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Friday Follies – Markets Still Look Toppy to Me

And we're done being bullish.  

It was a fun couple of days but I cannot, in good conscience, maintain a bullish stance into the weekend uncertainty.  In the past month, the Atlanta Fed has dropped their GDP forecast from 4.3% (which was silly) to 3.2%, which is down 25% yet the S&P has gained 45 point (1.8%) and the Dow is up 340 points (1.6%) and, as I noted in yesterday's PSW Report, the updated Fed Forecast from Wednesday's meeting indicates barely 2% growth this year and next – yet we are paying record-high multiples for stocks?  

I'm not advocating shorting stocks (other than TSLA, of course), that's how people got destroyed in 1999.  I'm just saying if we keep plenty of cash on hand and hedge our longs – we will have lots of money to go bargain-hunting when reality hits the fan – as it has been prone to eventually do, in every other instance of recorded history so far.  

Image result for hedgingMaybe this time will be different and that's why we have a Long-Term Portfolio that is filled with long-term trades (which are, in turn, hedged by our Short-Term Portfolio) and we went over our position in our Live Member Chat Room yesterday aftenoon and only had to make 6 adjustments to 37 positions despite gaining about $100,000 (7.6%) since our April Review.  That was offset by a $25,000 loss in our Short-Term Portfolio, which is what's supposed to happen to our hedges when our longs are doing well.  

And that's what I want to stress this morning – protecting your gains with hedges.  Hedges are not supposed to make money, they are insurance plays that help you lock in your unrealized gains when the market does correct on you.  It's very dangerous to be overly complacent about your profits, they can evaporate very quickly (just ask millions of trades who thought they were rich in 1999 and found out they weren't in 2000).  

Gains should be appropriate to what you have at risk.  When I was being interviewed at the Nasdaq on May 30th, we talked about hedging our Nasdaq-heavy portfolio (I run one for the TV audience there) with some focused hedges which, at the time were:

  • Buy 10 QQQ Jan $147 puts for $9.50 ($9,500) 
  • Sell 10 QQQ Jan $136 puts for $5.05 ($5,050)

That's net $4,450 on the $11,000 spread with $6,550 (147%) upside potential if QQQ falls below $136 into January expirations (19th).  This is the kind of hedge that doesn't pay well on a quick dip but pays very well on a sustained loss of value, which is perfect for hedging your long-term positions.  

That spread is already well in the money at $139 and the $147 puts are now $11 and the $136 puts are $5.80 for net $5.20 ($5,200) – up $750 (17%) on a 1.5% dip in the Nasdaq so we have 10:1 leverage on our hedge and no margin is required.  I loves those spreads as they can only lose money if the Nasdaq is higher – in which case our longs should be gaining.

We also talked about hedging the Nasdaq Futures using /NQ as it crossed the 5,800 line with tight stops ($100 loss) and again at the 5,900 line and the first time it didn't work and we lost $100 and the 2nd time it didn't work, and we lost $100 but the 3rd time, at 5,900 – it did work spectacularly well and we got a 200-point drop that paid $4,000 per contract for a net $3,800 per contract gain:

Futures trades give you great bang for the buck and an immediate pay-off but they can also burn you badly.  We teach Futures trading techniques during our Live Trading Webinars, like the one we had yesterday.  Speaking of Futures, you're welcome for yesterday's trade ideas to go long on Oil Futures (/CL) at $44.50, which gained $500 per contract at $45 and Gasoline Futures (/RB) at $1.415, which flew up to $1.4615 this morning and that was good for a $2,100 per contract gain.

In yesterday's Live Trading Webinar (Members Only), we chose /RBQ7, the August contracts and we cashed them out this morning with a lovely $5,439 gain in 18 hours and now we can have a wonderful weekend – THAT's why we love trading the Futures!  

On the bright side, by NOT subscribing to our Newsletter, you did save $3 yesterday and that will now pay for 2 gallons of gasoline and that should be good for about 60 miles of travel – though you won't have any money to spend when you get there…  

Our favorite index hedge at the moment is the Dow (/YM) at 21,350, those contracts pay $5/point on the way down with very tight stops over that line.  If the Nasdaq (/NQ) fails the 5,700 line then look out below and the same with the Russell (/TF) at 1,400 and both happen to be 11 points over their lines.  When pressed for long ideas in our Webinar yesterday I said I liked Silver (/SI) at $16.75 (still there) and Coffee (/KCU7) at $128 and we're already at $128.70 on that one and those contracts are good for $375 for each Dollar of movement.  

According to Fotune, President Trump has doomed coffee, which is negatively affected by the myth of Climate Change with 50% of the land used for global coffee production on track to be destroyed by 2050 at our current rate of (fake) temperature increases.  As noted by Fortune: " The impact will be enormous, particularly for the 25 million small land-holder farmers who grow coffee in more than 70 countries. Valued at about $19 billion in 2015, coffee is the “second most valuable commodity exported by developing countries.”

World Coffee Production

That's been our premise since last year, when we started playing coffee at $100, whenever it dips we like to buy some and we're only one drought away from $150.

Have a great weekend, 

- Phil


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  1. Good Morning.

  2. Good morning, all! 

    The weekly webinar replay is now available!

  3. Morning All

    Nice all on RB Phil!

  4. Good Morning—--Amzn buying WFM—wow

  5. Phil / LT Port – Did you send out an e-mail with this update?  

  6. Savi - That's a  WOW ! ! !

  7. People (mostly conservatives) forget that Ken Starr ran his investigation of Clinton for 4 years not 4 weeks! I can't imagine what 4 years of investigation with subpoena power would dig up from Trump's past! It's going to be chaotic.

