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Wonderful Wednesday – Dow 23,000 or Bust!

a chart of corporate guidance announcements over the past yearDoes anything matter?  

On the right is the Daily Guidance Oscillator, which shows how forward guidance is fading fast, unraveling the enthusiasm of August with only 28% of companies reporting issuing positive guidance and a whopping 39.4% going negative and the chart you see is the net trend difference between postive and negative guidance

The trend was this bad in July and the markets took a very small dip (2.5%) and in March it was worse and we dipped about 5% but we're up 10% from the March lows now and up 15% for the year so we'll stay on our toes and keep an eye on this indicator as more earnings reports come in.  80 of the S&P 500 report next week and another 240 next week so it's definitely crunch time.  

Another indicator we're watching closely is the Advance/Decline lines as we're seeing the game we discussed yesterday playing out where major index weights, like Apple (AAPL) are being used to prop up the indexes while the Fund Managers and Banksters sell off the bulk of their holdings.  The reason they do this is because holding up the index keeps the ETF money flowing in (from 401Ks, IRAs, etc.), which creates plenty of buyers for their small positions while they spend their money accumulating stocks they don't mind holding through a correction – like AAPL.

Notice that the number of stocks that were being sold and the volume of selling far outweighed the buying yesterday and also notice the most of our market gains come in the early morning Futures – where trading is very thin.  That's another Fund Manager trick – jack up the futures and the retail suckers rush in to chase the move while you sell off your holdings into higher volume.  

Jim Cramer had a nice video explaining how fund managers manipulate the market, noting it doesn't take much money to manipulate the markets using the Futures noting "It's a fun game, and it's a lucrative game" and "I would encourage anyone who is in the hedge fund game to do it because it's legal and a quick way to make money – and very satisfying." 

It is very satisfying to sucker in what Jim Cramer calls "the moron longs" and then pull the rug out from under them.  Try not to be one of those morons and make sure you do have hedges – just in case the funds decide it's time to pull that rug out.  Note how Cramer talks about how to spread rumors to knock down Apple ahead of earnings – that goes on all the time with many stocks this time of year – which is what makes it such fun for us!  

For example, yesterday, in our Live Member Chat Room, we called for a newm aggressuve play on IBM ahead of last night's earnings:  

I like IBM into earnings, by the way, you can sell the 2020 $130 puts for $12 to net in for $118 and leave it at that or you can add the 2020 $130 ($22)/$160 ($9.25) bull call spread at $12.75 to net 0.75 on the $30 spread with $29.25 (3,900%) upside potential if IBM gains 10% in two years and your worst case is owning IBM at net $130.75.

IBM did indeed do well last night and is already testing the $155 line pre-market so we're well on our way to our $160 goal and 3,900% returns on our $75/contract cash investments, which will turn into $3,000/contract if IBM can hold $160 into Jan, 2020.  It's possible, if you get in early this morning, that you can still catch a nice portion of the trade our Members got yesterday – even if the returns are "only" 1,500% going forward – that's still pretty good, right?  

Image result for peter pan clap hands animated gifWe also sent out a Top Trade Alert for IBM and another stock I can't tell you about because it didn't play yet as well as our 6 favorite mining plays.  As I noted last week, now that we have our hedges in place we are very happy to BUYBUYBUY as bargains present themselves during earnings season.  We may not believe in the rally but, as long as the children keep on clapping – we're happy to make money betting things can fly.  

You are welcome, by the way, cheapskate readers for our Russell Futures Shorts (/TF), which fell below 1,500 yesterday (back to 1,506 now) for a $750/per contract gain from our 1,515 short and also for those Oil (/CL) shorts, which gave us $500 per contract at $51.50 before jumping back to $52 overnight and we'll be looking to short them again if the cross below our line (or test $52.50 on an inventory spike).  Last night's API Report showed a huge 7.13M draw in Oil but a 1.94Mb build in Gasoline (/RB) and a 1.64Mb build in Distillates.  If all that only got them to peak at $52.10 – imagine what will happen if the EIA report at 10:30 is a disappointment (and now expectations are high).  

Over at the NYMEX, there are still 120,000 open November contracts, which settle on Friday at 2:35pm so there's bound to be some selling pressure at some point as they have to roll 110Mb worth of oil (110,000 contracts) to longer months, which is how they maintain the illusion of a draw in Cushing (by simply not actually ordering any oil for delivery to the one place we measure it).  That scam is even more fun that the Hedge Fund scam to play!  

