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Monday Market Movement – Recovering or Just Bouncing?

We're up 300 more points! 

That would be exciting but it's only 1.25%, which is exactly what our 5% Rule™ predicted and, at this stage, is certainly no sign of market strength yet.  While we flipped bullish in Friday Morning's PSW Reprort, with a long at Dow (/YM) 24,000 that is now up $2,500 per contract (you're welcome).  Of course, first it was down $2,500 per contract (cue screams) but not if you followed our instructions, which were:

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. 

Just before the market opened (9:17), in our Live Member Chat Room, I updated my prediction for our Members:

For now, we'll worry about the S&P lines – same as yesterday because, if we have to redraw them, then the Index is already failing (and forcing us to use lower levels).

And, of course, the lines don't change but the line we key off does.  Right now, we are looking at the 20% line on /ES and premising we consolidate there but, as I said yesterday, I think it's more likely we drift down to the 10% line (2,420) and that's where we should consolidate into Q2.  So, on the whole, I'm thinking 2,684 is going to fail today and we'll retest 2,640 next week and possibly blow it – hence the desire for more hedges!  

Meanwhile, our index longs are doing great – don't be greedy.  Should hit resistance at 1,480 on /TF, 24,100 on /YM, 6,400 on /NQ (big time) and 2,615 on /ES.

That was a chart we drew for Thursday Morning's PSW Report and now we can update is so you can see how good the 5% Rule is at predicting these moves:

Since we can exactly predict the moves of the S&P 500 2 days in advance (and actually we're using numbers we based out 4 months ago!), it should come as no surpise that, at 1:17pm on Friday, in our Live Member Chat Room, I was able to make the following call:

Back in the saddle on /YM long at 23,453 (2).  

As it turns out, that was pretty much the exact moment we turned back up and the move back to 24,000 was good for gains of $5,500 for 2 contracs for our Members – not bad for a Friday!  Overall, we positioned ourselves long into the weekend but, as noted by the S&P chart above, we remain skeptical until we see that strong bounce line on the S&P 500 being crossed at 2,728 – and that's another 3% higher than the 1.25% gain we're showing in the Futures at the moment (8:30).

Still, we did a lot of bargain-shopping last week and we put more money into existing bullish positions in our portfolio as they got cheaper so we are certainly hopeful that this 10% correction will be enough to satisfy the market Gods – for the short-term, at least.  Overall, I think this may still be the top of a lower range we drift into by June but drifting lower won't be bad for our well-hedged, well-balanced portfolio – it's the short, sharp shocks we have to watch out for.  

Anyway, I'd love to get back to discussing the fundamentals of the market but nothing really happened over the weekend so we're very likely to just drift up towards the weak bounce line while we wait for a proper catalyst.  We'll get details of Trump's Infrastructure plan this week but that's likely to be a bit of a disappointment – though still gives the market something to rally about – the question is, where will the sellers show up?  

Not a lot of Fed speak and not a lot of data but at least we have earnings, with pretty much the last 100 of the S&P 500 reporting earnings this week:

Earnings ratios have corrected off their insane highs but there is still a lot of work to be done to get back into "normal" territory.  HOWEVER, it doesn't have to be all prices coming down, a combination of lower prices and higher earnings will do the trick and, so far, earnings are up about 6% from last year overall, though mainly driven by a sharp recovery in the energy sector.  Still, if prices come down another 10% and there's even a mild increase in earnings from lower taxes, repatriation of overseas cash, infrastructure spending and continued QE (which is winding down) along with interest rates which are still very cheap – it's easy to see why we don't expect more than a 10% additional move down this year.  

We're just watching and waiting this morning – pre-market moves are meaningless and Monday's are meaningless anyway so we'll just see where we drift before placing any new bets.  


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  1. Phil, with oil seemingly in 45-70 channel, how about a uso butterfly?

  2. As I pointed out last week, still expensive on fundamentals so just don't know how far we can bounce! But at least the VIX coming back down…

  3. As suspected, most of the tax cuts benefits to large corporations will flow to the shareholders and not the employees.

    Analyst survey of how companies will spend their tax savings.

