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PSW January Trade Review (Part IV)

OK, let's see if we can finish January off!

Actually, I hate to see it go as  our Trade Ideas in Parts, 1, 2 & 3 have had 51 winners and just 8 losers (87.6%) so far, not bad in a choppy market!  Now it's crunch time (or crash time) as we left off at the top, on Jan 10th and it's all downhill from here for the rest of the month.  

Keep in mind that timing is fairly arbitrary, of course, between the review and when the trade was made so our short trade idea on the Russell Futures at 1,160 from 1/10, made $6,000 per contract by 1/28 but is down $320 per contact as of Friday's close.  Whether we specifially called a stop to that trade or not – if you rode the contract from a $6,000 gain to a $320 loss, you are an idiot.  That's right – I'm not going to sugar-coat it – that is idiotic and you need to seek help!  cheeky

RUT WEEKLYHopefully, this is not your case and you have reasonable expectations and set reasonable stops on your trades.  My rule of thumb for Futures is, if we specifically call a stop (we usually do) then I count that total but if we make a general call, like we did on 1/10 in the main post, then I will put down the total gain on the trade with a reasonable stop (the /TF Futures went to 1,180 for an $8,000 gain before turning back up) based on our normal trading rules (see Strategy Section).  

We had been playing the top of the rally "Cashy and Cautious," with means we should be CONSERVATIVELY taking pofits off the table (and that's what we switched back to this week as well).  Unfortunately, as the old saying goes: "You can lead a trader to profits, but you can't make him take them off the table."

Jan 13:  Merger Monday – Suntory Buys Beam for 25% Premium ($16Bn)

Mergers are great market boosters. 

They make investors think everything is undervalued in a sector when one company gets bought for high cash premiums and BEAM (Jim Beam) is one of those companies many of us know and love but not, apparently, as much as the Japanese who will be taking over this 110 year-old American Icon.  BEAM did not rise 30% last year, making it "cheap" vs other S&P choices and, of couse, the only thing in the World more plentiful than Free Dollars is Free Yen – so why not gobble up some assets while the gobbling's good?

Overall, we're still "Cashy and Cautious" as the Macros are NOT matching up to the markets' performance.   Mean reversion can be a real bitch, so there's no harm in us keeping the bulk of our cash on the sidelines, while we wait to see if this discrepancy can hold up through earnings or not (we're betting not).  

  • SHLD long at $35.30, now $40.93 - up 15%
  • 10 SHLD Jan $30/45 bull call spreads at $6 ($6,00)), now $7 ($7,000) - up $1,000 (16%)
  • 4 TWTR $65 calls sold for $4.50 ($1,800), expired worthless - up $1,800 (100%)
  • 5 FAS Feb $90 calls sold for $5.30 ($2,150), expired worthless - up $2,150 (100%)
  • RFMD Jan $3 calls at $1.70, selling 2016 $5 puts for $1.30 for net .40, now $2.15 - up 437%
  • 20 XLF Feb $23 puts at $1.10 ($1,100), out at $2.20 - up ($1,100) 100%
  • T at $33.42, selling 2015 $30 puts and calls for $7.30 for net $26.12/28.06, now $32.80 + .46 dividend collected - on track  
  • Russell Futures (/TF) short at 1,160, out at 1,140 - up $2,000 per contract 
  • Nasdaq Futures (/NQ) short at 3,575 , out at 3,500 - up $1,500 per contract

Jan 14:  Testy Tuesday – Letting off Steam or Sending a Warning?

Keep in mind though, that we are up from TERRIBLE comps.  People tend to forget that but sales were NEGATIVE in '08 and '09 so imagine the benchmark for 2007 was 100 and we fell to 97 and then 93 on 3% and 4% drops.  That means a 2% gain in 2010 takes us to 94 and a 6% gain in 2011 takes us to 99.5 and 4% last year is 103.5 and 4% this year is almost 108 so it's an 8% total increase in sales over 6 years – not all that impressive since consumer spending is 70% of our economy and, of course, not even keeping up with inflation. 

  • Oil Futures (/CL) short at $93, out at $92 - up $1,000 per contract
  • S&P Fututres (/ES) long at 1,820, out at 1,823.50 - up $175 per contract 
  • Dow Futures (/YM) long at 16,250, out at 16,350 - up $500 per contract
  • BTU 2016 $15/22 bull call spread at $2.80, selling $15 puts for $2.75 for net .05, now $0 - down 100%
  • Russell Futuures (/TF) short at 1,160 – out at 1,100 - up $6,000 per contract
  • TZA Feb $16 calls at $1.44, selling $16 puts for .50 for net 0.94, out at $3.50 - up 272%
  • TSLA March $180/160 bear put spread at $12.20, selling $180 calls for $8 for net $4.20, now $30 - down 614%

Leverage does cut both ways!  The same sensible stops you should be using on a winning trade should also apply to a losing one, like TSLA above.  On longer-term trades, we have strategies to cover long-term short positions with upside momentum trades or hedges like we threw on the next day (see below) but, when your time-frame is less than a year – you simply need to not let trades get away from you.  

