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$2,000 Friday – Big Win on Nasdaq Shorts offset Oil Losses

It was a mixed bag.  

In yesterday's PSW Report, we called for shorting the Dow (/YM) below the the 21,650 line and we never really got there but the Russell Futures (/TF) crossed below our 1,445 target and plunged another 20 points to 1,425, yeilding a nice $1,000 per contract win on the day.  That was enough to offset our loss (so far) of $600 per contract on oil shorts at $48.50 (for those who did not use the tight stops suggested, of course).  

Oil is $49.10 this morning and we still think the short story will play out during August but it's likely to be a rough ride along the way.  The Nasdaq was good for a 100-point drop, yeilding gains of $2,000 per contract from our Wednesday morning call and the S&P (/ES) was rejected at our 2,480 line, dropping to 2,460 and that was also good for gains of $1,000 per contract in just two days.

In Wednesday morning's PSW Report, we also discussed our Wheaton Precious Metals (WPM) spread, which was net $3,825 at the time and is now net $4,180 so up $355 (9.2%) in two days – I told you it was good for a new trade.  Chipotle (CMG) was also a great spread, going from net $16,900 to $23,050 for a very quick $6,150 (36%) gain but sadly, for Seeking Alpha readers, the report we submitted on Wednesday was rejected by the editors because they didn't feel the trades were "new enough" – since they were both derived from older trade ideas.  Pinheads!  

If you want to read our Morning Report BEFORE the market opens every day – you can sign up HERE – I've lost my patience with Seeking Alpha and will no longer submit content there – other than the occasional blog post and, for now, my Options Opportunity obilgations.

Speaking of politics:  32 Million thank yous to Republican Senators Lisa Mukowski, Susan Collins and yes, even John McCain for saving health care for 32M Americans (for now).  They voted against the Obamacare repeal last night and there were gasps on the Senate floor when John McCain, who Trump just called a real hero for voting to allow debate on the bill, voted against the actual bill – even criticizing the partisan process by which McConnell and company were attempting to ram the bill through on.

At one point before the final vote, Trump called Pence, who handed the phone to McCain, a source briefed on the call told CNN. The call, just off the Senate floor, was brief and ultimately unsuccessful.

Speaking after the vote, Senate Majority Leader Mitch McConnell looked stunned and lamented the vote and the inability of the GOP to fulfill its long-term campaign pledge.  "This is clearly a disappointing moment," McConnell said. "Our constituents have suffered through an awful lot under Obamacare. We thought they deserved better. It's why I and many of my colleagues did as we promised and voted to repeal this failed law. We told our constituents we would vote that way. And when the moment came, when the moment came, most of us did."  "It's time to move on," he said, moving the Senate on to the defense authorization bill.

Trump, of course, had a little Twitter Tantrum this morning, sounding like a cartoon villain whose evil scheme has just been thwarted.  

Of course, Seeking Alpha thinks talking about the health care bill is "too political" – even though it affects $3Tn of spending in the US – 15% of our entire GDP.  The pressure that is placed on authors NOT to talk about politics is unbelievable, and a huge disservice to the readers.  It's all about ad money – you can't piss off a sponsor – even if they are far left or far right nut cases and you can't upset a reader, no matter how wrong their view of the World is.  That's why I run a subscription service – we don't have to bow to ad pressure and we're sure not going to bow to editorial pressure.  What's sad is that readers don't know how how white-washed the content they do get to read usually is.  

On Tuesday we told our subscribers we were shorting Amazon (AMZN) at $1,040 and I gave all my reasons there.  Our trade idea in the Morning Report was:

AMZN is hovering around $1,040 and I'm very surprised they aren't down pre-market off Seagate's poor earnings.  I imagine people think AMZN is taking market share from STX but, as I have told our Members for years, ultimately, cloud storage is a commodity and it will ultimately lose it's margins, no matter how big it grows.  Amazon announces earnings on Thursday and the January $1,100 puts can be bought for $101.50 and the January $1050 puts can be sold for $72.50 which is net $29 on the $50 spread that's in the money to start.  If you are really brave, you can sell the $1,200 calls for $21.50 and that drops the net of the spread to $7.50 with a potential $42.50 (566%) profit if AMZN is below $1,050 come January expirations.  

This trade is going to pay of HUGE today, with AMZN plunging back towards the $1,000 line – you're welcome!  

The Q2 GDP report just came out (8:30) and the good news is it's up 2.6% but the bad news is last quarter's 1.4% growth has been revised down to 1.2%, keeping the average below 2% for the year, which is HALF of Team Trump's projections – the ones they are using to ram through ridiculous tax cuts for the Top 1%.  The White House's chief strategist, Steve Bannon, broke with the team yesterday and called for a new 44% top tax rate on Americans making more than $5M a year and he was immediately and savegly attacked by new Trump (and Goldman Sachs) attack dog, Anthony Scarmucci, who actually said:

“I’m not Steve Bannon, I’m not trying to suck my own c—,” he said. “I’m not trying to build my own brand off the f—ing strength of the president. I’m here to serve the country.”

