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Friday, March 31, 2023


TGI Fed – Help Us O-Ben One Bernanke – You’re Our Only Hope!

This is so exciting!

The Futures are up, Europe is up, the Dollar is down – despite the fact that the last Fed Statement, the last Fed Minutes and Bernanke's last speech all said, VERY CLEARLY, that there will NOT be any more QE UNLESS the economy worsens.  We just had the new Beige Book on Wednesday and, thankfully, the economy is not worsening.   Therefore – one may conclude – no easing today.  To do so would make the Fed seem capricious and inconsistent and erode their future ability to steer the markets with rhetoric.  

Of course, this doesn't matter to the robots who are jacking up the Futures after the foolish humans sold all day yesterday – and the day before, and the day before that, and the day before that.  But not last Friday – although last Thursday was terrible too and last Wednesday wasn't so good and last Tuesday was awful – so how about that rally?  

As you can see from our Big Chart, we're getting exactly the sell-off we've expected but, as I've pointed out to Members, things are much weaker than they seem as the Dollar, at 81.50, is down 2.5% from where our levels were drawn (83.50) and that means that each set of lines on the chart – including the 50 and 200 day moving averages, need to be moved up one notch and that means the Dow failed it's 200 dma yesterday (at an adjusted 13,100), the S&P dropped below it's must hold line (adj 1,400) and needs to break back over the 50 dma (adjusted to 1,414) in order to get back momentum.  

The Nasdaq is still above it's adjusted 50 dma at 3,037 but now need to get back over the adjusted Must Hold line at 3,075.  The NYSE has failed all of it's support and has to take back 8,000 for any rally to be taken seriously and, finally, the Russell is right on the adjusted 200 dma at 804 and failing to hold 800 would be a huge sell signal.  

For now (8 am), none of that is an issue as the Dollar has fallen another full percentage point (81.18) as the Euro climbs back to $1.26 because ECB Executive Board Member, Benoit Coeure said: "ECB bond purchases in the sovereign debt market must be subject to strict conditionality."  What?  What do you mean that doesn't sound bullish to you?  The man said BOND PURCHASES!  Don't you see?  It's a code – the code means the ECB is planning to buy bonds – if someone asks for them (which Merkel is actively discouraging) and if they meet "strict conditionality."  See – IT'S IN THE BAG!  

Fortunately, as we learned yesterday, reality is only what you say it is and Mitt did a much better job than his VP in wowing the crowd yesterday with his Reaganesque vision of America and I was particularly impressed by this documentary on his life:  

With all this love in the air and the great news out of Europe, we decided to go long on the Nasdaq Futures (/NQ) in early morning Member Chat to lock in yesterday's gains on our bearish positions.  Most likely, we'll be back on the short side before the market opens as we're still just a tad skeptical of all the rhetoric but nothing that happens at the open really matters until we get Bernanke's speech from Jackson Hole at 10am.  '

We have our long hedges that we discussed Tuesday, and the Tuesday before that and the Tuesday before that (in case you missed it), but our short-term $25,000 Portfolios are skewed 70% bearish and we added more downside protection to our Income Portfolio, in anticipation of some disappointment from Bernanke this morning.  

As I said earlier this morning to Members, I don't think they can get the Dollar below 81 and it's already (8:50) at 81.05 so we're going to be cashing out our Futures longs already and shorting the Dow (/YM) at 13,100 and the S&P at 1,410 as these are both lines that should be easy to bail out of if they break but this is simply stupid at this point – erasing all of yesterday's losses in the Futures based on an optimistic interpretation of a statement made by a guy we never heard of.  You can mess around with the Futures all day long but once you begin to try to push Forex past resistance – you'd better have something more substantial than an out-of-context statement by a minor official.  

Jens Weidmann is not a minor official – he is the President of the Bundesbank and he has threatened to resign if the above-mentioned bond-buying program is put into effect by the ECB.  Sounds like strong opposition to me…  In Berlin, a government spokesman said Chancellor Angela Merkel supports Weidmann but declined to comment on the report, which lays bare a deep rift within the ECB over the bond scheme that is increasingly being played out in public.