Jen Sorensen

Jan 15:  Balls to the Wall Wednesday – The Bull is Back!  

We've played this game before with TSLA and we know not to stand in the way of a runaway train.  We'll stop out of our Feb puts with a small loss if we have to and then re-short for April and again for July if they keep going higher because that strategy, of followed last year, eventually hit the jackpot as they dove from $195 all the way back to $120 between Oct 1st and Thanksgiving.  

Just like a Futures trade (and see Tuesday's Webcast for a good example), the key to success is having tight stops when you are wrong so you have another chance to reload at the next stop.  We expect some resistance at $165 and a pullback to $150 but, if not, then we'll see how $180 goes ($24Bn!).  While TSLA was crowing about ramping up production to 600 cars a week, TM, who produce 600 cars AN HOUR announced their HYDROGEN fuel cell Prius should be ready next year.  

  • Oil Futures (/CL) short at $93.50, out at $93 - up $500 per contract 
  • Gasoline Futures (/RB) long at $2.60, now $2.83 - up $9.660 per contract
  • Silver Futures (/SI) long at $20, now $21.83 - up $9,150 per contract 
  • 15 TSLA 2016 $140/200 bull call spread at $20, selling 15 $100 puts for $17 for net $3 ($4,500), now $18.82 ($28,230) - up $23,730 (527%)
  • 15 TSLA 2016 $140/200 bull call spreads at $20 ($30,000), selling 7 AAPL 2016 $450 puts for $44 ($30,800) for a net $800 credit, now $12,960 - up $12,160 (1,520%)
  • Russell Futures (/TF) short at 1,160, out at 1,161 - down $100 per contract
  • TSLA Feb $140 puts at $3.20, expired worthless - down 100%
  • Gold Futures (/YG) long at $1,237, now $1,324 - up $2,888 per contract 
  • USO weekly $33.50 puts at .30, out at .26 - down 13%
  • Oil Futures (/CL) short at $94.50, out at $93.50 - up $1,000 per contract
  • USO Feb $34 puts at .92, out at .80 - down 13%
  • SQQQ Feb $56 calls at $2.80, selling $56 puts for $2.60 for net .20, out at $3.50 - up 1,650% 
  • TZA Feb $16 calls at $1.20, selling $17 puts for $1.25 for net .05 credit, out at $2.50 - up 5,100%
  • 6 WYNN Jan $210/240 bull call spreads at $10 ($6,000), selling 10 March $210 calls for $8.20 ($8,200) for a net $2,200 credit, now  -$2,800 - down $600 (27%)

First thing first, if you are short TSLA, then the 2016 $140/200 bull call spread described above for $20 gives you another $40 of upside protection, even without a short put.  Also, in a PM account, it knocks off $40 of margin – another plus.   So, the way I want to cover 6 short $155 calls (looking like $15 for a $10 loss) is to buy 6 long spreads and then I'll want to sell 6 Feb somethings for about $15 as a pre-roll and put a stop on the $155s at $20 (+$5).

.NDX WEEKLYFeb 16:  Bye Bye Best Buy – Can the S&P Hold When Retail Folds?  

I already put out an early morning Alert to our Members to short the Futures at Russell 1,170 (/TF), Dow 16,400 (/YM) and, of course, Oil $94.50 (/CL) and we'll stop out if any two of the 3 get back over the line or the Nasdaq (/NQ) gets over 3,600 or the S&P (/ES) gets over 1,840 but these are just follow-on plays to yesterday's aggressive short option positions we sent out as an Alert yesterday afternoon at 12:33.  

…  That's the real sentiment (bearish), from people who actually put their own money on the line to predict the future, not the sentiment of paid pumpers, who shuttle from interview to interview so they can drill their talking points into the heads of retail investors, driving them into whatever positions the pumpers are paid to promote that day.  The entire financial network is itself just another propoganda machine for their advertisers, who are generally Investment Banksters who make their money churning retail investors in and out of positions.  It's a gigantic SCAM – don't take it seriously…

  • Russell (/TF) Futures short at 1,170, out at 1,100 - up $7,000 per contract
  • Dow (/YM) Futures short at 16,400, out at 15,400 - up $5,000 per contract 
  • Oil (/CL) Futures short at $94.50, out at $93.50 - up $1,000 per contract
  • Gold (/YG) Futures long at $1,235, now $1,324 - up $2,955 per contract 
  • Nikkei (/NKD) Futures short at 16,000, out at 14,000 - up $10,000 per contract
  • 8 SCTY 2016 $65/80 bull call spreads at $4.50 ($3,600), selling 12 Feb $75 calls for $5.25 ($6,300) for a net $2,700 credit, expired at $2,968 - up $5,678 (210%)
  • Oil (/CL) Futures short at $94.50, out at $94 - up $500 per contract
  • Natural Gas (/NG) Futures long at $4.35, now $6.24 - up $18,900 per contract 
  • SHLD 2016 $25/40 bull call spread at $7, selling 2016 $25 puts for $6.50 for net .50, now 0.60 - up 20%
  • Nasdaq (/NQ) Futures short at 3,600, out at 3,450 - up $3,000 per contract
  • SSO March $98/102 bull call spread at $2.60, selling SHLD March $30 puts for $1.20 for net $1.40, now $1.85 - up 32% 

