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Friday Freak-Out: 1, 2, 3, 4, Trump Declares a Trade War!

Wheeeee! 

This market is non-stop fun, isn't it?  It sure is for our Short-Term Portfolio, the same one we discussed adding more shorts to yesterday morning because the market was once again in a downward spiral gained a lovely $13,873 for the day and is now up $37,270.50 (37.2%) for the year.  Unfortunately, our bullish, Long-Term Portfolio Positions fell back to $515,411, up just $15,411 for the year (3.1%) but that's the whole point of our paired portfolio strategy – we use the STP to hedge the LTP and lock in profits on the way up.  

Even better, when there is a sharp sell-off, we still have tons of cash and we're already well-hedged so we're ready to go shopping.  In fact, the reason the LTP took a 7% hit on this sell-off is because we added a lot of bullish positions last time the maket fell (only 30 days ago), so we're actually less hedged than we were last time, when we had fewer longs and just as many hedges (in anticipation of buying on the dip).

Hedges are insurance and YOU WILL LOSE MONEY when the market goes up – it's like life insurance – you don't WANT to die but, if you do, at least you get paid.  We don't WANT our hedges to pay off but, when they do, they save our portfolios – which is the whole point.  Yesterday we showed you one of the primary hedges in our STP, which was the following bullish spread on the Ultra-Short Nasdaq ETF (SQQQ):

We're still waiting to sell the Sept $3 calls for $3 or better (maybe this morning) but already we had a nice move yesterday, with the net $18,800 trade (as of yesterday, we paid $21,000) has popped to net $23,100 so the spread we showed you yesterday morning and told you was our primary hedge jumped $4,300 (23%) as the Nasdaq dropped 1.6% – THAT is how you use leverage effectively! 

Keep in mind this spead pays $100,000 if SQQQ is over $30 when the calls expire and we paid $21,000 for that protection against our $500,000 long portfolio so we can afford to take a tremendous hit on our longs before our net balance is impacted and that helps us ride out these little dips and even take advantage of them.  Obviously, if the market is up, or even flat, we expect to make far more than $21,000 on our longs to pay for the hedge.  As a rule of thumb, we try to put 1/4 to 1/3 of our profits into the hedges to lock in our gains (depending on how worried we are).  

This morning, I put out a tweet to flip long for the bounce off the indexes but already (7:50) the weak bounces (20% of the drop is 20 points in this case) failed and we're out of those trades and, of course, our hedges are still doing their thing.  We take the longs to lock in the profits on the hedges if it's pre-market – as we can't close the positions if the market makes a snap recovery (see yesterday's Report for more notes on that strategy).  

Unfortunately (because I'm usually right), I also said in that tweet:

DAX down 2.3% so really nasty and Nasdaq testing 6,700 already, which is that death cross of the 20 and 50 dma and DOOM!!! if we fail it.  Oh, who's kidding, we're about to fail it! 

So DOOM!!!! on a Friday, DOOM!!! I say…

Actually, we might bounce here if Trump can keep his mouth shut long enough for them to spin his comments less insanely.  

Those insane comments I was speaking about were his 5:50 am tweet (mine was 6:53) saying (and I WISH I were making this up "trade wars are good" and, oops, that's out of context because you could argue that's not insane, just stupid but he added "and easy to win" to push his comment firmly into the insane camp – as anyone who has taken an economics class since 1930 can tell you!   Or, as I summarized:

"Easy to win" – what a moron!  For one thing, the things we import that give us a trade deficit are oil and metals we can't survive without, like rare earths from China.  It would be one thing if we stopped using oil but what Trump is doing is like fixing the blood deficit for someone who needs a transfusion by refusing to accept blood.  A win on the balance sheet isn't necessarily a win for the economy – and certainly not for the people. 

Oil is, in fact $356Bn of our $566Bn trade deficit, so about 63% (2/3) of it right there and we wouldn't need to import 1/3 of that if Trump hadn't changed the laws and allowed our refiners to EXPORT refined gasoline so they buy more oil and export gasoline which, of course, hits the US consumers both ways by INCREASING the price of oil (more "demand") and INCREASING the price of gasoline (less US supply).  In short, Trump and the GOP have completely screwed the American public by reversing the long-standing policy against exporting gasoline.  Who has been helped by this?  Oil campaign donors and, of course, Vladimir Putin, a man with $75Bn of personal worth – most of which is in oil companies.

So Trump and the GOP pass a law that blows up the deficit and then they say they have to fix the defict by punishing another country Putin wants to stick it to – China.  Of course, China could care less because the United States is China's 26th largest customer, not even rating a mention on this pie chart, which is what we used to call a "fact" that is easily checked before throwing the entire economy into chaos.

China sends more than twice as much steel to Taiwan – a country they don't even officially recognize – than they do to the United States!   

Even arch-Conservative and Trump cheerleader, Larry Kudlow is pointing out on CNBC that there are less than 200,000 jobs in steel and aluminum in the United States but there are over 5,000,000 jobs that depend on cheap steel in their manufacturing and, of course, there are 320M American Consumers who will see prices spike for all sorts of things – and that's before we even get the inevitable retaliation as Trump's tarriffs are targeting ALL countries – which is patently ridiculous and a violation of dozens of existing trade agreements.  

Image result for trump trade cartoonOf course, there's our salvation, Trump's powers are not unlimited and he can say what he wants about how China is ripping us off on steel to distract us from a week in which his administration is imploding with scandal after scandal, but there is a World Trade Organization that handles these matters and we do have treaties with partners that Trump needs to keep happy so it's possible that none of this stuff actually gets enacted.

So the World may not end because Trump can't get his way – this time.  

Have a great weekend, 

- Phil

 


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  1. Not a successful test of these 50 DMA so far!


  2. And I'll ask again, as there been a more incompetent administration in modern times! Forget the greed and corruption, these guys will leave deep wounds behind them.


  3. Some keep on showing data on why we should keep going up:

    http://blog.yardeni.com/2018/03/dow-vigilantes.html

    So yes, revenues and profits are up but these guys never mention the price you have to pay for these. Multiples are at historic highs. If revenues or profits go up 5%, can you pay 30x earnings? We had the same discussion in 1999! It was not expensive then also.


  4. Good morning!  

    Cramer says don't panic.  That kind of makes me panic!  

    Big Chart – Time to test those 200 dmas for the first time (other than a month ago) since Nov, 2016.  /ES was 2,084 at the lows, now 2,670 is up 28% still.  2,090 is our -5% line, 2,664 is the 20% line on the Big Chart – that's the line that really matters now and we failed it this morning.  If we finish below it then – DOOM!!!

    Keep in mind we have been playing for the S&P to settle into a range of 10-20% over the 2,200 "Must Hold" line so 2,420 should be the bottom (allowing for a spike below) and back to 2,664 as the highs for the next couple of quarters.  In other words:

    That does not, unfortunately, mean we get rich because it's been too hard to short the market so we simply set ourselves up to take advantage of the dip when it happens and that comes from keeping even while the market goes on sale so we will back up the truck and BUYBUYBUY when we get to that 10% line (hedging for another 10% though).  

    Meanwhile, we need to add hedges at the open (per yesterday's plan) and I'm waiting to see the pricing.

    More incompetent/StJ – I don't think they are incompetent, I think they are purposely destroying the United States from within.  Every move they make does more and more damage to the country – it can't be accidental!  

    Prices/StJ – Yes, it's funny how they accept the previous price as if it were correct and then go up from there.  


  5. Good Morning.


  6. cramer – I've felt that if Gary Cohn leaves, this market is toast…..


