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Terrific Tuesday – Futures Blast Market to New Highs – Just Because

Dow 26,000?  Really???

That's right, the Dow blasted 1% higher this morning to hit 26,000 and the S&P 500 hit 2,800 and the Nasdaq 100 hit 6,800 and the Russell hit 1,600 all record highs ahead of the Government shut-down on Friday (not really, they will extend it again).  Meanwhile, this puts Donald Trump only 12% behind Obama for first-year market rallies and he only had to promise a $1.5Tn tax cut to get it.  George Bush I also beat Trump – and that guy wasn't even trying!  

Obama's rally peaked out on Jan 19th, 2010 at 1,150 on the S&P and then we fell for a month – back to 1,050 (10%) but then we rallied to 1,200 (April) but then we fell to 1,050 again (July) in a very exciting second year.  Of course, those consolidation waves set the base for the next 1,200 points and then Trump took over we're up another 600 but, of course, Trump is taking credit for the whole 3,222-day rally – even though he's only been President for 10% of it.

Notice the Clinton Rally lasted 4,494 days and was much, much bigger (582%) than our rally (301%) and yes, it was pure lunacy at the end of the dot.com boom but this is the no tax boom and crypto-idiocy boom and 2,000 lie boom – all rolled into one.  Sure, in a few years, we'll look back at this rally and say "What were those idiots thinking?" and we'll forget "those idiots" were us and yes, I'm including myself because, despite warning you to be cautious, we put 20% of our CASH!!! back to work this month in our brand new Member Portfolios.

chartFOMO (Fear of Missing Out) is what drives the markets and, if we are on the way to a Clintonesque 100% additional gain from here (Dow 50,000?), then we'd feel like real idiots missing out on that rally, even if there is "no inflation" – according to the Fed.  As you can see from the Relative Strength Indicator – since 1960, we have never been this "strong" in the market and forget the fact that all those peaks ended in disaster – just MAGA!  

There is some really crazy stuff going on in the markets at this point.  Coca-Colar (KO), for example, is trading at 45 times earnings and 36 times cash flow even though revenues dropped 14.6% year over year.  Merk (MRK), another Dow Component and another S&P heavy-weight, is trading at 56 times earnings and 39 times cash flow despite 3-year average sales declines of 3.3% PER YEAR.  McDonalds (MCD) is trading at almost 50x cash flow but "only" 25x earnings thanks to massive stock buybacks – something that is saving many companies these days.  Sales at McDonalds are down 10.4% from the prior year and the stock has jumped over 50%, from $115 to $175 as "punishment". 

chart

 This is just like looking back at the wild valuations of the Dot Com era and saying "how could people invest in those things" only this is happening now and those people are us, right?  Now, these are not the stocks we are buying.  We're buying stocks that are still decent values and, this morning, those of you who missed out on GE will have another chance as the stock drops back to $18 after a huge one-time write-off ($6.2Bn) and suspension of the dividend.  This is something we expected as new CEO, John Flannery, cleans house AND takes advantage of higher tax rates to do a write-off.  It's also a good excuse to increase job cuts to 12,000 over the next two years.  

We reviewed our GE play on Friday and it should be back to our original price now – if you are brave enough to buy them when they are down.  In theory, a rising tide should lift all ships, eventually but, if not, we'd sure rather hold onto companies that are earning 1/10th of their market cap each year than ones that are taking 30-40 years to return your per share investment.  

This is the first week of earnings season and we'll finally get some indication of 2018 guidance as we close the door on 2017.  We'll be most interested, at this stage, in taking close looks at stocks that miss expections and are unduly punished – that's one way you can find bargains – even in runaway bull markets.  

As much as I don't trust the markets, we have to play along and, so far, our Long-Term Portfolio has been matching the market gains – despite the fact that we've used only 10% of our buying power.  In fact, on Friday morning, we were at $521,755 – up 4.4% for the month and, at Friday's close, we were at $525,787 – up another $4,000 for the day.  It will be interesting to see where we end up after today's rally but we only need to gain $5,000 to keep up with a 1% gain in the Dow – so no real rush to add more positions just yet – tempting though it may be to jump on the bandwagon.

If the market is really going to gain 1% per day and be up 200% by the end of the year – I think we'll be happy merely matching that and being up $1M on our $500,000 start BUT, if the market pulls back and corrects – THAT is when we can truly gain an advantage with a great opportunity to deploy our cash – while others are panicking.  As I noted last week, you don't win in the long run by beating the rallies – it's holding onto your gains when the market corrects that makes you a great long-term investor!  