BE THE HOUSE – Not the Gambler!  That's our theme for 2014 and we are drilling this point home in our series of weekly Webcasts, as well as our live weekend conferences.  If you want to see our first Webcast on this topic with Mike MacDonald – you can see a replay HERE.  We have a lot of fun doing short-term trades but it's really just something to do while we wait for our SENSIBLE, CONSERVATIVE long-term positions to bare fruit.  

Jan 17:  Friday Reveiw – Our 5 Inflation Fighting Picks

These are the kind of trades we like at Philstockworld, the "set and forget" trades where we SELL premium to other people (Being the House!) and simply sit back and let time do the work for us.  Also, as Fundamental Investors, we like to pick out spots and we PATIENTLY wait for opportunities to go long.  That's why last year's inflation-fighting picks didn't come out until April, when we thought the timing was right for our entries while, for 2011, we put up our "Secret Santa's Inflation Hedges" (also wildly successful) on Christmas day of 2010.

So, timing is very important but so is understanding our strategies and learning the one technique I have the most trouble teaching to our Members – how to be PATIENT!   We're still "Cashy and Cautious" in the current market, expecting a drop as more and more earnings pour in.  So far, all bad news has been ignored but perhaps there will be a straw that breaks the camel's back.  Or perhaps not – either way, cash makes us comfortable at the moment and I will be making some new selections in our Member Chat Roomand during our weekly Webcasts.

  • Oil Futures (/CL) short at $94.50, out at $94.20, up $300 per contract 
  • Nikkei Futures (/NKD) short at 15,800, out at 14,000 - up $9,000 per contract 
  • Dow Futures (/YM) short at 16,350, out at 15,400 - up $4,750 per contract
  • FXI March $39/37 bear put spread at $1.50, now $1.70 - up 13%
  • FXI March $39/37 bear put spread at $1.50, selling CHL 2016 $40 puts for $2.70 for net $1.20 credit, still net $1.20 credi – even
  • HMY at $2.80, selling 2016 $3 calls for .75 and $4 puts for $1.75 for net 0.30/2.15, now $3.37 - on track
  • XCO at $4.88, selling 2016 $5 puts and calls for $2.85 for net $2.03/3.52, now $4.77 - on track

INDU WEEKLYJan 21:  Tricky Tuesday – China Stimulus Saves Us Again

I'm ready to give up.  

I WANT to give up, actually.  I want to bash my brains in with a BRIC and just mindlessly BUYBUYBUY so that, when I wake up to yet another Central Bank staving off yet another near-collapse by dumping money on the problem, I can go "Yay, they fixed it" instead of "OMG, we almost collapsed again!"  

It's so much more fun being an optimist.  An optimist can whistle right up to the edge of the cliff and whistle all the way down, right up until the inevitable SPLAT.  Of course the bad news in that case is very short-lived while we otherwise enjoy the entire ride – just like a sperm whale that spontaneously appears in the upper atmostphere (and yes, there's a relevant link for that!).

  • Oil (/CL) Futures short at $95, out at $94.75 - up $250 per contract
  • Russel (/TF) Futures short at 1,172, out at 1,165 - up $700 per contract
  • 10 DBA 2015 $26 calls at 0.70 ($700), selling 10 MCD 2015 $75 puts for $85 ($850) for a net $150 credit, now $1,100 - up $950 (633%)
  • DBA Jan $24/28 bull call spread at $1.10, selling CAKE July $40 puts for $1.30 for net .20 credit, still $1.30 - even
  • Gold Futures (/YG) long at $1,235, now $1,324 - up $2,955 per contract
  • Oil Fututes (/CL) short at $95.25, out at $95 - up $250 per contract
  • 10 CLF 2016 $18/25 bull call spreads at $2.80 ($2,800) selling 5 short 2016 $18 puts for $4 ($2,000) for net $800, now $1,150 - up $350 (43%) 
  • Dow Futures (/YM) long at 16,250, out at 16,350 - up $500 per contract 
  • 10 LULU 2016 $45/60 bull call spread at $4.20 ($4,200), selling 5 2016 $45 puts for $8 ($4,000) for net $200, now $2,880 - up $2,680 (1,340%)
  • Russell (/TF) Futures short at 1,172, out at 1,171 - up $100 per contract 

We had our weekly webcast that day, where we discussed our inflation-fighting trades - a replay is available here

Jan 22:  Which way Wednesday – Earnings Edition

If the S&P has trouble at 1,840, that's going to be a bearish sign and we expect the Dollar to pop so Oil Futures will be a short below $95.75 (/CL) or off a rejection at $96, whichever comes first.  The Russell (/TF) may retest 1,175 again and a failure there is "game on" for the shorts as well (see yesterday's webcast).  That trade was a $1,000 per contract winner yesterday morning and worked out better than our Dow (/YM) shorts at 16,350 but those were good for $500 and far less stressful to play.  

