Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Friday Follies – Trump Promises Dow 30,000

Dow Jones Industrial Average crosses 25000 for the first timeWell, we're past 25,000 the Dow and the President is promising 30,000 so we'd better buy more stocks, right?

As crazy as it all seems, the makets COULD go up another 20% and there are about 200 trading days for the Dow to gain 5,000 points so 25 points a day would seem calm compared to what the markets are adding this week.  Keep in mind how silly this is as it's a $100 TRILLION Global Stock Market and when we have these 1% gains across the board, we're adding $1Tn of "value" in a single day against an $85Tn Global GDP that's growing, at best, 4% for the year ($3.5Tn).  

Related imageThat, in a nutshell, is what's wrong with the World now – we value Coprorations more than we value Governments and Coporations and their Top 1% owners are slowly but surely taking control of our Governments, turning us into a Global Oligopoly in which people don't matter.

Oddly enough, the people love it, though.  Especially the Top 10% of the people, who buy stocks, as they seem content to let the Billionaire Class lead us into the land promised by Ayn Rand 60 years ago, one in which "rational self-interest" was promoted and became a magnet for wealthy baby-boomers who wanted to alleviate the guilt they felt in a nation that was, at the same time, fighting a war on poverty and promoting equality for all.

Rand called her philosophy "Objectivism", describing its essence as "the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute."  She supported philosophical realism, and opposed anything she regarded as mysticism or supernaturalism, including all forms of religion, referring to "the virtue of selfishness" in her book of that title, condemning ethical altruism as incompatible with the requirements of human life and happiness and she considered laissez-faire capitalism the only moral social system because in her view it was the only system based on the protection of the rights of the job-creating class.

Image result for trump ayn randDoes that sound like any Presidents you know?  It absolutely sounds like House Speaker Paul Ryan, who makes all his interns read "Atlas Shrugged" and gives out the book for Christmas presents.  Slowly but surely, the Oligopoly is taking over the country and America is being run for the interest of the Corporations.  In fact, we just gave them Trillions of Dollars in tax relief and had to cut Trillions of Dollars of Social Spending (taking care of humans) to do it – and half the people in this country think that's just great.  

Do they not know they are people?  It's hard to say.  As George Carlin pointed out "Think about how dumb the average American is and then consider that half of them are dumber than that!"  Sometimes, however, when you have a low average, the fault lies with the top not pulling their weight and I have to wonder about the math skills of an investing class that thinks it makes sense to raise the value of Corporations by 50% in two years in an economy that will grow 8% at best.  Would you give employees a 50% raise for an 8% increase in output?  Of course not, you would destroy your company if you did that.  Well, take that obvious concept and replace the word "company" for the word "country" and give it the weekend to hopefully sink in…

Meanwhile, we've done some buying this week and this morning's pump up in the Futures is a good time to pick up some hedges.  For starters, we just got a disappointing jobs report, with just 146,000 jobs created in December vs 195,000 expected but Unemployment heald steady at 4.1% and Hourly Earnings were up 0.3%, warming up from 0.2% and, next month, higher minimum wages kick in so this number does nothing to take the Fed off the table. 

The Fed will meet Feb 1st, March 15th, May 3rd and June 14th for the first half of the year and it seems they are intent on hiking rates twice during that time.  If the markets are still this high at the end of the month, it would be a wasted opportunity not to hike then, especially as they have a chance to adjust their language 6 weeks later if they don't like the result.  

Meanwhile, we still expect a 10% correction as people take some profits off the table in our lower-tax environment and we're still thinking that Q4 earnings and 2018 guidance are going to be disappointing to investors – especially for companies who will be repatriating those overseas profits and paying one-time tax bills (good buying opportunities if they sell off on that news, however).  

This morning we have an opportunity to short the indexes at 1,560 on the Russell (/TF), 25,150 on the Dow (/YM), 6,625 on the Nasdaq (/NQ) and 2,733 on the S&P 500 (/ES) and the easiest way to play it is to wait for 3 to cross below the line and then short the laggard and then stop out if ANY of them cross back over.  That should keep your losses very small but places no limit on your upside.  I'm favoring the Nasdaq shorts myself at the moment.

