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Friday, March 31, 2023


Will We Hold It Wednesday – S&P 1,440 Edition – Again

SPY WEEKLY 1,440 – Again.

That's right, we have made not one inch of progress since we had the same exact title in last Wednesday's post, when I said: "This is the part where the MSM begins to realize that Manufacturing is slowing down, stimulus won't create jobs, earnings are not going to be as good as expected, Europe is not fixed, housing is not as strong as expected andthe stock market is being manipulated.  Yep, all the stuff I've been telling you for months."  Our plan was to buy into the dip and that's what we've been doing the past week as our short-term virtual portfolios are now much more bullish than they were a week ago.  

As you can see from Dave Fry's weekly SPY chart, we're still in an uptrending channel and still over the major support line at 1,420 and we tested 1,430 at the end of last week but have, so far, held 1,440 this week.  

Last week we were all worried about Spain because they were rioting in the streets and this week we are all worried about Spain because they haven't requested a bail-out yet.  "Plus ca change, plus c'est la meme chose," as they say in the country next to Spain…

USO WEEKLY In Member Chat last Wednesday, we took advantage of Oil Futures (/CL) testing $90 to go long and by the end of the week it was back to where we liked to short it at $93 and this morning, ahead of inventories, oil is at $91.22 but we're not long today as we don't expect the bulls to have much to get excited about but, if we get a dip to $88.50 that holds – we'd like to go long there.  As you can see from this USO chart – we're pretty well stuck in the channel but the bottom is about $89 so I'm thinking a build this morning takes us just below the $33 line on USO

AAPL was at $666 last Wednesday and they closed at $665 yesterday but we've worked ourselves into a more bullish position there (we had several long-term bullish trade ideas on AAPL in Member Chat that day).  XLF was holding $15.50 and we went longer there – now $15.69.  We added QQQ Oct $70s at .30 and yesterday we had the chance to add them again after having cashed out that batch at .50 (up 66% in a week).  We took $9 and ran on the PCLN Oct $595 puts in our $25KP and that nailed the high for the week, TLT was at $125 (now $124.19), the VIX was at at 15.70 (now 15.71) and my comment on HPQ hitting $16.50 to Members was "WTF?" and I reiterated our reasons for being long on that one (now $17.15).  

Annoying as the past 7 days have been, as you can see from our Big Chart, it's really just a bullish consolidation along our resistance lines as we wait for the Dow to build up enough steam to hit 13,600 – which our Tuesday analysis of the Dow components ("Still Waiting for the Dow to Show Some Strength") determined should be possible but we're only expecting a 600-point run at most (4.4%) from last week's 13,559 as long as earnings hold up.  

That, we determined, is why the Dow was and is having so much trouble getting over the Must Hold line at 13,600 and we were so harshly rejected there on Monday that we fell all the way back to 13,400 yesterday before turning back up.  

This morning's ADP Report came in better than expected, with 162,000 jobs added in the private sector.  Of those 162,000 jobs, just 4,000 were manufacturing and 18,000 "goods producing" with all the rest coming from the service sector.  When I was in college 30 years ago and we used to talk about transitioning to a "service economy," I don't think anyone ever imagined it could get so extreme….

That shifts the focus back to Friday's Non-Farm Payroll Report, where we're expecting about 120,000 jobs to be added but last month was surprisingly weak at 96,000.  

Tonight jobs will be a big topic of discussion at the Presidential debate but, as you can see from this chart, it's amazing that it's an issue at all.  Obama took office pretty much at the dead bottom of that trough and the improvements made since that time have been nothing but stunning but, for some reason, the Democrats allow the Republicans to take control of the narrative and act like coming into office with an economy that was losing 800,000 jobs a month was somehow Obama's fault – ridiculous!

Also ridiculous is the Romney plan to cut tax rates by 20%, which will reduce taxes paid by households with incomes over $200,000 by $250Bn a year.  According to the Tax Policy Center, If you leave preferential tax rates for savings and investing (e.g., long-term capital gains and dividends) untouched, as Mr. Romney has said he would do, that leaves only $165 billion of available tax expenditures that can be eliminated from this same group of high-income earners once their marginal tax rates fall.