  • Gasoline (/RB) long at $2.64, now $2.83 - up $7,980 per contract
  • SLW 2016 $18/25 bull call spread at $3.05, selling 2016 $18 puts for $2.74 for net .31, now $1.85 - up 496%
  • Oil (/CL) Futures short at $96, out at $96.15 - down $150 per contract 
  • Russell (/TF) Futures short at 1,173, out at 1,170 - up $300 per contract
  • 4 NFLX 2015 $370/400 bull call spreads at $10 ($4,000), selling 5 Feb $360 calls for $10.10 ($5,500) for a net $1,500 credit, now -$26,600 - down 1,806%
  • EWJ June $11 puts at .17, out at .50 - up 194%
  • LGF 2016 $28 puts sold for $5.20, now $4.30 - up 17%
  • SCO March $32/35 bull call spread at $1.20, selling March $32 puts for $1.35 for net .15 credit, now -$3.25 - down 2,066%
  • BRCM 2016 $25/32 bull call spread at $3.20, selling 2016 $25 puts for $3.10 for net .10, now $3.25 - up 3,150%
  • BBY 2016 $23 puts sold for $5.25, now $4.80 - up 8%
  • EBAY 2016 $45 puts sold for $4.30, now $4 - up 7%
  • HOV 2016 $5/10 bull call spread at $1.45, selling $5 puts for .90 for net .55, now .35 - down 57%

Notice how these leveraged plays can make outrageous gains OR LOSSES for us.  That's why it's very important to use stops.  In reality, SCO is at $28.83, so we would simply roll the short March $32 puts ($3.40) along to a lower strike in a longer month.  As long as you REALLY want to own the position you sell a short put in, the "loss" is not a big deal.  Also, of course, as long as you don't go too crazy with your position sizes!   

In SCO's case, stops and strategy were detailed in the Webcast and the Summary Notes.  In the case of NFLX – we decided at 9:37 the next morning to kill the trade with a $3,400 loss, not ride it out to the current $26,000 loss! 

Meanwhile, the short 2015 $400s are $53 so net $24 on that spread and the short Feb $360s are $29 so a loss of 5x $18 ($9,000) on the short calls and a gain of 4x$14 ($5,600) on the long means the whole trade is a net $3,400 loss – not devastating but annoying.  So, best to just cash it and do a new trade unless you want to go with my above suggestion to add more risk.  

SPY 5 MINUTEJan 23:  Thursday Fake-Out – Weak Dollar Props up Weak Markets 

The rally is looking a little tired.  

Despite repeated doses of Central Bankster stimulus, we just can't seem to get a proper breakout over our key levels.  As you can see from Dave Fry's charts, yesterday's volume was so low we may as well have been closed yet despite all the "good" news (see this mornings News Flast for details and Futures trading notes) the S&P only made a half-assed attempt at 1,850 and barely held 1,840 in the end.  

  • Russell (/TF) Futures shorts at 1,175, out at 1,163 - up $1,200 per contract
  • Oil (/CL) Futures shorts at $97, out at $97.15 - down $150 per contract
  • NFLX Feb $375 puts at $10, expired worthless - down 100%
  • NFLX Jan $420/380 bear put spread at $23.50, selling $500 calls for $23 for net .50, now $55 - down 10,900%
  • NFLX weekly $375 puts at $2.60, stopped at $1.70 - down 34%
  • NFLX next weekly $370 puts at $2.50, expired worthless - down 100%
  • Oil (/CL) Futures short at $97, out at $97.15 - down $150
  • TSLA Jan $210/180 bear put spread at $20, selling Jan $220 calls for $18.60, covered with March $190 calls at $10 for net $13.40, now net $5.75 - down 57%

Jan 24:  Faltering Friday – Fundamentals Finally Matter 

Our Long-Term Portfolio held a $4,375 gain (set up on 11/26/13) and, because we anticipated the sell-off, our Short-Term Portfolio jumped to a $1,370 gain as of yesterday's close.  That's the value of learning to BALANCE our portfolios as well as following our core strategy of BEING THE HOUSE – Not the Gambler.  

That $1,370 gain in the Short-Term Portfolio is off a $2,035 cash credit, so up 67% in less than 2 months.  In the Long-Term Portfolio, we have a $13,710 cash credit and that makes the $4,375 profit 32% against the credit and "on track" in our more conservative portfolio.  As I have been saying over and over until I'm sure you are sick of it – we are "Cashy and Cautious" because we've been waiting for a pullback to make bigger investments – but that doesn't mean we can't make a few Dollars while we wait, right?

… Still very choppy and not a good day to buy.  Too much investor optimism out there and people can be SHOCKED if they take the time to read the news this week and the news happens to start talking about the melt-down in Emerging Markets, the riots in the Ukraine, Turkey's mess, Argentina, China….   That, combined with the holiday week in China that will cut off a big chunk of the World's potential market participants (they take this holiday seriously) – does not make for a good investing climate.   