So far this year, the best-performing index is Russia's ETF (RSX), with a 9.76% gain:

That's right in line with our prediction from way back on October 11th, when I chose Brazil and Russia as my top two country ETFs for 2018.  On Russia, I said:

Russia is being held back by the turmoil in the states (they are the subject of investigations in the House, the Senate, the FBI, CIA and, of course, the Meuller Investigation) so they are lagging the way a company under investigation tends to lag.  Low oil prices have been hurting them but just this morning both Russia and Algeria stated they will work with OPEC to cut production and drive up oil prices to screw you at the pump – isn't that great?!?  They've also given marching orders to Donald Trump, who is doing his part by removing mileage requirements from autos that Obama put in place, which drove the US fleet average from 20mpg to 35mpg over the past 10 years – lowering the overall demand for oil.

So why not back a winner and invest in Russia?  At least we know the leadership there is stable – I don't see Putin having any Twitter wars with his staff or members of the Duma, do you?  It's a shame we missed the dip in June but Russia is begining to usurp the US on the International stage, so why not place a small bet on Rex Tillerson's favorite country?  Here's a nice spread for RSX:

  • Sell 10 RSX 2019 $20 puts for $1.75 ($1,750)
  • Buy 15 RSX 2019 $20 calls for $3.30 ($4,950) 
  • Sell 15 RSX 2019 $25 calls for $1.05 ($1,575) 

Here we're laying out just $1,625 in cash on a spread that will return $7,500 if RSX is over $25 in Jan, 2019.  That's a potential gain of $5,875 (361%) in 16 months and the risk is owning 1,000 shares of RSX at $20, plus the $1,625 cash if all is lost on the spread so net $21.08 is still $1.17 (5%) cheaper than it is now as your worst case.

It's been a bumpy start but now the $20 puts are down to 0.88 ($880) and the $20/25 spread is net $2.85 ($4,275) for net $3,395 and that's up $1,770 (108%) in 3 months (you're welcome) but only "on track" for the full $7,500 – so still a double to be had from here – even though we're past the intial uncertainty. 

This is why we're not worried about missing anything by being cautious during this rally.  Either we make it through ernings season and we get a bit more aggressive in our portfolios or we have a nice a pullback and we have a chance to go bottom-fishing on the pullback – either way we win!  

 


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  1. Military Quietly Prepares for a Last Resort: War With North Korea



  2. The South prepares for wintry mix of snow and ice




  3. Measured by the number of lines I have had to add and the number of countries we have antagonized, the Trump presidency is a resounding success!


  4. So much for saving coal:

    https://www.theatlantic.com/science/archive/2018/01/trumps-coal-bailout-is-dead/550037/

    The Federal Energy Regulatory Commission unanimously rejected a proposal to subsidize coal-burning and nuclear power plants on Monday. Its defeat hands a victory to the motley coalition—of environmental groups, natural-gas companies, free-market advocates, and Democratic state attorneys general—who had opposed the rule and promised to fight it in court.

    The 5-0 rejection was all the bitterer for the administration because four of the five commissioners who lead the agency were appointed by President Trump, and three are Republicans.

    Can't even hire good "Yes" men!


  5. Easy to prop up the markets by 20% when the dollar is down over 10% in that same period:

    https://qz.com/1179847/the-us-dollar-is-languishing-at-its-lowest-level-in-three-years/

    The ICE dollar index, which measures the dollar against a basket of six other currencies, fell nearly 10% in 2017, the biggest annual decline since 2003.


  6. Good Morning.


  7. ?StJean/success – I think some credit should be given to his economic advisor and goldman sacks….. :(


  8. FNSR down  on  GS downgrade.


  9. Good morning! 

    Image may contain: 1 person, text

    Nasdaq is up 65 points at 6,840 – not even a pause at 6,800.  All we can do is ride the wave and hope there are no rocks.

    Big Chart/StJ – Oddly enough, 1,440 on /TF is just a 10% pullback, can't say that won't happen.  NYSE not even up 5% so this is really a headline stock rally.  Still a lot of upgrades going on.  BA price target raised to $380 and that's barely keeping up with $335 as of Friday ($346 today).  Good point on the Dollar – no mention of it as a factor in the MSM.

    /RB $1.8565, /CL $64.14.  Dying to short but too scary.  

    Coal/StJ – Thank goodness!  

    FNSR/Seer – As long as they hold $20, I'm thrilled.