Speaking of scams:  President Trump, last night, went through the charade of pitching his tax proposal to the Heritage Foundation, the people who wrote Trump's tax proposal!  He asked for the group's help in getting the legislation passed before the end of the year (and before he has to pay taxes).  "Let’s give our country the best Christmas present of all — massive tax relief,” Trump said.  The left-leaning Center for American Progress announced plans for a news conference on how the plan “would give Trump’s cabinet a $3.5 billion tax cut” simply by repealing the estate tax.  The tax applies a 40% rate to estates worth more than $5.49M for individuals or $10.98M for couples.

Image result for trump tax plan cartoon

Critics of the president’s proposal have dismissed the White House’s claim of a $4,000 benefit for average households from the corporate tax cut as overly optimistic and based on incomplete information. In a blog post on Tuesday, economist Lawrence Summers of Harvard University wrote that “the claim is absurd on its face.”  He also said that tax cuts would “put upward pressure on interest rates” and that ending the global approach to taxing multinational corporations — as Trump and congressional leaders propose to do — “will encourage outsourcing.”

Image result for trump tax plan cartoonWhat I don't understand is why no one is asking the simple question of WHY, if the economy is as great as they say, with markets at record highs, do we need to CUT taxes and INCREASE our deficit and weaken our health care and retirement systems at a time we should be paying down debt and making social programs stronger?  Even if you believe the poor can go to Hell, what about paying off our debts?  Will we pay them off when the markets crash?  We clearly didn't do that last time.  How does this stuff not matter?

Sadly, these things do matter and pretending they don't is making America a joke in the eyes of the World.  President Trump made 32 false claims last week, which was an improvement from 40 the week before – he lied 15 times in one interview with Sean Hannity on Fox yet we are supposed to believe his Tax Plan is going to benefit the little guy – despite overwhelming evidence to the contrary from pretty much every reputable anayst who doesn't work for the Heritage Foundation.  

While Trump defunds and dismantles the EPA, 15M of his core constituents in farm country are now drinking nitrate-contaminated water – the kind they made a movie (Erin Brokovich) about 30 years ago.  You can shut down the EPA but the National Cancer Institute is private and it found that more than 1,600 systems serving small towns had levels above 5 ppm, which studies have found to increase the risk of colon, kidney, ovarian and bladder cancers

If you are an American, I suppose I will have to connect the dots for you (because clearly we don't get connections).  No EPA oversight puts contaminants in the water which lead to a sharp increase in cancer cases in a defunded health care system – that is a complete and total disaster in progress folks – and we're letting it happen!   

You WILL end up paying for this because those same farmers have no health insurance but, for the moment, they get to not have mandatory health care which would pay for them to be screened and catch the cancer the EPA is shoving down their throats (via big farm donors) before it becomes critical or, even worse, a pre-existing condition which will no longer be covered anyway.  It's not a now problem, it's a 20-year problem so we can ignore it until we get the bill for Trillions of Dollars in health care costs we kicked down the road.

You can't run a country this way, folks – not if you want it to last!  


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  1. Good morning, All!

    Join us for the live webinar at 1pm today!

  2. yodi
    October 18th, 2017 at 8:41 am | Permalink | Tweet thisIgnore this user

    Grass XRX Well printers are still been used at most places. Even that the div only shows .25 per quarter, but only for the last two quarters. Before .06$!!!!

    On the Apr 18 33/32 strangle you get 3.81 and my calculator says a combined monthly return of 2.15 %

    You just need to have a bit of confidence to buy the stock. For me not a stable Div.

  3. Saw Blade Runner 2049 yesterday and liked it. Not as good as the original honestly but the acting was good and they did manage to tie it in nicely with the first one. Does leave some questions open at the end though. Was a bit too long IMO. And the original Vangelis musical score still better than the new one.

  4. Now Trump taking all the credits for defeating ISIS:

    Not even a mention of the military! We are already running out of outrage I guess…  

    And speaking of the military – what kind of a call is that to the widow of the dead Green Beret:

    U.S. President Donald Trump told U.S. Army Sgt. La David Johnson’s widow Tuesday that “he knew what he signed up for …but when it happens it hurts anyway,”

    But hey, the Dow made it to 23,000! Total sociopath…

  5. No job is safe from the robots:

    It's no wonder most of the jobs Goldman Sachs Group Inc.'s securities business posted online in recent months were for tech talent. Billionaire trader Steven Cohen is experimenting with automating his top money managers. Venture capitalist Marc Andreessen has said 100,000 financial workers aren’t needed to keep money flowing.