Sure we want to pick up deals like LULU or SHLD when they crash below value on earnings misses but let's not consider every stock that pulls back 5% from a 50% one-year run to be a "bargain"!  

  • Oil (/CL) Futures short at $97.50, out at $96.50 - up $1,000 per contract
  • Natural Gas (/NG) Futures short at $5, out at $4.90 - up $1,000 per contract
  • Russell (/TF) Futures short at 1,160, out at 1,140 - up $2,000 per contract
  • TZA March $17/21 bull call spread at 0.93, selling $16 puts for .75 for net .18, out at $1.20 - up 566%
  • 5 TZA March $17/21 bull call spread at 0.93 ($465), selling 1 CLF 2016 $18 put for $4.20 ($420 ) for net $45, out at $600 - up 1,233%
  • S&P (/ES) Futures long at 1,800, out at 1,810 - up $500 per contract 
  • Dow (/YM) Futures long at 16,000, out at 16.050 - up $250 per contract 
  • Oil (/CL) short at $97.25, out at $96.50 - up $750 per contract

CEOs – I have tried explaining, in the past, to several major corporations why they should lobby FOR higher wages.  Even for a company with as much interest in cheap wages as MCD, the logic is that raising the wages for 100M of their CUSTOMERS offsets the damage that will be done by raising the wages for their staff by 10% (adding 2.5% to cost of food).  It's not complicated logic but the Conservative brain-washing is very thorough and they are all terrified of rising wages.

That finally brings us up to Jan 25th, where we did Part 1 of our Trade Review.  This last section had a whopping 86 trade ideas with 19 misses (78% positive), bringing our total for the month (we always start the next month at the end of the previous month) to 118 winners and 27 losers, for a very respectable 81% success rate. 

The main reason there were so many trades is that we had our Futures trading workshop and we've been getting into more detail on those quick in and out plays.  If you can't play the Futures – you can always just play the index or options on the indexes (deep in the money work best) and you get the same effect – only without so much leverage – which can be a good thing, when you're on the wrong side! 


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  1. TLT – Phil mentioned that a surge into Treasuries does indicate a flight to safety, which might in turn signal a drop in equities.  Well, I bought some calls @ mid-day on Friday, after the close they popped my position 25%.  H'm.  Glad I have that TZA hedge that was put up Friday morning.  And, yes, I am mostly in cash, but for my rocketing DBA spreads — not only was DBA in cheap when PSW puy iy up a few weeks ago [and still is, in historical terms] but now the news is full of drought/disaster/desalination/hottest year globally on record news.  This could be an interesting year.

  2. Interesting like the Chinese curse, ZZ.

    I was just shopping at Fairway (FWM) and they're moving the store around, less free samples and less discounts – and the store is less crowded than usual.  Hard to go from NYC to the styx of NJ and maintain your market…

    No wonder these trade reviews take so long – look how many trade ideas we have in just a few days!  

  3. "If a god gave his oath upon the river Styx and failed to keep his word, Zeus forced that god to drink from the river itself. The water is said to be so foul that the god would lose his/her voice for nine years."    Yes, come to think of it, New York Magazine did point out that New Jersey was actually riverine!!

  4. Phil,

    /NKD has had its 40% bounce off the low at 13950; range 13950 to 16250. Last friday it nudged 14920 and dropped…that was the 5% rule….your analysis on a directional trade here would help immensely….or at a review of the 20%-40% bounce and 5% rule would be greatly appreciated. Thank you as always.

    Your input on the /NG trade would be helpfull as well. thanks

  5. Well, I always begin with the big picture for context (weekly chart) and there we can see what was a series of rising bottoms that broke just in this last dip at 14,500.  So that is big support.  Consolidation for this run was around 9,000 so 50% is 13,500 and you can see the consolidation there and we never got close to 18,000 so we'll look at 60% and 80% from 9,000, which is 14,400 and 16,200 and now we can see how this channel makes sense, between 14,500 and 16,000.  Keep in mind that currency fluctuations make this a really screwed-up chart to track!  

    NOW, I'll go to the daily chart, to see how that channel looks.  We can see good consolidation but it's lower than 14,500 and that makes sense because our real number (60% up) is 14,400.  Also, now we need to consider that 18,000 may be the goal and then we'd expect retracements of 20% of the 9,000-point run (1,800 points) back to 16,200 and 40% to – Ta Da – 14,400.  That means we have really good reason to use that 14,400 line as a base and the run from 14,400 to 15,840 is 10% a 20% overshoot (2% more) is 16,128 and again – remember the currency fluctuations make a mess of this index.  

    So all looks good and we can assume the main range is 14,400 to 15,840 and now, on an intraday, we can run our lines from 14,440 up 1,440 and that means we're looking for 288-point moves but call it 300 and that's 14,750 (see on the chart!) and 15,000(ish).  So over 15,050 (to be more exact) is over the strong bounce line but VERY dependent on moves in the Yen.

