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Tuesday, February 7, 2023


Just Another Manic Monday – Stagflation Official in China

Wheeee, everything must be great! 

We are crushing our levels as the market flies ever higher.  Our 11,500 target on the Dow looks sure to be tested and we're already flipping bullish with our "Breakout Defense" trades, in which our goal is to make 5,000% in 5 trades or less.  We are not ashamed to jump on the bullish bandwagon – if they are giving away money, we'll stand in line with everyone else, only we'll take a larger share – thank you very much.  We certainly know how to use leverage just like a Bankster – we have a spread and we're not afraid to use it!  

Speaking of Banksters, the must-read article of the weekend is the NY Times piece that goes into surprising details of secret bank meetings that are regularly held in NY where the Gang of 12 (just 9 of them) do their best to manipulate the derivatives market, influence regulations and regulators and, of course, crush their competition.  The article even goes so far as to name my old friends at ICE as possibly maybe having something to do with these shenanigans and I am SHOCKED at these allegations as the good people at ICE were so good about telling me how I had things all wrong when I made similar statements last year (which I now legally know cannot be proven and therefore must not be true).  

And thank goodness that the commodity and derivatives clearinghouse that was founded by Big Banks and is controlled by Big Banks cannot be proven to be operating in favor of Big Banks because we wouldn't want to think that the Big Banks had some preferential treatment (beyond the access to the discount window and the TARP money and the POMO money, etc.) – that would just be unAmerican.  By unAmerican, I mean the old America that they write about in the Declaration of Independence and the original Constitution, of course – not the Corporate Kleptocracy this country has developed into.  Under the new guidelines, leveraging your influence and having the government rob the people to increase your profits on which you don't pay taxes is the very definition of patriotism, isn't it?  

VIXAh well…  As I said last Monday, this is really Somebody Else's Problem because we are in "get it while the gettin's good mode" at the moment.  So we're not going to dwell on the negatives and we will, instead, accentuate the positive as sell our premiums to Mr. In Between to fund our bullish plays.  Our first two bullish plays in this series are already a week old as I put up trade ideas on DBC and FAS in the December 3rd morning post.  

While the FAS trade is already getting away with an 833% gain in the first week (out of 3,233% potential gain by April if the XLF keeps climbing), the DBC trade idea is still playable as commodities haven't quite run away just yet.  As you can see from the VIX chart on right, market complacency may be peaking or the fabulous Obama Administration may have truly eliminated all the potential economic negatives in just two short years – INCREDIBLE!  

Unfortunately, China does not seem to be as lucky as we are to have such tremendous leadership that all of their problems are solved and just this weekend they reported shocking 5.1% inflation – if by shocking I mean pretty much totally ignored by the US MSM.  The inflation was not, however, ignored by China's own Deputy Director of the Finance and Economic Affairs – He Keng, who was reported as saying that China began experiencing a period of stagflation in the second half of this year with high inflation and unemployment. The nation will also face the possibility of an economic double dip next year, the Guangzhou Daily cited He as saying at a meeting yesterday.  That's STAGflation, as in stagnant economy, not the more benign INflation, as in the stuff the US pretends doesn't exist.  

Speaking of inflation that doesn't exist – commodities are flying this morning as the dollar takes a nose-dive from 80.70 down to 80.20 and that should be good for yet another 1% day in the markets.  Gold is testing $1,400, oil is $89.30, copper is $4.18, natural gas is $4.52 and hi ho silver is away at $29.59.  That's enough to get us to finally move some of our cash off the sidelines as we're going to get less and less stuff for it every day at this pace.  The Euro jumped an entire penny from $1.318 to $1.328 since their open at 3am and our normal 3am trade on the Yen (as it tends to go down while the Nikkei is open) didn't see the Yen bottom out until 4:30 but then it violently gained half a point against the Dollar and is now (8:30) at the day's high.  

The dollar is down on excitement about the Obama Tax Cuts moving through the Senate today and the House is now expected to pass tomorrow so there's $1Tn worth of new debt we'll be taking on.  At the same time, the EU has been making moves to stabilize the Euro and it's expected that, by the year's end, there will be a fund bigger than the current $1Tn bailout fund the EU currently has at its disposal.  

Meanwhile, the Shanghai Composite leaped 2.9% this morning and led Asian markets higher as an anticipated rate hike by Beijing seems to have been put off until at least after the holidays.  Lack of tightening by the PBOC gave commodities the green light to fly higher with both Jiangxi Copper and China Oilfield Services hitting limit up at 10% this morning.  Investment sentiment in the region was also helped by Wall Street's gains Friday after data showed that U.S. consumers were more upbeat on the economic outlook in early December and that U.S. exports in October surged to their highest levels in more than two years.

