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Thursday, March 30, 2023


Testy Tuesday – Already?

Wheeeee, this is fun!

It's only been a week since I called for "Turnaround Tuesday" and asked the question "Will CNBC Apologize to America" for their ridiculous, sickening parade of negativity that chased their poor viewers out of the market (now 600 points ago) by completely misrepresenting the economic outlook in order to protect the TERRIBLE advice given by Jim Cramer, the Fast Money Crew, their sponsors etc. etc. – it was all one national frenzy of media negativity designed to shove retail investors entirely out of the market while the cognoscenti went shopping.

It's not just CNBC, of course, it's a problem with the whole MSM but I ranted about corporate (top 0.01%) control of the media last week so let's move on as we wave bye-bye to all the beautiful sheeple who were kind enough to sell us their stocks at the bottom, despite my warnings.  Our 500% upside plays are now well on their way to making 500% for us and our "9 Fabulous Dow Plays Plus a Chip Shot" are also looking good already.  Even the trade ideas I mentioned right in last Tuesday's post are well on track as I said last week:

On Friday, I had said to Members right at 9:38, in the Morning Alert: "If we run up, then it will be prudent to get more neutral into the weekend but if we stay down and hold our levels, then saying a little bullish will be fine. Out of short-term short trades if you haven’t already.  Keep in mind we have some great 500% upside plays you can still grab here if you think you are too short." 

The latter was a reference to our 500% upside plays.  We also went with EEM July $38 calls at .99, and a QLD $50/53 bull call spread for $1.30 (selling puts as well for more profits) as well as long plays on RIMM, AA, HOV, VLO and TASR.  My optimism was based on the considered TA analysis I shared with Members at 2:39:

After completing last month’s "Omega III" market pattern on the Trade Bots, it’s now time to spring the bear trap and run the "Apha II" into options expiration on July 16th.  Maybe there will be as little logic to the rise as there was to the fall – who really cares – it’s just our jobs to try to catch these waves when they come and ride them out for as long as they last (until the cheerleaders are back on CNBC and we know it’s time to bail!). 

So far, so good – right?  Of course, now that we are up 60 S&P points in 4 days, we have to consider taking on some new downside protection.  We'll be looking at that today in Member Chat this morning as I have to see how we handle our upside targets for this week (set last week), which are:  Dow 10,290, S&P 1,102, Nas 2,257, NYSE 6,930 and RUT 651 – the 5% rule off our (also predicted) bottoms.  I don't think we're ready for a breakout today but a good run on the Dow could give us a look at 10,300, which would be exciting

Europe is hitting all of our levels this morning on a 1.6% relief rally after seeing the first day of US earnings.  This despite Moody's downgrading Portugal and Sarkozy having to defend allegations of corruption.  Things have gotten so bad for Sarkozy that he had to cancel the Bastille Day Party (lest the peasants get any bright ideas).  Asia was generally flat other than the Shanghai, which pulled back 1.6% on a sharp rejection at 2,500.  The Baltic Dry Index is still looking like it should be renamed "Voyage to the Bottom of the Charts" and that just can't be good – probably our most worrying global indicator although increased shipping volumes may play more of a role in the drop than actual lack of demand:

It is still all about copper, which is about to test a "life cross" as the 20 dma crosses over the 50 dma and if that can't give copper a nice pop back to 320 then we will have to assume that it's been artificially supported and will be collapsing along with the BDI and probably followed by oil and gold.  Natural gas (not charted above) has already been knocked down to $4.38 with just one more month to go until the start of hurricane season so – if copper does pop, then I'd chase nat gas with plays like UNG and CHK.  Oil also made a life cross and you can see the critical test lines in our local indexes

Notice how the 50 dmas (red lines) are converging on our 5% test levels (and also notice how cool it is that we were able to predict where the 50 dma would be two weeks ago!) so we can expect some very interesting action around there and if we can clear them without a pullback – then we are good to go for another 5% run before the next serious resistance.  It will take some good earnings reports to justify 1,157 on the S&P but so far, so good with sales at AA up 18% despite lower aluminum prices and CSX reporting "volume gains across all major markets.