  6. So much for predictions!

    Maybe helped by a more environment conscious administration for 8 years.

  7. Good Morning.

  8. If I puke my morning coffee will it help with demand?

  9. Nat Nay,

    If I could put my minors to work as miners I would.

  10. Phil,  thanks for your offer to help with the butterflys.  I'll take you up on that as we get earnings.  Nice call on IBM; everyone else was kind of negative.

  11. Good morning!  

    ROFL – Nas turned red already!   IBM keeping the Dow up with  an $11 gain is about 95 points by itself.  

    Big Chart – Ridiculous.

    Image result for alice looking glass

    XRX/Yodi – Not too many printers now, mostly services like IBM. 

    Blade Runner/StJ – I'd better go before it's out of theaters.  Clean energy news is good – while it lasts. 

    Coffee/Baron – There's only so much money to go around.  At the moment, it's going into IBM, not /KC.

    Minors/Baron – Don't worry, the way Trump is rolling back worker's protection, you'll be able to send those kids off to the mines in no time!  

    Related image

    Ah, the good old days!  Let's make America Great Again!  

    Image result for kids coal mines

    Damn,. my kids are almost too old for this stuff!  

  12. Phil, Your advice please.  I have KR 2019 $25 puts I sold for $2.00.    The 2020's are out so maybe time to roll?  I would consider selling a way out of the money call against it too, but maybe the buy-out potential makes that unnecessarily risky.

  13. All,

    you would think with housing starts down WSM would not be doing this well.  RH doing well too. What am I missing?

  14. Phil/IBM

    Good morning!

    Congratulations on a Very timely call yesterday! (I did not get in as it's not my kind of stock)

  15. SVU doing well after earnings, FU indeed!  

    KR/Baron – I think the target is fine.  Like SVU, they are over-panicked.    The 2019 $25 puts are now $5.90 with the stock at $20.70 so YOU would be paying $1.60 in premium to buy them back – are you really that certain they'll be lower than $23 (break-even) in 16 months?  The 2020 $18 puts are $2.80 so that's your 2x roll to keep an eye on.  I wouldn't panic as long as the ratio remains about the same.

    WSM/Baron – Like RH, they cater to the Top 10%, who are doing fantastically.  There's not a lot of RH and WSM stuff in poor people's houses.  Also, WSM does cover the poor with Pottery Barn and they actually do pretty good when things are tight as they are kind of on the low end so, very possibly, WSM played the rising wealth gap perfectly!  

    Image result for wealth gap us top 10%

    Image result for wealth gap us top 10%

    Image result for wealth gap us top 10%

    Related image

    IBM/Maya – Was our runner up for Stock of the Year!  

  16. Phil/aapl earnings

    Between now and Nov 2, I want to purchase puts against my stock that I own.

    Any great ideas on how to finance that put purchase? I just need short term protection as I am well hedged long term.

    I was thinking of selling the Oct 27 or Nov 3 (which date is better?) $152.50 puts, wait till just before earnings to buy the weekly puts.

  17. It would be easier if I knew the whole position as you're asking for a complicated hedge.

  18. Oil down just a bit (back to $52) on smaller builds in Gasoline and Distillates but smaller draw in Oil too:

    • EIA Petroleum Inventories: Crude -5.7M barrels vs. -4.2M consensus, -2.8M last week.
    • Gasoline +0.9M barrels vs. +0.3M consensus, +2.5M last week.
    • Distillates +0.5M barrels vs. -1.5M consensus, -1.5M last week.
    • Futures +0.69% to $52.24.

  19. Maya they call those type of puts CASH SECURED PUTS!

  20. Phil,

    Thanks for advice with KR; I'll leave it alone for now.

    With ABX,  I have the 2019 OOP position 1/2 size and was thinking about just repeating it with the 2020's ($15 puts and 13/20 BCS).  Anything  better?

  21. Phil, WBA?

  22. FU TEVA FTR IMAX GE !!!!!!!!!!!!1

  23. Phil are you liking nat gas futures down at $2.86-7 ish for a buy? Weather looks like it is going to be cooler in Nov and Dec but not too cold with some warm days here and there. 