    From the LTP (maybe a chance to get in if you missed it):

    Long Call 2020 17-JAN 15.00 CALL [FNSR @ $22.74 $0.00] 30 1/4/2018 (731) $28,200 $9.40 $1.05 n/a     $10.45 - $3,150 11.2% $31,350
    Short Call 2020 17-JAN 25.00 CALL [FNSR @ $22.74 $0.00] -30 1/4/2018 (731) $-15,900 $5.30 $0.30     $5.60 $0.20 $-900 -5.7% $-16,800
    Short Put 2020 17-JAN 17.00 PUT [FNSR @ $22.74 $0.00] -20 1/3/2018 (731) $-6,200 $3.10 $-0.30     $2.80 - $600 9.7% $-5,600

    Why is the VIX up?


  10. $200B just came out of crypto — maybe went into the DOW :)


  11.  

    China is heading toward a debt crisis that will throw into question everything we think we know about it's economy

     

     

     

    Seth Meyers and Trevor Noah explain why Trump's immigration vulgarity isn't the real story

    Broken staircases, improper food storage and inadequate smoke detectors — President Donald Trump’s Mar-a-Lago Resort in Palm Beach was cited for maintenance violations which could have posed a threat to public health, safety and welfare, according to a recent inspection of the 1920s beachfront property.

    North Korea’s official news agency responded Tuesday to President Trump's controversial “nuclear button tweet,” describing it as the “spasm of a lunatic,” according to the Associated Press.  “Trump’s bluff is regarded by the DPRK as just a spasm of a lunatic frightened by the might of Juche Korea and a bark of a rabid dog,” said the report

     

    Investors Place Record Bet that Market Winners Will Keep Winning

     

    The South prepares for wintry mix of snow and ice

    President Donald Trump plans to announce his “fake news” awards Wednesday. These dishonors are being handed out by the Commander-in-Chief at a time when more and more Americans believe they can’t trust the media while also believing it is more important than ever to hold powerful people—like the president—to account.  The news is “critical” or “very important” to preserving democracy, according to 80 percent of the more than 19,000 American adults surveyed for a new Gallup/Knight Foundation study published Tuesday. Yet less than half said they could pick out a news source they believe is objective.


  12. Phil, is there anything to do to lock in some profits or improve the positipn with a BCS that has run up way past the short call strike but still has a lot of premium to burn and months to go? For example I have the TGT 50/60 Jan 19 BCS which has another $1.20 to go. Thanks


  13. I have the same question as jelutuck… my TGT 2019 puts are 83% in the money… got about $0.70 to burn before January 2019.   Take profits now? 


  14. Profits- when in doubt, sell half . Usually my rule of thumb.


  15. Cryptos/BDC – Yes, $12,000 is a tempting place to re-enter BitCoin but I said I'd wait for $1,000 and I think I should stick to it.  cheeky

    TGT/Jet, Learner - Well TGT is $77 and the Jan $50s are $27 and the Jan $60s are $18.80 so $8.20 out of $10.  You want to avoid waiting a year for $8.80 to make $1.20 (13.6%) in a very safe spread, right?  I assume you have something much better to do with your money than make 13.6% so we'll take that as a given.  You could sell the $50s ($27) and roll to 2x the 2020 $70 ($14.50)/$82.50 ($8.75) bull call spreads at $5.75 so that would leave you with $15.50 in your pocket (more than the spread) and 2 x $12.50 spreads.  Then you could take the short Jan $60 calls ($18.50) and roll them to 1x the short July $75 calls at $6.75 and 1x the short 2020 $65 puts at $7 so that's net $4.75 of the sideline money out of pocket but you still have $10.75 in pocket and 2x 2020 $70/82.50 bull call spreads with 1x short July $75 calls and 1x short 2020 $65 puts and you have 3 more chances to sell short calls for another $18 – almost 2x what you have in the current spread plus whatever the new spreads are worth as a bonus.  

    See – easy!  

    And what Pstas said.  You could do it with a much smaller position as it returns 3x if all goes well.


  16. Phil / Hedge help-

    What would you recommend as a new hedge right now?  I know they just lose money and the market only goes up, but just in case sanity returns at some point…  Thanks!


  17. Softbank adding to Sprint position.    Curious.

    ~S 10% owner Softbank (SFTBY) bought 6,239,538 shares at $5.68-5.72 worth ~$35.6 mln


  18. Hedge/Mike – I still like SQQQ because it's hard to say how earnings reality can live up to expectations.  And, of course, TZA is always a good one to me.  The thing about TZA is it's only $10.90 so if you sell the 2020 $10 puts for $2.50, what's the big deal if you are assigned.  TZA would have to be up 10% for you to be assigned and up 20% would cost you 1/2 at $4.40 so, as long as you are going to make, say $50,000 if the Russell is up 20% in two years, then you know what you can afford to be assigned and lose half. 

