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Monday Market Momentum – Our Futures Calls Makes $3,000+ Per Contract!

I love to say "I told you so" – it means I got something right.

We did the math for you last Tuesday and predicted the S&P would drop to 2,730, which was a 2.5% pullback from 2,800 and 70 points down on the S&P Futures (/ES) pays $3,500 per contract but, even if you missed that call, we gave you another chance to cover on Friday with our call that the Dow would drop 600 points (at $5 per point, per contract) to 25,400 and we pretty much hit that one on the button for the day for gains of over $3,000 per contract so you are very welcome and what a great way to end our month of free trading tips!  

So yes, we know what the market will do today only we're not going to tell you – that was reserved for our Members this morning in our Live Member Chat Room.  What I can tell you is we're not worried and this is simply the pullback we expected – albeit a bit later than we expected it in January, since it's actually February at this point.  

Keep in mind that we're not Futures traders, we just use the Futures to make quick adjustments to changing market conditions and, of course, for fun during boring trading days.  Friday was aqnything but boring and this morning we'll have some follow-through to the downside but, as long as we hold 25,000 on the Dow – we're probably going to survive and turn around by mid-week.

Meanwhile, we look for bounces and, according to our 5% Rule™ (the same one that told us exactly what to play for last week), 2,640 on the S&P (/ES) should be the worst-case before getting a nice bounce off the fall from 2,860 and that's 220 points so we'd look for a 44-point weak bounce to 2,684 and another 44 points takes us to the strong bounce line at, Ta Da!, 2,728 – close enough to 2,730 that we can call it a strong confirmation of our theory.

If the S&P is going to stay away from 2,600, then we expect there to be good resistance at the strong bounce line (2,730) and, if we don't cross below it, we can even begin to look for a reversal, though I'm not seeing much Fundamental support for a quick turn-around, in this crazy market – who can say?  

There's not much in the way of data this week but there are 6 Fed speakers scheduled and they can put out the fire if today goes badly.  We get PMI and ISM data this morning, Consumer Credit on Wednesday, Chain Store Sales and Consumer Comfort on Thrusday and Wholesale Trade on Friday so ho-hum data but still lots of earnings, with over 100 S&P 500 companies reporting:

Speaking of Tuesday, in case this little dip in the markets made you realize hedging isn't such a terrible idea after all, you can still play the hedge we laid out for you in that post as it's a slow-moving hedge designed to protect you against a long-term collapse in the market, not a quick dip.  Our trade idea on Tuesday was:

(SQQQ) is the ultra-short Nasdaq ETF that's a 3x inverse of QQQ.  So, if the Nasdaq drops 10%, SQQQ goes up 30% (in theory, it's not perfect).  I'm going to add the following trade as a hedge and WE EXPECT TO LOSE MONEY ON THIS ONE – it's like life insurance, you pay for it but you hope that, each year, it's a waste of money!  

  • Buy 40 SQQQ Sept $16 calls for $2.80 ($11,200)  
  • Sell 40 SQQQ Sept $23 calls for $1.20 ($4,800) 
  • Sell 5 ALK 2020 $60 puts for $8.20 ($4,100) 

That's net $2,300 and $2,620 in margin (from the short puts) to protect our current $36,975 gains and our potential profits – not a large price to pay and, if the Nasdaq drops 10%, then SQQQ (now $16.25) should climb 30% to $21.12 and put the $16 calls $5.12 in the money for $20,480, so we'd be up $18,180 and the max pay-out on the spread is $28,000 so about $26,000 of downside protection – which is half of what we started with!

ALK held up well, still at $64.46 and the 2020 $60 puts are still $8.50 so down 0.30 is $150 while the SQQQ Sept $16s have popped to $4 ($16,000) and the short $23s are $2 ($8,000) for net $7,850, which is up $5,550 (240%) but still miles away from the full $28,000 payout so still a good hedge if you missed out on our multiple warnings to cover while it was 240% cheaper to do so! 

The other major hedge we gave away to the free readers recents was our Russell Ultra-Short (TZA) hedge from Jan 17th, which was:

We still like the Russell for a hedge into earnings and, in the Live Member Chat Room, we chose the following hedge at 11:25, just in time for the massive 100-point drop in the Russell but we're back to 1,585, so you can still make the hedge on the Ultra-Short ETF (TZA) as follows:

  • Sell 30 TZA 2020 $10 puts for $2.50 ($7,500) 
  • Buy 40 TZA July $10 calls for $1.80 ($7,200) 
  • Sell 40 TZA July $15 calls for 0.60 ($2,400) 

That gives you a net credit of $2,700 and a $20,000 upside on the July spread if TZA pops from $11.40 to $15 (31%) and, since it's a 3x short ETF, that would mean the Russell would have to drop about 10%, back to 1,425, which doesn't seem like much of a stretch after yesterday's quick plunge.  If the Russell doesn't fall, then we take the remaining $2,700 and invest it in rolling the long July calls to something lower in January and then cover with short Jan calls and then we have a full year of insurance in exchange for our promise to buy 3,000 shares of TZA for $10.  The idea, of course, is that our longs make much more money than our TZA shares would lose – hedges are all about balance. 

As you can see, TZA popped up to almost $12 on Friday and should open above it this morning.  As of Friday's close, the July $10/15 bull call spread was net $1.30 ($5,200) and the short 2020 $10 puts are $2.45 $7,350 so  a $2,150 credit is only up $550 (20%) so far and still a massive $22,150 (1,000%) upside if TZA marches on to $15 between now and July expirations (20th).

The hedges are not meant to be an immediate pay-off, what they do is let you plan for the future and make intelligent decisions about your longs.

For instance, if your portfolio is down 10% on Friday's sell-off, you are maybe down $10,000 but you know you have $8,000 coming if TZA holds $12 and another $12,000 coming if TZA hits $15 so there's really no need to panic out of your longs just because they took a little hit. 

See how this strategy works?  Now, imagine if you combine that with a quick $3,000 here and $3,500 there on the Futures and now you are hedging with style!  

Futures trading is how we raise quick cash in a sell-off, our hedges are there to protect our long-term positions from long-term damage and, as we did the math for our Money Talk Portfolio last weekend – if we DON'T end up needed the protection of the hedges, our planned gains on the long positions more than make up for the difference.  The primary value of the hedges is that they allow us to follow-through on our trading plan and even make beneficial adjustments along the way – rather than getting chases out of perfectly good positions just because the market has a mild correction.

We will be reviewing our portfolios this week and looking for where we can improve our current positions.  

Meanwhile, with the 120-point drop in the S&P to 2,740, we'll want to see a 25-point bounce just to call it weak so 2,765 is our immediate goal and we have to get over 2,790 (strong) before we even consider it a proper bullish move.


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  1. looks like the futures are recovering for now

  2. Still no tweet about the beautiful markets!

  3. I remember the days when the GOP complained that deficits under Obama were unacceptable:

    In the wake of last year’s tax bill, the Congressional Budget Office says the deficit for 2018 will hit about $700 billion — before any fresh increase. Next year’s deficit is already estimated to reach $975 billion, so the brewing agreement would mean the first $1 trillion-plus deficit since Obama’s first term.

    And that was during a recovery phase. There is really no excuse tor such numbers except for an idiotic tax cuts while the economy is OK! What are deficits going to be if we slow down – $1.5T?

  4. A game for the ages:

    Defensive coordinators Matt Patricia and Jim Schwartz, who both received heavy head-coaching buzz this hiring cycle, watched helplessly on the sidelines as the offenses combined for 1,151 yards. Forget Super Bowl records or even playoff records, that’s the highest number of any game in NFL history.

  5. In the meantime I got an extra $1.75 in my paycheck – that will pay my Costco membership and I'll have an extra $0.25 for a pack of gum. That tax cut is really boosting our middle class…

  6. QCOM – Qualcomm: Broadcom (AVGO) is set to bid $120 bln (or approx $81/share) for QCOM, according to Reuters.


    ~~WFC -6.7% (Federal Reserve restricts WFC' growth until firm improves governance and controls.)

  7. Not boosting QCOM much today! I guess down with the rest. The timing for that increased offer not really the best. Might be able to offer less soon.

