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TGI Friday the 13th – Bulls are Feeling Lucky

We're still waiting on a few of bounce lines:

  • Dow 23,800 (weak) and 24,200 (strong)
  • S&P 2,640 (weak) and 2,684 (strong)
  • Nasdaq 6,500 (weak) and 6,700 (strong)
  • NYSE 12,450 (weak) and 12,600 (strong)
  • Russell 1,520 (weak) and 1,540 (strong)

Even with this morning's pre-market rally, we still have to take the same 3 red levels we were looking for yesterday so we'll have to remain well-hedged into the weekend because we don't change our stance until at least 3 of five of the Strong Bounce levels are captured AND HELD – for at least one full day after a close above.

As you can see on the chart, 2,693 is the 50-day moving average on the S&P 500 so that's the real goal as it needs to be over that line to avoid (or at least put off) forming a "death cross" below the 200 dma into July earnings.  Remember, we predicted strong bank earnings in our Big Bank Theory Report last Thursday and our Trade Idea for Citigroup (C) is looking very good as they have already jumped $4 since we made the play:

The markets are generally back to bullish as Trump walks back threats against Syria and, more importantly, says he may want to put us back in the Trans Pacific Partnership (though the other partners may not want him now) and that then, makes it seem more likely NAFTA will be negotiated.

Oil (/CL) is back over $67 but a bit too dangerous to short again into the weekend.  Gasoline (/RB) is just under $2.05 and we will short that again at $2.075 if we hit it and I guess we might take a stab at shorting /CL at $67.50 – because that is a ridiculous number, being propped up by OPEC and IEA statements that will likely fade away into the inventory rollover on the 19th.  

There are still 223,636 fake, Fake, FAKE open contracts on the NYMEX representing a demand for delivery of 223.6 MILLION barrels of oil to Cushing, OK, by May 31st.  If that actually happpened, we would have a 50M WEEKLY build in crude oil and prices would drop to the low $20s.  What's going to actually happen is that those FAKE orders will be rolled into longer months – to create more FAKE demand and keep the prices up.  The only loser here is the American people – so don't worry about it!  

Click for
Chart
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
May'18 67.18 67.76 66.70 67.13 08:44
Apr 13

 


-
0.06 201626 67.07 223636 Call Put
Jun'18 67.11 67.63 66.59 67.04 08:44
Apr 13

 


-
0.09 56569 66.95 482855 Call Put
Jul'18 66.69 67.24 66.22 66.64 08:44
Apr 13

 


-
0.06 15967 66.58 216360 Call Put
Aug'18 66.06 66.59 65.71 66.06 08:44
Apr 13

 


-
0.05 8146 66.01 142162 Call Put
Sep'18 65.31 65.96 65.02 65.46 08:44
Apr 13

 


-
0.06 6702 65.40 214260 Call Put
Oct'18 64.70 65.38 64.44 64.83 08:44
Apr 13

 


-
0.03 2727 64.80 118845 Call Put
Nov'18 64.19 64.76 63.99 64.25 08:44
Apr 13

 


-

-
1440 64.25 82734 Call Put
Dec'18 63.65 64.23 63.35 63.75 08:44
Apr 13

 


-
0.03 13198 63.72 262986 Call Put

Remember, Cushing can only handle about 50M barrels a month and it's full so no more than 20M barrels worth of contracts (20,000) will actually be closed for delivery on the 19th – probably closer to 12M barrels.  It's the biggest scam in World history (see: "Goldman's Global Oil Scam Passes the 50 Madoff Mark!") yet it goes on every month and no arrests are ever made.

As you can see on the NYMEX chart, there are 1.065 BILLION barrels worth of contracts in the four front months (about to be the front 3 months) and we only import 50M barrels a week so that's a 20-week supply for the US being FAKELY ordered at one port (that can't possibly handle them) over a 90-day period.  Complete and utter BS yet the price of oil and gasoline are determined by this scam! 