    So, for argument's sake, let's say you'll risk losing $15,000 on a 20% RUT gain (about 1/3 of the $50,000 you expect to win) and that means you can risk being assigned $30,000 worth of TZA at $10 so you can sell 30 2020 $10 puts for $2.50 ($7,500) and that's your budget now for hedging.  

    Feb is too soon and March not really better and April is next earnings and the April $10s are $1.35 but you can only sell the $14s for 0.30 or the $15s for 0.25.  July $10s are $1.80 and you can sell the $15s for 0.60 so net $1.20 for July $10/15 vs net $1.10 for April $10/15 is a no-brainer to go for July and let's say you buy 40 of those for $4,800 and that leaves you with a net credit of $2,700 (about $1 per short put) and $20,000 of upside protection.

    That's a good initial hedge.  Don't forget the initial hedge is to make sure you don't get caught with your pants down on a 10% drop (when market circuit breakers are supposed to kick in) and should mitigate about 1/2 the damage.  If things turn ugly or we get nervous – we can always add more hedges but, more likely, in this market, we'll be using that extra money to roll the July $10s to the Jan $10s (now $2.50) for 0.70 or less ($2,800) and that then is our insurance for the year.  

    S/Albo – Softbank not very good at letting things go.


  19. Hedge – I noticed that although the markets are up today, my SPY hedges which were negative this morning, flipped positive about an hour ago.  It is the first time I've seen my spreads go positive (albeit not in a big way) when the market is up in this recent cycle.  More protection being sought to protect gains today I guess.


  20. Hedge / Phil-  Thanks for the info & explanation Phil, much appreciated 


  21. Wheee, nice dip finally and a pay-off on my long-suffering /TF shorts.  /NQ dropped 50 points ($1,000 per contract) – those were good too.  VIX up with the markets was a good warning sign.

    I'd keep tight stops on 1/2 at this point.

    You're welcome EMike.

    Interesting:

    • Qualcomm (NASDAQ:QCOMforecasts FY19 EPS of $6.75 to $7.50 (consensus: $3.79) in a letter to shareholders asking the investors to block Broadcom’s attempted takeover.
    • The company also forecasts FY19 revenue of $35B to $37B (consensus: $23.59B).
    • Qualcomm plans to reach its FY19 targets through a $1B cost reduction plan, resolving the ongoing legal dispute with Apple, and finalizing the NXP Semiconductors acquisition
    • If the NXP deal would fail to close, Qualcomm says it will initiate a “large” share repurchase to increase shareholder value.
    • Broadcom nominated a slate of board members to replace Qualcomm’s, which will go up for a vote at the annual meeting in March.
    • Qualcomm shares are up 3.4%
    • Previously: NXP investors will reject Qualcomm's tender offer (Jan. 16)
    • Nomura upgrades Qualcomm (NASDAQ:QCOM) to Buy and raises the price target from $58 to $75.
    • Nomura calls Qualcomm leadership “very smart” but “unassertive and complacent” at times. The firm expects the company to become more aggressive in driving shareholder value with the Broadcom hostile takeover attempt as the “gun to the head.” 
    • The firm calls the Broadcom bid “the most attractive long-term option for Qualcomm shareholders” but expects short-term bumps ahead in a strong earnings report and the potential closure of the NXP Semiconductors acquisition.  
    • Qualcomm shares are up 3%.  
    • Previously: NXP investors will reject Qualcomm's tender offer (Jan. 16)