  8. Savi, Albo – I second that WOW! Of course it would match their low margin business model :-)

  9. Thanks for reminding me stjean!  :(

  10. $42/share for WFM.  Thats nice for those that have it in their ports! I don't sadly.

  11. STJ – The juggernaut rolls on.

    Are you long any FNSR ?

  12. Did I miss the continued LT Port #2 review….

  13. Great post by Josh – worth a read:

    Quants and bots.

    A few years ago, Goldman Sachs Group Inc.’s leaders took a hard look at how the bank carries out initial public offerings. They mapped 127 steps in every deal, then set out to see how many could be done by computers instead of people.
    The answer so far: about half.

    The stock market is now 35% passive and 65% terrified. The bond market is not far behind.
    Just 10% of all trades taking place are being guided by fundamental research. Fundamental research is the wellspring of all profitability on The Street; Information asymmetry is our chief export to Main Street. We know stuff, therefore, pay us. Warren Buffett once quipped that Wall Street was the only place where millionaires took a Rolls Royce to get advice from guys who took the subway.
    The Rolls Royces aren’t coming by as often as they used to.

  14. FNSR / Albo – Short puts for now!

  15. When was coffee at 100?

  16. Wow – Amazon is buying Whole Foods

  17. On my chart we are testing last year's low

  18. Is the Whole Foods deal a stock deal?  That would be smart, use inflated stock to buy a company that could add earnings.  Besides cloud services, something that will make a profit.

  19. FU TGT!!!!

  20. On Bloomberg now, WFM deal $42 cash

  21. is tgt down because of the amzn news??

  22. @mkucstarts

    Yeah, just saw that.  Leaves them with 7bn in cash left.  Took a nice chunk out of their reserves.

  23. Jabob – It's even hitting WMT hard. 

    Phil is this an opportunity ?

  24. Lot of retail stocks down on AMZN news. COST is down 7% pre market.  

  25. Jeff, they are tools, not fools, and have every right to be able to defend themselves. And what a story that would be! Shootout on the floor in congress…

  26. Sure would boost cspan ratings…

  27. tgt down 11%

  28. What a way to start a civil war… I'm sure most would prefer we spend a billion on personal bodyguards tho.

  29. 48.75 wtf

  30. I would recommend a Walther PPK – Looks great in a suit!  :)

  31. Took my /TF short off the table to early.  

  32. went short KR made some money

  33. 1020 – For some reason, "Gohmert, Louie Gohmert" doesn't inspire the same feelings!

  34. Trump now attacking Rod Rosenstein.

  35. Trump is Toast…..

  36. svu down 16%.  Didn't think that would have this much of an impact due to AMZN by WFM.  I thought SVU is more focused on wholesale.  I guess their customer will be down and so goes the chain :-(

  37. Good morning! 

    WFM being bought by AMZN – I can't believe we don't have it – we usually do.  

    Dow back to 21,300 already, we'll see if it's bouncy here.  

    Thanks Latch, hope you caught /RB too. I almost forgot I had it because it wasn't the front month, was investigating to find out why my portfolio was up so much this morning and found it and quickly decided to cash that in – especially as I still have 10 long /CL so a bit redundant.  

    Big Chart – Nas still holding us back.  What's up with that?  

    LTP/Batman – No, I just posted it yesterday and 2nd half will be my morning project but none of those need changes (probably). 

    Investigation/StJ – Do people actually take him seriously?  His approval rating is 36 now, we're really scraping the bottom of the barrel trying to find people who support this idiocy.  

    Can you believe this is the President of the United States?  

    Trump's approval rating sunk to just 36 percent in the latest Gallup daily tracking poll released Monday. That's nearly the lowest point for Trump in the Gallup survey. Trump previously hit 35 percent approval on March 28 shortly after the Republican Obamacare replacement, the American Health Care Act, failed before the House of Representatives could even take a vote. 

    Trump's disapproval rating, meanwhile, has ticked upward to tie the president's record-high of 59 percent, according to Monday's Gallup survey. He previously hit 59 percent disapproval in the Gallup tracking poll on March 28.

    I think more people approved of Mussolini when they dragged his body through the city so people could take turns kicking it…

    Image result for mussolini trump

    Wheeee – and down we go! 

    Wall Street/StJ – They don't teach fundamentals anymore so the firms don't have good analysts (you can tell that by reading their crap reports) and so they have nothing to sell but Robo services.  I think it's great for us as machines clearly suck at identifying values – great stocks can languish for ages before something wakes up the machines and gets them buying again.  

    Coffee/Mkucs – Not the current contract, of course but, at the time we first picked it early last year (or maybe in the fall of 2015), that's where it was on the front-months.  

    WFM/Rustle – Great play for AMZN, also gives them 500 warehouses they can ship things to. 

    TGT/Jabob – Yes, because of WFM and because of everything else it's down for anyway.  WMT down too.

    Opportunity/Albo – I think AMZN getting in the grocery game is terrible for WMT and TGT and their grocery business – especially in light of yesterday's KR news.  I wouldn't put fresh money into either at the moment.

    Guns/Jeff – One can only hope!   Can you imagine how many people would want to shoot Ted Cruz at any given moment?  

    SVU/Rookie – That's the bots.  They don't know what SVU actually does, only what category it's in, so they sell all grocery stocks.  

  38. Phil!  You can't kick George C. Scott!!!  ;)

  39. Scott / 1020 – One of my favorites!

  40. Phil –  Would you add to the SVU position today on the "bot" sell off?  I have -10 of the Jan19 $3.5P and 10 of the 2/3.5 bull call.  