    But hey look – $1000 bonuses…

  4. Good Morning.



  6. Good Morning

    This SA article about late qtr of AMZN looks interesting, perhaps it’s time to short it.

  7. Russell?

  8. Good morning! 

    Image result for geez grandma

    Oil/JMD – It's kind of a wide channel (55%) and pretty wild and it has the potential to go much higher – though doubtful.  Also, generally the USO premiums aren't that good.  The problem with oil is it can easily move more than 10% in a month or 20% in two months and you can't cover that with a short put and call, can you?  

    Big Chart – Textbook tests of the 200 dma on SPX, NYSE and RUT so of course we're bouncing.  2 least reliable indicators (Dow and Nas) didn't test so we don't care, what we do care about is the weak and strong bounce lines from /ES's perfect 15% plunge from 2,850 to 2,540 so 310 points is 62-point bounces and we'll call it 2,600 and 2,665 so 2,665 is our immediate target but holding 2,600 for the day is constructive – failing it is awful. 

    On /TF, that's less perfect but call it 10% line at 1,584 to Must Hold at 1,440 so 144 is 32-point bounces to 1,472 and 1,504.

    Tax cuts/StJ – And they are only crediting tax cuts with natural wage inflation bought on by low unemployment – total BS.  Now anyone who was going to give a bonus to their employees who wants to kiss Trump's ass just has to say they are doing it because of the tax cuts.  

    Mondays/Jabob – Because we had one Monday where something finally happened?  Nope…

    AMZN/Advill – Real 3rd rail stuff to me.  I think they are a tremendous short but I've been wrong about that for the last $1,000 so I'm staying away! 

    Speaking of tremendous shorts, TSLA is not strong at all today (chart is delayed):

  9. Oh crap, I forgot I still had 5 long /RBs!   Could have stopped out 2 cents ago.

    Oh well, I was planning to hold them for the week but $1.735 would have been fine for the day.

    /DX tested 90 again, missed that re-entry.

    /NGV8 coming off $2.70, me love them long time.

  10. Malaysian newspaper publishes ‘how to spot a gay’ checklist

  11. Is Devin Nunes Obstructing Justice?

  12. LL

    Wedbush downgrades LL to Neutral from Outperform and lowers their tgt to $28 from $39

  13. Yep, they’re going to prison

  14. General Dynamics to buy rival for $6.8 billion to bolster IT unit

  15. For this week

  16. sorry photo did not copy

  17. APPL – Strong

  18. LL/Albo – They did come down nicely but we never loved them, they were just ridiculously underpriced due to that scandal at the time.  That was still more than 50% down from here.  

    For this week what, QC?  You can always post a link to a photo.

    AAPL/Albo – If AAPL is doing well (+$4.50, 3%), then we have to take a bullish move in the Dow, Nas and S&P with a grain of salt, since AAPL is such a big part of them all.  On the Dow, for example, 4.5 x 8.5 = 38 of the Dow's points and, if AAPL is 15% of /NQ, then 15% of 4.5 is 0.67 of the Nasdaq's 1.1% gain…   AAPL is often boosted to mask selling pressure but this may just be a normal rebound after some rough selling for no good reason (on AAPL, which was the only undervalued stock left). 

  19. For the Hedge Fund, we did pull the trigger and bought AAPL at about $155 (calls) and we sold half our puts (in case it went lower) and we are waiting for a nice bounce to sell calls to cover.  Was our first chance to leg into AAPL spread after waiting 2 months.

  20. Phil/TZA

    I have 10 JUL 12 Calls at cost of 1.96 and they are at 3.05. Do you advise to close it and maybe start a new spread to lock in a profit?


  21. LOL, I just realized we don't have AAPL in the LTP.  In the OOP, it's a bit expensive and I was hoping for a lower test but, for the LTP, we don't mind legging in so lets:

    • Buy 20 AAPL 2020 $150 calls at $31 ($62,000) 
    • Sell 10 AAPL 2020 $145 puts for $13 ($13,000) 

    That's net $49,000 and our plan is to sell 20 of the 2020 $180 calls (now $17.30) for $20 or better ($40,000) which drops the net of the $60,000 spread to $9,000 and then we can sell short-term calls, like 5 of the April $170s, which are now $3.80 for $5+ and that would raise $2,500 against our $9,000 outlay and it only uses 67 of our 704 days so, in theory, we can sell $25,000 worth of calls while waiting for our $51,000 payoff.