    Lithium stocks slide amid Asian supply, SQM’s Corfo talks

    • Top lithium stocks are weak in today's trade, as supply addition talks are coming from Toyota buying a stake in Orocobre and Chinese investment to increase capacity.
    • The selloff also is occurring ahead of Sociedad Quimica y Minera’s (SQM -7.3%) upcoming talks with Chile’s government development agency Corfo; SQM fell as much as 8.7%, while currently ALB -3.9% and FMC -2.4%.
    • Toyota's (NYSE:TM) Tsusho unit will invest $232M to take a 15% stake in Orocobre, primarily for the expansion of the Olaroz facility which will more than double capacity to 42.5K metric tons/year, in the latest move by an Asian automaker to secure battery metals as the industry accelerates its development of electric vehicles.
    • Source: Bloomberg First Word
    • "If there is an electric supercar to be built then Ferrari will be the first," says Ferrari (RACE+0.8%) chief Sergio Marchionne on the sidelines of the Detroit Auto Show.
    • Ferrari is expected to unveil its full electric strategy in March as part of a company-wide strategy update.
    • Marchionne said during the weekend that he expects electric vehicles sales from a manufacturer to become mandatory in Europe in the short term.
    • #DetroitAutoShow18
    • David Einhorn has gotten into Twitter (TWTR -1.8%).
    • An investor letter from Greenlight Capital says "We initiated a small position in Twitter at an average of $21.59." (Twitter shares have declined this morning to $24.94.)
    • "Despite a massive user base and broad reach, TWTR has an enterprise value of about 2% of Facebook, the largest social media platform," Greenlight continues.
    • The firm also went long on Brighthouse Financial (BHF -0.7%), Ensco (ESV -3%) and Time Warner (NYSE:TWX), it said.
    • While most stock market segments enjoy sturdy gains, big miners are lower as copper and other base metals sink in "a sea of red” due to softening Chinese industrial activity ahead of the country’s New Year holiday.
    • Copper has plunged as much as 2.2% in London while nickel tumbled nearly 4% for their biggest declines since early December, after which they went on to surge 10% and 20%, respectively.
    • A steadier U.S. dollar also ended the euro’s four-day hot-streak; a weaker dollar had helped the sector by making raw materials cheaper for buyers holding other currencies.
    • "China’s fixed asset investment is expected to continue to slow, so that slowdown in China will weigh on select commodities in 2018,” says Atul Lele, chief investment officer at Deltec International Group, but other analysts think prices will continue to rise, supported by a favorable global economic backdrop and supply disruptions.
    • BHP -2%RIO -2.5%VALE -2.9%FCX -1.1%TECK -2.3%OTC:ANFGF -1.7%.
    • comScore (SCOR -17.5%) announced an agreement with Turner, expanding its existing (VOD & Core Digital Media Matrix Service) relationship to include linear TV ratings measurement and comScore's Advanced Audiences™ segmentation.
    • With this expansion, the company can combine household-level TV tuning information with consumer behavior data from third-party segmentation providers to go beyond traditional age/gender demographics. This allows potential advertisers to better target more relevant audiences, ensuring ads are being seen by the consumers they want to reach.
    • comScore's SVP of National Television Sales, Carol Hinnant: "Turner is one of the biggest players in broadcasting, so this agreement only further highlights the value of advanced audiences. It's good for advertisers, it's good for networks, and it's good for the industry."
    • Press Release
    • Google (GOOGGOOGL) plans to build three underwater cables by next year to help Google Cloud reach new regions.
    • One cable will connect Chile to Los Angeles, the second (done in conjunction with Facebook) connects the U.S. to Denmark and Ireland, and the third runs from Hong Kong to Guam. 
    • Netherlands and Montreal regions will open in 1Q18 with L.A., Finland, and Hong Kong to follow. 
    • Google now has 11 direct investments in cables, which help maintain service in an area in case of server malfunctions. 
    • Market share: Google Cloud held a 6% cloud services market share in Q3, according to Canalys research, The share represented a 76% growth on the year, but Google still took third place to Amazon Web Services (32% share) and Microsoft Azure (14% share.) 
    • Alphabet Class A shares are up 0.7% and Class C shares are up 0.9%.  
    • Previously: Google acquired speaker tech startup last year (Jan. 11)
    • Amazon Fresh (NASDAQ:AMZN) sales rose 35% to $135M during the last four months of 2017 after Whole Foods was swallowed up, according to data from One Click Retail.
    • Overall, Amazon hit an estimated $2B in food and beverage sales in 2017 to capture 18% of the U.S. online grocery market share.
    • Shares of Blue Apron (NYSE:APRN) are down 2.88% today in what could be a bit of a  reaction to the data dump.
    • BMO Capital raises its Amazon (NASDAQ:AMZN) price target from $1,200 to $1,600, a new Street high and 23% higher than Friday’s close.
    • Analyst Daniel Salmon writes that “the emergence of Amazon’s advertising business can support both margin and multiple expansion and could be a greater catalyst for the shares if management shares more data points like it did for Amazon Web Services.”
    • Salmon says Amazon’s product ads, headline search ads, and product display ads all add up to a $18B mid-term revenue opportunity. 
    • Amazon shares are up 2.2%.       
    • Previously: SunTrust raises Amazon price target to $1,400; shares +2% (Jan. 12)