  41. Morgan Stanley – Bullish on AAPL.

    ~~Our view: We believe that the recent pullback in Apple shares is largely a result of overall tech weakness, primarily driven by systematic strategies that appear to have dominated most of the sector unwind, and not a change in investor sentiment towards Apple. Importantly, over the last 10 years, Apple shares have risen an average of 18% in the 3 months prior to iPhone announcements, outperforming the S&P 500 by over 1500bps and suggesting the recent pullback presents an attractive entry point. Our Overweight thesis on Apple ($177 PT, 23% upside) is unchanged and we continue to believe that the upcoming iPhone supercycle will drive accelerated upgrades and share gains from other vendors, particularly in China.

  42. It's interesting Trump's choice of words "After 7 months… nobody has been able to show any proof."  I can't imagine that's what I'd say if I actually didn't do something.  That's the kind of thing a person who got away with something would say.

    Obama didn't say "You couldn't prove I was born in Kenya" and Hillary didn't say "You couldn't prove that I was responsible for Bengazi" – Mobsters say "you can't prove it" because they did it and they know that you know they did it but they are confident is can't be proven.  

    As to Trump's 36% approval – you guys do realize that 20% of the country has an IQ below 85, right?  Another 34% are between 85 and 100, which is technically average.  He's barely got half the dumb people on his side!  cheeky

    SVU/Burr – It's only at $3.16 so I wouldn't worry about the short puts though, if you intend to sell 2019s as well, now's the time (the $3.50 puts are $1).  You'd $2.50s are $1.20 and the $1.50s are $1.80 so yes, I'd spend 0.60 to roll $1 and I'd buy back the $3.50s (0.72) and then wait patiently.  

    Colbert's right, this is a big moment in history, we should be enjoying it! 

  43. Phil – UUP – roll or kill???

  44. Phil – SVU.  I have the Jan19's already.  

    Short 3.5P, long 2/3,5 bull call.  

    On 10 contracts, it's only down $600 now.  So would you ADD here, or wait until SVU hits $3 or lower?

  45. Phil/Proof comment

    I agree, I thought that was an odd way for the President to comment. 

  46. IQ / Phil – I think that there is better correlation to lack of education than to mental capacities. Plenty of smart people still support Trump! And plenty of people with a lower IQ than average seem to have more common sense than so-called smart people.

  47. I think I posted on here about PI, a RFID company.  It's up 31% from the $40 area where I bought it.  Might want to take a look at it.

  48. WMT acquisition of Bonobos does have a lot fans among customers:

    These guys don't have the same target audience!

  49. UUP/Jeff – No, it's dead.  We got what we expected from the Fed and still no action.  

    SVU/Burr – Then I'd just pay for the roll down.  If it goes higher and you still want more, you can DD on the $2.50s and start selling calls.

    Proof/Jeff – Things are getting nuts.  Here's Franken in a good interview:

    IQ/StJ – Unfortunately, in this country, we aim for both – take people with low IQs and then don't educate them (and then call them lazy and say it's their own fault they are poor).  

    PI/Burr – $1Bn valuation on $100M in sales is still a long way from a bargain.  Let's say they miraculously drop 20% to the bottom line ($20M) and grow 30%, that would still put them 4 years away from a p/e of 50.  Keep in mind, that doesn't make them a bad trade – there are plenty of stocks that trade at ridiculous values – it's simply not the kind of stock I like to play.  I like stocks that actually make $1 for each $20 I spend to own them (5%) – those tend to hold up consistently over time.  They might be boring, but I really don't see many exciting portfolios outperforming our boring ones.  

  50. /TF 1400 looks like it might fail.  Tapped it, and failed strong bounce from this mornings start at 1415. I've got a couple short after some scaling back in an out.

  51. Looks like SpaceX could help our deficit – thanks Elon:

    The expected ULA launch prices for 2018 and 2019 are much lower at $202 million and $216 million, respectively. However, those amounts are still more than double the $83 million and the $96.5 million the Air Force is paying SpaceX to launch GPS satellites those fiscal years.

  52. Phil/TF- won't 1400 be bouncy from above?

  53. All stopped out of /TF.  I have a couple /CL that I'll sit on today and see what happens.  Working on a watch list for the kid, gonna start building an OOP type portfolio for him.

  54. AMZN/WFM- we will have to see what the Bezos strategy is but I think WFM provides a base for grocery delivery. WFM by itself serves a higher end niche and is not a head to head competitor with low price/volume sellers like TGT; WMT; etc. 

  55. FU GILD!!!!!!

  56. The whole food market just opened last week here in Woodbury Minnesota. It is very nice it has a tap room and a large Deli it’s like an Applebee’s

  57. Too bad.  I really liked Whole Foods

  58. I have an Aldi's 2 blocks away, can't beat the prices. Milk now 98c a gallon, eggs 89c a dozen, etc… they are shaking up the grocery biz and growing like mad. Small store, easy to shop, get 90% of what I need there.

  59. jeffdoc – Side note, but I opened a Robinhood account for my 3yr old.  No trading commish.  I put 250/month in there and invest in Reits and some Bio tech's that Pharm likes.  Figure I'll just let it grow and compound.  I tried to do options for her, but it got messy.  

  60. Burr, thanks.  I'll check it out. 

  61. AMZN-WMT opportunities, 

    I covered my COST butterfly short call $183 July 21 position since it was 95% in the money and sold a new put position $165 for the same July 21 expiry.   Now, wait until july 21. 

  62. Burr, what was the issue with an options portfolio for your daughter?  Did it get too time consuming to manage?  Just curious since that's what I was planning to do.