    Kind of makes you wonder why we bother with any other trade….

  22. TZA/Pat – Well, I strongly recommend you go back to Friday and close it at almost $15 but, failing that, yes, I'd take that off the table as long as we hold 2,600 on /ES but make sure you know exactly what spread you would want to re-enter if we don't.

  23. Phill, I have 10 2019 CMG 280/350 BCS. What do you think of a roll from 2019 280 call to 2020 250 call for $30.5?

  24. Phil/TZA

    yes I missed that spike. I will get out of these. Do we have a TZA spread in OOP?

    thanks as usual


  25. Phil/TZA

    I was thinking of entering 10 Jul 10/12 BCS for 0.99 to look in the profit for the current naked calls and maybe get 100% profit if TZA remains at 12 till july


  26. Good note from Ray Dalio:

    In the “late-cycle” phase of the short-term debt/business cycle, when a) an economy’s demand is increasing at a rate that is faster than the capacity for it to produce is increasing and b) the capacity to produce is near its limits, prices of those items that are constrained (like workers and constrained capital goods) go up. At that time, profits also rise for those who own the capacities to produce those items that are in short supply. Then the acceleration of demand into capacity constraints and rise in prices and profits causes interest rates to rise and central banks to tighten monetary policy, which causes stock and other asset prices to fall because all assets are priced as the present value of their future cash flows and interest rates are the discount rate used to calculate present values. That is why it is not unusual to see strong economies accompanied by falling stock and other asset prices, which is curious to people who wonder why stocks go down when the economy is strong and don’t understand how this dynamic works.

    Yet Another Year of Magical Thinking

    URBAN: If humanity is, you know, like a precious photo album you’ve got, the Earth is like a hard drive you have it on. And any sane person would obviously back it up to a second hard drive. That’s kind of the idea here – is all of our eggs are currently on one planet. And if we can build a self-sustaining civilization on Mars, it’s much harder for humanity to go extinct.

    SHAPIRO: And a million people is about how many people he thinks it would take for a population to be self-sustaining.

    URBAN: Right, self-sustaining meaning if something catastrophic happened on Earth during some world war or something that has to do with, you know, a really bad-case scenario with climate change, maybe some – I don’t know – the species went extinct on Earth but ships stopped coming with supplies and anything else, a million people is enough that Mars’ population would be fine.

    Not to put too fine a point on, I never heard so much fucking nonsense in my life. There’s absolutely nothing that might make Mars a “sustainable” habitat for human beings, or probably any other form of Earthly life. The journey alone would destroy human bodies. If you think that living in Honolulu is expensive, with most daily needs of the population shipped or flown in, imagine what it would be like sending a cargo of provisions (Doritos? Pepperoni sticks? Mountain Dew? Fabreeze?) to a million “consumers” up on Mars. Or do you suppose the colonists will “print” their food, water, and other necessities?

    Elon Musk’s ventures have reportedly vacuumed in around $5 billion in federal subsidies. Mr. Musk is doing a fine job of keeping his benefactors entertained. Americans are still avid for adventures in space, where just about every other movie takes place. I suppose it’s because they take us away from the awful conundrums of making a go of it here on Earth, a planet that humans were exquisitely evolved for (or designed for, if you will), and which we are in the process of rendering uninhabitable for ourselves and lots of other creatures.

    This is our home. Can we talk about the necessary adjustments and arrangements we have to make in order to continue the human project here? Just based on our performance on this blue planet, we are not qualified to infect other parts of the solar system.

    It's not an infrastructure plan, it's a privatization scheme

    Trump will propose cutting entitlement programs by $1.7 trillion, including Medicare

    In 1983, Sears was unstoppable, the Amazon of its day. explains why competitive advantages die

  27. Thanks Phil the photo was from a text not sure how to post

  28. CMG/JMD – In the LTP, we went with the 2020 $260 calls for $57 (now $52.25) uncovered and figured if they don't bounce, then we'll sell $280 calls (now $46) and use $10 of that money to roll down to the $240 calls but, hopefully, we'll be able to sell the $300 calls (now $36) for $45+, which will put us in the $40 spread for just over $10.  So our worst case is being in the $240/280 spread for net $16ish and our better case is being in the $260/300 spread for net $10ish – either way, seems good!  We also sold 5 $270 puts for $35.20 and those are now $52!  