That's fine for day-trading but, for portfolio protection, we prefer using the Ultra ETFs as hedges.  The new stocks we've been adding to our portfolio have, so far, been staying away from tech – as none of them are cheap, so there's not too much sense in shorting the Nasdaq as a hedge.  We have been, however, picking up some small-cap bargains so the Russell makes a good vehicle to trade against and (TZA) is the 3x Ultra-Short of the Russell.  In our Options Opportunity Portfolio (OOP), we can add the following trade:

  • Buy 50 TZA April $11 calls for $1.40 ($7,000)
  • Sell 50 TZA April $15 calls for 0.40 ($2,000) 
  • Sell 5 AAPL 2020 $145 puts for $10.50 ($5,250) 

That's a net credit of $250 on the $20,000 spread so our upside potential is $20,250, which is plenty of protection as we don't have that many posititions yet.  The margin requirement for the Apple (AAPL) puts is $5,000 and you can substitute any stock you REALLY want to own at a discount and we know we'd love to add AAPL if they ever go on sale.  

For this trade to pay off TZA has to go up $3.19, which is 27% and it's a 3x ETF so we're playing for a 9% drop in the Russell from 1,560 to 1,420 – that's the range we're expecting.  Of coruse, if the Russell never falls, then probably Apple never falls an our insurance play doesn't cost us anything and we'll adjust the trade along the way to extend the time if we need to.  For now, though, we'll sleep much better this weekend knowing we protected the portfolio.  

If all goes well, we'll get some profit-taking into the weekend and pick up a nice chunk of change on our index shorts but, if not, then we will be adding a lot of additional trades to our Watch List for next week!  

Have a great weekend,

- Phil

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Good Morning!


  2. Have to add more lines and Trump is now predicting that we'll have to calculate new lines before the end of the year! Must hold for the Dow should be around 25,000 now. Winning truly is tiring!


  3. On the other hand, I wonder if the markets are cheering because it's becoming clearer that Trump and his entire family are intellectual lightweights that can be manipulated for greater profits or because we are getting some indications that he won't serve 4 years!


  4. These minimum wages slowly creeping up:

    http://ritholtz.com/2018/01/min-wage-increases/

    Even some red states are feeling the pressure!


  5. A bunch of very cool charts:

    http://theirrelevantinvestor.com/2018/01/03/my-favorite-charts/

    And many more at the link!


  6. Good morning! 

    Not index shorts above:

    This morning we have an opportunity to short the indexes at 1,560 on the Russell (/TF), 25,150 on the Dow (/YM), 6,625 on the Nasdaq (/NQ) and 2,733 on the S&P 500 (/ES) and the easiest way to play it is to wait for 3 to cross below the line and then short the laggard and then stop out if ANY of them cross back over.  That should keep your losses very small but places no limit on your upside.  I'm favoring the Nasdaq shorts myself at the moment.


  7. USG – My play on hurricanes Harvey and Irma, up big today on several upgrades.


  8. Good morning… TEVA downgraded to underperform by Wells Fargo retards.   Stock not reacting much so far. 


  9. FU WELLS FARGO!!!!!


  10. Well that dip didn't last long.  /TF made a 5 point drop and popped right back.  This market is invulnerable to news, data, logic…

    USG/Albo – Cramer was just talking about them.  Not too expensive for a company generating $2/share – they were way underpriced before.

    Good wages chart, StJ.  Not too impactful, unfortunately.  


  11. AMZN – Stock just hit an all time high.  The Bezos juggernaut continues. 

    Still rolling deep OTM short puts.


  12. Phil – Love this AM's rant, one of your top ten. Keep bangin that drum.

    "Think about how dumb the average American is and then consider that half of them are dumber than that!"

    In the global plague of stupidity, here is the battleground.  Speaking of Rand, John Rodgers juxtaposition of Rand and Tolkien, says it all.

    "Would you give employees a 50% raise for an 8% increase in output?  Of course not, you would destroy your company if you did that.  Well, take that obvious concept and replace the word "company" for the word "country" and give it the weekend to hopefully sink in…"

    One must understand the indoctrination of these lemmings, which is one of cranks and crypto-cultists.  Here are two shorts of Charles Colson, and William F. Buckley with Charlie Rose on the subject.

    A holla out to Jabo… Rand's Objectivism is nothing more than Satanism without the trappings, and is distilled in the not so secret ghost title for Atla's Shrugged.  Randed Out.


  13. I almost forgot, Objectivism is a nice way of saying.. being a selfish asshole. Why is Ayn Rand still a thing?


  14. LOL Naybob, I like that one:

    Why/Naybob – Rand is the religion of rich bastards, who seek salvation through her works, which tell them the world simply doesn't understand them and they should do whatever they want, whenever they want because they are better than other people because they are rich.  That's how they can sleep soundly in solid gold bedrooms after spitting on the homeless on the way home.


