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Trillion Yuan Tuesday – China Pumps it Up to Close the Quarter

Photo published for Strap In! China Is Crashing Again

Down in the pleasure centre,
hell bent or heaven sent,
listen to the propaganda,
listen to the latest slander.
Pump it up until you can feel it.
Pump it up when you don't really need it. – Elvis

China has set a new Global record by dumping almost $200Bn (over 1Tn Yuan) in stimulus into their overheated markets in just two days.  Sunday night it was a rate cut AND lowering the reserve requirements for banks and yesterday afternoon they dropped another $50Bn in a "Reverse Repo" operation and, to cap it off this morning, the Finance and social Security Ministries published draft rules that would permit the state pension fund to invest up to 30% of its net asset value in securities, potentially allowing ANOTHER 600B yuan ($97B) to enter the market.

Take 30% of our retirement savings and buy stocks that already gained over 100% this year in an attempt to prevent a bear market from wiping out all of the gains – BRILLIANT!!!  

Embedded image permalinkCertainly Chinese speculators thought so as the Shanghai went from down 5.6% at the open to up 5.6% at the close!  This allowed them to save a little face at the close of the Quarter and, more importantly, promises Fund Managers a whole new round of suckers to dump shares into in July.

10% happens to be a Strong Bounce off the 25% drop, per our 5% Rule™, so we're not going to be too impressed until we see some follow-through.  Like us, Bloomberg is skeptical, saying: "China's Magic Tricks Can't Save Its Stock Market" warning us:

Only time will tell if Beijing's bag of tricks is empty. But if it is, the fallout on global markets could dwarf the impact of Greece's flirtation with default. The world, after all, has had a few years to contemplate a Greek exit from the euro. But if the world's biggest trading nation suddenly hit a wall, it would be a catastrophe of a different order, wreaking havoc on economies near and far.

SPY  5  MINUTEEurope seems a bit relieved and has worked itself into a flatline this morning while the US Futures are up about 0.5% but that's just a weak bounce off yesterday's drop that we already called a long for in our Morning Alert to Members (also Tweeted out for you cheapskates who don't subscribe).  We're playing for the bounce but we already took the money and ran on /RB (Gasoline Futures) at $2.025 and Russell Futures (/TF) stopped us out at 1,252.50 with a 2.5-point, $250 gain per contract – enough to pay for a nice breakfast as we wait for better entries. 

As you can see from Dave Fry's SPY chart, our 5% Rule nailed 2,055 on the S&P (10x SPY) almost to the penny (see prediction at the bottom of yesterday's morning post which, by the way, made $1,000 per contract as a day trade for you!) and, let's not forget, we are now looking for a bounce as high as 2,075 today (strong bounce) and, if that fails, we'll expect the next test of 2,055 to fail and then we're ready to complete the correction trip to 2,035, which is the 10% line on our Big Chart:

Notice how the Dow stopped dead on our Must Hold line?  These are same lines we've been using to predict market channels since early 2009, when we first looked ahead to a 5-year recovery plan.  Here we are in year 6 and the Fundamentals haven't improved enough for us to bump up those Must Hold lines – that's right where the market should be (at a mid-point) and the S&P and the Nasdaq are still way over their levels, and perhaps not for good reasons.

NDX WEEKLYRampant speculation in the Nasdaq and S&P with crazy valuations on momentum stocks like NFLX (p/e 168), AMZN (p/e 300), TSLA (p/e 100), CRM (p/e 100), UA (p/e 88), etc., when they are accepted, begin to drive us the valuations of ordinary stocks and now the entire indexes are overvalued by at least 10% and the only reason earnings come CLOSE to justifying the numbers is because the companies are depleting their cash reserves and even BORROWING MONEY to buy back their own stocks – thus reducing the number of shares their earnings get divided by and "fixing" their p/e rations.  BRILLIANT!!!  

Or perhaps, like China (you remember China?  This is an article about China) we'll find out that EU and US companies are not just cooking the books by reducing their share count but are also outright faking sales and profit reports, like our friends at Alibaba (BABA) have been accused of or the entirely fake banks they have in China.  Zhuhia Boyuan Investments has taken a new tactic for China – honesty (belatedly):

“The company’s board of directors, board of supervisors and senior management are unable to guarantee the truthfulness, accuracy and comprehensiveness of the annual report. Nor are they able to guarantee that the report doesn’t contain any false records, misleading statements or significant omissions.”

In fact, just this weekend, the National Audit Office said that 14 state-owned groups, including well-known names such as State Grid, China Ocean Shipping (Cosco) and China Southern Power Grid, falsified nearly 30Bn Yuan ($4.8 billion) in revenue and nearly 20Bn ($3.2Bn) in profits in 2013.  Last week, a separate agency, the Communist party's anti-graft watchdog, said it would probe China Railway, China Aluminum and People's Daily, the official party mouthpiece, in the latest round of inspections at state companies.  The audit office statement said 56 serious cases had been handed over to "relevant departments", probably a reference to prosecutors or the party's anti-corruption commission.