    Nat gas is harder to chart because the continuous contract makes a mess of things.  Obviously, /NGH4 didn't drop $1.40 on Friday, but that's how it looks on the chart.  As we know, as the front-month trading got very thin – the NYMEX crooks took it for a ride (and it's still $6.40).  

    So I wouldn't even bother to apply any long-term trendlines to it because it doesn't have a real price – it's all BS Futures trading.  You just have to watch for short-term trends to form, keep an eye on the news, and wait for an opportunity to get on the right side of the trade at a good resistance point.  

  6. All,


    Updated FCF portfolio is posted with Friday's activity:


    A number of partial positions were called away raising the cash balance.

    Against this cash position a new option position was sold in PETM and a short term position was taken in CONN.

    Both major equity and high yield bond models have remained on buy signals. 

  7. Good morning! 

    It bores me to tell you the Dollar is being driven down (80.16) and the Futures are up.  

    Oil $102.50 (good short with tight stops on /CL), gold $1,330, silver $21.84, copper $3.25, nat gas $6.42 on old /NGH4 contract (and I still like the short but be careful!) and $5.152 on new and gasoline $2.83.

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    Asia wasn't all that excited this morning with the Shanghai down 1.75%, Hang Seng down 0.8% and Nikkei down 0.2% and that was AFTER a 200-point pop into the close.  India was up 0.4%, Singapore up 0.2%.  

    This is exactly what we were worried about!  Industrial Bank Co. and other unidentified banks have tightened lending to property sector and some property related industries such as steel and cement. Industrial Bank Co. may suspend some property-related loans business through end-March, citing people familiar with the situation.

    China Weighs on Asian Shares - Worries over China's property market cast a pall over investor sentiment in Asia, sending many of the region's stock markets lower.

    Shares Fall on China Property Market Concerns - European stocks edged lower, as concerns over China's property market weighed on investor sentiment at the start of the week.

    Chinese Developers Cut Prices - Developers in two cities in eastern China cut new home prices to spur sales, raising fresh concerns about the sector's health and hammering property stocks.

    China Rebuts Lew as Emerging Markets Keep Up Pressure on FedChina led developing markets in hitting back at the U.S. as South Africa kept up pressure on the Federal Reserve to consider the spillover effects of tapering its bond-buying program. A day after Treasury Secretary Jacob J. Lew questioned the pace of China’s economic opening, Chinese Finance Minister Lou Jiwei said yesterday the U.S. economy had been buoyed by monetary policy rather than structural changes. South Africa’s Deputy Finance Minister Nhlanhla Nene called on the Fed to weigh the impact on developing nations as it pares stimulus. “The tension is likely to continue,” said Tomo Kinoshita, chief economist at Nomura Holdings Inc. in Tokyo. “China is on the side of the emerging economies rather than on the side of the advanced economies.” 

    China Faces "Vicious Circle" As Commodity Collateral Collapses

    Beijing Air Pollution Reaches 11-Times WHO Recommended Levels. Beijing’s air pollution reached 11 times World Health Organization-recommended levels today, as the country’s meteorological department forecast smog in north and central China to continue. The concentration of PM2.5, fine particulates that pose the greatest risk to human health, was 290 micrograms per cubic meter at 3 p.m. near the city’s Tiananmen Square, the Beijing Municipal Environmental Monitoring Center said on its website. The WHO recommends levels of no higher than 25 micrograms per cubic meter in 24 hours.

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    India’s Modi Attacks Chinese ‘Expansion’ in Tougher Border Stand. Indian opposition prime ministerial candidate Narendra Modi criticized China for its “expansionary mindset”, signaling he would take a tougher stance in a territorial dispute along their Himalayan frontier. Speaking at an election rally in the remote northeastern Indian state of Arunachal Pradesh that is partly claimed by China, Modi said India would never give up parts of its territory. Instead he urged China to pursue closer economic ties with India for the benefit of both nations as they try to meet a target of $100 billion in bilateral trade by next year. 

    Thai Farmers Lose Pickup Trucks as Protests Raise Debt Risk. Koon Thaveepat is in danger of losing his pickup truck and his livelihood. He’s behind on loan payments as Thailand’s anti-government protests delay state rice-purchase payments, threatening to plunge thousands of farmers deeper into debt.

    Indonesia’s GDP Growth May Slow to Least Since 2009, Basri Says. Indonesia’s Finance Minister Chatib Basri said economic growth may slow this year to the least since 2009 as the government reins in the current-account deficit. Southeast Asia’s largest economy may grow between 5.5 percent and 5.8 percent in 2014, Basri said today in an interview in Sydney following a meeting of Group of 20 finance chiefs. The state budget had assumed expansion of 6 percent. Gross domestic product expanded 5.8 percent in 2013

    Maduro Warns Venezuela Opposition as Caracas Protests ReturnVenezuelan President Nicolas Maduro told opposition governors to take part in talks he called for next week or face “consequences” as Caracas residents prepare for dueling rallies today. Maduro, in a news conference from the presidential palace yesterday, said opposition groups were trying to overthrow his government, backed by the political “right” in Latin America, foreign media and the U.S. “There is a campaign to demonize, to isolate, the Bolivarian revolution,” said Maduro, sitting in front of a portrait of late President Hugo Chavez. “It’s an international campaign that is trying to divide Latin America.”