The new White House Communications Director also had words for Chief of Staff, Reince Priebus saying:

“Reince is a f—ing paranoid schizophrenic, a paranoiac,”

Impersonating Priebus, Scaramucci told Lizza: “Let me leak the f—ing thing and see if I can c—-block these people the way I c—-blocked Scaramucci for six months.”

Come on, do you really think the implosion of the United States Government doesn't matter to the markets and shouldn't be talked about or should I talk about it and pretend to be neutral in order to fool readers into liking me more?  Yeah, that's the basis of a good author/reader relationship, isn't it?

The strongest net effect of a weak Government in turmiol is a weak Dollar and ours has plunged 8% since Donald Trump took office.  That's a stealth tax not just on your income but the reduced buying power affects every cent you have in your bank as well as the assets you've accumulated over your entire life-time, including those equities you think are doing so well.

In fact, the S&P has gained 8.6% over the same period (from 2,270 on inauguration day) – we've only "gained" what the buying power of the Dollar has lost and, since you buy stocks with Dollars – well, I assume I don't have to paint the whole picture for you, right?  So the market, priced in constant Dollars, hasn't even gone up as much as our GDP although that too isn't priced in constant Dollars so, had the Dollar not fallen 8% in two months – what would our GDP look like today?  Probably negative – welcome to the Trump Recession!  

Image result for venezuela inflation 2017Veneuela is a government in turmoil and their money has gone completely worthless just 4 years after Maduro took over from Chavez and things are now bad enough in Caracas that the US has sent family members of Embassy officials home for fear of their lives.  Meanwhile, over in Russia, Moscow is sending US Diplomatic staff home and is seizing properties used by Embassy staff (but not the Embassy) in retailiation for the "Fake News" that led the Senate to almost unamimously (98-2) sanction them.  

In the House, only 3 Repblican Congressment voted against the 419 Republicans and Democrats there who also backed sanction and Putin called this "SAD news" – very much like his protoge would say.  Now it's up to the President to possibly veto the sanctions and Putin's dramatic actions have set him up to have a reason to urge caution and it would be interesting to see if Congress sticks to their guns and overrides his veto.  Think this stuff doesn't matter?

Because reality is banned from the financial media – investors are happily oblivious to what's going on in the World around them and the markets are free to bubble away.  There's an exellent article in Automatic Earth (thanks Scott) called "Debt Rattle" that makes for very good reading over the weekend but this chart says it all (have I mentioned how much I like CASH!!! lately?):

Have a great weekend, 

- Phil


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  1. I wonder what will happen to our markets when the rest of world realizes that we have a completely dysfunctional government here! What happens next time we have a crisis – we have White House people looking to score personal wins against rivals and a president who doesn't care about what's in the bills but only about political victories. And little noticed, but yesterday the Pentagon basically said that they were ignoring Trump's directive about transgenders. What other directives are they willing to ignore as well? And we have a president instructing the DOJ to go after political opponents and crush investigations on himself. And all expressed with such class – great role models for our younger generations (especially boy scouts). Insanity!

  2. StJeanluc … the leading Tweet on my morning commute referred to the Mooch and keeping him away from interviews where he might be chemically enhanced … complete with memes from various shows.

    Literally .. U.S Administration = laugh out loud.

  3. Good Morning!

  4. 49.34 and climbing.  I think we'll see .55.  

    I only trade short term on oil now and follow the price action/volume.  

  5. Good morning! 

    Gotta love the Mooch:

    Trump vs Sessions is fun too.

    Big Chart – I guess we'll have to start using the 50% Rule….

    Dysfunction/StJ – It's amazing how they've turned this country into a joke in just 6 months.  So much for our great system of checks and balances protecting us from the excesses of a single branch.  

    Dollar down another 0.3% (93.40) and oil up 0.6% ($49.33), that's about par for the course.  Indexes still look like they'll open lower of so-so GDP. 

    Oil/Burr – Good call yesterday. 

    /RB $1.66.

    /KC still going up.  Pretty much these are Dollar moves.

  6. Wow, nailed this one:

    Submitted on 2017/07/06 at 6:47 am

    GT/Kapella – I like GT when they are cheap because they may go down a bit when auto sales go down but, if people don't buy new cars, then their old cars need tires (who hasn't put off buying a new car and bought tires for the old car as a consolation?) and retail customers pay much more for tires than the auto companies do.   GT is actually not a bad butterfly stock – as they never really go anywhere but very violent on the way to nowhere.  $35 isn't actually very low in the grand channel, which goes down to $25 and tops out at about $36 so there's no compelling reason to get in but a great add to the Watch List.  

    Because of the violent action, you can sell 2019 $30 puts for $2.65, which is a net $27.35 entry – that's not a terrible way to start but the Delta is 0.27 so you'll be down 50% if GT drops $5, which is likely to happen eventually if you are more patient and the auto news continues to be weak.