This is why Corporate defaults on bond payments are becoming rampant in China and the Government can lower the rates every week but that won't put cash in the hands of those who have already borrowed way over their head in order to prop up their companies so they could take advantage of the hottest IPO market in history (even beating our .com days) so they could make Billions off of anything that sounded like it combined China and Internet.  Sound familiar?  Not to Chinese investors, who have margined themselves up to the eyeballs chasing these "unicorns."  

Unicorns are pre-IPO start-ups that are already getting valuations in excess of $1Bn from investors in the private marketplace.  Already this year there are 111 of them and, just this morning, the term sheets for Uber's $1Bn bond sale Term Sheet revealed that this little unicorn lost $470M on $415M in sales.  Like our friend Jeff Bezos: "Sure they lose money on every transaction but they make it up with VOLUME!"

Like many unicorns, Uber promises infinite growth in China, even while the country's GDP growth is rapidly contracting.  Like their Chinese cousins, Uber is paying out 8% interest on Billions in bonds and borrowing another $2Bn from Wall Street (and they already raised $1.6Bn this year in convertibles note with GS clients at a $40Bn valuation) all in the expectations of going public and getting a $100Bn valuation – all without making a dime.  

Meanwhile, in Reality Land, Komatsu (the Japanese version of Caterpillar), is so down on the Chinese market, with heavy equipment demand down 50% from last year's levels, that they are cutting staff and Hitachi Construction Machinery has scaled back plants in China by 50% to begin burning off excess inventory – these are not "blips" that correct themselves quickly!  In fact, Hitachi's CEO Ohashi is already looking to 2017 before a turnaround begins.  

So perhaps it's a bit soon for China to rally back?  

 


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  1. Phil, from this am:

    Phil, I was assigned 1000 shares of TZA @ 8, now 9.80, what kind of cover should I be looking at, if any. Would like to keep as a hedge so I was thinking of Oct 15's for .34? Maybe higher? Thanks


  2. Phil / China

    If the main portion of  stocks of Chinese companies in U.S is done by the same Chinese investors or owners ( which is quite common with ADRs) then the effect could be smaller but not sure how much of the outstanding of this group  is owned by funds or non-chinese investors….if big….


  3. Oil Lines

    R3 – 60.28
    R2 – 59.77
    R1 – 58.95
    PP – 58.45
    S1 – 57.62
    S2 – 57.11
    S3 – 56.29


  4. Here is a good article for some quotes Phil:

    http://www.eclectablog.com/2015/06/5-reasons-billionaires-should-hate-runaway-wealth-inequality.html

    Concentrating all the wealth at the top creates “a crappy business environment” for a simple reason: “When workers have more money, businesspeople like me have more customers.”

    If current trends continue, customers will be as rare as moderate Republicans.

    “In 1980, the top 1 percent had about 8 percent of national income. Today it’s closing in 24 percent. The bottom 50 percent of Americans in 1980 shared about 18 percent of national income. Today it’s down to 11 percent, down a third… So here’s thing. All you have to do is put that data in an Excel spreadsheet and just run the extrapolation out 30 years. The numbers are scary, right? Because the top 1 percent will control in the mid 30s — 35, 36, 37 percent of national income — and the bottom 50 percent of Americans will share 5 or 6 percent of national income. At that point you don’t have a capitalist democracy anymore. You have some kind of feudal system.”

    Much more at the link. Good stuff!


  5. Good Morning Everyone!

    Today's webinar (1pm Eastern) will be:

    http://philstockworld.enterthemeeting.com/m/4Y36PHRP

     

    Meeting ID (for iOS apps, etc.): 4Y36PHRP


  6. Experimenting to prepare for the rise of the robots:

    http://qz.com/437088/utrecht-will-give-money-for-free-to-its-citizens-will-it-make-them-lazier/

    Basic income is an unconditional and regular payment meant to provide enough money to cover a person’s basic living cost. In January of 2016, the fourth largest city in the Netherlands and its partner, the University of Utrecht, will create several different regimes for its welfare recipients and test them.

    A group of people already receiving welfare will get monthly checks ranging from around €900 ($1,000) for an adult to €1,300 ($1,450) for a couple or family per month. Out of the estimated 300 people participating, a group of at least 50 people will receive the unconditional basic income and won’t be subject to any regulation, so even if they get a job or find another source of income, they will still get their disbursement, explained Nienke The experiment seeks to challenge the notion that people who receive public money need to be patrolled and punished, said Horst. The traditional criticism of basic income is that it does not incentivize people to work, and thereby damages the economy. “People say they are not going to try as hard to find a job,” she told Quartz. “We will find out.” Her view, however, is optimistic: “We think that more people will be a little bit happier and find a job anyway,” she said.

    Check out the articles for the results of such an experiment in Canada. It was pretty successful!


  7. Good Morning!



  8. CM – sold some CM puts Dec 75 for 3.6 yesterday.  May buy some more at 4.5 if we get another drop today.  


  9. Good morning! 

    Friggin' /RB jumped to $2.04 before I could get back in at $2.01 – I was too busy writing my post to pay attention… angry  Oh well, congrats to all who had faith!  

