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Faltering Thursday – Terror at Dow 22,000

Image result for dow 22,000 crashWhere's our Apple?

Last week I told you it would take an AAPL (earnings) a day to keep the Dow over 22,000 and this week we've been faltering at that line and, while it's not yet time to panic, the Apple tree is looking a little picked over at this point.  With the Dow at 22,000, a 2.5% correction would send us down 550 point and we haven't had a WEEK like that since May (16th, just after earnings – lining up with next Wednesday) , when the Dow fall from 21,000 to 20,600 as earnings wound down

Traders are herd animals and easily spooked and the Dow hasn't given up a full 500 since last July and the two times before that we had big corrections were 2,500-point drops – in Aug of 2015 and again in July, both times falling from around 18,000 to 15,500.  But hey, this time is different, right?  Now we're at 22,000 and we haven't had a proper consolidation since November – it's the new normal, right?  Right???

Back on May 16th, the title of our morning report was "Toppy Tuesday – S&P 2,400 – Again" and I was skeptical, as I had been all month, that the market would hit such a milestone without at least a minor (2.5%) pullback – as dictated by our fabulous 5% Rule™.  We were shorting the indexes at the time because I felt that AAPL was boosting the markets too much and the rest were actually weakening, saying:

It seems like every Tuesday I have to point out that Mondays are meaningless and, so far, we've made good money shorting the S&P Futures (/ES) at 2,400 as well as Dow (/YM) 21,000 and Russell (/TF) 1,400 but the Nasdaq (/NQ), now 5,708 keeps going up and up, which is no surprise with Apple (AAPL) at $156 – up 10% since April 25th and AAPL is 15% of the Nasdaq by itself.

That adds 1.5% to the Nasdaq and the rest of the Nasdaq's 3% move came from the Dollar falling from 100 on the 25th to 98.35 this morning (-1.65%) and that's the story of how we got here.  The fact that the S&P STILL can't get over 2,400 DESPITE the weaker Dollar and the stronger Apple does not give me the warm fuzzies about the strength of this weekly rally so, once again – we are going to be shorting the indexes at the levels we keep shorting them at and once again, later in the week, I will tell you how much money we made and you will say: "why can't I ever catch trades like that."  It's a vicious cycle…

Remember, I can only tell you what the market is going to do and how to make money trading it – that is the extent of my powers.

The crash was blamed on "Turmoil at the White House"  over revalations that Trump had attempted to push Comey to back off the Flynn investigation - which, in retrospect, seems like just a tiny little incident that doesn't hold a candle to all the BS that's going on now (we were so innocent back then).  But hey – RECORD HIGHS – so why worry about it?  Let's just go with the flow.  After all, what can go wrong?

You can see the spike down in May that followed our call to short everything and boy, was that profitable:

  • Dow 20,600 paid $2,000 per contract 
  • S&P 2,355 paid $2,250 per contract
  • Russell 1,350 paid $5,000 per contract 

In addition, we had long suggestions in that very same post and, though we posted a new hedge on Tuesday, there are still plenty of bargain stocks to be had in an overbought market.  Just this morning, in our Live Member Chat Room, we were discussing strategy on Chicago Bridge and Iron (CBI), who are on sale after an earnings miss, as well as GNC Holdings (GNC), which is a must-read for our Members as we go deeply into our entire Long-Term Portfolio (LTP) strategy as well as position management techniques.  

Speaking of great calls, there's still time to get on boad with our Trade of the Year, on Wheaton Precious Metals (WPM), who were called SLW when we took the trade back in December (see: "Secret Santa's Inflation Hedges for 2017").  Panic over the prospect of an unbalanced, egomaniacal leader with nuclear weapons has sent silver and gold flying higher – and it's also possible that Kim Jong Un may have some nukes as well!  

We're not in a full-blown panic yet but that's a 5% move in Silver (/SI) over the past 2 days – pretty unusual with a flat Dollar (93.40).  Gold has jumped from $1,260 to $1,286 (2%), so a bit behind silver but still a healthy move for the metal.  

Our trade idea on WPM was:

  • Sell 10 WPM 2019 $15 puts for $2.80 ($2,800)
  • Buy 15 WPM Jan (2018) $15 calls for $4.75 ($7,125)
  • Sell 15 WPM Jan (2018) $20 calls for $2.65 ($3,975) 

The net cash outlay for that spread was $350 and WPM is now just under our $20 goal and the spread is now priced at $3.45 ($5,175) while the short puts are just 0.20 ($300) so a net of $4,875 is a profit of $4,525 (1,290%) in just 8 months – far above our 100% guaranteed return (you're welcome!).  Meanwhile, the spread is merely "on track" to the full $7,500 return so, even at $4,525 – it stands to make $2,975 more (65%) into January, which, for ordinary trading sites, would be the kind of trade they brag about for years to come.   At PSW, we call them LEFTOVERS!  

Still, if you are a free reader, you take what you can get and 65% in 5 months is certainly not bad.  It would certainly cover the $3/day you would be spending to have a full PSW Report Subscription, where you would make 3x MORE THAN THAT ON THE SAME TRADE!  

