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Flailing Thursday – Trouble at 2,700

Well, that about sums it up, right?

As I said in yesterday morning's Report: "On the whole, I'd rather if we consolidate here before even popping above 2,700 again as 2,850 was too high.  Hopefuly we can hang around 2,650 for a week or two and form a proper base before trying to move higher again – but traders are so impatient.…" 

Well, it's been a day and people are already freaking out because we haven't flown back to 2,850 and it's going to be a while before they realize 2,850 shouldn't have happened in the first place and it's more likely that this (2,700) is the top of the range, not the bottom – at least through Q2.  On our Big Chart, 2,640 is the 20% line on the S&P and, even being generous, THAT should be the middle of a range we move 5% up (2,772) and 5% down (2,508) in, so call it 2,500 to 2,800 with 2,650 the middle line.  That's where I think we'll settle once all the dust clears.

This morning, however, in our Live Member Chat Room, we are playing for a bounce using the following levels:

I also like /TF over 1,500 and /NQ over 6,600 and /NQ is lagging and likely to pop big if we get moving.  /YM 24,800 and /ES 2,675 will confirm and tight stops if 2 of the 3 fail to hold those lines!

Remember, 25 points (back to 2,700) on the S&P (/ES) is good for $1,250 per contract – nothing to sneeze at.  The Russell (/TF) hit 1,520 yesterday and that's up $1,000 per contract and the Nasdaq hit 6,700 and getting back there pays $2,000 per contract, so it's well worth playing for the bounce and the BOE gave a more hawkish statement this morning and that should keep the Dollar in check and allow our indexes a bit of breathing room today.  

In the Futures, we tested 2,550 on Tuesday and our 30% line is 2,860 and 2,640 is 20% so, ignoring the spike below, we have a 220-point drop and our 5% Rule™ tells us to expect a 20% weak bounce off that fall (44 points) back to 2,684 and then the strong bounce line is 44 more points at 2,728 and that is EXACTLY where we topped out yesterday.  It also tells us that we can expect a 44-point overshoot of 2,640 on the way down and we saw that (and a bit more, but not during market hours) as well so, so far, things are going exactly as we expect they would – indicating the Bots are in charge of the moves.  

As you can see, we're following the 5% Rule™ pretty much to the penny so it's not a good time to "think" when we can just watch and see what happens.  If the market is recovering, we should get back over that strong bounce line and hold it into the weekend and, if the weak bounce line fails to hold this morning – it's more likely we head back down than up.

Our base level on the S&P (what we call the "Must Hold" line) is way down at 2,200 and that is where we think the bottom line value for the index is and the 20% line (2,640) is the highest we think the S&P should go in 2018.  This is why I was so upset when we were over the line.  The indexes simply haven't yet grown into that valuation yet.  Since we ran the numbers (last fall) we've had the Tax Cuts and the Repatriation of Overseas Cash so I'm willing to bump up to the 10% line (2,420) as a base but that still makes 2,860 way overbought and 2,650 is the level we're expecting to consolidate around into Q2 earnings.

We use our 5% Rule™ for futures trading as well – as we did yesterday when Gasoline (/RB) made a 2.5% correction back to $1.755.  Live, during our Weekly Trading Webinar, we picked up 2 long contracts and used a 3rd to lower our basis a bit and ended up picking up a quick $1,121 profit – LIVE, so that was worth attending the Webinar for, right?  

This morning, I put out a note to our Members and even issued a Top Trade Alert to go long again at $1.76 and we'll see how that plays out into the weekend.  We expect at least $500 per contract gains and we're happy to take those quickly off the table, along with similar gains on our Nasdaq (/NQ) longs

Bear (oops, don't say "bear"!) in mind 2,684 is likely to be rejected on /ES, so that's the point at which we want to take profits on /NQ (6,605) and /TF (1,510) and then, if we brake over, /ES becomes a good play over 2,685 with tight stops below along with the others (and /YM should be 2,850).  That's all it takes to play the Futures and we call that our Pony Express Strategy, where we ride a horse up to resistance and then get a fresh horse for the next leg up.  All the futures contracts pay similar amounts for similar moves, so it doesn't matter which one we play so we go for the one with the best lines at any given moment.

Not much else to do but watch and wait today.  Unless we're over our strong bounce lines tomorrow, we'll be re-hedging into the weekend (we're a bit bullish at the moment) but I'll be surprised if we clear 2,700 – let alone 2,728 and that means we're back to the same hedges we were using before the crash.  

Meanwhile, enjoy the bounce but "Don't get excited!"  


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  1. Good Morning -  one hit/one miss on earnings…

    TWTR  +++ pre-market up 27% on earnings beat

    TEVA – pre-market down 8% on lower 2018 guidance… although is it trading at a forward PE below 10. 

  2. Most experts seem to agree that a war with N. Korea would be a catastrophe for a lot of people:

    It was a chilling conversation. Stavridis said there was at least a 10 percent chance of a nuclear war between the US and North Korea, and a 20 to 30 percent chance of a conventional conflict that could kill a million people or more. Flournoy said President Trump’s tough talk about North Korea — which has included deriding Kim Jong Un as “Little Rocket Man” and threatening to rain “fire and fury” down on his country — made it “much more likely now that one side or the other will misread what was intended as a show of commitment or a show of force.”

  3. HBI down 6% pre-market after earnings guidance weaker than Consensus.  

  4. The phony deficits hawks:

    Republicans used to profess to be extremely worried about the budget deficit. Many of us suspected at the time that they were full of it. And one big thing we’ve learned this week is that they were, indeed, full of it.

    Back in 2012, Senate Majority Leader Mitch McConnell called the budget deficit “the nation’s most serious long-term problem.” That same year, House Speaker Paul Ryan called it a “serious threat” to the economy. They were full of it.

    Not just in the narrow sense that they both went on to enthusiastically endorse a $1.5 trillion tax cut late last year. Nor even in the somewhat broader sense that the real cost of that tax cut is much higher than $1.5 trillion when you consider the various accounting gimmicks and bad-faith phaseouts that were used to squeeze it under that figure.

    Even under the weird linguistic conventions of American conservative politics where deficits caused by tax cuts don’t count as real deficits, today’s budget deal — a big, multi-billion dollar increase in military spending “offset” by a nearly-as-large increase in non-military spending — gives up the game entirely. They don’t care, on any level, about the size of the federal budget deficit.

    In some ways this is healthy, since deficit alarmism was never a good idea on the merits. But in other ways, they’ve picked a terrible time to own up to not caring — the great wheel of macroeconomic history has finally spun back to a position where deficits are plausibly an actual problem for the economy, albeit a modest one.

  5. The XIV story – makers of their own doom!

    So XIV has $ 1.5B notional short VIX futures, and an NAV of $ 1.5B ($ 100/share).   Now let’s make up some numbers: Imagine what happens when the short VIX futures go up 40%.  XIV now has $ 2.1B in short futures exposure, and and NAV of only $ 900MM (because it has lost $ 600MM on the short futures position).  So what does the XIV manager have to do?  He goes out and buys VIX futures to reduce his exposure and get it back in line with the NAV.

    Herein lies the rub…  As the XIV manager goes out and buys VIX futures, in massive size, in an illiquid volatility market, he drives the price up…which drives the NAV down… which requires him to buy more VIX futures… Rinse, repeat.   This is why we saw VIX futures spike late in the day on Monday, and especially into the 4:15pm ET benchmark (times on these charts are Central time, fyi).