    There's a nice little goose into the open and, of course, the quarter ends today, so we can't take anything seriously.  

    TZA/Jomp – From a short put?  You're up $1.80 and I doubt your original intention was to hold TZA so why do it just because you were assigned.  

    I can't think of any reason I'd want to own the stock at $9.80 when I can cash $9,800 and sell 10 2017 $8 puts for $2 ($2,000) and buy 20 Jan $9 ($1.90)/12 ($1.15) bull call spreads for 0.75 ($1,500) and keep $9,300 in my pocket while still having a $5,500 upside at $12.  TZA would have to get to $15.30 (up 56%) for you to make $5,500 on straight shares and, of course, if TZA pops $10 and holds it, you can add 20 more bull spreads for $1,500 and 20 more over $12 for $1,500 more so, at $15, you'd make about $15,000 – without having to make a big commitment up front until you see the index moving higher.  Worst-case, of course, is you end up back in at net $8.50, saving you $1,300 in losses from staying in the ETF.

    China/Advill – Hard to say as it's so hard to get good information but, where there's smoke – buy something else… 

    Billionaires/StJ – At least some people get it. 

    Basic Income/StJ – I'm thrilled with this – it is what we need to do in the Future.  I'm thrilled they are experimenting like this.  Unfortunately, with liberal-minded experiments like this, they'll screw up the study once it looks clear that some people are relatively suffering and they'll move them to the better system – cutting off a good data-stream before it plays out.  

    Woops, so much for the big open already…

    Incomes/Albo – Hey look – a trickle!  surprise  Of course that's a 3.3% increase for the bottom 99%, not the bottom 90% (which they do mention) or 80%.  Taking a couple of million people who were earning $0 out of the mix is a huge help as jobs improve – that really hits the average hard.

    The top 10 percent of income earners also boosted their share in 2014, receiving 49.9 percent of total income, up from 48.9 percent in 2013.

    Yet there was progress outside the richest 10 percent. Families in the bottom 90 percent of income-earners saw their incomes increase 2.8 percent, or about $900, to $33,068. That matched 2007's increase as the largest bump up since 1998.

    Most Americans still have a long way to go to recapture the sharp losses they suffered during the 2008-2009 recession. Average incomes for the bottom 99 percent plummeted 11.6 percent to $45,269 in those two years, Saez calculates. All figures are adjusted for inflation. They have so far recovered just 40 percent of their losses.

    Chicago PMI at 49.4, which is contraction.  

    • Redbook Chain Store Sales: +1.7% Y/Y vs. +1.6% last week.
    • -1.5% M/M vs. -1.6% last week.
    • "Redbook's call is a sharp 1.5% contraction for June":

  10. /RB- So annoyed that I missed the bounce up to 2.04! Got out at 2.0275 just before it took off. Yes I made a nice profit already, but I hate leaving that much on the table.So, my question Phil is as usual do you think we might get another opportunity to get in lower and get a play into Thursday or was that it and it just stays here for a couple days? Or finally do we buy here at 2.035 and look for another pop up towards 2.10? Or do we need to wait for inventory numbers to figure it out?


  11. Phil/BTU – coming back do you still think the 1.50/2.50 August bcs for. 60 still a good play trading around. 70 now.


  12. Well I caught the drop from 59 to 58.65 on oil, and will keep an eye out for another RB opportunity along the way. Time to stop worrying about whatever move I miss and be happy with all the moves I catch. We can't be perfect and sometimes it is good to be out and not worrying if I am missing a move.


  13. FXP,  uuff, got a call of my broker because the operation with FXP   was not complete only  the sell of the Dec 34 CALL , now have to close position  with at a loss because there has been no operation to complete the bcs….  $ 3,700 loss.


  14. Phil / SSO – i'm thinking of getting long on SPY at about 2040 or 2035 if we see a bounce here.

    Would like to use SSO to do this.  I was originally going to look at Aug, but wanted your take on how to position and what strike.  


  15. /RB/Craigs – I was hoping the Dollar would pop and knock /RB lower and it did ($2.01) around 8:30, where I certainly would have come back in if I were watching (with a plan to DD at $1.99 for a $2 avg again).  Over $2.04 may be on the way to $2.10 so you can play the $2.04 line with tight stops but, since we just came off $1.99 yesterday, I certainly wouldn't want to risk a move below $2.04.  

    BTU/STP, $25KP, Eddie – Well, yesterday the Aug $1.50s came in at $1 and the short $2.50s never got below 0.35, so there was no fill but, hopefully, today we'll get 0.60 or less.  Sure I still like it because we found a good reason for coal to go higher and net 0.60 is essentially $2.10 and there's certainly no reason for BTU to go lower on that news. This trade simply isn't worth paying 0.05 more for!  

    Oil/Craigs – I'm not even looking at oil, too crazy this time of the month. 

    FXP/Advill – That's BS, did you order it as a spread?  

    SSO/Batman – First of all, below the 200 dma at 2,050 on the S&P (about $64 on SSO) I wouldn't be in a position at all on that one.  The tighter your time-frame, the more screwed you'll be if it moves against you but, if you are just trying to bet SSO holds $64, then the Aug $64s are selling for $3.65 and your goal is simply to buy something with less premium, like the $55s at $11 and then you are in for net $7.35 on the $9 spread, set to make a 22.4% gain if your premise holds. 