    • Goldcorp (GG +3.7%) jumps in early trading after reporting preliminary gold production for Q4 and FY 2017 of 646K and 2.569M oz., respectively, exceeding the midpoint of gold production guidance of 2.5M oz.
    • GG also says it expects FY 2017 all-in sustaining costs of $825/oz. to fall further to $800/oz. in 2018.
    • President and CEO David Garofalo says GG is "well underway to deliver on our 5-year plan of growing gold production and gold reserves by 20% and reducing AISC by 20% by 2021."
    • "Too far and too fast," say Richard Hill and team of the shellacking in the REITs this year. As measured by the iShares U.S. REIT ETF (NYSEARCA:IYR), the sector fell more than 4% in 2018's first two weeks vs. a 4% gain for the S&P 500.
    • The story is a familiar one: An already-cruising economy is to get a further boost from tax cuts – that and a soaring stock market (ex-REITs, of course) assures a steady stream of Fed rate hikes. Who needs income favorites in that scenario?
    • Hill, however, notes commercial MBS prices have been on the rise even as Treasury yields climb. A mean reversion in REIT stock prices could be at hand.
    • Source: Bloomberg
    • The IYR, by the way, is bouncing - up 1.5% today.
    • U.S. Apple (NASDAQ:AAPL) iPhone activations were up 10 points on the quarter in Q4 CY17, according to CIRP data, up to a 39% share from 29% in September’s quarter.
    • Activations were up five percentage points on the year. 
    • Samsung (OTC:SSNNFOTC:SSNLF) came in second place in Q4 with a 32% share, and LG came in third with 13%. 
    • Apple’s Q4 jump on the quarter wasn’t surprising due to the later release date of the iPhone X, but CIRP partner Josh Lowitz says the year-over-year data shows that “Apple clearly improved its market position.” 
    • Apple shares are up 1%.       
    • Previously: Apple roundup: Cowen's iPhone build note, Mac sales +7%, AR glasses discussions(Jan. 12)
    • Cheniere Energy (LNG +3.1%) opens higher after commodities trader Trafigura agrees to buy 1M metric tons/year of liquefied natural gas from the company for 15 years beginning in 2019, indexed to the monthly Henry Hub price plus a fee.
    • Independent traders such as Trafigura, Vitol and Glencore have increased their presence in the LNG market in recent years, using their commodity trading expertise as well as their links with developing countries in Africa and Asia.
    • Cheniere CEO Jack Fusco says the deal, which is the first long-term agreement signed between an independent commodities trader and a U.S. producer, will help support the company’s expansion plans.

  22. StJL – your Eagles prayers for the Saints, were not answered by that Stone Skol Stunner. This week its the NFL's #1 defense invading your nest. Good luck.


  23. BDC – BDC turns off the TV – Whatever do you mean? Are you insinuating that there are shady dealings going on? Point shaving? The results of these sporting events are predetermined or even scripted? Where's Mulder and Scully?  CGB Spender has a message.

    Just like Phil, this isn't our first goat roping, we KNOW like the WWF its rigged. It's an entertainment product in which Hundreds of Billions of dollars are involved annually.  An industry all about money, mind share, and designed to distract the masses from what's really going on.

    When your gladiators are paid hundreds of millions, and billions in public funds are diverted and spent to build them coliseums, while education, healthcare, the poor and homeless suffer, you know where that societies priorities are, and exactly where it is headed.  

    Next time you drop the kids off at the pool, glance down and take a good look at the future, then flush to see where it is headed. That is the only guarantee because the real fix is in.  

    In the chariot a slave stood behind the conqueror, holding a golden crown and whispering in his ear a warning: that all glory is fleeting. Enjoy it while you can and Out.


  24. Meanwhile, speaking of investing:

    Cabot (CBT) is a nice, boring specialty chemicals company that's doing something exciting – they just bought a Graphene company called, sadly, Tech Bland for $64M, which is no big deal but a nice indication that they are moving into what I consider a huge growth area and, since CBT currently sells $2.7Bn of other stuff to customers along the world – they have a better chance of landing orders for Graphene than some company whose salespeople aren't already out to lunch with the purchasing managers.  

    They are running about $3.80 per $67 share so p/e 17ish and, unfortunately, high in the channel at the moment.

    Still, that's no reason not to collect $4 for selling 5 of the July $65 puts ($2,000) in the LTP to remind us to keep an eye on them.  