    So, the ETN’s own rebalancing creates negative convexity – where its own executions drive the price to a level where it must continue to buy more, higher – a vicious feedback loop. 

  6. Good morning, All!

    The webinar replay is now available!

  7. This move in TWTR is incredible ! ! !

    I'm there, but unfortunately, more than 1/2 the position is covered.  Never expected this.

  8. Thoughts on HBI earnings? 

  9. Good morning!  

    See what I mean by needing to take quick profits – wow!  Just have to watch and wait and, hopefully, /TF finds support at 1,500 but there's no good support as the others are all failing their pink (center) lines on the Pivot Points.  In fact, /TF is the laggard to the downside if you do need a short below that line. 

    Still I want to play long and we know what babies those Europeans are and they are down 1% and taking us with them at the moment but we can:

  10. Wow on TWTR but we knew they were undervalued last year.

    TEVA looks like we can get back in the water after the downgrade police have at them.  

    Friggin /NQ is moving up and down 5 points at a time – that's not normal at all!  I would avoid futures unless you can shake off a big loss as it's one of those days.  

    Oops, as I wrote that it went from 6,590 to 6,575 in about 2 seconds!  

  11. Have to buy some (/NQ) at 6,550 – if we hit it.  

    Big Chart – Would be fun to test those 200 dmas properly.  Good time to go shopping!  

    Millions/StJ – What does Trump care how many people die in his name – he's a sociopath.  

    Ouch, there goes 1,500 – no bullish plays if that's failing and, as I said, good lagging short below that line with /NQ 6,550 a good long on the way up.

  12. HBI/Learner, CRS – I don't like the $1Bn increase in debt with only $460M in cash remaining.  Not a clear picture on what they are doing so back to LB as my favorite stock for now!  

    Wow, 6,575 – taking half of that off!  Stops at 6,570 on the rest but could gap down right past it the way this is moving!  

  13. That was literally 25 points in 5 minutes ($500 per contract) – crazy!   I have 4 longs left with a stop now at 6,580.  

  14. WTF, 6,555 again.  This is a very scary market!   But back in, of course (I think I have a problem…surprise

  15. Not ready to jump on TWTR yet – they are still quite expensive for a social network company that is not adding users! And that faces problems with disinformation bots… 

  16. Buy back the OID March 30 calls at .08 and sell March $26 for .73

  17. XIV/StJ – That's exactly what I said the other day.  

    Submitted on 2018/02/06 at 9:59 am

    Nothing to do but wait for the dust to settle, word is they are going to withdraw the ETN, whatever that means at this point.  To some extent, this is what happens when any crowded ETF has to unwind, the ETF was forced to buy VIX to cover as people sold the fund and that then caused the fund to sink further as the VIX rose, forcing them to buy more VIX to cover.  It's going to correct quickly, but not sure if the damage will be undone.

    6,570 – Wow, they are just giving money away today! 

    More downward pressure now as the Dollar should be bouncing of 90 so a bit less inclined to jump back in once these stop out (but still long my /DX, of course). 

    Never expected/Albo – No one expects…

    HBI just spent half the money they borrowed – not a terrible purchase, actually. 

    • Hanesbrands (HBI -10.7%acquires Bras N Things in a deal valued at A$500M (~$400M).
    • Bras N Things is a leading specialty retailer in Australia, New Zealand and South Africa that generated sales of approximately A$180M in 2017.
    • The company says the purchase price for Bras N Things is ~10X 2017 EBITDA and is expected to be less than 8X EBITDA after cost and revenue synergies.
    • The deal is expected to be accretive to earnings in 2018.
    • Hanesbrands (HBI -9.7%) falls after full-year profit guidance disappoints.
    • The company forecasts FY18 EPS of $1.72-$1.80 vs. $2.04 consensus, even though the outlook for revenue is ahead of estimates ($6.72B-$6.82B vs. $6.64B).
    • CEO update: "We rebounded to achieve organic growth in the third and fourth quarters, including fourth-quarter organic growth for each of the Innerwear, Activewear and International segments. We have additional work to do, including addressing inflationary and short-term cost pressures, but our brands are strong, our key market shares are increasing, our international businesses are sizable and growing, and we are driving significant direct-to-consumer growth worldwide."
    • Hanesbrands trades below $20 for the first time since last December.
    • Previously: Hanesbrands EPS in-line, beats on revenue (Feb. 8)

    OK, now I don't mind that they borrowed $1Bn and spent half of it.  I'm sure knowing rates were heading higher forced them to make the decision while they could borrow cheap and not a bad use of $1Bn actually.   Let's let the dust settle but put them on the shopping list!  

  18. FU SVXY!!!!!

  19. HBI – looks like the quarter was fine…. with some compression in profits,  I don't understand the outlook…. I had them pegged at 2.09 for '18 and 2.23 '19 for ….  so this is a pretty major change…..  still good for a 23 price target 26 ish. but Im concerned at what is changing in the cost structure

  20. HBI – a 26ish price target 

  21. Ouch, Kaplan just sent the markets lower:

    • Dallas Fed expects GDP growth to peak in 2018 in the range of 2.5% – 2.75% and slip in the next two years.
    • Dallas Fed President Kaplan expects unemployment to dip below 4% in 2018 reflecting stress in the labor market.
    • Source:

    Jobless claims fall for second straight week

    • Initial Jobless Claims -9K a221K vs. 235K consensus, 230K prior (unrevised).
    • Continuous Claims: -33K at 1.923M vs. 1.956M.

    Blockchain players higher in premarket action

    • While Bitcoin trades nearly flat compared to a day ago, cryptocurrency companies are getting a look from investors. Some analysts are reminding that despite the wild fluctuations in Bitcoin prices, blockchain initiatives are moving forward.
    • Kodak (NYSE:KODK) is up 7.69% premarket to $6.30.
    • (NASDAQ:OSTK) is 3.38% higher to $58.05.
    • Riot Blockchain (NASDAQ:RIOT) is showing a 11.73% gain to $16.00.
    • Walmart (NYSE:WMT) makes an addition to its board that makes quite bit of sense given the huge e-commerce push out of Arkansas.
    • Square (NYSE:SQ) CFO Sarah Friar is being added as the newest independent director to the retailer’s 12-person board.
    • “We’re pleased to welcome Sarah to the Walmart board and know that Walmart will benefit from her fresh perspective and skillset, which includes strong expertise in finance, operations, strategy and knowledge of technology,” says Walmart Chairman of the Board Greg Penner.
    • WMT +0.12% premarket to $102.97.
    • Source: Press Release