In that same post, we also had an upside bet on gold (/YG) using Barrick Gold (ABX), which was $14.55 at the time.  Our trade idea for Barrick was:

We can promise to buy ABX for just $13, by selling 10 2019 $13 puts for $2.63 ($2,630) and our upside bet can be 20 2018 $12 ($4.10)/17 ($1.95) bull call spreads net $2.15 ($4,300) for a cost of $1,670 on the $10,000 spread.  

So you are putting up $1,670 in cash and the margin requirement on the sale will be roughly $1,350 in an ordinary margin account.  What have we accomplished?  Well, if ABX goes up, your $1,670 becomes $10,000, gaining $8,330 (498% gain on cash) as a very nice general inflation hedge.  So nice, in fact, this trade is in the running for our 2017 Trade of the Year! 

As with WPM, ABX is already at our Jan target and the bull call spread is already $3.60 ($7,200) while the short 2019 $13 puts have dropped to 0.82 ($820) for a net of $6,380 and a profit (so far) of $4,710, which is "only" 282%, as it required more cash up front than WPM did.  Still, the ABX spread has the potential to return $10,000 at $17+ so still good for a double – if you don't mind picking up our table scraps…

The other two trades from that post were SUN, which has flown higher and is no longer good for a new entry (not enough left to make) and DBA, which is still drifting around it's mid-point and still playable for a few more deflated Dollars.  Speaking of inflation, the Fed wants to see MORE of it, per Bloomberg:

A pair of Federal Reserve officials sounded a touch more fretful at the inability of strong labor markets to deliver price gains of the magnitude the central bank wants. St. Louis Fed President James Bullard warned that failure to get inflation to the central bank's 2 percent goal undermines the target’s credibility, echoing some colleagues. “The misses add up over time,’’ he said. Separately, Chicago Fed chief Charles Evans stated it would be reasonable to announce the start of balance-sheet reduction next month, but cautioned disappointing inflation data may delay rate hikes.

Meanwhile, I'd also heed the following from the same Bloomberg feed:

Two of the biggest money managers are telling investors it’s time to dial back on risk.  Pacific Investment Management Co. says U.S. stocks and high-yield debt should be pared in favor of lower-risk assets, such as Treasuries and mortgage-backed securities, according to an allocation report by the company, which oversees more than $1.5 trillion.  It deems that “asset prices generally are fully valued.’’ T. Rowe Price Group Inc. had a similar view, cutting the stock portion of its asset-allocation portfolios to the lowest level since 2000. The Baltimore-based money manager said it also reduced its holdings of high-yield and emerging market bonds.

We can always make plenty of money in bullish or bearish markets or, as you can see from the above trades – sometimes both at once!  The most important thing, in these uncertain times, is to have plenty of CASH!!! and plenty of hedges protecting our long-term longs – that way you can enjoy your summer (I'm on a cruise ship right now) without worrying about what the market is doing!  

 


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  1. DJ Frontier Unlikely to Cut Its Dividend Like Windstream Did — Barron's Blog

    Aug 09, 2017 16:48:00 (ET)


  2. We continue to believe that Frontier can change the trajectory of its sub losses in the next 6-12 months, which should give investors comfort in the value of its network, which we believe trades at an industry low $1,200/home passed vs. the larger telecom/group industry closer to $2,400 and with a range of $1,200-$3,500/home passed. Even if the network multiple does not improve on its own, the repayment of $1.3 billion of debt in 2018-19 would represent a doubling of the equity value on a static Enterprise Value. 


  3. Not to continue to beat a positive drum on TEVA, but there are some positives here.

    ~~*ISRAEL ECONOMY MINISTER ELI COHEN SPEAKS IN PHONE INTERVIEW *TEVA HAS `STRONG' CASH FLOW, DOESN'T NEED GOV'T BAILOUT: COHEN *COHEN SAYS WILL CONTINUE TO HELP TEVA WITH TAX BREAKS, GRANTS


  4. thanks seer… maybe they will end their losing streak today? 


  5. Thanks Seer, to beat on your drum….  TEVA 



  6. M—what our your thoughts about their earnings?


  7. CMG closed a Dallas restaurant because of rat sightings. They are quickly becoming a health code joke and it's going to start sticking.  It's too public.


  8. QUIK – Reported another rather dismal quarter yesterday.  The Tier 1 wearable (We think it's Samsung), has not been released yet.  That is their most visible product, although there are other design engagements proceeding according to plan.

    Disappointed by the delays, but keeping my heavily over weighted position in this small, speculative company because I continue to believe that the potential here is very big.

    Keeping the faith. 


  9. Good morning!  

    Europe having another bad day, down about 0.8% for lunch so I would expect we have some catching up to do.  

    To me, this is a really obvious short.  What reason does the US have for massively outperforming Europe?  How about Asia?

    It's not because we're smarter than the rest of the World – we're the country that elected Trump – that pretty much disproves that notion right off the bat….

    Don't look for the FU stocks to go up while the broad market is falling but hopefully they fall a bit less than the rest.  