  25. chart

    chart

    chart

    chart

    This is why I am waiting on getting back into TEVA:

    chart

    BitCoin is prone to bad starts to the year:

    chart

    chart

    chart

    chart

    chart


  26. Damn, took my /TF money too soon.  Now below 1,590 and I thought we'd bounce.  

    Lined up with 25,900, 2,790 and 6,780.  /ES, /NQ and /TF close to going red!  /YM still up 94 but that's 150 off the high.  Silly markets….

    /KC tested $120, I added 2, of course.  Now 5 long at avg $122.69.

    /SI did not stay below 17 long but what a sneaky spike down to flush out the stops:


  27. Wow, and down we go.  

    No particular reason – just the whole move up was BS…

    Good reason to go long (HRB), who I like anyway:

    • H&R Block (HRB +1.2%) breaks higher after the company announces that it will be the "exclusive DIY" desktop tax software provider at Walmart stores.
    • "In addition to better prices, the value H&R Block can offer Walmart shoppers with our support features, such as free in-person audit representation and unlimited free tax advice, is among the many reasons we are so pleased to expand our partnership with Walmart this year," says H&R digital manager Heather Watts.

    They are very reasonably priced at $26.65 and they do pay a 3.6% dividend so I really don't mind owning them long-term. 

    In the OOP:

    • Sell 5 2020 $25 puts for $4 ($2,000) 
    • Buy 10 2019 $22 calls for $6.20 ($6,200)
    • Sell 10 2019 $27 calls for $3.40 ($3,400) 

    That's net $800 on the $5,000 spread that's almost entirely in the money already.  If HRB squeaks up from here, we make $4,200 (525%) but we will still have the open short puts for another year but, again, I'm very happy to own HRB at $25.

    For the LTP: 

    • Sell 10 2020 $25 puts for $4 ($4,000) 
    • Buy 20 2019 $22 calls for $6.20 ($12,400)
    • Sell 20 2019 $27 calls for $3.40 ($6,800) 

    So just doubling the OOP with an $8,400 (525%) upside on $1,600.   Nice boring way to make 5x I think! 


  28. Wow, Moviepass is getting $2 kickbacks from 4 movie studios for every ticket they buy!  They say when they promote a film – they can account for 10% of the box office and are generally accounting for 3% of the box office.   Prices seem to have gone way up – looks like $50/month now.  

    I don't see any reason not to sell 10 HMNY Aug $7.50 puts for $3.50 ($3,500) in the LTP and buy 20 $5 ($3)/$10 ($1.50) bull call spreads for net $1.50 ($3,000) for a net $500 credit on the $10,000 spread that's half in the money.  Worst case is we end up owning 1,000 shares for net $7 and I'm really starting to like what they are doing.  Revenues in 2016 were $6.7M and this year trending around $6 but I think it's going to explode.  

    MoviePass Hires Natasha Mulla as Company’s First Chief Marketing Officer

    A Look At What MoviePass Has Accomplished In 6 Months


  29. This is not even a big volume day on SPY so far – not a good sign with that kind of sell-off but could have been just one firm cashing out.


  30. Or several people realizing the last two weeks were crazy…


  31. Let the profit taking begin!


  32. Well, we expected a sell-off to begin in Jan, just wasn't expecting the big rally first.  

    • AutoNation (AN -1.4%) CEO Mike Jackson says mass adoption of electric vehicles is on the way.
    • Jackon expects global mandates to drive EV sales over the next five years before profitability enters the picture. He anticipates that EVs will account for 20% of all vehicles sales by 2030.
    • In the past, Jackson has said that he thinks Ford and GM aren't just blowing smoke about challenging Tesla (TSLA +0.3%) in the EV mass-market.
    • Source: Dow Jones Newswires
    • #DetroitAutoShow18
    • Shares of General Motors (GM +0.3%) were starting to close in on their 52-week high before the broad market turned this afternoon on government shutdown concerns.
    • The company is impressing at the early part of the Detroit Auto Show with model awards and its financial presentation. The snippets below from Consumer Edge Research's latest note on GM gives a taste.
    • "The company has a strong product mix looking into the new year with the launch of the updated Silverado light-duty pickup, among other products."
    • "In combination with a fortress balance sheet and an attractive share repurchase/dividend strategy, we believe GM to be rightly focused on next-generation technologies including driverless and electric vehicles."
    • "We think GM is doing the right thing by promoting its focus on (autonomous vehicle) tech and best as we can tell appears to at least be in the lead pack though the question is how many companies make up that pack."
    • Previously: GM higher after guidance update (Jan. 16)
    • Previously: Meet the Detroit Auto Show award winners (Jan. 16)