    Exxon Mobil: At A Critical Juncture 

    • Southwestern Energy (NYSE:SWN+11.1% premarket after announcing several strategic steps to reposition its portfolio and issuing 2018 guidance.
    • SWN says it plans to actively pursue strategic alternatives for the Fayetteville Shale E&P and related midstream gathering assets; identify and implement structural, process and organizational changes to further reduce costs; and utilize funds to reduce debt, supplement Appalachia development capital, potentially return capital to shareholders and for general corporate purposes.
    • For 2018, SWN forecasts average net production of 930B-965B cfe, up 6% vs. 2017 production of 897B cfe, and plans capex of $1.15B-$1.25B.
    • Chicago Bridge (NYSE:CBI) has received a letter of award from Abu Dhabi National Oil Company to build a Crude Flexibility Project valued at more than $500M in Ruwais, UAE.
    • The company is part of a JV led by Samsung Engineering, that will execute the $3.1B CFP, which will upgrade the Ruwais Refinery to process heavier offshore crude oil from Upper Zakum fields.
    • UPS (UPS +0.1%) is introducing something new with UPS Worldwide Express Freight Midday.
    • The service is an extension of the current UPS Worldwide Express Freight service, offering a commit time of 12:00 p.m. or 2:00 p.m. from all 71 origin countries to 35 key destination countries.
    • "We have customers in the industrial, auto, high tech, and healthcare fields that need shipments fast and sometimes end of day just isn’t soon enough," says UPS marketing exec John Miltenis.
    • "Our new Midday service is unique in the market and provides our customers with a strong competitive advantage when timing is critical," he adds.
    • Sealed Air (NYSE:SEE): Q4 EPS of $0.58 beats by $0.01.
    • Revenue of $1.23B (+11.8% Y/Y) beats by $40M.
    • Press Release
    • Teva Pharmaceutical Industries (NYSE:TEVA) Q4 results ($M): Revenues: 5,459 (-15.9%); Generics: 3,114 (-16.2%); Specialty Medicines: 1,795 (-18.5%).
    • U.S. generics: 1,186 (-15.0%); U.S. specialty meds: 1,165 (-32.1%).
    • Copaxone: 821 (-19.1%).
    • Net loss: (11,600) (-999%); non-GAAP net income: 1,014 (-31.5%); loss/share: (11.41) (-999%); non-GAAP EPS: 0.93 (-32.6%); cash flow ops: 1,179 (-17.3%).
    • Goodwill impairments of $17.1B in U.S generics business recorded in 2017.
    • 2018 guidance: Revenues: $18.3B – 18.8B (down 17.2% from 2017); non-GAAP EPS: $2.25 – 2.50.
    • Shares are down 9% premarket on robust volume.
    • In its Q4 earnings presentation, Teva Pharmaceutical Industries (TEVA -8.6%) announced that it expects to complete 50% of its planned 14,000 headcount reduction by next quarter. Additional points:
    • Annual operating plan completed with the new management team.
    • 12 manufacturing facilities closed or sold, six more on tap for this year.
    • 25 programs in Specialty Medicines and over 100 in Generic Medicines discontinued.
    • More than half of the planned $3B reduction in base spending will be achieved this year. The full amount will be achieved in 2019.
    • Three top growth drivers: movement disorder med AUSTEDO (deutetrabenazine), migraine med fremanezumab and pain med fasinumab.
    • Five-year debt maturities to be reduced to $1.7B by 2022.
    • Q4 cash flow ops was down 17% to ~$1.2B.
    • Total outstanding debt at year-end was $32.475B.
    • L Brands (NYSE:LBreports sales increased 29% to $1.04B in January.
    • Comparable sales were up 7% for the month. Comparable sales rose 2% for the 14-week period covering Q4.
    • The company expects to report Q4 sales of $4.823B vs. $4.72B consensus and Q4 EPS of about $2.05 vs. $2.00 prior and $2.02 consensus.

    Wow, people have turned unforgiving on any disappointment: Ubiquiti Networks -14.6% with flat profits despite revenue beat

    • Ubiquiti Networks (NASDAQ:UBNT) has slipped 14.6% this morning after its revenues topped high estimates but guidance at the midpoint came up lighter than consensus expectations, and net income was flat.
    • It swung to a net loss on a GAAP basis of $51.5M (from a year-ago gain of $60.6M), including a $110.7M tax expense due to the Tax Cuts and Jobs Act. Non-GAAP net income was $59.6M vs. the prior-year $60.1M.
    • Revenues overall grew 17.5% Y/Y and 2% from Q1, driven by demand for UniFi AC and airMAX AC lines.
    • Revenue breakout: Service Provider Technology, $119.9M (up 3.7%); Enterprise Technology, $131M (up 33.7%).
    • Cash came to $823M, up 34% from the prior year and up 30% from Q1.
    • For Q3, it's guiding to revenues of $245M-$260M (vs. consensus for $255M) and EPS of $0.92-$0.99 (vs. consensus for $0.98).
    • Conference call/webcast Q&A to come at 11 a.m. ET.
    • Shares of iRobot (NASDAQ:IRBT) fall sharply in early trading after the company issues disappointing guidance.
    • The company expects 2018 revenue of $1.05-$1.06B vs. $1.02B consensus and full-year EPS of $2.10-$2.35 vs. $2.80 consensus (via GAAP).
    • CEO update: "In 2018, we plan to capitalize on the incremental investments we made in 2017 with the introduction of new products in the second half of the year. We expect double-digit revenue growth in all regions as we continue to evolve and extend our proven sales and marketing initiatives in overseas markets. In the U.S., we expect continued strong sales following our 40+% growth in 2017."
    • Previously: iRobot beats by $0.29, beats on revenue (Feb. 7)
    • IRBT -19.92% premarket to $70.50 vs. a 52-week trading range of $52.12 to $109.78.

    GrubHub +6.5% after Q4 beats, in-line guidance, Yum partnership

    • GrubHub (NYSE:GRUB) shares are up 6.5% premarket after the company announces a Yum Brands partnership and reports Q4 results that beat EPS and revenue estimates.
    • In-line Q1 guidance: Revenue, $224M to $232M (consensus: $227.14M); EBITDA, $54M to $60M. 
    • In-line FY18 guidance: Revenue, $910M to $960M (consensus: $938.33M); EBITDA, $225M to $255M. 
    • Key metrics: Active diners, 14.5M (+77% Y/Y); Daily Average Grubs, 392.5K (+34%); gross food sales, $1.1B (+39%); adjusted EBITDA, $57M (+45%); operating costs and expenses, $178.9M; cash and equivalents, $234.1M.  
    • Earnings call is scheduled for 10 AM Eastern Time with a webcast available here
    • Press release     
    • Previously: Yum Brands and Grubhub announce strategic partnership (Feb. 8)
    • Previously: GrubHub beats by $0.06, beats on revenue (Feb. 8)

    Twitter soars after turning profit

    • Twitter (NYSE:TWTR) is now up 26% in premarket trading after achieving GAAP profitability for the first time.
    • The company brought in $91M in profit off of revenue of $732M, although the Twitter used base stayed at roughly 330M vs. 333M consensus estimate.
    • In Q4, adjusted EBITDA was reported at $308M vs. $242M consensus. For Q1, Twitter expects adjusted EBITDA of $185M-$205M vs. $188M.
    • Previously: Twitter beats by $0.05, beats on revenue (Feb. 8)