It's the same old story – we go up because China went up and then Europe goes up because the US and China goes up and then we go up because Europe and China went up.  As long as none of us ever look down, it will all seem perfectly normal, I suppose – kind of like when the coyote heads off a cliff and keeps walking until the road runner points out that he's standing in mid-air.  

One short we will be taking today is oil as that is just silly back over $89.  We have a standing entry to short the Futures but USO puts should be attractive at $38.50 on that ETF as there are still 550M barrels on pretend order for the three front months at the NYMEX with 194M barrels scheduled for January delivery to Cushing, OK – a facility that has a capacity of 45M barrels and happens to be full.  Those contracts that are still open next Tuesday must be delivered and, with the January contacts at $89 and the June contracts at $90.08, it's hardly worth storing oil for 6 months to make $1, is it?  

As I pointed out to Members this weekend, there's no point in being skeptical when the Gang of 12 is determined to run the markets.  Just this morning the big gun analysts weighed in at Bloomberg with an average forecast of 11% gains on the S&P in 2011 (about 1,379) with Goldman's own David Kostin leading the bull charge with a 17% rally target.  Readers of the WSJ this morning were treated to GDP upgrades from the economists they polled with 3% growth now expected in 2011.  GS is also targeting index movers like AAPL for big upgrades – just what the doctor ordered to push the Nasdaq even higher..   

Yep, things could not possibly be better, I suppose – and that's what scares me!  



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What is impact of these bullish plays on the 1050p current positions?  Are you adding these bullish plays now?

S&P +5.10, Dow +44 at 7:42
oil +1.55, gold +12.0
NET $  = +.34, dx/y = (.24) at 7:45

mike5885          Tell me how I can make money by reading your posts.   šŸ™‚

 and here comes Lloyd to give the markets a push into year end, initiating coverage on a bunch of companies, including AAP: w/ $430 price target.
What a coincidence.

Phil did you see the piece on NFLX?  AMAZING

jabobeast…..Gil Morales writes this article, in which he lambasts the comments of a NFLX short-seller.  His comment reads…."our advice to investors would be to simply ignore the short-seller’s comments —"  Then, he admits to being long NFLX.    Perhaps we should ignore Morales’ comments as well. 

Phil / DeGraw   Reading Ilene’s post today of DeGraw’s incredible article on how the Fed stole $12 Trillion from the American people left me dumbounded and depressed.  Our problem is that less than 5% of the US population can comprehend the article.  For goodness sake they just voted for a tax cut for the billionaires who perpetrated the $12 Trillion fraud.  America is now a feudal society.  So, after reading who really controls the world I’m thinking I need to put aside my fears of a coming mortgage tsunami, hold my nose and buy JPM, Goldman and BAC???  They’ll have Ben print as much money as needed to keep the mkt going up.  I’m more concerned now about my short positions.

VIX almost always opens up after a weekend
very weird, opened lower (4.32)%

NET $  = +.92% highest I have seen, dx/y (.54)%
oil = 1.37
C =1244.22, F = 1239.50

 that is VIX moves is very strange, maybe the opposite will happen
 maybe a bottom and sign of capitulation on volatility

might want to watch that 16.78 open and remember that number

not sure just thinking out loud

Hypothesis: Retail traders (with the possible exception of PSW subscribers) are no longer the target of market manipulators at all; rather it’s the institutional investors who can trade AH & BH, so a lot of games have been transferred to those arenae. Or am I just slow to notice things?

NET $  = +1.02%,  dx/y = (.54)%

C = 1242.97, F =1238.00
oil +1.26, gold +11.0,  vix (3.69)%
10yr = +1.33%,  30yr = +.43%

Good Morning!  No need for a wait sign here.  Patience has been profitable this year…… šŸ™‚

NET $  =+1.15%,  dx/y = (.62)%
C =1242.50, F =1237.75
Chinese Yuan still falling faster, dx/y down today, but the nice peg keep the $$$/Yuan  = +.09%

Where can I read how you calculate +1,000% on these trades? I’m just not getting it – yet.


cant’ I guess

dx/y goes up, gold and oil go up

dx/y goes down , gold and oil go up

Phil/TZA – picking up on the premium built into TZA  what about buying $16 ETF and selling April $13ps and $16Cs for $5.32 for net $10.74. A 48% return if the market goes south and it is called or put to you at net 2X TZA at $11.87, 26% below $16.

Good Morning Phil, do you have a new short play on FCX now? it looks unstopable.

Phil? HMY? no such symbol.