Stepping up the pressure to attach conditions to the plan, fellow German ECB policymaker Joerg Asmussen said late on Thursday the ECB should only buy sovereign bonds if the International Monetary Fund is involved in setting the economic reform programmes that should be demanded in return.  "Opposition from Weidmann and reservations from some other Council members will mean that ECB bond purchases would be highly conditional, be focused on the short end and would not aim to bring yields down quite as much as Italy and Spain might like to see," said Berenberg Bank economist Holger Schmieding. 

Ah well, enough talk – let's see what Uncle Ben has to say….


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Well, now back to the same ol' grind.

Girl friend's apt manager also poor pay teacher scares us both. This year he failed cutting grass, replaced in 1 month. No power to fire alarms, buy battery powered, stick wires in wall. Government housing! wise spenders?

Phil, I never use hard stops. I tried 2 this week, one a stop-limit, and today a stop. Both went right through my stop, today I had a stop at .75, watched as the bid dropped to .74, then dropped to .70, (got filled at .66) and the whole time I watched the bid never dropped below .70. Time to change brokers?

XLF: Looks like we're going to lose our little cab fare on those weeklies.

Jeb Bush quoted Governer Butch Otter as fixing schools. He doesn't fact chech either, dropout rate or solution buy laptops, send kids home, fire teachers is the plan. good for business. On TV no link.

Now that reminds me FOX owns the CBS station same local news want it at 9 instead of 10 PM? Switch to FOX. The great state of Idaho.

GLD – i rolled up earlier to 161, now just DD.  heck of a range and press up today.  more bad china/australia news not to mention no QE, spain, germany etc.. there may be a pause and dip before rallies on further. ..

FCX moves like a 3x ETF, but the options are more liquid – nice move today

Paul / Shadow.  Ron Paul is a racist.  He is also an obstetrician who wants to make abortion illegal.  As far as I am concerned, this makes him a phony as a libertarian. 

Phil – SQQQ, Sep 38's at 1.75. Would you double down at 1.50?

AMZN hit 300!!!
(p/e, that is…)

Anyone else think CRM is a trifle overvalued?  I sold Jan 165 C for 815, margin cost 1650.

EEM Oct $38 Puts….yeah baby…here we go….


deano / FCX — A favorite of mine.  I have a position that buy and hold would be down 26% but my postion is up 48% using options.

Phil, et al…AMZN…I can generally completely divorce myself from emotional responses to stocks, but this one is starting to irritate me.  Do you realize that if AAPL was valued the same as AMZN that AAPL would carry a price today of $13,260.00 per share?   Someone please  tell me I've done the calculation wrong, but AMZN has a P/E of 300 and AAPL 15, so the math says AAPL shares have to be 20 times what they are to be equally valued with AMZN.  

AAPL, AMZN – i'd like to see them BOTH drop 3% today.

I see your AMZN and I raise you an LNKD.  Priced at LNKD levels (PE = 878), AAPL shares would be worth $38,870 a piece.  How's that?

IFlan – bu bu bu but this time it's different!!!!
AMZN can have a 300 p/e and pink ponies will print 10,000 bills for all of their fairy-tale profit needs!

Catalunya / Phil:  As you know, their debt was lowered to junk rating today.  This is a far bigger issue than, say, California being downgraded, even though their GDPs are comparable relative to the entire economies within which they exist.  Catalans only  threw off the shackles of Franco in 1981, and there was an attempted coup in 1983 to reimpose them.  No one in Spain would ever refer to speaking "Spanish" — it is Castilian, always.  Catalan, Basque [Euskera] and Gallego [Galicia] are the three others, and they are exclusively spoken in the street and on all signage, to the eternal frustration of tourists with their "Spanish" handbooks.  
Paying 25% of the total 17 province revenues that flow to "Madrid," then having Catalan debt being downgraded to junk, is a serious blow, and I doubt they're kidding when they ask Madrid to fork over some serious bailout cash.  Spain, as we all know, is by far the worst off of the larger Euro countries in terms of unemployment, Catalans are famously frugal, and I would guess that the bailout request "with no further conditions attached" will prove a large fly in the ECB bailout ointment.  You already know what the Bundesbank thinks of Draghi's open checkbook pronouncements.  And the Swiss are reaching their limit on buying Euros.  It's starting to look like High Noon in Euroland to me.