  7. In the OOP we have:

    • 40 SQQQ Jan $20 calls at $6, now $4
    • 40 short SQQQ Jan $30 calls at $4.80, now $2.40

    These are too long-term to show gains on short-term dips. 

    We also have:

    • 50 TZA Jan $10 calls at $3.20, now $3.40 
    • 50 short TZA Jan $20 calls at $1.70, now $1.27
    • 25 short TZA July $12 calls at $0.95, now $1.92.

    We bought 1/2 the July $25s back at $1.80 and we can roll these, so I'm not worried and TZA is at $13, so we're well-covered but, as a hedge, it's not making apparent gains while the market falls.

    In the STP we have:

    • 40 DIA June $255 puts at $10.60, now $14.13
    • 20 short DIA June $230 puts at $6.40, now $5.03.

    We can flip more bearish by buying back the short puts but let's wait and see, I think I'd rather add another leg down for $5 than spend money to buy back a short put that's 10% out of the money.  

    • 40 SQQQ Jan $20 calls at $6, now $4
    • 40 short SQQQ Jan $30 calls at $4.80, now $2.43 
    • 40 SQQQ Sept $15 calls at $4.05, now $4.25

    Also a good hedge but no short-term pay-off.  Let's roll the Jan $20 calls to the Sept $15 calls to get in the money (80 Sept $15s at about $4) – that's our only change for now.  We still want to sell 40 Sept $20s for $3 if we can.


  8. Ouch, there goes 24,300 – $230 getting closer fast on DIA!  


  9. Incompetence / Phil – Sorry, but I disagree there. I do think that they suffer from hubris mainly. Trump thinks that he can solve every problem because he is so smart but in fact, not so much and he is simply creating chaos! Not on purpose I think although some of his actions are dictated indirectly by his Russian puppet master. And he surrounds himself by people who are either dumber than him or acquiesce to all his requests with few exceptions. That's incompetence! 


  10. We might have another interesting Monday!


  11. 25,800's 5% Rule was 24,510 and we weak-bounced off that and then failed hard so we really need to look at lower numbers but, to do that, we should zoom out first:

    So the real fall is from 26,250 (the 25% line), even though we went over it a bit.  The 20% line was 25,200 and the 15% line is 24,150 and, since it's down 10% from the 25% line and, since we broke over the line and held it a bit, it's very likely to be support, which means not much more downside today.

    NOW we can go back to the hourly chart and draw the bounce zones from 24,150 and, since that was a 2,100-point drop, the bounces are a whopping 420 points to 24,570 (weak) and 24,990 (strong).  If those numbers are correct, we'd expect to see some consolidation along 24,570 on the way down:

    See how easy that is?!?  Remember, the 5% Rule is NOT TA – it's just math.  We just put it on a chart to illustrate how the technicals obey the 5% Rule – no matter what form of TA voodoo they choose to follow.  

    So, knowing that we're already at 24,250 and knowing we have a floor at 24,150 that should be bouncy (and no new news that makes things worse so far), we expect a bounce higher than we are now, so there's no reason to rush into any adjustments  and certainly no reason to panic.

    Unfortunately, I don't see any particular reason to think things will get better today, or over the weekend so I don't think we get past the weak bounce today and we'll have to stay bearish into the weekend – even if we lose a bit of money on a bigger bounce.  

    I'm going to take 2 /YM longs over 24,300 with tight stops below and /TF 1,500 as well and we'll see if we're bouncy.  /NQ 7,000 needs to confirm or we're out.  2,560 on /ES.


  12. Incompetence/StJ – So you think Putin only worked to elect a dupe who is so easy to manipulate that he just has to push a button and Trump does his bidding without knowing it?  Very possible but it means Putin is one super-scary spy!  

    Image result for putin spy

    • The same Russian-backed propaganda groups accused of meddling in the 2016 U.S. presidential election used social media to try to disrupt U.S. energy policy, including inciting protests against pipeline projects, according to a new congressional report.
    • The House Science Committee report says it found evidence that Russian-sponsored agents used Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and Instagram to suppress research and development of fossil fuels and impede efforts to expand the use of natural gas and fracking in the U.S.
    • The groups targeted Energy Transfer Partners' (NYSE:ETP) Dakota Access pipeline and TransCanada's (NYSE:TRP) Keystone XL pipeline, as well as projects by Enbridge (NYSE:ENB) and other companies, according to the report.
    • "The Kremlin has a motive to disrupt U.S. energy markets and influence domestic energy policy, since American energy represents a direct threat to Russian energy interests," the report says.
    • Stocks tumble around the globe in the wake of Pres. Trump's planned tariffs on steel and aluminum – 25% and 10%, respectively – raising fears of a potential trade war.
    • Japan’s stock market was Asia’s worst performer in today's trade, with the Nikkei -2.5% and just three of the index's 225 stocks ending with gains; Honda (NYSE:HMC) and Toyota (NYSE:TM) fell by respective 3.8% and 2.3%.
    • Every other Asian market also fell, with declines of more than 1% in South Korea, where steelmaker Posco (NYSE:PKX) slid 3.6%, and Hong Kong.
    • Stocks in Europe are trading at two-week lows, with Germany's DAX currently ~2% lower, as the European Commission said it could take the U.S. decision to the World Trade Organization.
    • Meanwhile, U.S. Treasury prices are higher, with the benchmark 10-year yield sliding to 2.81%, its lowest level in three weeks and further extending the distance from its four-year peak of 2.957% touched on Feb 21, and yields on German Bunds fell to a five-week low 0.618%.
    • Gold rose 1% to $1,317/oz. and the yen strengthened 0.5% against the dollar.
    • Stocks open squarely in the red, turning the S&P 500 index negative for the year, as Pres. Trump's tariffs on steel and aluminum imports stoke fears of retaliation from other countries and for other products; Dow -1.2%, Nasdaq -1.1%, S&P -1%.
    • European bourses trade lower across the board, with France's CAC -2%, Germany's DAX -1.9%and U.K.'s FTSE -1.1%; in Asia, Japan's Nikkei ended -2.5% and China's Shanghai Composite closed -0.6%.
    • In corporate news, retailers are in focus this morning following earnings reports from Gap, Nordstrom, Foot Locker and J.C. Penney.
    • The financials (-1.4%), industrials (-1.4%), consumer discretionary (-1.3%) and tech (-1.2%) sectors are the weakest in the early going, while utilities (+0.3%), telecom services (+0.2%) and consumer staples (+0.1%) open higher.
    • Treasuries have pulled back from yesterday rally, pushing the yield on the benchmark 10-year note 4 bps higher at 2.84% and the two-year yield up 3 bps at 2.23%.
    • U.S. WTI crude oil -0.7% at $60.53/bbl.
    • The U.S. oil and gas industry slams Pres. Trump’s steel tariff, saying the move would kill energy jobs by raising costs for big infrastructure projects.
    • The industry relies on imported steel for drilling equipment, pipelines, liquefied natural gas terminals and refineries; as an example, the Interstate Natural Gas Association of America says the type of pipe and steel used to make thick-walled interstate pipelines are hard to source domestically.
    • A study last year by the Association of Oil Pipelines showed that a 25% increase in pipeline costs could increase the budget for a typical project by $76M; TransCanada’s (TRP -0.5%) proposed Keystone XL expansion would cost at least $300M more.
    • Large midstream companies, including Kinder Morgan (KMI -1.8%), Magellan Midstream Partners (MMP -0.4%) and Enbridge (ENB -0.8%) have declined to comment on the steel tariffs.
    • The auto industry warns that the recent pattern of sales declines in the U.S. may continuebecause of Pres. Trump's planned tariffs on steel and aluminum imports.
    • The proposed tariffs "couldn’t come at a worse time,” says American International Automobile Dealers Association president Cody Lusk. “Auto sales have flattened in recent months, and manufacturers are not prepared to absorb a sharp increase in the cost to build cars and trucks in America.”
    • UBS analyst Colin Langan forecasts Ford’s (NYSE:F) raw material costs, which already were likely to rise by $1B this year, would increase by another $300M due to the tariffs, and General Motors' (NYSE:GM) raw material costs, already seen climbing $800M, would rise an additional $200M.
    • Ford already had warned about rising metal prices: Steel, its biggest commodity purchase, has jumped by about a third since the start of last year, and aluminum, used for the bodies of F-Series pickups, is up more than a quarter.
    • Canada and Brazil – not China – likely will suffer the biggest impact of any U.S. tariffs on steel, according to a 2017 report from the U.S. Department of Commerce.
    • Canadian and Brazilian steel comprised a respective 16% and 13% of U.S. steel imports as of September 2017, while China, frequently criticized politically for dumping cheap steel on trade partners, is not one of the top 10 importers of steel to the U.S., the report said.
    • Meanwhile, Top foreign sources of aluminum included Canada (56%), Russia (8%) and the United Arab Emirates (7%) during 2013-16.
    • Alcoa (NYSE:AA) says "vital trading partners, including Canada, should be exempt from any tariff on aluminum… We will continue to work on solutions that create a level playing field and address Chinese overcapacity."