  8. Good morning! 

    Hopefully things aren't too crazy as I have to leave at 11:45 for a meeting, should be back by 1:30.

    We got a little pop on /NQ (see early morning note) but it's already fading at 6,725 but that's a quick $500 per contract – so the Egg McMuffins are paid for and that's all we need from a morning trade.

    It don't mean a thing if /ES can't pop 2,765 or 2,764 to be exact (20% of the 120-point fall from 2,860 (the 30% line on the Big Chart) to 2,740 (the 25% line)) and, even then, that's just the weak bounce and we need another 24 for a strong, but that's unlikely today after such a steep drop. 

    1,552 is the 50 dma on the Russell – that's very key and if the NYSE fails their 50 dma at 12,938, then DOOM!!!, DOOM!!! I say…  

    So happy Monday! 

    Market/StJ – Trump got handed a shiny, strong market by Obama (who barely ever mentioned it) and he used it constantly to bolster his image and now it's turning on him and the reality is he has no idea how to fix it nor does he even understand how it works so he acts like any child who broke an expensive toy – embarrassed silence…

    And don't even get me started on the MASSIVE deficit he's racked up in his first budget.  The GOP voters really live in some kind of fantasy land where they believe Dems cause deficits despite overwhelming evidence to the contrary.  

    Eagles/StJ – I would have given the defensive line the game ball.  They kept the pressure on Brady and kept him off his game – especially when it counted.  That was a great Superbowl.

    I like that Control chart. 

  9. BDC -I believe that you did very well a couple of years ago in CNX.

    Southeastern Asset Management, their largest stockholder, bought an additional 3 million shares last week at $13.68 and now own more than 24% of the outstanding shares.

    Starting to rebuild position.  Sold some Jan 12 puts for $1.40.

  10. I tend to read a lot of news impacting /NG, and thought some may have an interest in this article.  

  11. ALB/Phil   I'd like to get back into ALB?

  12. TZA July 9s are still super cheap!

  13. Dollar finally making a bit of a move up, long way from a proper bounce but I'll take it (still 8 long):

    Global Equity Rout Deepens as Rate Fears Grow. Asian equities fell with Dow Jones Industrial Average futures tumbling almost 1 percent as the biggest rout for global stocks in two years and surging government bond yields kept investors questioning the speed of monetary policy tightening. The dollar extended gains. Equity indexes in Australia and New Zealand sank at least 1 percent, while futures on the S&P 500 Index were 0.7 percent lower and losses were expected in Japan and Hong Kong. The gauge of U.S. shares tumbled 2.1 percent Friday and the 10-year Treasury yield rose above 2.85 percent following solid jobs data showing rising wages and a hint from Dallas Fed President Robert Kaplan that the Federal Reserve may need to lift interest rates more than three times this year. Futures on Japan’s Nikkei 225 Stock Average sank 1.4 percent in late Friday trading in Chicago. Australia’s S&P/ASX 200 Index dropped 1.3 percent and New Zealand’s S&P/NZX 50 Index sank 1.5 percent. Contracts on Hong Kong’s Hang Seng Index declined 1.3 percent. The MSCI Asia-Pacific Index fell 0.3 percent.

    Despite Market Turmoil, Corporate Earnings Shine Bright. With about half of the companies in the S&P 500 having reported results, 80% have beat revenue expectations.

    Selloff Ignites Unprecedented Hedging as VIX Options Hit Record

    Bitcoin’s CrashingThat Won’t Stop Arbitrage Traders From Raking in Millions. Cryptocurrency arbitrageurs cash in on wide price disparities between exchanges.

    • A sizable bounce from last Friday and into the weekend can now officially be called "dead cat," with Bitcoin plunging to a new cycle low of $7.5K earlier this morning. It's currently sitting at $7.66K after rising as high as $9.5K at one point on Saturday.
    • The alt coin universe is faring even worse.
    • Previously: Credit card ban on buying cryptocurrencies (Feb. 5)
    • Markets in Germany are in the red after Chancellor Angela Merkel's CDU and the Social Democrats failed to agree to a coalition government on Sunday.
    • Talks between the parties are now set to continue this week, extending months of political uncertainty within Europe's economic powerhouse.
    • The parties reportedly reached a deal on migration, energy and agriculture but continue to debate healthcare and labor policies.

    • U.K. Service PMI fell to 53.0 from 54.2 in December, against the consensus of 54.1 casting doubt over the likelihood of an interest rate hike in the coming months.
    • The non-renewal of finished contracts, unfavorable weather and the loss of existing clients, as well as uncertainty about the outcome of the Brexit negotiations dragged service PMI to a 16-month low.
    • “The softer service sector growth follows news of the manufacturing upturn losing momentum at the start of the year and a near-stagnant construction sector,” IHS Markit chief economist Chris Williamson said.
    • "Canada is willing to walk away from NAFTA if the U.S. proposes a bad deal. We will not be pushed around," Prime Minister Justin Trudeau said at a town hall event in Nanaimo, British Columbia.
    • "Canceling it would be extremely harmful and disruptive to people in the U.S… We are going to keep negotiating in good faith, [but] we are not going to take any old deal."
    • The number of defaults by highly leveraged companies could rise significantly amid tightening credit conditions, according to S&P Global Ratings.
    • The agency estimates that the proportion of corporations whose debt-to-earnings exceed 5x – stood at 37% in 2017, compared to 32% before the financial crisis.
    • Removing the "easy money punch bowl" could trigger the next default cycle since high corporate debt levels have increased the sensitivity of borrowers to elevated financing costs.

    • Height Securities calls it at 65% odds that the U.S. government will shut down on Thursday even as some progress has been reported.
    • Height's update: "There is incrementally positive news that Senators John McCain (R-AZ) and Chris Coons (D-DE) plan to introduce immigration legislation mainly centered on a DACA fix that they hope can pass the Senate. We are not more positive yet because it is too soon to tell whether the proposal enjoys broader support within the Senate."
    • There's five downgrades of Buffett's favorite bank so far, with JPMorgan, RBC, and Morgan Stanley cutting to Underweight (or its equivalent), and KBW and Citi to Neutral (or its equivalent).
    • For its part, Wells Fargo (NYSE:WFC) says it's confident it will satisfy the requirements of the consent order, which gives the bank 60 days to detail what's already been done and further plans to boost board oversight and not cheat its customers.
    • Shares -7.5% premarket
    • Best known for its Rocket Mortgage, Quicken Loans overtook longtime leader Wells Fargo (NYSE:WFC) to become the largest retail mortgage lender in Q4 with $25.1B in direct-to-consumer home loans.
    • Wells was still bigger than Quicken if including correspondent loans, or mortgages purchased from other lenders shortly after they were originated.
    • The last company to edge out Wells Fargo was Countrywide Financial in 2004.

    • There's "no rush to buy this dip," says Chief U.S. Equity Strategist Michael Wilson, as markets have not yet fully digested the big jump and interest rates and rising inflation expectations.
    • He cuts the tech sector to neutral, noting weakening earnings revisions for semis, software, and services. He upgrades utilities to overweight as the rise in interest has been priced into those names. Favorites: American Electric Power (NYSE:AEP), FirstEnergy (NYSE:FE), NextEra Energy (NYSE:NEE).

    Banks Raise Oil Forecasts but See RisksRebalancing in crude supply pushes prices to multi-year highs but some analysts question how long the rally will last.

    • Tesla's (NASDAQ:TSLA) sales in Hong Kong fell sharply after the tax breaks for electric vehicles were lowered drastically, observes Financial Times.
    • The tax break changes began last April and are slated to last until at least March.
    • A similar pattern emerged in Denmark after the government pulled some EV tax breaks. The unsurprising link between tax incentives and sales increases pressure on Tesla to produce vehicles locally in China or set up a joint venture to lower costs. On that note, The Wall Street Journal tipped last October that Tesla struck an agreement to build a factory in the free-trade zone in Shanghai, although full details haven't emerged since that report.
    • Volkswagen (OTCPK:VLKAY) says Porsche SE will invest more than €6B in e-mobility initiatives by 2022, double the original target of ~€3B.
    • The automaker is developing several variants of its all-electric Mission E model as part of the investment.
    • "Alongside development of our models with combustion engines, we are setting an important course for the future with this decision," says Porsche CEO Oliver Blume.
    • More robo-taxis? Daimler (OTCPK:DDAIF), the world's No.1 maker of premium cars, and Bosch (OTC:BSWQY), the world's No.1 automotive supplier, will begin testing the vehicles "in the coming months."
    • "Apart from highly autonomous level 3 vehicles we will also bring fully autonomous vehicles – level 4/5 – to the streets in the foreseeable future," Daimler's Wilko Stark told Automobilwoche.