    TZA/Pat – We do have 2 TZA spreads.  We cashed in our long calls for a nice profit and now we're hoping our short calls (July and April) go back down in price (covered somewhat by the Jan spread now):

    Short Call 2018 20-APR 15.00 CALL [TZA @ $13.52 $0.02] -25 1/5/2018 (67) $-1,250 $0.50 $0.58 n/a     $1.08 $-0.41 $-1,450 -116.0% $-2,700
    Short Call 2018 20-JUL 12.00 CALL [TZA @ $13.52 $0.02] -50 1/24/2018 (158) $-4,750 $0.95 $2.26     $3.21 $0.11 $-11,275 -237.4% $-16,025
    Long Call 2019 18-JAN 15.00 CALL [TZA @ $13.52 $0.02] 50 2/6/2018 (340) $11,750 $2.35 $0.59     $2.94 $-0.47 $2,925 24.9% $14,675
    Short Call 2019 18-JAN 20.00 CALL [TZA @ $13.52 $0.02] -50 2/6/2018 (340) $-8,500 $1.70 $0.43     $2.13 $-0.12 $-2,125 -25.0% $-10,625

    Ideally, TZA slips back below $12, the short calls expire worthless (+$18,725) and we still have the Jan $15/20 spread providing $25,000 of portfolio protection for the 2nd half.  We sold the July $9 calls for a $9,500 gain already at $4 and that's more than the $3 spread would have paid, of course.  

    From a text/QC – Oh, that's way too complex for me.  

  29. Gartman just said to sell. 

    only 15 more S&P points of upside!!!!

  30. Jabo – "Gartman just said to sell. only 15 more S&P points of upside!!!!"

    2661 or so?

  31. Nat-- not sure where it was when he said to sell (on bloomberg).

    That guy seems to always be wrong.

  32. Gartman/Jabob – LOL, that guy is a parody of himself.  

    Silver made a massive move up since we bought WPM, which is now keeping pace:

    Long Call 2020 17-JAN 17.50 CALL [WPM @ $19.32 $0.30] 10 2/7/2018 (704) $4,600 $4.60 $-0.25 n/a     $4.35 $0.25 $-250 -5.4% $4,350
    Short Call 2020 17-JAN 25.00 CALL [WPM @ $19.32 $0.30] -10 2/7/2018 (704) $-2,150 $2.15 $-0.25     $1.91 $0.12 $245 11.4% $-1,905
    Short Put 2020 17-JAN 20.00 PUT [WPM @ $19.32 $0.30] -10 2/7/2018 (704) $-3,300 $3.30 $0.43     $3.73 $-0.21 $-425 -12.9% $-3,725

    If you KNOW what something is worth, then you KNOW when to buy it (and when to sell it too!).    

    Still good for a new trade.  

  33. Oh, by the way:  Sure, I'd love to have an LNG car – nothing more fun than driving around in a bomb!  

    It's even more fun when they put a massive tank of the stuff in your neighborhood:

    • Cheniere Energy (LNG +1.6%) says production of liquefied natural gas from its Sabine Pass export plant in Louisiana will not be affected by an order to shut two cracked storage tanks that leaked the fuel.
    • The U.S. Department of Pipeline and Hazardous Materials Safety Administration last week ordered the company to shut two LNG storage tanks after discovering multiple leaks, raising the possibility that similar leaks may have occurred in multiple tanks.
    • Cheniere "cannot validate the exact source or amount" of leaked LNG and "cannot identify the circumstances that allowed the LNG to escape containment in the first place," PHMSA said in its corrective action order that called on the company to complete a thorough assessment of the problems.
    • PHMSA allowed Cheniere to continue importing and exporting gas and use three other LNG storage tanks at the site.

  34. shoulda dumped my AAPL puts last week!