    Big Chart – There goes the 30% line on the Dow (22,025) and 47.5% on the Nas (5,915) and the RUT has totally lost it and heading for the 200 dma at 1,370, which is not far now (1,387).  The 200 dma for the Dow is barely visible on the Big Chart, way down at 20,450 (-600) and S&P's 200 is 2,335 (-135) and Nasdaq is 5,352 (-550), which is like 10% down – what a friggin' catastrophe this could easily become.

    ARE YOU HEDGED????

    DO YOU HAVE PLENTY OF CASH!!!???

    M/Jabob – Retail has been better than expected generally but M will incur heavy costs for store closings (10%) and layoffs so I wouldn't count on a good Q yet.  

    CMG/Rustle – Oh please, if restaurants in NYC closed for rats, there would be nowhere to eat!  There's just this ridiculous microscope on CMG and they are not helping things by over-reacting to any small incident. 


  10. Phil – Fed Inflation? They can't explain why "low" unemployment and their falsity in econometrics refuses to measure real stagflation, or why credit demand and GDP is low. 

    Fed Evans – Unfortunately, low inflation has been more stubborn….  the uncertainty created by evolving business models is also probably leading to reduced demand for credit despite low borrowing costs and high stock-market valuations, Evans said.

    Fed Bullard – "Recent inflation outcomes have been unexpectedly low, below the inflation target of 2 percent. Recent inflation data have surprised to the downside and call into question the idea that U.S. inflation is reliably returning toward target"

    Unfortunately? Uncertainty? Probably? Unexpectedly? Surprised? Why doesn't it work? How does it work?    Drinking their own punch, they have become so out of touch with reality. Expecting anyone of sound mind to consume their swill, is to be construed as drunken fools.  At least most addicts realize, and when they hit bottom, can admit to what they are.

    Call into question? Do we have worse than drug and alcohol addicts manning our Central Bank?  The judiciary, legislative and executive branch turds are already in the toilet, into which those determining monetary policy are vomiting, while attempting to drive the great white porcelain economic bus.  Par for the course and Out. 


  11. CBI – Phil – you mentioned rolling positions earlier today….  what did you have in mind?


  12. Phil/

    VXX..zooming up. maybe a crap roll or something

    IMAX – below 20…good entry I guess

    CBI – below 12…watching and watching….

    CMG – below $330 – got killed with this

    regards


  13. Phil/SVXY

    Maybe this is better as we had a trade in them last time before the split.

    Regards


  14. CBI – looking to buy shares at 11 and sell some calls – … still waiting 


  15. Phil / Pharm / SGYP,

    Down big again, is this a buying opportunity before their earnings ? Can't figure out why they are again down today.

    Thanks

    Pat


  16. Was reading you all yesterday about CBI and I never got in it. Dumpf is so full of hot air I can never force myself to do anything that might have his taint on it. However, because of your repartee yesterday I put a fat Put on CBI, 15 and scored this AM. Thanks for your input-keep it coming!


  17. Pharm/SGYP,

    What is your take after their earnings? They did show more sales but more loss as well.

    regards


  18. M sinking now…dangit!

    can't seem to catch a break with these FU stocks.


  19. Hey you will be happy to know that TSLA is still going UP today. I always gauge a true correction by looking at aapl and tsla. aapl is down, but recovering.


  20. CBI – Just sold the 2019 – 5 put for .65 – 56% return on margin if we hold above that level. 


  21. when will teva do a prgo???

    looks like we have the wrong generic.. for now ;-)


  22. 2,450 should be a little bouncy on /ES, lined up with 21,875, 5,832.50 and 1,380.

    CBI/Batman – Way too early to take action.  Down 30% at the moment, complete lack of faith on them.  Could get worse so better to wait.  

    VXX/Pat – Well yesterday I liked it up today, short below 15 is a better bet.  

    SVXY/Pat – I just find the whole thing too annoying to bother with.  When the VIX is at 10, then you can go bullish and close to 20 is bearish – that's all there is too it. 

    CBI/Pirate – And THAT is the right way to play!  When you hear others crying, it's a good time to get in.

    TEVA/Jabob – The fall is slowing down nicely.


  23. Phil / CBI – cancelled my open orders and waiting



  24. CBI – batman – may go single digits – I am waiting on the sidelines for now.


  25. UVXY – Zoom, zoom…. Gonna be shorting calls soon!


  26. Put an order into to buy 2019 $10 calls at $3.75.  Small position to start legging in………will look to make it into a spread on an up day. 


  27. That was on CBI. :)


  28. I'm day-trading QQQ AugWk2 calls – I don't think they can hold the market down.

    Will try to low tick 100 shares of TEVA. I like it down here. I've done well on VRX.

    been a lot of negativity lately. Phil. NICE JOB ON LL. All I've got to say for now


  29. StJ – Or simply buy SVXY for long-term-hold!


  30. Study: Trump actions trigger health premium hikes for 2018


  31. UVXY/StJean

    It is starting to look juicy.  Hoping for one a nice fall tomorrow to prowl this to mid to high 40's


  32. oh c'mon wall street, sell me 50 JNK Sep17 35 puts for a nickel, I dare you!