    T-Mobile -1.4% as record revenues miss slightly

    • T-Mobile (NASDAQ:TMUS) is 1.4% lower premarket after revenues came up slightly short of consensus in Q4 earnings with other operational numbers generally in line.
    • EPS on an as-reported basis was $3.11; it included a $2.50/share benefit from the impact of tax reform legislation. Net income was $2.7B, incorporating a tax-law benefit of $2.2B.
    • Total net adds came to 1.9M. Branded postpaid net adds were 1.1M; branded postpaid phone net adds came to 891,000.
    • Meanwhile, branded prepaid net adds were 149,000. Postpaid phone churn fell 10 basis points to 1.18%.
    • Branded postpaid ARPU came to $46.38, down 4.1% Y/Y; branded prepaid ARPU was $38.63 (up 1.1%).
    • Of revenue that rose 5.1% to a record $10.76B, service revenues increased 7.1% to a best-ever $7.76B.
    • Free cash flow rose 53% to $1.1B; net cash from operations rose 28.5% to $2.1B.
    • For 2018, it's guiding to adjusted EBITDA of $11.3B-$11.7B (including leasing revenues of $0.6B-$0.7B), light of consensus for $11.95B, and branded postpaid net additions of 2M-3M subscribers.
    • Press release

  22. LNG/ all

    Cheniere has now 4  compression lines operational, they have long-term contracts that were negotiated well before today prices level, from my point of view  and what has been reading for years about the contracts they  have, they must be doing a killing with the price they are buying NG and the prices of the LNG  ready to freight., price is not so low  right now  but selling puts 2020  is  $10 with a $55 price.

    Will appreciate  your comments, 

  23. SVXY/Jabob – Why, do you think it's unfair that today is considered volatile?  

    HBI/Batman – Yes, I'm looking more and liking more.  I'd love to BUYBUYBUY but the market still could drop another 10% and I don't want to use up too much firepower not even 40 days after starting our new portfolios.  

    LNG/Advill – I love them as a long-term play along with, of course, /NG or even UNG.  I was hoping LNG would come bat to the 200 dma at $48.50 but I don't even think we'll see $50 again.

  24. LNG / Phil….I will wait,  ER is on Feb 21st., but if they touch near $50 before will buy some. 

  25. What we have going for us is they are spending a fortune building things.  

    Wow, and down we go now – thanks Kaplan!  Truth hurts…

    Now we'll see if 6,500 holds on /NQ and that's lined up with 24,500, 2,650 and 1,490 but until we're back over 1,500 on /TF, nothing to be bullish about.  

  26. Don't forget, 2,640 is the key point of failure for /ES.  As predicted in chart above, this is most likely going to be our base line – not nec. a bottom though hitting it this fast makes me wonder if maybe we're heading towards the 10% line – but let's not get ahead of ourselves!  

  27. People are going to wake up to the fact that we are adding at least $1.5T to the debt to get to 2.5% growth which we were getting without the tax cuts anyway! But the top 0.01% will get their money and the rest will inherit the deficits. Such a joke!

  28. Sold 30 CHK 2.5 puts for .49.

  29. Jan 2019.

  30. I know we like WPM but PAAS covered calls pays nicely and there has been a lot of accumulation of 

    2020 $17 calls

  31. Phil IRBT – down 30% today 

    Weak guidance pulls the plug on iRobot

    Feb. 8, 2018 8:42 AM ET|About: iRobot Corporation (IRBT)|By: Clark Schultz, SA News Editor 

    Shares of iRobot (NASDAQ:IRBT) fall sharply in early trading after the company issues disappointing guidance.

    The company expects 2018 revenue of $1.05-$1.06B vs. $1.02B consensus and full-year EPS of $2.10-$2.35 vs. $2.80 consensus (via GAAP).

    CEO update: "In 2018, we plan to capitalize on the incremental investments we made in 2017 with the introduction of new products in the second half of the year. We expect double-digit revenue growth in all regions as we continue to evolve and extend our proven sales and marketing initiatives in overseas markets. In the U.S., we expect continued strong sales following our 40+% growth in 2017."


  32. Debt/StJ – It's really time to start planning an exit from this country.  I don't know if we'll survive 3 more years of Trump and GOP in charge. 

    PAAS/Stock – They are good but I like WPM because they're not miners, just trading paper in a pretty reliable system that works in their favor when prices rise and not too much against them when they don't.  

    IRBT/Batman – Well it was our Stock of the Century since the single digits but we took the money and ran when they ran towards $50, as I thought that was overdone.  Then they went to $110 and now back to $60 but I still think $50 is overdone.  

    Our Stock of the Decade, AAXN (was TASR) is still on track for a 10-bagger at $50.  

    Speaking of being halfway there – Dow down 450!   Another 450 and we're testing 24,000 again!


  33. where is mr stick ;-(  


  34. IRBT – mega ouch for any suckers that bot yesterday.

  35. ALB holding up.  That's one I think we'll grow into. 

  36. Long-Term Portfolio Adjustments (LTP): OK, we're down 2.3% on the LTP with the Dow at 24,450 but I think we should take advantage of this VIX and we still have $750,000 of our $1M buying power available and $527,450 out of $500,000 in CASH!!! (we sold a lot of premium) so would be silly not to use some of it and we start by improving the positions we have and THEN we see what new positions will help balance our risk best (CIM is a must).  

    Short Puts – None bother me.  Worst-looking is IBM 2020 $145 puts we sold for $12.50 so net $132.50 and IBM is at $151 but the puts are down 36% at $17.  Good example of how you have to learn to ignore the paper losses and focus on whether you are on or off track.  Great for a new trade – especially as an offset to a hedge!   We only sold 5 so we might circle back, sell 5 more and add a bull call spread as this is where I like to buy IBM ($150).

    FTR – What?  It's profitable!  

    ABX – 40 2020 $13 calls at $3 can be rolled to 40 2020 $10 calls at $4.70 for net $1.70 ($6,800) and the short $20 calls are fine and so are the 20 short $15 puts, though they are down 40% at $3.25.  We spent net $4,700 on the original $28,000 spread (upside at $20 is $23,300, 495%) and now we've spent $11,500 on the $40,000 spread with an upside of $28,500 (247%).  That's perfectly normal – it's very lucky if we hit it right off the bat and make 500%.

    BBBY – Still good for a new trade and one of my favorites.

    Long Call 2020 17-JAN 17.50 CALL [BBBY @ $21.80 $-0.38] 30 1/8/2018 (708) $19,350 $6.45 $0.48 n/a     $6.93 - $1,425 7.4% $20,775
    Short Call 2020 17-JAN 25.00 CALL [BBBY @ $21.80 $-0.38] -30 1/9/2018 (708) $-10,500 $3.50 $0.17     $3.67 - $-495 -4.7% $-10,995
    Short Put 2020 17-JAN 17.50 PUT [BBBY @ $21.80 $-0.38] -20 1/8/2018 (708) $-5,600 $2.80 $-0.30     $2.51 $-0.15 $590 10.5% $-5,010

    CHK – I'm seeing $1.05 for our 2020 $3 calls and someone just paid $1.45 for the 2020 $2 calls so, if we can do that roll for net 0.40 – we should! 

    CMG – We're kind of even so let's get more aggressive.   We'll buy back the 4 short March $310 calls at $1.40 – not because I think we'll come back but it clears the slot for a sell on the bounce.  Now we'll take a proper risk and buy back the 10 short 2020 $310 calls ($38) as they are up $12 ($12,000) and I want to lock it in.  We can then roll our 10 long 2020 $280 calls ($50) to 10 long 2020 $260 calls ($58.50) as that's well-worth $8.50.  