    If you want to be more aggressive, I'd go farther out in time, like the Jan $60s for $9, selling the $67.50s for $4.50 is net $4.50 on the $7.50 spread.  At least that way, if the S&P isn't going up by Sept, you can roll the $60s for $4.50 or better to a longer-term spread.  

    $2.05 on /RB.  I get the feeling our calls were holding it back…

    Indexes barely better than flat after that BS open – does not bode well.  VIX recovering quickly:

    Europe back to all red – down 0.5-1% except Italy, which is flat for some reason.  


  16. DAX chart is textbook strong bounce followed by a weak bounce and back to the Must Hold line means it's very likely it's consolidating for a move lower.  


  17. TWTR up on what looks like a FB related rumor.


  18. CLF getting killed today.  Down another 10% today.  


  19. TWTR/Albo – We'll see what kind of traction the rumor has.

    CLF/Palotay – Iron glut contines with no end in sight. That same china building news is terrible for CLF, though they don't do much in China – it's just a sign of low demand everywhere.  

    I'm waiting to see if CAT takes a nice dive and gives us a nice, $75 entry:

    BA not happy on that bank news – another one I'd love to get back into if they drop 10%:


  20. According to one  technician I follow, gold is threatening a major breakdown here.  Would have expected more positive action as a result of Greek situation.  Phil, what are your thoughts ?


  21. FXP,  yep  order the bcs 25/27 Dec 2015 and  sell the 34 dec 2015 .  It results that the only one operated was shorting the 34 call, no operation at the price (midterm  usually) of the bcs….as a result  I got a short of the call which is not allow by the broker so was force to close the  position yesterday at last moment  at market price. 20 contracts


  22. And no, not ordered as spread, just the usual way I do it 3 separate operations….


  23. all the refiners are up too- VLO,MPC,HFC,PSX


  24. Gold/Albo – Well, let's see.  Gold is at $1,169 and it costs about $1,050 to pull it out of the ground so I guess it depends on the definition of "major breakdown".  I guess the squiggly lines look like gold can go back to $800, where mining companies will borrow money and spend $250 an ounce so they can get the gold out of the ground and sell it for massive losses — makes perfect sense to a "technician", I suppose…

    I'm not a technician but it looks to me like gold is down because:

    Because, if I took my head out of my US-centric ass, I know it would look like this priced in Euros:

    So gold is up 17% since November as far as Europeans are concerned and about 15% priced in Yen so it's only an illusion of your Dollar-based charts that makes you think gold isn't doing well and, of course, ABX is a global company that sells gold all over the World but employs people in the local currency so strong gold, strong dollar is good for them, which is why I prefer them to physical gold. 

    The fact that "technicians" and US investors aren't able to grasp that there's a much bigger world out there than the one they are charting doesn't make me not want to say in ABX or even GLD – it's not my problem that other investors don't understand the things they are trading.  I simply choose to adopt a patient time-frame and, eventually, I figure the bell will ring and investors will suddenly jump in to the then "obvious" opportunity.  

    For those of you not in ABX, our LTP play is 25 of the 2017 $10/15 bull call spreads at $1.77 (now $1.45) but now you can pick up, let's say 20 of the $8/13 bull call spreads at $2.30 ($4,600) and sell 10 of the $13 puts for $3.60 ($3,600) and that's net $1,000 on $10,000 worth of spreads that are $5,200 in the money ($2.60 each) and the worst case to the downside is owning 1,000 shares of ABX at net $14.  It's an aggressive play (since ABX is only at $10.64) but we have 18 months to get a pop.  

    FXP/Advill – If it's not allowed by the broker then they had no business filling it without filling the cover.  I'd complain.  

    Refiners/Stock – All about the holiday weekend excitement.

    Speaking of excitement – Chris Christie announcing he will save us by collecting millions of dollars from donors so he can travel around the country and stay in good hotels and continue to ignore NJ for another year.  Good riddance – you can have him!  


  25. Phil / SSO – Thanks for the feedback. Where / when  would you be looking to get into a position ?


  26. Bitcoin and Litecoin are up. BTC is up about 20% from where it had settled over the past couple of months. Litecoin has tripled though. 

    I was heating my basement in the winter with a litecoin miner. At the time power was 10 cents and I was making about 4 cents in litecoin per kWh. So that's now 12 cents. Did I just heat my basement for a profit? Either I'm an idiot or smart people don't know what they are doing. Who would use "dumb heat" when you can make money?


  27. SSO/Batman – Well, since I called a top to the S&P at 2,120, it really wouldn't make sense for me to make and aggressively long call on the S&P at 2,061.  Even at 2,035, I would just want to see if it holds first and I'm sure there are dozens of stocks I'd rather bet on than make a blanket bet on the S&P.  At 1,942.50 (the 5% line) or 1,850 (the must hold line), THEN SSO would get interesting looking but by then I'd be pounding the table on AAPL, BA, CAT etc and would consider SSO a comparative waste of capital. 