NVLS also had great earnings, with revenues up 169% over last year.  Later today we hear from AIR, ADTN, HCSG, INTC, INXI and YUM and tomorrow morning it's AMR, JTX, PGR and TXI and THEN things begin to get crazy (as you can see from this Bespoke chart).  Bespoke studied all 65,210 earnings since 2001 and found that, overall, 62% beat estimates and 25% missed with 13% in-line.  Revenues, on the other hand, never seem to be in-line with 62% beating and 38% missing for the full 100% there.

Later this week we get MAR, FCS, JPM, AMD, GOOG, SCHW, BAC, C and GE with our last three Financials on Friday and that's why our current hedge is FAZ but only until then, after which we switch to a more general, long-term index hedge – hopefully with our indexes much higher!

Still, in this "flash crash" environment, we will need to begin protecting our gains today because you never know when the market will drop 1,000 points for no apparent reason.  It's a silly, irrational thing to have to worry about but, fortunately, that means it can be covered with silly, irrational hedges that have huge leverage.  Small investors have been fleeing the market in droves for quite some time and we can never get too comfortable playing all day against Uncle Lloyd's TradeBots so we will play it a little bit cautiously until the sheeple come back to play as their behavior is much more predictable (and Cramer was already herding them back last night as he goes into full reverse mode without missing a beat).  "Could we be seeing a cease-fire, or even a truce, in Washington’s war against business?Cramer asked viewers on Monday. “That would be about the most bullish thing that could happen right now.” 

Much more data tomorrow including Retail Sales for June, Import/Export Pricing for June, Business Inventories for May, Oil Inventories for July 10th and Fed Minutes at 2pm.  Thursday we get another 450,000 layoffs (remember them?), 24 earnings reports, PPI, Empire Manufacturing, Industrial Production and Capacity Utilization and the Philly Fed and Friday we finish the week off with CPI, TIC Flows and Michigan Sentiment.  While this is going on, FinReg should be passing by the end of the week and keep in mind that this is all the same stuff that was blamed for taking us down a month ago in this silly, silly market

Barry Rhitholtz reminds us that: "The President had barely been in office for 18 months when the pushback to his agenda became fierce. The media and the opposing political party all focused on the budget deficit. Most of it had been accrued long before this President came into the office, but that did not stop him from getting the full blunt of the blame. “We must stop this fiscal profligacy, or it will be the end of us!” the critics all cried.  But the president ignored the critics, and put forth a deficit laden budget that contained a massive stimulus and tax cuts. He even joked about the debt issue: “I am not worried about the deficit. It is big enough to take care of itself."

Of course that President was Ronald Reagan, not Barack Obama who is is also dealing with huge deficits and targeting tax cuts to his electoral base while allowing policiies of his predecessor to expire.  "I continue to see the Austerian movement in the United States as thinly disguised partisan politics," says Barry.  "These are people who will say anything to keep the subsidies and tax benefits flowing to their electoral base. They will say anything –regardless of whether they actually believe these things — to thwart the opposing fellows priorities.  Anyone who believes the new deficit fighters care about deficits has not been paying attention.

"This is simply about power and money and legislative priorities and cash. With only a very few exceptions, it has nothing to do actual fiscal priorities and debt loads and deficits.  The vast majority of these new deficit chickenhawks — who voted for unfunded entitlement program (prescription drugs), who gave away trillions in unfunded tax cuts, who voted for a trillion dollar war of choice, are simply not to be believed. Their past actions speak far louder than anything they might say today."




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Very impressed by today market moves on solid volumes
Almost perfectly orchestratred to reach your levels, Phil.
We are now just 800 dow points below our BS top of the year (or -7.5%).
I sold all my long positions today, waiting for the next predictable big move – hopefully down!

Glade I could help. I am still learning a lot every day. The only way you learn is ask questions.
See you tomorrow

Well that was fun not watching from 8:00 on; wish I had done a full position instead of 1/2 !! $2.50 on the trade, 3% on the day for the portfolio with my eyes closed !!