    • The jet is designed for up to 172 passengers and a maximum range of 3,850 nautical miles (the longest range of the MAX airplane family), while having 18% lower fuel costs per seat compared to its predecessor, the 737-700.
    • The first MAX 7 will now undergo system checks, fueling and engine runs at Boeing's (BA-2.4%) Renton, Wash. factory and begin its flight testing program in the coming weeks.
    • The plane is scheduled to enter service in 2019, following delivery to launch customer Southwest Airlines.
    • Automotive, clothes and shoes pulled Euro zone retail sales lower 1.1% M/M, against 2% rise in November and against consensus of 1.1% decline.
    • Retail sales reported 0.8% Y/Y decline driven by decline in sold fuel as well and  lower rise in the volume of sold food drinks and tobacco.

    Long-term bullish call on Lowe's from Jefferies

    • Another glowing review on Lowe's (LOW +0.1%) arrives from Wall Street this morning.
    • This time it's Jeffries with the upgrade on the home improvement retailer to Buy from Hold.
    • The analyst team calls Lowe's its "franchise" pick and sees EPS potentially tripling over the next five years.
    • The nod from Jeffries continues a general theme on Lowe's that it is closing the productivity gap on Home Depot, particularly with the Pro business.

    "An Organized Effort By Republicans To Obstruct": Democrats Draft Talking Points To Refute FISA Memo

    Two Dead, 70 Injured In South Carolina Amtrak Train Collision

    Hamas Leader Warns War With Israel Will Erupt "Within Days"

    • Dog walking: Recode reported that SoftBank (OTCPK:SFTBFOTCPK:SFTBY) invested $300M in dog walking app Wag. SoftBank’s Vision Fund will receive a 45% stake in the startup and two board seats, which allows users in more than 100 U.S. cities to find a verified dog walker.
    • CEO and co-founder Josh Viner stepped down ahead of the investment and former LifeLock head Hilary Schneider stepped up into the role. 
    • The original investment was supposed to be $100M, but SoftBank raised the offer as discussions continued. SoftBank supplied the entire investment and none of it went to buying out existing shareholders. Wag was valued at $650M in the transaction. 
    • Competitor: Rover has raised over $160M in funding from the likes of Menlo Ventures, Foundry Group, and Spark Capital. 
    • Big grocer: Alibaba (NYSE:BABA) led a $300M corporate round into online grocer Bigbasket, which brings the Indian company up to a $950M valuation with $885.7M in total funding. Other investors included Abraaj Group and Bessemer Venture Partners. Bigbasket previously held investment talks with Amazon and Walmart. 
    • Groceries account for about $600B o India’s $399B retail market. 
    • Competitors: Online retailer Flipkart ($7.3B in total funding, SoftBank backing) and Grofers ($180.3M in total funding, SoftBank backing).
    • Air taxi: Intel (NASDAQ:INTC), Toyota (NYSE:TM), and Jet Blue (NASDAQ:JBLU) were involved in a $100M Series B round in air taxi startup Joby Aviation.  The round brings total funding up to $130M. 
    • The round will help the company develop its electric vertical take-off and landing (eVTOL) air tax prototype supposedly in testing at the company’s private airfield in Northern California. 
    • Competitors: Air taxi development is a crowded field with Boeing (NYSE:BA), Airbus (OTCPK:EADSFOTCPK:EADSY), Uber (Private:UBER), Intel-backed Volocopter, and startup Kitty Hawk among the players. 
    • Pea protein: Goldman Sachs (NYSE:GS) was among the investors in a $65M round for pea protein “milk" startup Ripple Foods. The round brings total funding up to $110M for the two-year-old company. Euclidean Capital led the round with other participants Khosla Ventures, Fall Line Capital, and S2G Ventures.  
    • Ripple created Ripptein, a pea protein the company claims is stripped of the “funky flavor” found in some plant-based protein substitutes. In development: pea milk ice creams.  
    • Competitors: Campbell Soup Company’s (NYSE:CPB) Bolthouse Farms brand has a completing pea milk product.
    • Big data: Google (GOOGGOOGL) and Ericsson (NASDAQ:ERIC) were among the investors in a $48M Series D round in big data startup Trifacta. The round brings total funding up to $124M and gives Trifacta a valuation of about $258M, according to PitchBook.    
    • Trifacta is a “data wrangler” that combines machine learning with human workers to query and organize data for various insights including risk analysis, IoT deployment, and customer relations. 
    • Competitors: GoodData ($101.2M in funding, Intel among backers), Looker ($117.5M in funding, backers include Goldman Sachs), and Sisense ($94M in funding) stand out in a crowding field. 
    • 3D LED: Intel Capital participated in a $36M Series C round for 3D LED developer and manufacturer Aledia. The round brings total funding up to $43.8M. Other backers included Braemar Energy Ventures, Demeter, the Ecotechnologies Fund of Bpifrance, and IKEA Group.  
    • Aledia plans to use the fund to speed up its LED tech development with new equipment. The startup is currently developing LEDs manufactured on 200mm/8-in. silicon wafers scalable to 300mm/12-inch that are targeted at mobile displays.  
    • Telehealth: Walgreens (NASDAQ:WBA) participated in a $25M round in telehealth company Tyto Care. The startup has the option to expand funding to $28M in the coming months. The initial round brings total funding up to $41.6M. Ping An Global Voyager Fund led the round with participation from Cambia Health Solutions, Orbimed, Fosun Pharma, LionBird and Qure.  
    • Tyto Care has three products: TytoHome for consumers, TytoPro for professionals, and TytoClinic for remote point-of-care locations. The company will use the funding to continue expansions into the US and Asian markets, the latter made easier by a financing-related strategic partnership with Ping An.  
    • Competitors: Include Doctor on Demand ($86.7M in funding, Qualcomm (NASDAQ:QCOM) among backers) and Teladoc (NYSE:TDOC). 
    • Computer vision: GV (formerly Google Ventures), Home Depot (NYSE:HD), and Standard Industries led a $25M Series B round in computer vision startup Hover, which lets consumers easily create 3D models of their home. The round brings total fundraising to above $56M. 
    • Hover users take pictures around the home, upload the photos into the Hover 3D app, and it produces a 3D model of the home. Hover can then connect the user to local contractors, who can use the 3D model for giving a quote.               
    • Previously: SoftBank among backers of $175M AI Fund (Jan. 30)


  14. AMZN tease!

  15. /NG/Grass – That's my long-term bullish premise, we'll be selling more and more of our gas overseas thanks to LNG exports and that will drive our prices up and global prices down.

    ALB/Stock – I like them because they are a solid stock with a Lithium kicker and that was a nice pullback considering they made $4.50 last year which was up 10% from 2016 and no reason to think they won't beat $5 this year so reasonably priced now at $106.66.  

    For the LTP:

    • Sell 5 ALB 2020 $100 puts for $15.50 ($7,750) 
    • Buy 15 ALB 2020 $110 calls for $19 ($28,500)
    • Sell 10 ALB 2020 $130 calls for $12.50 ($12,500) 

    Our net on this trade is $8,250 but notice we have 5 naked longs.  The intent is to, when ALB pops, sell 10 of the June $130s, now $2.10, for $4 (price of the $120s) or better.  If we get a really good move up to $120+, then we'll cover the other 5 2020s.  On the downside, we can always sell 10 lower 2020 calls and use that money to roll down our $110s to the $100s (now $24) and at 5 more.  On the upside, we have a $30,000 spread so, even if we sell no more calls, $21,750 (263%) upside potential at $130.  

  16. TZA/Knight – And you can see why.  No good sell-off goes unpunished in this market.  

  17. Jabob -  AMZN.

    Just BTFD.

