob – That's why we took the money and ran.  Now we want it to go up so we can short it again.

    Submitted on 2017/07/18 at 4:07 pm

    • TSLA – We were worried enough to sell short puts to cover our losses so let's not look a gift horse in the mouth and buy back the short calls and the short puts and be done with them until earnings(unless they get all feisty again).  

  15. go imax!!!!


  16. Rules / QCMike – Go to the link. I didn't want to post the entire article.


  17. Short Cl at 46.48


  18. Oil tapping 46.50……..


  19. First six rules:

    The intro is:

    'Nobody can actually buy low and sell high. Not consistently anyway. Successful traders typically buy high and sell higher, and successful investors buy low and sell rarely. But if you are tempted to catch bottoms, to be the investor who can recognize treasure where others find trash, there are some broad rules that I suggest you follow'.

    Oh, and it uses Macy's as an example of a train wreck of a stock to reference in avoiding catching a falling knife 

    Rule #1 of catching a bottom is don’t try to catch a bottom

    Rule #2: Don’t rush into buy after a massive down day

    Rule #3: Wait for a higher low. 

    Rule #4: Wait for a longer-term moving average to stabilize

    Rule #5: Wait for an ETF to be created.

    Rule #6: Use a stop loss.


  20. stjeanluc / Winston 

     

    Rules thanks


  21. Thanks Winston and stj!


  22. IMAX/Jabob – About time on them.

    Oil/CDC – Good call, that's right where we want to short them ($46.50 line). 

     

    • Halliburton (HAL -3.2%) has turned sharply lower after its earnings conference call, as Chairman Dave Lesar said rig count growth is showing signs of plateauing and North American customers are "tapping the brakes."
    • HAL says its pressure pumping equipment is sold out in Q3 and it has been successful passing along supply cost increases to its customers, but Q2 saw the first decline in years in average sand pumped per well.
    • HAL also expects margins in its completion and production division to increase by 225-325 basis points in Q3.
    • However, the company does not expect a near-term rebound in the international markets for several reasons, including the lengthy contracting cycles that will mute any near-term pricing inflection, and a lack of confidence in commodity prices in order to overcome the duration risk in their projects.
    • The IMF lowers its forecast for U.S. economic growth this year but keeps its global growth outlook unchanged for this year at 3.5% and next year at 3.6%.
    • In its latest World Economic Outlook, the IMF cuts its U.S. GDP forecast for 2017 to 2.1% from its previous outlook of 2.3%, and for 2018 to 2.1% from 2.5%, “primarily reflecting the assumption that fiscal policy will be less expansionary going forward than previously anticipated.”
    • Slowdowns in the U.S. and U.K. are expected to be offset by an improved outlook for growth in most of the euro zone and Japan; China is still seen growing by 6.7% in 2017 and 6.4% in 2018.

    /NG going lower. 


  23. coffee weakening?


  24. It often has bad Mondays and $135 was likely to be rejected anyway. 

    If we call $120 the base then $132 is the 10% line, that's what matters now.  A consolidation around there is nice and healthy for a move up to $144 (20% line).


  25. TSLA – Might just be bouncing off the 50 day MA resistance today before it heads south. Not sure if anyone else registered for a Model 3 but I did, as much for curiousity, or if it turns out to be amazing I'll take the $14K in Canadian rebates and enjoy access to the highway HOV lanes.  Having said that, although being on the reservation list there has not been one communication from Telsa since the supposed launch.  No features, pricing etc.  I have actually got more communication from Jaguar on their iPace launching in 2H2018 after expressing an interest in it than from Tesla.  The iPace looks amazing and will be nasty competition for the Model X.  


  26. StJL/Winston – gotta know this.


  27. out of CL at 46.28-- made up for my stopped out loss in GC overnight.   Looking to jump into NGV7…but can't hold on like Phil..will wait to see 2.8 something


  28. Phil/Gin – Some Nattering on CMG, SINO, valuation poster children, boiler rooms and what Phil said. Like the rug, that "pot" really tied the room together. Thanks for the wet clay and Out.


  29. I'm going to kick start my diet by going to CMG.  Hopefully won't be in the hospital that long.


  30. Heard they let you pet the rats, but not allowed to feed them.


  31. TSLA/Stu – That's interesting, at this point, you would think they'd begin marketing to the people who put up deposits.

    /NG/Latch – If you can't hold on, I wouldn't play.  It's a crazy commodity, biggest losses and biggest gains on that one in the past two years.  