    Very ugly report, emerging markets down 12% but let's take the markets to record highs, right?  

    Still, I like GT down here (but let's see how it plays out), electric cars still need tires.  

  7. gnc and ftr sinking 

    good call to dump xom

  8. SBUX paid $620M in cash for Tevana in 2014 and, 3 years later, they are wiped off the map.  That's a good reason to lose confidence in a CEO.

    I guess they'll still sell the teas in the stores (though not the bulk tea – where would they fit it?) but you can't just rip up a few hundred leases – they'll take a big hit.  The problem with Tevana, from a tea-drinker's perspective, is they sold big-batch commercial tea for ridiculous prices.  It would be one thing if it was great tea but it's totally ordinary and the prices are easily matched by any specialty shop with way better tea.  

    Canada GDP print sends loonie higher

    • We're talking May numbers, and the calendar is about to turn to August, but traders are going to trade … Canada's GDP rose 0.6% in May, shattering expectations for just a 0.2% again. It's the7th consecutive monthly GDP advance up north – the longest streak since 2010.
    • On a year-over-year basis, GDP was up 4.6% in May – the fastest pace in almost 20 years.
    • The loonie (NYSEARCA:FXC) has risen nearly 100 pips vs. the greenback on the print, now up 0.75% on the session and buying more than 80 American cents – the most in about two years

    Chevron flat after missing Q2 earnings, beating on revenues

    • Chevron (NYSE:CVX) is little changed before the open after posting a mixed Q2 earnings report, missing EPS expectations but reporting a better than expected 18% Y/Y rise in revenues to $34.5B.
    • CVX says Q2 global net production totaled 2.78M boe/day, up 1% from 2.53M boe/day from a year ago.
    • Q2 U.S. upstream operations lost $102M vs. a $1.11B loss in the year-ago quarter, while international upstream earned $955M compared with a $1.35B loss a year ago; U.S. production of 701K boe/day was 19K higher than a year earlier, while international output of 2.08M boe/day rose by 233M from last year's Q2.
    • Q2 U.S. downstream operations earned $634M vs. $537M a year earlier, and international downstream earned $561M vs. $741M in the prior-year period.
    • "We’re delivering higher production with lower capital and operating expenditures," CEO John Watson says.
    • Exxon Mobil (NYSE:XOM-1.9% premarket after Q2 earnings of $3.35B nearly doubled the $1.7B from the year-ago quarter but nevertheless missing analyst estimates; total revenues rose 9% to $62.9B, beating expectations.
    • XOM says Q2 upstream earnings totaled $1.2B, up $890M from a year ago, as realizations increased.
    • Q1 downstream earnings totaled $1.4B, up $560M from a year ago, on improved refining margins and higher refinery volumes.
    • XOM says its global production fell 1% Y/Y to 3.9B boe/day; liquids production of 2.3M bbl/day fell by 61K bbl/day mostly through field decline and lower entitlements, while natural gas production of 9.9B cf/day rose by 158M cf/day due to project ramp-up, primarily in Australia.
    • U.S. Steel (NYSE:X-3.2% premarket after Citigroup downgrades shares to Sell from Neutral with a $20 price target, cut from $26, citing downside risk to U.S. flat rolled prices for the remainder of 2017.
    • Analysts are turning cautious on the stock following Wednesday's post-earnings run-up; Longbow Research yesterday downgraded shares citing valuation, uncertain pricing and Pres. Trump's recent comments about a delay in implementing tariffs.
    • Commerce Secretary Ross reportedly told Congress yesterday that Trump’s pledge to quickly provide import protection to U.S. steelmakers is bogged down in “complexity,” with no clear deadline for completion.
    • (NASDAQ:OSTK) announced the launch of the beta version of a new online car-buying platform called Cars by Overstock.
    • The company says the full-service platform will help customers navigate every aspect of the car buying process.
    • "We designed Cars by Overstock to provide the most full-service online car-buying experience available,” says Overstock CEO Patrick Byrne.
    • Related stocks: CVNATRUECARSKARCRMT.
    • Source: Press Release
    • Goodyear Tire & Rubber (NASDAQ:GT) reports tire unit volume declined 10% to 37.4M in Q2.
    • Original equipment unit volume fell 8% Y/Y, driven by lower auto production.
    • Replacement tire shipments dropped 11% Y/Y.
    • Segment sales: North America: $2.03B (-3%); EMEA: $1.11B (-12%); Asia Pacific: $543M (+3%).
    • Gross margin rate contracted 320 bps to 24.3%.
    • Segment operating margin: North America: 10.5% (-340 bps); EMEA: 6.9% (-480 bps); Asia Pacific: 13.1% (-430 bps).
    • Total segment operating margin rate slipped 390 bps to 9.8%.
    • The company expects FY2017 segment operating income to be between $1.6B and $1.65B.
    • GT -8.66% premarket
    • Analysts are looking at Spirit Airlines (NASDAQ:SAVE) in different ways after the carrier reported disappointing results amid operational disruptions.
    • Raymond James (Strong Buy, $55) says the 18% drop provides a buying opportunity on its view that Spirit will see improved margins over time.
    • Cowen (Market Perform, $45 PT) points to the ongoing pricing pressure at Spirit, while Bank of America Merrill Lynch (Neutral, $44 PT) warns on further pilot contract issues.
    • Citi is in with the boldest call, upgrading SAVE to Buy and hammering the table that Spirit's business model isn't broken.
    • Previously: Spirit Airlines beats by $0.04, revenue in-line (July 27)
    • SAVE -0.17% premarket to $40.00 after a 18.3% drop yesterday.