Yes, it does.  HMY:Harmony Gold Mining Co. Ltd.

dollar gettin hammered against the Swiss Franc = (1.44)%

dx/y was (.54)% just after the bell now (.67)%
the NET $ got hammered even harder, fell from +1.15% to +.53%
C = 1243.37, F =1239.50
oil = +1.42,  gold +12.90

 The big losers today:  NFLX  PCLN  CMG.   All red .  Almost everything else is green.

Over the weekend, there was news that I-pad 2 was coming.
BUT, with a small screen, maybe 1/2 the size of the current version.
That is weird.
Particularly after Steve Jobs comments a month or so ago, denigrating all competitors like RIMM saying that a 7" screen would be too small to be functional.
And now AAPL may come out w/ a 5" screen.
I dunno, something weird going on.

Cap, I think iPad 2 will have a 7" screen which is about half of the size of 10" iPad.  You are correct about Steve Jobs comments on a 7" screen and now it looks like Apple is making a 7" iPad 2.

I am still trying to recup some of the losses on BCRX got the stock at 10$ now 5.07 Playing puts and call against this stock. What is the future look out on this stock.
I can not fail noticing that Phil is warming up on GOLD !!!!!! HMY

 TLT at support at 92.50

Good morning Phil,
On the 1050P we are still long the QIDs and the DIAs? I have 2 x the 111P than the Dec sold 113’s… USO 36P’s still holding too? 

 CMG … I think we may see upside bias thru tomorrow at least, CEO going to be interviewed tomorrow Noon by Motley Fool.  Be careful / patient w/ it.

Since Phil gave the advice on the HMY play 10/12.5 Jan 12 option went from 1.40 to 1.45 interesting to many people placing orders at the same time!!
I entered a B/W on HMY selling Feb 13c and Feb 12 p for 1.05 if expires worthless 9.4% called away 6.9%

HMY is Harmony Gold Mining on NYSE


Two questions I’m contemplating……Will the senate tax vote pass on the first call, and if not (or if so) how will the market respond?   Any thoughts? 

The USD has dropped over 1.3% today and the markets have barely budged (up 0.3%).  I have been thinking for a while that a "big" drop will finally occur when the correlation between the USD and markets breaks down ie. they both fall simultaneously.  Does this make sense and could we be seeing the beginning of that breakdown?

Just thinking out loud here Phil
so is this dollar selling or is it the Yuan
maybe Chinese inflation and them not raising rates is causing fear about inflation and their currency in China
so two sceanrios
1) people do not have easy access to sell the Yuan, so sell the dollar and get the benefit of the peg and get the Yuan down that way
2) the Yuan is leading the way lower and the dollar is following

They will be playing  funeral taps,as the dividend and capital gains are suddenly in potential peril

 Button –
Correlation on USD and SPX looks really good over one year period – not so much on a three month chart – both have been rallying.

Good Morning Vietnam!…. Oh, wait… Good Morning Wall St!
Phil / big 9 — I’m surprised you didn’t reference the coming big banks currency manipulation platform. If you control the money, you control the markets! All of them, not just commodities.

Sorry to do this during market hours, but I just wanted to make a website related suggestion to Phil and everyone here that we start prefacing ticker symbols with the "$" sign like they do on Twitter to make searches on tickers easier (e.g. $AAPL, $NFLX, $GS etc..). 
As it is now, its near impossible to run specific searches on one and two letter tickers like C, X, S, BA, T.  Adding the dollar symbol adds a unique identifier that separates it as a ticker symbol.  It should make life easier for everyone.

 Phil… time to dump those NFLX puts again?  In fact – I bought the Jan 150’s instead of the 155’s so I’m up about 20% now.

C = 1244.36, F =1238.75 at 10:30
10yr = +.58%,  30yr = +.16%
VIX (2.84)%
oil  +.66, was +1.26 earlier

thank you. for some reason, it didnt show up on my site temporarily

Phil, question for you that I have been pondering ever since becoming a member, and that is:  How am I supposed to understand your typical suggestion, that is, the bull spread combined with selling some puts; are the puts simply in order to help pay for the bull spread?  Or, as you repeatedly advise, not to sell puts unless we really want to own the underlying stock?  Furthermore, when buying the spread, is the intention for us to buy the underlying as well? 
If things go the way you want on these suggestions, and the stock rises, then is your intention to sell the spread (buying back the short call and selling the long one), as well as the short puts (that should be cheaper at that point)?  And if things go the opposite direction and the underlying goes down, what do we do with the combo?  In other words, I’m trying to fathom the mechanics of this trade before I actually try it, because it’s not clear to me how to manage it…
Thanks for your help, it’s clear there are some good ideas and smart people contributing to the banter on the "chat," but there may be some other rather inexperienced people like myself out there as well…

I am new on here.  To make sure I understand your HMY play, you purchased stock and then basically did a short strangle, selling the Feb puts and calls, right?

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