by phil - November 23rd, 2016 8:28 am
Last time all our indexes hit all-time highs together was back in good old 1999 and that party was never going to stop either – unitl it did, of course. The pullback in 2000 wasn't even that bad, if you don't count the silly run to 5,000 on the Nasdaq that made no sense, then the pullback from 4,000 to 3,000 was very normal – it was only the crazies that bought stocks up at Nasdaq 5,000 that got really burned….
Of course, that Nasdq wasn't the same Nasdaq we have today. There is no more Pets.com (Amazon delivers our pet food), there is no more WebVan or Kozmo (Amazon delivers our groceries) and, of course, there is no more Books-a-Million (yep, Amazon).
Aside from Amazon, who lead the overpriced team in the new dot.com bubble with market cap that is 179 TIMES their projected (forward) earnings, other survivors of the crash of 2000/2001 are AAPL, HPE, IBM, MSFT, GOOGL, INTC, CSCO, ORCL and IM, who are especially notable as they actually compete with Amazon yet they still survive.
So clearly it is better to be a company that actually makes stuff – especially stuff that other apsiring tech companies buy from you. For AAPL, it's tech employees who buy there stuff and for GOOGL – they advertise all the stuff people are trying to sell you. Yet AMZN has a $373Bn market cap – bigger than all the dot.com stocks put together back in 2000!
Amazon was coming back to reality before the election but now it's off to the races again and, while we're not worried about our Jan $900 short calls we sold for $8.10 the last time AMZN popped (now $1.98 so we're up 75%), it is getting interesting again as a short for those brave enough to point and say "Emperor Bezos has no profits!"
Well, they do have profits but they are all in their cloud storage division – the rest of the business is actually running at a loss this year. Anyway, it's an interesting stock to short. I favor the April $850 ($90)/780 ($50) bear puts spread at net…
by phil - November 22nd, 2016 8:04 am
Yep, we did it again.
In yesterday's post, I noted that Gasoline Futures (/RB) were taking off, as they crossed the $1.35 mark and said our target was $1.45 and they already hit $1.40 during yesterday's session and it came so fast that we took the $2,100 profit per contract and ran, missing this morning's pop to $1.43 but hopefully we'll retest $1.40 for another entry (and another $2,100).
We're now into real profits on Gasoline Futures as we clawed back from our intitial loss with huge wins on Monday (+$1,875 per contract), Tuesday (+$1,875 per contract) and Thursday (+$420 per contract), where I said in Friday Morning's post: "Hopefully we'll pop over $1.35 (from $1.33) and run up from there.
We laid out our long premise for gasoline almost 3 weeks ago, right in the morning post:
So more people working making more money means more driving yet Gasoline Futures (/RB) have plunged to $1.39 this morning because that pipeline fire that caused prices to spike (which we shorted) earlier in the week, is already fixed but now we like /RB long because more workers = more drivers and we have the Thanksgiving Holiday coming up and that's a big demand holiday. We made a quick $500 yesterday on a pop off the $1.45 line so this, of course, is a much better entry but it's a scary, volatile contract that makes or loses $420 per penny move!
It's those boring FUNDAMENTALS that make plays like this possible and the next Funamental Issue we're tracking is the very low volume that this "rally" has been trading on and that means there's no real support for this sudden $5 TRILLION surge in market valuation so, when people do finally decide it's time to take profits – there won't be any buyers and we can drop back very, Very, VERY fast.
by phil - November 21st, 2016 8:32 am
Up and up we go.
If we knew voting for Trump was going to be this good for the markets, we would have doubled down on our longs. As it is, our Long-Term Portfolio gained $98,471 since Nov 6th and that's 20% in 15 days so thank you, Mr. President!
Of course our Long-Term Portfolio is all long, protected by our Short-Term Portfolio, which lost $10,968 (11%) on our hedges but not so bad as the net is still up $87,503, which is a gain of 14.5% in 15 days in our paired portfolios (we began with $500,000 in the LTP and $100,000 in the STP). Our self-balancing Options Opportunity Portfolio gained $7,843 (7.8%) over the same period and our well-hedged Butterfly Portfolio gained $16,100 (16%) – actually our best overall performer – even though it's our most conservative.
