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Wednesday, June 7, 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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I searched the site to get information on the  "Alpha II" model that you referred to in today’s post but can’t find it.  Do you have a link?

Phil / Baltic Dry   There has been a huge increase in shipping capacity during past year (orders placed during boomtimes) driving shipping rates down, so rather than rates need to look at volumes shipped for economic pointers.

Phil –
FTR – any opinion on the VZ spinoff? Wish i had thought about that one more and sold the calls pre-deal rather than the puts –

Any thoughts on GOOG?

 Hey Phil…
got any target for yrcw….its funny how quickly one flips from fear to greed (2 days ago i was like if i break even im selling, and now I wanna hold 🙂 )….

Good morning,
IWM 62.49,63.05, 63.38, 63.97, 64.74
Iam afraid that I will be unavailable for much of the day today, but it should be a normal "Monday". Good hunting !!

Waiting for those hedges Phil, I believe it’s almost time…From here to 10600 is prime short entries I think…

JRW groundhog day? Tuesday for the rest of us 😉

How do you like selling some T puts here – and if so, trying to decide between Oct 10 24’s or Jan 11 22.5’s. Thanks!

Phil/small biz survey – I know small biz isn’t a concern for the markets, but it is really getting ugly for small biz out there per the latest survey:
Very few small businesses plan to create new jobs, according to respondents. The survey showed that only 10 percent of firms plan new hiring, that is down 4 points from May, the NFIB said. About 8 percent of firms plan to reduce their workforce, up one point from the previous month, the group said.
The number of business owners planning to make capital expenditures over the next few months fell a point to 19 percent, 3 points above the 35-year record low, the NFIB said.

phil    i’ve have a little protection to go into last wekend on dia like we talked about. where do you think i should roll to

Are we ready to short VVUS?

Phil/Pharm – Maybe this is a dumb question but why is ARNA blowing up when it was VVUS who had the positive FDA report? I understand David Ristua’s theory of buying competitors when a company has a good report but I would think the biotech sector is a completely different beast. Im not complaining, I own a boatload of ARNA but I just thought that it would’ve been better for ARNA if VVUS had a setback….

 hey phil..
got a target for yrcw..

Phil would you take profits on the DIA 104s and wait on the 102s?

 Wow Nas is up 0.7% and thats WITH AAPL down $8….they would also be flying if aapl wasnt dragging them down…

AAPL just getting mauled on no apparent news.

kururi67 – the new iphone 4 has some serious problems with "the talking portion of the phone"  It is a great phone unless you want to talk over the network.  I know, i have one.  So, i think people are realizing that this is a hardware issue, not a software issue.  Apple should come out with a new customized case that puts extra emphasis on the left lower corner, and distribute it at no charge.  people would be happy with a new case and lines will continue.  JMHO

APPL/jomama:  Have you really had problems with your iphone 4?  I got mine the 1st day and I’ve had no problems at all (even w/ out a case).  I think it is complete bullshit.  First of all, no one buying the iphone is getting it for the "talking portion of the phone".  The iphone has always been inferior in the reception area.  I tend to think this is a problem the hardware and w/ ATT.  My previous phone was a Blackberry on Verizon and I had way more reception problems with it than on the iphone.  Now that i have it I can’t see owning any other phone.  just my 0.02

George Steinbrenner, owner of the Yankees passed away of a heart attack.

Out of all ARNA $3 July P.  VVUS FDA Data is out and they are hopping.  Does not mean anything, but I don’t want to risk more than we already have.    If ARNA can move back up through 4.20, then it might be worth covering 1/2 stock with the July $4 C, which can be rolled up if needed.  Otherwise, let them go and let the rest ride…..It is gonna be a wild one this week for VVUS and ARNA.

Phil / % long    Could you update the guidance on what we should still be holding in cash %, in view of your short term bullish guidance, recognising that you might quickly turn more bearish after a run up.  This is working beautifully so far and you’ve kept me in the mkt heavily long, when my medium term sentiment is negative.

