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Frail Friday – Living on a Prayer

"Whooah, we're half way there

Livin' on a prayer

Take my hand and we'll make it, I swear

Livin' on a prayer"

Well that prediction didn't take long to play out!  

In yesterday's report, we said it was time for a 500-point Dow drop and we got the first 200 yesterday and, as you can see from the Fear and Greed Index, the needle has moved from 59 to 31 already – halfway to EXTREME FEAR, where the sheeple start trying to sell stocks for any price and, in a thin market like this one – that can get pretty catastrophic.  

Our long-term postions lost almost $100,000 yesterday (from $1.6M) but our short-term hedges gained $80,000, which means we essentially, automatically, begain cashing out as the market dipped.  Of course, the real money comes when the market kicks in 5% or better and we're not counting on that happening in this gogo market – which is why we're not getting out of our long-term positions – yet. 

We're also not adding to our long-term positions – yet – it's just too hard to say which way things will go but a nice correction is healthy and we're playing for a bounce this morning, using Dow 21,800 as our long like (/YM) as the Russell (/TF) bounces right off it's 200-day moving average at 1,370, which is also a good line to play long, with tight stops below.

Using our shorting line on the Dow Futures yesterday was good for gains of $1,000 per contact and hopefully we can re-enter the shorts as the strong bounce fails at 21,880 but, meanwhile, that's good for $400 per contract gains on the way up.  Aren't futures fun?  As we expected, silver and gold continued to blast higher as well, which is great for the trade ideas we discussed on Barrick Gold (ABX) and Wheaton Precious Metals (WPM).  

Image result for warren buffett greedy fearfulBeing well-hedged with a good BALANCE of positions allows us the luxury of sitting through these market upsets without panicking.  In fact, all the CASH!!! (have I mentioned how much I like CASH!!! lately?) gives us the chance to be greedy while others are fearful – one of Buffett's top rules of investing.

We have certainly been fearful while others have been greedy this summer but it hasn't stopped us from making great gains.  Our Options Opportunity Portfolio, which we trade and track over at Seeking Alpha, just ended it's second year on Aug 8th and is up 211% in two years – the best performing portfolio at SA!  It's a great service, you should check it out – just ask ACLend:

Phil's analysis and timing are phenomenal. I have learned an invaluable amount of information from him on strategy, positioning, and trade management as well as how to identify my own opportunities and conduct sound portfolio management. He is responsive to questions and has a passion for teaching which shows in his tireless commitment to real-time interaction with his clients. In following Phil for five years, I have seen him call more good trades than I can remember and he makes himself accountable for reviewing his analyses and trading history. Phil's service is the best money you can spend on trading education.

There are lots of testimonials on the site, you can check them out but I think the proof is in the pudding or, in this case, in the portfolio, which is full of trades like the two I shared with you yesterday.  Unlike the Long-Term/Short-Term paired portfolios we keep at PSW, the OOP is a combination of the two that started out with $100,000 (and we still make trade that are generally appropriate for that level, despite having over $300,000 now) where the hedges are part of the same portfolio.

This allows us to avoid the effects of violent market swings while we stick to our tried and true system of "BEING THE HOUSE – Not the Gambler" and collecting premiums from all the suckers who think they know how to predict the market.  I was intervied on the subject at the beginning of 2016 in Forbes and the trade idea I gave them as an example (pg 4) was a long spread on UCO that was net $1,050 and made back $200 less than our $5,000 goal for a net gain of $3,750 (357%) in 6 months.  

These are publically published trades – our system is not complicated to learn and our trade ideas are laid out in the OOP (and our other portfollios) just as clearly.  We are not right all the time but, when your winning trades make 357%, you can afford a few losers, right?  

In the last two weeks, we've discussed a few of the hedging strategies we've been using in our Member Portfolios at PSW and in the OOP at Seeking Alpha and, of course, they are up today but it's more important to see how they play out if we do continue towards that 500-point drop zone next week.  

It's a whole different world when you have a well-hedged portfolio because, when the market drops – instead of worrying about how much you lost, you look at all the money gained on your hedges and decide where you want to go shopping.   Of course the main place we deploy our short-side gains is into the longs we are losing money on – we dollar-cost-average into long positions that we already like before we go looking to add new ones.  

I mentioned yesterday that we like Chicago Bridge and Iron down here at $12 and now Macy's (M) is back on sale around $20, with no help today from JC Penny's (JCP) sad earnings, which is knocking them down another 25% this morning.  The fallout from that disaster should give us a firm bottom on Macy's – as their bad news for the quarter is already priced in.  We like M long-term for their real estate value and also the fact that they trend more towards the Top 10% shoppers (M owns Bloomingdale's too), who have no idea how bad the economy still is for the bottom 90% and are happily spending money. 

To set up an options spread on M, we can do the following:

  • Sell 5 2019 $18 puts for $3.25 ($1,625)
  • Buy 10 2019 $18 calls for $4.50 ($4,500)
  • Sell 10 2019 $25 calls for $2.10 ($2,100) 

That works out to a net cash outlay of $775 on the $7,000 spread, which means if M is back over $25 in Jan, 2019, the net profit would be $6,225 (803%) and your worst case is you end up owning 500 shares of M at net $18 ($9,000) plus the $775 cash you laid out is $9,775 or $19.55, still a discount to the current price.  

So, when we use options to construct a trade like that, our upside is 803% of our cash outlay and our downside is owing the stock for a discount (see "How to Buy Stocks for a 15-20% Discount") and, of course, then we have our hedges to take the sting out of any downturn there may be in the stock price and, of course, we still have the flexibility to pull the plug any time we want to, if we lose faith in our long premise (the real estate value of Macy's, in this case).

We had another huge spike in volatility yesterday but, as I said, today we're playing for the bounce this morning and that will drive the VIX back down but we think the bounces will fail (see our Live Member Chat Room for the bounce levels) and next week we should continue to see falling markets and a rising VIX.  As I noted above, 21,880 is where we re-initiate our short on the Dow Futures (/YM), probably a 10% pullback on the VIX after yesteday's 45% gain.

As I said to our Members yesterday – who is going to want to go long into the weekend when there is an irrational madman in power who has his hands on nuclear weapons and is already threatening to use them?  I'm also worried about what Kim Jong Un might do in response….

Have a great weekend, 

- Phil


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  1. Huge reversal in some stocks already.  Waiting to see if this is a bull trap.

  2. The bounce is on, good call Phil

  3. Good Morning.

  4. rustle--when are we going to see a reversal in the FU sttocks??? 

  5. Pharmboy -  BLCM – one of the names you have mentioned before at a 2 year low after earnings and now starting to recover? Is it a good time to leg in a position?  Your thoughts on the company going forward..thanks

  6. jabo – looks like it's happening now, went short TSLA while it was up

  7. rustle-- i keep seeing these FU stocks make new lows every day…  so annoying.

    hope they are good buys here

  8. Good morning!  

    Dollar spiked down to boost markets this morning – more manipulation and that's why it was easy to call a fail at the strong bounce line 21,880 but now we'll see what happens in real trading. 

    I think Europe is sick of the weak Dollar and is putting in a floor at 93.

    Really we topped out at 22,050 last week so call it a 250-point fall so 50-point bounces to 21,850 (weak) and 21,900 (strong).  The 21,880 I called this morning was a short-term bounce off the short-term drop from 22,000 to 21,800 but, once the quick move is over, you need to get back to a bigger picture. 

    S&P was at 2,475 and 2,435 is 40 points so 8-point bounces to 2,443 (weak) and 2,451 (strong)

    Nas I'd say 5,925 was fail and 5,775 is down 150 so 30-point bounces to 5,805 and 5,835 but I'd use 5,850 as the Nas is very bouncy and it likes those 25 lines.