    So now, if CMG goes higher, we'll sell the $310s again for $50 but have a much wider spread that's deeper in the money (and we'll sell more short calls).  If CMG goes lower, the $300 calls are $43 and we'd sell them by $40 and we'd be in a $40 spread ($10 wider) at a $20 lower strike for net $6.50 more.  That's our worse (not worst) case!  

    FNSR – The whole sector tanked for not very good reasons.  We'll take this opportunity to buy back the 30 short 2020 $25 calls for $3.05 and we'll buy 20 more (50 total) 2020 $14 calls for $6.50, which will bring our average to $8.24, less the $2 profit we just took off the table on the short calls is net $6.24 so right on track and then we'll sell more short calls!  

    GE – Back at $15 this morning.  We have 40 2020 $15 calls at $4.80, now $2.95 and we sold 40 2020 $20 calls for $2.35, now $1.33.  We sold 20 short 2020 $18 puts at $2.35 and they are now $4.13 but I'm fine with a net $15.65 entry so no worries there.  Let's buy back the short $20 calls as they are half done anyway with 2 years to go and the $10 calls are $6 (+$3) and the $13 calls are $4 (+$1.05) so let's just spend the $1.05 for now and roll down to the $13s and buy 10 more so we have an even 50 long 2020 $13 calls and then we'll see where things go.  If we head lower, we sell the $15s for maybe $2.50 and that's more than enough to pay to roll to the $10s from the $13s so we're spending net nothing (as we made $4,000+ on the short calls) to drop our spread $5 in strike.

    IMAX – Sept is out so we can roll our 15 long June $21 calls at $1.80 to 25 long Sept $18 calls at $4 and I refuse to pay 0.45 to buy back the short June $26 calls so leave those and we'll just sell 15 of the Sept $23 calls for $1.65 to help pay for the roll.  We sold 10 June $23 puts but I'm comfortable with that target so no sense in moving them.  

    SPWR – Tariffs killed us but overdone.  Earnings are 2/14 so we won't go crazy but it's crazy not to roll our 30 2020 $7 calls at $2.25 down to the $5 calls at $2.90 as that's just 0.65 for $2 better strike and a $2 wider spread (we sold the $12s, which is still a good target).  

  37. Retail group: Annual retail sales to rise 3.8 to 4.4 percent

  38. U.S. Congress to Hold Blockchain Hearing on Valentine’s Day

  39. Long-term US mortgage rates climb for fifth straight week

  40. There's not much negative news so I guess this is about the shutdown again or maybe, as I noted, it's not good to have such a rapid recovery for no reason either so now we're retesting the lows – hopefully they hold! 

    Nas (/NQ) hitting 2.5% Rule at 6,390 so good for another stab long but crazy moves make it very dangerous.  Lined up with 24,200, 2,615 and 1,475.

  41. Back in /RB long at $1.7507 (2).  

  42. 30-year auction went off OK, should be a little relief based on that.  

  43. I’m Calling It

  44. The Guns and Butter Budget

  45. UBNT – "net loss on a GAAP basis of $51.5M (from a year-ago gain of $60.6M), including a $110.7M tax expense due to the Tax Cuts and Jobs Act." 

    Add back the 110M tax expense due to Gropinführer's making America great again, they post net gain of 59.2M -  $68 seems like a bargain.  Of course you might be able to get them for under $40 when this is all over, so like Phil says… PATIENCE and Out.

  46. Phil – I never can figure-out the 5% rule. So big picture, on the Dow, is this just a 20% pullback of the about 18k to about 26k run?

    And i remember always reading 20% weak and 40% strong bounces, and so it works the same upsidedown?

  47. And so its either back up from here or down another 1600?

  48. Who cares about the market today – Phila is rocking with 1 million people in the streets!

  49. Adding to my VXX short calls.

  50. Deficits will be over $1T next year:

    With all these changes, the annual gap between spending and revenue in 2019 is projected to eclipse $1.1 trillion, up from $439 billion in 2015. And they are expanding the deficit at an unusual time, when the economy is growing and unemployment is low, a dynamic that often leads to shrinking budget gaps.

    The rallying cry will be cut spending. There won't be any talks of tax cuts paying for themselves!

  51. stjeanluc 

    What strike and month?

    Adding to my VXX short calls.


  52. Same ones Jan 19 100 calls.

  53. Is VXX better than UVXY?

  54. Phil – 5% Rule Redux

    StJL – "Who cares about the market today – Phila is rocking with 1 million people in the streets!"

    It is indeed this, and here is your moment of Zen… let me know what you think, and Out.

  55. You can sell UVXY calls, but I feel safer with VXX given the current volatility!

  56. Quoting my favorite WW2 general Naybob!

  57. Well that was a hard way to make $6K – 30 in and outs on /NQ:

    I think I'll take the rest of the day off from the Futures (unless there's another good set-up – wait – there's one!).  

    UBNT/Naybob – I would be happier at $45 to get back in but they were great last time on your call.

    5% Rule/Dsheara – I don't want to mix apples and zunes.  You CAN use the 5% Rule to simply go spike to spike but it's far less accurate and you have no idea if the base you are using is real..  What's more important is using the Must Hold lines, which is 21,000 on the Dow so 20% higher than that is 25,200 and 25% is 26,250 so that's the closest one. 

    On the downside, 24,150 is the 15% line and we hit that so those then are the key lines to watch and NOW we chart the move from 26,250 to 24,150, which is down 2,100 points and 20% of that is 420 so a weak bounce is 24,150 + 420 = 24,570 and a strong bounce is 420 more but call that 25,000.  

    Funny how that works out, right?  On the downside, by the way, an overshoot is also 420 to 23,730 and you can see how that sort of held up and 420 below that was 23,310, which was the low that quickly recovered (so far).  

    So, like the S&P above, you can now draw those lines around 24,150 to see how the Dow behaves as it consolidates and, for day-trading purposes, you can further break down weak and strong lines within those levels too.

    $1Tn/StJ – They are dreaming.  No one is paying taxes next year AND the economy isn't growing anywhere near 3%, let alone over it.  There will be a huge "unexpected" shortfall and the Reps will call for Social Spending cuts because they would never, ever roll back the ridiculous tax breaks.  

    Zen/Naybob – This is Zen!  

  58. /RB paying off like a broken slot machine!  

  59. Oh yeah, I meant index futures, not /RB and /DX!  

  60. VXX

    Would it be less risk to use a spread for example buy Jan 50 sell 100

    And do 2 x for about the same money

    Thanks for the help

  61. Do imbalanced VIX very much at your own peril!  I'm completely staying away from those things.  

  62. Speaking of /RB – up $2K for the day is good enough for me so done with that one.  

  63. Thank Phil   VIX  I am staying away too just learning 

  64. You could of course do a spread – sell the whatever and buy the 100 but I don't like to have to adjust spreads. Easier to simply roll a short position. 

  65. I am seeing odd option pricing today. On a lot of my positions with the underlying down, the calls are higher and the puts lower. Also the bid/ask spreads are crazy wide on a lot of positions.

  66. Phil – "Zen/Naybob – This is Zen!  "

    Indeed, Sir Elton John wrote that song for Billy Jean King and her Philadelphia Freedoms in 1974.  As I wrote…  

    This Super Sunday, we hope all enjoyed the game, our union and their freedom, while they still could.  And now this friendly and still prescient reminder…

    Said reminder (the video is excellent) for the losers and the winners echoes throughout history, which despite the efforts of many, and that whispering slave, oft repeats its mistakes. Time for zen, dim sum, my IV and Out.