    Bitcoin/BDC – Interesting new flight to safety on that one.  


  28. https://en.wikipedia.org/wiki/Jerry_Brown

    Christie – You can keep him and we'll keep the old guy…..He's pretty good…. :)


  29. Thanks, Phil ! 

    Quite a treatise on gold !


  30. Greece getting fixed again? Temporarily at least to try getting talks started again.


  31. Phil, looks like you did it again. 8-)

    ~~Gold Miners catching bids into midday, reversing early morning weakness as price moves into positive territory


  32. You're welcome Albo.  I have to be careful to use these powers only for good…  wink

    Greece/Criags – Yes, getting talks started again is such a good thing – as they've worked so well in the past…

    Europe did not end well:

    VIX perking up again:

    Oh no – Merkel will NOT negotiate until after the referendum now!  

    Must be time for popcorn:

    Strange goings on!  

    Webinar time….


  33. And DBA finally breaking out of that range they were trading in for the last 4 months!


  34. DBA

    Maybe it was this USDA report, 

    Corn acres planted lowest since 2010, ( but still more than many other years).

    Soybean acres planted up..

    http://www.nass.usda.gov/Newsroom/2014/06_30_2014.asp


  35. so what do you think about this. In terms of macrocycles, when stocks AND bonds go up, oddly, at the same time, money comes out of commodities. Now that stocks and bonds will both need to fall to revert to a long-term average, commodities will rise.


  36. ALL: TRADING ACCOUNT PERFORMANCE  What a difference a month makes. Starting January 1, 2015 account went from 15.25% as of May 31, to 11.55% this afternoon. Profits on YTD closed trades = $161,156.  Beginning balance on January 1=$649,787.


  37. Wheee on DBA!  

    As I mentioned in the Webinar, that LTP trade is still good for a nice gain:

    • Buy 25 DBA Jan $21 calls for $2.54 ($6,350)
    • Sell 25 DBA Jan $23 calls for $1.30 ($3,250)
    • Sell 25 DBA Jan $22 puts for 0.50 ($1,250) 

    That's net $1,850 on $5,000 worth of spreads that are now in the money.  Our original entry was net $350, so we're already up $1,500 (428%) and it does seem less attractive but we took a big risk in April and now it seems a lot more likely that we'll get the full $5,000, which is up $3,150 (170%) from here so I do still like this trade – even though it now only pays 170% in 6 months…  

    Crop report/Randers – Thanks for fining that.  Ags are still moving up – I remember in 2008, at the same time the Asian markets were falling, rice and soy spiked higher and led to hosts of other problems:

    Futures/Terra – I like trading at night and pre-market better than trading during the day.  

    Macrocycles/BDC – Aren't those the things Scientoligists try to get out of your system?  cheeky  I agree on commodities – money has to go somewhere, that's why we're loaded with material stocks in the LTP. 

    Profits/IHS – Well hang on to those, you might need them in the fall.


  38. Food prices can move markets and mobilize forces- Arab Spring and the tortilla revolt in mexico changed governments..


  39. Is 15.50 still the buy line on /SI?  


  40. PHIL: PROFITS  You can count on the YTD profits getting hit thru October.  My stops are in place and unless the market go into a melt down mode, I should survive. Thanks for your counsel.


  41. Not going well into the close.  That's very bad considering you'd think they WANT to have a good close.  Still 45 mins left so we'll see.  

    Food/Randers – Very true.  Very tough on the oil countries, who are already having cash issues due to low prices.  Generally they subsidize food costs on imports.  Another factor for them is the Ukraine is the bread-basked for the Middle East and much of Europe and they have, for obvious reasons, been underproducing for a while.  If we start short-shipping vital grains – we could have big problems very soon.  

    Silver/Burr – Yes, but keep in mind I see it as one at $15.50 and DD at $15 for 2 at $15.25 with a $2,500 loss.  Then wait until $14.75, where my first two would be down $5,000 and a DD makes 4 at $15 avg. and then probably give up below $14.50 for a $10,000+ total loss.

    That $15 line looks like great support – unless you switch to a monthly view:

    The key point is, though, that Silver crashed in 2008 along with everything else so if a key support line like $15 fails – this trade is probably f'd.  Just don't go into it thinking it's not EXTREMELY DANGEROUS and you'll be fine.  

    Stewart/Jbur – I can't believe he's leaving us.  Colbert better pick up the slack.

    Melt-down/IHS – That's what I'm worried about!  


  42. LGCY looks interesting.  Company reduced their distribution to .35 per quarter.  Current yield 16%.  Dec 7.50 puts can be sold for .80-.85 for extra kicker.

    http://seekingalpha.com/news/2580425-wunderlichs-best-positioned-upstream-mlps-memp-vnr-lre-lgcy

    This from the CFO on their conference call :

     ~" Let me cover a few quick facts on the quarter. Our Q1 distribution coverage is 1.11 times, given our reduced distribution and our reduced capital spending we feel very confident in our ability to deliver on our previously stated expectation of 1.3 times coverage for 2015. "


  43. Phil — DBA — you forgot sugar (/SB), which had a big bounce off of 11.1 cents, now up to 12.50-ish.


  44. Sugar/Esco – Also good and bouncy. 

    StJ had mentioned SGG as a good play on this. 