  24. Jabo Your FU nothing to get excited about we discussed them the other day. The only one still standing up would be GE for my two cents

  25. What just happened to svu?

  26. SVU.  Looks more like on closer inspection that the question should be why was it up in the first place.

  27. StJ – installed solar +4800% – wow, hyper growth.

  28. Phil – "Damn,. my kids are almost too old for this stuff!"

    Baron – "If I could put my minors to work as miners I would."

    Once upon a time, you could have started a server farm and made them BTC miners. Not so much  anymore as you would be competing with the Chinese (subsidized electricity) and multinational corporations, so that ship has sailed. 

    With shrinking block reward, increasing hash rate requirements and difficulty, perhaps you could make them ETH or Alt-Coin miners? Or just forgo the hosting hassle, put the money into a cloud based pool, or flat out invest in those crypto currencies.  

    I am sure BDC has already discussed this and more, and knows way more than I ever will about ASIC based Antminer S9's (for BTC), Radeon R9 295X2 GPU's (for ETH), mining software, pools, wallets and this fascinating subject.   

    So much for making miners of those minors.  Perhaps buying a metal detector and sending them to the local landfill or beach, might be more palatable and profitable? I am reminded of this and Out.

  29. Solar / BDC – Even wind and solar at close to 400% is insane! Eating coal's lunch!

    On a crypto note, what's your take on Monero?

  30. Phil – On Buybacks, Suckers and Mickey D's – Since 2012, MCD’s revenue -12% while EPS +17%. More efficiency, great management? NOPE. Similar to revenue, GAAP net income -8% over the same period. 

    MCD has about 20% fewer shares outstanding than they did five years ago. The reduction in shares accounts for the warped EPS. When adjusted for the decline in shares, EPS did not increase by 17%, it actually declined 7%. Using adjusted EPS instead of stated EPS, the P/E rises from 25 to 30. 

    Meanwhile, shareholder equity, the difference between assets and liabilities, went from +$15.2 B to negative $2 B. Ronald McDonald spent an estimated $23 B on share buybacks and debt increased +$16 B or 112% to accomplish this financial wizardry.

    Mickey D's could have used debt and cash flow to expand into new markets, increase productivity and efficiency of its restaurants or purchase higher growth competitors. Instead MCD executives manipulated EPS and the stock price, while collecting some hefty bonuses for "improved" performance. 

    Despite all these shenanigan's the stock is up 65% in the last two years. To their good fortune (quite literally), the Board of Directors and shareholders appear well deceived by the costume of a healthy and profitable company.  – Something Wicked This Way Comes

  31. BDC, what do you know about Tezos? The Singularity people seem to think it is the next big thing.

  32. Nat Nay,

    Re MCD.  And as you can see, it looks like the shorts have given up.  Huh.

  33. MCD   for what its worth dept: owning a McDonald's franchise is not nearly as profitable as it used to be

  34. jel/tezos – 10B total coins * 2.36 = $23.6B market cap so they better have something figured out for that! If they go 100B you still only get 4X. That's one thing I don;t like about ICO coins versus freely-run organic growth coins (like bitcoin) that have no pre-sale: the latter usually limp out quietly with no fanfare (therefore, inexpensive) and the former are like stock IPO's where you may have paid for a bunch of hype. And cryptos definitely seem to be in an overly-hyped stage to me, at this time.

    Their shtick is the blockchain can evolve by 51%-approved voting. I'm not convinced this is necessary since current chains (laboriously so) mutate via forks, which can be jerky and contentious, so I don't discount something making this more seamless could be useful, but they would have to prove it out. It may introduce new risks like bad actors attempting to change the chain via the voting mechanism. I mean really, who knows.

    They also get into some economic theory. In their position paper they claim that "Cheerleaders for this Hayekian growth, however, miss a fundamental point: for a cryptocurrency to be an effective form of money, it needs to be a stable store of value" though I disagree with this premise almost entirely. For example, the stability of 1 bitcoin is that it's 1 bitcoin. Even though that seems obvious it cannot be understated. Before bitcoin came along there was no peer-to-peer (3rd party free) way to transact digital information intact and proven to duplication-free. What they, and other people mean by a "Stable store of value," is the conversion of one asset to another, say bitcoin for USD, but who can control the relative prices of two finite resources? Bitcoin economics can be constructed and utilized so risk-takers incur capital appreciation/loss and users are agnostic to price conversion – it is afterall, only a software protocol and nothing more. With bitcoin, or tezos, or anything else, the value for the early users holding it are the project gets larger. More People * Finite Resource = Higher Market Capitalization (i.e., price per coin). The irony here is the very "Hayekian Growth" the authors reference is the very same incentive they have for executing the project in the first place (well, maybe in their case pre-selling coins at a $24B market cap has its own rewards).