Hey there is news on the Iphone 4 having issues.  However my wife has had one for 2 weeks and has zero problems.  Jomama it must be your area because again my wife has the iphone and has not had a single problem..  It’s her first Iphone and he loves it

 This move in AAPL is so frustrating.   It looks to me like a flush of the weak hands before another blowout quarter with raised guidance.    The consumer reports item was on local tv morning news (this issue is what, three weeks old?), so I guess this is just the sheeple just doing their thing:  calling their brokers and sell, sell, sell!    Or maybe it’s that AAPL will report that nobody wants their already purchased Iphone 4….!

Brooklyn –

If you see this, answer about WFR is up now.

To all – 

I hope you got involved with AMR Corp. (AMR) this morning. It is my new Buy of the Day. Check it out here.


Good Investing!

daveo, i use the iphone a lot for everything including work & i have had a lot of reception issues – depending on how i hold the phone even with the case – just my experience, could be isolated but i doubt it.

 Phil – roll mattress to Dec 104?

If this is a "AA rally"…why is AA only up 0.83% and falling?

ARNA/jro – they will follow each other for a while, as ARNA and VVUS have very similar data (VVUS a bit better).  It now comes down to safety…….VVUS has a bit of an issue, but many AEs are known due to the migraine data (JnJ owned topiramate for the migraine and antipsychotic franchise).

to kururi67/ AAPL : Consumer Reports found signal problems in iphone4 and does not recommend it.

sorry, I was asking abt DIA 102 & 104 short puts

VZ   I’m short Jul 29 and 30 puts which have been adjusted so that I’ll get 100 VZ + 24 FTR if it’s exercised.  I’m thinking of taking the 29s and rolling the 30s –> Jan and then later selling a call to make a buy/write.   I’m comfortable holding VZ with its 7% dividend, but wondering if any folks are negative on it.

Yeah, from the visual demonstration the Iphone 4g loses reception when your hand is touching the bottom part of the phone due to the antenna being on both the top and bottom.Definitely bad PR for Apple, they should offer those rubber cases for free until they fix the problem

thanks for the comments. I should probably be more cautious with it as you noted. I just wondered if their new license would help drive them upwards if the market keeps creeping up, even though China profits are small…..you are wise to advise caution.

David – Starting last week, I have been receiving your emails after close of market (changed suddenly) – is there some setting I need to fix somewhere? I have a gmail id. 

any news on MEE? It usually follows the indexs but not today.

It is really strange watching the two stocks that lead this rally sitting at half the rally gains today…at this rate, CSX and AA are going to go negative, and join TSLA.  Update..>CSX just went negative…=D

I just took my wifes Iphone and put my hands all over it while testing it on a call and there are zero problems for me.  It’s obviously not an across the board issue.
The market goes lower.

 The only way I see the AAPL justified in losing this much market value is if they are planning a massive recall.   Otherwise, where is the real financial impact, especially as the Ipad is having greater than expected success?

Phil/AA rally – not according to MSM…which I know doesn’t count for much, but this is the headlines—>Upbeat reports from Alcoa and CSX to open earnings season sent stocks higher for the sixth straight day…per Yahoo finance.yahoo.com/news/Stocks-surge-after-Alcoa-CSX-apf-3162492258.html

 ocelli7. I am in the GOOG 480 August calls, 1/2 covered by the July 500 calls short ; i got in at 460, but will stay in through earnings, as i think the stock is a good value here anyway. Total cost avg of $10/call cal. now.

Phil and RN –

Are you talking about alerts? This is a different problem entirely…

Phil – got advice from Pharmboy last night (PSW rules 1 & 2) but would like your take as well, please…
Phil – your advice on what to do with this bull call spread, please…
On June 23, I bought  10 Jan $30 calls at $5.90, sold 10 Jan 34 calls at $3.90, and sold 10 BP Jan $17.50 puts for $1.88.  I was thinking of sitting on this a while, but the pop today (yesterday) caught me by surprise. What do you think?

CSX just went into the red.

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