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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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Yen is diving against the dollar

Sorry strike that reverse it, dollar is diving against Yen

 Report/Phil + David – Yes, I did mean the report – thanks, I did not realize the 830 cut off. 

sorry phil,  bought two aug 90 puts @ .48   if you think we’ll get a pull back around 10400 level i might be inclined to ride this out.& depending on if the other index’s follow

In digital rather than analog where you have your hand differences will not effect the reception, that is why unless you enter a metal building, always grounded you don’t loose a signal, maybe if extremely weak anyway. I believe the antenna problem is related to the fact that they have 2 which can either boost or lower signal strength. Problems are intermittant because the tower and your relative position of the phone make the difference. In high traffic areas there may be 2 towers near with equal strength and which one you get depends on where the most traffic is. My guess is the solution is 1 better designed antenna and to get it in and the others out is a redesigned phone. I also think AAPL knew this and is playing it to their best advantage. Time will tell.

YRCW – is it too iffy now? rumor has it that there is a lot of insider buying.

Hi Phil,
Here a little nailbighter for you In April I set up a HOV vertical caller 7.5/ 10 jan11 120  with putter of them I closed the short 10 and putter  with a good credit but I am still stuck with the 7.5 caller for which I pd 1.80 now trading for .175 any good suggestion.  down 50% Thks

IPONE! Another engineering fact is we often assume set conditions in design. If the tower is fixed and most people hold it this way everything looks perfect. The problem is it’s a movimg target and I’m sure the antenna people forgot that the apps people were designing in every direction. This design problem started in the 70’s when fear of coppies started and nobody is allowed to see the total design.

Phil, from one lefty to another, I cannot get over what a BS market this is !!
FMD people !
How this is holding up above 1090 w/ AAPL getting hammered is beyond me !




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I’m long 300 TNA;  and long  3 Aug 39 puts; and short 3 Aug 43 calls. This is my first time to use a collar.  Should the price reach 43, what happens?  I am using Ameritrade TOS.  Does TOS automatically transfer my 300 TNA to the owner of the calls and cancel my calls?  Do I have to do something to make this happen?   Do I then sell the Put, or if I expect the price to decrease below 39, maybe I hold on the puts for a better price. What if the calls are not exercised immediately?
I know how I got into this, now, I need some advice about how to end it.

 Not much of a move in copper off dollar weakness

What about a call spread on the tza ?

TZA call spread maybe if no breakout

The Senate has the votes for passing FINREG.  That’s the cover they need to take down the banks today.  Please?

Sould the TNA stock exceeds 43 by 1.2 a penny  the 300 stock will be automatically called away you do not have to do anything. You keep  the proceeds of the short caller which you can set of against the loss on the putter 39.
Phil seldom buys insurance. If the stk drops by Aug experation below 43 you still keep the proceeds of the short caller as well as the stk but you mostly lose on the putter. Hope this helps

 Hi Phil/ I am quite sure that Intel is not going to disappoint on the other hand I am not going to be surprised if it gives back the gain by Thurs. The question I have is sell tomorrow’s pop or sell calls against it. 

i m with you Matt. I need BAC under 15 on friday.

Lunch time and here we are near highs of the day, this is rare..looks like they are taking advantage of every opportunity to jam the markets higher

Thanks Y’all,
Another scenario – I expect TNA to max out at ~ 44 and then go south.  I want to take profits at 43 -44 and be done with the trade.  What’s the best way to handle this?
  If the price is below the Aug 39 put at expiration, do I get to sell my 300 TNA at $39 and the calls expire?
Thanks again.

Phil, where is your gut telling you we finish today? Im short the RUT and have to go to class for 90 minutes – debating whether to let it ride with a stop about .3% higher than where we are or just taking my losses now and being able to focus on the boring lecture….

 this month long rally is just getting started and I already bought a few more DIA Aug-98 puts

 Hi Phil,
I’m still in the FAZ bull call spread Aug 15/17 from last Friday.  I’m holding it right now waiting for that other shoe to drop as there’s likely more bumps in the road between now and Aug expirations.  Please let me know if you think I should do something different with this position. 