For our trading purposes, what we care about is how many contracts the traders need to dump out of May between now and the last trading day (19th) and we can assume they'll want to get rid of about 210M of those barrels (effectively commiting a crime against the US by damaging our energy security for profiteering purposes as those are valid contracts to replenish US stockpiles).  There are 5 trading days left so they have to roll 42,000 contracts a day and, we'll keep a close eye on whether they are on or off track and, if they are off track (under), then there will be more last-minute pressure to dump May contracts at lower prices – and then we can be bearish on the /CL Futures.

You can see how we got a nice $4 ($4,000 per contract) drop at the end of March so, hopefully, we'll get something similar to close out this month as well.  Otherwise, we're just wating and seeing if the Strong Bounce levels hold and how the earnings are coming in over the next couple of weeks.  

Meanwhile, Trump is at it again as James Comey's book came out and it did not paint a flattering view of the President.  I think we will soon be seeing if this Teflon Market can shake off an idictment of a sitting President as Mueller is clearly closing in on Trump and, as we've already seen this week – ANYTHING can happen – and then it can be reversed a day later. 

All in all, the S&P is now flat for the year and up or down next week can easily show us the direction the rest of the year will be taking.

Have a great weekend,

- Phil

 


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  1. Good morning, 

    NQ futures touched 6700. hopefully it holds! Phil will you be interested to short crude at 67+ ahead of noon rig count?



  2. good call on the banks Phil


  3. Good Morning.


  4. Short CLN8 at $66.88, Long NGV8 & 2.79


  5. Got one /CL at 67.5

    Made some $ going long /NQ this morning. Might buy another round at 6700 if we go there again. 


  6. Never mind that. 


  7. Good morning! 

    It's check-out day for me so I'll be done about 2pm and back home on Sunday.

    MVEN $1.60!

    Rejected off the Futures open very quickly, won't be good if we close red today.

    Oil/Dave – As noted above, I like the short back at $67.75 for sure but $67.50 with tight stops above is OK too.

    Banks/Jabob – If they can't lift the markets over the strong bounce lines – then we may be back to bearish.  Remember, we also added an SQQQ hedge last Thursday too.

    Never mind/Jeff – LOL!  It's Friday, the 2nd silliest day of the week.

    Image result for never mind snl animated gif

    Financial sector flat after JPM, C, WFC earnings beats

    • The three all easily topped estimates, but investors are modestly selling the news – all three are barely in the red. PNC Financial also reported today, but wasn't able to finagle an earnings beat. It's down 2.9%.
    • The Financial Sector SPDR (NYSEARCA:XLF) is flat vs. a 0.3% advance for the S&P 500. The KBE and KRE are also flat.

    Fed's Rosengren floats need for fourth rate hike this year

    • "I expect somewhat more tightening may end up being needed than is currently reflected in the projected median for the federal funds rate," says the Boston Fed president in a speech.
    • Markets are currently pricing in a total of three rate hikes this year (one has already taken place), with the big question being whether investors or the Fed hawks are going to prove correct.

    Weaker reading on consumer sentiment

    Job Openings and Labor Turnover Survey of February

    • 6.052M job openings in February vs. 6.143M consensus, 6.312M prior.
    • Feb. job opening rate 3.9% vs 4.1% in Jan.
    • Press release

    Alaska Air reports March traffic

    • Alaska Air Group (NYSE:ALK) reports revenue passenger miles rose 6.5% in February to 4.65B.
    • Capacity expanded 7.2% to 5.485B available seat miles.
    • Consolidated load factor down 50 bps to 84.9%.
    • YTD load factor slipped 120 bps to 80.1%.
    • Press release

  8. Big banks beat but now down >1%, bad omen to you Phil? Or we are firm on Monday/ Friday are not important days? :D


  9. China Delays Deal Reviews as U.S. Trade Frictions Build







  10. Well, that /CL short is working out. 

    I also have some weirdness with JO, now I have JJOFF? Due to the delisting that I forgot to act on I suppose. 


