-1.4 C
New York
Tuesday, February 7, 2023

Subscribe

Tempting Tuesday – Again

SPY DAILYWell here we go again.  

Once again it's Tuesday and once again it's a primary and once again we are meant to believe everything is right in America as the Futures take the markets back to levels not seen since last August.  As we discussed last week and as noted by David Fry this morning

 Throughout the week Fed governors will be making speeches: Dennis Lockhart (2 speeches), Charles Evans (2 speeches), Esther George, John Williams, Charles Plosser and Jeffrey Lacker. This is part of their transparency mission and/or a campaign to pump-up investor confidence. You choose.

Yesterday we made our breakfast money shorting the Dow off the 12,350 line and today we already had a double dip at the Dow off the 12,450 line but, on the whole, it would have been easier to drink the Kool-Aid and go long.  

Unfortunately, I'm a Fundamental Investor and not a TA guy so, impressive as this run may seem, it doesn't match up with the data and, so far, it's neither matching up with Q4 earnings or Q1 outlooks.  We HOPE the Fed will go for QE3 (Friday's Fed speak indicated that and more today) and we HOPE Europe is fixed and we HOPE China doesn't implode – is this a sound investing premise?  Let's see how things have been going in the last Quarter:  

Up 15% in all of our indexes and led by the Transports, which are up 21% – even with oil up 25% over the same period which once again proves our theory that trucks and airplanes must poop oil when they run – which explains the non-inverse correlation between Transports and Fuel Costs that those of us who took Econ 101 may be familiar with.  

VIXThe most interesting thing about the above chart set is the uniformity of the moves up in the majors but I think it's the NYSE and the Russell which PROVE beyond a shadow of a doubt, that this market is traded by robots.  Look at those two charts – they are practically tick by tick matching – even to the point where the Russell is almost exactly 1/10th of the NYSE.  Sure, you could assume some similarities in two broad indexes but this is 6 full months of daily moves that are in lockstep.  That's just not natural on the order of maybe a Billion to one vs. two independently traded indexes.  

So the theory is that the broad indexes are difficult to manipulate and so they have underperformed by about 5% over the past 6 months but they were both part of the BuyBot express that has jammed this market higher since early October and lulled investors back into a state of complacency that usually comes right before the rug is pulled out from under them.

First of all, let's keep in mind that we bottomed out on the 28th at 12,150 on the Dow and the next morning we gapped up to 12,200 in a futures move that Retail Investors were unable to follow.  We went up to 12,300 on Thursday and closed back at 12,200 on the last day of 2011 and then the poor Retail Traders woke up last Tuesday with the Dow at 12,450 and we flopped to 12,300 again on Friday and yesterday we closed at 12,400 and today we should open around 12,500 (keep in mind Futures don't match the Dow, about 50 points lower).  So, of the 350 points added to the Dow since December 28th, 400 of those points were added pre-market and all the Retail Traders got to do was buy into a 50-point loss.  

This is, of course, a gold mine for the Banksters, who KNOW they are going to jack up the Futures so they just wait for a nice dip, buy from the Retailers (using the money we lend them for free through the Fed) and then they jack up the Futures and dump it on the suckers who chase the rally in the morning.  It's nothing more than a 3-Card Monty game where EVERYONE is in on the scam except the mark – and that mark is the retail investor!  

See, it's not just about having a card game you can't win – if that's all it was then eventually even Retail Traders would wise up – it's about creating the impression that you CAN win and getting you to commit your money and THEN making the loss seem like a fluke so that you are encouraged to go back to work, save up your money and gamble it again because "it could never happen twice," right?  As the great George Bush used to say: "Fool me once, shame on you, fool me you can't get fooled again." 

Speaking of getting fooled again, NFLX is back to $100 up about 60% since Thanksgiving and it's already tempting but I want to see if they can fill that gap to $120 from the last time they had earnings and fell from $120 to $75 overnight as reality is a very ugly experience for NFLX bulls.  Earnings are on Jan 25th so we have a couple of weeks to see how this little run plays out but, with a market cap back over $5Bn on less than $250M in profits, NFLX is priced for healthy growth and they'd better deliver or they will de-lever VERY quickly.  