  33. Phil / RRD – What do you think of RRD around these levels?  TIA


  34. CBI/Batman – If we had a reason to think today's reaction was a huge mistake – then it would make sense to jump on changes.  That's not really clear so far.  

    And, speaking of CBI, it's complicated in the LTP as we already do have a few other positions (TEVA, FTR, IMAX) that we like and we're legging into.  While each individual position is manageable, we don't want to have 4 or 5 huge positions we're chasing down – especially in a toppy market.

    For the S&P, the fall is from 2,480 (we ignore the spike) to 2,455 so 25 points is 5-point bounce to 2,460 (weak) and 2,465 (strong).  Until that happens, still bearish:

    /NG liked their report:

    Oil making good money on the pullback (as usual):

    • Chicago Bridge & Iron (CBI -31.7%) plunges to eight-year lows at the open following yesterday's news of disastrous Q2 results and a dividend suspension.
    • CBI also cut its FY 2017 guidance for EPS to $1.00-$1.25 from its earlier outlook for $3.50-$4.00 and for revenue to $3.7B-$4B from $9.5B-$10.5B.
    • Baird analysts maintain their Neutral rating on the stock and cut their price target to $10 from $24, seeing CBI's cash burn likely continuing with ample risk stemming from further project degradation.
    • Citigroup also keeps its Neutral rating on CBI while trimming its price target to $18 from $20, as the firm does not see a major liquidity risk because the company's technology business is a "significantly valuable asset that should have lots of interested buyers," but it worries that Q2's $548M in charges are "more the start and not the end" of CBIs challenges.
    • But Deutsche Bank maintains its Buy rating although with a reduced target price of $21 from $25, seeing a "clear path" to trading near $20 again if management executes and avoid further cost overruns.
    • Analysts are weighing in on Chicago Bridge (CBI -32.1%) after it lost almost a third of its value since yesterday's Q2 results.
    • Baird: Kept CBI at Neutral, and reduced its PT to $10 from $24, stating a cash burn puts the company's balance sheet back in focus.
    • Citibank: Also kept the stock at Neutral, and lowered its PT to $18 from $20, concerned that charges in Q2 are "more the start" of CB&I's challenges.
    • DA Davidson: Has a Buy rating on shares, saying weakness is "overdone," but slashed the company's PT to $25 from $40, on the "dismal" results.
    • Deutsche Bank: Maintained a Buy rating, but lowered its PT to $21 from $25, seeing shares rebounding should management avoid further cost overruns.

  35. FU M!!!!!!


  36. Science Says: Trump team garbles climate science


  37. I was kinda right about FGP


  38. SVXY / BDC – Always tempting… But I like to sell premium better!


  39. SVXY sells premium for you


  40. That little elf Sessions should stick to baking his cookies, fortunes to be made off the pot heads… about time congress (the opposite of progress) legalized weed for us all. They could use the tax revenues.


  41. looks like my QQQ's are going down in flames LOLZ.


  42. RRD/EMike – They are a very truncated version of what they were so hard to say what their real numbers are.  Last Q was good, the Q before that was bad, etc.  Assuming they avoid more losses, they are underpriced below $10 and, if you do want to take a chance on them, you can sell March $9 puts for $1.20 and then pick up the $9 ($1.10)/$11 (0.45) bull call spread for 0.65 and you still net in for $8.45, even if things don't go well and, if they do go well, you make $1.35 (200%). 

    M/Jabob – It's good to retest lows:

    Weak bounces all failed, Europe closed, watch out for fast leg down.

    /NG flew over $3!  


  43. Pirati – "Dumpf is so full of hot air I can never force myself to do anything that might have his taint on it. "

    Thank you for bringing this to light. There is something emanating from the reality TV star of the Apprentice. Not a smell, stink or funk, more like a slime. The lyrics to our New Presidential Anthem fit PERFECTLY. Joe, time for a stiff one and Out.


  44. $11 seems to be the line in the sand on CBI……….at least for today. 


  45. SGYP…Earnings ticked up.  That is good. Liabilities down big most likely due to the clinical trials being done.  Burning less cash now as well, but having to build up the sales force and paying off the clinical trials is where the loss comes in.  For now, I am going to just hold on, as I am out in time.  Biotechs are falling hard across the board, and they are usually the first shoe to drop as they now in 'risk off' mode.  


  46. Phil / RRD – Much appreciated, Ill go with a conservative block as it sounds like I might not want to DD later.  Thanks!


  47. Pharm hi, MDXG looking for capital gain just a fun play sell Dec 17 10 put for .50 cents for free money,

    any input?


  48. BDC – "oh c'mon wall street, sell me 50 JNK Sep17 35 puts for a nickel, I dare you!"

    10X if you get it and it hits, 35.20 could happen.


  49. Of course right after I say $11 is the line in the sand for CBI……….it drops like a rock below that.  d'oh!!


  50. new lows for M, TEVA, CBI, IMAX….

    who will be next—LB or GE?

    not a fun week.


  51. Jabob What do you expect on a down day like today, Look at PG even up, I sold some long jan18 calls!


  52. FTR up .14 cents! look at the positive sides


  53. Yodi--unfortunately, it hasn't been much different on the up days…

    plus, I don't think those names are sinking because of a weaker market anyways.