That means there’s an $86 billion shortfall — the difference between $251 billion in tax cuts and $165 billion in potential tax increases on this high-income group — that needs to be accounted for somewhere.  By process of elimination that somewhere must be the rest of the population, the 95 percent of households earning less than about $200,000 annually.  No wonder Pinocchio Ryan said he didn't have time to do the math!  

We're not expecting much of a move in the markets until after the debate because fiscally irresponsible nonsense like this scares a lot of investors – and rightly so.  We also face headwinds from the BOJ having a Yentervention as they try to weaken the Yen by buying Dollars this morning.  Already, at 8:45, the Dollar is back over 80 and the Yen is at 78.39, up from 78 yesterday and we assume they'll target 78.50 today and 79 tomorrow, which could bring the Dollar back to 81 if they are successful.  

That will put pressure on commodities and the good news there is that gasoline is plunging below $2.80 (/RB) and weak demand evidenced in the inventory report (any kind of build) could send us all the way back to re-test $2.70, where they'll likely make a good long.  Meanwhile, if the 2.80 line holds pre-market, /RB Futures make a fun bullish play over that line with tight stops below it as we don't expect the Dollar to go much higher from here (now 81.05) today.  

Tomorrow is a big data day with Jobless Claims, Factory Orders and FOMC Minutes while we wait for Friday's NFP report.  Earnings are not very exciting but next Tuesday is AA & YUM and then we're off to the races but today is most likely a watch and wait kind of day as we wait to see what nasty things Romney has to say about our "failed" economy – the one that's no longer losing 800,000 jobs a month with a stock market that's gained an average of 25% a year since Obama took office


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Oil Lines

R3 – 94
R2 – 93.46
R1 – 92.56
PP – 92.03
S1 – 91.13
S2 – 90.60
S3 – 89.70

Yesterday's high and low – 92.94 / 91.51

BBY – Apparently Schultze is preparing an $11 Bn buyout of BBY (Reuters). The current market cap is $5.71 Bn. That strikes me a quite rich… 

AAPL –  Courtesy of my insomnia, some nearly useless trivia. AAPL has had only 1 down or "red" October since 1997 when Jobs retook the helm. That one red October occurred in 2008 when everything was melting down. We are currently down for the month and would need a close above 671 for history to repeat itself. 

Mornin'  nothing like a quiet morning to enjoy studying up in my charts a little bit.  momma bear left early for work, and baby bear, well she fell back to sleep, busy week for a 4 1/2 yr old.  Anyway, so enjoying my coffee, hat tip to Rdn, and catching up.
Interesting action in AAPL yesterday following the dip to 650.  Would like to see some follow through today, but will probably see lots of profit taking early on….currently have Nov 655 calls 1/2 covered by 680s.  May go naked if we hold 660 this am or fully cover if we break below 659 on volume.  Yesterday kinda felt like a little capitulation selling on e race down to 650, so maybe(stress maybe) a ST bottom in there?

And there is also some PE interest in SVU again – it traded at $2.50 AH but it has gone back to $2.30.

I am guessing that we will continue to see these rumors as long as the prices are depressed.

BBY/StJ – including debt and cash, that makes it about $8B, so a 23% premium for here.  They could unload real estate, but how much is that worth in the scheme of things.  I hear they are also trying to sell the Geek Squad, so there is an additional injection of cash.

BBY / Pharm – So basically he is willing to pay abut $21/share… They release earnings on 10/20. I am curious to see what happens then.

Gold – Louise Yamada with some squiggly line stuff re gold and silver.

Good Morning!

/DX – Dollar acting happy here over 80. But really strong fib resistance at this level. Gold and Silver holding their own in spite of dollar strength. Incidentally both the metals have triggered the "golden cross"  signal (50dma crossing over 200dma) while the dollar looks to be inching closer to triggering a "death cross" (opposite of golden).  Of course, the fact that these trends are helping my positions almost guarantees that they will reverse!

go PLX.