    • U.S. Steel (NYSE:X-2.5% premarket after BofA Merrill Lynch downgrades shares to Neutral from Buy following the stock's recent run higher, as Pres. Trump's tariffs were largely expected.
    • BAML believes the tariff will have a limited benefit in 2018 due to previously contracted tonnage locking in lower prices, and the firm expects steel prices to slide by 2019 because of likely WTO challenges and threats of trade retaliation, domestic capacity restarts and potential demand degradation as downstream products containing steel content could be imported.
    • J.P. Morgan's Michael Gambardella notes significant details around the tariffs, such as whether specific countries will be exempted, are still lacking so it is difficult to assess the ultimate impact on steel prices.

    Consumer sentiment improves sharply in February

    • February Consumer Sentiment99.7 vs. 99.5 consensus and 95.7 prior.
    • Current economic conditions 114.9 vs. 115.1 consensus and 110.5 prior.
    • Index of consumer expectations 90 vs. 90.2 consensus and 86.3 prior.
    • Inflation expectation: 2.7% in-line with consensus, 2.7% prior
    • Activity in the UK construction sector rose to 51.4% in February but still remained subdued compared to consensus of 50.5 amid client demand still remains low due to "fragile business confidence and ongoing political uncertainty."
    • Tim Moore, associate director at IHS Markit, said that residential construction was set to experience its worst quarter in over a year, suggesting a decline in demand for housing
    • Q4 GDP growth of 1.7% was shy of expectations for 2%. In addition, Q3 growth was revised lower to 1.5%.
    • Household consumption growth in Q4 slowed to 2.1% from 3.7% in Q3.
    • For all 2017, real GDP rose 3% – the fastest annual pace since 2011.
    • The loonie (NYSEARCA:FXC) remains under pressure, mostly thanks to U.S. steel and aluminum tariffs. It's down 0.3% to $0.7767.
    • The Bank of Japan Governor for the first time overnight began talking about an exit from the central bank's extraordinary stimulus program. That doesn't mean rate hikes are coming next month. Instead Kuroda pointed to 2019 as a time for the BOJ to begin thinking about a change.
    • Kuroda says he and the policy board are expecting inflation to reach the 2% target sometime next year, so it  makes sense to consider curtailing stimulus.
    • The Nikkei fell 2.5%, and the yen is up 1% vs. the dollar.

    • A combination of the macro ("deteriorating industry conditions") and the micro ("disappointing" start to the new $1 $2 $3 value menu) has RBC's David Palmer cutting his same-store sales growth forecast for Q1 to 1% from 3.5%, and his price target to $170 from $190.
    • "Our sense is that the $1 $2 $3 platform stole attention from local marketing, particularly at breakfast, which likely slowed as a consequence," say Palmer and team. They maintain an Outperform rating on the stock.
    • MCD -2.7% premarket to $151.50
    • Exxon Mobil (NYSE:XOM) reportedly has declared force majeure on exports from its $19B Papua New Guinea liquefied natural gas project, which has been shut since Monday because of an earthquake.
    • XOM earlier had told buyers that the plant’s two LNG trains would be shut for at least seven days but has not commented on whether it had invoked force majeure.
    • The large-scale supply disruption has caused Asian spot LNG prices to surge 5% since last week to $8.80/mmBtu.
    • "Given the location and magnitude of the earthquake, as well as the scale of the aftershocks, we anticipate at least a month’s downtime is likely,” UBS says on the earthquake’s likely impact on the LNG sector.
    • Foot Locker's (NYSE:FL) FQ4 (ended Feb. 3) EPS of $1.26 topped estimates by a penny, but comp-store sales fell a worse-than-hoped 3.7% Y/Y.
    • The 2018 outlook calls for flat-to-slightly up comp-store sales, and an improvement in gross margins (which fell during 2017). Said forecast is dependent on a strong H2, as 2017's softness is seen continuing through the first half of this year.
    • The conference call is set for 9 ET.
    • Previously: Foot Locker beats by $0.01, misses on revenue (March 2)
    • FL -8.5% premarket. Nike (NYSE:NKE-2.1%, Under Armour (NYSE:UAA-1.4%, Finish Line (NASDAQ:FINL-0.2%
    • Valeant Pharmaceuticals (NYSE:VRX) has filed an S-3 for an unspecified mixed shelf offering - NOW they are getting interesting! 
    • General Motors' (NYSE:GM) South Korean unit plans to cut 5,000 jobs, or ~30% of its workforce, but keep production at current levels if the government agrees to its $2.8B proposal for the loss-making operation, according to a Reuters report.
    • GM, which owns 77% of the Korea unit, announced last month that it would shut down a factory in Gunsan, southwest of Seoul, and that it was considering the fate of its three other plants in the country; since only 2,000 people work at Gunsan, the other factories also would be affected.
    • GM’s proposal may put the government in a bind, as South Korean Pres. Moon Jae-in wants to save thousands of jobs but could face a public backlash if he uses taxpayer money as a lifeline for the U.S. company.
    • General Electric (NYSE:GE) shares have fallen too far, says William Blair analyst Nicholas Heymann, who expects the stock to rise ~50% this year after crashing 52% in the past 12 months.
    • Despite overwhelmingly negative media sentiment, Heymann foresees no further dividend cut or share issuance to raise money, and he expects GE’s planned sale or exit from underperforming businesses valued at $20B to net the company $12B-$15B in cash by the end of 2019.
    • GE’s pension obligations are underfunded by ~$31B – $19B in mandatory obligations and $12B that are voluntary – but Heymann sees a major benefit to GE from rising interest rates, as every quarter-point increase in the yield of 10-year U.S. Treasury notes reduces the pension deficit by $2.2B, because the discount rate used to calculate the obligations rises.
    • Heymann expects more turmoil ahead as GE continues to work through its problems but he also believes CEO John Flannery’s moves to “reset everything” and simplify the business will enable the company to lift its annual cash flow to “the mid teens” in billions of dollars by 2020.
    • Pres. Trump told oil and corn industry representatives today that he supported changing U.S. biofuels policy in a way that would limit costs to refiners while expanding sales of ethanol, Reuters reports.
    • Sen. Grassley of Iowa, who attended today's meeting, said nothing was decided but that an “emerging solution” could include allowing for year-round sales of 15% ethanol blend for motor fuels.
    • Senators Cruz and Toomey said they were “encouraged that Pres. Trump recognizes the importance of providing relief from crushing RINs costs" for oil refineries.
    • Among companies represented at the meeting reportedly were Valero Energy (NYSE:VLO), Delta Air Lines' (NYSE:DAL) Monroe Energy, PBF Energy (NYSE:PBF), Philadelphia Energy Solutions and Green Plains (NASDAQ:GPRE).
    • In an amusing Twitter thread with actor Robert Downey Jr., Marvel (NYSE:DIS) announces that key release and tentpole hero film Avengers: Infinity War will come out a week earlier than expected this spring.
    • The film, originally set for a May 4 release, will now come out April 27.
    • Competing films were already dodging the release, but an extra week gives it more space from some other Disney films in May: Deadpool 2 (part of what Disney would buy from Fox; the original did a pleasantly surprising $363M in domestic business and $783M worldwide) on May 18, and the highly anticipated Solo: A Star Wars Story on May 25.
    • DIS is up 0.3% after hours.
    • Canadian Natural Resources (NYSE:CNQ) says it will delay the completion and production ramp-up of some wells that produce heavy crude oil due to the steep price discount tied to tight transportation capacity from Alberta.
    • CNQ also is considering reducing its heavy oil drilling program during H2 and switching to more light oil drilling, President Tim McKay said during today's earnings conference call.
    • But McKay said he expects the cumulative effect of slowing heavy output from new wells and advancing the timing of planned outages at some production sites will be “quite minor” for overall production.