  54. good point yodi! ;-)

    teva up too ;-)


  55. Sorry did stay away from TEVA I just did not like them originally


  56. CVS up .75 cents even try to sell a Sept. 82.5 cherry call for .85 cnets


  57. Pharm – "Biotechs are falling hard across the board, and they are usually the first shoe to drop "

    Indeed, and if things head down, XBI will fall hard. Got sliced 50% last big down leg early 2016.  At $74 now.


  58. MDXG/yodi - a regenerative company using skin.  Don't know much about them.

    SGYP…IBD review is in Jan 2018. This will expand their label.  I am holding and will buy more stock in this area.  They will need to raise capital in the next few months.


  59. I know all small fries but " Kleinvieh macht auch Mist"


  60. Pharm thanks anyway just a small hamburger play


  61. Why is /NG up so much but CHK is down?  I'm about ready to say FU CHK.  I got out of UNG and switched to CHK because I thought it would be a better place to invest in natural gas, but so far that has not worked out for me.  I'm down quite a bit so far.  Hoping for a recovery later this year.  The company is in much better shape financially than a year ago, but their stock price is not reflecting that.


  62. CHL up 1.18 allways been a good play! One of my smaller armchair plays


  63. CCP even up today an other armchair play!!! 9.3% !!!


  64. ARR an other one with green light good for an armchair play


  65. Phil are you still OK or are you allready looking for a RV?

    Sea Princess cruise passengers spend 10 days in blackout for fear of pirates


  66. so much for teva being up… geez  what a POS


  67. Phil,  M hitting their 52 week low, VIX is up, — would now be a good time to make my first entry?   

    /NG – Latch, a day early.  =(


  68. nattering, never would I buy a nickel option hoping for 10X. I think a 30% drop in junk bonds is already baked in (my opinon), simply due to the market run being long in the tooth and the damage Turnip will do being drastically underestimated. The question is when. So 30%, that's (current price for JNK) 36.5 * 0.7 = 35 – 25.50 (for the 35 puts) = 9.5 * 5000 = $47.5k for $250 invested (190X). BUT – you gotta call the right month. So if it takes 24 months (trump crash will happen WAY before that, but let's just look at worst-case), then 24 * $250 = $6k.

    So still 8x over the long haul and maybe that's what you meant by 10X. I agree with that.


  69. I'm using this exact strategy to protect a ~$140k portfolio, so JNK * 70% = $47.5k from the puts, the portfolio falls to 98k (same 30% loss) and 98+47.5 = $145.5 so I break even plus a little. Somewhere in there.

    If the Orange Turnip proves me wrong I lose $6k off the top of the market gains on the $140k portfolio and that is worth the risk because I always end up being right. Right? LOL!


  70. Well, we got a good drop but quickly reversing, no change in bounce lines as it was so fast.

    LOL on /CL – $50, Ha!  In their dreams….

    Big fall for /RB too

    /NG starting to look like the real deal but no one connects the dots to CBI.

    We need lithium futures – those would be fun to play.

    JNK/Naybob – I like that idea but BDC does make a good point as to it being priced in.  

    $11/Ult – Came back, good call.

    IMAX/Jabob – That one might be my favorite.  

    CHK/Ernest – Strange on them, you'd think they'd be popping.  LNG down too.

    I think people are waiting to see if the move up sticks this time.  Still plenty to make on /NG playing over $3 with tight stops below.

    CHL/Yodi – My only Chinese stock.

    Stranded/Yodi – I'd be gone in 48 hours.  Actually, I wouldn't be dumb enough to book a cruise there in the first place – what is wrong with people?

    M/Joseph – I like them for the value of their real estate holdings but it's a very long-term way to play them.  If you don't mind a long ride, it's a good time to sell 2019 $18 puts for $3.10 to net in for $14.90 – that gives you another 25% cushion.

    Indexes failing weak bounces again – who will be brave enough to hold into another Trump weekend?  Will there be indictments, will there be threats, will missiles be launched?   What fun!  


  71. Sold some JCP Jan 18 $4 puts for .52. 

    Just looking to put back some JCP exposure after taking profits a couple of weeks ago.


  72. This is assuming I can get them. The market wants me to spend a dime! No thanks! Hey all you chicken option sellers: Put those JNK Sep17 35 Puts to me. oh please.  


  73. JCP reports tomorow morning.


  74. STJ – Time to sell some UVXY calls?  


  75. Joseph- too early.. I know what u mean. but too many times I was greedy and it turned out to be too late.  Got to win more times then lose. 


  76. /NQ down roughly 100 so if the PPT kicks in with a stick save today, per Phil's rules 20 points is a weak bounce and 40 a strong one. I switched from short to long at 5825.


  77. ~~Bill Miller's next big value bet is on the shopping mall.

    •Bill Miller's Income Strategy sold out of private prison company Geo Group in the second quarter.
    •The fund said it used the proceeds to buy two shopping mall real estate investment trusts as it believes fears of the Amazon threat are overdone.
    •Warren Buffett has also invested in shopping malls in the last few months.