If FAZ goes below 13.56 tomorrow I’m obviously wrong but by the looks of it FAZ has bottomed today.  Today was total tradebot control.  Folks were dumping into it and the bots just kept coming back for more.  Looks like a top to me.  Unfortunately, OE isn’t for 3 more days.  Lionel, I think you made the right move-

Hi Do you still see any light in APPY or shall one just take the loss?  thks

Wax on Wax off!  HAHAHA….  At least it’s exciting but nothing is different than it was 2 weeks ago but I love the movement, 8-8 today and 2% mostly on TZA if you could believe, counter trend trading!  It’s been a long time since that’s happened. 
I’ve added standard 20, 2, -2. 0 bollinger bands to the 1 min charts on TNA – TZA WITH the 8MA chart.  Take a look at the relationship with the bollinger bands and the 8MA, it helps me see if it helps you.  If the market is trending they work particularly well if the market is choppy forget it. 

Matt…. I want to agree but it might breach that low and rally for a few more days but I would strongly guess in 10 days things will look much different and much lower.

Nice call on the IWM 66 calls, a double for the day !!

INTC beats!

Sorry another post.  What does the grey color around some of our names represent, I’m sure Phil mentioned it but I’ve been out of the loop…

INTC .51 cents  "best qtr ever"  67% GM’s. SPY popping,

 Intel reports best quarter ever – Yippee!

Intel Corporation today reported second-quarter revenue of $10.8 billion, up 34 percent year-over-year. The company reported operating income of $4.0 billion, net income of $2.9 billion and EPS of 51 cents.

Estimated revenue: $10.25 billion

Estimated EPS: 0.43

AMD … yippee!

 Intel is slamming it!! Tmr we may have a blow off top IMO. China GDP on thurs most likely overshoot

Phil / ‘Them’     I guess the Intel guidance gives ‘Them’  an opportunity to take us over your levels while we sleep?  Does this set up tomorrow for another Pamplona?

JRW- RUT- I know you deal with daily support/resistance but do you have any thoughts on S/R lines for the RUT going out to August opex? I am looking at repositioning some short strangles, i.e., flipping some puts to calls on this run up.

Phil / Valero   The stronger refining margin guidance from CVX would seem to support a buy on VLO?

VIAP/gel – that was ME!!!!!
CaFords – thx.  VVUS and ARNA still have a huge short interest (25% float), so I think there is some covering going on.  Days to cover b’w ARNA and VVUS are 2:1.  Now, VVUS traded 30M shares, almost 50% of their float where ARNA was about 10%.  Just trying to figure out which way ‘they’ are going to take it after the DCTH debacle.

David be careful with AMD, looks like INTC is cleaning their clock.

 Pharm- What is the "DCTH debacle"?

pstas / R/S












Note these levels change with time !!

Hi Phil– sorry just now able to see your comment, see if I get this right from you, buy back the august 280 short call, roll my aug 250 long put down to 240strike, at the same tiem sell july 250 put — after market i see the price is at 2.67– did not see 5, I gues it decay so fast since last you enter the comment, wait till after earning, and possible sell the august 270 short call again to make 30$ spread again after earning — I am not sure why you recommend to sell july 250 short put — ? to pay for rolling long 25call down to 240 strike ??? and also expired in 3 dys and hopefully wortless — am I thinking right? thx

JRW- thanks- what are the numbers below the numbers? 2, 2, 2, 6, 8, etc?

Do you have an anticipated target price for ARNA if approved, either short-term trade-wise or long-term based on sales and penetration?

Thanks for the move today — ha ha – I’ll do the same for you tomorrow, and maybe we can get  some new interest in this stock!

pstas / #’s
Relative strength

 Phil, thanks for your insights on SRS :-). Funny thing about real estate – IYR doubles since 2009 low, but you will be hard-pressed to find an actual piece of real estate that has appreciated in that time frame. Do the REIT’s underlying IYR just keep buying down and rely on rental streams to keep growing? Or is IYR just up on speculation?

I just went over your disaster plays and I have a question on these 3.
DXD Oct 23 calls
your price 3.90
current price 5.00
Selling Oct 27 calls
your price 2.10
current price 2.40
Selling Oct 23 puts
your price 1.55
current price .55
Oct 9 calls
Oct 14 calls
Oct 10 puts
Sept 26th calls
Selling Sept 32 calls
Selling Sept 27 puts
Are these plays are still current according to month and current prices? 