  15. Oil finally coming down a bit, got our penny on /RB too!  

    /NG really whacked, not rushing back in but a nice discount.  

    Remember when we worried if $16 would hold on /SI?

    Dollar coming back finally:


  16. Phil – Indeed, and thank you for my ROFLMAO of the day, that last photo of Scrooge McDuckman proves, all the money in the world cannot buy class or good taste.  Epically horrid and tasteless, Out.


  17. ah another day in the life of a "Crypto-cultist"

    I didn't even know I'm a thing. Can I get tax-exempt status for this? 


  18. Rand and Tolkien

    In high school I ran out of classes I wanted to take, so they let me do a semester of self education.  I did a long paper on Tolkien, which of course involved reading The Silmarillion.  I have never read Rand.  I guess that explains why I am who I am.


  19. What did they do to the UNG ETF?


  20. baron--prob 4 for 1 reverse split


  21. BDC – "ah another day in the life of a "Crypto-cultist" I didn't even know I'm a thing. Can I get tax-exempt status for this? "

    ROFL, do you have a secret allegiance to a political creed?  You could file as a non profit and sell these medallions to support your cause.  Tales From The Crypt and Out.


  22. Slowly but surely, the Oligopoly is taking over the country and America is being run for the interest of the Corporations.

    This is the truth. Can't fight it, and the owners really don't care what names you call them. The older I get the more I realize that almost everyone is a self serving bastard, it's either that or a patsy. Just a fact. Present company excepted, of course.


  23. Phil / IMAX – This is a blow for IMAX not sure about the technology and experience but it will pose competition.  Thoughts?

    https://www.bloomberg.com/news/articles/2017-12-28/china-s-imax-rival-aiming-for-no-1-spot-with-government-backing?utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=yahoo

    China’s state-backed provider of jumbo-screen cinemas said it is aiming to be the top brand in a market dominated by Canada-based IMAX Corp. as it focuses on expanding with a business model that lets theater operators retain a bigger share of ticket sales.

     

    “We have a government mandate to become the largest premium large format brand in China’s film market and we are confident to achieve that target in 2019,” Lin Minjie, chairman of China Film Digital Giant Screen (Beijing) Co., said in an interview in Beijing last week. “Our top priority is expansion, not profitability.”

    Chinese IMAX Rival Aims to Be No. 1

     

     

     

     


  24. Cryto-Cultist/BDC – I think, back in 2012, they were referring to people who worship gold or Baal, which Ryan has been linked to as well.

    UNG/Baron – 1 for 4 reverse split.

    And what Jabob said.

    Sadly is right Mkucs – not much to do but make sure we're on top.

    IMAX/Batman – This is an annual event when someone comes out with something better than IMAX and it might happen one day but, logistically, is it so good that theaters in the US and Europe will tear out their IMAX screeens, speakers and systems to replace it with someone new and then, even if they do, how long will it be before a $300M movie production decides to go with untested technology in their 2-year filming and editing process?  

    I'm not reading that they are better, only cheaper and, apparently, they want to push Chinese films – how well will that go over in the US?  I'm not saying ignore the competition, but take it with a grain of salt..


  25. Phil / IMAX –  In my research last year, this company did not really hit my radar as key competition – however IMAX expansion in China is key growth factor for the stock.  I don't know if this company is a government sponsored entity ( don't think it is) if it is not this is BS, if it is, or even is 'unofficially' this could be an issue for growth.   


  26. IMAX- I like the company and have been in and out and made some money. As to competition, assuming it is legit, it tells me it is a good business and others see opportunity. I ran my own small business for years and was often asked about any concerns about competition and my reply was always, "come on in, the water is fine" I had faith in my market approach in that we provided a very good service at competitive prices. Not the cheapest, mind you but in the competitive ballpark. Consumers will pay for value so competition keeps you honest. 

    I have been watching IMAX for more pullback to get back in. The sector is still unloved. 


  27. Baron

    4-1 reverse split today.  Very annoying ticker if you put money in it.


  28. Phil/SQQQ

    I have March 22/June 30 spread as a hedge, bought at net .65. The March 22’s are now .65 so time to roll. I’m thinking to just roll down to the June 19’s at 2.45 and buy back the 30’s. Perhaps sell the 25’s for 1.50 or so. What do you think? 