  35. Still hanging around those weak bounce lines but a good building day if we hold it.

    GE price target cut as J.P. Morgan grows more bearish

    • General Electric's (GE +0.3%) fundamentals remain "challenged/mixed" and show "few signs of a snap back," J.P. Morgan analyst and longtime GE bear Stephen Tusa says as he cuts his stock price target to $14 from $16 and maintains an Underweight rating.
    • Tusa's sum-of-the-parts value for GE is $13/share with downside to $10-$11, "depending on the outcome of certain liabilities that are tough to call but have historically been money bad."
    • Tusa expects an "expedited evolution of outcomes" at GE after the company said it was evaluating its portfolio structure; the analyst thinks it is possible the company will stay in its current form and "grind it out," but there is more "urgency" to GE's situation given the recent weakness in GE bonds and balance sheet challenges.
    • An equity raise is possible, Tusa says, as it would help boost GE's balance sheet and shield the company from increased capital markets volatility.

    OPEC raises 2018 forecast for oil supply growth, also higher demand

    • Crude oil prices rebound sharply from their largest one-week slide in two years, helped by a weaker dollar and an easing of the turmoil in global stock markets; U.S. WTI +1.7% at $60.24/bbl, Brent +1.4% at $63.68/bbl.
    • In its latest monthly oil report, OPEC raises its crude oil supply forecast for this year but it says demand will grow faster than expected because of the healthy world economy and continue to help eat up the excess supply.
    • OPEC now forecasts world oil demand to rise by 1.59M bbl/day this year, 60K bbl/day more than estimated in its last monthly report, to 98.6M bbl/day vs. the 97M demand figure for 2017.
    • Balancing the raised demand outlook, the cartel sees non-OPEC production growing by 1.4M bbl/day this year, 250K bbl/day above the last monthly report, with the U.S. accounting for 150K additional bbl/day.

    Sector movement on Trump infrastructure details

    • Infrastructure-related stocks are on the march higher after the Trump administration releasedhighly-anticipated details about its infrastructure plan.
    • They include stimulating at least $1.5T in new investment, shortening project permitting time to two years, improving training to get more qualified workers and boosting investment in rural projects.
    • The proposal also calls for allocating $200B in federal funds over a decade, mostly as seed money to spur states, localities and the private sector to spend the balance of the promised investment, according to a White House official.
    • President Trump plans to meet with state and municipal officials to discuss plan at 11 a.m. EST.
    • Previously: Trump to unveil infrastructure plan (Feb. 12 2018)
    • Related tickers: (AA +0.3%), (AKS +3.2%), (CAT +1.5%), (CLF +2%), (CX +0.7%), (DE +1.4%), (FLR +0.8%), , (MT +0.5%), (NUE +0.6%), (PWR +0.3%), (STLD +0.7%), (URI +0.5%), (USCR+2.7%), (USG +0.5%), (VMC +1.6%), (X +1.8%)
    • "We have been in the automotive industry for a long, long time. We are in electronic and energy and we are 80 years in traffic safety," 3M (NYSE:MMM) CEO Inge Thulin told Mad Money host Jim Cramer.
    • "That's around a $6B [electric car] addressable market, with a growth rate of 8% to 10%. We are now growing that business by 15% to 20% if you combine those three elements."