  18. albo—always ;-(

  19. 60 days ago, Bitcoin was over $20K! Lost 2/3 of its value in that time. Growing pains?

  20. /ES stopped right at the weak bounce line (see above) so Bots seem to be in charge.  /NQ with a bigger move but that's because AAPL popped 1.6%.

    If we call /NQ down from 7,050 to 6,700 that's 250 so 50-points is the weak bounce and 100 is strong, where we are now.  

    Holding over 6,800 would be our first bullish sign and then we'd look for the others to confirm.  

    • Apple (NASDAQ:AAPL) supplier Pegatron (OTC:PGTRF) is optimistic about high-end phone demand in 2018.
    • Pegatron CEO S.J. Liao recognizes that the overall smartphone market is slowing but doesn’t think his company will be affected. 
    • Pegatron makes the iPhone 8 while Foxconn / Hon Hai makes the iPhone X, the premium model rumored to have weaker-than-expected sales. 
    • Pegatron could receive more orders from Apple this year and could become the main supplier for the new 6.1-inch LCD iPhone KGI predicts will join two OLED models for a fall release.    
    • Speaking of KGI, analyst Ming-Chi Kuo also predicts that the next iteration of the iPhone will have Intel (NASDAQ:INTC) as the only cellular modem supplier, which would eliminate Qualcomm (NASDAQ:QCOM) from the supply chain. 
    • Apple could still send some orders over to Qualcomm as a negotiating tactic as the two companies remain in a bitter legal battle. 
    • Apple shares are up 1.8%. 
    • Intel shares are up 1.7%
    • Qualcomm shares are down 1.5%.    
    • Previously: Broadcom confirms $82 per share offer for Qualcomm (Feb. 5)
    • Jan. ISM Non-Manufacturing Index: 59.9 vs. 56.2 consensus, 55.9 prior.
    • Business activity 59.8% vs  57.8.
    • New Orders 62.7% vs 54.5%.
    • Employment 61.6% vs 56.3%

  21. BitCoin $7,440 off the low around $7,250 – those are some very painful growing pains!

  22. phil—350 points not 250

  23. LOL Jabob – Too much math for a Monday (especially post Bowl).  

    Make that 70-point bounces to 6,770 and 6,840 then on /NQ.  

    Dow is 1,400 so call it 300-point bounces to 25,500 and 25,800 but be aware we rounded by 20 and 40.  

    S&P spike was 2,880 and 2,740 is down 140 so call it 150 and 30-point bounces to 2,770 and 2,800 but what I put in the post is more accurate.  Either way, you can see how high we need to get to call it a recovery.  

    RUT 1,620 to 1,530 is 90 so call it 100 and 20-point bounces to 1,550 and 1,570.

    Nikkei should be thrilled the Dollar is stronger so should be extra bouncy.  As it was longer ago, let's round to 24,000 and 22,400 for the bottom is 1,600 and call it 1,500 for 300-point bounce to 22,700 and 23,000.

    Dax 13,600 to 12,600 is 1,000 so 200-point bounces to 12,800 and 13,000 (lots of round numbers is nice).

    3,675 to 3,475 is 200 so 40-point bounces is 3,515 and 3,555 – ugly numbers.

    So that's what we'll be looking for today though CNBC is already, somehow, gushing over the "comback" but it looks to me like we're up net 11 on the Dow and 2.5 on /ES – people need analysts, not cheerleaders on their market shows!  

  24. Looks like heavier than average trading:

    Over 1.5x average although might be a Monday average!

  25. 2,288 days ago bitcoin was $1.99. Nothing like a Lorentz's contraction to take something out of perspective.

    Albo – I'm >90% out of the equities market now.

  26. Hitting resistance on all indexes and, of course, it's Monday, so nothing that happens matters.  White house said they are "confident in the economy's fundamentals" and that kind of spurred the recovery.  Kind of like BA earnings pulled us out of a dive last week (for a day).

    • Apple (NASDAQ:AAPL) supplier Pegatron (OTC:PGTRF) is optimistic about high-end phone demand in 2018.
    • Pegatron CEO S.J. Liao recognizes that the overall smartphone market is slowing but doesn’t think his company will be affected. 
    • Pegatron makes the iPhone 8 while Foxconn / Hon Hai makes the iPhone X, the premium model rumored to have weaker-than-expected sales. 
    • Pegatron could receive more orders from Apple this year and could become the main supplier for the new 6.1-inch LCD iPhone KGI predicts will join two OLED models for a fall release.    
    • Speaking of KGI, analyst Ming-Chi Kuo also predicts that the next iteration of the iPhone will have Intel (NASDAQ:INTC) as the only cellular modem supplier, which would eliminate Qualcomm (NASDAQ:QCOM) from the supply chain. 
    • Apple could still send some orders over to Qualcomm as a negotiating tactic as the two companies remain in a bitter legal battle. 
    • Apple shares are up 1.8%. 
    • Intel shares are up 1.7%
    • Qualcomm shares are down 1.5%.    
    • Previously: Broadcom confirms $82 per share offer for Qualcomm (Feb. 5)

  27. 1) Crypto's aren't an equity or a security, they're a new type of trust-based system that has characteristics of both.

    2) Crypto's (properly run ones, not "ICO" scams), are decentralized, not-for-profit organizations that condense a social group around a specific need or categorical value add. Here's a 4-word cheat sheet for 100 of them.

    3) In a crypto organization your customer, employee and asset holder are the same person. This is a key concept most people miss.

  28. Well, I'm off to my meeting – back about 1:30.

  29. Speaking of growing pains – UK not really saving money with that Brexit decision:

    Before Christmas, a meta-study by the Financial Times concluded that the economy was already £340 million (€385 million) a week poorer.

    A more recent analysis by the Bank of England suggests that the costs are now accelerating and that the economy is now 1 per cent smaller than it would otherwise have been. That’s a lot of money lost, a lot of taxes not being devoted to the NHS.

    That’s the bigger picture, which can be dismissed as mere expert opinion. But Brexit is as much about the details. British truckers are alarmed by the fact that, under current rules, they will be granted 1,200 permits to drive in the EU. For a fleet of 75,000 lorries.

    Little details here and there adding up!

  30. albo – QRVO, SWKS related… Apple inventory -

    I noticed that both VZ and Tmobile announced a buy 1/get 1 free deal on the iphone8.

    So the inventory reduction has started. 


    Morgan Stanley: RF chip stocks feel pressure from weak iPhone sales (update)

    Morgan Stanley says disappointing iPhone sales and an Apple inventory build could continue to pressure radio frequency chipmakers.

    The iPhone accounts for over a third of the RF chip market demand. Apple only sold 77.3M iPhones in the holiday quarter (consensus: 80M), and Nikkei reported last month that iPhone X production would drop by half in Q1 CY18.

    RF stocks that can move on the news: Broadcom (AVGO +2.5%), Skyworks Solutions (SWKS -1.1%), and Qorvo (QRVO -1.9%).

    Previously: Apple halving iPhone X production in Q1 (Jan. 29)

    Previously: Apple -1% on Q1 unit sales drop, downside guidance (Feb. 1)

    Update with more analyst information:

    Morgan Stanley analyst Joseph Moore reiterates his Underweight rating and $85 price target for Skyworks, a 14% downside on Friday’s close.

    Moore: "This looks more severe than simply weaker iPhone X, given that Apple on and off balance sheet component inventory hit new highs. Given Apple's outsized influence (the company purchases ~10% of all semiconductors), a reduction in their build rates and inventory could be the catalyst for industry conditions to loosen up."     

  31. Thanks, Learner.

  32. if the market dropped 1 million points would AMZN still be up??? WTF!!!!!

  33. StJL – Yo dawg, lil bow wow is askin questions… and has a post mortem.  Bought that little doggie in the window early +7 and 2.94 to win straight up. I was LMAO with Collinsworth's mis-attributions: the inability to catch the trick play pass to old age, and then the errant bread and butter passes to Brady's BS hand injury, what a crock of misinformation.