    Gilead's Vosevi OK'd in Europe, Harvoni label extended to include adolescents

    • As expected, the European Commission approves Gilead Sciences' (NASDAQ:GILD) Vosevi (sofosbuvir 400 mg/velpatasvir 100 mg/voxilaprevir 100 mg), a once-daily, single-tablet regimen for the treatment of adult patients with genotype 1 – 6 chronic hepatitis C virus (HCV) infection.
    • Vosevi is approved as a 12-week treatment regimen for patients with any genotype of chronic HCV infection, without cirrhosis or with compensated cirrhosis, who have previously failed therapy with a direct-acting antiviral (DAA)-containing regimen and in DAA-naive patients with compensated cirrhosis with any HCV genotype, with an option to reduce therapy to eight weeks for genotype 3 patients. The recommended duration of treatment is eight weeks for DAA-naive patients without cirrhosis.
    • Vosevi was approved in the U.S. on July 18.
    • Also, the EC authorizes the extension of suitable patients for Harvoni (ledipasvir 90 mg/sofosbuvir 400 mg) to include adolescents aged 12 – 18 years with HCV genotype 1, 3, 4, 5 and 6.
    • Previously: FDA OKs Gilead's pan-genotypic HCV pill Vosevi (July 18)
    • Previously: EMA to review Gilead's marketing application for HCV med SOF/VEL/VOX (Jan. 20)

    WWE -4.5% as 3.5M-share offering prices at 4.1% discount

    • World Wrestling Entertainment (NYSE:WWE) is 4.5% lower premarket after Bloomberg reports a 3.5M-share offering that it says priced via Morgan Stanley at $21/share.
    • Shares had closed yesterday at $21.89; they're down to $20.90 in the early session today.
    • The seller isn't disclosed, but Bloomberg notes only Lindsell Train and BlackRock held at least 3.5M shares each, according to latest filings.

  9. Sinking/Jabob – People do take profits.  

  10. i hear you.. but i hope it holds 10…

  11. same thing happened last earnings for GNC.. 

    shorts got squeezed for a day and then right back down.

    kicking myself for not getting out yesterday…dangit!

  12. SBUX / Phil – They are not cheap especially if growth is slowing. But they still have a good brand recognition, I guess that's worth something. Looking at charts, looks like good support between $52 and $54 although I will follow my 3 day rule before making any move.

  13. In the meantime SPWR continues to shine! A bright spot in my portfolio today.

  14. Oil approaching $50 and RB bangs through 1.67. 

    Healthcare story for you all to ponder. My brother has been suffering with sinus infections for over a month and had surgery scheduled for today to do 4 procedures to fix the problem. He got a call from the doctors office less than 24 hours before the scheduled time telling him that after several days of fighting with the insurer that they won't pay for one of the needed procedures and the doctor wants to cancel because he wants them all done at once and he feels that all 4 are needed to fix the problem. So my poor brother who pays a fortune for health insurance as a small business owner and has been feeling terrible for all this time, has to be sick for even longer while they appeal. Is it not a disgrace that insurers are making medical decisions now instead of doctors? So he will have a huge copay, even with a pretty good policy, and he has to keep waiting to have that privilege!

  15. I am guessing that Trumpcare will fix this by making him uninsurable! 

    Burr- nice call on oil! Glad I stopped out my short at $49 this morning and went long at 49.25ish stopping out at 49.74! 

  16. People aren't patient.    Our LTP target is $7.50, as noted in yesterday's detailed discussion on it.  Can't imagine why I'd even be looking at it with 18 months to go, let alone worrying about every daily gyration it makes.  

    Oil flying up to $49.75, I'm bringing my avg to $49.15 on 20 short at this point – hope I'm not wrong (down $10K).

    Dollar down 0.5% now (93.25) – total loss of confidence in US policies and uninspiring GDP – not a good combination.  

    Anyone shorting SBUX hasn't tasted this Cocoa and Honey Cold Brew!  Found them at Target for $3 each – worth it!  