Just back to the US after a vacation in Montreal!  For the short strangles portfolio ($500k portfolio), let's sell some more premium:
– Sell 5 SPX Sep 1120/1275 short strangle ($0.825 credit for the short put and $0.675 for the short call)
– Sell 5 RUT Sep 720/870 short strangle ($0.9 & $0.35 credit respectively)

MoMo portfolio:   AMZN…….Sold to open 3 September 7  250 puts for 4.45.  

Basis for trade on AMZN….They will slip, sometime, but probably not next week…..  September 6 event in California and expectation of same should hold it up. 

Phil, September is" buying GOLD" season in Asia.

LNKD – TDA screen tells me LNKD is now 918 P/E. i have to sell a collar.

Never got to the abortion issue with Paul but if Romey is a morman he lies or should find another church before they don't want his money. I remember before, RvW, has little chance of going away it has swayed way off but like everything it will go back. Bottom line is it expands welfare or creates new need, prison with a maturnity ward.

neet/gold – agreed. Big gold buying in India, although people are pretty stretched so I am not sure this time around.

September starts with a double-buy operation on Tuesday

I think my NTE question should have been to you instead of ZZ. What caused 2003 to the crash?

AMZN/Lflan:  Annoying and unfortunately you are 100% correct. I really don't like that stock.

Well, that was an extremely exciting day.  Glad I wasted that time for a big

FYI. Never got the NTE/ MIL research email. I would love to see it, but certainly don't want to be a pest.

INFI….keeps on giving.  I wish I may… I wish I might… have remained in that stock for longer than a few night(s)….

…and another killer day for volume. Barely 70 million shares.

sell into close below 81.13

Good weekend all!

All – Have a great Labor Day Weekend.  Today was certainly an education for me.  One to learn from!  Nothing expensive and in reality, I was up a few bucks as X was stopped out early today for a nice gain.  All in all, not a bad day considering a learned a ton.


I spotted a typos in my earlier post, it's the Sep 1475 short calls (instead of 1275!)
– Sell 5 SPX Sep 1120/1475 short strangle ($0.825 credit for the short put and $0.675 for the short call)

All – A pleasure spending bernanke day with you all. Have a good labor day too.

I hear what you're saying on LNKD, but which market do they serve?  It's mostly geared towards headhunters and I'm sure that by now all the Korn & Ferry dudes and all the other HR professionals have LNKD premium accounts, so I'm not sure where the growth would come from.  Of course I may be wrong, there's always CHINA!!!  Have a wonderful weekend!

AMZN/ Phil – So, based on this idea…"There's just no way AMZN pulls it off.   Of course, I used to say this about CMG from $300 to $440 so I could be wrong on AMZN all the way to $300 before it pulls back to $200!" 
Will rolling and chasing this another 20% or so to $300 ever pay off for the 25K account even if/when it pulls back to $200?   I am in a different, longer term short AMZN trade, but I figure you are in for around $8 (BE $222) including all rolls and DDs so far.  Why not wait and look for some/any sign of weakness (Like with the CMG trade – 10% sell off before the big earnings drop).  Obviously their disastrous quarter wasn't…I know that each trade stands on its own, but I think tracking the entirety of a trade thesis is also useful…I get the AMZN numbers problem, just not really the actual "pay the premium" trades
…trying to get the most out of the "learning portfolio"

Strangle / Peter – I'll post an update to your portfolio this weekend!

They just dropped the dollar to support line on springhill jacks chart that was posted earlier today

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