  67. If we break 2590 and 2550, this shall become much, much nastier and any calls on the VIX will pay huge.

  68. So much for the Tuesday rally – right now people are just looking for the exit!

  69. Pricing/Jet – Yes, they are all over the place but that's to be expected with the Dow moving up and down 150 or so every half hour (more down than up).   As I often say – just make sure you are comfortable that your positions are on track and don't worry about the prices shown on the statement (unless you are tight on margin, of course, which you should never be). 

    Break/Naybob – Nah, I'm ready to go long /NQ 6,400 again. 

    Exits/StJ – There aren't enough sellers and still people who want to get out.

    VIX is back up so we're not done. 

    We're getting off easy by comparison:

    Wow, got out of /RB just in time – Let's hear it for non-greedy exits! 

    /NG getting cheap again but, as noted the other day, weather does not favor the trade this week.

    Honey badger don't care….

  70. You have to trend lower with this kind of disparity:

  71. Notice we're right at 24,150 and we set those 5% lines 3-4 months ago!  

    Before StJ started charting it, I just used that little spreadsheet in the corner of the Big Chart to tell me where the indexes were likely to turn – the 5% Rule has nothing at all to do with TA – it's just math…

    Ouch, selling off into the close = BAD! 

  72. StJL – "So much for the Tuesday rally – right now people are just looking for the exit!"

    And they should, a falling dollar and rising yen is a double whammy on anyone in that carry. Think HKD and RMB as well. The day comes when rolling is not so good,  and when margins get called, they must liquidate to pay the piper.  Back to my half full IV and Out.

  73. So I had 2 long /NQ at 6,400 and now we dropped to 6,375 so I added 2 more and now 4 long at 6,384 and, of course, I want to get back to 2 even.  I'm hoping that, if the Government doesn't shut down – we'll get a celebration bump.

    And adding 2 more at 6,365 as I'm hoping 2,600 holds on /ES but, if  it doesn't, I'll take the loss, now 6 long at 6,378 avg.  

  74. Wow, Just sold 4 well over my break-even.  Tight stops on last and can't lose now (6,396) unless we gap back.  

    Point was I played the Nas but keyed off what should be strong support on /ES 2,600 and quick profits off the table, of course.

  75. This does not look healthy with /YM at 24,000 and /ES at 2,600 as they both look like only those lines are pausing the sell-off.  If this dam breaks, we have a long way to fall!  

    2,600 on /ES happens to be the 2.5% line for the day – I simply can't believe that's going to fail in a single session.

  76. Yet, there it goes – very scary when big floors like that don't hold…

  77. I love how CNBC et al are always telling the retail investors to stay calm and hold onto their stocks during a sell-off while the Institutional Traders are clearly heading for the exits.  Yet no arrests will be made…

  78. So Trump is now presiding over the two worst point drops in market history.  Can't wait to hear his excuse. 

  79. Hannity already said it was Obama's fault

  80. Phil/NQ and ES- are you holding after hours?

  81. /RB – I'm long again below 1.75.  It's been a crazy day. 

  82. Well, we said the dip buyers have to get burned 3 times before the learn.  This would be twice burned.  

    Yikes, that was about the worst close I ever saw!  

    /NQ/Ravi – Well, now that we're at 6,300 on NQ, I have to give it another toss and I'll go 2 long overnight and see what happens.  I didn't buy /ES, was just watching it and it gave the sell signal when it failed 2,600.  

  83. Thx

    Did you close NQ?

  84. /RB/Tshroy – Me too, I don't mind making money on the same trade 3 times in a week…  

  85. Stop saying bad things about the beautiful markets Phil – all time highs baby!

  86. This looks ugly, but the indices are only down 3-4% for the year. 

    Drawdown since the peak on Jan 26 of course is ~ -11% so far.  

  87. It bears repeating – markets that go up parabolic don't correct sideways! There is just no support lines anywhere near. If we breach the 200 DMA it could get ugly. Generally speaking that's not the end but this could add some temporary velocity which we don't need now! The Dow is looking like one of the SpaceX booster landing without the last minute burnout. Looks what happened in 2015 and 2016 when it happened, we lost 250 points on the S&P in days. Not saying that this is going to happen, the market sometimes bounces off these lines, but with the current valuations and macro settings, it's a risk.

  88. Phil/ NQ – thx, read the message again and it makes sense. 

  89. Good point on CNBC – we are looking at a $1T deficits and the Fed is not buying bonds anymore. So what does that do to rates? They'll have to bribe a lot of buyers.

  90. Funny line on MSNBC from a Republican strategists – The Dems are a tax and spend party, the GOP is a tax cut and spend party, only one of these parties is intellectually honest.

  91. GE- so, how about a good old fashioned buy/write- 2020 $15 puts/calls nets $9.11/12.05.

    Call away yields 64% plus 3.3% dividend for two years. Seems like we used to do a lot of these trades way back when the VIX stayed elevated. 


  92. Rates/StJ – Absolutely heading higher whether the Fed wants to raise them or not and they can't afford to be behind the curve, so they'll have to "officially" raise rates just to make it look like they are in control.

    GE/Pstas – Since their dividend is so small, I didn't want to bother owning the stock but nothing wrong with doing it that way.

    Futures reopening with no bounce at all.  

    Image result for help me obi wan gif

    • Stocks resumed their headlong plunge into the red, with all three major market indexes settling at their session lows following another steep selloff in the final minutes.
    • The Dow posted its second 1,000-point decline of the week but ending ~80 short of Tuesday's intraday low, while the S&P 500 closed below its intraday low; both benchmarks are down more than 10% from the Jan. 26 high, officially entering correction territory.
    • Today's losses were broad-based and indiscriminate, with the 11 S&P 500 sectors down from 1.2% (utilities) to 4.5% (financials).
    • "This whole correction is really about rates… about inflation creeping up… about people thinking the Fed is either behind the curve or actually has to be more aggressive," says Stephanie Link, global asset management managing director at TIAA. "That fear, that unknown is really what's driving a lot of the anxiety."
    • Sentiment likely was not helped by comments from the likes of NY Fed President Bill Dudley, who called this week's stock market drop "small potatoes" and not an influence on his outlook for growth or policy.
    • Also, the reported two-year budget agreement in the Senate has fueled concerns about the level of the budget deficit and national debt.
    • Surprisingly, Treasury prices ended little changed, with the 10-year yield hitting 2.88% but settling just a basis point higher at 2.85%.
    • U.S. WTI crude oil fell for the fifth straight day, -1% at $61.15/bbl.
    • Dow components Home Depot (NYSE:HD) ended the day down 5.28%, Visa (NYSE:Vpeeled off 4.84% and McDonald's (NYSE:MCDswung 4.1% lower as a flurry of late selling pressure drove major indexes lower.
    • Some analysts have suggested that the indiscriminate selling could open opportunities for investors.
    • S&P Global Ratings warns investors that the U.S. tax overhaul could harm the tech sector and that it might “never look the same again.”
    • S&P believes “the overall industry credit profile will weaken over time, largely because of the potential for more aggressive financial policies in response to greater access to overseas cash.” 
    • S&P notes Apple’s (AAPL -0.6%) plans to go from $163B in cash to becoming net-cash neutral and says this could happen with other companies. 
    • Other tech companies with large stashes of overseas cash: Alphabet (GOOGL -2.6%), Cisco (CSCO -2.4%), and Qualcomm (QCOM -3%). 
    • S&P also calls out companies with almost as much debt as overseas cash. If those companies repatriated and passed the cash on to shareholders while holding on to the debt, the action would prove harmful to the company’s rating
    • Companies with overseas cash and debt nearly in balance:  Oracle (ORCL -2.7%), Hewlett Packard Enterprise (HPE -1.9%), Western Digital (WDC -3%), and Intel (INTC -3.9%).  
    • Previously: Moody's not too concerned with Apple's "cash neutral" policy (Feb. 2)