As you may have noticed, I've been banging the table on Gasoline Futures (/RB) and that finally took off this morning, breaking towards our $1.45 target. Natural Gas (/NG) hit $2.95 and that's a "take the money and run" level as $3 is going to be hard to break and the cold weather on the East Coast that's goosing the contracts will only last this week and then it's back to warmer than usual weather.
Speaking of weather, we figure out why Warren Buffett changed his mind on airlines and it's because of the weather. NASA just launched a very advanced satellite that will do for weather what Hubble did for astronomy and will improve our forecasting ability by leaps and bounds. That's going to benefit the arilines, a business where every penny counts and knowing where the storms are going to be can save them Billions. The current NOAA satellite is 40 years old!
More accurate weather info can help airlines plan better and save Billions of Dollars and that's right to their bottom line. United does $40Bn in sales and drops $3Bn to the bottom line (9%) so even a 2% increase in operating efficiency is about another Billion for them and a 33% increase in net income. Now THAT makes sense as a Buffett play.
by phil - November 18th, 2016 8:31 am
Down goes the Dollar!
That's significant because it's Options Expiration Day today AND we're settling the December Oil Futures Contracts (/CLZ6) so the well-timed 0.5% drop in the Dollar (which we predicted – thank you!) is boosting oil, gold, the indexes – well everything priced in Dollars – you get the idea. This is how they take advantage of TA people because TA doesn't take into account the value of the underlying currency of the thing they are charting.
To illustrate how silly that is, suppose you were charting the freezing temperature of a water and they kept changing the type of liquid but you just kept putting lines on the chart as if it were water all along.
A person looking at the chart would believe the freezing temperature of water varies wildly and they would come up with all sorts of idiotic reasons to explain this and, if there was a market for betting what temperature water would freeze at, they would start naming the chart patterns and selling you analysis that claims to give you the inside edge to bet what temperature water would freeze at tomorrow.
Does that sound idiotic? Well that's Technical Analysis! Water freezes at 32 degrees F and that's a F'ing FACT, not a theory. F is also the first word in Fundamentals – where we deal in FACTS, not theories. You can't ignore a massively significant FACTOR, like the price of the Dollar and expect to accurately chart the movement of something that is priced in Dollars.
Of course, at PSW, we are Fundamentalists and we do take these things into account, that's how we knew to go long on Gasoline Futures (/RB) at the $1.325 line this morning – based on the chart AND the chart of the Dollar AND the expectation of a rumor from OPEC we discussed in yesterday morning's PSW Report. We've been in and out of /RB all week and, at 3:24 pm in our Live Member Chat Room, I said:
RUT/Jasu – Still 6 short
by phil - November 17th, 2016 7:41 am
Will we still have Janet Yellen to kick around next year?
Almost certainly we will because her term as Chairman of the Federal Reserve doesn't expire until February, 2018 but, even if she is not re-appointed as Chair – she's still a Governor until 2024 and Trump has no ability to remove her. Likewise, Fisher remains vice-chair through June of 2018 and his Governorship lasts through 2020 and there are only 7 Governors with two open slots because, like the Supreme Court, Congress has refused to confirm any of Obama's picks for replacements (yes, they are that petty). So now it's going to be up to Trump to confirm 2 new Fed Governors but it will be many years (past his term) before it's likely to have any real influence on the Fed.
And you've heard the expression "don't fight the Fed", right? Well that goes for Presidents too because the Fed represents the nations' bankers, not their voters and you cross the money-men (or women) at your own great peril. Janet will get a chance to tell us about it today as she begins her two-day testimony to Congress. It's a great day to short the market (same levels as yesterday) as you can expect questions from Democratic Congresspeople like "Just how insane is Donald Trump's economic policy and how much damage will it do to our country?" – stuff like that…
Of course, Yellen will attempt to remain bi-partisan and pretend she doesn't know what programs he's proposing and will even pretend she can't do math and, hardest of all for a grandma from Brooklyn, she will pretend she has no opinion on the subject – it's going to fun! Fun, but it will come off as uncertain and confusing to those watching and you really don't want to see that when you are holding stocks at the top of the market rally.
Yesterday we thought 2,180 would not hold on the S&P Futures (/ES) and, of course, they did not but, in our Live Trading Webinar yesterday afternoon, we decided to short the Russell (/ES) and we're currently short 6 at 1,302.8 so we'll see how that plays out.
by phil - November 16th, 2016 8:30 am
Another day another $15,000.