Only person in the media asking the important questions

BP Cap Test  – I believe the file below is the BP test gage live feed (can open in media player).  8,000-9,000psi needs to be held for 6 hours once the valves are shut (sometime today)… less would bring into question the structural integrity of the casing.  8,000 psi should be at the "3-o’clock" position, yet hard to read due to sediment covering the gage, and the visual distortion from the saltwater currents… (also note the gage is rotated 90 degrees CW in the feed).  
Below is the article explaining the procedure in more detail:

Hmmm…actually this ROV might be the correct pressure gage instead…there seems to be two gages out of the twelve video feeds:
Here is the oil live feed:

second gage is actually this one:

VIAP/gel – I am not confident that they are going to be around FWIW for my puny amount did not do a thing.  It is too bad, b’c their drug, whilst not the greatest, is a trailblazer for a potential market that could be exploited by another big pharma IF they had the cahunas to do the proper clinical trial.  I would stay away from them.  ‘Nuff said.
DCTH/jtiff  – I am confident that this stock was manipulated by hedge funds and big block traders (GS??).  Big black pools of stock are out there, and someone either wanted in so they drove it down, or they drove it down to make good on both the up and the down.  DCTH data from a scientific point of view is stellar, and there no reason for them to have been risen from the ashes to be clobbered down other than sheer manipulation and greed.  VVUS and/or ARNA could be in that boat.  I recommended DCTH at $6 many months ago and remain in them for a long, but it was very painful to be up big, only to have my pants dropped to my ankles and…..You get the picture.
ARNA/ac – from $3 to $15, so a 5X.  It is a WAG, but my premise is….VVUS goes belly up, ARNA gets approved and Eisai buys them for a max of $15…..With Fen/Phen being at ~$4B drug b’f w/d from the market, and obesity being a bigger problem now than it was then, the market is now > $10B/yr.  ARNA has 100M shares outstanding, a 400M market cap, so paying a premium of 4X now is pennies for 10% of that market share.

 Hi Phil, 
What is the current mattress play? To put in place AFTER we hit resistance I guess right?  

Are you still feeling the financials will dissapoint and to put the FAZ hedge now? I am long 4,000 shares of C, trying to get back to 5.1 where I bought it… so I don’t want to hedge a losing position right? What do you recommend?

"BP new cap test to stem Gulf oil flow delayed"….so much for the OPEX long and short hedges I was working on for Wednesday.  Now we will get the test results post OPEX due to "additional analysis" BP decided to perform instead of pressure testing the well head Tuesday evening as planned.  All of the calculations should have been performed already via computer fluid dynamics simulations….wish they would allow an engineer to explain in further detail what is really going on…
On a positive note, at least the markets can’t be hurt this week by a possible failed BP pressure test…

Phil/All- OK, I’ll try asking the question in a different way…. how can I view PSW pages so that the comment number is in front of the comment? I hit a few buttons on my keyboard accidentally and saw that view and really liked it… but I can’t replicate what I did. Thanks.

PHARM, i  totally agree with your premise on AReNA.  I have been watching from the sidelines — they will get taken out by someone.  Having said that, all of these drugs have side-effects that are going to keep the trial lawyers busy for years.  Looking at the avandia stuff is pretty disheartening…all of these drugs have serious side-effects.  It is always a true risk/reward analysis.  I’m sure all of these drug companies play some games/fudge data etc – but as a practioner i am always aware that drugs come with risks….Most diabetics have small vessel disease and are prone to cardiac disease – avandia is a good drug for many people, but now it will become a political football.  Just ask all the rheumatoid/arthritic  patients who depended on vioxx.

This is a newb question–apologies in advance.  Is there an evergreen guide to how to maintain disaster hedges?  I am into the DXD hedge suggested on July 3–actually I got in a bit later after DXD was $3 lower, so it hasn’t gone as far against my adjusted positions (long Oct $27 calls / short Oct $35 calls) as the strikes suggested in the post.  I am unsure as to whether I should leave something like this in place, roll options to "stop up" behind the DIA’s upward movement, or get out completely and put something new in place.  Thanks for your suggestions, or pointing me to a link.

Phil, what would you recommend as safe target margin cushion on 30K and 100K reg T margined portfolios? So as not to over trade. Thx! 

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