  63. Yeah, it just wasn't for me.  I want her to eventually learn about how the account is growing and has grown over time with interest and divs and compounding.  She's 3, so by the time she's 6 it should have a good history we can go over.  I figure it's 50/50 investment and education.  She won't understand options though.  

  64. AMZN/WFM –   AMZN has been promoting their pick-up option recently.  Hmm.. does this mean  I can pick up my amazon packages with my groceries from WFM now :) ?

  65. Maybe tomorrow bai LOL, give it some time

  66. Speaking of portfolios…

    Long-Term Portfolio Update (LTP) Part II:  Part I was here, in case you missed it so we'll get right to the 2nd half.  

    • AAPL – Unfortunately, we only had a 1/2 sale on AAPL so we didn't double down like we did in the OOP and Butterfly Portfolios so we're "only" up $32,000 with another $68,000 to go if AAPL is over $130 in 2019.  I'm pretty confident in this one!  

    By the way, when you have a trade like this that's miles in the money and not a source of concern, you don't need to hedge it as much as other trades.  Don't waste money hedging things you are not at all worried about – that's silly. 

    • AAXN – Former TASR coming into the home stretch as our Stock of the Decade and still running like a thoroughbred!  Time to buy back the short Jan $22 calls ($4) to get more bullish.  
    • ABX – Good for a new trade.  
    • AMGN – Good for a new trade.  
    • BX – On track.
    • CBI – Is $15 finally the floor or are they teasing?  Let's roll the 2019 $27.50 calls ($1.50) to the $15 calls ($4.45) for $3(ish) and buy back the short $37.50s (0.70) and see what happens.

    • CHK – Good for a new trade and let's buy back the short $10 calls (0.35) as that's up 50% so why look a gift horse in the mouth?  
    • CLF – Another great stock cheap.  Good for a new trade and we'll buy back the $10 calls for 0.75.  
    • DBA – Good for a new trade but time to roll the Jan $19 calls ($1.40) to the 2019 $17 calls ($3.60).
    • DIS – No sense in risking the short July $110 calls, let's buy them back for 0.33.

    • EWZ – Good for a new trade. 
    • EXPE – By not taking $11,500 off the table we can only make another $1,000 by Jan.  Since we know we can find better uses for our money – let's cash this one in.
    • F – Waiting for a move up to sell calls around $12.50.
    • FTR – Waiting for the reverse split to do adjustments.  
    • GILD – Waiting for a move up to sell calls.
    • GM – On track.
    • GPRO – Speculative play not working out.  I have no real love for them so let's kill it except the short $8 puts, those are fine at net $5. 

    • HBI – On track.  
    • IMAX – Hopefully recovering.  Good for a new trade with half as many short puts.  
    • LB – forgot to sell calls at $55 but now we'll see if $50 holds before adjusting. 

    • LL – Remember when no one loved them?  Let's cash these out and put the $24,000 to more productive use.  
    • MU – $14,000 out of $17,500 is on the fence but let's cash it in as it saves us having to hedge it.
    • PSO – Waiting for $10 to sell some calls.  
    • QCOM – On track.
    • SVU – Disaster today.  Nothing worth adjusting though. Good for a new trade as this is where we came in.  

    • TEVA – Let's buy back the short 2019 $35 calls ($2.75) and roll our 10 short 2019 $45 puts ($15) to 15 short 2019 $37.50 puts ($9.80) for about even.  
    • THC – On track.  
    • TWTR – On track. 
    • UNG – Frustrating but we'll hold it.  
    • WPM – Our Stock of the Year is on track for for it's $54,000 gain (up $21,000 so far is "on track").  The short June calls are expiring worthless and we'll wait for a move up to sell some more (just playing the channel for bonus money). 

    • XOM – Finally came off the floor a little, still good for a new trade.  

    So there it is – a nice, lazy portfolio to pick up some retirement money with.  When I look at a trade like WPM, which was our Trade of the Year (so we liked it a lot) and we netted in for a $4,450 credit (not including the short puts, which are now a $3,400 bonus) and is on the way to paying us another $50,000 at $25 in 18 months with net $17,150 if we cash it after just 6 months – I wonder why we ever play those small, speculative stocks.  

    Sure they are fun but you have to remember fun is not why we invest.  We invest to build wealth and to make sure we have enough money to have fun with the rest of our lives.  It's fine to carve out a small portion of your portfolio for short-term speculation but, long-term, you should be in sensible plays like this one which give you a reliable return.  

    180% in 3 years isn't that bad, is it?  cool

  67. Phil – RB, no I did not. got a breakfast money on the way down to 1.41, but as I said earlier – cold feet. I still want to short. but will wait for your call.   Have 2 short TF at 1402. will close them at 1400 ish.. probably will run up  into the close ?

  68. LTP update – a couple of the adjustments have matching positions in the OOP such as CHK and DBA.  Not doing the same adjustments there?

  69. FIT hit an all new low today.  If it breaks 5, has a chance to go lower since many brokerage firms then consider it a small cap and will not let you buy it.  Also margin rules in many firms also do not let you use margin for stocks under $5.

    Don't have any stock but do love my fitbit charge 2

  70. I wonder if my Prime membership will include free Whole Food groceries deliveries from my local store? Of course, I usually go to Trader Joe's but still, could be convenient.

  71. @stjean

    Doubtful since they also have prime pantry and that is not free delivery with prime membership.

  72. stj – AMZN as Amazon Fresh and it is about $15/month for home deliveries.

  73. /TF/Ravi – Lines like that SHOULD be bouncy from any given fall and, if not, they are likely to fail but then you use the same weak bounce measurement on the other side to see if it's just an overshoot (not often strong overshoots unless the fall is very sharp).  