    Seriously, they are sized and shaped for vending machines.  They should have iced tea and iced coffee vending machines – great impulse items for office workers.  SBUX is doing $21Bn/yr in sales now so let's say they sell $3 iced teas/coffees in machines.  Typical machines sell 500 items a month so $1,500/month/machine means they need 66,000 machines to move the needle towards $1Bn in additional sales.  Still, they only drop 15% to the bottom line and they could make that with the machines easily.  Sounds like a plan worth proposing to the board.  

    Meanwhile, as SBUX stands now, they are still on track for $2/share this year and $2.50 next year which is a p/e of 27.5 at $55 so yes, not cheap.  That's why we never added to the 2019 $50 puts we sold for $5 way back on 2/2 – I refused to pay over $55 and figured they'd correct eventually.  Long, strange trip though…

    FDA killing tobacco stocks on plan to cut nicotine levels to "non-addictive" amounts.  How strange is that under Trump?  BTI down 10%, MO down 10%…


    Insurance/Craigs – It's sickening what goes on in this country.  People in other parts of the World can't even understand the concept of private health care and why we would deny medicine to anyone who is sick.  It seems barbaric and it is.  

    Oil/Craigs – Fortunately, last night, we had that nice dip back to $48.90 and I got back to 10 short – that kept me from losing my ass.  Now I just need to get back to $49.15 – though that's looking iffy.  

  17. reminder: remove bitcoin from coinbase and store elsewhere. Withdraw because if bitcoin forks on 8/1 you will own both BTC and BCC ("bitcoin cash"). Whether or not you think coinbase should be regulated or not to mandate this, these are the facts of the case. Ethereum split into ETH and ETC (ethereum "classic") late last year so there is precedent for this. ETH trades at 195 and ETC at 14, so obviously you would want to own both to capture maximum value. I have a "banking analogy" below for those that want a simplified explanation of the fork.

    Bitcoin core: The original wallet of course. You don't need it to fully sync to use it. Just open it, get an address, send the coins there, and close it. If you want to spend the coins later it needs to fully sync or you can get the private key and import it elsewhere (like Jaxx below). Strength: most secure. Weakness: hard-ish for newbies to use.

    Jaxx is pretty cool. You control your own keys. One weakness: no password protection. Whoever owns your Jaxx file owns the coins (though they have a 4-digit "PIN" you can set up but that is not very secure IMO). So use a computer you trust. Strength: easy to use. Weakness: no pw means soft security.

    Paper wallet: generate an address and send your coins to that address. Be sure to copy down the key or print the screen. Don't lose this! Stengths: easiest to use – no downloads. Weakness: a) need to trust the website is doing what it says it's doing, and b) if you lose the key you are totally screwed.

    I have personally used all 3. I am not making recommendations on what you should do, you have to find what's best for you, and what you trust the most for the amount of work you put in.

    Analogy: Let's liken a bitcoin "private key" to a $100 bill. You can obviously spend the $100 (peer to peer, just hand it to someone else). Also, you can put it in the bank. The bank takes the hundy and hands you a ledger that says they owe you $100 bill on demand, or send it as payment to someone else. Now let's say the government comes along and says "for every $100 bill you hold (which are green) we are forking it into two, and magically issuing an additional "orange bill." So for every green $100 bill you hold you now hold one green $100 bill and one orange $100 bill. If your hundy is in the bank, then they would need to do this on your behalf.

    With Bitcoin, putting your coins in a "bank" like coinbase is giving them the private key. The key is like the $100 bill. Without it you don't own anything except an IOU from coinbase. On 8/1 the coin might for (depending on the consensus in the network, which is unpredictable), which may create two separate blockchains, the original bitcoin core (BTC) and bitcoin cash (BCC). Coinbase has stated they will not support any chain except bitcoin core (I'm not sure why this is – I'll post if I find some info on the subject). However, they are not being secretive about this. They specifically recommend you withdraw your coins now. If you do, you will hold the private key which allows you to have ownership on both blockchains should any fork occur.

  18. LB -Phil you posted this yesterday.  Very aggressive target.  Do you think now would be a good time to start a new position in the name ?


    ~~FBR Capital expects comeback for L Brands.

    ? L Brands (LB +0.7%) is still rated at Outperform by FBR Capital after the firm hosted an investor meeting with the retailer.
    ? After taking in management company, FBR analyst Susan Anderson thinks L Brands still holds "significant mindshare" with its target clientele and notes unit growth for the Pink and Victoria's Secret brands.
    ? FBR's price target of $60 reps 32% upside for L Brands.

  19. Don't know where the question marks came from !

  20. ?/albo   ?I have no idea?…… :)

  21. @albo,  I have initiated a 25% position in LB, BCS 40/50.   Will scale in more if the market corrects in August/Sep.  Expecting some seasonal tailwinds in 4Q in addition to good value at these prices. 

  22. Thanks ? 1020 ?

    Learner – Thanks.  Selling a few LB Jan 40 puts at 5 1/2 + might make a good addition to you position.

  23. Thanks BDC.. I was going to complete the transfer of BTC to Greencoin. I can do this over the weekend right?

  24. Thanks Albo 

  25. BDC – Thank you

  26. i wonder if AMZN will be up today…nuts

  27. latch – weekend should be fine.