    They only have options out to Nov but you can still sell the $29 puts for $1.50 and use that to buy the $29 ($2.60)/32 ($1.40) bull call spread for $1.20 and you have a net 0.20 credit on the $3 spread.  

    LGCY/Albo – I haven't got a clue what their operation looks like. 

    Lame way to finish the Q.  Now we'll see what happens with just two trading days left to the week.

    Holy crap – I have to pack!  


  45. Phil not sure your math is right on Silver but your point is right on…..

    - Sell 1 at 15.5, at 15 down $2.5k ($5k per $1)

    - DD at 15 so 2 at average of 15.25 but still down $2.5k at 15

    - At 14.75 those 2 are down $3,750 and $1,250, respectively at 14.75 or $5,000 and $7.5k at 14.5

    - DD for 2 more at 14.75 which will be down $2.5k at 14.5

    - All told down $10k at 14.5 not $11,250

    - That is dangerous and way above my pay-grade if I have it right.  Not able go in with a potential to lose 10K.  With TF, NQ, CL or RB I feel comfortable I can manage losses to an acceptable level.


  46. Options Alpha/  /SI is pretty tough…I am a beginner and admit it, but, I never quite figured out what hit me, except, I lost $19k in silver alone in May and the only thing I remember was thinking let it ride and it will turn back…never did.  We live and learn … hopefully.  


  47. Coke, what did you buy in at on /si?


  48. I can't remember…one of these days I will look back over the records I printed and try to figure it out.  I tried to forget it for a while.


  49. Silver/Options – Yep, confusing but I think it's actually:

    • Contract #1 goes from $15.50 to $15 is -0.50 x 50 = – $2,500
    • Contract #2 is added at $15 so both average $15.25 and we're down $2,500
    • At $14.75, contracts #1&2 are each down 0.50 = $2,500 x 2 = $5,000 loss 
    • Contracts #3&4 are added at $14.75 so all 4 now average $15 and are down $5,000
    • At $14.50,  the next 0.25 loses 4 x .50 x 25 = $5,000 more = Down $10,000 at $14.50.  

    I don't know what I was counting above but fixed now, thanks.  Silver is VERY dangerous and not for everyone.  It's not just expensive per contract but very jumpy as well.  

    And what Coke said!  


  50. /CL- did anyone get the API report? Seems to be driving price down a bit.


  51. P/E Multiple Expansion Accounted for 135% of the S&P 500 Return in 2015: Goldman

    In one year from now, stock market investors, as benchmarked by the S&P 500, can expect a mere 1.1 percent yearly return on their investment, predicts a Goldman Sachs Group Inc (NYSE:GS) research piece. The blame for this relatively pedestrian performance is a price earnings multiples finding gravity.

    http://www.valuewalk.com/2015/06/pe-multiple-pe-multiple-2015/


  52. Phil/SI   think I will table trying to fig out what I did wrong and try to learn your explanation of trade instead.  thanks


  53. Coke- May was a really tough month to play silver. It went down and stayed down for an unusually long period of time. In past months it went down and then zoomed back up after a day or two. 


  54. craigs/  thanks for the enlightenment….I got pretty bummed out.  How is Kathy today?


  55. I think that the emphasis in Coke's description should be on "let it ride…" As Craig points out with silver, sometimes these commodities just keep on going for a while (up or down) so require a lot more proactive handling I guess. Look at oil between October and January – if you enter short at $90, it never recovered! 


  56. To all of my PSW friends, we got the final pathology report this afternoon (which is why I missed the webinar) and the final word is BENIGN! Completely benign, no cancer to be found. I cannot tell you all how wonderful it is to hear those words and I want to thank you all again for your support, energy and prayers. I wish to believe it contributed to our positive outcome. My wife Kathy and I thank you one and all. This will be the last time I write about this. Mission accomplished! (not the George Bush mission accomplished either. The real kind!)


  57. Awesome craigs!


  58. Hey Craig!

    Image result for good news


  59. And the hits keep on coming:

    http://talkingpointsmemo.com/livewire/miss-usa-hosts-quit-donald-trump

    Getting funny now!


  60. Excellent news Craig. Keep those positive Vib's going.


  61. Quote of the day:

    The "judicial tyranny" gets really long-in-the-tooth when you're forced to argue that it is "judicial tyranny" when a Court will not overrule the legislature and executive.


  62. Great post on CNBC:

    http://www.thealphapages.com/content/cnbc-demystified

    Judged as a news show that is supposed to report objectively on the economy and the stock market – it is grievously flawed.

    But at a deeper level, below consciousness, CNBC serves an indispensible shamanistic function, providing a kind of ideological placebo that calms everyone down by offering a series of comforting myths.

    At this, it succeeds wildly.