So after your recommendation yesterday on AMD I loaded up on stock and some options.  Options are up 25% so I took half off the table.  Good job.

Hey all,

I have a new Two Day/Overnight Trade in Marriott International Inc. (MAR). I like the travel sector a lot this earnings season. I think we are going to see big things from MAR. 

Check out my analysis, entry, exit, etc. here.

Good Investing!

wow, does anyone really think that the Dow is not going to give up at least 100 points in the next few days? Too much too fast.

Suddenly CNBC thinks double dip is a curse word. THEY ARE ALL BULLISH…I hate this tv network. They have about as much spine as a jellyfish and stick to what they say like a 12 year old girl. 

David, your link isn’t working. at least on my screen.

Appears my link was not working.

Here it is again. 

"I feel like something will disappoint us and I’ve been reading all morning and can’t find it."
Let me/us know when and if you do !

Morx –

Should be working now.

David… I switched a long time ago to Fox Business Network for the breaking news. They have a better format, not as much BS – and the babes are far smarter and certainly more attractive.

Phil/ BlowOff :  No, I was just hoping for a pullback today.  Not a blowoff top.  We didn’t open high enough or go up fast enough for it to be a top.  At least in my experience.  I think FAS will close up today.  Just not 6% up.  So, can a guy at least get a pullback?  I think I am.  😎 

To double dip, Copper is a little on the puny side presently.

Gel –

Haha I will keep it in mind. I am not sure I have it. I have Bloomberg TV, but they are really dry…

Phil/ Sorry I meant I owned INTC since 19, not too sure to take profits here outright or sell calls against it 2012 22.50 calls

AAPL — Hi Phil I saw your comment on aug 230/260 bull spread, I open last week aug 250/280 bull spread net 12.6, should I adjust down to your strike for 6.65 debit and sell jan 200 1/2 position to cover the cost, I have 10contract on the bull spread — thx

Hi, gel1,
How are currencies?

July 13th, 2010 at 12:37 pm | Permalink  
The seller of an option has the obligation to deliver the stk at a given price.
the buyer of an option has the right to receive a stock at the given price
In your case you made a buy/ write on the stock. you can sell the stock and buy the call option back at any given price over 43. The stock increases in value over 43 always faster than your 43 short caller but you will not receive more money out of your stock if it goes over 43 as you set your limit of gains at 43. And you need to close them at the same time as the caller might run away from you once you sold the stock!!!
Should the stock at experation be between 39 and 43 you can keep the stock and you gain the proceeds you received from selling the caller but the putter becomes worthless. Even if the stock drops below 39 the putter will lose very quickly its value until experation. Obviously if you would have bought a long BP 50 putter you are in the pound seats today. !!!!! I recomment to study the option game very closely specially with selling puts or calls.
Read  the beginners guide.
Thanks Y’all,
Another scenario – I expect TNA to max out at ~ 44 and then go south.  I want to take profits at 43 -44 and be done with the trade.  What’s the best way to handle this?
  If the price is below the Aug 39 put at expiration, do I get to sell my 300 TNA at $39 and the calls expire?
Thanks again.

Hi Phil : What do u think of DD at $37.30 with buy/write Jan. 2012 $30 calls&puts for $13 for net $24.30/$27.15 ? Provides 24% return plus 4.4% dividend.thanks
Ps: I won’t wait until your dead to tell you how great you are. I’m going to tell you now that your great.

 Phil, any thoughts re: setting up bearish positions on real estate using SRS or IYR options? Looking to hedge anew real estate investments that are already fairly battered, but may have more to fall.

Phil / Dow vs Rut    Strikes me that the big multinationals will continue reporting good eps and outlook since they are international and have huge operating leverage to control costs.  The smaller more domestically focused cos will have more problems with guidance, especially in light of the small bus (UN)confidence index today.  ? a play might be to stay long during Dow and large cap announcements and then cash in / cover prior to the RUT volume announcements, assuming they are mainly published later?

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