That's right, yesterday's long play on Gasoline Futures (/RB) that were already up $15,000 from Monday's call, gained another $15,000 yesterday. Not bad for two day's work, right? We only made $10,000 more though as we cut back to 6 contracts at $1.32 – as we didn't want to be too greedy but, as you can see on the chart – they kept on going higher and higher – all the way to $1.34 before finally pulling back.
NOW you missed it – I can't heartily recommend this as a new trade the way I did yesterday and Monday but we do have a Live Trading Webinar today at 1pm (EST) and I'm sure we'll find something fun to trade there. Another good call from Monday's post was Barrick Gold (ABX), which blasted higer yesterday as George Soros followed us in, buying 1.8M shares, about 1.5% of the company. Monday's Oil (USO) trade idea is also blasting higher, made even more significant as it's doing so against a strong Dollar.
Oil led the rally yesterday and the S&P seems to have lost its oil dependence way back in May though a bad inventory report today is likely to spark a sell-off that will pull the index down from the 2,180 line and the /ES Futures are testing our shorting line at 2,170 (short below, tight stops above) along with Dow (/YM) 18,900, Nasdaq (/NQ) 4,760, Russell (/TF) 1,295 (raised from Monday's 1,290) and especially the Nikkei (/NKD), now 17,900 and a really fun short (and see Monday for our Nikkei Index (EWJ) play.
Today's EIA inventory report at 10:30 is going to be critical and we are still long 6 contracts in the Futures (see above) but expecting a possible pullback. Waterborne gasoline exports surged after Colonial Pipeline Co., the main system that moves Gulf Coast gasoline to the Eastern Seaboard, shut for six days following an Oct 31 explosion. The outage backed up almost 8Mb of gasoline that would normally flow to states in the Southeast and along the Atlantic coast.
by phil - November 15th, 2016 8:31 am
How's that for a good call?
As I told you in yesterday morning's post, we've been pressing our long commodity bets as the Dollar topped out at the 100 mark yesterday morning. As you can see on the right, our gasoline (/RB) longs made $15,000 this morning and yesterday, my pre-market comment was:
What I can tell you is that, generally, a strong Dollar puts negative pressure on commodities, as well as the indexes so, if the Dollar were to pull back off the 100 line (and a weak retrace takes it to 99 which a strong one will test 98 without breaking the still-bullish uptrend), then that will boost Gold (GLD), Silver (SLV), Oil (USO), Gasoline (UGA) and Natural Gas (UNG) – all of which look like good long-term pokes here at $116.50, $16.35, $9.75, $24.50 and $7.05 respectively. Of course we have really cool options plays to leverage them but, again, we have to save some things for our Members or it's no fun!
If you missed the post (and you wouldn't if you subscribed) you might have caught me over at the Nasdaq at 10am, where we reiterated our short call on the indexes (and they were still over our lines at the open) as well as our bottom call on Oil (/CL), Gasoline (/RB) and Coffee (/KC).
We're still a long way from getting even on our Gasoline (UGA) trade, as we entered too early on /RB and need to be over $1.37 to begin netting a profit but we have faith that Thanksgiving weekend (next Thursday) will give us the boost that we're looking for. Oil (USO) still has to get past the contract rollover on Friday but, after that, we should see some quick upside action.
Meanwhile, those Futures shorts we gave you (also in the morning post) made a $625 per contract profit at Dow (/YM) 18,775, $750 per contract at S&P (/ES) 2,155, $1,600 per contract at Nasdaq (/NQ) 4,680, $800 per contact at Russell (/TF) 1,282 and $500 per contract at Nikkei (/NKD) 17,600 and, best of…
by phil - November 14th, 2016 6:38 am
Go Dollar, go!
As you can see on the chart, we had a blow-off spike down to 96 on Election Eve but, since then – it's been a rocket to 100 for the Dollar which is now up 5% since early October and really 3% of it came in November, after our first pullback from 99.