    /TF/Jeff – Good call, why risk a nice win on a Friday?  

    AMZN/Pstas – Those WFM customers are the ones AMZN really wants.  They actually make margins on things they sell to rich folks and I can imagine them applying their "you may also like" marketing to food.  They do it in the bookstore, it's very cool.   

    GILD/Jabob – There has been no change in guidance or outlook, they are on track to make $8/share at $63.87 – amazing.  I don't know why you can't be happy just owning a good stock – who cares what the current price is if you are in it for the long haul?   Do you check the value of your home every day?  If you are not selling something – who cares what other people think it's worth?  

    Aldi/Mkucs – Yeah Albrecht figured out how to make money selling groceries, he was the richest person in Germany.  They have like 10,000 stores internationally doing $50Bn/yr – that's half of AMZN's revenues just in food (WFM does $15Bn).   They also own Trader Joe's, which is very hot.  They also pay people well and, like COST, the customers appreciate the better service.  

    $250/Month/Burr – That is incredibly sensible, nice job!  Maddie wants to do a little of her own trading this summer so I'm very happy about that.  

    COST/Learner – See what I meant about computers overreacting?  Such a crazy sell-off for not a particularly good reason.  Good adjustment.  

    Good sensible plays, Latch.  

    OOP/Tangled – We did the OOP on Monday.  Not a big deal for 0.35 on CHK but the OOP is more of a learning portfolio and I don't want people to get into the habit of turning spreads into riskier plays.  On DBA, that roll is worth doing in the OOP so let's make that official:

    DBA – Time to roll the Jan $19 calls ($1.40) to the 2019 $17 calls ($3.60).

    FIT/Rustle – You can love the gadget but, if it's a low-margin gadget with tons of competition – don't fall in love with the stock.  

    The news that APPL is getting more serious about medical uses for the iWatch isn't helping. 

    WFM/StJ – There's no margin in that but, then again, they box up a tube of toothpaste and ship that so we can't apply logic to their system.  

  74. Latch – RB – I am with you. I dont see a clear direction and waiting on it to calm down

  75. /KC – Coffee just cratered.  1.2730 on the Sep contract.  

    Looks like it's very near the ATL of 1.2565

  76. I will be happy if GILD or the other FU stocks end up being good stocks.

    But they have basically gone down 20-75% from their original purchase prices in a very short time period while the market has been hitting new alltime highs almost daily.

    so unless you are pounding the table to double down, then I am not going to be happy seeing them drop every week. 

    Like Winston said, I usually do not enjoy watching my assets drop in value tight after I purchase them like you do… ;-)

  77. Now 1.2635.

  78. GILD/jabob

    I actually own a position in my IRA, I bought it after last earnings at 66.15 but plan on holding it for awhile.  I have the dividends reinvested so for right now, I'm happy to acquire more shares at the cheaper price.  I strongly believe they will be buying another company with the cash they have to flood their pipelines again.  Think until then it will be treading about here.  Pharmboy I'm sure will have more insight than I would about them.

  79. rustle--I am just giving Phil grief.

    I own GILD call spreads and I am short puts.

    Also, I am just frustrated that it is another one that just hit a new 52 week low.

  80. Burr coffee cratered because I took a poke. Down it went.

  81. Craigs, I thought it was because of me!  In the same boat unfortunately 

  82. /KC diving into the close.  

    I added one more at $126.40 so now 3 at $127.38 is fine by me. 

    Double down/Jabob – After we have a general correction and see where they shake out, then I'll want to add more (or, in the case of FTR, after the split).  As to liking it, you have to go into the purchase WANTING to DD at a lower price.  The disappointment should be when the stock takes off on you before you have a chance to add more.  

    Thanks Craigs, CJ - I was wanting at least one more.  If it wasn't Friday, I would have added 2.  Now, if you guys could knock down /NG, I'll be done with my day's buying.  

  83. Phil, under the category, "Yike, where did you dig them one."  (Your comment when I first mentioned QUIK)

    Started a spec position in TOO at 1.84.  Also sold some Nov 2 puts for .60.  Stock is down 70% in the last two months.  It pays a 23% dividend.  Believe the odds are good that they cut or eliminate the dividend.  If they do, I believe the stock will bounce, and I'll close out.  If they don't, it will be a great yield to hold on to.  In any event, the company has a meaningful backlog of contracts, and could see an increase from new contracts coming on line later this year.

    Catching a small bounce here.

  84. Phil-- when I buy a call spread I want the stock to take off. I don't need to add more. I am very happy with a max gain. So if GILD closes above 75 in January I am not going to regret that it didn't drop to 50 earlier. And FTR has dropped big time and I did buy more and buy more and buy more on the way down. But that doesn't mean I will be disappointed if it does not drop to 80c. You are assuming all of these FU stocks will eventually take off. I hope you are right. 

  85. Sorry, Yike where did you dig them up,( not one.)   

  86. TGT is earning about $4 a share and you can buy them for $50, that's what I care about. I'm a fundamental investor and I like to buy stocks that make me a return on my investment as a business. If they are doing that, the stock price will eventually follow.

    For their sector, figure 15x earnings ($60) would be a reasonable price and, even if you assume AMZN really hurts them for 10% (unlikely) then $54 is still better than we are now so let's add them to the OOP:

    • Sell 5 TGT 2019 $45 puts for $4.20 ($4,200)
    • Buy 7 TGT 2019 $40 calls for $12.50 ($8,750) 
    • Sell 7 TGT 2019 $52.50 calls for $5 ($3,500)

    That's net $3,150 on the $8,750 spread that pays $5,600 (177%) and all TGT has to do is hold $52.50 in to Jan 2019.