Click to View1,297 was our +5% line on the S&P and we're not there yet, nor have we hit our 2,733 target on the Nasdaq and we're still miles below 774 on the Russell and 7,866 on the NYSE – all levels we discussed last Tuesday and even the Dow needs another 250 points to hit it's 10% line at 12,749 and it's a wide swing in the range between there and the +5% line at 12,170 so, essentially, meaningless moves in the Dow should not be the basis for bullish investing (see last Wednesday's post).  

AA certainly didn't report numbers that justify it being higher than last year (when it opened at $16) and we're long on them at $9 but that doesn't mean we feel the rest of the Dow components should be off to the races.  We'll stay Cashy and Cautious while we wait for either the other indexes to get over their Big Chart lines or for the Dow earnings to come in and somehow justify a 10% move up from last year and a 20% move up from last quarter.  

Just trying not to get fooled, AGAIN…  

224 COMMENTS

Subscribe
Notify of
224 Comments
Inline Feedbacks
View all comments

They did it again.
 
Ran it up to resistance then pushed it through in after hours.  Same ol same ol.

Scaling into DOW shorts and selling if it moves higher (do I need my mind examined?)……….# 1 answer; probably.

The small guys gets the shaft…. again!

Oil Lines

R3 – 104.48
R2 – 103.27
R1 – 102.52
PP – 101.31
S1 – 100.56
S2 – 99.35
S3 – 98.6

Yesterday's high and low – 102.06 / 100.1

Breakout lines – 105.23 / 94.96

Phil/Gaps

 
It really is sickening how they screw the retail investor. 
 
I'm not sure I'm following where you're going with your comments above.  Do you think this is a setup to screw the Johnny come lately retail investor or are they going to continue to run it up.

Morning guys. More of a tech question: Is anyone using an RSS Reader to follow the comments on Phil's Daily posts? I tried various readers on my cell phone to keep in touch when on the move, but always get error messages,cant subscribe on the RSS Feed.  Thanks for any help!

Phil-what should I do with the $58 weekly qqq puts I have? When should I roll?

Dpas / RSS
OMG, I can't believe you asked that today.  I've been going round and round with Greg trying to get any windows RSS reader to work and subscribe to comments.  None work, even ones I paid for and work with secure feeds.  He said he sent this to the developers.  I don't think he's tested it himself.
 
For now I've disabled images and flash, and it's loading better here in Nica.

DPAS/Burrben  Im having the same issue.  I would love to get this settled

as much as it looks tempting – I'm going to move my 401k into cash today and keep it in cash until March

PP for today:

Well, thinking musically of how to describe the market  – is it levitate me – http://www.youtube.com/watch?v=aljYMDwJLiM
or a magic carpet ride – http://www.youtube.com/watch?v=YGtT4cv5HFQ&feature=related

StJ / Fas Strangle
Are you looking to close out the Put since FAS is up to 73 premarket?  

Interesting article here about the maiden voyage of the world's largest supertanker in the Valemax class, carrying enough iron ore from Brazil to China to build the Golden Gate Bridge three times. (What do they carry on the return journey?). Presumably these babies are too big to go through the Panama and must cross the Atlantic, go round the Cape of Good Hope, and across the Indian Ocean too, but probably they run on cheap Brazilian fuel as they carry as much fuel oil as a small oil tanker.
http://www.telegraph.co.uk/finance/newsbysector/transport/9001096/Vales-megaship-sails-to-China-and-into-the-record-books.html#disqus_thread

Also excellent Wikipedia article, which also mentions some problems with these ships.
 
http://en.wikipedia.org/wiki/Valemax
 
Don't know if it is a future game changer improving the competitive cost of getting Brazilian ores to Asia versus producers in Australia, but VALE is pretty beaten down, might be a good play on both Brazil and China, not to mention India, isn't denominated in dollars, and a tiddly dividend. Might  be a decent long term IRA hold. What do you think, Phil?

AAPL portfolio:   For anyone holding Jan 425 weeklies, we are going to scale out of those beginning this morning and will be completely out by EOD> 

In French news today, an association just finished a shopping study and found out that the "generic" shopping basket (basic necessities) is up 4.4% YoY as compared to the official 2.2% inflation numbers. Apparently, the top 1% are not affected so all is good!