    The RUT is crazy bouncy but has been in a very steep decline to the 200 dma – anything red on the RUT is a very bearish sign for the others.  I had to back up to the daily chart and clearly we tested 1,450 so, if we assume we're completing a move to 1,350 (where we've consolidated on the way up) that's 100 and 20-point bounces are 1,370 and 1,390.  Even though we haven't actually gone lower yet, we can still use the bounces off the theoretical goal to see where we expect resistance.  If 1,370 fails, in this case, we can expect the markets have turned sour again. 

    DAX 12,000 would be our best bull signal

    Vix back below 14.60 is another

  9. /RB made us a quick penny and now we wait and see if they can pop $1.61.  

  10. ~~CLF CEO bought 100,000 shares at $7.17-7.22 worth ~ $700K

    ~~ETSY CEO bought 64,000 shares at $ 15.67 worth ~ $1 mln

    ETSY has been a big winner.  Put on a position because I thought it likely that they would be bought out.  No sign of that, but a big winner nonetheless.

  11. CHL – nice bump up on earnings..!

  12. wpm.  con call starting

  13. FTR – In non-margin accts, putting in orders to sell jan 2019 13 puts for $5.25. If I get fills, is 26% annualized return against $1300 reserve requirement. Of course, that is only a 26% return. Buying the underlying might offer 100% or better by then…  -might-.

  14. HD/phil, do you think Home Depot is ready for a pullback?  seems a little overextended to me.

  15. Phil we are seeing Dow futures push up to 21880 three or four times in the last two hours. What would you be looking for at this point? Russell is above 1370 so I assume we are still in wait and see mode, but can you once again clarify what we will be looking for today to give us some signals about next week? Also you mentioned waiting to see if RBpops 1,61. What is the trade if it does? Will you be bullish into the end of the day and next week or does that give you a line to short? Very confused at the moment with all the Noko noise and Venezuela sanctions being discussed, etc. Thanks as always for the help you give.

  16. COuld we please have a few days with TEVA FTR and IMAX all being green instead of red???


  17. M – The dividend yield is 7% at current prices.  I like buying the stock at $20.80 and selling the 2019 $20 calls for $3.85 and 2019 $15 puts for $1.80.  Lower basis to around $15.15 a share….which makes the yield around 10%.

  18. TEVA RSI is 10.82, EXTREMELY OVERSOLD in short term

  19. rustle--seems like there is a constant seller of TEVA who unloads on any move higher… sucks

  20. there goes 17… what a POS 

  21. TEVA/Yodi – what did you not like about them originally and has that been remedied by the price drop, or do you not like their business/management?

  22. Short interest on TEVA is large and that was before the negative outlook.  I suspect some bond holders are hedging a downgrade by shorting the stock.  The 2B in asset sales were cited as one of the things required to maintain IG and are supposed to happen before year end.  Sentiment is negative so this is likely to be an uncomfortable ride though.

  23. Comment content omitted because it is too long.

  24. ETSY/Albo – Big surprise to me.  

    CHL/Scott – Selling telco to China – that was an easy pick!  One of our perennial buys:  

    CHL/8800 – I like CHL long-term.  As we've seen from the US economy, even the poorest people want their smartphones.  CHL is suffering from ramping up IPhones, just like T did when they started as those up-front subsidies take a long time to cycle back.  That's why we stopped picking CHL but, down around $40, they are getting attractive again and that's your net and you still have a year so I'd wait as the roll won't likely get worse as your 2015s lose premium and the 2016s gain it (on the way down).  

    Don't forget, if you get assigned 1x at net $41.75, you can sell the 2016 (or 2017 by then) $37.50 puts and calls for $11 and drop your net to $30.75/34.13.  If you are not HAPPY to own 2x CHL at net $34.13 (25% off current price) then take your $1.85 loss and get out now! 

    Submitted on 2014/03/25 at 7:32 am

    CHL/Bdon – If they weren't in China, sure!   This is where we wanted to get in but, with all the turmoil going on, I'd just sell the 2016 $37.50 puts for $3.60 to net in for $33.90, which is almost 25% off the current price.  That's enough cushion to take a poke, so let's add 5 of those in the Income Portfolio to keep an eye on them.  It's an amount we'd happily double to 10 if the stock dropped to $20 and we'd average in at $27ish.

    Submitted on 2014/06/30 at 10:06 am

    CHL/Scott – While I do like them as a long-term investment more than T (the US doesn't have 300M more customers without phone service waiting in the wings), short-term they are going to be more volatile.  T is a utility play, it's nice and dull and not likely to grow or fall.  CHL has 760M customers and bills them an average of $136 each, T has 110M subscribers and bills them an average of $1,163 each – which one do you think has room for explosive growth? 

    Submitted on 2016/11/17 at 4:00 pm

    CHL/Selozi – Another perennial favorite of mine.  Yes, $50 is our buy price for them so close here at $54 and I'd start by selling the June $52.50 puts for $2.80 and you can add the $50 ($6.40)/$55 ($3.40) bull call spread for $3 and that's net 0.20 on the $5 spread and worst case is you own them for $52.50.

    WPM/Batman – 12% better earnings on slightly lower production is simply a focus on efficiency.  I'm happy enough with earnings.  Also, metals prices were dragging all Q.  Cash flow was excellent, double earnings.

    Average cash costs2 in the second quarter of 2017 were $4.51 per silver ounce sold and $393 per gold ounce sold, as compared with $4.46 per silver ounce and $401 per gold ounce during the comparable period of 2016. This resulted in a cash operating margin2 of $12.58 per silver ounce sold and $870per gold ounce sold, a decrease of 1% per silver ounce sold while the cash operating margin2 per ounce of gold sold was virtually unchanged as compared with Q2 2016. The decrease in the cash operating margin was primarily due to a 1% decrease in the average realized silver price in Q2 2017 compared with Q2 2016.

    Net earnings and cash flow from operations in the second quarter of 2017 were $68 million ($0.15 per share) and $125 million ($0.28 per share2), compared with $60 million ($0.14 per share) and $134 million ($0.31 per share2) for the same period in 2016, an increase of 12% and a decrease of 7%, respectively.

    HD/Lunar – Well we have hurricane season coming up and that can be a bonanza for them so I don't think they'd be a top pick for shorting.  Even if that were not the case, they make a pretty solid $7.50 per $150 share so 20x and 10% growth is not unfair.  

    Dow/Craigs – I'm just looking to see if we fail those bounce lines or get over but, if we fail – I like the short bets.  If we break over, I don't have any faith in the longs so I just don't play.  I said above, we play for the $400 bounce on the Dow and then flip back to short – a perfectly good plan.  I don't know of anything that happened to change my mind in the 3 hours since I wrote the report.  As to /RB, if it goes over $1.61, then we can use that line to go long with tight stops below and ride it for another penny (hopefully) and then the same game if it consolidates at $1.62.  

    A few days/Jabob – You realize, of course, we don't actually have any control over that, right?  The question is, what are you doing to set yourself up to benefit from green days (if they ever come).  If you need more than a 20% move up to get even, that may be unrealistic and you need to consider altering the position.  

    M/JJ – I assume they may cut the dividend but fantastic if they keep it. 

    TEVA/Jabob – There is a constant seller, it's AGN, who are unloading their 9.9% stake, which is 90M shares and that would be TEVA's entire volume for 2 weeks.  

    Stocks edge higher after tame inflation data

    • Most of the world's stock markets are lower amid continuing U.S.-North Korea tensions, but Wall Street opens slightly higher following another lukewarm inflationary reading; S&P, Dow and Nasdaq all +0.1%.
    • July CPI and core CPI both ticked up just 0.1%, lower than analyst expectations; on a Y/Y basis, total CPI and core CPI are both up 1.7%.
    • In European markets, U.K.'s FTSE and France's CAC -0.9% but Germany's DAX +0.1%; in Asia, China's Shanghai Composite closed -1.6% while Japan's Nikkei was closed for a holiday.
    • In U.S. earnings news, Snap -13.1% after reporting worse than expected earnings, revenues and daily active users; Nvidia -4.5% despite beating both top and bottom line estimates and raising its Q3 revenue guidance.
    • Sector movement is modest, with techs (+0.3%) among the early leaders and the utilities group (-0.4%) lagging.
    • U.S. Treasury prices are trading mixed, with the benchmark 10-year yield up by a basis point at 2.21%.
    • U.S. crude oil -0.5% at $48.34/bbl.