  28. BIDU going to the roof today up more than 11% one day

  29. Phil--what is your thoughts on coffee now? nice recovery--wow

  30. Oil – Rig count +2

  31. CIM adding more stock and selling the Mar 2018 strangle 19/18 for 1.60

  32. I see rig count +8 US and + 14 Canada. Plus 22 not 2

  33. On assignment I replaced OHI for 31.02 and sold the Mar 30 straddle for 4.61, while I am waiting.

    Armchair trade!

  34. Yodi, are you updating your Armchair Trades somewhere else too ? I would be really interested in following this in a separate thread. I would also be interested in understanding your process in selecting stocks. I'm not good enough at this to fully understand if a company is a solid investment or not. Especially understanding when conditions for holding have reversed.


  35. Oil rigs added 2 to 766, marking the 26th increase in 27 weeks, while gas rigs gained 6 to 192; last year at this time, 374 oil rigs and 86 gas rigs were active in the U.S.

  36. Good summary on Bitcoin, thanks BDC.  Will be curious to see how it plays out.

    Oil finally breaking down a tiny bit.  

    $52.50 finally did it on /BZ

    /NG setting up for yet another long next week.

    LB/Albo – Earnings are the 16th, you might want to wait.  We bought back the short caller so we have 10 2019 short $55 puts @ $11.75 and 20 long 2019 $45 calls @ $8 so net about $2 per long less whatever we made on the short calls so our target is $47+ but we don't make our full $20,000+ unless /LB is over $55 (because of the short puts, which we'll roll).  

    So, bottom line is I still like the trade we have but, if you want to be more conservative, I'd sell 5 2019 $40 puts ($6 = $3,000) and buy 10 $40 ($9.40)/$50 ($4.80) bull call spreads @ $4.60 ($4,600) for net $1,600 on 10 ($1.60/long contract) and then at $50 you get $10,000 for an $8,400 (525%) profit.  

    Worst case is you own 500 shares of LB for net $41.60 – still a 10% discount to the current price for a company making $3/share (p/e 15).  In fact, that's good enough to put in the OOP because who doesn't like to make 525% in 18 months?  

    Coffee/Jabob – No change since Tuesday:

    July 25th, 2017 at 10:28 am | (Unlocked) | Permalink

    Coffee/Jabob – NOW it's getting interesting for a re-entry (/KCU7) at $130.   Actually, I'd rather go /KCH8 at this point, which is $136.85 and very thinly traded so you need serious conviction to play it. 

    I had charts and graphs and links and details.  Not much has changed in 3 days other than the price and, as you know, I cashed out at $143.50 (/KCH8, now $145) and I'm waiting for the next pullback to get back in:

    CIM/Yodi – Love those guys but they might go lower ($17) before steadying.


    My other favorites:

  37. Yodi, You bought more OHI and then sold the straddle?Thx

  38. LB – Thanks, Phil.

  39. Sundevils yes the 30 Mar straddle. I was holding 1000 stk and the cut off 200 of my Sep 30 caller no problem as the Sep 30 putter is already 70% to my favor. These are all armchair trades. I did show many like this before.

  40. thanks Phil. not good when i can't remember what yu said only 3 days ago… ;-)

  41. Thanks…Other than ex-dividend I haven't found a reason to explain their drop….earnings looked to be ok the other day….

  42. Albo – did you paste into the post with the question marks? (I've seen question marks appear out of nowhere when pasting text.)

  43. Ilene – No I didn't.  Wondered where they came from.

  44. The 4 Types of Project Manager

  45. Gardling.

    I did a write up on armchair trading in the member’s corner. I basically updating only stocks which I have already in one of my Ports.

    Under present circumstances it is very difficult to find stock which has a rock-hard base. Look only at yesterday's trading range of the /ES as commented up some 10 points done 15 points and finished at I think at 2.5 minus.

    You need to valuate stock based on solid foundations cash flow etc.. Further stocks for armchair trades need to pay mostly a div of 3.5% and plus per year. Combined with the further ATM or close to it straddle or strangle sold, I am looking for a return of 2 to 3% per month. Just look at MO dropping 7$ today should you buy it? I sold some additional Jan 2019 65 puts. Do I worry about my armchair trade with MO I bought the stock at yes 23$ So looking at 23 $ it is hard for me to recommend to buy the stock even after a drop of 7 $.

    Same with PM I bought the stock at 87$ can I recommend it to you at 118$ today but I trade my armchair options against PM even sold a 100 put Dec 17 for 1$ at the time.

    Yes I hold a list of stock but sometimes it is too much work to keep it all up. As Phil says about the LTP or Butterfly, you do not look at them every day. Even my tree planting stocks 2019 I let sleep most at the time.