    CMG/Naybob – Still $10Bn at $340 and would be making $500M for a p/e of 20, which I can live with while they either expand or finally figure out another idea that works (and I have one for them in development).  A little live bacteria is the price we pay for fresh food – that's why MCD doesn't serve any! 


  32. Rustle – "I'm going to kick start my diet by going to CMG.  Hopefully won't be in the hospital that long. Heard they let you pet the rats, but not allowed to feed them."

    Phil – "A little live bacteria is the price we pay for fresh food – that's why MCD doesn't serve any! "

    Thanks, LMAO.  Your right, MCD cooks the shit out of everything and many restaurants won't even serve a burger the way I like it, still MOOING!!! The scary thing with all these outbreaks… probably not sanitary procedures, probably reduced immunity, too many antibiotics handed out like Chocks, too much hand gel, too many well scrubbed pussies that need to swim in the Hudson, in raw sewage like we did, and Out.


  33. Long-Term Portfolio Update (LTP) Part II:  Part I was here, in case you missed it so we'll get right to the 2nd half.  

    • AAPL – Now that we've adjusted more bullish (1/2 cover) it should stay on track moving forward.  The short Aug $130s are protection at $152 and they can, at $23, be rolled up to, FOR EXAMPLE, 27 of the Jan $140 calls at $16.50 for about the same price.  If we can roll up $10 every 4 months for  little cost, this trade will work out fine.  

    By the way, when you have a trade like this that's miles in the money and not a source of concern, you don't need to hedge it as much as other trades.  Don't waste money hedging things you are not at all worried about – that's silly. 

    • AAXN – We got more bullish last month and still consolidating into the wedge.  

    • ABX – Not performing as well as gold.  Good for a new trade.
    • AMGN – Was "good for a new trade" last month but now up $25 since.
    • BBBY – New bull call spread disappointing so far so it's: "Good for a new trade!"  
    • BX – On track.
    • CBI – We got more aggressive and they took off but then they pulled back but I still like them.  Keep in mind, with trades like these, we show $7,350 in  losses on the short $25 puts (15) with the stock at $17 but $25-17 is $8 and we sold them for $5.20 so $3 x 1,500 only a $4,500 loss if we hold $17 and, of course, we'll roll them along anyhow.  

    • CHK – Got more aggressive, no luck so far.  
    • CLF – Got more aggressive and this one worked.  
    • CM – Since we sold more puts than calls it's uneven and isn't with the other dividend payers but it's on track.
    • CSCO – Still has that new trade smell.  Good for a new one.  
    • DBA – Got more aggressive and caught a huge move up.
    • DIS – These guys are all over the place.   Earnings on the 8th.  

    • EWZ – Was good for a new trade, now in the money already!  
    • F – Waiting for a better move up to sell calls around $12.50.
    • FCX – On track
    • FNSR – New and good for a new trade.  
    • GILD – Came back strong!  That's good, I got tired of banging the table on them.   Kind of irresponsible if we don't lock in the gains by selling the 2019 $75 calls for $8 but let's just cover 15/20 ($12,000) – give it some room to run.  It leaves us with a net $3K trade that can drop $30,000 in our pockets if GILD holds $75.   This trade went from -$3,000 last month to +$13,500 – a $16,500 swing – that's how the LTP cranks up the gains once our value stocks make a comeback!  

    • GM – On track.

    • HBI – On track.  
    • IMAX – Hopefully recovering.  Good for a new trade with half as many short puts.  
    • LB – We're aggressively long now.  

    • M – Just added the bull call spread and still good for a new trade.   
    • QCOM – On track.
    • SVU – Waiting for the reverse split now.  

    • TEVA – Got more aggressive and it seems to be getting better. 
    • TGT – New trade already on track.  
    • THC – On track.  
    • TWTR – On track. 
    • UNG – Frustrating but we'll hold it.  
    • WPM – Our Stock of the Year is on track for for it's $54,000 gain (up $21,000 so far is "on track").   We like to sell short-term calls for bonus money but now down here. 

    • XOM – I don't really have faith in these – let's kill them. 

    Only one change – you've gotta love the LTP! 

      


  34. The IMF just downgraded the Trump economy




  35. FNSR looking strong today.

    Approaching the 200dMA.





  36. FNSR / Albo – And still relatively cheap… I am betting they get to $35 again which the structure of my play.


  37. what is wrong with ABX and the miners today?

    gold is flat


  38. Tillerson mulling resignation per CNN


  39. Hi Phil and All -

    What do you think about ADI for a potential trade idea? 

    Here's a recent article from Motley Fool describing its areas of business: https://www.fool.com/investing/2017/07/24/heres-how-analog-devices-inc-makes-its-money.aspx?yptr=yahoo. 