    DryShips soars after stock deal

    • DryShips (NASDAQ:DRYS) is up 66% to $3.41 on heavy volume after announcing a deal to sell $100M worth of stock to CEO George Economou and end a controversial arrangement with Kalani Investments.
    • Shares poked their head over the $4 level at the open before falling back.
    • Previously: Trading halt on DryShips (Aug. 11)
    • Previously: DryShips cancels stock deal with Kalani (Aug. 11)

    DRAM prices expected to keep rising in 2H17

    • DRAMeXchange expects DRAM contract prices to continue rising in 2H17, according to Digitimes.
    • The TrendForce-affiliated market research firm says the average contract prices for PC Dram modules was $24 in Q1, up 40% sequentially, and reached $27 in Q2. 
    • 2H tends to have a higher demand for DRAM due to the holidays, but this year will prove tighter after early July’s two-week manufacturing halt at a Micron (NASDAQ:MU) plant due to equipment malfunction. 
    • DRAMeXchange estimates the Micron malfunction cost 20K wafers while the shutdown cut 30K wafers. Overall, the fab lost about 50K wafers for DRAM chip manufacturers. 
    • DRAM bit supply growth for the year expected at nearly 20%, which is lower than prior 25% growths. Bit demand growth expected to exceed 22%. 
    • Top manufacturers, by 2016 DRAM revenue: Samsung (OTC:SSNLFOTC:SSNNF), $19.5B; SK Hynix (OTC:HXSCL), $10.7B; Micron, $7.7B.     
    • Previously: Citi advises to buy on Micron weakness (Aug. 1)

      DRAM prices expected to keep rising in 2H17

      • DRAMeXchange expects DRAM contract prices to continue rising in 2H17, according to Digitimes.
      • The TrendForce-affiliated market research firm says the average contract prices for PC Dram modules was $24 in Q1, up 40% sequentially, and reached $27 in Q2. 
      • 2H tends to have a higher demand for DRAM due to the holidays, but this year will prove tighter after early July’s two-week manufacturing halt at a Micron (NASDAQ:MU) plant due to equipment malfunction. 
      • DRAMeXchange estimates the Micron malfunction cost 20K wafers while the shutdown cut 30K wafers. Overall, the fab lost about 50K wafers for DRAM chip manufacturers. 
      • DRAM bit supply growth for the year expected at nearly 20%, which is lower than prior 25% growths. Bit demand growth expected to exceed 22%. 
      • Top manufacturers, by 2016 DRAM revenue: Samsung (OTC:SSNLFOTC:SSNNF), $19.5B; SK Hynix (OTC:HXSCL), $10.7B; Micron, $7.7B.     
      • Previously: Citi advises to buy on Micron weakness (Aug. 1)

  25. Vicious cycle in play at Blue Apron?

    • Blue Apron (NYSE:APRN) is down 1.17% and traded as low as $5.00 earlier as investors digest the latest bump in the road with warehouse complexities.
    • Recode's Jason Del Rey points out that the slide can't be blamed solely on the Amazon-Whole Foods development after the earnings reports highlighted the vicious cycle in play at the company.
    • "Blue Apron is experiencing warehouse issues that are causing customer satisfaction issues that are causing retention issues that are causing marketing issues that are causing revenue issues," he writes.
    • Previously: Blue Apron -16% as confidence fades, bye-bye HelloFresh IPO? (Aug. 10)

    Netflix in talks with Disney over Lucasfilm, Marvel content

    • Netflix (NASDAQ:NFLX) is in active talks with Disney about landing the streaming rights to Marvel and Lucasfilm movies after 2019, according to Reuters.
    • Chief Content Officer Ted Sarandos calls Disney's launch of a streaming service a "natural evolution" in media that the company expected.
    • Shares of Netflix are down about 5% since Disney made its streaming announcement.

    Bloomberg: Nuclear industry seeks Trump help for Georgia reactor project

    • Nuclear power backers have asked the Trump administration to come to the aid of Southern Co.'s (NYSE:SO) Vogtle reactor project in Georgia, Bloomberg reports.
    • The request for help could be in addition to or part of the $8.3B loan guarantee provided by the Energy Department under the Obama administration, according to the report.
    • A Georgia public service regulator has visited Washington to make a case for the project, and SO has hosted congressional staff members at the construction site.
    • Federal support could be crucial, with SO set to tell regulators in Georgia by the end of this month whether it plans to continue with construction plans for the plant, but it is not clear how much help might be offered after Energy Secretary Perry turned down a request for $3B in aid for Scana’s nuclear plant in South Carolina.

    Fiduciary rule proving to be a windfall for asset managers

    • via Lisa Beilfuss at the WSJ
    • Wall Street fought hard against D.C.'s fiduciary rule which requires brokers to act in the best interest of retirement savers. As it turns out, the rule has firms pushing clients into fee-based accounts, rather than commissions, which can violate the rule. And those fee-based accounts have always been far more lucrative than the commission model.
    • Whether that's in clients best interests is another story, says Nomura's Steven Chubak. He notes the fee-based trend also allows for more predictable revenue than commissions – something the sell-side has always been a fan of.
    • Bank of America's (NYSE:BAC) Merrill Lynch has been a fan of fee-based accounts for years, and last year gave its thundering herd the ability to cut fees for clients moving onto that platform, without sacrificing their own pay. In Q2, fee-based assets of $991B were up 19% Y/Y to 38% of total client assets.
    • At Morgan Stanley (NYSE:MS), fee-based assets were up 17% Y/Y to 43% of total assets. This, even as the bank lowered commissions to try and comply with the rule's "reasonable compensation" standard.
    • Discount brokers like Ameritrade (NASDAQ:AMTD) and Schwab (NYSE:SCHW) are seeing similar moves.

    Wheaton Precious Metals +1.5% after dividend hike

    • Wheaton Precious Metals (NYSE:WPM+1.5% premarket after reporting a slight Q2 earnings beat and a dividend increase to $0.10/share, citing $250M in cash flow during H1.
    • Q2 revenues fell 6% due primarily to an 11% decrease in silver sales to 6.4M oz., partially offset by a 2% rise in gold sales to 72K oz..
    • WPM says Q2 attributable production totaled 7.2M oz. of silver and 78.1K oz. of gold, compared with 7.6M oz. of silver and 71.2K oz. of gold in the year-ago quarter.
    • Q2 production was helped by a 61% increase in attributable gold output from Vale's Salobo mine in Brazil and a 71% rise in attributable silver output from Goldcorp's Peñasquito mine in Mexico; silver production was hurt by a 39% decline at Primero Mining's San Dimas mine in Mexico amid continued uncertainty around the future of the operation.
    • WPM estimates attributable silver and gold production for FY 2017 at 28M silver oz. and 340K gold oz.; over the next five years including 2017, WPM forecasts production will average ~29M silver oz. and 340K gold oz. per year.