    • The Dow was up more than 200 points and topping 26K early in the session,  but has moved modestly into the red an hour before the close. The S&P 500 and Nasdaq are faring a bit worse, down 0.4% and 0.5%, respectively.
    • GE remains lower by 3.5% as investors begin to maybe contemplate the possibility of another dividend cut following a big insurance charge.
    • The banking sector is down 1% as investors sell some of the good earnings news.
    • Williams-Sonoma (WSM -2.2%) drifts lower after Goldman Sachs lowers the retailer to a Neutral rating from Buy.
    • The firm points to valuation on Williams-Sonoma after its run to +$55 and voices concerns on the impact of tax reform on high-end housing.
    • Williams-Sonoma isn't due to report Q4 earnings until March.
    • Sources: CNBC and Nasdaq.com
    • That Goldman Sachs (NYSE:GS) is about to post another weak quarter of trading revenue isn't news, and early Q4 reporters JPMorgan and Citigroup have already produced sluggish numbers. Things look especially bad in the commodities business.
    • According to Bloomberg, Goldman tomorrow morning will report about a 75% decline in commodity results for all 2017 – the worst year in the history of the bank, and it would put revenue at the Goldman commodity unit behind that of competitor Morgan Stanley (where revenue rose about 20% last year).
    • For longer-term perspective, commodity revenue for Goldman in 2008 neared $3.5B, and was roughly $1.25B as recently as 2015. It's expected to come in at $250M in 2017 (Goldman doesn't break out commodity revenue; these numbers are compiled by Compass Point and Bloomberg).
    • So far in 2018, things are looking up a bit, in part thanks to the cold snap and related binge in natural gas trading.
    • Goldman investors are looking well past this bit of news, with shares up 1.2% today.
    • Harmony Gold (HMY -3.6%) says it is on track to meet annual production guidance of 1.1M oz. after producing more than 550K oz. in H2 2017.
    • HMY says H2 gold production rose 3%-5% compared to H1, with gold production from its South African operations rising 9%-11% vs. the previous six months.
    • HMY also says its Hidden Valley mine is on track to deliver as forecast in FY 2018, after an infrastructure upgrade was completed and processing of ore started two weeks ahead of schedule.

  33. HMNY – The power of Phil ! 8-)


  34. So much for getting rid of Trump on health issues – he's getting a glowing medical report. 

    Well, that was a strange day.  RUT finished down 1% but the rest is pretty flat so kind of like a nothing day unless you pay attention to the drastic turnaround from the morning rally.  


  35. phil/BTC – re-enter point is $3k IMO.


  36. Could be there soon, BDC, $10,600 now! 


  37. HMNY/Albo – Oops.  


  38. Phil / FXI – getting close to 50 time to short this?


  39. Hmmm… 

    Ford shares dip as it provides preliminary 2017, 2018 numbers

    Ford Motor (NYSE:F) shares are quickly slipping postmarket, down 1.5%, after it's issued preliminary 2017 results that fall short of expectations and 2018 guidance on the low side.

    Speaking at the Deutsche Bank auto conference, the company says preliminary 2017 EPS is $1.78 on an adjusted basis, vs. $1.84 expected by Street analysts. Ford sees unadjusted EPS for 2017 at $1.95.

    For 2018, it's expecting adjusted EPS of $1.45-$1.70 vs. consensus for $1.59.

    It's detailing plans to "improve operational fitness, refocus capital allocation and accelerate the introduction of smart vehicles and services.


  40. If 'F' sells off, perhaps we can pick it up at a yield of 5%+ and then Yodi armchair it.  


  41. Learner / F – getting it under 12 would be nice…..  I exited this last year at just over 12, and never got back in it… at this point with the new leadership there is lots of excitement.  


  42. BLCM / Pharm(boy)   looks like they are the last of your three picks remaining




  43. Poll Finds Upturn in Sentiment on Tax Overhaul and Economy





  44. Good morning! 

    Dow up 140 so far but hard to get a handle on what's going on.  Seems like another round of manipulation that will lead to another sell-off but too scary to bet on.

    FXI/Batman – Very tempting, that's for sure.  It doesn't tend to break that upper channel so it's a high-probability short here.  Long on FXP is an interesting play, Feb $14 (0.95)/15 (0.45) bull call spread is 0.50 so you are putting your foot down at $50 and make a double if it dips a bit.

    F/Learner – I agree, good chance to get in.


  45. GS blew out earnings.