  13. M/Phil I have a covered call in an IRA with the short $20 Jan 19 and $25 Jan 19. There is no premium left in the $20 calls. I could just close out that part of the covered call and exit, but I still like Macy’s. Roll the call to a 2020? Any other moves? Thanks.


  14. Sqqq/Phil- so that’s 80 sept 15 calls, short 40 20 calls and 40 jan 30 calls?


  15. Based on chart mubo-jubo /ZB don't like being 'up' on weekly 10 year basis.  If it goes down, is TBT the right play?


  16. Nice gains on /TF but no love from /YM yet.   Done with /TF at 1,510 ($500/contract) and I have worked my way into 3 long /YM at 24,253 avg so far (going in and out as it gyrated up and down – 15 trades so far).  Ideally, of course, I'd love to get the basis down to 24,150 and then have faith in the bounce.

    Hopefully this is European selling and we'll move up after they close.  

    M/Jet – Wow, they are at $30 so I guess you have the stock and you have the short Jan $20s ($10.50) and the short Jan $25s ($6.80) in some mystery configuration.  Let's say it's 1,000/5/5 – I'd sell the stock ($30,000) and buy 20 2020 $20 calls for $10 ($20,000) and roll the 5 short Jan $20 calls ($5,250) to 10 short 2020 $30 calls at $5.75 ($5,750) and leave the short $25s as they still have premium and can be rolled any time.  That would leave you with $9,500 in your pocket and:

    • 20 2020 $20 calls 
    • 10 short 2020 $30 calls
    • 5 short Jan $25 calls.

    Since the short Jan $25s can easily be rolled to the 2020 $30s or 2x the 2020 $40s ($3) for that matter, you clearly have at least $20,000 more to collect at $30 or better and up to $30,000 if all goes well and you end up with 10 of the 2020 short $40s.

    SQQQ/Dave – Correct.

    /ZB/That – I don't short-term trade TBills and the problem with TBT is it suffers from outrageous decay so you could be right and still lose money.  In the past, we simply shorted TLT whenever it hit $130 and that was good but there's not enough history now to say whether or not we can safely lower our mark.


  17. It's a strange day to get bullish but VRX is down on the shelf offering and because they guided to "only" have $8.5Bn in sales this year.  The stock is down to $5Bn at $15 and, even if we assume they get eaten up by generics and have no pipeline (neither of which is likely) – they still have more than $5Bn in sales and MRK has $39Bn in sales and makes 10% and PFE has has $53Bn in sales and makes 15% so $5Bn is the very low end for VRX, which means we should at least take a poke here. 

    As is often the case, it's the discount that attracts me so, for the LTP:

    • Sell 10 VRX 2020 $15 puts for $4 ($4,000) 
    • Buy 20 VRX 2020 $15 calls for $4.50 ($9,000) 
    • Sell 20 VRX 2020 $22 calls for $2.50 ($5,000) 

    That's net $0 on the $14,000 spread and we're happy to add more if they go lower as our commitment is only to buy 1,000 shares for $15 and our allocation blocks are $50,000 so, even if they drop 50% to $7.50 and we double down, we'd only be in for 2,000 shares at net $11.25 and still not even half a block committed (and we didn't even sell more calls yet).  

    For the OOP, same trade but 1/2:

    • Sell 5 VRX 2020 $15 puts for $4 ($2,000) 
    • Buy 10 VRX 2020 $15 calls for $4.50 ($4,500) 
    • Sell 10 VRX 2020 $22 calls for $2.50 ($2,500) 

    ?Same net $0, less commitment, returns $7,500 at $22

    Also in the OOP:  

    • Let's buy back 25 (1/2) of the short TZA Jan $20 calls for $1.45.  That will swing us a bit more bearish into the weekend.
    • Let's buy back the 20 short GNC 2020 $7.50 calls at $1.05 as that's up 30% already and we'll re-sell on the next pop over $5.
    • Let's buy back 30 SPWR short 2020 $12 calls at $1.25 – also one we'll re-sell when they pop again.  I like the way they held $7 this week.

    Let's buy 10 WPM 2020 $15 calls for $5.70 and roll the 10 2020 $17.50 calls we have ($4.45) down to the $15s as well so we'll end up with 20 of the $15s and 10 short $25s and 10 short $20 puts.

    More changes coming!  


  18. Phil – Welcome aboard the VRX trade.  :-)


  19. XON – One of Bill Miller's favorites up 18 % today.


  20. Same here.. Phil – Welcome to VRX.

    I was wondering when you were going to pull the trigger.


  21. Well, that was worth the effort in the end:

    Obviously, I don't have conviction like I did on the way down, when I'd let them ride.  We were looking for 24,570 but up 2,000 was time to take it off the table and now we'll see if they pop it.

    That one short was a mistake, I sold too many and quickly bought it back.

    We have our S&P lines from the last crash:

    2,684 is the weak bounce we're looking for and we know the 20% line was 2,640 and that obviously held well this morning so now we'll see what kind of bounce this is but I think weak should be the end of it.

    Nas 25% line at 6,750 is super-critical and they just made it over that (I still have 1 /NQ long, in fact, with a stop at 6,750 now) and /NQ topped out at 7,000 and dropped exactly 10% to 6,300 so the big bounces are long gone there but we can use the 250-point drop to 6,750 from 7,000 now and, if we are going to be bullish, then 50-points to 6,8000 should be no problem.  

    If, on the other hand, 6,750 is rejected, then we are likely more in the range back to 6,500 and then it's 6,550 and 6,600 we'll be looking for for support.

    Russell topped out well over the 10% line (1,584) but then it fell to the Must Hold (1,440) on a spike so that's still the range and the 5% line is 1,512 and we're at 1,520 so a bit over that means the range back to 1,584 is 72 points and call it 1,512 + 15 = 1,519 (where it's having trouble now) + 14 (rounding) is 1,533 for the strong bounce.  

    XON/Albo – We liked them last year and made good money.   Didn't realize they got so cheap.

    VRX/Learner – On a stock like that – it has to be a real bargain for me to want in.

    Well now I'm shorting /TF at 1,519 with a stop over 1,520 ($50).