FAS / Burrben – Absolutely, the plan is to buy back the 64 puts at the open and I'll wait until after 10:00 to decide on the new strike for the puts.

Mom/Phil – there are services like you thought about for your mom.

AAPL Portfolio:     OUT of the 100 Jan 425 weeklies  for 3.95 for a profit of  $6,680.   If any of you are still in this trade, exit.  You might squeeze more out of it but it's risky.  We've made a lot.  Let's move on to the next trade. 

lflan, on the 425 weeklies, I had a cost of 3.54 and now and exit of 3.95. For 100 contracts, that gives me a profit of $4100. Did I get the wrong numbers?

AAPL portfolio:   And what is the next trade?     I've placed an order to 20 contracts  April  425/450  bull call spread.  Analysis:  I believe AAPL is close to 450 by April.    This trade has an upside of 131% above 450 and a break even of 435.  Let's do it!   I know you guys can't follow all the crazy day trading I do on AAPL but this April spread should work for you us.

GE moving straight down since the open….

IWM kissing the upper BB on the daily, and above the 200d MA.  Wow, world must be in a bull market rally.  Go go go go…..

stj….I just spend some time doing an exact calculation on that trade.   The 100 Jan 425s bought at average of 3.49 each (not 3.54)  then all sold for 3.95.   The profit therefor is $4,600.   That should be correct.   Thx. 

Stj, i believe it was 5 contracts of MA in the 25KP. Easily available for 2 today.

Iflan
Thank very much for your suggestion for the AAPL project and your daily guidance.  At this moment I'm not in lockstep with you AAPL portfolio in that  I'm still long some of the original $390 Calls and they are offset by an equal amount of the Jan-21 $425 Calls that I'm short.
Given these positions would you get out and if so is it because you see the risk in AAPL specific or you would be more concerned about a general market correction / unseen event?
Thanks in advance

And stj….the 20  April   12     425/450  bull call spread contracts went through (purchased)  for   26.28/15.28…Thx. 

i ve extended my target for this run from 1300 to 1305 -1310..

Iflan – we still have the Jan 410/420 & 415/425 open, correct?

cslanson2…….If that's a January 390/425 bull call spread I think it will do fine just to keep it.    I'm looking for AAPL to go up to around 430 pre-earnings then move up another 5 to 7 % post earnings. 

nicha ….correct

Good morning,

 

IWM    73.51,  73.92,  74.28,  74.61,  75.12,  75.54,  75.80  and  76.39

 

Also, I have an ascending trend line now at IWM 75.90

Today sould be about it, I would think !!

Phil, Do you have a bullish hedge for $25KP if we add to are positions

lflan, OK, thanks. Correcting and updating the spreadsheet now.

Phil, you didn't mention the DIA 123 puts in the 25KP.

50KP / MampcsA – Correct on the MA puts, thanks! Corrected now.

25KP / Phil – Sorry, my bad, but we already had 5 MA puts in the portfolio.

FAS Strangle – Selling a 69 Put for about $0.43. I was tempted to go higher, but I am worried that we correct this afternoon so I wanted more cushion.

AAII sentiment is all bullish FWIW.  Rule #9 from Bob Ferrel:

When all the experts and forecasts agree — something else is going to happen

stjeanluc
HI FAS what about you caller what are you holding ?

Phil, we initially had 5 MA 290 puts. Did you mean add 5 more or 2? Thanks

TOL – what the ….. are they doing up at 22.3x.  That is crazy.  HOV should be at $10 then.

@Felipe
I just read your reply to my post about multiple Ipad ownership. Would you, when you have a free minute, 'splain the reason, necessity, or kinkiness for having one in the bedroom? 
Short WOR @ 21

AAPL traders:   We've already had a good day and we are set pretty stable now with bull call spread in January, April and July..    I will check back later in the day but  I don't see any new trades I want to do at the moment.   

1 2 3 5

Stay Connected

159,282FansLike
406,812FollowersFollow
2,160SubscribersSubscribe

Latest Articles

224
0
Would love your thoughts, please comment.x
()
x