    When Brady got it back with 2min+ remaining, I yawned and said the sack and turnover are long overdue, he's holding on like a squatter and its coming up pronto if he goes through any  checkdowns…. 2.8 seconds later, his slow release was doing the attempted pass flail, with a Beagle scooping up the ball, a thing of beauty. 

    That's what happens late game against a really good pressure unit with depth, and your QB is playing with an unadvertised disability (Achilles heel).  I feel for unsuspecting Pats bettors who got suckered in, and have to wonder about the stupidity level of the so called pundits and ex players employed by the media.  When you know just a little sumpin sumpin, its nice and Out.

  34. 1 million/Jabo, that was funny.  I view AMZN as a lever not a stock, it is a mechanical way to lift something up, in the case of AMZN it lifts index values

  35. S & P approaching 50dMA.

  36. SVXY – Starting to look interesting around the 94-95 level.

  37. CELG / Phil – Do you like them near this 2 year support and with JUNO acquisition?  

  38. Albo – See what I mean about SVXY? If panic sets in, this could be cut in half.

  39. Very volatile, indeed.

  40. Yo Naybob- That game was thing of beauty. Crank out the running shoes man, there were big plays all over. That one interception really was a fluke so no really a game changer. And the refs didn't really have an impact which is always something you worry about with the Pats. Both the lines (O and D) for the Beagles played as expected. 

  41. I guess if went down 666 point on Friday, going down over 300 points today would not be unexpected… And still not tweet about the markets. 

  42. What does the 30 Year bond /ZB going to 3 year low mean mortgage rates going up.  Is it as simple as that or variation to it?

  43. Dow and S&P bouncing off the 50 DMA lines for now, but both NYSE and Russell solidly below at the moment. Not necessarily a big drama, that happens often, but this market might be looking for an excuse for a meaningful correction. Although close a 7% pullback overall now. So nothing to sneeze at.

  44. Stj/SuperBowl

    "~~And the refs didn't really have an impact which is always something you worry about with the Pats."

    not taking anything away from eagles but seriously that is what people say when ref take their side and when they screw something then Pats are cheaters. Why not it is the issue with ref and why Pats are blamed, I do not understand. do they pay the ref's to do this?

    though the game was good that one touchdown from clement when he stepped of bounds and the ball was still moving is a suspect. I think whatever happened may be good or else philly fans would have raised an havoc/violence and not good for people….

  45. Wow, I can't leave you guys alone for a minute, can I?

    Well, I was productive, just locked down a $500,000 customer for PSW Investment's Judgement Search Network.  Looks like we officially launch around 4/1 – already in test phase with limited clients.

    I see we tagged 25,000 on /YM – all looks perfectly normal to me.

  46. Refs / Pats – There is always that perception when it comes to the Pats. And the memories that Superbowl against the Eagles with spygate. And then deflategate and that small issue of the tuck rule! 

    But hey, they played well, Brady had one heck of a game. No doubt he is a great player but it was a time for a new team to win.

  47. Oops, picking up speed now… Next tweet:

    Never had 2 600 points losses on the Dow before! Biggest 2 day losses in history… #Winning #BiggestEver #Buildthedam

  48. I may have missed something, and apologies if this has already been picked up, but there is a bit of snafu in the Top Trades issued on Jan 19, 2018. It was published in that days main post as:

    January 19th, 2018 at 2:16 pm | Permalink | Tweet thisIgnore this user

    Speaking of portfolios, what a fantastic time to add hedges to the STP!  

    I'm going to try to have hedges we can make money on along the way – in case the market fails to surrender. 

    Hedge #1 is SVXY, which is the Ultra-Short VIX ETF.  This is going to be an actively managed trade:

    Buy 20 SVXY June $140 puts at $28.50 ($57,000) 

    Sell 20 SVXY June $110 puts at $17.50 ($35,000) 

    Sell 6 SVXY Feb $130 puts for $8 ($4,800) 

    However in the email alert sent out as a Top Trade alert as well as on the Top Trade home page, the short puts were listed (which was obviously a typo) as sell the Feb $30 puts (not the $130 puts).

    The SVXY Feb $130 puts are now trading at $38, so unless they have already received some TLC in the way of adjustment they need to be looked.

    Again, apologies if I missed something and this has already been addressed. I would have thought plenty of subscribers would have picked up the fact that the SVXY Feb $30 puts could never have been sold for $8.

  49. Phil,

    Would you take a stab at setting some longs here ? Sounds like the 5% rule is met.

    Thanks as always


  50. Stj/Pats

    "Time for a new team to win" ~ yes always should be best team to win it. Pats defense played really bad and they lost. Lot of chances to hold and tackle but did not come through.

    I hope people appreciate the caliber of the players and not just measure it with rivalry and hatred (which can give them one ring but not five)

  51. The problem with markets going parabolic like they did is that they don't build any support anywhere. Proven over the last 2 days. 

  52. Can't not write at least a few puts with VIX up… so far wrote some GE and HOV puts… no farm bets..just nibbles

  53. And it looks like we just erased all the 2018 gains! That started with the SOTU speech which is funny…

  54. Phil/Adjusting positions

    a) The 3 SVXY Jun 115/90 Put spread showing a > 70% gain.

    currently 115 Put 33.82 (cost 19.18) and 90 Put 18.20 (10.18)

    b) 30 FAZ April 10/11 BCS

    currently 10 Call 1.55 (0.65) and 11 Call 1.01 (0.37)

    Do you advise to keep these as is or make some adjustment to take something off or to protect it?

    thanks as always


  55. Put on a scalp trade in SVXY at 86.80.  Risking two points.

  56. Bezos/Rexx – Well you know it is possible for him to retain the title of Mr ECommerce and actually grow into his valuation.  After all, it's a $5Tn consumer company and AMZN does just $150Bn of it so 3% and they made $1.9Bn for the Q so call it $6Bn a year (Q4 is bigger) and sure, $700Bn at $1,450 is a lot but give them 10 years to match 4x growth of last 6 years and that's $24Bn (assuming profits don't scale up, though they are projected to) and suddenly $750Bn is just 30x and they are still not 20% of Retail.

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 2018E 2019E CAGR / Avg
    Revenue $m 61,093 74,452 88,988 107,006 135,987 177,866 229,090 277,477 +23.8%
    Operating Profit $m 676 745 178 2,233 4,186 4,106     +43.4%
    Net Profit $m -39.0 274 -241 596 2,371 3,033 4,109 7,217  
    EPS Reported $ -0.086 0.59 -0.52 1.25 4.90 6.15      
    EPS Normalised $ -0.086 0.59 -0.52 1.25 4.90 6.15 8.12 14.2  
    EPS Growth %         +292.1 +25.6 +31.9 +75.4  
    PE Ratio x           232.4 176.2 100.4  
    PEG x           7.28 2.34 1.55

    Brexit/StJ – There's the uncertainty factor and, to some degree, they are punishing the UK for their decision and a lot of people (like truckers) are being caught in the crossfire.  

    IPhone/Learner – IPhoneX wasn't available for half the quarter and how many people in Q4 were putting off buying for the X to come out?  Also, there was pretty much no way to get delivery by Christmas on the X so I think Q1 will make up for Q4 and most of these chip complaints are being cause by AAPL moving more orders to INTC – who haven't been complaining at all.  

    CELG/Stu – I do not like what they are spending on JUNO or the fact that it indicates that, internally, they are out of ideas.  They are spending $10Bn to buy a company that doesn't actually make money and has no sales?  Really???  

    SVXY/StJ – Killing the STP at the moment as we sold short puts (but bear put spread is a winner).

    Bonds/That – Yep rates are going up fast but it's bouncing off the lows.

    It's because if I have a 30-year bond that pays 3% with 25 years left and a new 30-year bond is 4% then my old bond is 1% less valuable per year than the new bonds so actually I have to take a discount (loss) to sell my bond because who wants it compared to a new one with more time and more interest?

    So if it's $100,000 at $3,000 x 25 years = $175,000 total bond value expected 

    Versus $100,000 at $4,000 x 30 years = $220,000 total bond value.

    With some time calculations thrown in, the net value of the 3% bond is worth about $45,000 less (over time) than the 4% bond so roughly a 20% haircut for the 1-point rate rise.  