    Microsoft disagrees with Consumer Reports decision on Surface devices

    • Microsoft (NASDAQ:MSFT) again disagrees with Consumer Reports’ decision yesterday to remove its “recommended” rating for the company’s Surface devices.
    • ”While we respect Consumer Reports, we disagree with their findings,” says Panos Panay, VP of Microsoft Devices. “We stand firmly behind the quality and reliability of the Surface family of devices, and I can confidently tell you there has never been a better time to buy a Surface.
    • The Consumer Reports survey covered Surface devices released between 2014 and early this year. Microsoft has publicly apologized in the past for a range of problems with some models including power management. 
    • Panay cites a Microsoft-commissioned study from January to June that found 98% of Surface Pro 4 and Surface Book owners were happy with the device and says that the company focuses on “other incidents of quality such as incidents per unit” that have improved with the new generation and fallen below 1%.       
    • Previously: Consumer Reports removes recommendation for Microsoft's Surface (Aug. 10)

    Apple, Ireland close to reaching agreement on tax escrow

    • Apple (NASDAQ:AAPL) is close to reaching an agreement over Ireland’s sought indemnity from potential losses related to holding up to €15B of the company’s cash.
    • Last year, the European Commission told Apple to repay about €13B in back taxes to the country, which had given Apple unfair tax breaks. 
    • Apple has to put the money into an escrow account while appealing the decision; if Apple wins, it gets the money back. 
    • Ireland worries it will be held responsible for any drop in value while the money waits in escrow. 
    • Bloomberg First World reports that the company and country are close to working out an agreement, but neither has commented officially. 
    • Previously: Ireland seeks custodian for Apple cash (July 23)

    Petrobras reports 68% drop in Q2 net profit

    • Petrobras (NYSE:PBR-3.1% premarket after announcing its Q2 net profit fell 68% Y/Y to 292M Brazilian reais ($92.3M) on a 6% drop in revenue, driven by lower fuel sales in the domestic market amid Brazil's worst recession on record.
    • PBR also cites unfavorable rulings in tax cases that forced it to pay 6.23B reais and setting up an 818M reais provision due to a dispute involving an offshore drilling vessel as primary causes for the profit decline.
    • Q2 EBITDA fell 6.6% Y/Y to 19.09B reais, below the analyst consensus estimate of 20.21B reais.
    • But free cash flow was positive for the ninth consecutive quarter, allowing PBR to continue chipping away at its massive debt load which totaled $113.8B at the end of Q2, down from $115.1B at the end of Q1.
    • PBR says it has regained the ability to obtain financing locally and overseas, reflecting its debt reduction efforts.

    Buy gold as risks rise – Dalio

    • "Prospective risks are now rising and do not appear appropriately priced in," writes Ray Dalio. The fact that emerging risks – U.S./NK tensions, and rising odds of failing to raise the debt ceiling – look more political than economic makes them particularly challenging to price in.
    • Though Bridgewater doesn't claim to have any unique insight into political matters, Dalio says gold – more than other safe-haven assets – seems poised to benefit should the above not end well. Take another look at your portfolio, he says, to make sure gold accounts for 5%-10% of it.
    • The yellow metal this morning is up another 0.25%, now on track for more than a 2% weekly gain.

    Nvidia Beats And Sinks 

    Why We Are Buying Snap

    Weak profit sends J.C. Penney lower

    • J.C. Penney (NYSE:JCP) reports a wider loss than anticipated for Q2 as sales weakness persisted.
    • Comparable sales fell off 1.3% during the quaretr to just miss the 1.2% drop anticipated by analysts.
    • Cost of goods sold rose two percentage points to 64.9% of sales as store liquidations factored in. Adjusted EBITDA was $196M for the quarter vs. $233M a year ago.
    • "While broader retail remains challenged, we are encouraged by the improved performance in our total apparel business, including a significant acceleration in kids' apparel," notes CEO Marvin Ellison.
    • Looking ahead, J.C. Penney expects comparable sales for the full year to fall in a range of -1% to +1%. EPS of $0.40 to $0.65 is anticipated vs. $0.49 consensus.
    • Previously: J.C. Penney misses by $0.04, beats on revenue (Aug. 11)
    • JCP -14.23% premarket to follow on a 8.72% decline yesterday.

    Reuters: Saudi Arabia favors NYSE for Aramco listing despite risks

    • Saudi Arabia favors New York for the main foreign listing of Saudi Aramco, even though some financial and legal advisers have recommended London as a less risky option, Reuters reports.
    • A final decision on where to stage what could be the world's largest IPO will be taken by Crown Prince Mohammad bin Salman, who oversees the kingdom's economic and energy policies, and he may choose to list Aramco on the NYSE for "political considerations," given the longstanding ties between Saudi Arabia and the U.S., according to the report.
    • Some advisers reportedly have recommended London for the main listing outside Saudi Arabia, partly due to concerns that a U.S. flotation would require greater disclosure of sensitive information.

    HBO offers hacker bounty payment

    • The hacker who stole TV show scripts from HBO (NYSE:TWX) has leaked an email, obtained by The Hollywood Reporter, showing a company executive offering a "bounty payment" to the cyber-thief.
    • "As a show of good faith on our side, we are willing to commit to making a bug bounty payment of $250,000 to you as soon as we can establish the necessary account and acquire bitcoin."

    Latest oil report from the IEA

    • The oil market is re-balancing but output from non-OPEC producers will continue to expand over the coming years, according to the latest report from the International Energy Agency.
    • It comes as OPEC announced a continued rise in its collective output, which jumped by 173K bpd to almost 32.9M barrels in July, undermining its efforts to reduce production and boost prices.
    • Crude futures -1% to $48.11/bbl.

    China investigates internet giants

    • China's cyber regulator is investigating the country's top social media sites over content banned by the Communist Party.
    • The Cyberspace Administration said WeChat (OTCPK:TCEHY), Tieba (NASDAQ:BIDU) and Weibo (NASDAQ:WB) have users spreading "violence and terror, false rumors, obscene pornography and other hazards to national security, public safety and social order."

  26. Pharmboy – funny pic…. BLCM ..your thoughts here?  

  27. Phil,

    Do you have any open futures positions right now? I want to get short but missed the 21880 call. I did pick up VIX August calls last week which are paying off

  28. Pharm

     Any interest in

     Vanda Pharmaceuticals  VNDA 


  29. Pharm

     What are you thoughts on  Celgene Corp CELG


  30. Phil;  thoughts on SNAP and APRN at these levels?

  31. Pharm/

    I am still laughing about those pictures you posted of our "Dear Leader"! Very funny.

  32. BCLM….still like them and the technology, but biotech buying is not going to be recommended at this time.  This market is in a correction that will be larger than most think.  

    VNDA…well, a CNS pharma…that I would not recommend right now.  The EMA rejected their application for schizophrenia.

    CELG….80% revenues are from two drugs for MM.  I find it funny, that while working with CELG, they harped on GILD for being a one trick pony (HepC), but really GILD is not.  HIV was their foundation, HepC became the house, and they are really more diversified.  CELG is all in on MM, and many different cancer treatments.  Right now, CELG needs to grow revenues, and I am not sure they will be able to do it over the next few years.  I will give CELG credit as they have signed a bunch of smaller deals, and if a few work out, then things will change.  These deal signings are their backbone…and the rest of Pharma is trying to catch up.

  33. Phil / CBI – Gov.t tax case to get through dispositions by end of year…..  this is all that is weighing down the company.  Lots riding on this.   It was an OK quarter given the myriad of issues w/ so many mines, they managed to minimize revenue losses and on the earnings side increase margins.  Taking the payout up to 30 percent from 20% is  positive.    I'm holding but not adding not his….    

  34. SGYP just broke under 3 / sh….. they need more cash ,….  wonder if they are looking at selling more shares?

  35. Trump warns North Korea: US military ‘locked and loaded’

  36. The Madman and the Bomb

  37. Cryptocurrency 101

  38. RUT really trying to stay above 1370… 2 short at 1370

  39. How to Invest for a Nuclear War

  40. Dollar diving but not helping push over those bounce lines:

    Just masking the selling, I think.  

    Futures/Japar – Well I'm on a boat so I didn't bother playing the Dow for the bounce (but did catch the down move) nor am I short now as I plan to quit by 2:30 today (unless anything exciting happens).  I'm not doing /RB again for the same reason.  There's certainly nothing I would feel good about taking my eye off.