  22. Yes, welcome to VRX!   All aboard!    =)


  23. In the STP, we have 20 short NLY Jan $12 puts at $1.82 that are now $2.80.  We're going to close them in the STP (taking the loss) and moving them to the LTP:

    • Sell 25 NLY 2020 $12 puts for $3.15 ($6,300) 
    • Buy 2,500 share of NLY at $10.05 ($25,125) 

    Also in the STP, we covered our Sept $15 calls with the short $20 calls as planned.  Let's adjust DIA:

    • Sell all 40 DIA June $255 puts for $15 ($60,000) 
    • Buy 200 DXD July $8 calls for $1.20 ($24,000) 
    • Sell 200 DXD July $10 calls for 0.55 ($11,000) 

    We're putting $25,000 back in our pocket which is almost all of the $30,000 we laid out on the hedge and we still have $40,000 worth of upside covering the 20 short July $230 DIA puts, now $5.53 and we'll put a stop on half of those at $6, which is above the day's high at $5.70 and a stop on the rest at $7 so we can't lose any money on those as the Dow moves higher.  

    In the STP, let's also sell 20 of the TZA Jan $15 puts for $4.85 ($9,700) as we don't mind owning TZA as a permanent hedge at net $10.15, right?   So why not collect the $9,700 for promising to do it?


  24. LOL, a lot of closet VRX players around here!  cheeky


  25. By the way, notice how we transfer $5,600 (by taking a loss) from the STP to the LTP, where we open the losing position at better prices, collecting cash for the put sale.  That's a money pump you can work to an IRA as well!  


  26. Trudeau says steel tarrifs are unacceptable and concerns about national security are "nonsense".  

    Wow, Trump managed to piss off a Canadian!  

    World leaders are usually a lot more subtle but Trump can't take a hint if you don't beat him with a stick.


  27. VRX – love to join the party, but it will require patience to fill at those suggested prices – or have things moved in the last hour?




  28. Using this opportunity to add to long call on VRX, trying to get 3,000 Jan 20 $20 calls for $3.00 a pop…  lets see if I can fill it.

    Rick


  29. ~~ SWN – Southwestern Energy beats by $0.03, reports revs in-line.

     I started a position in SWN last week following a whole bunch of "gurus", who bought the stock 2 points higher.  Stock is up 10% today.

    Rick, you're a horse !




  30. The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures


  31. NLY put sale – I think the math is wrong, you collect $7,875 (not $6,300) for selling the $12 puts for $3.15.


  32. Phil – been using DTYS to short the 10 year treasury, starting a position in January with 100k shares, has worked out quite well, I think there is some good room to run this year.

    ?Rick



  33. Jumping SpiderBots And BeeBot Pollinators



  34. Kind of like a snow tornado outside.  

    VRX/Rick – Geez, I guess all those times I've said "don't be the sucker paying premium" sort of fell on deaf ears, right?    You want to spend $90,000 when VRX is at $15 betting it will be above $23 (up 53%) in 2 years so you can at least break even?  I'd sell 50 of the 2020 $15 puts for $3.90 ($19,500) and buy 100 of the 2020 $12 ($6)/17 ($4) bull call spreads for $2 ($20,000) and now you've spend just $500 and you have $50,000 worth of upside at $17 and your break-even is around $13.  To make $50,000 on 3,000 2020 $20 calls, you need to hit $23.17 – quite a bit higher.  Worst case, is of course, owning $45,000 worth of VRX – still only 1/2 of what you're risking.  That leaves you with $89,500 free to do something productive with! 

    NLY/Winston – That's right, I was counting 20, not 25 – I changed my mind after I started as 20 was too wimpy.  

    DTYS/Rick – Haven't looked at it but it's a logical play. 

    OK, so where are we?

    Dow 24,150 was base, 24,570 (weak) and 24,990 strong.

    That's a weak failure.

    S&P 2,640 is our base and 2,684 is weak and 2,728 is strong:

    On the nose!  

    Nas 6,700 is base and 6,750 is weak and 6,800 is strong:

    Split the difference at 6,875

    RUT 1,512 is base and 1,529 (not 19) is weak and 1,544 is strong

    Also pretty much on the nose.  

    So, we just made weak bounces and they all failed except the Nas, which is the silliest index anyway.  

    Still shorting /TF at 1,520.


  35. Now shorting /TF at 1,525 – we'll get it eventually.

    Have been going through the LTP – nothing I want to change that can't wait.


  36. GE – Phil, I have the 2020 18 P sold with 18/25 BCS.  Is there any adjustment that I should be considering?


  37. feltok / the advantage of the 2020 timeframe is that you have an eternity to make any adjustments. Keep an eye on the relation between the price you paid for the spread, and the value of the 2020 $18 call – which is now trading around $1.40. Currently the value of the $18/$25 spread is $1.00. The time to adjust is when the value of the long call equals the price you paid for the spread (which I do not know how much you paid for it).

    The theory is that you sell the long call when that equal relation occurs – so you are in effect making sure you do not lose money (rule 1). The biggest caveat is what is the next move after you have sold that $18 call. Respecting rule 1 means that you would buy another spread to the value of what you sold the long $18 calls for. It also means that you are still short the 2020 $25 spread (because if you closed that out you would be losing money). The end result is that you find yourself in a call ratio spread. It would be good to have Phil's view as to whether there is an alternative to closing out the additional short call without 'losing' money. I certainly have not found the answer.

    You question is opportune, because it is critical to how we adjust the bread and butter trades of the PSW system – the artificial buy write (ABW).


  38. Phil / NLY – do you have a target price point of when you will cover this position?

    Or is it covered and I'm looking at the wrong portfolio?

    thanks 


  39. Winston – nice summary of the ABW. I would just add that if you still like the company, since its now at a better price, you could buyout the short calls that are left, perhaps (crazy) flipping them to short puts of a similar value, and starting all over. This way, you are just "longer" the underlying at a lower, and better price. It may require patience, but could be much easier to manage if the stock snaps back on you.


  40. Well they are trying hard to get things green but there's really nothing impressive about that.

    My whole house is shaking from this crazy snow storm. 

    GE/Fel – I think the $18 target is fine for the puts but, if you plan to stick with it, why not roll the $18 calls ($1.40) down to the $13 calls ($3.40) for $2 and you pick up $5 in strike – no sense in staying with the stock if you're not willing to do that.  Then I'd buy back the $25 calls for 0.42 as they are doing nothing for you and the $18 calls are $1.40 so look to sell them for $2+ on a bounce and you'll be back in business as that would pay for the roll.

    NLY/Batman – Earnings are May so hopefully by then they are back around $12 and maybe time to cover.  We bought them at $10.21 (1,000 shares) and we sold the $10 puts for $1.80 so net $8.41 on this set so far means I'm really not worried.  Let's say they fail $10 and we worry, the $8 calls are $2.10 and that would drop our basis to $6.21 called away with a $1.79 profit at $10 plus dividends.  The $5s are $5.40 for that matter and that would drop our net to $3.01 and $6.51 even if assigned more at $10 so maybe a better sell!  

    But hopefully it goes higher and we can sell the $12s for $1.

    How is the RUT up 1.5% for the day?  

    MADNESS!!! 


  41. DIN – just wow. you'd think they had launched a crypto or something. 'IHOPcoin' has a nice ring to it.


  42. Hi Phil, i have sold GE Jan 2020 $25 puts at $7.50. Now $11. Any point adjusting? Thanks


  43. STP – Just have to sell 3 NFLX April $300 calls for $18.75 ($5,625) out of principle!  

    DIN/Scott – Didn't see that coming.