    Recall that the function of a shaman is to give puzzled victims a narrative framework for redemption, a story in which their afflictions can be warded off, and blessings bestowed, if they perform a certain ritual, or appease a demon, or ingest a magical substance. A person who consults a shaman does not seek evidence or back-testing. He wants a comforting myth that casts himself as master of his destiny when things go well, and as a blameless victim of the gods when things go wrong.


  63. Back to business! Phil with API reporting a 1.9 mil barrel build, don't know about gasoline, what if anything will this do to your 2.10 hoped for price on /RB? Or is it completely about EIA report? OR can they drive up price regardless of inventory? Curious if you have any guidance or if it is a no call/no comment.


  64. craigs – GREAT NEWS!


  65. Craigs, I'm so happy for you! Hope you and Kathy have many good years to come


  66. Congratulations Craigs and Kathy, great news!

    That is (by the way for you non-nerds) called the "B-9, Class M-3 General Utility Non-Theorizing Environmental Control Robot."  Get it?  B-9!  Damn, I crack myself up.  cheekycheekycheeky

    OK, back to work…

    API/Craigs – Gains were across the board and that's bad but no, into a holiday weekend it's not likely to stop them from pumping it up.  Of course, now there's a bigger risk of disappointment on EIA tomorrow and spike down we can take advantage of. 

    The American Petroleum Institute said that U.S. crude stocks jumped 1.875 million barrels last week, while distillates rose 263,000 barrels and gasoline supplies gained 334,000 barrels.

    P/E Expansion/Jbur – Finally other people are picking up on this.  Maybe it's because Value Walk now publishes my posts?  

    You're welcome, Coke.  It was just an exceptionally bad time to play it.  

    LOL – TOS has a warning about the leap second.  "Shortened trading hours" – really?  It's a second people, get over it!  It is however a good reminder that time is every bit as FAKE as money.  They are both just things we made up arbitrarily to try to explain the values of things so, when people tell you "time is money" they are correct – they are both artificial constructs that you should never let stand in the way of your happiness.  

    Trump/StJ – Well I guess he can consider the massive loss he's going to take on Miss USA to be part of his campaign costs.  I imagine there will now be pressure on contestants to step out too (though maybe they have rough contracts).  

    Courts/StJ – Watching Fox, etc. and seeing the hoops these idiots are all jumping through to bash the recent court decisions is both pathetic and hysterical.  They are so confused they can't even keep their narrative straight anymore.  

    CNBC/StJ – I like that post, too bad there's no commenting.  Of course my take on it is that CNBC is nothing more than a propaganda tool for the Top 1% – that actually explains how a money-losing network like theirs continue to function year after year as the ratings slip further into oblivion.


  67. B-9… those were the good old days. I used to chart dow stocks on graph paper, out of the business section.


  68. Good news Craigs! 


  69. Trump / Phil – The guy might have put himself in a corner now. In 2012 he quit the race because he claimed that NBC wanted him to come back for the Apprentice. And then he went on to pretend that if he has stayed, he would have won the nomination and then the presidency (total BS of course, but part of the show I guess). But today, there is no Apprentice to go back to  so he is going to have to come up with a lame excuse to come out soon or face the results of the votes. No matter what the polls say today, there is just no way he wins the GOP nomination. Since the guy doesn't like losing, a lame excuse will have to do… It's going to be fun watching! Of course, 4 years from now, he'll be making the rounds again pretending he could have won in 2016 if it was not for the fact that <insert lame excuse>. What a jackass!


  70. Craigs & Kathy       GREAT NEWS!


  71. Value Line, Inc. (VALU)

    -NasdaqCM

    10.38 -1.42(12.03%) 4:00PM EDT

    Remember when these guys were the "go to " for stock research.  Once, I even had a subscription. Who knew they were still in business?


  72. Craig's.  Very happy for you.  Things like this are a good time to count blessings and use every day going forward as a precious gift.   


  73. A dead cat would have bounced higher…


  74. great news Craig!!!!


  75. Good Morning, Craig, good news, now  be watchful!, a regular checkup is the best way to handle this kind of things, I had myself a cancer which was handled with quimio and radio  and keep a regular verification twice a year.

    I suggest you to do it.


  76. 2.0190 again after touching 2.65.
    Go Long at 2 again Phil?


  77. Good morning!  

    Damn, we popped 1% again and I missed it.  Greece seems to be saying they will accept something or other and Europe popped 2% in one shot.  So exiting it makes people not notice that Shanghai fell 5% again…

    Embedded image permalink

    Shanghai Composite might drop to 2,100 Chovanec says

    China Unleashes Police, Internet Censors on Anti-PX Plant Protesters…

    "Once they found out that you were a resident of Jinshan, they took you away. The Internet was blocked. The minute that photos were uploaded, they disappeared."

    Photo published for China Unleashes Police, Internet Censors on Anti-PX Plant Protesters...

     

    Apparently, this is real:

    JUST IN: Greece can stay in euro even with 'no' vote, Schaeuble tells lawmakers

    Tsipras ready to accept most bailout terms – FT

    Markets rally on report Greece accepts creditor terms

    Interactive Greece debt tracker: See what the country owes in the upcoming weeks

     

    We hit our re-entry target on /RB last night, $2.02 and no need to double down lower as we bounced right off it all the way back to $2.04 already!