  11. JO/jeff- yeah they delisting, go read the link below for your options. Hope it helps.

    https://www.businesswire.com/news/home/20180111006198/en/Barclays-Announces-Launch-15-Commodity-ETNs-Delisting



  12. L Brands (LB), a specialty retailer of women's apparel, reported Thursday a 4% increase in same-store sales for March compared to a year earlier.

    Net sales for the month totaled $1.02 billion, up 7.2% from $951.4 million reported for the same period last year.

    Instinet cuts PT to $35 from $47

    Telsey Advisory cuts PT to $41 from $52



  13. Donald Trump allegedly had a love child with his housekeeper, and the coverup is under criminal investigation




  14. Comcast to Bundle Rival Netflix in Plans




  15. Thanks Dave. 


  16. I am missing the FU doctor on GE!!!!


  17. The Forward P/E Ratio Has Collapsed




  18. advill,

    Had a few questions about Barcelona and would like to hear from a resident expert – would you please contact me off-line. jag4006@gmail.com

    Thanks 


  19. I forgot we had a Barcelona expert on the site.  I'll be there next week for a day before boarding a cruise.  A restaurant recommendation would be very helpful.  We plan to see the bunkers and Segrada Familia late in the day.  Thanks


  20. Omen/Dave – I said last week, if the banks can't get us over the 50 dmas, then I don't think the rest of earnings will.  BBBY was a disaster and the issues that are taking down the banks now will hit the regional and local banks much harder.

    /CL/Jeff – Hope you took that and ran!  Of course $67 was going to be bouncy but past that now and testing $67.75 again.  Very tough day to short.

    Honey badger is on fire!

    JO/Dave, Jeff – I'd get out before it becomes too thinly traded.

    LB/Dave – 4% increase, what's wrong with that?  I think they'll be fine.   Our 2020 target is $45 with $35 puts and long calls.


  21. CL/Phil- you think the rig counts will affect much? I was thinking to grab the June contracts at this levels and just hang on for abit or that's dumb?


  22. Oil/Dave – Fridays are very often jacked up into the close though sometimes there's an epic fail.  Either way, it's too dangerous to bet so I generally don't.  If oil is $67.75, I'll take one short and hold that over the weekend if it doesn't work out because I wouldn't mind doubling down at $68.50 for 2 short at $68.15ish and I'd DD again at $70 to average $69ish into the contract rollover because it would be a nice $16,000 if they fall back to $65 vs my risk of stopping out over $70 with a $4,000 loss.  So, on that basis, yes, I'd short oil!  cheeky


  23. From Briefing Trader

    "The new American Association of Individual Investors (AAII) survey data out this morning is showing a Bearish reading of 42.8%. Ie, nearly 43% of all respondents said they believe the market will be lower in 6 months than it is now. That is the highest in more than a year. And the only other time it was higher in the past 5 years was around the bottom in February 2016."
     


  24. Banks My comments on C and JPM the other day!!!


  25. VRX – Trading above the 50 & 200 dMA lines on news of paying down some debt.  They still have way too much, but making some progress.


  26. We're drifting now.  No volume to speak of.  

    24,350 comes up a lot on /YM.  It's 11.2% so 1.25% over the 10% line at 23,100 is 23,362.50 so the sequence would be 22,575 (the 7.5% line), 22,837.50, 23,100 (the 10% line), 23,362.50, 23,625 (the 12.5% line), 23,887.50, 24,150 (the 15% line), 24,412.50 and 24,675 (the 20% line) so now we see how they are looking:

    So 24,362.50 has been the bottom of the channel and 24,675 has been the top.  So, on the whole, we are basing at around the 12.5% line at 23,625 and testing the 20% line at 24,675.   Now that we confirm the short-term, 7.5% range within our Big Chart Lines, we can then calculate that 1,050 spread x 0.20 = 210 point moves so the range we look for on the Dow, short-term is:

    23,625 (12.5% line), 23,835 (weak bounce), 24,045 (strong bounce), 24,255 (strong retrace), 24,465 (weak retrace) and 24,675 (20% line).