    Brent Above $110 in Asia - Crude-oil futures were slightly higher in Asia after last week's sharp rally and as markets assessed the outlook for demand in the U.S.

    Red Flag for Gold: Fear May Be Fading - Gold's believers see it as a store of value, a hedge against inflation or a hard alternative currency. But in recent decades it performed better in a different role.

    Las Vegas Sands' Adelson Ready for Big Investment in Japan Chief executive of Nevada-based company ready to spend 'whatever it takes.'

    Lenovo Pushes Its Own Apps With New Tablet - Lenovo Group is attempting to differentiate itself with a suite of homegrown apps on its new tablet.

    Europe is pretty flat an hour after opening but also recovering sharply off the lows with the Nikkei.    The news that popped us was an IMF aid package for the Ukraine, coinciding with the ouster of their President, who is now on the run and wanted in connection with a mass-murder investigation from the riots.

    Draghi Highlights Importance of March ECB Meeting

    Stock Investors Like the View in Europe - Investors have been buying European stock funds, focusing on a brightening economic outlook and low interest rates.


    • Eurozone CPI dropped 1.1% on month in January after rising 0.3% in December, with the fall much sharper than the 0.4% decline that was expected.
    • On year, inflation +0.8%, as in December, vs expectations of +0.7%.
    • Core CPI +0.8% vs +0.7% previously.
    • The euro is +0.2% at $1.3763. (PR)


    • The German Ifo institute's business climate index has increased to its highest level in 2 1/2 years, rising to 111.3 in February from 110.6 in January and topping consensus that was also 110.6.
    • The current-situation reading rose to 114.4 from 112.4 and exceeded forecasts of 112.8, while the expectations print slipped to 108.3 from 108.9 and just beat estimates of 108.2.
    • The DAX is +0.2% and the euro is +0.15% at $1.376. (PR)


    • Deutsche Bank (DBintends to slash its U.S. balance sheet to $300B from $400B in order to meet tough new capital and leverage requirements from the Federal reserve.
    • The figure doesn't include $200B that Deutsche holds at its U.S. branch and doesn't fall under the new rules.
    • The German bank will implement the changes mainly by reassigning some operations that are located outside the U.S. to other parts of the business.
    • Analysts have estimated that Deutsche will have to allocate over €7B ($9.6B) in capital to its U.S. unit to fulfill the Fed's regulations.


    • HSBC's (HSBC) 2013 pretax profit rose 9% to $22.56B but fell short of consensus of $24.6B.
    • Underlying revenue grew to $63.3B from $61.6B, while underlying operating costs dropped 6% to $38B.
    • Q4 pretax profit fell to $3.96B from $4.43B a year earlier.
    • HSBC increased its dividend to $0.49 a share from $0.45.
    • However, the bank warned of "choppy markets" this year as emerging economies adjust to "changing economic circumstances and sentiment."
    • Shares are -4.2% in London. (PR)
    • The U.S. and the EU have been working on a multi-billion-dollar IMF aid package for Ukraine following the ouster of President Viktor Yanukovych over the weekend.
    • The White House has asked Russia to join the effort, with the aim being to ease tensions between East and West over Ukraine. Russia's $15B aid package for the country is on hold, while it has recalled its ambassador to Kiev for consultations.
    • The EU is happy to help, but wants Ukraine to overhaul its economy in return for assistance.
    • The moves to shore up the country come after S&P last week cut its credit rating to CCC and said it risks default.
    • ETFs: GURESR

    EU Offers Conditional "Aid" For Ukraine's "Catastrophic, Pre-Default" Economic State

    Ukraine Interim Leader Warns of Economic Danger. Ukrainian parliament Speaker Oleksandr Turchynov, handed presidential powers as lawmakers prepare to form a coalition government, warned that the economy was in a “pre-default situation.” Lawmakers in Kiev worked on reshaping government after ousting Viktor Yanukovych from the presidency for a role in the violence that killed at least 82 people last week. The U.S. and the European Union pledged aid for a new cabinet. Border guards stopped Yanukovych at an airport in the eastern city of Donetsk two days ago. He wasn’t detained. 

    Pope Appoints 19 New Cardinals

    After Hype, It's Showtime for Renzi - Europe File: Newly installed Italian Prime Minister Matteo Renzi's career now depends on delivering the overhauls that he accused his predecessor, Enrico Letta, of failing to deliver.

    Our Futures are up about 0.25% but we didn't expect to go straight down on Monday, Tuesday morning is usually the high on a down week in a fake rally.  