    Too bad, we had them in the old LTP.

    GE/DM – Now there's an unrealistic target with no premium to wear off so yes, should be adjusted.  You are down $3.50 so focus on getting that back, the $18 puts are a better target at $4.65 and that's net $1.15 less the $3.50 you are paying back to roll so your target is $16.85, not $17.50 but, more importantly, the $18 puts have $1 of premium that the $25 puts do not.  If you then sell 50% more, the net collected goes to ($1.15+$4.65)/2 = $2.90 and your net is then $15.10 – that's the way I'd go.  

    The risk isn't too much more as you get assigned 1.5x at $15.10 ($22.65) vs 1x at net 17.50 so it's like adding 50% more shares for $5.15.

    Wow, I should have stuck with my longs – flying now.  Dow is lagging by a lot as Nas up 1%, S&P up 0.5%, RUT almost 2%.  Trump's right, we're winning the trade war already!  


  44. How much coke did Kudlow do today?  He's been on TV since the opening bell screaming about trade.


  45. Seriously, he sounds like a drunk guy at a bar who won't stop trying to make the same point over and over again… 


  46. Phil – thoughts on VZ or S here?


  47. VZ/Scott – They sold 3 states to FTR so I am not a fan of them.  T I like a lot better, they just keep plodding along.  S is too much of a crap shoot.  FTR still my favorite at $7.25 but I'm sick of telling people so I'll just wait quietly and let them do their thing.  


  48. 15 min chart on RYN today looks pretty mechanical.


  49. correction – on RYAM


  50. heck of a week for DDS, too, after blowing to doors off with earnings last monday


  51. At the close:

    • Dow 24,150 was base, 24,570 (weak) and 24,990 strong.
    • S&P 2,640 is our base and 2,684 is weak and 2,728 is strong:
    • Nas 6,700 is base and 6,750 is weak and 6,800 is strong:
    • RUT 1,512 is base and 1,529 (not 19) is weak and 1,544 is strong

    So the Nas made the strong bounce but not the rest and now we'll have to see what happens over the weekend.  Don't forget the death cross for the Nas – we predicted for next Tuesday, when the 20 dma crosses below the 50 dma at around 6,700 – that's what they are trying to avoid by pumping it back up but it can't be stopped now – only put off a day or two.

    Have a great weekend, 

    - Phil


  52. and Netflix made an all time high today…  what a day…  peace on the streets.    – Rick


  53. Cheers Phil


  54. Deano / Flipping – thanks, I like the thinking, but flipping to what effectively is now 2X the short puts creates perhaps another conundrum. Maybe using another approach that has been mentioned here before in splitting the difference. Take half of the original short calls off the table and add half short puts to the same value. 


  55. GM & Korea – it's a dilemma here. It turns out, and I'm not sure if people already knew this but it's being presented as news, that GM has been sucking loads of money out of Korea for all the decades it's been here. So many people, including TV commentators, were initially holding the door open for them to leave.

    Buuuut – there's those jobs, and the economy (while not really that bad) is perceived as bad, so preserving the jobs took priority. So President Moon, rumor has it, chatted with Ivanka about this problem, and GM came around and said, okay we won't leave, and apparently they were even persuaded to behave somewhat better – so no loss that I know of on the Korean side, and likely no under the table deals, as, unlike the previous conservative presidents, President Moon is a famously clean guy.


  56. Winston – is 2x the short puts is too much you can always flip it to another underlying. I think it all depends on the total position target and where you're at with respect to support and fundamental value.


  57. Deano – another underlying – yes, that makes a lot of sense. thanks for sharing your thoughts.



  58. Closing the circle of collusion


  59. Trump risks more than a trade war by targeting China




  60. Phil/Corp Wage Suppression-that article really highlights the forces myself and my contacts are seeing that cause me to doubt the projected increase in wages.  Hope I'm wrong, but corps have really manipulated the environment to have leverage and the current administration is unlikely to try and reverse that.

    Trump is in so much trouble now that the odds of him doing something for a distraction have increased (like institute tariffs).  Seems like the event risk makes the 5% rule harder to rely on.


  61. The real reason NASA hasn’t sent humans to Mars



  62. Phil – And now this moment of Zen…

    After the uprising of 1917, T.E. Lawrence of Arabia gifted the Arab leaders with portraits of themselves. One pointed to the pigment depicting the image of his nose and asked, "is that a Camel?".  To the amazement of T.E., his friends could not "SEE" what those paintings were supposed to be or represent. How and Why? (Boy do I ever know how he felt.) 

    Light from a point in space is reflected upon each retina, which line the spherical surface on the back of each eye. Thus, like a camera, through our retinas we actually "SEE" all images and this world in 2D.  If you doubt this, please do attempt to play tennis, park or drive a car, and catch or hit a baseball, with one eye closed.

    To achieve 3D, 2 spatial dimensions (height, width) are rendered to add depth for a 3D image. 4D is achieved by adding 1 temporal (time) dimension, think of the image of a tesseract moving on a 2D screen.

    To perceive the world in 3D, what we "SEE" in 2D is processed by the brain, which creates a sensation based on not just the stereoscopic image, but all other sorts of contextual information. Context can be influenced by many things, viz. light, shadow, substance, ideas, science, knowledge, imagination, superstition, ignorance, fear and bias.

    What those bedouin saw was pigment on canvas, they were just unaware that a portrait or picture is a visual metaphor. Not being culturally educated or indoctrinated to recognize such, at first they were unable to interpret what seemed to be blotches of pigment, as facial renderings in their mind's "eye".

    Much like these very letters which form words, sentences and paragraphs of expression, as you read them, the voice in your head transmutes the shapes into sound, which they are not. 

    Without knowing what is human or otherwise, a newborn can recognize the face of its parents, even if it was raised by wolves or apes. Thus, the important gift or ability to recognize a face is hard wired into the brains of talking monkeys and other species, and is NOT something which needs to be learned.

    As Lawrence's bedouin example demonstrates, face recognition is not the same as the ability to "SEE" an image of a face. The ability to render or "SEE" a face through the mind's "eye", in a two dimensional painting, photo or image, is something that has to be learned.

    What did we learn? It is through education that we are indoctrinated; the senses can be flawed because they are first filtered through the mind's "eye"; and our perception of the world, is subject to all sorts of context therein. 

    This is important to bear in mind with what is to follow…. 

     


  63. Phil – On Thursday in this forum…  My initial comment regarding a commonly known and proven monetary axiom…

    "Economic actors make choices governed in part by Gresham’s law where the bad money drives out the good."

    To which you responded with an PHD (Piled High + Deep) sound byte graphic, of oversimplication, overassumption, misapplication or syntheses of theories that never coherently existed, which was a misconception on your part. Is that a Camel?

    Due to your confusion, I further clarified my statement for your edification…   Gresham's Law is a statement of the “principle of substitution” as applied to money: that money, forms of money, and even a commodity (or services) will be devoted to those uses which are the most profitable. 

    To which you responded by changing the subject… "Gresham/Naybob – That's not the same thing at all. " replete with a pasted Wiki explanation of Gresham's theory as related to circulating specie. Indeed its not the same thing, and I almost thought you had grasped the concept.  Is that a Camel carrying coins?

    So to avoid any feats of circular logic, I reiterated with this succinct post, giving you a 2nd example of the axiom in economics, and a link to a paper by a RENOWNED MACRO PROFESSOR at GRESHAM which fully backed my original statement and point.

    I take Friday off to put a 52 year old friend, whose death was sudden from aortic aneurysm, into the ground. And I am welcomed back to the latest in your string of non sequitur: you still don't get it and even posted some ad hominem. 