  29. UNG – if every carbon atom that is attached to exactly four hydrogen atoms immediately turned into Neon then that would explain UNG going from 5.50 to 22 in one trading day.

    Unfortunately, I feel it's just another reverse split on this PoS position…


  30. IMAX/Batman – I agree, certainly a concern if it's not all BS.  IMAX installed a bit over 100 screens in China last year out of about 1,200 screens worldwide so losing that market would not be good.  

    Competition/Pstas – I agree when it's fair but it's possible, in China, if the Government is favoring someone, then it's not going to be a level playing field.  I find there's never a need to compete on price as long as you can provide value – most people don't get that.

    SQQQ/Jeff – Good time to roll.  My move would be to get my 0.65 back and roll to the June $20s at $2.05 and sell 1/2 the Jan $20s for 0.25, which doesn't seem like much but it's another $1 off if you keep at it.  Then I'd roll the short June $30s (0.75) to the 2019 $35s at $1.80 as they'll lose 0.90 by June anyway.  So your net on the June $20/30 spread becomes 0.65+$2.05-1.05-0.125 = $1.525 with maybe 0.50 left to collect over the next 4 months that will bring it down to about $1 by the time you have to roll again.  I think the long $19s are spending 0.45 for nothing as the Nas either falls or it doesn't and 5% on SQQQ won't make much difference.  

    Neon/BDC – That might work! 


  31. Thanks Phil. Where are you at with your /NQ shorts at this point? 


  32. phil, i shorted the nas with 3x QQQ puts.  in at 2.27, now down to 0.70.  i'd like to persist with the short position.  would you roll up only in strike or up and out in time also.  thanks in advance.


  33. phil/QQQ.  those are january puts.  thanks.


  34. Phil / /RB- Are you still short /RB?  Would you consider shorting over the weekend?  TIA


  35. /NQ/Jeff – Well we got stopped out this morning as all the lines blew but now back in 5 short at 6,650, hoping to make up about $5K in losses at some point.  We have /YM 25,200, /ES 2,737.50 and /TF 1,557.50 for a set at the moment.  

    QQQ/Lunar – Well I wouldn't go naked puts anyway, I like an SQQQ spread better.  The June $20s are $2.05 and the short $25s are $1.15 so net 0.90 costs you very little to cover with up to $5 return on a 9% drop in the Nas and, of course, when the price of the long $20s falls to $1 (down 50%), then it's time to invest in the next roll.  Meanwhile, see comments above re. selling short calls against the long spread.  

    /RB/EMike – I took the money and ran to help fund my /NQ losses.  Very dangerous shorting oil or gas with Iran unrest and Saudis pushing oil prices at the moment, I would only short at the $1.80 line, looking for pennies with tight stops above and NOT over the weekend.


  36. /RB / Phil- Sounds good, thanks Phil! 


  37. CLNS, I have shares with short puts/calls expiring out of the money this month.  Please share thoughts on whether or not to continue with position.  Thanks.


  38. Started a new short put position in ETSY.  Sold some Jan 20 $15 puts for $2.  Still believe the company gets acquired before expiration.


  39. Holy Heysus….what a market.  up up up up up up flat up up up up….. Rand must be a very happy lady rolling around in her capitalistic grave.


  40. If we can just maintain this pace the Q's will gain 150% this year…


  41. War must be in the cards, b/c all the war machine makers are flying.  BA, NOC, GD


  42. This from Jon Markman :

    ~~ RIPPLE

    "There is a new way to get rich. It is as simple as creating digital money.

    Chris Larsen, the co-founder of Ripple — a real-time, digital payment network — is now the fifth-richest person in America. He earned most of that this week.

    Welcome to the world of cryptocurrencies.

    For perspective, at $59.9 billion, Larsen’s net worth would put him on Forbes’ list of billionaires ahead of Larry Page and Sergey Brin. And they “only” founded Google.

    Larsen is just behind Mark Zuckerberg, the guy who started Facebook (FB) in a Harvard dormitory a decade ago and transformed the way most of the developed world communicates."


  43. Going Parabolic!! Wtf. 


  44. Pharm, I’ll email you this weekend


  45. Thanks jeffdoc.  

    Something is up…and I think MrM said it the other day….it is like 2000 all over again. I cannot put a reason on it.


  46. Betting all on red.  SPY Jan10 271 Ps for 14c.  


  47. Blasting higher into the close!  

    CLNS/Mike - I do still like them.  I don't think I'd sell calls down at $11 if I owned the stock, just wait and see what earnings look like, I think.  I believe our net entry was around $12 originally in the LTP way back last Jan and they've been up and down since.  