    AIG flat following Q4 results; had record $4.2B full-year catastrophe losses

    • AIG shares are now little changed after-hours following Q4 earnings of $0.57/share that fell well short of Wall Street expectations, but it's progress compared with an adjusted loss of $2.8B, or $2.72/share, in the same period last year.
    • AIG's unadjusted Q4 net loss totaled $6.66B, or $7.33/share, including a $6.7B charge due to the recent U.S. tax law changes; it reported a net loss of $3.04B, or $2.96/share, a year earlier.
    • AIG booked $762M of catastrophe losses during Q4, including $572M from the California wildfires; it had estimated ~$500M of losses for the quarter from the wildfires.
    • For the full year, AIG reported $4.2B in catastrophe losses, a company record and more than 3x higher than the previous year, but it delivered $3.16B in adjusted pretax income for 2017 vs. $1.42B in 2016.
    • “2017 represents a starting point from which we expect to build, and 2018 will be a year of execution,” says AIG President and CEO Brian Duperreault. “Our actions to diversify our business and pursue profitable growth were further reflected” by last month's acquisition of Validus.

    Tesla peels off 7% on lack of Model 3 visibility

    • Shares of Tesla (NASDAQ:TSLA) are down 7.44% to outpace the declines across broad market averages.
    • Yesterday's earnings report and conference call didn't do a whole lot to knock bullish-leaning analysts off their positions, although there is some hedging from the group on when Tesla will outlive its Model 3 production headaches and on the nature of the free cash flow tally generated during the quarter.
    • One analyst taking the long view is Baird's Ben Kallo. "We believe the delayed ramp has derisked the stock, and incremental production data points should drive shares higher as TSLA works towards its 5k/week target," he advises today.
    • Tesla sits just below $320 vs. the 52-week trading range of $242.01 to $389.61.

    International sales soar at Skechers

    • Skechers (NYSE:SKX): Q4 EPS of $0.21 beats by $0.08.
    • Revenue of $970.59M (+27.0% Y/Y) beats by $89.2M.
    • Shares +5.81%.
    • Skechers (NYSE:SKX) reported an unexpected loss in Q4, although the numbers were clouded by a one-time tax expense. Adjusted EPS topped estimates.
    • International sales soared 40% during the quarter, while domestic wholesale sales were up 11.6%.
    • Company-owned global retail sales increased 25.8% Y/Y.
    • Gross margin increased 20 bps to 46.8% of sales, while operating margin improved 200 bps to 5.7%.
    • CEO update: "“The four record sales quarters in 2017 resulted in a new annual sales record of $4.16 billion, an increase of over $600 million from the previous year’s sales. This growth is a testament to the worldwide strength and relevance of our product, marketing and brand."
    • Looking ahead, Skechers expects Q1 sales of $1.175B-$1.2000B vs. $1.23B and EPS of $0.70-$0.75.

    MoviePass tops 2M subscribers

    • MoviePass announces that it hit the 2M subscriber mark this month.
    • The news has helped to drive up shares of MoviePass owner Helios and Matheson Analytics (HMNY +8.2%).
    • "MoviePass is attracting people back to the movie theaters by lowering their cost, which we believe is transformational for the industry," says Helios CEO Ted Farnsworth.
    • "Based on the dramatic increase in the number of MoviePass subscribers over such a short period of time, we believe MoviePass will continue to grow its subscriber base significantly," chips in Moviepass CEO Mitch Lowe.
    • Source: Press Release
    • Previously: MoviePass army up to 1.5M (Jan. 9)
    • Amid heavy investments on original content, Hulu lost $920M last year, according to a Comcast 10-K.
    • The service — co-owned by Comcast (CMCSA -3.2%), Disney (DIS -1.8%), Fox (FOX -2.1%FOXA -2%) and Time Warner (TWX -1.5%) — had lost $531M the year prior.
    • Owners invested $1B, up from the prior-year $733M, including $583M from new partner Time Warner.
    • Investments (and content costs) are expected to climb further in the coming year, as amid a transformation in the ownership (Disney's deal for Fox media assets means it will add Fox's 30% stake to its own, to hold 60%).
    • As of year-end, Hulu said it had more than 17M subs for its on-demand and live packages.
    • Comcast 10-K
    • Activision Blizzard (NASDAQ:ATVI) is up 4.1% after hours following Q4 earnings where it topped expectations on top and bottom lines with record revenues and record full-year operating cash flow.
    • Net bookings for 2017 hit a record $7.16B, up from the prior-year $6.6B, and net bookings from digital channels were a record $5.43B.
    • Overall the company had 385M monthly active users, up from last quarter's 384M: King had 290M MAUs (down 1% Q/Q) along with time spent per player at a record 37 minutes a day. Activision had 55M MAUs (up 12% Q/Q). Blizzard had 40M MAUs.
    • Overall, players spent more than 50 minutes per day in Activision, Blizzard and King games.
    • Revenue breakout: Product sales, $737M (up 5.9%); Subscription, licensing and other revenues, $1.31B (down 0.9%).
    • Revenues by channel: Digital online channels, $1.43B (70% of total); Retail channels, $335M (16% of total); other, $277M (14% of total).
    • Operating cash flow for 2017 hit a record $2.2B.
    • For Q1, it's guiding to $1.82B in non-GAAP revenues along with -$540M impact from GAAP deferrals; EPS of $0.65, with -$0.34 impact from deferrals. Net bookings are expected at $1.28B for Q1 and $7.45B for 2018; consensus expectations for revenue are $1.41B for Q1 and $7.39B for 2018.
    • Conference call to come at 4:30 p.m ET.
    • Press release