    From $175 to $145 is – $30 – just about 20% of the value lost since summer 2016.

    -500, that's getting a bit ugly.  

    SVXY/Winston – Well $30 puts was a typo, wouldn't have made sense at the price.  Even now they are about 0.12.  We haven't adjusted them yet (see note above) but there's only 6 and we can roll 6 Feb $130 puts (now $40) to 12 March $90 puts (now $12) and if they have to rolled to 18 of the June $70 puts (now $10) we would add 20 of the Jan $100 ($33)/$80 ($22) bull call spreads for $11 ($22,000) on the $50,000 spread after cashing the $60,000 we have coming from the June $140/110 spread we paid net $20,000 for.  So we're up $40,000 and we'll be up another $38,000 if SVXY stays low and our 18 short June $70 puts wouldn't be in the money at all if we didn't have $78,000 profit in our pocket and we still have 6 months to roll them along.  So, for now, we can just wait and see what happens.

    Longs/Pat – That's not how the 5% Rule works.  We played for the weak bounce, that failed and that indicates we're likely to have a 10% correction, not 5% and you can see from what's happening now that it seems likely.   The 5% Rule prevents us from jumping in and catching falling knives and yes, I use it to calculate a likely turn – but I haven't read anything so far that tells me we're likely to turn back up without a proper correction.  

    I'll let you know when I decide to put my kids' college funds back to work – that's the real all clear!  

    Bitcoin $6,660.

    SVXY/Pat – See above, next step is to layer the bear puts and then roll the short puts and THEN take profits on the first set.  

    FAZ is kind of all or nothing to make the full 0.50 but this is what we expected once we cleared the big banks:

  57. Stopped out of SVXY.

  58. SVXY / Albo – Use a VIX charts as an indicator. VIX is still falling and SVXY will fall faster… There is a huge volume on the April 50 puts now. Could be selling from people looking to collect premium or buying from others thinking we go in panic mode.

  59. VIX close to 30 – that's almost panic range!

  60. Thanks, STJ.  Just looking to play for a scalp of about 4 points.  Might try again.

  61. Holy crap – do we go for a 1000 points on the Dow today?

  62. WTF, down 900?  Accelerating the drop here can be very dangerous!  

  63. 1000 points….

  64. Trump still silent LOL!

  65. WoW….




  66. 1500 points now

  67. Going for 2000 points now!

  68. ES 2600?

  69. Holy crap – now it's starting to look like 2008.

    Well, this is what I meant when I said these low-volume rallies are total BS.  No support at all on the way down.  

  70. Yo Phil – not a meaningless Monday now?

  71. I'd like 2580 myself….

  72. What's really scary is NOTHING HAPPENED – imagine if there were a reason to panic?

  73. WFC – not just WF getting whacked… BAC, MTB, CM, DB, SAN, RBS, HSBC, JPM..  couldn't happen to a more swell bunch.

  74. Did Phil not warn us about a small drop. Did I not tell you I closed 80% of all positions last week, boy o boy do I sleep well tonight!!!

  75. Panic?  We'd be up?

  76. Wow! What a reversal.

  77. Looks like some buying happening now!

  78. Fantastic timing Yodi.

    Well that was something strange, now we're bouncing back to 2.5% lines.  

  79. 1,500 on /TF is a good long spot (tight stops below), lined up with 6,600 on /NQ, 2,670 on /ES and 24,500 on /YM.

  80. Caught a 6 point swing in SVXY.

  81. I am guessing we are seeing a lot of bots buying at the moment.

  82. Nothing seams to be much scarier than nukes….

  83. seems

  84. What about nukes?!

  85. I've never watched a 1500 point drop in the Dow before. 

  86. You've got about 10 more days of this, mid Feb it should subside, unless of course real panic breaks out. 

  87. Amazing!  32 VIX makes me want to sell ABX puts.

  88. VXX reaction to VIX rise seems very muted to me.

  89. Natt be nice !!!!!

  90. jelutuck – I was referring to the "threat" from North Korea and the markets that could not have cared less….

  91. CDE having a good day, ABX flat.

  92. Dow regains 700 points because they brought Cramer back……Shades of 2009…..vintage Cramer!!

  93. Be interesting to see how that 50 cent guy who was buying all those calls on the VIX made out.  Must be laughing all the way to the Bank today!!!

  94. Meaningless/StJ – It will be if it's all erased tomorrow.  

    1,500 points/Jet – There are traders working at GS, JPM, MS for 10 years who've never seen a drop like this.  

    VXX/Tangled – Spread over several months makes it less volatile.

  95. Phil/SVXY,

    do you suggest to close the 115/90 bear put spread and open the Jan 100/80 bear put spread? I can close the 115/90 spread close to $20 I guess/

  96. Yodi – "Natt be nice !!!!!"

    I am that I am. 

    Ehyeh! Hello Dathan… not you Yodi. LMAO

  97. Wow Phil – your advice on hedges… could not be more timely. 

    Saved a lot of $ today in my portfolios after suffering all of last year. 

  98. There has never been a 1500 point drop in the Dow if I recall… Percentage wise we have seen worse, but not points. And there you have it:

    The previous record drop during trading hours was 1,089 points on August 24, 2015, a 6.6 percent drop. But in percentage terms, the worst sell-off in recent years was the "flash crash" of May 6, 2010, when the Dow temporarily plunged 998 points, or more than 9 percent. Trading would recover both days but the Dow would still close down more than 3 percent on each of them.

    So no one ever saw anything close to that point wise.

  99. Wow is right - and this zit got so much bigger than the last few before it popped. 

    StJ – we need to start to think about our long SVXY strategy. I wouldn't touch it yet, but it's back on my radar now.

  100. Dropping back toward the day's  low AH.

  101. Point losses: StJ, 1500 is almost double the biggest ever!!!! 2nd place is 777. %-wise, no big deal really at 4%. Not the Black Monday I predicted.


    Is it fair? no. but based on the absolute crap we've endured from him, so be it.

  102. I wonder how many of the big guys start lowering risk tomorrow and then capitulation … 

  103. SVXY / BDC – Look at the after hour trading. Mid 40's now! That's what happens when they rebalance with all the VIX futures. Going to be interesting now. The VIX getting close to 40 will do that. Almost time to back up the truck. I would certainly cover half at the onset. But still tough days ahead.

  104. Albo – Aren't you glad you close the SVXY trade? 

  105. SVXY – holy after hours batman! That's WAY oversold. That thing is a cash cow that sells premium to suckers and accumulates it. Check out the NAV = 127. 

  106. BDC – "Wow is right – and this zit got so much bigger than the last few before it popped. "

    Thanks for my LMAO of the day… It's a fatty carbuncle, er, Fatty Arbuckle, er Nasty Nassar, sufferin sebaceous glands and out.

  107. Now in the mid 30's BDC! I was really expecting a nice pullback but that's overdone. In any case, we'll see what shakes tomorrow morning. That thing is almost more volatile than bitcoin :-)

  108. It will not be a surprise if we need another huge bailout in the coming years with these clowns in charge:

    Credit reporting agency Equifax in September revealed that a data breach had left the information of 145 million customers exposed. The company waited weeks before disclosing the incident to the public, during which time three executives sold nearly $2 million worth of the company’s shares.

    Not even six months later, the Consumer Financial Protection Bureau, under interim director Mick Mulvaney, is scaling back an investigation into what happened, according to a new report. It’s the latest example of how the CFPB, which was created under the Obama administration to look out for consumers in the financial products and services space, is stepping back from that under Trump.

    All these big financial institutions will take advantage of the low regulatory environment and we know how that ended in 2008! Dems will have to step in to fix the mess and get blamed when they bail out banks and have to raise taxes to reduce the deficit.

  109. So with SVXY, it looks like the options have horrible bid/ask spreads and little volume. Seems like buying the underlying is the best way to go? Not sure I have the stones to play this one, but it sure is tempting if you could really buy it for 36 where it is right now!

  110. And there you go – helping the middle class again:

    In mid-April, hundreds of members of the payday lending industry will head to Florida for their annual retreat featuring golf and networking at a plush resort just outside Miami. The resort just happens to be the Trump National Doral Golf Club.