    Gold and silver pulling back as Greece is "fixed" again but I still like them long because – CHINA!!!


  78. This is no quick fix, markets are over-excited but I was happy with our mix going into the weekend and I have no desire to change things based on this.  And also – CHINA!!!


  79. From Bloomberg, Jul 1, 2015, 5:31:05 AM

    Greek Prime Minister Alexis Tsipras accepted creditors’ proposals as a basis for compromise to end a standoff over its bailout.


  80. From Bloomberg, Jul 1, 2015, 3:13:24 AM

    July 1 — European leaders are waiting for signs that Greek Prime Minister Alexis Tsipras is ready to compromise as his country buckles under capital controls and fails to make its International Monetary Fund payment.

    It’s a day of fresh indignities for the people of Greece.


  81. From Bloomberg, Jul 1, 2015, 12:01:00 AM

    When financier Leon Black said his Apollo Global Management LLC was exiting “everything that’s not nailed down” amid rising valuations, he made headlines. Two years later, other private-equity firms are following suit — dumping stakes into the markets at a record clip.


  82. From Bloomberg, Jun 30, 2015, 9:00:00 PM
      DFC Associates Chairman and CEO Domingo Cavallo. Photographer: Joe Marquette/Bloomberg

    Domingo Cavallo, a man who knows a bit about sovereign defaults, says stiffing creditors would be a terrible mistake for Greece.


  83. From Bloomberg, Jul 1, 2015, 12:30:00 AM

    Uber Technologies Inc., a startup with losses that outstrip revenue, is drawing fresh comparisons with another big tech company that has a reputation for spending: Amazon.


  84. From Bloomberg, Jun 30, 2015, 5:00:00 PM

    Zhang Minmin is one of tens of thousands playing in one of the riskier corners of China’s stock market, borrowing money at high interest rates through unregulated online lenders to amplify his bets on potential equity gains.


  85. From Bloomberg, Jun 30, 2015, 6:55:31 PM

    European stocks rose with U.S. equity-index futures as Greek Prime Minister Alexis Tsipras signaled he was ready to compromise to end a standoff over a bailout. German bunds and Treasuries declined, while oil dropped amid signs a global glut will persist.


  86. From Bloomberg, Jul 1, 2015, 4:30:00 AM

    U.K. manufacturing growth unexpectedly slowed last month, posting its weakest performance in more than two years as demand in Europe faltered.


  87. From Bloomberg, Jul 1, 2015, 12:01:00 AM

    Illinois and New Jersey have dragged down the municipal-bond market this year as the states wrestled with growing pension-fund bills. Puerto Rico is depressing it even more.


  88. From Bloomberg, Jul 1, 2015, 12:01:17 AM

    Obamacare is attracting younger and healthier people to its coverage plans this year, according to research by Express Scripts Holding Co., a trend that could help balance and sustain the law’s insurance markets.


  89. From Bloomberg, Jul 1, 2015, 12:01:00 AM

    Manhattan apartment prices jumped to a record in the second quarter, pushed up by competition for a limited number of properties and strength in the luxury market.


  90. From Bloomberg, Jun 30, 2015, 7:56:05 PM

    Sentiment among large Japanese manufacturers improved for the first time in three quarters in June, a positive sign that runs counter to indications of a slowing economic recovery.


  91. From Bloomberg, Jun 30, 2015, 6:07:36 PM

    Stock investors of the world unite! For the first time in modern China, you outnumber the Communists.


  92. From Bloomberg, Jul 1, 2015, 7:10:04 AM

    Ace Ltd. agreed to purchase Chubb Corp. for $28.3 billion in cash and stock.


  93. From Bloomberg, Jul 1, 2015, 6:56:47 AM

    Greek Prime Minister Alexis Tsipras signaled he’s ready to end his standoff with creditors as the country gets a taste of financial meltdown.


  94. From Bloomberg, Jul 1, 2015, 6:55:10 AM
     

    Markets rally on reports Tsipras is ready to accept bailout terms, more wilds swings in China and lots of manufacturing data. Here are some of the things that people are talking about in markets this morning.


  95. From Bloomberg, Jul 1, 2015, 6:20:06 AM

    The ruble fell after its biggest advance in two weeks as declining oil prices overshadowed data showing the nation’s economic slowdown isn’t as deep as predicted.


  96. From Bloomberg, Jul 1, 2015, 6:12:35 AM

    Gold Fluctuated in a range of about 6% of its value since March

    As global markets convulsed this week over Greece’s possible exit from the euro, gold kept doing what it’s done for most of the year: not much.


  97. From Bloomberg, Jul 1, 2015, 6:00:00 AM

    Asia’s fast-growing economies will increase demand for food in the next decade, especially meat and dairy, as incomes rise, the Organization for Economic Cooperation and Development and the United Nations predicted.


  98. From Bloomberg, Jul 1, 2015, 6:00:00 AM

    Tesla Motors Inc. Chief Executive Officer Elon Musk has turned his worries about the rise of artificial intelligence into an international research program.