    Nvidia +11.5% on 34% revenue growth, upside guidance, gaming and data demand

    • Nvidia (NASDAQ:NVDA) shares are up 11.5% aftermarket following Q4 results that beat EPS and revenue estimates with revenue up 34% on the year. 
    • Q1 guidance: Revenue, $2.84B to $2.96B (consensus: $2.47B); EPS, $1.59 to $1.72 (may not be compatible with consensus of $1.13); non-GAAP gross margin, 63% +/- 50 bps; operating expenses, $643M; tax rate, 12%.
    • Segment revenue: GPU, $2.46B (+33%); Tegra Processor, $450M (+75%). 
    • Revenue by market platform: Gaming, $1.74B (+29% Y/Y); Professional Visualization, $254M (+13%); Datacenter, $606M (+105%); Automotive, $132M (+3%); OEM and IP, $180M (+2%).
    • Key metrics: Non-GAAP gross margin, 62.1% (+190bps Y/Y); operating expenses, $607M (+22%); cash and equivalents, $7.11B; accounts receivable, $1.27B; cash flow from operating activities, $1.36B; FCF, $942M; capital expenditures, $416M. 
    • Capital return: In FY19, Nvidia intends to return $1.25B to shareholders through dividends and share repurchases. 
    • Earnings call is scheduled for 5 PM Eastern Time with a webcast available here
    • Press release / CFO presentation 
    • Previously: Nvidia beats by $0.56, beats on revenue (Feb. 8)
    • Qualcomm (NASDAQ:QCOM) says its board has unanimously rejected the revised buyout offer from Broadcom (NASDAQ:AVGO).
    • Broadcom changed its offer to hit $82/share earlier this week ($60 in cash, $22 in Broadcom stock). QCOM closed down 4% today to $62.42.
    • The deal "materially undervalues" Qualcomm and falls short of a firm regulatory commitment it would demand given the risk of a failed deal, the board says.
    • But it's offered to meet with Broadcom to see if it can work out their differences.
    • QCOM +1.1% after hours; AVGO flat.
    • The New York Times Co. (NYSE:NYT) is up 9.2% and tagged a new 10-year high today on Q4 earnings where a sharp increase in subscriptions outweighed ad declines and boosted revenues by double digits.
    • Adjusted EPS grew 30% to $0.39; adjusted operating profit was up to $108.3M due to strong digital subscription revenues (up by $100M), and the impact of a 14th week in the quarter.
    • The company added 99,000 net digital news subs and 157,000 net digital-only subs; News, Cooking, and Crosswords products all contributed to growth.
    • Revenue breakout: Subscription, $269.4M (up 19.2%); Advertising, $182.6M (down 1.3%).
    • For Q1, it's expecting subscription revenues to increase in mid to high single digits Y/Y, and ad revenues to decrease in mid to high single digits. Operating costs are expect to rise in low single digits.
    • For the full year, it sees capex of $60M-$70M.
    • Press release
    • Bank of America Merrill Lynch analyst Wamsi Mohan calls Apple (NASDAQ:AAPL) “a name to own in volatile market conditions” due to its “cash cushion like no other.
    • Mohan predicts Apple will raise its dividend 10% this year, will generate $50B to $60B in FCF annually for the next two years, and will announce a new share buyback in April. 
    • On the iPhone X, the analyst sees “low single digit growth and mix adjusted ASP growth into 2019, with upside to gross margins.” 
    • Firm reiterates its Buy rating for Apple and reaffirms its $220 price target (38% upside on yesterday’s close and $1.1T market valuation). 
    • More action: Barclays says iPhone battery replacement wait times appear to be on the decline but that could potentially harm Apple. 
    • Analyst Mark Moskowitz reached out to 30 U.S. Apple stores and found out that wait times were averaging 4 to 6 weeks last month and have now dropped to 2 to 4.5 weeks. 
    • But increasing replacement availability could mean fewer iPhone sales and drop iPhone ASPs.
    • The firm previously said the replacement program could cost Apple up to 16M in iPhone sales. 
    • Barclays rates Apple at Neutral with a $170 price target. 
    • Apple shares are up 0.2%.  

    10% correction level for DJIA: 23,955.03 10% correction level for S&P 500: 2,585.58 10% correction level for Nasdaq: 6,755.19 10% correction level for Russell 2000: 1,449.63 10% correction level for Bitcoin: eight thousand points ago.


  93. I can't think of a single Trump cabinet secretary who isn't the worst person ever to hold that position in departmental history.


    White House Instructs Government Agencies To Prepare For A Possible US Gvt Shutdown – WAPO/FXL

    Uh-oh, CNBC special report:  "Markets in Turmoil!"  

    Image result for trump stock market tweet

    Image result for trump stock market tweet

    Too bad he didn't say "put on a rocket to Mars" – THAT we could have taken care of! 

  94. Dow (/YM) back over 24,000 if you are felling brave, /ES just getting ready to cross 2,600 so both of those are great long lines with tight stops if either fail.   Matching up with /NQ 6,345 and /TF 1,467.50 but neither of those are particularly good spots.  

  95. OK, that's it, nice gains on /RB and /NQ so going flat (except /DX) – hopefully through the weekend, unless I'm tempted again tomorrow…

  96. Senate stumbles into shutdown, as Rand Paul blocks vote

  97. Miss. lawmaker displays pistol to protest gun legislation

  98. Asian shares plunge after major US index enters correction

  99. America’s consumer debt keeps skyrocketing

  100. Obama-backed committee targeting races in 11 states

  101. New casino opens in Catskills after decades of waiting

  102. Why Amazon’s Grocery Store May Not Be the Future of Retail

  103. Senate Approves Two-Year Budget Deal

    The Senate approved a breakthrough deal as well as a stopgap spending bill, sending the package to the House too late to prevent a government shutdown that began at midnight.43343 minutes ago

  104. Asia Stocks Plunge After U.S. Correction

    Asian stocks capped their worst week in years with more heavy selling after a late slump pushed the Dow Jones Industrial Average and S&P 500 into correction territory.

  105. Has Anyone Seen the President?

  106. Nikkei – 2.3%; Shanghai – 4%; Hang Seng -3%; China -5%; DAX, CAC, FTSE all down -0.5%; 

    Futures DJIA +0.6; SP +0.7; NAZ +0.8; RUT +0.9; your going to get a bounce, how long that is good for is another question.

  107. Good morning!

    Budget bill passed – 6 week extension, not 2 years.  Not much reaction so far in Futures but I just added 2 /YM longs at 24,100 – just in case we pop 200 points ($2,000).  Seems more likely than failing 24,000 (-$1,000) but I'm watching /TF 1,480.3 and will get out if 1,480 fails and /ES is just trying to pop 2,615, which would also become the stop line once we're over it.  /NQ 6,370 is the mark at the moment and hopefully it doesn't have trouble getting over 6,400.

  108. Good morning Phil – to repeat… Naybob Feb 9th at 3:17PM…  if we break 2590 and 2550, this shall become much, much nastier and any calls on the VIX will pay huge. 

    Overnight low on ES was 2580, watch that 2600 line closely.

  109. Phil/NG- Good Morning!

    NG tested 2.6, any interest here? Thx

  110. Everything hits the fan for Donald Trump

  111. "/NG getting cheap again but, as noted the other day, weather does not favor the trade this week."

    Thank you for the observation. 

    What if you are buying for the longer run and want to snag a couple while it is low?  /NGV8 

  112. After his memo fails, Devin Nunes goes berserk in the weirdest way possible

  113. Well here's the test of 24,000 and we're failing that and 2,600 and 6,350 and 1,470 but those are now the lines we want to play long if we move back up but very ugly if we're failing that.  

  114. How do we have trouble selling bonds?

    • Following a 48-hour delay blamed on international market turbulence, Greece has wrapped upthe sale of a seven-year bond, raising €3B at a yield of 3.5%.
    • The issue marked the first time since 2014 that the country has raised new money.
    • Greece plans two more issues – to help build a cash buffer to support debt repayments – before a planned exit in August from its current bailout.

  115. Phil,

    What’s your exit point on /DX?

  116. LOL I just did.  I decided not to rise out another pullback and took the money at 90.25 when it failed.  Will get back in ASAP, of course as the long-term premise remains.