    With any high-value ICO my MO is to Stay Away. You'll always have a chance to buy on the open market post-ICO at any time, and you get a free-look this way: what happens once the coin is out and live in the wild.

  35. ABX/Baron – I do like it with the 2020s, target is good.  

    WBA/Pstas – I do like them down here.  Making at least $4 per share, maybe $5 and still having growing pains.  You can sell the WBA 2020 $55 puts for $4.50 and that's a good cushion so let's do 10 of those in the LTP to raise $4,500.  If you want to be more aggressive, you can add the $65 ($10.40)/$80 ($4.75) bull call spread at $5.65 and net in for $1.15 on the $15/spread and then you can do some 1/2 call sales along the way (the Jan $72.50 calls can be sold for $1.45) to pay yourself a dividend.  

    /NG/Craigs – I like /NGH8, now $3.175 – that's my favorite.  It's still about the exports more than the weather.  

    SVU/Baron – Wow, big negative turnaround.  Someone must have downgraded them or put out a bad note.  

    • It's a super rally for Supervalu (SVU +9.3%) after the company tops Q2 estimates and makes a strategic investment.
    • The sizable profit beat turned in by Supervalu has helped sentiment across the jittery grocery store sector. In early trading, Natural Grocers by Vitamin Cottage (NGVC +5.5%), Smart & Final Stores (SFS +3.7%) and Ingles Markets (IMKTA +3.5%) are making notable gains. Kroger (KR+0.8%) is also in positive territory.
    • Previously: Supervalu acquires Associated Grocers of Florida (Oct. 18)
    • Previously: More on Supervalu's Q2 results (Oct. 18)

    MCD/Naybob – Good example of the excesses of this market.  Next time we have a downturn, they will have exhausted their bag of tricks (and rising rates won't help either).  

    MCD/Stock – Do you own one?  

    I can't believe this isn't spooking the markets:

    Oddly, in a Politico interview published this morning, Mnuchin – already a master of mixed messaging – warned that passing tax reform by year end is “essential” and that, if it doesn’t happen, markets could tank.



    “There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,” Mnuchin said in the interview. “To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains.”

    Mnuchin had promised earlier this year that tax reform would be done by August. Then it was year-end. Now, it appears the only concrete “deadline” for reform is some time just before the 2018 mid-term election. And once again, market implied odds have proven correct, while many market strategists – like the team at Goldman with its 65% odds of a deal by Q1 – have been far too optimistic.


    My boys are scoring!  

    • Ocean Power Technologies (OPTT +41.7%) skyrockets after the company is granted a patentfor a wave energy system that harnesses free power from the ocean.
    • OPTT's "invention is directed to a novel [wave energy conversion] technology which may be referred to as pitch driven WEC technology and which, in its implementation, eliminates the need of springs to overcome gravitational forces."
    • The company has not yet issued a press release discussing the patent award.


    • Perhaps it's the hurricanes, but the Atlanta Fed tracker has been particularly volatile over the past month – starting at 3%, dipping to nearly 2%, rising back to near 3%, and now steady for the past week at 2.7%.
    • Two months ago, it was predicting 4% Q3 GDP growth.
    • The Blue Chip consensus forecast has moved up to about 2.4%.