This "War" has become outrageous – I'm not sure why assad is still alive….
Oh yeah…I forget, "they" don't have anything "we" want…… 🙁

AAPL – oh, who knew? took a dive because the iphone 5 doesn't fit in the Bose docks.. thankfully there is a solution.

Good Morning!

Scottmi/GLD – Hey, we are totally saying the same thing. Err, except he is a world renowned technician and I just have insomnia.

phil, tks for comeback on my pcln.  since it didnt close over 620 i will wait to see what happens.
i had a bcs jan14 gdx 40-55.  per ur suggestion. i closed out the 40 and added a jan 14 57-63.
so now it looks to me selling some shorter dated puts on gdx in the 53/52 area could be good to work
off the prem on the 55 caller.
what say you and if so would u rec weeklys 1 mon, 3 mon etc……tks

PLX – musta been an etrade carrot. Was at 5.39. Oh well.

AMZN – Closed positions have a P&L of -$6075 so our net on the put is $6.07 above what we paid minus what we get for the short puts.
V – Net $1.42
QQQ – Net $0.42
AAPL – Net is about $24.00

Cobra: "I like gold pattern here, can be seen as a base and breakout setup."

lflan – The short weeklies never made it to your BTC price yesterday so they are still open.

stjeanluc….for the MoMo portfolio……BTC now the 7 Oct 665 calls for 5.70..   And a typo, the Feb 665 calls are not anywhere near 44.70.  You must have meant 54.70.  Thx

TNA Puts or Calls?

Look at NFLX popping.  I haven't looked for the news on it yet.

MoMo / lflan – My bad… I have corrected the spreadsheet…

NFLX – Good comments from an analyst at Citi this morning!

Wow, S3 for oil is at 89.70 and we are below. Don't have an S4 so we better hold it there… I have a daily Fib at 89.19 and then wheeeeeee….

I can not understatnd how CRM keeps going up!!  It is overvalued IMHO…

Pharm/ Zalicus buying on this dip?

That Euro-zone Composite PMI is not pointing in the right direction:


Markit’s final eurozone composite fell to a four-month low of 46.1 in September, little changed from 46.3 in August, but slightly above the earlier flash estimate of 45.9. Business activity and new orders both continued to fall, job losses rose, and the rate of cost inflation moved higher.

Phil/UN   I agree.  So why can't there be a couple of skyblue/white cruise missles sent to the assad residence?
I guess it's more important to pay attention to sabre-rattling, than to the daily killing of civilians….. 🙁

there is not much supporting CMG if it can fall that hard on a hedge-fund rumor…

  something odd going on with US sov cds…its up 29% in 5 days with most others down

Re who's using it:  Salesforce.com is all about managing sales leads and opportunities, so it is somewhat anti-cyclical in nature.  When the economy's good, products are flying off the shelf anyways, but when times are bad, every company needs a sales tool to analyze and manage their sales to get the last penny of revenue.  And Salesforce is the leader of the pack – others offer sales force automation as well, but they don't come even close.
Of course, that doesn't mean the company isn't overvalued, but there are better shorts out there!

Phil/ Well done on CL!

CDS / Phil – Maybe rating agencies have started analyzing the Romney/ Ryan tax plan and came up with the same conclusion as everybody else – it will increase the deficit dramatically over the next 20 years!

Apparently sanctions work better than war and are much cheaper in the long run:


Hey, it turns out that the sanctions against Iran really are crippling — so much so that even Mahmoud Admadinejad is admitting it and Benjamin Netanyahu now has sanctions fever.  Based on my own sanctions model, I'd predict that the sanctions are now becoming so costly that Iran will in fact be willing to compromise on its nuclear program — but any concessions will seem tiny compared to how devastating the sanctions have been. 

Who would have thought?

AMZN Weekly 250 short puts in $25KP:  profit now >50%

in your table it says JAN 12 XLF Put i.o. Jan 13 XLF P.  Just in case you have nothing better to do 🙂

Thanks hemas!

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