    TOO/Albo – I'm staying away from those shippers but fun for speculation.

    Spreads/Jabob – Try starting out buying less and stretching your timeframe to include 2 years of rolls and you'll be a lot happier.  

  87. Phil--thank you (serious)..

  88. I got 1 @ 1.255

  89. JO…. dangit! 

  90. In the Butterfly Portfolio, let's buy back 10 COST short July $175 calls at $1.70 – that's a gift!  

  91. Trump to announce a plan to stop cash flow to Cuba’s military and security services

  92. TOO – Phil, a spec for sure, and sized accordingly.

  93. Hi Phil, I think the 5 TGT puts sold above should be for $2,100…

  94. Emails reiterate EPA chief’s ties to fossil fuel interests

  95. Total solar eclipses are going extinct

  96. Citron out negative on Wayfair (W).  Stock just hit all time high

  97. TGT/Max – Yes, I originally had 10 and cut it so it's:

    That's net $3,150 on the $8,750 spread that pays $5,600 (177%) and all TGT has to do is hold $52.50 in to Jan 2019.

    Wow, market volume just gets weaker and weaker all the time:

    Date Open High Low Close Adj Close* Volume
    Jun 16, 2017 242.77 242.80 241.63 242.39 242.39 46,839,965
    Jun 15, 2017 242.68 243.91 242.36 243.77 243.77 63,001,500
    Jun 14, 2017 244.86 244.87 243.29 244.24 244.24 78,602,300
    Jun 13, 2017 243.98 244.61 243.58 244.55 244.55 60,067,000
    Jun 12, 2017 243.13 243.42 242.38 243.36 243.36 86,108,100
    Jun 09, 2017 244.09 245.01 241.95 243.41 243.41 132,256,400
    Jun 08, 2017 243.77 244.33 243.17 243.78 243.78 63,989,800

    If we ever get a real sell-off, there will be no buyers – it will get ugly very fast. 

  98. Did everyone leave for the weekend?

    Don't forget to stop at target, Macys, and gnc please!!!!

  99. Is anyone betting TF runs to +1410 at the close?

  100. ~~ CTL -CenturyLink weakness attributed to report company is being accused of running a sales scheme similar to Wells Fargo.


  101. NAR Cites “Housing Emergency” as Starts Unexpectedly Dive 5.5 Percent: NAR “Befuddled”

  102. This is just so ridiculous:

    Announcing the rollback of President Barack Obama’s diplomatic opening during a speech in Miami, Trump said Cuba had secured far too many concessions from the U.S. in the “misguided” deal but “now those days are over.” He said penalties on Cuba would remain in place until its government releases political prisoners, stops abusing dissidents and respects freedom of expression.

    He didn't has such concerns when he was in Saudi Arabia or when talking to his good friend Erdogan! What a fraud!

  103. Weekend/Jabob – Didn't it start yet?

    /TF/Latch – Not a bad bet, 1,405 at least.  

    CTL/Albo – Those guys are very aggressive, not surprised.  

    Cuba/StJ – He's doing this for his buddy Marco and other anti-Cubans in Congress.  I'm waiting for Obama to get tired of taking all this BS lying down.  Hopefully he'll start calling them out on this crap.

    Actully, not looking too strong into the close but volume is near 0, I think everyone has gone for the weekend. 

  104. Agreed Phil – stopped out at 1403 from with $260 on GC, $505 on TF  and -$125 on SI today overall I made a $740 win total for the day.    Weekend starts now — Happy Fathers Day all.

  105. phil--do you think tgt and the others continue to recover a little more before the close? curious about what typically happens. I can't believe it was down over 10% this morning!

  106. I do not get /TF or /KC quotes anymore—TDA says I have to pay for monthly quotes—really?

  107. Nice trading Latch, you're getting the hang of this stuff!  

    Close/Jabob – There's no normal anymore.  I've just been reading for an hour and what hit me the most was how quickly people are now accepting the story that AMZN will now wipe out the entire grocery industry.  Go to twitter and search AMZN and look at all the stories with the same theme.  This is that whole thing I was talking about yesterday with the combination of robo traders and lazy analysts causing a one-way trade that makes no sense. 

    And, of course, if the grocery system is down today (it is) it will get more negative press over the weekend and Barrons will have a headline saying "The Death of the Supermarket" and the Bots will start another selling cycle on Monday.  Don't catch the knives, let's see where things bottom – that's why I only went with 5 short TGT puts – I wanted a position I'd be HAPPY to DD on if they drop another 30%.

    /TF/Savi – Yes, apparently there's some charge for the service now.  Not sure what other brokers are doing but I'd ask for a rate reduction to offset it.