    And now this… Tonight on "Point/Counterpoint", Phil and I will argue Gresham's Law in Economics. Phil will take the Point for Gresham's Law being limited to physical money or specie, and I will take the Counterpoint against. Phil?

    Phil – Still wrong, Naybob but, as usual, way too exhausting to discuss something with you since you can never be wrong.  Fortunately, there are entire research papers written with extensive citations backing me up (but I'm sure they're wrong too). 

    Thank you Phil, but WRONG again Gresham Breath and this.  Talk about way too exhausting, you add to this weeks collection of PHD economoron graphic; "expert" Wiki research notes, a link to a "research paper" written by a SENIOR STUDENT at Hogwarts?  Well, at least that student agreed with me. SAY WHAT???

    And now Garrett, you dope smoking piston head, put that Paraquat laced blunt down and get back in here… OUR TOP STORY TONIGHT

    HAD ONE BOTHERED TO GO BEYOND THE SYNOPSIS AND READ THE PAPER YOU REFER TO or its CONCLUSION… One might have found THE AUTHORS CONCLUSION:

    Gresham’s law, in its basic form, i.e. that bad money will drive out good money, seems to be a useful tool for simple economic modelling. However it would appear through the discussion of the historical development of thought concerning the law, that there needs to be some kind of adjustment in order for it to be more applicable to the real world. 

    Simple economic modeling using Gresham's Law adjusted so as to be applicable in the real world. HOLY CAMEL TOES PHILMON!!! Exactly my point, what Prof. Chick at Gresham College refers to, and your citation concludes, all backing my initial comment and the point I made. Thank you Brother Phil.


  64. Phil – On Thursday in this forum…  My initial comment regarding a commonly known and proven monetary axiom…

    "Economic actors make choices governed in part by Gresham’s law where the bad money drives out the good."

    To which you responded with an PHD (Piled High + Deep) sound byte graphic, of oversimplication, overassumption, misapplication or syntheses of theories that never coherently existed, which was a misconception on your part. Is that a Camel?


  65. Due to your confusion, I further clarified my statement for your edification…   Gresham's Law is a statement of the “principle of substitution” as applied to money: that money, forms of money, and even a commodity (or services) will be devoted to those uses which are the most profitable. 

    To which you responded by changing the subject… "Gresham/Naybob – That's not the same thing at all. " replete with a pasted Wiki explanation of Gresham's theory as related to circulating specie. Indeed its not the same thing, and I almost thought you had grasped the concept.  Is that a Camel carrying coins?


  66. So to avoid any feats of circular logic, I reiterated with this succinct post, giving you a 2nd example of the axiom in economics, and a link to a paper by a RENOWNED MACRO PROFESSOR at GRESHAM which fully backed my original statement and point.

    I take Friday off to put a 52 year old friend, whose death was sudden from aortic aneurysm, into the ground. And I am welcomed back to the latest in your string of non sequitur: you still don't get it and even posted some ad hominem. 


  67. And now this… Tonight on "Point/Counterpoint", Phil and I will argue Gresham's Law in Economics. Phil will take the Point for Gresham's Law being limited to physical money or specie, and I will take the Counterpoint against. Phil?

    Phil - Still wrong, Naybob but, as usual, way too exhausting to discuss something with you since you can never be wrong.  Fortunately, there are entire research papers written with extensive citations backing me up (but I'm sure they're wrong too). 

    Thank you Phil, but WRONG again Gresham Breath and this.  Talk about way too exhausting, you add to this weeks collection of PHD economoron graphic; "expert" Wiki research notes, a link to a "research paper" written by a SENIOR STUDENT at Hogwarts?  Well, at least that student agreed with me. SAY WHAT???


  68. And now Garrett, you dope smoking piston head, put that Paraquat laced blunt down and get back in here… OUR TOP STORY TONIGHT

    HAD ONE BOTHERED TO GO BEYOND THE SYNOPSIS AND READ THE PAPER YOU REFER TO or its CONCLUSION… One might have found THE AUTHORS CONCLUSION:

    Gresham’s law, in its basic form, i.e. that bad money will drive out good money, seems to be a useful tool for simple economic modelling. However it would appear through the discussion of the historical development of thought concerning the law, that there needs to be some kind of adjustment in order for it to be more applicable to the real world. 

    Simple economic modeling using Gresham's Law adjusted so as to be applicable in the real world. HOLY CAMEL TOES PHILMON!!! Exactly my point, what Prof. Chick at Gresham College refers to, and your citation concludes, all backing my initial comment and the point I made. Thank you Brother Phil.


  69. Is that a Camel carrying prudence? Nobody is arguing that Gresham's Law was not initially intended for specie and the like. Again, the two examples I supplied applying the axiom as a statement to the substitution of money have already been historically and empirically proven. One who is prudent minds his step with sound judgment.

     

    Is that a Camel carrying knowledge and discretion?  Rather than see the forest for the trees, you prattled on about specie which might as well be feces soon to be stepped in… much like those conditions I speak to in my examples represent a clear and present danger. One with knowledge and discretion knows what is going on around him, can plan for the future, and avoids stepping in camel dung.

     

    Is that a Camel carrying reverence? With regard to deference and demeanor, as it is not my bailiwick or wheel house, I never question your trade, hedging or portfolio advice. After giving you sound Macro info, you step out into my wheel house with misinformed assumptions and misconceptions. One who is reverent has discipline and respects the gift of wisdom and counsel. 


  70. Is that a Camel carrying counsel? The closed minded, argue benign points, not to question, not to learn, but in a vain, biased and failed attempt to discredit.  In as much as I can only lead one to water, one who lets their bias filter what their mind's eye sees, may not want to learn and unlike Lawrence's beduoin, can rarely be taught.  A beduoin with counsel gives, seeks and listens to good advice and wise guidance. The ignorant one ignores counsel, does not listen, keeps his head buried in the sand and cannot drink.

    Is that a Camel carrying sound wisdom and understanding? My steadfast devotion to the ancient religion of inside money, looking at financial sector debt or credit flows, flow of funds accounts, banking, distinguishing between real and financial wealth, and knowing the links between the real and financial sectors, has never failed to serve me or others I share with.  I find your lack of faith disturbing. One with practical wisdom, who is discerning and behaves wisely has no limits.

    Is that a Camel carrying Power? You know in no uncertain terms, though on occasion I play the fool, I am not a YES man or brown noser, never have been, never will be. I speak my mind, the truth, can readily back it up, and will not hesitate to take you or anyone else deserving out back, where there is something nasty in the woodshed. One who attains the other six pillars, naturally achieves strength and power.


  71. In closing, sometimes you and I are like this Ol Chum, and sometimes not so much. But that's why we are here, to share, learn and make each other better. At least I thought so, please try not to forget that, and if you have a question or are confused, just ask. Often wrong but never in doubt and Out. 

     

    “All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake up in the day to find it was vanity, but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.”  ? T.E. Lawrence

     


  72. NN….are you OK?


  73. And what Jet said!


  74. Nat- how about giving old Gresham a rest and dive in to the housing market- a timely economic indicator.

    Current metrics may be a blip or could they be a harbinger of more to come? 

    Supply is tight (especially here in CA); Mortgage rates creeping up a bit; limited local tax deductions per new tax legislation; Lumber prices up affecting production costs: 

    Up or down from here?


  75. Beating a dead camel/Naybob – My only concern here is that you misinform our Members and have them spouting off that nonsense down the road and get themselves laughed our of any reputable gathering of economists, historians, mathematicians or any other profession that can see through that word cloud you are spewing and pick out the very basic wrongness of the premise.  