    Transocean -4% after signing new rig contract at 75% dayrate discount

    • Transocean (RIG -3.8%) sinks despite signing a new two-year contract for the Deepwater Invictus ultra-deepwater drillship with three one-year priced options.
    • The rig’s $106M of revenue for two years of work calculates to a $145K dayrate, a 75% reduction from the current $592K – a great deal for BHP Billiton (BHP -1.4%), which secures a modern rig built in 2014 for a very cheap price – further evidence of the dismal state of the offshore drilling market.
    • Bloomberg also published a story today describing RIG's retirement of six floating rigs that will add up to a $1.4B writeoff as a signal of "just how bleak the future looks for deepwater drilling."
    • Offshore drilling rig operators junked more rigs during Q3 than have ever been trashed in a 90-day stretch, according to the report.
    • “Deepwater is going to be playing a much-reduced role on the global oil supply stage relative to what the industry expected as recently as three years ago,” says FBR analyst Thomas Curran.
    • Also: ESV -3.5%DO -0.7%RDC -0.5%SDRL -8.1%.
    • General Electric (GE +0.1%) shares should continue to drift lower but a "myriad of potential moves" from the company are forthcoming, possibly including exiting Baker Hughes (BHGE+1.2%) through a share exchange and selling the transportation unit for a combined $30B-$35B, J.P. Morgan analyst Stephen Tusa speculates.
    • Among other possible outcomes include raising $8B of debt for pension funding, undertaking a restructuring to save $2B-$3B, and/or cutting the dividend to $0.60/share from the current $0.96 which would free up $3B in additional available cash flow per year, Tusa says, adding that potential actions will begin to clarify this Friday with GE's earnings report.
    • The GE bear, who said a week ago that a dividend cut looked "extremely likely," keeps an Underweight rating on the shares with a $20 price target.
    • Hanesbrands (HBI +1.2%) announces a deal to acquire privately-held Alternative Apparel in an all-cash transaction valued at ~$60M on an enterprise basis.
    • Alternative Apparel is expected to generate sales of $70M in 2017. The retailer sells online and has stores in Venice, California; SoHo, New York; and San Francisco.
    • The post-synergy purchase price multiple on Alternative Apparel is estimated at 3.5X the projected EBITDA.
    • "This is an exciting acquisition that supports our activewear growth strategy," says CEO Gerald Evans.
    • Previously: HanesBrands announces in-line preliminary Q3 results (Oct. 18)
    • Longbow upgrades GoPro (NASDAQ:GPRO) from Neutral to Buy with a $13 price target based.
    • Analyst Joe Wittine says the company “stabilized the ship” in early 2017 and improved execution, which isn’t priced into the current valuation. 
    • Wittine also says the Google Clips-based selloff earlier this month was misguided because it’s not a competing product. 
    • The analyst moves $30M of forecasted Q4 sales to Q1 due to planned inventory reductions. FY18 sales estimate now $1.5B with Q1 loss per share forecasted at $0.14 compared to the $0.23 loss consensus.   
    • Source: Bloomberg First Word 
    • GoPro shares are up 4.23% premarket.   
    • Previously: GoPro shares down after Google launch event (Oct. 4)
    • Previously: GoPro up after JPMorgan dismisses Clips concerns (Oct. 6)

  36. isn't it a given now that TSLA goes back up to 390 before either breaking up or down?

  37. DOG – volume really up today… gambling on a retracement

  38. /NG is great, it allows me time to adjust my position.  And, it tends to ride in a range of below $3 and back above almost weekly, coupled with your premise on a spike upwards versus a downward trend.  What is there not to love about /NG

  39. Yodi/AAPL

    I guess you call them cash secured puts

    I guess what I cannot decide is whether to sell the Oct 27 or the Nov 3 puts at this time.

    Then, if the stock is up another few bucks, I can buy the $160 puts for maybe the same/similar price I sold the puts for 2-3 weeks before earnings.


    Make sense now? Sorry, I did not explain too well earlier to Phil- was rushing for my second job

  40. Phil/AAPL

    I have 2000 shares at $130 net.

    Margin is not a problem for the most part in selling puts.

    I plan to BUY puts around $160 strike, just before earnings…or higher if the stock is up significantly.

    Oh, and I have sold 20 of the the Jan $160 calls for $9

  41. XRX-Yodi/Phil,  Thank you for the feedback.  

    I have been reading your Arm Chair Trades and you mention at times you purchase the stock.  I was looking at a Buy/Write (Assume that is a Covered Call and Put Sale).  Learning here, so a small stake of 200 shares $32.99 and a Jan19 32 Call @ $1.93 and Jan19 29 Put @ .40.  If my math is correct, that is 6.56% monthly, if all goes well.  

  42. I missed the webinar, Any futures plays in general or oil gasoline specifically?

  43. Phil/Greg/webinar

    Meeting Burner, currently, has no upgrade for MAC users running IOS11.  We can not join your webinars using Meeting Burner.