    ADI recently acquired another company, Linear Technology, and it pays a dividend of around 2.3%.

    Thanks! Ilene 


  40. Jabo / ABX – see earlier news article on Acacia mining and its woes in Tanzania. ABX is a majority owner of Acacia mining. 


  41. thanks winston!


  42. Phil – gold miners have not been tracking gold price, and my guess(hope) is they are due for a good rise up. Depends on the FED – hike and QT. if neither happen it should be good for miners.  I have an legacy trade in AEM.  Bought 30 calls Jan 18 55 at $7.4.  Heavily underwater. Can you suggest something or should I switch to a new ABX trade when you say?


  43. Ilene,

    ~Analog Devices (ADI)
    At last month's Analyst Day, ADI laid out its future growth plans :
    • Annual revenue growth in mid-single digits.
    • EPS Growth of 8-12% per year
    • Free cash flow (FCF) growth of 8-12% per year
    • Revenues will grow faster than op-ex
    • Return 80-100% of annual FCF less debt service to shareholders
    This sets a two-year EPS target of about $5.10. FCF less debt service should be $5.92 in FY 2018 and about $6.75 in FY 2019.

    FWIW – I'm short the Jan 75 puts.
     


  44. Phil after watching oil stay in a very tight rage all day, do you still think you will be shorting at 46,50 again or do you think "they" are now going along with the idea that rebalancing is happening and will drive the price higher?


  45. Phil

    Killing the XOM trade?

    With so much time left?

    That's the same trade we did in Gegas, right? It seemed to be profitable last week when XOM was at 81.50


  46. Thanks Albo, that seems pretty conservative. Looks like you can sell the $75 puts at around $4 and then get into ADI (if it drops) at $71. About a 9% discount. 


  47. Miners/Jabob – Acacia mining is being shaken down for money in Tanzania – people are nervous this might be a trend. 

    And what Winston said!  

    Miners Had Mixed Performances Last Week

    Tillerson/Savi – Too bad, he's one of the only adults in the room.  I wonder what GS stooge will replace him?

    ADI/Ilene – Well I'd want to know more about where they fit in IoT Tech.  It does look like sales are growing and profits were $861M last year but last Q was under $100M and they'll miss for the whole year without a miracle and already priced at $28Bn means I agree with the people who bailed after their recent report.  They are still up 33% for the year so I'd say it's late to the party on this one – not a bad company, just not cheap at $80.

    Miners/Latch – See above, strange goings on with other governments besides our own.  My favorite minders are ABX, HMY and NAK for speculation.  

    Oil/Craigs – Fundamentally yes, I think they are going lower.  It may take 3 or 4 inventory reports for it to prove out though but I like the short play here.  

    XOM/Maya – Well I think oil is going to collapse so why stay in XOM?  


  48. Good comment from SA:

    Yep, a room in a decent retirement home (ALF) run by a corporation here in Jacksonville, FL (not an expensive city, by any means) is $4,300 per month with an additional $300 per month for any assistance with taking medications. I know a lady who is living in one and she had the foresight to produce 8 (sic) sons in her breeding days who are paying for her accommodations, but even they are having a hard time meeting the cost and are planning to move her to cheaper digs, especially as they are now reaching retirement age and she is still trucking along in her 90s.

     

    If you are broke and elderly and need full time care in a residential setting, you can get this by qualifying for Medicaid, but you must sell all your assets including a home and have no more than $2500 left over to qualify, so a lot of families would rather keep the oldster at home and inherit the home when they die, than send them off to a Medicaid place.

     

    There has been recent controversy in England when Theresa May had the temerity to suggest that people who needed long term social care should have to sell their homes, or have all but 100,000 pounds of their estate impounded on death to pay for care, (depending on the amount owed). This was one of the reasons why her party almost lost the recent election. Outraged heirs expecting to cash in on inflated real estate values when their last surviving parent dies.

     

    Here in the US such matters don't seem to be political issues, because there is no universal health care, but as Phil points out, could certainly affect the demand for places in high priced retirement communities (such as the US Senate).

     

    As for new households, in the 2 years I have been residing in Jacksonville I have seen many funeral processions, but cannot remember seeing a single wedding although I am driving around the city and suburbs on most weekends. Demographics!


  49. Hi Phil, I'll see if I can find out that information. Don't know off-hand. 


  50. Well, interestingly, ADI is active in the Internet of Tomatoes:  http://www.analog.com/en/landing-pages/001/iot-internet-of-tomatoes.html 

    There's a short video at the left of the page. 