    Report: Facebook losing youth members at faster pace than before

    • Facebook (FB -0.8%) is losing younger users more quickly than previously estimated, according to a new eMarketer report.
    • The firm expects the first-ever decline in the age 18-24 user base in the U.S. this year, of 5.8%.
    • Facebook is still growing in the U.S. market, it says, but mainly due to older users signing on; meanwhile, Snapchat (SNAP +0.5%) is pulling young users away from Facebook at a quicker pace than Facebook's Instagram platform is.
    • The firm also says that for the first time, less than half of the 12-17 age group would be on Facebook (down 5.6% there, and with a 9.3% decline in under-12 members).
    • The study says the declining trend in users under 25 is expected to continue into 2019 and 2020.
    • It seems like an obvious point on the MoviePass sensation, but B. Riley is spelling out exactly why theater chains should benefit from the explosion in MoviePass subscribers.
    • "If a MoviePass subscription drives those moviegoers into the theater more times than they normally would go each year, we believe it is only a positive for the exhibitor group, as it does not involve discounting on their part," write B. Riley analyst Eric Wold
    • "Furthermore, the additional traffic means more people in the concession line with 85% to 90% margins on those incremental concession purchases," he reminds.
    • Wold thinks an arrangement can be worked out between movie studios, exhibitors and MoviePass that will benefit all parties.
    • Shares of Helios and Matheson are up 3.88% in premarket trading. Regal Entertainment (NYSE:RGC), IMAX (NYSE:IMAX), AMC Entertainment (NYSE:AMC), Cinemark Holdings (NYSE:CNK), Marcus Corporation (NYSE:MCS) and Reading International (NASDAQ:RDI) are on watch for a bump from the positive B. Riley note.
    • After winning at the International Trade Commission before, TiVo (TIVO +0.2%) has filed a new complaint against Comcast's (CMCSA -0.1%) receivers at the ITC.
    • It want to block set-top boxes from the U.S. market, for largely the same subset of reasons as before: recording technology.
    • Comcast had removed a specific remote-recording feature before after its loss in the previous order. But TiVo says that other features on the boxes are infringing its patents and has filed new civil suits in connection.
    • Amazon (AMZN +0.9%) plans to become an AI chipmaker, according to The Informationsources.
    • The chips would let Alexa devices respond faster to commands and are in development using tech brought in with the $350M acquisition of Israeli chipmaker Annapurna Labs three years ago. 
    • Last December’s Blink acquisition brought more chip-making tech to Amazon. The startup was founded as Immedia Semiconductor and built chips for low-power video compression. 
    • Amazon Web Services might be working on an AI chip for data centers.   
    • Amazon shares are up 0.9%.    
    • Previously: Amazon paid $90M for Blink technology (Feb. 12)

  36. /RB giving another entry. 

  37. Not much volume…

  38. /RB / Jeff – maybe wait, another week like this and we can get some for 1.50, a nice entry to hold for summer!

  39. MrM, I’m just playing for this week. But, if it goes to 1.50, I’ll be forced to hold for much longer. Avg now 1.69

  40. Correct that, I’ll stop out and re-enter

  41. Phil,

    Any interest in 3M after a 50% retrace of past 12 mths range? Possible stop on option position equivalent to the 200dma where it reversed Friday with the mkt.


  42. Phil – "Oh, by the way:  Sure, I'd love to have an LNG car – nothing more fun than driving around in a bomb!"

    Since it's slow… Liquefied NG is no more dangerous than gasoline or diesel. ALL LIQUID fuels such as diesel, gasoline, or liquefied propane gas, which are heavier than air, pool on the ground, creating a fire hazard.

    In that video, the explosion ignited under the 1st car which pulled to the side of the road, there is your spark for what must be vaporized.  The flame trail shoots under the 2nd car in the fast lane, under both those cars, the road appeared to be wet. 

    The explosion then trailed off the pavement and exclusively down the gully of the motorway, where the plants, trees and soil contained WATER.  It is likely cold LNG had spilled onto an already damp portion of the motorway, the truck pulled over to the road side, and continued to leak LNG into the gully, all of which had to vaporize to ignite.

    Cryogenic liquefaction reduces the volume of NG by 600X, which allows for massive amounts to be economically and under normal and properly controlled conditions, safely stored and transported.  When extremely cold LNG mixes with water, heat energy is transferred from the water to the LNG, rapidly vaporizing the NG from its liquefied state back into its original gaseous state, 600X expansion, resulting in a rapid phase transition explosion.

    And now for your moment of Zen… NGV's use Compressed NG, in its natural gas form, 600x volume. Should a leak should occur, since compressed gas is lighter than air, the gas will disperse rapidly upwards into the atmosphere and dissipate.

    In terms of being a fire hazard, CNG is less volatile than gasoline, because its ignition temp is 1200F as opposed to 600F for petrol. CNG also has very narrow flammability limits. The high ignition temp and limited flammability range make accidental combustion of CNG unlikely. 