  44. So which talking head will shoot off a racist statement today? 

  45. Phil,

    Why is the spread between /CLX7 and /CLZ7 staying so wide? I need to roll and looking for a narrower spread. Only o w day untl expiration

  46. Someone downgraded CMG – not too much damage but 2.5% rule hit:

    By the way, that's a great trick analysts use to look powerful.  The Stock was up 10% from $300 to $330 so due for a pullback anyway and the 5% Rules says weak pullback is 20% of the run ($6) to $324 and a strong pullback would be $318 so holding $318 is still bullish but the analyst called it this morning at $330, which was a very likely spot to force some proit-taking anyway.  

    AAPL/Maya – I simply don't understand why you want to tie up $260,000 in AAPL when they only pay a 1.6% dividend.  Now you are SPENDING MONEY to avoid possible losses?  Yuch!  Where do you think AAPL will be in 2020?  Will it be $200?  So you make $40 at most ($80,000) on $260,000 less what you feel you need to protect it with – OR you could:

    Sell the stock ($240,000) or cover the stock with short 2019 $140 calls for $30 if you don't want to sell for tax reasons.  

    • Sell 20 AAPL 2020 $140 puts for $13 ($26,000) 
    • Buy 40 AAPL 2020 $150 calls for $30 ($120,000) 
    • Sell 40 AAPL 2020 $180 calls for $17.25 ($69,000) 

    That's net $25,000 on the $120,000 spread that's $40,000 in the money to start.  You only need $180 to make $95,000 and your worst case is having 2,000 AAPL put back to you at net $152.50 (assuming you just stand there until it expires) and, meanwhile, you are left with $215,000 to invest in other things.  

    Isn't that a better use of funds?  

    Futures/Bulls – Well I like /RB short at $1.65 (not there yet) with tight stops above and I've got 3 /CL short at about $52.25  

    MeetingBurner/DC – Greg will get back to us on that.

    Spreads/Japar – People are selling the X's before expiration and a lot of them are rolling to Zs so it's just a supply/demand thing, which is why I like /CLZ7 short at $52.25.

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'17 51.94 52.33 51.69 52.02 15:01
    Oct 18

    0.16 129058 51.88 101293 Call Put
    Dec'17 52.17 52.56 51.92 52.25 15:01
    Oct 18

    0.15 513552 52.11 572028 Call Put
    Jan'18 52.37 52.72 52.11 52.44 15:01
    Oct 18

    0.17 65205 52.28 291553 Call Put
    Feb'18 52.50 52.81 52.23 52.57 15:01
    Oct 18

    0.17 29026 52.39 129490 Call Put
    Mar'18 52.61 52.86 52.30 52.67 15:01
    Oct 18

    0.18 33891 52.46 239682 Call Put
    Apr'18 52.70 52.87 52.34 52.64 15:01
    Oct 18

    0.19 16053 52.47 66589 Call Put
    May'18 52.61 52.79 52.29 52.63 15:01
    Oct 18

    0.20 8686 52.43 63793 Call Put
    Jun'18 52.41 52.76 52.21 52.55 15:01
    Oct 18

    0.21 33221 52.35 197069 Call Put

  47. DF – selling the March short 10 put, long 12 call combo for .37 credit.

  48. Nice little sell-off into the close but what a finish for the Dow. 

  49. Phil – Why RB is flying today with the build that they had in the morning?

  50. Phil//:  What is your take on SVU?  More to go down based on today's actions?  

  51. Xi Jinping’s Marathon Speech: Five Takeaways

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  54. /RB/Bulls – They often jam it higher into the weekend but $1.65 seems like a stretch to me.   

  55. Pharm I am reading up a bit about IART. Would like to hear your opinion. Presently trading at 50.59 and is tageted for 56 to 58. A 50 dollar put sale could be a start.TIA.

  56. Good morning and wheeeeee!!!!  

    Spanish Government moved to shut down Catalan independence so a sharp dive in the markets.  I just cashed out yesterday's webinar shorts as it's a move down that's not likely to last and it was a nice, quick gain ($7,000 on /TF, $1,200 on /YM, $720 on /CL) – a good way to move into the weekend!

    $51.40 bounced last time so why not just take the cash?

    /RB may still have room to fall but now we can play the $1.64 line with tight stops:

    /TF likely to bounce off 1,492 and we hopefully have learned not to press our luck on these!  

    /YM obviously is going to be bouncy back at Tuesday's close (22,900) so, again, why sit through the bounce when we can re-short later?  Watch that 2,300 line but it should be support once it's taken back, which is game off for shorts – for now.