    As to Larry and the camel painting.  Since TE Lawrence was only first stationed in Egypt in 1916 in a war that lasted 5 years, it seems very, VERY unlikely that he was sitting around with time and resources available to have paintings commissioned of the Arab leaders who were, of course, revolutionaries at the time. 

    Even supposing that were true and they then sat for a portrait for days or weeks – were they really dumb enough to be surprised and bewildered by the resultant pigment on canvas?  This is, of course, over 50 years after photography was widely invented and Western art itself originated in the Byzantine empire – so these must have been some horribly uneducated revolutionary leaders to be confused by the White Man's offering of a portrait.  Actually, the whole story seems borderline racist – do you have a citation?

    Faiyum Mummy Portrait

    Is that a camel on your nose or are you just happy to see me?  From the 5th century…


  76. Jel – NN….are you OK?

    I'm fine, it's Phil I am worried about.


  77. Pstas – Housing – few houses are being placed on the market, which is construed as strength. Rates rising, Irma, Harvey, Fires, winter, all transitory.  Every idiot and economoron who THINKS they KNOW something is constructing an economic boom narrative out of distortions. Projected trajectory is down.  See here for somebody who is clued in.


  78. Phil – "Beating a dead camel/Naybob – My only concern here is that you misinform our Members and have them spouting off that nonsense down the road and get themselves laughed our of any reputable gathering of economists, historians, mathematicians or any other profession that can see through that word cloud you are spewing and pick out the very basic wrongness of the premise…. Actually, the whole story seems borderline racist – do you have a citation?"

    OMG! More of Phil's non existent silly string theory (so aptly named because that's what it is hangin by),  I'm going to feed this through in chunks to avoid your moderation BS. This is more fun than the labyrinth of Fun house mirrors at Playland by the Beach in the 60's!!! Phil you distorted ignorant… 


  79. Your latest lame assed Trump-ish ad hominem above will not suffice, as it relies on others either being afflicted with ADD, mentally challenged, or just plain ol' lazy boy lounger like yourself. Concerned about PSW's getting laughed at? Unlike you, I give your parishioners much more credit.  Unlike the quicksand you've sunk yourself in, my premise and position is solid as the chins on Mt. Rushmore. Let me help you out of that pit, here hold these bricks…

    The bedouin metaphor is racist? Typical Phil-istine non-sequitur BS. After the boner you pulled with YOUR paper backing ME up, you WANT a CITATION?  The fact that your ASKING is BAD enough. What's wrong ol chum, none of the "for idiots" or Cliff notes "experts" where you get most of your MSM pabulum and economic false doctrine from, could tell you that Arab ink, pigments and parchment have been dated to the 5th, and paintings to before the 7th century? Let me do some splanin…

    Thus "Is That a Camel?" was probably a reaction to surrealist style on the part of the Bedouin. How Lawrence interpreted that sarcasm is another story. But that's our off point serpentine Phil tryin to tread quicksand, those bricks are a hindrance, here let me help you out, by stepping on your head.


  80. Of course it is alleged that certain American Indians could not "see" black and white photos. The ability to "see" paintings and photographs may be rooted in the suspension of disbelief. For those who do not know how to disbelieve, there may be no such suspension….so no "seeing." Which could be part of your affliction, but I digress…

    I too could point you to additional volumes of work backing me up as I have in the past. Since you find ample occasion of late to engage in T-rump-flu symptoms, not pay attention, choose to ignore the facts, engage in circular logic, sleight of hand, ad hominem, red herrings, wish to argue trivial non sequitur, while attempting to misdirect and discredit with BS and sound byte comments, why the hell should I bother?  We already have an idiot in Chief for those kind of irrational pedantic antics.

    Perhaps your going through Man-o-pause? Your reactions, responses and behavior have been very Trump-a-doodle of late, which I for one am concerned. At that show you might have ingested some MSM narrative kool-aid, stumbled into some of Agent Orange's parrot food at a Trump hotel, have an evil twin, like I asked last week WHO ARE YOU? OR suffer something far more serious. I know your not a Gemini, so….


  81. At least you got the beating a dead camel part, which is what you continue to do. Not acknowledging something obvious, like reality, which is right in front of one, is a form of denial, which is not a river in Egypt. Once more unto the the Camel breech or toe Ol Chum. 

    It seems that on occasion, the facts, if not in concordance with the world according to THE PHIL-LIP, are far too exhausting for you. I lead you to water, you refuse to drink, nobody can force you to, even with the stick of solid logic, common sense and all the facts in the world. Hopeless, sad, not fake news.

    All you need do is look in the mirror, that camel staring back at you, is your nose.  All levity aside Ol Chum, what you should worry about is not the laughing going on due to your recent spate of Trump-hillitic symptoms, hissy fits, and this Jane and Dan go round we seem to engage in weekly, your symptoms could be a serious sign.  

    People frequently see faces in clouds; no one ever sees clouds in other people's faces, cept our Trum-Phil. Your fugues, spells and episodes are scaring me, please err on the side of caution and get checked by a professional. Pareidolia Phil that's the ticket, get in the car. Fellow PSW'ers do not attempt this at home. Next week, same Bat time, same Bat channel, nah count me out.


  82. Naybob/ I apologize for interrupting your fight/debate with Phil, but you seem to have forgotten that this is Phil's website. So please no "Phil you distorted ignorant"! Just out of politeness and respect…

    We all pay a membership fee for the privilege to benefit from Phil's vast knowledge of the markets and his unusual common sense. Phil has created a community of sensible investors which you and I belong to. So I am not too sure that this is the best forum to argue at length the merit or interpretation of an economic concept. And yes Phil is the ultimate moderator since it is HIS website. Lastly if Phil is a distorted ignorant and we keep listening to him what does it make of me/us/you? Not very flattering :)

    Luckily the weekend is over and ASX is bound to open 12 points up.


  83. Phil

    One part of trade I have trouble getting my mind around Is if you want a business in China you need a Chinese partner and you only own 49 %. (I think japan is the same way). Whereas if a Chinese person what to invest In the USA he they can own 100% of the company. 

    What’s is the reason for this type of business trade practice?

    Thank you for the help Afterhours is ok







  84. lionel – Well Said. 


  85. Good morning!

    Told you I'd get those /TF's eventually…  

    • Went long at 10:01, out at 1,510 at 11:17 (flipped to /YM)
    • short /TF 1,519 (and out of /YM) at 12:12 with a stop over 1,520
    • another /TF short at 1,520 at 1:27 (stopped out again)
    • another /TF short at 1,525 at 2:28, saying "we'll get it eventually" 

    I had more conviction at 1,525 and added to it as it climbed and ended up with 10 short at 1,530-ish average but it would have worked just as well if I'd stopped out again at 1,530 and 1,535 and gotten back in at 1,535 as it's finally eventually!  I only regret not getting up 15 mins sooner and I would have had a bit more gain but that was nice enough and now we'll see where the bounce takes us.

    Now it'st too in-between to play – especially as I don't know why it's moving (and it's Monday), so we'll have to wait and see how things shape up.

    Oil blasting back to $61.83 after bottoming at $60.13 and /RB just hit $1.91 – up from $1.855 at Friday's lows.  

    Dollar flat at 90.


  86. I second Lionel too.. for whatever ots worth.. NN have some respect for fellow members.. and less of whatever it is you seem to be on.


  87. Asian stocks fall as markets mull China growth forecast



  88. Time for the ignore button (again) for NN.


  89. Back in 4 short /TF at 1,530.  Lined up with 6,800 on /NQ – also a good shorting line and 24,500 – also good and 6,285 and I'll feel better once we're below 2,680.  Tight stops if any of them pop over – of course!