    One of the stocks Miller bought is CBL which was mentioned here some time ago.  Currently yielding 12.3%.


  78. BDC – JNK puts are a good plan but what is your backup plan if you can't buy them for a nickle?


  79. Phil/CBI,

    How you decide the strike price of the put to be sold? in case of CBI 2019 Jan puts below are the premiuns

    $10 strike @ 2.65

    $12.50 strike @ 4.30

    $20 strike @ 10

    so we believe that CBI would be up in a year or so then 20 put looks to be a good deal giving 50% back. Your thoughts.

    regards


  80. Stick/MrM – They are running into a lot of sellers so far.   Biggest volume day of the last two weeks, mostly down.

    Malls/Albo – You have to pick the right ones.  I'd wait until all these stores do their purges and then see how the REITs sit.  I suppose Buffet has access to already know which malls are losing which stores so following him not too bad. 

    • Stocks slide at the open as continuing tensions between the U.S. and North Korea weigh on investor sentiment; Dow -0.5%, S&P -0.6%, Nasdaq -0.8%.
    • "We're through most of the earnings season and the valuations [in the stock market] become a bit problematic when you have something like North Korea come up," says Maris Ogg, president at Tower Bridge Advisors.
    • European markets are broadly lower, with U.K.'s FTSE -1.2%, Germany's DAX -0.9% and France's CAC -0.4%; in Asia, Japan's Nikkei finished -0.1% and China's Shanghai Composite closed -0.4%.
    • In U.S. corporate news, department store retailers Kohl's (-8.7%) and Macy's (-4.2%) open sharply lower as continued declines in same store sales overshadow better than expected earnings.
    • All sectors are trading in the red, with tech (-0.6%), financials (-0.6%) and consumer discretionary (-0.5%) leading the retreat.
    • Safe-haven assets are trading higher, as gold +0.9% at $1,290.50/oz., marking its best level in two months, while the benchmark 10-year Treasury yield has slipped 2 bps to 2.23%.
    • U.S. crude oil +0.4% at $49.76/bbl.
    • The SPDR S&P Retail ETF(NYSEARCA:XRT) is down 2.61% as the sector takes its marching orders from a weak trio of earnings reports in the department store sector (KSS, DDS, M), guidance warnings and analyst caution.
    • The broad-based declines, centered on traffic and pricing concerns, cover a large number of well-known retailers — including Target (TGT -3.8%), Signet Jewelers (SIG -6.9%), Conn's (CONN -6.6%), Gap (GPS -3.3%), Lands' End (LE -5.1%), Dick's Sporting Goods (DKS -7.7%), Sears Holdings (SHLD -10.1%), Big Lots (BIG -2.8%), Fred's (FRED -4.2%), American Eagle Outfitters (AEO -6.2%) and Guess (GES -3.8%).
    • J.C. Penney (JCP -6.7%) heads into tomorrow's earnings day on a down note after peers Kohl's, Dillard's and Macy's all stumbled with their reports.
    • Hope that a wave of bankrupcties helped to add some incremental traffic at department stores faded after Dillard's and Macy's all reported weak same-store sales/
    • Analysts expect J.C. Penney to report sales of $2.84B and a $0.05 loss for the quarter.
    • The Wall Street Journal reports that 28 app developers in China have filed an antitrust complaint against Apple (NASDAQ:AAPL).
    • The complaint accuses Apple of a monopoly for removing apps without explanation and of taking a high percentage of in-app purchase earnings. 
    • Apple says “most submissions in China are reviewed and approved to be on the store within 48 hours, or less” and that developers can ask for a review on a removed app.  
    • Apple struggles in the Chinese market with a fifth place position in smartphone sales. The company recently received criticism for removing VPN apps from its App Store in the region. 
    • Apple shares are down 2.08%.
    • Previously: Apple call: comments on China slump, Trump factory quote, no iPhone news (Aug. 1)
    • The Trump administration’s move to slap sanctions on eight members of Venezuela’s new legislative assembly brings to 30 the number of government loyalists targeted for human rights abuses, but economic sanctions have yet to materialize amid complaints by the U.S. oil industrythat a potential ban on petroleum imports from Venezuela would hurt jobs and drive up gas costs.
    • Nine U.S. companies including Chevron (CVX +0.1%), Valero Energy (VLO -1.4%) and Phillips 66 (PSX -0.6%) currently process Venezuelan crude in more than 20 U.S. refineries, many of them designed for the type of heavy crude that Venezuela exports, and replacing those supplies would be disruptive and costly.
    • The oil industry is finding allies in the U.S. Congress, particularly among lawmakers from the Gulf coast states where the refineries are located, but energy analysts are more circumspect about the effect on global markets and prices at the pump.
    • A recent analysis by Wells Fargo said that one impact would be to raise foreign heavy crude prices by ~$3.50/bbl, but the ban would not affect demand for gasoline or reduce the overall supply of crude on the global market, as Venezuela would redirect its shipments to countries in Asia and elsewhere.
    • Credit Suisse weighs in on Wendy's (WEN -2.2%) after the restaurant chain posted its Q2 results.
    • The firm says that while "potentially significant" free cash flow over the next few years is compelling, sector discouting and McDonald's move into fresh beef pose risks.
    • CS sticks with a Neutral rating and $15.75 price target on Wendy's.
    • Previously: Wendy's tops estimates, backs profit guidance (Aug. 9)
    • Dick's Sporting Goods (DKS -7.3%) swings lower after Consumer Edge lowers estimates ahead of next week's earnings report from the retailer.
    • Another factor in today's trading on Dick's may be the solid apparel and footwear sales posted by Kohl's, according to Bloomberg
    • Sonic (SONC +4.4%announces an incremental $160M share repurchase authorization was approved by the board.
    • The authorization allows for buybacks up until the end of FY18.
    • Blue Apron (NYSE:APRN) plunges on the open after execs warn on the earnings conference call about unexpected costs related to setting up a new manufacturing facility.
    • The company's management also said that labor wage pressure is a factor for its bottom line.
    • Shares are down 16.35% to $5.19 and traded as low as $5.03. Across the pond in Frankfurt, shares of HelloFresh owner Rocket Internet are down 1.45%. Hopes for a HelloFresh IPO may be fading.
    • Previously: Blue Apron misses by $0.17, beats on revenue (Aug. 10)
    • Previously: Blue Apron reports loss in first post-IPO report (Aug. 10)