    Global Economy Collapses Despite 4th "Warmest" January On Record


    India’s Rajan lashes US over international reform. The outspoken head of India’s central bank has lashed out at the US Congress for failing to back International Monetary Fund reform, saying emerging markets wanting more say on the body were starting to seek alternatives. “There is only so long the world can wait for the US to get its act together [on IMF reform],” central bank governor Raghuram Rajan told Financial Review Sunday in an interview.

    Is This The Moment The Fed Decided To Go All In

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    U.S. Corporate Credit Swaps Index Rises First Time in Four Weeks. A gauge of U.S. corporate credit risk rose for the first week in four on signs the Federal Reserve is unlikely to slow the pace of stimulus cuts. 

    Why No Capex Recovery

    Treasury Yield Curve Narrows as U.S. Economic Growth FaltersThe difference between yields on two- and 10-year Treasuries narrowed for the first time in three weeks as investors questioned the pace of the economic expansion after reports showed harsh weather weighed on U.S. growth. 

    G-20 Agrees To Grow Global Economy By $2 Trillion, Has No Idea How To Actually Achieve It

    G-20 Renews Vow on Shadow Banking Amid Talk of China Risk. Global finance officials renewed their promise to address risks from unregulated lending and said their drive to end bailouts for large banks should be nearly finished this year. Group of 20 finance ministers and central bank governors meeting in Sydney over the weekend said they are focused on “substantially completing” efforts to prevent lenders from becoming too big to fail and addressing the risks of shadow banking before a summit of the nations’ leaders in November.

    IMF’s Lagarde Sees Tapering Spurring Further Market Volatility. The dialing back of Federal Reserve stimulus will cause further ructions in financial markets even as it marks an improvement in the global economy, International Monetary Fund Managing Director Christine Lagarde said. “The tapering that we see is a result of the significant improvement of the global economy, but particularly the U.S. economy, and that in and of itself is positive,” Lagarde said today in an interview following a meeting of Group-of-20 finance chiefs in Sydney. “There will continue to be volatility on the markets as a result of this tapering.”  

    Citi Warns "Housing Sentiment Got Carried Away"

    U.S. Examines Swiss Insurance Products In Tax CrackdownProducts Can Be Used Legally By Americans to Defer Taxes. U.S. authorities are scrutinizing Americans' use of Swiss insurance products to determine if they have been used to hide assets, signaling a potential new direction in the U.S. legal crackdown on tax evasion in the Alpine country, according to people with knowledge of the matter. 

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    • Chesapeake Energy (CHK) is pursuing strategic alternatives for its oilfield services division, including selling the unit or spinning it off to the company's shareholders.
    • Chesapeake Oilfield Services (COS) generated revenue of $2.2B in 2013; its service offerings include drilling, hydraulic fracturing, oilfield rentals, rig relocation, and fluid handling and disposal.
    • The news follows speculation last week that 10%-owner Carl Icahn is seeking a cash bid of up to $40 a share for Chesapeake, whose shares closed at $26.57 on Friday to give it a market cap of $17.67B. (PR)

    Feds Withhold Water To California Farmers For First Time In 54 Years

    Humana(HUM), UnitedHealth(UNH) May Face 3.55% Advantage Rate CutsHealth insurers participating in the Medicare Advantage program for elderly Americans, including Humana Inc. (HUM) and UnitedHealth Group Inc. (UNH), face a base payment cut of about 3.55 percent next year, the U.S. government said.

    Bankrupt Solar-Panel Maker Suntech Seeks Protection in U.SSuntech Power Holdings Corp., the Chinese solar-panel maker that defaulted on $541 million of bonds, filed for bankruptcy court protection from U.S. creditors as it liquidates in the Cayman Islands.

    • Chip makers such as Intel (INTC) and Broadcom (BRCM) are using the Mobile World Congress to demonstrate technology that will increase network speeds.
    • One new service is expected to provide download rates of up to 300 megabits a second, four to six times the top speeds of existing LTE networks.
    • The companies are out to chip away at the dominance of Qualcomm (QCOM), which holds 9% of the LTE market.
    • Other companies that are putting out decent LTE chips include Nvidia (NVDA), MediaTek, Marvell Technology (MRVL), and Spreadtrum Communications (SPRD).
    • More on the Mobile World Congress.

    Microsoft(MSFT) Said to Cut Windows Price 70% to Counter Rivals

    Samsung Drops Android for New Watch - Samsung announced the release of its Gear 2 smartwatch, running on the company's Tizen operating system, rather than Android.

    What's on Tap for Mobile World Congress - Much of the new swagger at Barcelona's Mobile World Congress comes thanks to the explosive intersection of computing and mobile devices in recent years. Underscoring its new position in the tech world, Facebook Inc. CEO Mark Zuckerberg is giving one of the show's keynotes. So, what are the biggest things to watch?

  8. Nice, fake pop in /NGH4 to $6.493 but back to $6.425 already, great if you were scaling in and out.  

    Other /NG(J4) gave us a good short entry at $5.20 but keep in mind this is even more fake then oil so, the minute you put in a bid, they will try to flush you out so you have to be sure about your entries and able to take a hit.