    It will cap a year in which the industry has gone from villain to victor, the result of a concentrated lobbying campaign that has culminated in the Trump administration’s loosening regulatory grip on payday lenders and a far friendlier approach by the industry’s nemesis, the Consumer Financial Protection Bureau.

    Gone is Richard Cordray, the consumer bureau’s director and so-called bad cop, who levied fines and brought lawsuits to crack down on usurious business practices by an industry that offers short-term, high-interest loans that critics say trap vulnerable consumers in a feedback loop of debt. In his place is Mick Mulvaney, the White House budget director and a former South Carolina congressman, who was chosen by President Trump to assume temporary control of the bureau and has emerged as something of a white knight for the payday lending industry.

  111. I would wait until tomorrow no matter what Jelutuck! They'll have to work out all their VIX futures calculations. But at that price, it's getting interesting as long you sell premium along the way because there could be more downside. Not rushing into it… 

  112. SVXY is insane. If the current price of $30 is real, today's  move erased all the gains since mid-2016!!

  113. SVXY now below $20. I don't think it is a real security, just a random number generator. VIX was up 100% today, but this thing is down over 80%.

  114. That's actually the way it should work – it's an inverse relation to the VIX move:

    Keep in mind that the VIX was trading around 9 a month ago. It's up 400% since then. We really got complacent there. So it's not surprising to see SVXY lose big in the same period.

  115. SVXY – I see a current price of around $20.  I might just buy a 100 to watch it!

  116. SVXY's price bounces around but I'm  not sure it actually trades after hours. I have a buy order in for a little at $22 and it's not filling even though the quoted ask is about $19 right now.

  117. After continuing to fall AH, the indexes are positive right now. Crazy market indeed!

  118. To be clear, they are positive since the close, not for the day.

  119. Jetuluck- I use ETrade and they have a different section for after hours trading on their site.  I just bought some at $18.50.

  120. 17 handle on SVXY, unbelievable considering it closed at $71 & was trading at $140+ last month!?!?!

  121. SVXY – BOT 17.80 on think r swim 

  122. Is there a separate place on TOS for after hours? 

  123. I picked up some, placed the trade with ARCA.

  124. I just know there is some lucky trader out there who caught the LONG VIX – SHORT BITCOIN trade in size and is about to become a legend.

  125. SVXY now at $12.  This is crazy.  Could this destabilize the markets?

  126. I see that SVXY was halted today for a short time today.  These things are fun, but too good to be true and all that.  I have been burned before playing really great after hours deals!

  127. Me Too!  :)

  128. Likewise

  129. Stocktwits going nuts with people that bought SVXY before the close.  This after hours move makes no sense.  Looks like plenty of liquidity, really odd.  If you don’t know who the sucker is……..  

  130. SVXY still trading for under $12. My TOS order wont fill and I've been on hold a half hour trying to reach the trading desk. Very frustrating!

  131. Seriously, that may be a blessing.

  132. That Zero Hedge article claims they might liquidate the security!  It quotes:


    Additional risks arise as ‘liquidity gates’ may be imposed, even in the absence of a spike in volatility. In 2012, for example, the price of TVIX ETN fell 60% in two days, despite relatively benign trading conditions elsewhere in the market. The reason was that the promoter of the volatility-linked note announced that it temporarily suspended further issuances of the ETN due to “internal limits” reached on the size of the ETNs. Furthermore, for some of the volatility-linked notes, the prospectus foresee the possibility of ‘termination events’: for example, for XIV ETF a termination event is triggered if the daily percentage drop exceeds 80%. Then a full wipe-out is avoided insofar as it is preceded by a game-over event.

    The reaction of the investor base at play – often retail – holds the potential to create cascading effects and to send shockwaves to the market at large. This likely is a blind spot for markets.

  133. SVXY at 12-17 is a gift from God. I wish I could trade AH!!!!! That's just free money, unless somehow this 4% market drop caused them to go bankrupt?? I just bought some at $13.20. There is no way it's not at least 30-40 at some point tomorrow and if the market stabilizes even a little, it could be 60-80.

    StJ – the bitcoin trade is dead for the next 12-18 months. I can't agree more: SVXY is the trade now!

  134. I'm not sure my limited brain capacity can get around this. So SVXY holds two short VIX contracts. These have theoretically unlimited downside, but the fund has cash to cover some move down, probably 3 or 4 standard deviations right? I mean can it go bankrupt overnight?

  135. Honestly SVXY looks like free money to me as well.  Just AH anomaly.  I am just staring at it though.  Like a big bucket of $100 bills with “Free Money” written on it.

    Makes no sense.  Can’t make myself hit buy again.  40 minutes to decide!  

  136. I am thinking that it could definitely go bankrupt overnight.

  137. At least StJ pays me $1…. right?

  138. that's not a very good short instrument if it can't handle 4 points. Seems criminal. Oh well, good for my 35 puts I wrote off as worthless as little as a week ago!

  139. SVXY/Pat – No, I'd open a new spread and keep stops on the original spread.  Depends what you can get, of course, if it's $22+ (out of $25), then not much point in keeping it open.  

    SVXY – I hope it's not real but, after hours, it seems adjusted to $15!  If so, very bad for the short puts but I guess if the underlying goes up 100%, it's possible the ultra short goes down 100%.

  140. Basic question here. Are these the correct tickers on TOS to check after hour indexes :  /ES and /YM?  If so, how do those values relate to SPX and $DJI?  Thanks anyone.

  141. GE – Wow broke through 15 today…. getting a bit interesting but so far has only sold some '20 $18 puts…

    would like to get a spread when / if we find an inflection point in this market.

  142. HQ Trivia Paid Nothing For Its Super Bowl Ad

  143. Once again, no need to rush into anything with SVXY! It's some crazy move by the VIX today so not unexpected… XIV is also getting clobbered AH although no options so not as interesting. But SVXY survives the night and opens at $15 we would need to start loading up! The VIX is not going to go up another 100% to 80 I imagine. There is still some downside there for sure, but today was pretty remarkable already.

  144. Get Started: EPA, Army Corps reconsider ‘Waters of the US’

  145. And VIX futures are higher as well so should sort itself out.

  146. The False Choice Between Automation and Jobs

  147. VIX futures look lower after hours if I am looking at the correct symbol? (/VXG8)

  148. Driven Down the Road to War

  149. SVXY is supposed to be the opposite of VXX not the VIX.

    Why did it crash AH? XIV too.

    Aren't the VIX futures lower?

  150. Jabo, are you in Phil’s SVXY trade? Luckily I am not.

  151. Could SVXY go to zero this week? 

  152. I shorted some $60 puts today.

    Looks like I am going to be demolished tomorrow.

  153. This is insane. Dow down another 600 now.

  154. I made some quick money playing the futures but it’s too crazy to mess with very much. Amazing how much it’s sloshing around right now. 

  155. jabo why would you trade such dreck?

  156. stockbern… dreck is how I feel like for owning another pos

  157. SVXY – STJ, by the grace of God I escaped ! 

    Unreal !  Thanks for your cautions all day today.

  158. Wow, it looks like we're down to 23,400 now, another 1,000-point drop after hours. 

    I'm sorry I wasn't more bearish, was not expecting a drop this relentless and sudden.

    SVXY seems like it's not going to be recoverable at this rate – so much for STP hedges working since that one's an offset that will cost us the gains.  Fortunately, the LTP wasn't too exposed.

    GE/Batman – If at this point.  What's scary about this drop is there's no particular reason – seems like severe lack of liquidity is causing a massive melt-down as people try to sell.

    VIX/StJ – Don't count on it, another 1,000 points at the open could be ugly.

    Futures/Jeff – Way too crazy for me at the moment, staggering moves in short time-frames. 

  159. I take it back, picked up 2 long /TF for fun (1,429).

    /YM also tempting above the 23,400 line with tight stops below.  Getting back the 1,000-point drop would be $5,000 per contract!

    It's kind of like watching a horse race without a bet otherwise – just a bunch of horses on a track….

    Hedge fund is up 2% though because – well, hedging…

  160. Good morning!

    Nice move up, quick $5K on /TF so far – not bad for 2 contracts and even better on /YM at 24,000+ (that's the stop now).  In fact, I'm out on /TF, stop set for /YM and fresh horse would be /NQ if we pop 6,450 but I think we pull  back around here.