None of this is a surprise to our Members, of course, as we told you back on 9/14, right in the Morning Report (subscribe here if you like to know what the market will do in advance):
Goldman Sachs has finally caught up to our long Dollar (/DX) premise and we're still sitting on 4 longs at 95 on the Dec 31st contracts (DXX6) with a goal of hitting 100 (but we'll take 99.50 for $4,500 per contact gains for the holidays). We're expecting a bit of a repeat of last October's action and, until then, we'll just need to be patient. As I was saying to our Members yesterday, we don't know WHEN enough people will realize we're right to move the Dollar higher but we do know it won't take much of a catalyst to get it going – a Fed hike next week would be a good start.
If you are futures challenged, the Dollar ETF (UUP) is a nice way to play, now $24.64 and you can buy the Jan $24 calls for 0.85 and sell the $25 calls for 0.35 for net 0.50 on the $1 spread which is already 0.64 in the money so, if UUP stays flat through January expirations, you make 28% but the potential is 100% gain if up moves up just 2% to $25 – that's nice leverage!
So that's goaaaaaaalllllllllll at 99.50 for gains of $4,500 per contact in less than two months and those…
by phil - November 11th, 2016 8:32 am
This is NOT good.
Not only are rates spiking 20% since the election but we just had the worst Treasury Auction since 2009 – indicating that investors are quickly losing faith in the US's long-term economic prospects. And, keep in mind that's WITH expectations that the Fed will tighten in December and WITH a strong Dollar, which is usually a factor when deciding what currency you'd like to tie you money to for 5-30 years.
We are, of course, shorting the markets again this morning. Yesterday's watch levels didn't fail so today we raised them in my morning note to our Members and we're focusing on Russell (/TF) short below 1,250 and the S&P (/ES) below 2,160 confirmed by the Dow (/YM) failing 18,700 and Nasdaq (/NQ) below 4,700. Trump may make America great again – but he doesn't get to change anything for 2 more months so I think the market is getting a bit ahead of itself.
While quite a lot of money poured into the market on Wednesday, the volume yesterday was still 70% over average but the S&P only went from 2,163.26 to 2,167.48 – up just 4.22 (0.2%). If it takes 70% over average volume to buy us 0.2% – it seems to me that a lot of people must be heading for the exits.
The Dow burst higher yesterday but 4 companies (GS, JPM, UNH and IBM) were 180 (75%) of the 240-point rally – that is NOT broad-based! In fact, the entire rally of the past two days has been centered on Pharmaceuticals (no more Obamacare – charge whatever you want!), Oil, Gas & Coal (drill baby, drill), Defense (who hasn't he threatened?) and Financials (repeal regulations helps the little guy how?).
Yesterday we got the first inkling of money going the other way as investors began to rethink their Tech Sector investments under an anti-science administration. Alternative Energy stocks have been a cornerstone of investments in tech for most of the past decade and that's the kind of unwind that won't play out over just a couple of days.
by phil - November 10th, 2016 8:30 am
That's how much yesterday's 5 futures plays gained in less than 24 hours – thank you President Trump! And your welcome to all our appreciative readers who are learning to love the new administration by cashing in on their policies – we look forward to a wild 4 years and then the usual 8 years the Democrats will spend trying to fix all the damage. But that's in the Future – yesterday, right in the morning post, I said to you:
Well, I may have sold my Futures too soon but we have great lines for re-entering longs at 18,000 on /YM, 2,100 on /ES, 4,700 on /NQ, 1,175 on /TF and 16,800 on /NKD. Tight stops below, of course and you can even use them as shorting lines if you need them (with tight stops above) but, as noted earlier – it was an overreaction.
We went pretty much straight up off those lines. You can see the S&P (/ES) on the charts above and here's the Russell (/TF), which gave us the best bang for the buck, picking up $7,500 per contract as it tested 1,250 this morning. Our other winners were the Dow (/YM) at 18,650 – a $3,250 per contract gain, Nasdaq (/NQ) at 4,875 – up $3,500 per contract and the Nikkei (/NKD) hit 17,550 – up $3,750 per contract so our 5 index calls, which we sent as an Alert to our Members at 4:58 am, gained a total of $21,000 – and that is over and above what we made playing the night before on the massive sell-off, when we first decided President Trump would not be so terrible.
This is why we teach our Members how to play the Futures as well as how to use options to enhance their portfolio returns – sometimes things happen after hours that you can take amazing advantage of and, with President Trump – we look forward to LOTS of those things happening on a regular basis!