    I'll have to look more into the money side of things. I know they did an acquisition so I would imagine their revenues should go up due to that, but I don't know anything about how all the factors play out. I believe they are somewhat dependent on Apple products. Maybe Albo knows more(?) I suppose if the company is just too expensive, waiting for a proper selloff would make sense. Kind of forgotten what that looks like. smiley Thanks! 


  51. WYNN – starting to move on the 145 calls.   Higher lows followed by higher highs each round trip.


  52. LOL Ilene.

    Well, that was a typical Monday – same old, same old.

    If Europe pops tonight, then we can go long /YM over 21,500 as it's lagging but, if not, Nas makes a good short into earnings – especially if we close on 6,000.  /TF 1,440 would be my 2nd choice. 


  53. Follwing up my dicusions of yesterday with Winston, I liquidated today some 100 option positions mainly short puts


  54. Is there a futures symbol for DAX?


  55. Good idea Yodi.  Things are getting more and more uncertain.

    DAX/Latch – Not one I know of (in the US).  In Europe, it's Jabob's favorite:  FDAX


  56. Anyone ready to reload on CL short at $46.5 when it reopens?


  57. FDAX = FUDAX?  lOL 


  58. I am going short on CL with 2 contracts, if it touches 46.50.   I am also carrying a few long on NGV7, which dropped today and is causing me a bit of heartburn.  avg 2.97


  59. Yodi – liquidating short puts – same from my side, although not so many. Putting in low bids at the moment to catch market at its most manic. 


  60. Maya / Liquidating Vegas XOM. Initially I had the same reflection – why close out a relatively recent pick with so much time left? But it takes a strong discipline to know when to walk away from a position. That kind of strong discipline would have saved me a fortune over the years! There is no dishonour in changing one's mind. "When the fact change, I change my mind. What do you do, sir?" – John Maynard Keynes

    "When the facts change, I change my mind. What do you do, sir?""When the facts change, I change my mind. What do you do, sir?""When the facts change, I change my mind. What do you do, sir?""When the facts change, I change my mind. What do you do, sir?"


  61. Took one TF short at 1439.5.  Looking to DD on CL at 47 from 46.55


  62. Or is 47.20 the bounce line?


  63. Good morning   Decided not to DD CL or short TF  wait for them to bounce first  


  64. What a bunch of sleepy heads ????


  65. Latch I'm quietly watching . Phil's call on YM is keeping me from being too upset about my CL  losses at 4:45 this morning when I saw my oil shorting gains disappear in a .40 move up. I had sold at 46.63 and knew I should have taken my little bit of profit and waited until I was more awake, but I dozed off and woke up to find myself down . Oh well, lets go Dow futures.


  66. Looks like Europe is popping and our futures are up.


  67. Good morning!

    Oil flew up to $47 and the markets rallied with it.  At least the index longs are working.

    If Europe pops tonight, then we can go long /YM over 21,500 as it's lagging but, if not, Nas makes a good short into earnings – especially if we close on 6,000.  /TF 1,440 would be my 2nd choice. 

    /ES testing 2,475 will be interesting and 2,500 will certainly get us a pullback if nothing else does.

    Nas 6,000 would come about the same time.

    /NG/Joseph – If I'm long one thing and it's not doing well, I don't like to then go long something similar.  I'd rather average into a lower basis on my first choice and then get back to a reasonable amount as soon as I get near even.

    Keynes/Winston – Yep, that one used to be on a post-it on my monitor, right in front of me all the time.  Also, don't forget rule #1 about put-selling –  you have to really, Really, REALLY want to own the stock LONG-TERM at the net strike.  We have the XOM $80 puts we sold for $8.50 so a 10% drop to $72 assigns us but do I REALLY want to own XOM for years after the last two 2 terrible years have dropped them to $72?  No, I don't…

    Autos/Latch – Wow, it's amazing how they seem to have coordinated their cheating.  Even more amazing if the Government doesn't throw the book at them.  And the funny thing is they weren't smart enough to confess after VW was caught – as if the rest of them would get away with it once people were paying attention.

    $47.20/Latch – Those 5% lines don't change, we should get at least a pullback of the run from $46 so $1.20 and call it an 0.25 weak retrace back to $46.95 is what we can play for with very tight stops over $47.20.

    /RB not really moving so the oil rally is based on hopes, not demand or supply.

    Sleepy/Latch – I was up at 2 and it took me 3 hours to go back to sleep.  Finished reading Disrupted though, very good.  

    Dozing/Craigs – There's no napping in futures!  


  68. As I have learned many times Phil. 


  69. Phil,

    Did you get out of your /DX long?