    6,450 lined up with 24,050, 2,635 and 1,477.50.

  161. I Suggest a evaluation of your list, perhaps today is “ the day”  to enter some of positions.

  162. LOL, check out yesterday's advance/decline numbers:

    Now THAT is what I mean when I say there will be no buyers on the way down!

    At some point, they have to start taking some profits.  Always tricky to call a top but what's so dangerous about this market is how low the volume has been on the way up and how narrow the focus has been on index leaders.  When selling does begin – there aren't going to be many buyers and things can drop really fast.

  163. The Day/Advill – I endorse anything on our Watch List that you'd like to own but, for now, I'm more into improving the portfolio positions we already have.  It's a lot cheaper, and more sensible, to roll our FNSR 2020 $17/25 bull call spread, that we paid $4.05 for down to a 2020 $13/25 spread for net $1.50 so now we're in the $12 spread for net $5.55 (less $3.10 collected for puts) and $3.70 in the money.  Doesn't that make more sense than buying a whole new position?

    Also, we have to remember to look at NAK, I was waiting to DD at 0.85 and already they popped over $1.

  164. Wow, gotta be quick in this market – now we're turning back down sharply.  

    Well, another shot at /NQ 6,450, which was good for 100 points ($2,000 per contract) just an hour ago.  2,600 on /ES 27,750 on /YM and /1,460 on /TF all need to be over as well to stay bullish and TIGHT STOPS below – as these can also be used as shorting lines – especially 2,600.

    Notice on TV how, suddenly, everyone "saw this correction coming"?  No accountability at all!
    • After a busy week in the U.S. that showed accelerating wage growth, the economic calendar slows to a trickle.
    • Investors will still get something to chew on today, when the Commerce Department releases international trade data amid a more protectionist stance being adopted by the Trump administration.
    • Economists forecast another steep trade deficit of $52.9B for December, following a $50.5B deficit in November.
    • Bitcoin slid another 13% to below $6,000 overnight, bringing the cryptocurrency's losses to more than half since the start of 2018 following a peak of almost $20,000 in December.
    • At a Senate Banking Committee hearing scheduled for today, the SEC and CFTC plan to ask Congress to consider federal oversight for digital-currency trading platforms, many of which have been operating in a regulatory gray zone.
    • The U.S. House of Representatives plans to vote on legislation today to keep federal agencies operating beyond Feb. 8.
    • It will likely include a full year of defense spending, two years of funding for community health centers, but nothing related to DACA or a border wall.
    • The measure would also mark the fifth short-term spending bill, known as a continuing resolution, that Congress will have considered since last fall.
    • German factory orders surged in the last month of 2017, with the economy's solid performance helping the country's largest union – IG Metall – score a landmark labor deal.
    • Orders, adjusted for seasonal swings and inflation, increased 3.8% after dropping a revised 0.1% in November.
    • "Brisk demand from abroad brought full order books and good sentiment in companies. German industry should start strongly into 2018," according to the Economy Ministry.
    • The top 33 shale oil producers need another $8.3B in funding plus $2.4B in debt refinancing to meet expected capital spending of $58.4B this year in a $60/bbl environment for WTI crude oil, according to analysts at Rystad Energy.
    • Capex would be cut ~18% to $47.7B without the additional funding and any debt refinancing, which would bring down the amount of completed wells to 5,600 from 6,900 with external capital, according to the report.
    • Rystad expects Anadarko Petroleum (NYSE:APC), ConocoPhillips (NYSE:COP) and Marathon Oil (NYSE:MRO) "to have positive cash flow balances amounting to $2.3B in 2018 [but] unless these companies acquire the acreage of cash negative operators, the gap between capex and available funds without additional financing will come to $10.7B."
    • The report also identifies seven U.S. shale producers that would take the biggest hit from hedging losses: Concho Resources (NYSE:CXO), Encana (NYSE:ECA), Diamondback Energy (NASDAQ:FANG), Devon Energy (NYSE:DVN), Pioneer Natural Resources (NYSE:PXD), QEP Resources (NYSE:QEP) and WPX Energy (NYSE:WPX).
    • The U.S. is considering a ban on oil imports from Venezuela and exports of petroleum products but is wary of damage to U.S. companies, Secretary of State Tillerson said over the weekend.
    • Valero Energy (NYSE:VLO) is the biggest buyer of Venezuelan oil, importing ~208K bbl/day in November for its refineries in Texas and Louisiana, and Chevron (NYSE:CVX) was the second largest buyer.
    • As Venezuela became dependent on demand from the U.S. Gulf Coast, home to a huge cluster of refineries, U.S. fuel makers grew to rely more on Venezuelan crude; the country is now the second largest supplier of crude to Gulf Coast plants, after Mexico.
    • With late figures in, ratings for the Super Bowl on NBC (NASDAQ:CMCSAfell 7% Y/Y and reached their lowest point since 2009.
    • As always with major sports and entertainment events, 103.4M is enough to dominate the landscape for the day. But that was enough to show a heavy drop from last year's 111.3M viewers, according to Nielsen, a move that mirrors the regular-season decline.
    • That's still enough to make it the 10th most watched U.S. TV program of all time. (The top nine programs? The Super Bowls from 2010-2017 and the MASH series finale).
    • In Nielsen's parlance the game drew a 47.4 rating, down from last year's 48.8 on Fox. Interestingly, the teams' hometowns of Philadelphia and Boston were only No. 2 and No. 3 in metered markets, topped by Buffalo, N.Y.
    • In the live-streaming world, the game set records, however, with an Average Minute Audience of 2.02M viewers through the various alternatives on NBC apps and those from, Verizon, Yahoo Sports and others.
    • This is Us, the drama program that got the coveted postgame catbird slot, drew a 16.2 rating — good enough for the top-rated postgame entertainment telecast overall in six years, and making it NBC's most-watched scripted show in more than 13 years.
    • Comcast shares slid 4.6% today with the market decline and are flat after hours.
    Remember how Trump was going to negotiate tough with LMT and BA?  Bloomberg: Lockheed to get $10.7B for F-35s in Pentagon budget plan
    • The U.S. Defense Department plans to ask Congress to approve $10.7B to purchase 77 Lockheed Martin (NYSE:LMT) F-35 aircraft in the fiscal year set to begin Oct. 1, Bloomberg reports.
    • The proposal will be included as part of the Pentagon's FY 2019 base defense budget plan of ~$597B, which would be a victory for LMT, as the quantity is close to the 80 planes the Obama administration had projected for the fiscal year in its final report on major weapons systems two years ago, according to the report.
    • Congress appropriated money for 74 F-35s in FY 2017, 11 more than requested in the last Obama-era budget, and the DoD requested 70 aircraft for the current FY 2018 but appropriations have yet to be passed as Congress remains mired in budget and policy disputes.
    • The energy sector is one of the market's worst performers in a day filled with awful performers, with the Energy Select Sector SPDR ETF (XLE -4.2%) at one point posting its biggest one-day decline since January 2016 and following Friday's 4% thrashing.
    • Exxon Mobil (XOM -5.7%) is in the midst of a ~10% loss over two trading days, while the sector drowns in a sea of red: CVX -5.3%BP -4.4%MRO -4%COP -3%APC -3.4%HES -6%OXY-3.2%VLO -3.8%KMI -3.5%EPD -2.8%ETP -2%.
    • Among the fundamental reasons – aside from the selling wave that has washed over Wall Street today – are a stronger dollar and rising U.S. crude production, as tailwinds for oil markets in recent weeks “have become headwinds, including the U.S. dollar bottoming out, and storage drawdowns turning into inventory builds,” says Colin Cieszynski of the Canadian Society of Technical Analysts.
    • "When something becomes too good, we know it’s about to end in tears," warns Ole Hansen, head of commodity strategy at Saxo Bank. "And the market has almost become too perfect in the last few months."
    • U.S. WTI crude settled today -2% loss at $64.15/bbl, marking its lowest finish since Jan. 22, and Brent crude ended -1.4% to $67.62/bbl, ending at a roughly four-week low.