    • June Consumer Sentiment94.5 vs. 97.1 expected and 97.1 prior.
    • Current economic conditions 109.6 vs. 111.7 prior.
    • Index of consumer expectations 84.7 vs. 87.7 prior.
    • Speaking to reporters, Dallas Fed President says he wants to see clearer evidence that inflation is on the way to its 2% target before tightening policy any further.
    • Given the current environment, Kaplan says he's comfortable with where the Fed Funds rate stands. His comments are notable given the Fed "dots" which indicate expectations for another rate hike this year.
    • The Minneapolis Fed boss was the lone dissenting vote in the FOMC's 25 basis point rate hike on Wednesday (he also dissented on the March hike).
    • At issue is his belief that the Fed should have waited for more data to confirm whether the recent decline in inflation is the start of a trend or transitory.
    • "The risk of not [hiking] soon enough generally doesn’t appear to be large."
    • With global growth stronger and more synchronized than expected, the dollar's bull run doesn't have much longer to go, say Goldman Sachs' Michael Cahill and Zach Pandl. The pair so they can no longer describe themselves as outright dollar bulls.
    • They lift their estimates for the euro (NYSEARCA:FXE) and pound (NYSEARCA:FXB), but interestingly leave the yen out. Not seeing any change in ultra-loose BOJ policy, the team expects the dollar to rise to ¥120 by the end of 2018 and ¥125 by the close of 2019.
    • Source: Bloomberg

    • Bank of America's harsh assessment on the U.S. automobile industry is impacting stocks on the retail and suppliers side of the business. In a nutshell, the firm sees used car pricing and overall unit volume heading lower in the U.S.
    • Lithia Motors (LAD -7.2%), Sonic Automotive (SAH -7.9%), Group 1 Automotive (GPI -7.4%), Asbury Automotive Group (ABG -5.6%), Penske Automotive Group (PAG -6.1%), AutoNation (AN -5%), BorgWarner (BWA -5.5%), Tenneco (TEN -5%), Lear (LEA -4%) and American Axle & Manufacturing (AXL -7.5%) are all lower.
    • Previously: Dire assessment on U.S. auto from BAML (June 16)

    • Don't assume store closings at Sears Holdings (SHLD -2.3%) is a positive development for J.C. Penney (JCP +0.5%), warns Credit Suisse.
    • "We believe that any further Sears store closings may increase the likelihood that JC Penney will have to accelerate closure of lower-tier mall locations, adding meaningful medium-term revenue and EPS risk of about $150-200M and $0.09," writes analyst Christian Buss.
    • The number crunching from CS suggests JCP investors are better off in the long term if Sears is a mall neighbor.
    • Buss and team: "Our analysis of a full Sears closure scenario suggests an $800-900M revenue boost, $130-140M in incremental EBITDA, and $0.40-0.45 in EPS for JC Penney. Unfortunately, even in this scenario, we estimate FY20 revenue and EPS of $12.5B and $0.83, well short of company targets for FY19 of $13.8-14.3B and $1.40-1.55 (a year earlier). As a result, our primary concerns remain: 1) continued weakness in the core apparel business; 2) persistent degradation of store traffic, and 3) diminishing contributions from asset sales."

    CenturyLink slides as suit charges Wells Fargo-like scheme

    • CenturyLink (NYSE:CTL) is facing a lawsuit from an employee who claims she was fired for blowing the whistle on the company's sales culture.
    • Bloomberg notes the suit alleges a Wells Fargo-like scheme that left customers paying millions for accounts they didn't request.
    • CenturyLink shares have slid, down 2.6%. Merger partner Level 3 Communications (NASDAQ:LVLT) has tumbled 2.1%.
    • Heiser says she was fired days after notifying CEO Glen Post on an internal message board of a scheme to "falsely indicate" approval by customers for new lines and services, by those who had an incentive to upsell customers.

    Amazon just acquired a major Microsoft cloud customer

    • Amazon’s (NASDAQ:AMZN) acquisition of Whole Foods makes the e-commerce giant a real player in the grocery space and also just snapped up a major client for Microsoft’s (NASDAQ:MSFT) Azure cloud platform, which rivals Amazon Web Services.
    • Whole Foods uses Microsoft’s Azure Active Directory software for employee management. The company also provided employees with subscriptions to the Office365 suite of products. 
    • Amazon could move Whole Foods to AWS and still provide access to a version of Microsoft’s Active Directory, which AWS can manage, but replacing the Office365 suite wouldn’t prove as seamless. 
    • Previously: Amazon acquires Whole Foods Market (June 16)
    • Apple (NASDAQ:AAPL) takes a larger step into the world of original programming with the hires of execs from Sony (NYSE:SNE) Pictures Television.
    • Execs Jamie Erlicht and Zack Van Amburg were responsible for a range of popular shows including “Breaking Bad,” “The Blacklist,” “Rescue Me,” and perhaps most notably, “The Crown,” which is distributed by Netflix. 
    • The execs join Apple as co-heads of video programming, under SVP Eddy Cue and backed by the company’s $24B services business, which right now mostly amounts to iTunes and music streaming. CEO Tim Cook wants to double that segment revenue by 2020.
    • Original content can keep Apple competitive with the successes of Amazon and Netflix exclusives and draw buyers to Apple TV. 
    • Apple has slowly rolled out some original programs including a recently released “Shark Tank” inspired app developer competition show called “Planet of the Apps”, which received mixed reviews.  A streaming version of James Corden’s “Carpool Karaoke” was also announced. 


  108. Phil TGT logic – much appreciated context of Amazon / retail. Just curious that given the circumstances and your analysis of the market (not bullish), why not hold off on the bull call spread. The cautious put sale I get, but in a market that is priding itself for a fall, wouldn't waiting until a price resistance level has been taken out be more appropriate?

  109. TGT/Winston – Because, although I am generally cautious, I may be wrong and the market could double from here so we do need to find the occasional bullish position.  I don't know that we'll ever see $50 again and the spike in the put prices made it very attractive at the net entry.  If it goes lower, roll, DD and widen the spread – that's what I HOPE will happen but, if not, it will just be another one of those "only" $5,600 gains that are boring and on track.  That is how we make most of our money, you know…  

    Happy Fathers Day to all you boys out there (you never really know, right?).

