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Monday, February 26, 2024

Flatline Friday? Economy and Markets on Hold

Our charts predicted a flatline and a flatline is what we’re getting!

I do so love it when a plan comes together (see David Fry’s chart).  In yesterday morning’s post I predicted that bad data would send us down at 10 am and I rushed out our first Alert to Members at 9:37 with a call to go naked on our DIA Mattress play, which effectively flips our virtual portfolio bearish and we even added the QQQQ July $46 puts at .85, which we exited just one hour and four minutes later at $1.05 (up 28%) as we 1/2 covered our Mattress Plays back to neutral.  

We do a lot of day trading on options expiration week – taking advantage of the lower premiums.  As I said I would in the morning post, we shorted gold at $1,250 and we even shorted AAPL for a nice, quick gain before stopping out.  At 10:37 I had already said to Members: "I’m done with short plays here.  Not going long but that’s a lot of money already and I’m not greedy.  We’ll see if we hold this 1% dip first," meaning we got the 1% pullback we expected on our 5% rule and we know not to be greedy with our day trades!  At 10:57 we flipped to TNA June $47 calls at $1.20 and we rode those up to $1.60 (up 33%) at 11:54 but it was our TBT short put play that made me the most happy as brand-new Member Flipsiceland told me at 12:12:

Thanks Phil, just paid for my 3 month ‘prescription’ for the members service, in one and half hours.

That’s what I really love about my job, as it says on our logo:  High Finance for Real People – Fun and Profits!  We love making profits and we also like to have fun while we’re doing it…  The fun didn’t stop there as we had a nice winner on OIH puts, Copper Futures long and we hit the turn on the nose as I warned Members at 2:25 that: "Volume is very light with just 80M shares on the Dow at 2pm so VERY stickable but I would have to short into a stick save at this point as we shouldn’t be going up other than some desperate window dressing that can be quickly unwound" and at 3:19 we hit the turn almost on the nose as I said to our Members: "Volume at 3:15 is 99M on Dow, still super-stickable so take those short profits!"

JRW posted his target for IWM at 3:20, saying: "It’s all about confluence; I posted something in the last couple of days.  Right now I’m set up for a bounce off 66.36 for a close above 66.90."  IWM bottomed out at 66.35 eight minutes later and topped out at $66.82 into the close.  That may not seem like much but it gave us a big move on TNA, which is what most of us trade to follow the Russell and we got a $1 move on that ETF (2%) in less than 30 minutes.  See, it’s much easier to have fun trading when you know what’s going to happen next…   

We had another very fun, knock-down drag out debate in our Member Chat last night on Capitalism versus Socialism along with the normal Keynes vs. Hayek stuff we usually talk about when trying to solve the World’s problems.  Just when I was running out of liberal gas, our Nobel prize-winning buddy, Paul Krugman chipped in on the NYTime Op Ed page with this great summary of the economic situation:

Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s.

Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.

In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.

While Europe is openly discussing universal belt tightening and long-term sacrifice, the United States are engaged in an "extend and pretend" policy which is, of course, pushed by the top 10% and their Congressional and MSM flunkies, who push the idea that it’s somehow unAmerican to expect the rich to help shoulder the burden of debt they created.  I found this neat little chart last night that neatly sums up the cancer that has been taking control of this country for the past two decades.

Notice how financial workers (a good representation of the top 10%) have had positive changes to weekly earnings EVERY SINGLE YEAR since 1984.  Compound that year after year and you end up with STAGGERING amounts of money that have been transferred to the top 10%.  Where did all this money come from?  Certainly not from economic growth – in 1998 the S&P was at 1,100 – without adjusting for inflation!  Since 1998, the wages paid to Financial workers has gone from a weekly average of $1,000 to a weekly average of $3,000.  EVEN INCLUDING those fantastic salary gains for the top 10% – here’s how the rest of the country did during the same time period:

Not a pretty picture, is it?  These are real wages, a measure of the effective purchasing power of individuals and you can see that the government’s accounting for this vital statistic using their infamous "Core CPI" model is miles more optimistic than the real-world SGS model.  A tank of gas only cost $15 in 1998, not so terrible on a $300 of salary but $50 for a tank of gas gets to be a problem, doesn’t it.  The same goes for food, electricity, heat, shelter, clothing etc.  It’s very easy for the top 10% to get confused as to the reality of the impact of inflation on the bottom 80% as most of us don’t even know how much milk and eggs cost. 

If you are annoyed by people who stand in front of you in line and ask a cashier how much an item costs and then spends a few seconds deciding whether or not it’s worth it – then congratulations, you are an out-of-touch top 10%’er!  If your reaction to that scenario is "Do they really let those kind of people into my store?" then you are most likely in the top 5% and, if you were thinking "I’ll have to ask my personal shopper if that really happens" – then you are probably in the top 1% where inflation only affects you at art auctions and the shipyards.

As Krugman says, Senator Nelson and the other 51 Senators who voted not to extend unemployment benefits because we can’t afford $77Bn while extending $35Bn in tax breaks to oil companies IN THE SAME WEEK are A CANCER that is eating away at the fabric of American society.  This is not Capitalism folks, this is Corporate Welfare.  No, not even Corporate Welfare, although we certainly do plenty of that, this is Government-sanctioned Corporate Piracy as they have taken over our government, boarded our ship of state, looted the lock box and are now walking 1M people PER MONTH off the unemployment plank as their benefits run dry. 

WAKE UP AMERICA – they are robbing you blind!  How can you go to the polls and re-elect these thieves?  They don’t give a damn about you or your home or your family – they only care about the Corporate pimps who dress them up and parade their pet politicians in front of you every couple of years so you will vote to maintain the status quo.  They own the media which tells you over and over again how unAmerican it is to expect the government to reign in Big Business as if it’s Big Business’ goal is to take care of you.  This is like cows voting for the abattoir because they don’t want to be milked anymore!

Anyway, it’s options expiration day and it’s my job to take care of my people and make sure they can take adavantage of this nightmare and make some money because we damn sure won’t be able to count on Social Security to get us through retirement

Speaking of Retirement and ways your Government is going to screw you over completely – unless you are only watching Fox news, it should be pretty obvious to you that taxes WILL be going up in our future.  That means if you invested in a 401K or other tax-deferred retirement account on the premise that you will be taxed at a LOWER rate in the future, you may want to have a serious talk with your financial adviser.  That goes for expected capital gains, home sales and whatever else you can think of that the government will ultimately have to be grabbing if the deficit hawks take command in November and this country is forced into an austerity mode, as we were brilliantly convinced to do in the 30s by the banks who weren’t done grabbing all the land and wanted push the economy down even further. 

We are stagnating here at best and even our fake, Fake, FAKE rally couldn’t convince Asia to BUYBUYBUY this morning as the Shanghai FELL 1.8% on their first day back and th Nikkei was dead flat.   Europe is also flat just ahead of the US open and our futures are flat as a pancake, which is probably where we’ll close but we’re going to be ready for anything and setting ourselves up to take advantage of a possible sell-off next week – allowing ourselves to be pleasantly surprised if it DOESN’T happen. 

Have a great weekend,

– Phil



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