  81. Trump said his fire and fury comment wasn't tough enough.  He took that line, btw, from World of Warcraft


  82. CBI/Pat – Well you want to get max premium but, more importantly, what would your net be if it is assigned to you?  I would not be too aggressive on CBI, especially when you can sell the 2019 $12.50 puts for $4.30 and net in for $8.20 – that's very reasonable and gives you $3.30 cushion (about 30%) if it still falls.  The thing is, what if CBI is down another 50% at $6?  Are you going to be THRILLED to have it assigned?  Will you be happy to DD at $6 or $5 or will you regret the position.  If you don't REALLY want to own 2x at $5 when your average entry $6.60 – then you don't want to roll or DD and you need to set stops – probably if $10 doesn't hold.

    Warcraft/Rustle – LOL!  I hope that's not true.  


  83. Bio just to understand your plan with JNK clear are you buying Sep 35 puts for .05?


  84. Phil – indexes   what is your read into the close? Up – Down – Sideways?  I am not buying this fall, and think the BFTD folks will be around if tomorrow then next week.


  85. Warcraft/Phil

    Unfortunately it is true.  He got it from Steve Bannon who got it from there.  So indirectly.  Also his immigration policy is now supposed to cause a loss of 4.6mm jobs by 2040 and is affecting agriculture already, much faster than previously thought.  Mueller, move quicker.  


  86. Phil could we see another CL  run up to $50 between now and tomorrow for the Friday play?


  87. Phil – "who will be brave enough to hold into another Trump weekend?  Will there be indictments, will there be threats, will missiles be launched?   What fun! "

    Reminds me of this from 1966 and Out.


  88. JNK/BDC. You must see JNK to be well-correlated to the stock market. Is there a history of that?


  89. Once again we fail to recover – not looking good for the bulls. 

    Indexes/Latch – Looks like new lows to me.  As I said above, why would you want MORE exposure into this weekend with this Administration?

    Jobs/Rustle – Well by 2040 is not a big deal unless that's our net jobs through 2040 – in which case we're screwed.

    Oil/Craigs – Not sure why they would want to go long into the weekend either.  I'd play /RB off $1.60 with tight stops below before playing /CL at $48.50.  Just the usual weekend play, of course.  

    Batman/Naybob – It reminds you of a cheap knock-off of a Batman cliffhanger?  Unfortunately, this is real life – OUR real lives! 

    • Baird analysts say they are optimistic over Raytheon's (RTN -0.6%) future missile defense sales growth after a meeting with the company's management, prompting them to reiterate their Outperform rating and raise their price target on the shares to $212 from $170.
    • The price hike reflects "the significant programs wins both domestically and internationally for missile defense and missile systems that puts [the company] in position for favorable organic growth in 2018 and beyond," Baird says.
    • The firm notes that 42% of RTN's contract backlog is from international customers, the highest percentage among its industry peers, with the company's missile defense systems such as Patriot, THAAD and Radars a major driver of its sales to 80 countries
    • America Movil (AMX +1.9%) has moved up after an upgrade from Morgan Stanley, which is favoring telecom markets in Mexico and Brazil over those in Peru and Colombia.
    • "A sequential macro recovery, and more accessible telco services, should boost the consumption of value added services (e.g. one more day of access to social media) or potential upgrade from prepaid to postpaid wireless," the firm says in a detailed report on Latin American telecom.
    • America Movil and Brazil's TIM Participações (TSU -0.6%) are its top picks in a rubric that ranged across companies' product, geography, and profitability measures. TIM gets the nod in Brazil over Telefonica Brasil (VIV -1.2%), rated at Equal Weight.
    • It's set a price target of $21 on AMX, implying 17.4% upside from today's higher price.
    • Meanwhile, Morgan Stanley downgraded Telecom Argentina (TEO -1.6%) and Grupo Televisa (TV -0.8%) to Equal Weight, and Liberty Global LiLAC (OTCPK:LILAB) to Underweight.