    At PSW many trades are mentioned so you need to analyze them and only you need to make the final decision, enter the trade or stay on the fence. Many waiting for the bubble to pop. My ports hold 50% cash 25% stock and 25% options. So the options is the first which could fall. I hope this helps.

  46. Gardling,

    Look above Phil mentioned NLY possible buy the stock But selling only puts is the answer here.

    ARR great stock bought at 21$ now 25 running my armchair options against it. If assigned just reload. See my OHI. Some you lose some you win,

    CIM received a cool1K div today do you wait till theydrop to 17 or buy at 18 and sell a 1.60 strangle against them. These are all individual decisions. I just added some more stock, just to make it look so I have done something today, or was it thanks for the div.?

  47. P.S. ARR runs in my ports at 2.2 and 2.5% per month

  48. One more trick I did learn with options

    Say you need to buy back a caller at 1$ The option is trading at the market for 1$ as soon as you put in the offer they put up the price to 1.05. You offer 1.05 it goes up to 1.10.

    I go to one of my other portfolios and enter a sell order for 1.25 same option position. You will be surprised how quickly they find the real trade price for this option, possible you will buy back the caller for 1$. Than you say thank you and cancel the sell entry from your other port.

  49. You're welcome Albo, thanks for bringing it up. 

    Senility/Jabob – Funny how it creeps up on you.  surprise

    Puts/Yodi, Gard – Yes, selling the put is the best way to initiate an entry.  With NLY, for example, the dividend is $1.20 on the $12 stock (10%) and you can expect to collect $1.80 between now and Jan 2019.  On the other hand, you can just sell the 2019 $12 puts for $1.80 and you are collecting the dividends up front, not laying out the cash for the stock and, if assigned, you net in at $10.20 (15% off).  This way, you only end up owning dividend stocks when they are on sale and, if not, you are not missing out on the dividend payments while you wait. 

    As Yodi notes, you can make 2% PER MONTH using these strategies – beats putting money in the bank! 

    /ES, on the whole, fell from 2,480 to 2,460 so 20 points with weak bounce at 2,464 and strong at 2,468 – keep that in mind into the close.  

    RUT 1,450 to 1,425 is 25 so 5-point weak is 1,430 and strong is 1,435

    Dow never fell but it was all BA so we throw it out as bad data:

    Nas is easily manipulated but call it 6,000 and the 2.5% line is 5,850 and that's 150 points so 30-point bounces to 5,880 and 5,910 – where we are now.

    So everyone is testing strong bounces and the Nikkei, EuroStoxx and DAX have closed weak – we'll see what happens:

  50. Phil – Iced coffee machines; good idea, I dont know why its not more prevalent. I remember when I visited Japan one year on a sort of grad trip they had iced coffee vending machines literally EVERYWHERE, i think the brand was called "BOSS" coffee, various flavors; sweetened/unsweetened and a couple iced green teas in there as well. They came in small little cans similar to the mini coke cans you see nowadays. 

  51. Japan/Crs – Even better, they have beer and sake machines!   We would be drunk before we made it to the bar…

    Image result for japan sake machine

    Image result for japan sake machine

    Bad as it is, I still like a good old One Cup every once in a while.  

    Speaking of sake – had the Premium Sake Tasting with dinner last night at Nakazawa last night – the sakes were excellent.   While there were some really fantastic things (especially the toro roll), on the whole, the dinner at O Ya is, I think, a better overall experience.  O Ya doesn't take things so seriously, Nakazawa is good for purists but, in an attempt to be an upscale NYC restaurant, they aren't as pure as Kabuto in Vegas.  

    Looks like we're just drifting into the close.

  52. Looks like the head chef from Kabuto started his own place called Yui Sushi – plenty of stuff to try when we do our conference this year.  

    Woops, Dow popping higher into the close, 21,772!

    Maddie turns 17 this weekend (that's why we went out for sushi) – time really flies.  And Greg will be over this afternoon showing me baby photos of his new kid – the circle continues…

    Have a great weekend,

    - Phil

  53. Phil – Have a great weekend. – I lightened up some winners and with your help lowered the risk on some losers…..   IMAX perked up today. Prescient call. Thanks for your help this week!

  54. Phil-  not sure if you have covered this… I have some $$ in VXX 300 shares.  There are articles now talking about how the VIX ETFs can 'implode' or collapse if the VIX goes only to 14 or 16 in one day.  

    are you familar with this?  Should I exit the VXX? currently have a $2,5k loss

  55. Happy Birthday Maddie. I remember my 17th—60 years a go!  May you have many more!!

    Also, Greg and dear new mother and child— fantastic joyful best wishes!!

    Enjoy your weekend Phil, sounds like your set for a good one. 

  56. There Is No Trump Doctrine, and There Will Never Be One

  57. Behind Legislative Collapse: An Angry Vow Fizzles for Lack of a Viable Plan

  58. Venezuela’s hyperinflation is jaw-dropping. See for yourself

  59. WTI OIL /CL – "The last dip (52.22 down to 42.05 = 10.17);  a potential 50% retrace to $47.13; or .618 = $48.26; or .763 (1 – .236) = $49.81."