    On the whole, the numbers are decent for a company you can buy for 

      2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
    Relevant Numbers (Quarterly)          
    Revenues (mil) 783.7 681.76 609.66 84.17 95.5
    Revenue Growth (%YOY) 720.61 602.16 477.57 -27.99 -11.67
    Earnings (mil) 29.75 75.8 10.8 -11.84 23.79
    Earnings Growth (%YOY) 25.05 649.05 -34.85 -165.91 -40.12
    Net Margin (%) 3.8 11.12 1.77 -14.06 24.91
    EPS -0 0.07 -0.01 -0.06 0.13
    Return on Equity (%) -0.02 0.27 -0.3 -4.33 8.62
    Return on Assets (%) 0.46 1.21 0.34 -5.58 11.45

     

    They are going to have to do a lot better than $200M/yr over time.  They just sold some operations for $475M so hopefully they have plans for that money.

    ETSY/Albo – That's a strange company but doing well.  

    150%/Mkucs – It's absolutely amazing, just like 98/99 was.  

    And what Pharm said!  

    War/Pharm – Even better!  

    Larsen/Albo – It's the new American dream.  Day one: create your own currency  Day 2: Cash out.  

    Red/Pharm – I'm sitting on those /NQ shorts and Futures say 6,666.50 at the bell – they are just f'ing with people now!  

    Have a great weekend folks!

    - Phil



  48. From Mexico to the U.S., a Nafta Tale of Two Truckers


  49. Wildcard Weekend post is up, enjoy.





  50. And to follow up:

    https://www.theatlantic.com/science/archive/2018/01/how-actual-smart-people-talk-about-themselves/549878/

    We can think of exceptions—the people who are eminent in one field and try unwisely to stretch that to another. (Celebrated scientists or artists who become ordinary pundits; Michael Jordan the basketball genius becoming Michael Jordan the minor-league baseball player.) But generally the cliche is true: the clearest mark of intelligence, even “genius,” is awareness of one’s limits and ignorance.

    On the other hand, we have something known as the Dunning-Kruger effect: the more limited someone is in reality, the more talented the person imagines himself to be. Or, as David Dunning and Justin Kruger put it in the title of their original scientific-journal article, “Unskilled and unaware of it: how difficulties in recognizing one's own incompetence lead to inflated self-assessments.”

    Odds are that the world’s most flamboyant illustration of this dangerous mis-perception, despite his claimed omniscience, would not even recognize the term, nor its ominous implications in his case.



  51. Phil,

    Frequently you'll sell a put on a stock that you "wouldn't mind owning at that price". I watched your video The Secret to Consistent 20-40% Annual Returns on Stocks. At 1:53 you say "we should know that it's close to a level that value investors will jump in". I have some questions about that segment of the video:

    "Zero debt" – do you literally mean zero or do you just mean low? Do I go to the balance sheet and look for 0's next to "Short/Current Long Term Debt" and "Long Term Debt"? Or maybe I go to finviz and look for a debt / equity ratio below ??

    "Lots of Cash" – Vid says "with lots of cash on hand there is an automatic lower limit on how low the stock can go". What constitutes "lots of cash" and from the cash how can we determine this "automatic lower limit"?

    "PEG" – Do we use the PEG to infer the price "close to a level that value investors will jump in"? What I mean is, say stock XYZ is otherwise a great company but currently it's PEG is 1.25 and price is $100. Assuming all else remains constant, if price went down to $80 then PEG would go to 1.0 so we'd be interested in buying this stock if price ever dipped down to $80. Am I on the right track?

    Thanks!



  52. Phil, GNW

    What are your thoughts on GNW, I was looking at them over the weekend it appears they have a merger offer on the table which may be blocked and I understand that is a risk but if it goes through they are trading at a significant discount than the deal offered. 2.3B vs 1.6B would you recommend to take a small position ? 

    Thanks as always

    Pat


  53. Greencoin catching a solid BTC 0.00000007 bid tonight. That is a 700% increase from a month ago. We're  all gonna be rich!


  54. Actually a 600% increase to be precise. Add that to the increase in BTC itself and I am up nearly 10x from when I bought it in September. Now if only I had invested as much in GRE as I did in FTR….


  55. Phil, just curious, did anyone ever pay for a subscription using GRE? 


  56. The dam of denial has broken