    Further, the design of CNG vehicle cylinders is subject to a number of “severe abuse” tests such as heat and pressure extremes, gunfire, collisions, and fire. And finally, due to the fact that compressed gas is not liquid, NGV's are proven safer than gasoline powered vehicles, making the assertion that driving a NGV is like driving a bomb, untrue.

    Go /NG, my name is Hank, I work at Stickland propane in Arlen and I approved this message. See here for some interesting facts.

  43. So the secret is out, Naybob is Hank. I'm shocked! 

  44. Wow, up 500 points and VIX is down 12% because this isn't volatile?

    /RB down with oil up, that's odd.   Now it's back to Friday's low so good for a new entry at $1.675.

    MMM/8800 – At $200 I might have gotten interesting but $230 is $135Bn and they only make $5Bn so 26x earnings is a bit stiff.  Expensive shares make it no good for our portfolios and I don't see a really compelling reason to own them.

    Keep in mind, we're only at the weak bounce line here!

    LOL Naybob – good lesson, you have convinced me, though I'm still driving the old gas-guzzler for now…

  45. Phil,

    Thanks for the 3M thoughts

  46. Big picture bounce lines:

    Dow 26,500 to 23,500 is 3,000 points (wow!) and that's 600-point bounces to 24,100 and 24,700, which we're testing now.  

    S&P 2,850 to 2,550 is 300 points (you know it's BOT trading when ES is exactly 10% of the Dow move) so 60-point bounces to 2,610 and 2,670 and we're right there.  

    Nas 7,000 to 6,300 is an even 10% and 700 points so 140 bounces to 6,440 and 6,580 – not there yet. 

    RUT 1,600 to 1,450 is 150 so 30-point bounces to 1,480 and 1,510, just testing 1,500 now.

    So we're looking good and it's normal, of course, to pause or even pull back at the strong bounce lines and all you have to do is chart 20% retraces of the run from the bottom to the strong bounce to see if we're holding a weak or strong retrace from the strong bounce lines.  

    At the moment, it seems like we're consolidating for a move higher.  

  47. Phil – "LOL Naybob – good lesson, you have convinced me, though I'm still driving the old gas-guzzler for now…"

    I drive one and would not do so unless it was safe. When I tank up in the EU, it's 66% cheaper, Stateside little to no difference, gotta keep em on the petrol. The funny thing is many think that gas is more dangerous than liquid. Only when liquefied do you get the white gas and NAPALM effect seen in that video. If you really want to trip out, read this, in particular page 24 and 25.

  48. Muck – "So the secret is out, Naybob is Hank. I'm shocked! "

    I'm not really Hank, but I once had to give a safety lesson regarding surfing and NAPALM. Time for my IV and Out.

  49. MMM / Phil – A good example of stuff still not being cheap even after the correction! 3M should not be selling at 28x earnings (on Finviz) or even 20x forward earnings. Earning growth is between 5 to 10%, this is not some fast growing company there and yet trades like one. There should still be ways to go before we get some more normalized pricing I think. 

  50. STJ- agreed!

    The retrace to SPX 2619 on Friday only puts us at levels of Nov., ’17 where, I would argue, prices were elevated then. So its up or down from here and we shall see if the bullish market sentiment continues to prevail. Tame inflation and moderate interest rates support the notion of higher forward p/e multiples as long as inflation stays tame and rates remain contained and earnings growth stays in an upward trajectory. Are we going to see all of that with deficits bumping $1T as far as we can see? Interesting times indeed.

  51. Pstas – There has been few times where the macro environment would justify these multiples for slow growing companies and I doubt that this is one. And you make the argument that I made last week – how low will rates be in 18 months when we have to borrow $1T and the Fed is not buying anymore. And the inflation has been the same now for close to 20 years so not much of a factor. 

    What could drive prices higher is companies buying back more shares and competitors using their tax cuts. But how long does that last?

  52. Report/Naybob – No wonder LNG has a bad rep!

    Normalizing/StJ – I agree but the market seems to think otherwise at the moment. 

    Interesting/Pstas – Really crazy stuff but, then again, that's how we played it with our portfolio moves last week.  There was nothing to indicate the markets would suddenly become rational and now the dip buyers feel justified and will keep putting their hand on the stove.