    Friday closing 49.80. All those levels have been hit during a 27 day retrace.  Should be interesting next week.

  60. tsla…uh oh..

    think it flies on Monday because of the hype from the model 3?

  61. Have you seen how ugly the interior is?

  62. nope.. just saw the hype headlines.. will look 


  63. interior looks weak.. exterior looks good in my opinion.

    hope tsla crashes after earnings, of course..

  64. pstas--forever eloquent but is he ever right?

    Has he made money for anyone?

    Many of us agree that the markets seem stretched but Hussman has been bearish for years, I believe.

    His track record seems Gartmanish..

    He doesn't flip flop as much as Gartman but his track record seems about the same, right?

    Listening to those two guys has been the last thing anyone would have wanted to do for many many years now.

    Doing the opposite of what they have said for the last 5+ years would have made you rich!!!

  65. Hussman- IMO the key to understanding his perspective is evaluating full market cycles, i.e., from trough to peak back to trough. One does not have to agree or not to learn from what he says.  I don't know the returns for his investors but I find his data driven analyses informative and useful balance to present bullish sentiment. Sort of keeps me grounded. If you are , like me, a value oriented investor then his commentary is quite valid. It is also true markets can and do stay elevated for extended periods. 

    The Hussman comment cited above is pretty basic , i.e., buy when stocks are cheap and you are more likely to hold those gains over a complete cycle; and vise versa. Is it not obvious that today's MOMO's will likely get killed when (not if) we experience a genuine correction? 

    Of course, timing is unknown – could be Monday or years from now. 

    On a cycle basis, the markets will turn when earnings turn. I watch earnings very closely as one day this will change while keeping in mind we can still get a significant correction and keep the bull trend intact.

    I make my own decisions. I don't follow in lockstep any money manager, pundit or blogger. But I do read and evaluate assorted viewpoints. I have been at this a long time and have done OK and still learn something new most every day. 

    So, for me, I remain holding majority bullish positions but hedging my bets. 

  66. Just started a subscription to a new online magazine called American Consequences, a joint project of P J O’Rourke and Stansberry Research. Anyone here familiar with any of them? Seems like it sits in the space where finance and politics meet, like some aspects of this site. Not sure if they are intelligent and informed or rabidly partisan.

  67. Markets down a bit at Asia's open, oil up around $50, Dollar still weak.

    Your welcome Batman. Isn't it much more relaxing to have CASH!!!?

    VXX/Latch – I think they are trying to chase the longs out of VXX ahead of a correction.  This guy is writing on a Forbes blog – those things are filled with peril.  Even the author notes, only 3x in 27 years has there been a 50% move so highly unlikely in any event but if you have such a huge (proportional) bet on VXX that you are worried about the fund being liquidated – then you should probably lighten up and spread it around anyway.

    TSLA/Pstas – I agree, Musk has changed the World and it's of little consequence whether or not his company is ultimately successful (much like the man he named it after).  In fact, Toyota just announced the Prius Prime, which still uses gas but gets up to 113 mpg and has a 680-mile range for $27,100.  Doesn't need to be plugged in at all and the average driver needs about a tank every two weeks – short gas stations (and refineries and oil companies) – this is all happening faster than people think.

    Short selling/Pstas – That's true.  Despite the relentless up market, we've consistently made money shorting the indexes as they tested each new level.  Of course we could have made just as much going long but, if I get caught short, I have conviction to stick with it but, if I get caught with a long and the market tanks – I just feel like an idiot.

    PJ O'Rourke/Jet – Didn't he used to write for National Lampoon?   He went insane (Republican) as he got older.

  68. Two covered call play for up and coming earnings.

    INTC buy stock @ 35.31 and sell the Aug 18 call 35.5 for .28. If assigned you make .8% in 18 days and if not assigned you still with the stock and your return in 1.5% in 18 days.

    AAPL buy stock @ 149.50 and sell Aug 18 150 call for 3.40. If assined you make 2.27% and if AAPL is below 150 you get an other .63 making it 2.69 % in 18 days. 

    Both in small doses please!

  69. Two more candidates are CSCO and ADM

    ADM stk 41.78 sell Aug 18 42 call for .90

    CSCO stk 31.52 you can go Aug 18 31.5 call for about .66 and expect to be assigned or run with the 32 call for .41 and hope for the div. of .29 in both case you can expect more than 2 % in 18 days.

  70. The above are no 1 million dollar trades but you do not have to chew your finger nails!

  71. Those are the best kind, Yodi!

  72. ~~Short selling/Pstas – That's true.  Despite the relentless up market, we've consistently made money shorting the indexes as they tested each new level.  Of course we could have made just as much going long but, if I get caught short, I have conviction to stick with it but, if I get caught with a long and the market tanks – I just feel like an idiot.

    Phil — THANK YOU for all ALL you do — this sums it up for me best.