    SNAP/Options — The kids are still very much with them and there's 350M of them so can't write them off.  I've seen some signs of encouragement but the real issue is they came out of the gate overpriced for where they actually are earnings-wise.  So did FB when they started – it does take time to justify, what in SNAP's case is a $14.5Bn valuation at $12.25 and they were $17 with close to $20Bn at IPO.   It's not their fault that investors are idiots – they are executing their plan (and losing $1/share) but it's not something I'd want to ride out – as it's going to be long and bumpy.  

    APRN I never liked at all.  We make food (part-way) and deliver it to yuppies who don't realize they are paying triple the price.  How is that a business model?  The only hope they really have is that some other retailer will buy them rather than spend the time to build an in-house system but, with AMZN putting a lot of time, money and effort into the space – margins will be zero forever, so what's the point?

    Amazon looks to ready-to-eat food without refrigeration

    I mean, what does blue apron have (I use Sakara myself)?  They send you ingredients and food.  While it's nice to have everything ready for a meal – it's not what real cooks want to do as improvisation is what gives you the sense of accomplishment.  Here you have no choice other than the exact recipe – unless you are going to shop for other ingredients, in which case, why have their stuff at all?  


    Mine are the same price as blue apron (still ridiculous) but all I do is pop a lid and eat

    Related image

    Does chopping and boiling and cleaning up make me feel more like a chef?  These are indulgences and it's very hard to get rich selling indulgences.  

    Correction/Pharm – How low can it go?

    You know I love my LABU when it's cheap! 

    CBI/Batman – As with the Westinghouse deal, we'll have to wait and see.  

  41. SLB/phil, thoughts on SLB over next couple of years?  I had sold some 2018 $65 and 2019 $60 puts some time back.  still kind of in the money, but wondering if i should adjust.  like rolling the 2018 65's to 2019 60's.  TIA.

  42. BLCM….just FYI…I am in the stock and still have the Nov 7.5 Puts STO.  I just bought back the Aug 15 Call, and looking to STO the Nov 10 call…but waiting for a better price.

  43. From a TA perspective, BABA is in for a bounce up now…don't know how far, but the Sept 150 Calls look ok for a bounce play.  Out if it fails 150.

  44. SLB/Lunar – So much cutting in spending but, on the whole, 100Mb/d of oil has to still be produced and they need equipment so, over the long haul, I imainge there will be another spending cycle. but timing is everything.  If all goes well, SLB should make $1.50/share this year and more like $2 next year but I don't see why I'd want to pay $60 for that.  Those are not major downward revisions, I think people were insane to ever pay $80.  

    Looks like the Nas is crawling up to 5,850 but not much excitement from the others so far.  

    It's my last day on the ship so I'm going to go have some fun in the sun while I still can, but I'll check back later before dinner.  

    Have a good weekend, 

    - Phil

    U.S. total rig count slips but oil rigs rise

    • The total U.S. rig count fell by 5 to 949 but active oil rigs rose by 3 to 768, Baker Hughes says in its latest weekly report; gas rigs fell by 8 to 181.
    • Despite this week's increase, oil rigs appear to be stabilizing, rising by an average of fewer than one rig over the past four weeks.
    • U.S. crude oil trades roughly flat at $48.62/bbl.

    ITC taking second look at Comcast-Rovi patent dispute

    • Following a ruling in May that two Rovi (TIVO +0.4%) patents were violated by Comcast (CMCSA +0.9%), the International Trade Commission says it will take a second look at the findings.
    • Bloomberg notes that each side asked the ITC to review part of the findings. The panel is empowered with blocking imports of any infringing products.
    • Piper Jaffray noted in May that resolving the issue could mean a renewal of TiVo's business with Comcast, which could mean quarterly revenue of $14M-$14.5M for TiVo outside of any catch-up payments.

    30-year mortgage rate slides to six-week low, Freddie Mac says

    • The benchmark 30-year mortgage rate slipped to six-week lows and now sits just 2 bps above its YTD low, as investors snapped up safe-haven assets in recent days, according to Freddie Mac's latest weekly survey.
    • The 30-year fixed-rate mortgage averaged 3.90% in the week ending Aug. 10, sliding from 3.93% a week ago, while the average 15-year fixed-rate mortgage held steady at 3.18%.
    • Last year at this time, the 30-year and 15-year fixed rates averaged 3.45% and 2.76%, respectively.

    Stephens sees Wal-Mart investments paying off

    • Stephens thinks grocery rivals are playing catch-up to Wal-Mart (WMT) after the retail giant began cementing its price leadership position in late 2015. The firm sees Wal-Mart using its scale to improve operating margin and sees tech investments paying off. There's also an interesting take from Stephens on the impact of Amazon's attention-grabbing purchase of Whole Foods.
    • "While the recent AMZN/WFM acquisition creates questions for the food retailing industry, likely creates additional pricing pressure and accelerates the transition to online/omni-channel grocery shopping, we think Walmart is well positioned to compete on these fronts," writes analyst Ben Bienvenu.
    • A revealing data point highlighted by Stephens is that the crossover between Wal-Mart shoppers and Whole Foods shoppers is 9% vs. 45% for Trader Joe's, 23% for Safeway and 23% for Target. The Sam's Club crossover is only 15%.
    • Stephen rates Wal-Mart at Overweight and sets a price target of $91 (19X the near-term EPS estimate).
    • Wal-Mart is due to report Q2 earnings on August 17

    Snap -10.7% as analysts hack at price targets

    • Snap shares (NYSE:SNAP) followed yesterday's postmarket declines from disappointing earnings into regular trading, now down 10.7% on volume that's already doubled daily average and setting new lows.
    • Analyst have responded with slashed price targets. Perhaps the lowest comes from Susquehanna, cutting its target to $10, implying 18% more downside from the current price.
    • UBS cut its price target to $12 from $19; it's cut Q3 revenue estimates to $257M from $291M, and trimmed EBITDA estimates to -$200M from -$190M and EPS to -$0.32 from -$0.29. There's lots of unanswered long-term questions on the scope of the platform, the firm says.
    • Piper Jaffray set its target down to $12.50, and Barclays and Citi both cut their price targets to $13. Canaccord Genuity is down to $15 and Stifel Nicolaus is staying bullish at a lowered price target of $18.
    • Goldman Sachs wanted to see 10M net new daily active users rather than the 7M Snap delivered, but it's sticking with a Buy rating since Snap's engagement is a “unique asset that will benefit from the growth and diversification of internet usage." It's cutting its price target to $23 from $27.
    • Meanwhile, swimming against that negative tide is Drexel Hamilton — reiterating its Buy rating and a $30 price target (that's 145% upside from today's depressed pricing) on a "good enough" quarter, and preparing to raise estimates on the company's financials.

    Shell shuts Nigerian oil flow station overrun by protesters

    • Royal Dutch Shell (RDS.ARDS.B) says it shut down a crude oil flow station and gas plant in Nigeria after hundreds of protesters stormed the facilities in the restive Niger Delta oil hub earlier today.
    • The protesters reportedly believe they are not benefiting from oil production in their area, a common complaint in the impoverished swampland that produces most of Nigeria's oil.
    • Security guards did not disperse the crowd as it entered the Belema Flow Station in Rivers State, which feeds oil into Shell's Bonny export terminal, but the army sent reinforcements after protesters said they would stay at the facility for two weeks.

    Sharp drop in U.S. restaurant traffic in July

    • Restaurant same-store sales fell 2.8% in July, according to data from Black Box Intelligence.
    • Comparable traffic was down 4.7%, a 170 bps decline from the pace seen in June.
    • Blackbox read: "Calculated on a two-year basis, sales in July 2017 were down -4.2 percent compared with July of 2015. Same-store traffic was -8.7 percent for that same period. These are the weakest two-year growth rates in over three years, additional evidence that the industry has not reversed the downward trend that began in early 2015."

    U.S. air fares break higher in July

    • Air fares in the U.S. increased 0.7% M/M in July to help offset two straight months of decline, according to data compiled by the Bureau of Transportation Services.
    • Fares were down 2.5% Y/Y in July on an unadjusted basis.
    • BTS data
    • Related ETF: JETS.