    Justification/StJ – I think real inflation justifies the whole market doubling to keep up but, so far, no actual signs of serious inflation – not in a way the S&P 500 would react to by raising prices (and accidentally raising earnings on a Dollar basis).

  53. PSW/OOP

    when you have time can someone post the latest OOP portfolio?


  54. OOP/Pat – I'll be doing a review this week, hopefully by Weds.  

  55. Inflation / Phil – In that case, healthcare companies should drive the move up because that's where inflation is! Higher education as well, but not many investment instruments there…

  56. Phil, what you think of the last 30min? s&p lose some steam at 2672

  57. StJL – "What could drive prices higher is companies buying back more shares"

    Considering floating rate notes will also reflect a higher cost of loan funds, unless LIBOR remains low, one wonders how much they will be able to buy back.  Then again, perhaps the 3.5T notional commercial net long (lower rates) on 90 day Eurodollar positions are wrong?  Either way, somebody gets screwed and Out.

  58. BKLN – For what it's worth, I've been putting some idle cash in BKLN.  The price has been pretty stable over the last year and it yields about 3.45%.  Powershares Senior Loan Portfolio.  If anyone has better ideas, please share.

  59. HMNY – Down sharply in aftermarket.

    Bought some at $6.50

  60. albo, 

    HMNY – do you understand this? Why are they issuing stocks and warrants to buy common stock? 

    Is this just the converts dilution? 

            Helios and Matheson Analytics Inc. (NASDAQ: HMNY) ("HMNY"), a provider of information technology services and solutions and a majority owner of MoviePass Inc. ("MoviePass"), the nation's premier movie-theater subscription service, today announced that it has commenced a best efforts underwritten public offering, subject to market and other conditions, to issue and sell shares of its common stock and warrants to purchase shares of its common stock. The shares of common stock and warrants to purchase shares of common stock are being offered as units. The shares of common stock and warrants will be issued separately. There can be no assurance as to whether or when the offering may be completed, or to the actual size or terms of the offering. HMNY may use the net proceeds from this offering to increase the Company's ownership stake in MoviePass or to support the operations of MoviePass and MoviePass Ventures; to satisfy a portion or all of the amounts payable in connection with previously issued convertible notes; and for general corporate purposes and transaction expenses. The Company may also use the proceeds to make other acquisitions.     

  61. FU HMNY!!!

  62. ABX earnings on Wednesday.

    I hope they do not disappoint!!!!

  63. HMNY – Does anyone know the price or QTY of the equity offering?

  64. Phil/RB- Good Morning 

    What is your avg?

  65. Trump Doesn’t Give a Dam

  66. Pepsi beats amid strong demand for snacks

  67. The strategy of maximal extraction

  68. Good morning!

    Dollar down half a point is supporting markets but not /RB, which is down to $1.675 though /NG is having a good run to make up for it.  Dollar not low enough to get back in (89.5) yet.

    We didn't get much international enthusiasm for our Monday rally (rejected at strong bounce lines) and that, in turn, is spooking everyone but I think we were consolidating for a move higher though – looking at Trump's Budget – I'm tempted to short everything.  I hold out hope that Congress doesn't have the balls to pass that mess, but who knows these days?

    Healthcare/StJ – Good idea but not a cheap sector.  We did pick up THC though. 

    Last 30/Dave – Just a normal rejection of our levels.  As I said above, we expected a 20-40% pullback of the run so minus 80-160 on the Dow is "normal".

    HMNY/Learner – Apparently, they don't own all of MoviePass and now the stock is adjusting to reflect their true, current percentage of ownership.  

    HMNY/Batman – No clear info that I can see.  

    /RB/Ravi – My new ones (from yesterday afternoon, are about $1.68 (2).  Will DD at $1.66 and then think about it at $1.65, which would bring me to 8 at $1.66 avg.

  69. Phil/RB- thx 

  70. ~~HMNY -20.5% (commences best efforts underwritten public offering to issue and sell shares of its common stock and warrants to purchase shares of its common stock; size not disclosed.

    The fact that it's a best efforts underwriting sets up for the shorts to attack to drive the price down.  Short interest is now over 54%.

  71. Added a few more shares at 5.89.

    Have been trading HMNY but putting on a 1/2 position.