    /NG still a good floor at $2.85 (front month) and $2.99 on /NGV8

    /KCH8 ($127.50) is our coffee long (and also U8 at $135) the front-month (/KC) is $124.50 at the moment

    We'll see how bouncy things are but a dip like this is a gift pre-market (when you are short) and we don't look gift-horses in the mouth.

  57. Phil,

    I just noticed volumes are higher on the move down this morning can this be a sign of "calm before the storm" ending and beginning of the storm ? 



  58. The budget plan that is being proposed by the republican party and is being voted on this week calls for $5 trillion in spending cuts over the decade, including cuts to Medicare, Medicaid and the Obama-era health care law, though Republicans have no plans to actually impose those cuts with follow-up legislation. This helps justify and allows for the tax cuts being proposed.

    This is just one of the accounting gimmicks and lies being used to sell the plan as a middle class tax cut. In reality it is a continuation of the wealth transfer being enjoyed by the wealthy, the corporate class and their sponsors.

    Another proposal being discussed is the elimination of tax free contributions to 401k plans. Instead, all plans going forward would be set up as Roth accounts. This would result in an immediate and  significant tax increase for many people. 

  59. Another example of the favoritism of corporations over the middle class:


    One of the main 'pay for' items included in the tax proposal is the elimination of the deduction for state and local tax payments. However it is being retained for corporations and businesses. 


    The tax proposal blueprint as written indicates that the deduction of expenses deemed an "ordinary and necessary" cost of doing business would mostly remain, and would continue to include state and local tax payments.

    The only business deduction specifically set for elimination is one that allows U.S. manufacturers to deduct costs related to production such as building plants.

    Several experts confirmed that reading of the tax framework, including Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center. Rosenthal, who previously worked as legislative counsel to Congress' Joint Committee on Taxation, said he expects lawmakers to continue to allow the business expense deduction.

    As with many aspects of the Republican tax plan, "the money basically goes to corporations and big business. It's unfair," said Rep. Bill Pascrell, D-N.J., a member of the tax-writing House Ways and Means Committee.

    To be sure, small businesses too can deduct state and local taxes as business expenses. But many more billions of dollars are at stake for large corporations, especially those with plants and operations in high-tax states.


    So Amazon gets to deduct there local state and local taxes but their workers do not. 

  60. Trump’s health subsidy shutdown could lead to free insurance

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  64. Commentary: The lying game

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  67. Volume/Pat – Well that's our theory, that any sort of volume selling will send the market sharply lower.  Hard to say what it means, we just have to wait and see what the bounces look like (weak so far).  Volume this week has been the weakest all year:

    Date Open High Low Close* Adj Close** Volume
    Oct 18, 2017 255.90 255.95 255.50 255.72 255.72 39,145,800
    Oct 17, 2017 255.23 255.52 254.98 255.47 255.47 31,561,000
    Oct 16, 2017 255.21 255.51 254.82 255.29 255.29 38,221,700
    Oct 13, 2017 255.14 255.27 254.64 254.95 254.95 54,800,400
    Oct 12, 2017 254.66 255.06 254.37 254.64 254.64 47,065,100
    Oct 11, 2017 254.51 255.02 254.32 255.02 255.02 47,674,300
    Oct 10, 2017 254.60 255.05 253.98 254.62 254.62 43,057,400
    Oct 09, 2017 254.63 254.70 253.65 253.95 253.95 35,803,100
    Oct 06, 2017 254.15 254.70 253.85 254.37 254.37 80,646,000
    Oct 05, 2017 253.54 254.68 253.20 254.66 254.66 63,522,800
    Oct 04, 2017 252.69 253.44 252.56 253.16 253.16 55,953,600
    Oct 03, 2017 252.32 252.89 252.23 252.86 252.86 66,810,200
    Oct 02, 2017 251.49 252.32 251.29 252.32 252.32 59,023,000

    As I noted yesterday in the Webinar – I cashed out both kids' college funds yesterday because I couldn't easily hedge them and, of course, our portfolios are on lock-down, with more than enough hedging to take us through a rough patch.  CASH!!! remains king.  

    Hidden/Den – These are truly evil people who are purposely defrauding the American people in order to enrich themselves yet, sadly, they enjoy a 75% approval rating among the Republican base – even the among the people whose futures they are destroying. 

  68. Thanks Phil I missed the webinar yesterday but plan to watch the replay over the weekend