    Trucking stocks make gains

    • Trucking stocks move into a higher gear after Wells Fargo issues positive comments on J.B. Hunt Transport Services (JBHT +2.7%) and the sector as a whole.
    • The firm points to recent demand trends and sees improved pricing over the longer term.
    • Notable gainers include Patriot Transportation (PATI), USA Truck (USAK +2.4%), Werner Enterprises (WERN +1.3%), Knight Transportation (KNX +1.4%) and Celadon Group (CGI +3.5%).

  45. IMAX just broke below 19

  46. The fight is on to keep the markets up… seems to be a loosing battle.

  47. we need mr stick

  48. PSW,

    anyone in TZA, VXX , SVXY …on a short term? Markets may go up if the N. Korea fear subsides I guess

    thanks and regards

  49. Not sure what I accomplished today… and not sure what next week looks like.  Don't think I want to be short

  50. oh and try and have a good weekend!

  51. Scott, Sorry to come back to your question that late, have taken the day off and just returned. But nice to see my ports have gone up by 0.5%!

    TEVA Sometimes you have a gut feeling not to enter a trade. But I do not like the management as well,

    So I stayed away form it. Possible the will surf in the end, but there are many fishes in the pond.

    All have a nice week end.

  52. Let's just hope Mr "locked and loaded" doesn't push any buttons. We don't need any more shock and awe… let little Kim talk all he wants, I just don't want to see us in another war unless we are attacked. I get the sickening feeling the chances are 50/50 at best. Trump is dying to have something else for the MSM to focus on.

  53. Yodi – thanks..! Another that is sooo tempting here. And IMAX.. And AAXN..  and M..  and FTR..  (but not LB).   Good grief.   

    Need to start looking at MU again…and TMUS..

  54. Scott, 

    IMAX the entertainment world, lots of competition, even DIS cannot hold its footing, worse than the Pharm industry, with their pipelines,

    AAXN possible good to defend one selves in this uncertain future, possible that stock has bottomed out,

    M and LB in the rag trade, fashion changes like the weather, Phil and I had some different opinions on M the other day, real estate on M may be OK but does not help to sell anything.

    FTR used to be a winner of mine, turning in to a big loser. Again the communication world's completion is very fierce, and I think the company tries to do to many things in all different directions, to stay above water. If the last split will stabilize their down slide only God knows. At this stage I still hold it in my portfolio as a very very sick puppy.

    MU in the semiconductor field, in a very competitive world as well, seems to have bottomed out somewhat, but does not pay a div. so at this time still, as we dancing on top of a bubble, I would not look for much capital gain on this one.

    TMUS in mobile communication, again no div. tons of competition, it would look better at 55$. I fined here in Europe there is a ton of mobile operators, offering cheaper and cheaper rates as well as traps, to get customers. I dismounted my sat disk from my car and entered in to a 2 year contract with O2, a large provider here in Germany. Now I have a small little mobile WFI hanging in my RV, the size of a cigarette box, in exchange of an elephant on top of my car, which should provide me with good connection all over Europe, paying 30€ per month for 15 G, where as I paid for the sat connection 100 € / month for 10G where I could only use 8 Gs before getting slowed down, after which the reception becomes useless. Each additional G I paid 15€ and still could use only 700 Mb. I Tested the O2 in Germany and Holland, where it works fine, next week will be Belgium, and I hope the sucker will be working in Spain and I do not have to look out for Trees anymore, as the Sat disk always does require a free look to the south. Now try this at a RV Park, and still find some shade to park your rig under. I hope this will give you an idea on my thoughts, which should as well be taken with a pinch of salt, and here I share Phil's comment "Keep a good deal of cash on the fence!"

    Long out tree planting option plays are still part of my ports, obviously with some losers as well, but I am holding a good deal of div. paying stocks in concept with my armchair trades, where as in case of a dip, yes the stock will dip as well, but you are not forced to sell the stock, so if you can take the heat, still receiving your div., taking the profit on the than worthless call options and hoping the short put options will not burn you too much, sit back in your armchair and watch the daises grow.

    Remembering that, in case of assignment of put options, you wanted the div. paying stock in the first place, which you already did buy for a higher price to start off with, and now which you hopefully could get assigned for a 20% discount.

    Don't take my word for it, as they are just my way of thinking!!!!!!!

  55. Yodi – thanks for your comments. Good considerations.

  56. TZA/Pat – That's one of our main hedges in the STP and OOP, VXX I got sick of but we do have an SVXY Sept put spread in the OOP.

    Accomplishments/Latch – Treading water in this kind of market is an accomplishment. 

    • Stocks eked out small gains to cap an otherwise dreary week which saw alarm over the heated rhetoric between the U.S. and North Korea pressure the S&P and Dow indexes to their worst weekly declines since March.
    • For the week, the Dow fell 1.1%, the S&P slipped 1.4% and the Nasdaq tumbled 1.5%.
    • Today's action was helped by more tepid inflationary data, with the July Consumer Price Index and core CPI both rising by a less than expected 0.1% in July.
    • "With weak inflation, if not turning down, it will make it even more difficult for the Fed to do anything, between today's CPI and yesterday's PPI," said Baird chief investment strategist Bruce Bittles. "Are you going to raise rates in this environment?"
    • Among stock sectors, the S&P 500's most influential groups – techs (+0.8%) and financials (-0.5%) – battled each other from opposite ends of the leaderboard.
    • Treasury prices moved higher across the curve but buying was heaviest at the front end, as the two-year yield slipped 4 bps to 1.29% while the 10-year yield shed 2 bps to 2.19%.
    • U.S. crude oil futures rose 0.5% to $48.81/bbl but posted a second straight weekly decline.
    • Tesla (NASDAQ:TSLA) says it raised $1.8B, $300M more than expected, at a 5.3% yield in its first traditional bond offering, marking a vote of confidence in the company and another sign of investors’ appetite for corporate debt at a time when government bonds provide meager returns.
    • TSLA is "at the right place at the right time with the right product," says CreditSights analyst Hitin Anand.
    • Goldman Sachs was the lead underwriter of the eight-year bonds, which were rated B- by S&P and B3 by Moody's.
    • Efraim Levy of CFRA says the bond investors are expecting profitability from TSLA's more affordable Model 3, but "by 2025 there's no more room for excuses."
    • The deal "speaks to the sheer insanity found in the high-yield market to have a deal like this upsized with terms so unappealing to investors," says Larry McDonald of The Bear Traps Report. "Congrats to Elon Musk."
    • Gold closed at a two-month high today, settling just $6 shy of $1,300/oz., as tensions between the U.S. and North Korea sparked demand for safe-haven assets.
    • Gold recently has attracted some high profile advocates such as Ray Dalio of Bridgewater Associates, who urged investors to hedge their risks with gold amid growing global tensions.
    • Capital Economics says gold is a preferable hedge against geopolitical events that directly involve the U.S. but the metal's recent gains could quickly reverse; “If [the tension] appears to be a lot of hot air, we expect gold prices to fall back quite quickly,” says Capital chief commodities economist Caroline Bain.
    • Precious metals miners rose during the past three days as other stock sectors fell: ABX +3.2%FNV +6.8%NEM +2.2%GG +3.6%AEM +3.6%EGO +5.2%IAG +3%.
    • The board of Intuitive Surgical (NASDAQ:ISRG) has approved a 3:1 split of its common stock, subject to shareholder approval on September 22. Post-split trading will commence on Friday, October 6.
    • Petrobras (PBR -1.3%) says it made its first commercial oil discovery in the pre-salt layer of the Marlim Sul field in the Campos Basin offshore Brazil.
    • PBR says the discovery during its drilling of the Poraque Alto well "demonstrates the potential for new discoveries in mature basins, with production infrastructure already deployed."
    • Separately, PBR outlines a plan to spend $17B in investments and sell $8B worth of assets this year in a presentation explaining its Q2 results; PBR also plans to refinance as much as $13B worth of debt and generate ~$27B in cash.
    • Stifel maintains its Buy rating on Chesapeake Energy (CHK -0.4%) but with a $6 price target, cut from $10, as the firm says it expected CHK's announced rig count reduction and thus views Q2 results as incrementally positive from a operations standpoint.
    • CHK announced plans to move to a 14-rig program by year-end from 18 rigs currently, as well as removing 20 gross wells from the completion calendar, a reflection of the need for cash flow in a challenged oil and natural gas liquids price environment.
    • But Stifel notes CHK reiterated its full-year guidance, including continued positive developments from the company's gas assets and on-track oil target of 100K bbl/day at year-end; however, reduced activity in 2018 and lower commodity environments reduce 2019 growth to flat Y/Y before returning to 4% in 2020.
    • Source:

  57. Phil hope you had a nice cruise with the family. A couple of questions that came to mind as I was looking at the news feed today. First, how can Twitter not be finding a way to monetize when they are mentioned constantly as Trump uses this platform for every thought and other world leaders respond on it as well. Reading about his threat of military intervention in Venezuela via a tweet and Venezuela's leaders response using Twitter, I couldn't help but wonder about this. Next question is about the effect of this Trump tweet on oil price. I had read that if Trump decided to impose sanctions on Venezuela it could spike oil and I was wondering if this tweet could have any effect when they start trading Sunday? I know that Trump's threats generally seem to be hollow and imposing sanctions would have a real impact as opposed to his threats, so i am curious if you think traders are likely to react negatively like they did briefly over his NoKo rhetoric? 

  58. Globally, People Point to ISIS and Climate Change as Leading Security Threats

  59. Bitcoin just passed $4,000

  60. Don’t listen to rich people — inequality is bad for everyone

  61. Yodi

      Would you please post a few of your armchair trades?


  62. .


    Armchair trades.

    Only during the last 14 days I have mention quite a few of these trades. In my portfolios I do have at least 125 of these trades. I have published a write up on armchair trades in Members corner.

    However regret to say, I find it difficult to find the article myself. Possible Irene, the gate keeper of Members corner, could assist in making it more possible to find articles.

    I have grumbled various times, that some of my trades I mentioned, are not even looked at. Only Phil, I must say reads everything!

    I am not a wisest like Phil as well not a genius as some members on this board, so you must understand I am very happy to answer and help any member asking questions, but repeat and repeat the same, because people do not read the things when published, can get a bit heavy. I do keep myself busy with my 3 portfolios, which possible hold sometimes up to 1000 option plays.

    I regret to say I am not such a patient teacher as Phil, even my wife grumbles about this.

    But here again the basic thoughts on armchair trades.

    To show you some of my trades, which are already 3 and four month old, does not help you. A trade must be done when it is hot, not when the horses are already out of the stable.

    So let’s pick on GE. Possible many others could do, but you look for a stock which is good but undervalued. GE was mostly in the 30 range but now it is trading at 25 with a div. of 3.81% per year and having a quarter payout at present of .24 cents.

    I could as well pick PM, but I hold this stock at 87$ and 93$ so it would not be good at present market conditions, to buy the stock at 114$. At this point I could give you a bunch of good looking stocks but they are no good at the present price, however I can continue to play these, as I bought them at a much lower price. With other words, if you wish to become an armchair trader you need to build up an arsenal of good stocks. Only last week various stock were mentioned. CHL , CIM etc. CHL already from 52 to 56.!

    Before we carry on with GE here the basic thought of armchair trading Buy the stock and sell a further out say now Jan18, Mar 18 or even as far as Jan 19 close at the money a strangle or even a straddle. In case of the strangle, the put just slightly under the stock price and the Call at or just above the stock price.

    The stock you will be looking at should pay a minimum div. of over 3% plus. Buy receiving a fat premium you should be able, when and if assigned you get the stock for an at least 20% discount. This is not too bad as you now already buying the stock for the present price, so you need to feel comfortable with the stock when you at a dip, receive the stock 20% lower.

    I mentioned PM above, which if my option play expires shortly, I possible would only sell a caller but not a put, as on a put sale I might get burned under present “TRUMP market” conditions with many and this type of stock. But I do not mind if the caller gets called at this high price as I bought it for 87.5$!

    Back to GE

    Buy the stock @ 25.20 and sell the Jan18 26/25 call/put strangle for 2.02. Calculating the combined monthly return from div. and option sale, you receive .46 per month over the next 5.3 month. Giving you a monthly return of 1.82%. Obviously the 2.02 you already do have in your pocket, which is part of the .46 cents per month. During the time you just have to watch that you do not get an early assignment, at which time you will have to get out of your armchair and reload.

    Please copy and paste this in your note book as I do not will rewrite this again.

  63. I would have mentioned MSFT above, at 72$

    I compare MSFT and Ballmer, like Trump and the US, Look where MSFT is today, from 2012 27$ to 72$ today, do I have to say anything more?

  64. Good afternoon!

    Back in the command center and holy crap, there goes the summer already. 

    TWTR/Craigs – Well, interestingly, the free cash flow has been flying higher while the stock price is dropping:

    Performance-wise, though, they still trail far behind FB and that's the bar people set for them – though they are catching up.

    Twitter's problem is it's very small size with 140-character tweets and the overall design on mobile (where all the ad money is) doesn't give them much room for advertising.  There's also overall pressure on TAC across the board for all providers and TWTR is still in a process of experimenting to find their way to a formula that brings in more cash.  

    As to the oil thing – It's very hard to play right now with all the cross-currents.  There's a huge, fundamental glut of oil and, with OPEC holding back 1.5M or more of production, then cutting off an individual county like Venezuela can quickly be made up by more OPEC supply – so there's no actual danger of a lack of oil driving up prices.  Also, oil is fungible, as in – if we refuse to buy from Venezeula, that doesn't stop 100 other countries from buying their oil, so there's no net effect to an embargo – other than giving Trump something in the press other than the total train wreck his administration has become. 

    Image result for oil fungible

    WFC/Scott – Horrible people.

    NFLX/Pstas – That's the trouble they have, the content providers are realizing that without them, NFLX is nothing.  This is why I'm often looking to short them but, so far, they've been skating higher after each pullback.

    Electric cars/Pstas – I see no new charging stations being built in my area, nor do I hear any outcry from electric car drivers to have them built – the silence is deafening for now.   

    Armchair trades/Yodi – I see this one from March, is that the latest?  I like the new ideas.

    This will be our chaos for the next week: Trump plans China trade crackdown

    • President Trump will call for his chief trade adviser on Monday to investigate China's intellectual property practices and forced technology transfers, according to Politico.
    • He had been expected to order a probe earlier this month, but the action had been postponed as the White House pressed for Chinese cooperation in reining in North Korea's nuclear program.


    • China's President Xi moved to calm growing tensions about Pyongyang over the weekend, telling President Trump in a phone call that all sides should maintain restraint and avoid inflammatory comments.
    • The conversation came shortly after Trump added to his recent tweets by saying that U.S. military options were "now fully in place, locked and loaded, should North Korea act unwisely."
    • Saudi Arabia's state budget deficit shrank by a fifth from a year earlier in Q2 as revenues rose moderately and spending fell marginally.
    • The Kingdom is reporting quarterly budget figures for the first time this year in an effort to increase government transparency.
    • It's part of Crown Prince Mohammed bin Salman's "Vision 2030" plan for life after oil, which will overhaul the Saudi economy.
    • Britain is ready to move to the next phase of Brexit talks and set out details of the future relationship it wants with the EU.
    • It's preparing to publish several papers, including plans for a new customs arrangement and a proposal on how to resolve the difficulties of a land border in Ireland.
    • "These papers show we are ready to broaden out the negotiations," a source told CNBC.
    • Permian Basin shale production should rise by as much as 300K bbl/day by year-end, according to the Wood Mackenzie consultancy, with oil production from the largest U.S. oil field next year approaching or surpassing the 2.7M bbl/day mark.
    • The strong outlook comes as investors sold off shares in a range of Permian producers after Pioneer Natural Resources (NYSE:PXDearlier this month reported a surprise increase in gas production at its Permian wells, even as its oil output remains on the track with the expectations of its engineers; Parsley Energy (NYSE:PE) also reported additional gas output alongside oil volumes it said were in-line with forecasts.
    • Noting that wells tend to produce more natural gas as they age, Morgan Stanley analysts say the phenomenon has been hard to see in the Permian as companies have been growing at a breakneck pace, drilling new wells that are flush with oil.
    • “We think it's execution risk that's the culprit” behind investor concerns, says RBC analyst Scott Hanold. “The Permian is going to have some growing pains.”