    Have a great weekend, 

    - Phil

  110. LOL, and /TF does pop into the close!  

  111. Happy Fathers Day to you Phil and other Fathers in the chat!

  112. Hey hey, I made unrealized pnl of $600 on /kc so far!  Talk about a bottom buy!

  113. Hopefully it gets realized!

  114. 1,408.7 on /TF – Nice call Latch.  Go manipulators! 

  115. Whole Foods – Amazon is in for a surprise, LIDL is coming.  A German grocery chain with the power to cripple Aldi, Whole Foods, and Trader Joe's is about to invade America.  When I'm on the Continent, I do 95% of my grocery shopping at Lidl.  The uber low cost, high quality model works in Europe, 10K stores in 27 European countries. 

    LIDL is really competing with another German firm ALDI.  Aldi is growing into an increasingly considerable threat to American grocery staples like Walmart (WMT – Free Report) , Kroger (KR – Free Report) , and Whole Foods, among other national and regional grocery store chains. Walmart even reportedly tested a “price-comparison test” in nearly 1,200 of its U.S. stores in the hopes of closing the pricing gap between itself and its competitors, including Aldi.

    Aldi Nord operates 2.5K stores including TRADER JOES, Aldi Süd operates 1.6K.  Can LIDL compete with ALDI in the US? With German efficiency and ATD, (attention to detail, a term I coined at Rockwell in the 80's)  LIDL will be very successful in the US. Both LIDL and ALDI will be making life difficult for those following traditional models and Out.

  116. Aldi's… don't forget to bring a quarter when you go, and I have a bunch of reusable bags now.

  117. What happened with FTR at the end of the day????? YOWZA!!

  118. Muck – "Aldi's… don't forget to bring a quarter when you go, and I have a bunch of reusable bags now."

    Gotta keep them carts from becoming homeless condos, and save the planet.  One word and Out.

  119. Mkuc, Natt – I go to Aldi for milk and chocolates (and any organic food they happen to have) -  no cart needed, just reusable bags (extras in case of a surprise find).  

    Ethnic food markets are growing too – Patel Brothers (Indian), HMart (Korean) and Sea Food City (Filipino) are sprouting up in the Chicago area, killing the ethnic mom & pop stores.  In Canada, there's T&T (Chinese) – this one has everything –  dimsum, bakery, prepared food, produce, groceries, even live seafood - and it's always crowded!

    Now off to Costco  -  have a good weekend and happy fathers' day to all dads!

  120. I love being a father and grandfather…comes in a close 2nd to being a husband.  I am so lucky and blessed!!  Hope you all can be as fortunate.   Regards,

  121. Phil – "As to Trump's 36% approval – you guys do realize that 20% of the country has an IQ below 85, right?  Another 34% are between 85 and 100, which is technically average.  He's barely got half the dumb people on his side!"

    Ignorance is deceitful, cunning and never to be mistakenly equated with a lack of intelligence or education.  Plenty of ignorant people work, pay taxes and vote. This is evident from having elected many a mental deficient into office and the systemic problems we have vis a vis government fiscal policies (budget deficits and national debt). 

    Phil – "It's interesting Trump's choice of words "After 7 months… nobody has been able to show any proof." I can't imagine that's what I'd say if I actually didn't do something.  That's the kind of thing a person who got away with something would say."

    Trump cannot say any of these things, because he would be lying in the extreme. Then again, lying is the currency of our impolitely fucked up society.  POTUS dearth of deference, demeanor and honor, perfectly reflects the ignorant populace that elected him.  

    Voting is one of two things you don't need a license for, having children is the other.  Reflect on that for your moment of Zen and Out. 

     'Free election of masters does not abolish the masters or the slaves.' – Marcuse

    A Possessed Man's Rant Part One ; Part Two ; The Neuralyzer? ; The Real Enemy

  122. Where's Your Sign? Or What's That Sound? Adding to the recent retail bloodbath (Payless Shoes, when Americans can't afford cheap Chinese shoes, what can they afford?), discretionary, auto, GDP, IP, coffee and the 1st appearance of the Oil death cross since August 2014…. 

    Since 1957 there have been 722 overlapping two month periods. As core CPI prices almost always go up, in only SIX of these (722), or less than 1%, have we seen core CPI DEFLATION – but that now includes the most recent March-April period this year. Much like the fat lady warming up, that giant sucking sound coming from the vortex is starting to hum and Out. 

  123. Sam Zell Speaks His Mind

    The real estate investor sounds off about property, Donald Trump, immigration, pot, Amazon, marriage, malls, and newspapers.

    The stock market isn’t a reflection of the whole. It reflects a few companies that dominate: [AMZN] at 150 times earnings, instead of XYZ regular company at six times. Back in 1999, the first thing a company did was go public. Now we have unicorns, a very sophisticated form of avoiding price detection. That changes the whole perspective. In 1999, instead of Amazon, I talked about Cisco Systems [CSCO]. I said that at the growth rate on which it was being valued, it would be 25% of the U.S. economy in 10 years. Well you could say the same thing about Amazon—to justify 150 times earnings, you have to assume it will be 25% of the U.S. economy in 10 years. Not likely.

  124. More Where's Your Sign?  Aside from declining real household income and wages, GDP since

    Q1 2012 – +6 quarter avg. 1.20%

    Q3 2013 – +5 quarter avg. 2.89%

    Q4 2014 – +4 quarter avg. 2.21%

    Q4 2015 – +6 quarter avg. 1.55%

    Great recovery there and headed right back into the hole.

  125. did you see ftr friday?

  126. What a weekend, and Happy Father's Day to all so blessed!

    And then there's this:

  127. Not exactly an image of equality

  128. This is why that one year of tax return for Trump might have been a head fake:

    He might have recovered some of the taxes he paid then in future years.