  90. Ugly finish but it makes me so happy when the markets make sense!  


  91. yes buying JNK puts – JNK is well correlated with junk bonds off course, which are yielding less than 5% right now. There was strong correlation with market volatility and junk bonds crashing in 2008, though that had a heavy subprime component to it.


  92. ugly market end. if things go poorly tomorrow, monday could be black monday


  93. Naybob

    Ok, I am only on the site after hours some of these days. Twin Peaks it is, My college age son was interested in that show this summer.

    BTW, I always liked your handle. Agnew & Nixon had tax crimes.Maybe Agent orange and his crew will be too: Excerpts from 

    The Tax Analysts' Tax History Project Web site (http://www.taxhistory.org) contains an archive of presidential tax returns that have become available under the Freedom of Information Act. Among the returns in the collection are those filed by President Richard M. Nixon for 1969, 1970, 1971, and 1972. Samson finds access to these returns exciting, but also recalls the troubling issues surrounding the president's aggressive (fraudulent) positions regarding his own income taxes. Those returns also dredge up reminders of national and personal turmoils, Samson says.

    As both the tax and the Watergate investigations moved slowly forward, news leaks indicated that the JCT would find that Nixon owed at least $300,000 in back taxes (WSJ, Mar. 11, 1974). Mills, vice chair of the JCT, even predicted that the findings about the president's taxes would force Nixon to resign. To diffuse the issue from being part of the call for impeachment, Nixon said publicly on several occasions his willingness to pay any tax amount for which the committee found him deficient (WSJ, April 1, 1974).

    Nixon's greatest concern with the IRS audit and the JCT investigation was that fraud might be charged, thereby imposing a civil fraud penalty of 50 percent of the tax deficiency, increasing his chances for impeachment. Amazingly, fraud was not mentioned either by the IRS or by the committee report. However, the House Judiciary Committee, which was considering the impeachment of Nixon, stated that it might investigate the possibility of tax fraud.

    By agreeing to pay $465,000, Nixon's wealth was reduced to half of the previous $988,522. One White House spokesman stated that Nixon was "almost totally wiped out" by the agreement (WSJ, Apr. 5, 1974). However, Nixon was fortunate to have had $433,000 in liquid assets to pay the tax deficiency.

     On April 7, 1974, Alexander, the IRS commissioner, pledged that his agency would do a better job of auditing presidential tax returns in the future and that the president would be treated like any other taxpayer. He admitted that the IRS, under his predecessor, had been remiss in the early Nixon audits (WSJ, Apr. 8, 1974).

    Time will tell if history repeats itself..( or rhymes)






  94. Study: Fines for illegal pollution plummet under Trump





  95. North Korea’s threats are driving down markets across Asia


  96. Perhaps got the link here, 

    An interesting GILEAD analysis, in fundamentals  (stock price is another story) it seems that  storm is now in the rear mirror.

    https://seekingalpha.com/article/4096866-gilead-sciences-back-folks?source=email_rt_article_readmore&app=1&auth_param=ac4q:1comcb8:50002efc2f0a2be1379689b9fb9e820c&uprof=82


  97. Phil – "Batman/Naybob – It reminds you of a cheap knock-off of a Batman cliffhanger?  Unfortunately, this is real life – OUR real lives! "

    Your mezzo stoccato delivery which invoked William Dozier.  Cheap knockoff indeed, but an A for effort with unbearable (Trump and Market) being apropos. FYI, could not find a real one for the life of me, not invoking M. Clark, pun intended and Out.


  98. Randers – Twin Peaks, Returns, Mimsy – Lynch and Frost (Hill Street Blues Bochco alumnus) are masters of obscure and arcane subtlety, easter-eggs abound.  Nice run down on Tricky Dick's returns. Unknown to many… for decades, literally every single member of the executive and legislative branch have been in Trusts. Obvious conflicts of interest are glossed over with those Trusts and SPV/SPE's.  Is it any wonder that Mimsy has just kept growing and never been higher? and Out.


  99. Good morning!

    Euro Stoxx bouncing off 3,400 so we'll see if it's strong or weak:

    DAX over 12,000 would be a bouncy sign too:

    Generally though, we're down 0.25% and, of course, the VIX will drop if we're going to pop but I like /YM long at 21,800 with tight stops below as a bounce play.  

    Oil still sad:

    Watch for the weak bounce here but I like /RB long over the $1.60 line into the weekend (not there yet).

    Honey badger don't care:

    Taxes/Randers – Well Capone was untouchable and that's the way they got him, maybe Trump can also be undone by our beloved Treasury Agents as well. cheeky



  100. ~~ JCP -J. C. Penney misses by $0.05, beats on revs; reaffirms FY18 EPS and comp guidance  (4.71)

    ~~•Co  reaffirms guidance for FY18, sees EPS of $0.40-0.65 vs. $0.49 Capital IQ Consensus. The Company has updated its cost of goods sold guidance and reaffirmed the remaining 2017 full year guidance. Comparable .