    Stocks to watch next week

    • Key events are scheduled for the companies listed below next week.
    • Notable earnings reports: Retailers dominate the list this week, led by Target (NYSE:TGT) on August 16 and Wal-Mart (NYSE:WMT) on August 17. Also reporting are Coach (NYSE:COH), Dick's Sporting Goods (NYSE:DKS) on August 14; Urban Outfitters (NASDAQ:URBN), Home Depot (NYSE:HD) on August 15; Cisco (NASDAQ:CSCO), L Brands (NYSE:LB) on August 16; Alibaba (NYSE:BABA), Gap (NYSE:GPS) on August 17; Foot Locker (NYSE:FL), Deere (NYSE:DE) on August 18.
    • Expected IPO filings: Capitol Investment Corp. (Pending:CIC.U).
    • Go-shop expiration: Rocket Fuel (NASDAQ:FUEL) for the Vector deal.
    • IPO quiet period expirations: Calyxt (Pending:CLXT) on August 14, Kala Pharmaceuticals (Pending:KALA) on August 14; PetIQ (Pending:PETQ) on August 15.
    • Secondary offering lockup expirations: Bluebird Bio (NASDAQ:BLUE), Carrizo Oil & Gas (NASDAQ:CRZO), Ziopharm Oncology (NASDAQ:ZIOP), Loco Oncology (NASDAQ:LOXO) on August 14; Five Oaks Investment (NYSE:OAKS), Alcentra Capital (NASDAQ:ABDC) on August 15; Advance Disposal Services (NYSE:ADSW) on August 16; Halozyme Therapeutics (NASDAQ:HALO), Indentiv (NASDAQ:INVE), Harte Hanks (NYSE:HHS) on August 17.
    • Notable annual meeting: Pangaea Logistics (NASDAQ:PANL) on August 14, Canadian Goose (NYSE:GOOS) on August 15, J.M. Smucker (NYSE:SJM) on August 16.
    • Special shareholder meetings: Care Capital Properties (NYSE:CCP), FelCor Lodging (NYSE:FCH), RLJ Lodging (NYSE:RLJ) on August 15; Rent-A-Center (NASDAQ:RCII) on August 17, Albany Molecular Research (NASDAQ:AMRI) on August 18.
    • Sales and revenue update: Charles Schwab (NYSE:SCHW) on August 14.
    • Credit card charge-off reports: American Express (NYSE:AXP), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Capital One (NYSE:CO), Discover Financial (NYSE:DFS), JPMorgan (NYSE:JPM) and Synchrony Financial (NYSE:SYF).
    • Analyst/Investor day: Humana (NYSE:HUM) on August 14; Equifax (NYSE:EFX) on August 15; Progressive (NYSEARCA:PGF), Unisys (NYSE:UIS), IDEXX (NASDAQ:IDXX) on August 16; Rogers Corporation on August 17.
    • Media watch: A week after the Disney (NYSE:DIS)-Netflix bombshell, media heavyweights gather on August 15 at the Nomura Instinet Media & Telecom conference in NYC. Presenters include Akamai (NASDAQ:AKAM), AMC Networks (NASDAQ:AMCX), AT&T (NYSE:T), CBS (NYSE:CBS), Juniper Networks (NYSE:JNPR), Lions Gate (LGF.ALGF.B), Sprint (NYSE:S), Twenty-First Century Fox (NASDAQ:FOXA) and Verizon (NYSE:VZ). Also of interest is a talk by NBA execs with sports a large streaming wildcard.
    • FDA watch: Seattle Genetics (NASDAQ:SGEN) is expected to find out by August 20 if Adcetis has been accepted for review.
    • Hedge fund watch: Pershing Square will hold a webcast with investors on August 17. Expect ADP (NASDAQ:ADP) to be knocked around.
    • Barron's mentions: The cover story warns on a 50% drop for Netflix (NASDAQ:NFLX), while 50% upside is seen for Volkswagen (OTCPK:VLKAY) with breakup opportunities in the air. Microsoft (NASDAQ:MSFT) and General Dynamics (NYSE:GD) land very favorable write-ups. On the flip side, the huge drops from IPO duds Snap (NYSE:SNAP) and Blue Apron (NYSE:APRN) catch some attention.
    • Sources: EDGAR, Bloomberg,

  65. Yodi

    Thank you for taking the time to explain

    I did cut and paste for reference

  66. Phil, Thanks for pointing out the date when publishing the original Armchair trader. It is interesting to see the results 5 month later. All doing relative well. Only F has lost some feathers, but there I am not too worried about. Some plays I have killed the puts and even rolled others or set up new plays.

    April 1st, 2017 at 10:40 am | Permalink | Tweet thisIgnore this user

    Sorry I did not see your question. Yes I do have an excel file programmed for these plays but this works combined with the TOS platform. The excel file, with the programmed formulas, helps always to analyze partly, if it is worth using a particular stock for this type of trade. Obviously you do need to do additional research before entering any trade

    Hi Yodi,  I do appreciate this work and hope to start this 'one day' when my gold miners recover.  To track these trades do you use an excel file? Or can you manage well enough in the trading platform you use?


  67. Good morning!

    It's Monday so the Futures must be getting jacked up – 100 points on the Dow.

    Europe is up 1% as well, though, so we have to consider this a real move up but it all came on a jacked-up open.

    Of course we're bouncing off this support – the question is – will it stick or are we just getting another shorting opportunity?  I'm not a TA guy but it does look like indicators are rolling over.  

    Oil isn't up, it's down to $48.50 again.  /RB slipped back below $1.60 so all that BS washed out over the weekend.  Honey badger still don't care and /NG up over $3:

    Gold and silver calming down a bit:

    • Japan's economy expanded by a much higher-than-expected 4% in Q2, extending the longest streak of uninterrupted expansion (six quarters) in 11 years.
    • Growth was driven by robust domestic demand, as consumer spending and capital expenditure both rose at their fastest rates since 2014.
    • With a rising yen, the benchmark Nikkei fell 1% following the news, as markets reopened after a public holiday last week.

    • A "peaceful solution" to the political unrest in Venezuela is possible, VP Mike Pence said during a trip to Latin America, announcing that the U.S. was "looking at a full range of additional economic sanctions."
    • Different intervention? President Trump warned of a "military option" before the weekend, telling reported at his Bedminster, N.J., golf resort that it was "certainly something we could pursue."
    • Market watchers are keeping their eyes on the health of the the world's second-largest economy, as lending costs rise and the property market cools.
    • Official gauges of retail sales, industrial production and fixed asset investment in China started Q3 on a downbeat note, with all three decelerating more than expected last month after outperforming in June.

    Also Kaplan Thursday at 1pm and Kashkari at 1:45 and then Kaplan again Friday is a strange arrangement after the minutes.  Kaplan has been very dovish so I imagine he's there to allay any fears the minutes might give people that the Fed will hike at ther next meeting:

    Fed to soon shed bonds, should hold off rate hikes: Kaplan

    Lots of retail towards the end of the week:

    This fell fast.

  68. Phil/KC- Good Morning Phil! Do you like coffee here?