    So, with the Dow now at 24,386, we see that's almost, but not quite, a strong retrace and holding over 24,255 is not very bearish for the day.

    VRX/Albo – What a long, strange trip it's been for them.

    U.S. total rig count, oil rigs gain again in Baker Hughes survey

    • The total U.S. rig count rose by 5 to 1,008, following last week's gain of 10, according to the latest weekly survey from Baker Hughes.
    • The number of active U.S. oil rigs rose by 7 to 815 for the 10th gain in the past 12 weeks and the highest total since March 2015, while gas rigs fell by 2 to 192; one rig was classified as miscellaneous.
    • May WTI crude is little changed on the news, now +0.5% at $67.44/bbl.

    No real effect from that report but it's not bullish!


  27. CANN just started my pot farm. Entered some stock at 3.92


  28. Yodi

    ~~President Trump plans to support protection for states that have legalized marijuana, according to Washington Post.  


  29. Great I love the CLOWN


  30. Well, fortunately not too exciting today.  I have 1 short /CL at $67.50 and I don't mind getting on a plane with that and we'll see what happens next week, when I'm back in the command center.

    Have a great weekend, 

    - Phil


  31. Verizon issues details on MoviePass stake

    Apr. 13, 2018 1:32 PM ET|By: Clark Schultz, SA News Editor 

    Helios and Matheson Analytics (NASDAQ:HMNY) spikes after Verizon (NYSE:VZ) files a SEC form 13G in connection to its ownership stake in MoviePass. The filing shows that Verizon holds a 9.3% position in Helios.

    Last week, the announcement came down that Oath and Verizon took a position in MoviePass through the sale of Moviefone.

    Previously: MoviePass and Moviefone join forces (April 5)


  32. pstas--thank you!

    hopefully, it will now be able to stay above 3!


  33. FU HBI!!!!!


  34. Scottmi  – IQ

    There are several articles on SA.  I called it to your attention since I know you follow TCEHY.  BIDU still owns a majority stake.  The stock isn't cheap and they are still losing a lot of money, but the opportunity looks to be huge.

    FWIW – I bought some more stock today at $18.42 and sold some Sept 20 calls for $2.65, which looked like good premium to me.


  35. I was thinking of bottom fishing on INCY.  I don't know much about the company.  Some strange bid to ask quotes.


  36. jpm c pnc…ugly!


  37. DJ L Brands Price Target Cut to $38.00/Share From $45.00 by Credit Suisse 

    Apr 13, 2018 15:06:00 (ET)


  38. IQ/albo – thx. I'll have a look. I like TCEHY mainly for it's chat/communications app which i understand is 'the' one to use everywhere in the chinasphere, and they are bigly big.  Re IQ, why wouldn't a NFLX replacement -rule-!?


  39. Anyone — when Credit Suisse or others post Price Targets as above, is this for a specific time period?  

    Out of /NGV, /NGH, /SBN, /SBV, and /CL.  Feeling a bit naked now.  Thanks Phil for the continued discussion on /CL, I don't play it unless you are talking about it.  

     

    I like HMNY -- Thanks for sharing Pstas


  40. Scottmi/Albo  -  I don't know if this has any impact on your discussion, but thought I'd share it.  

    And, for chat apps…  LINE is a very popular app in Asia, even outside Japan.  Like Twitter, FB, LinkedIN, you see LINE ID's everywhere from Business Cards to Billboards.  It is a lot like WhatsApp, but based off the hyperlink above, who will BB go after next?    


  41. /CL/Phil- Damn, the attack on Syria is not good for our CL. Hmm


  42. Trump Orders Strikes on Syria Over Suspected Chemical Weapons Attack




  43. GE’s Credit Rating Is at Risk


  44. Avoid Gulf stream disruption at all costs, scientists warn








  45. Senators want temporary halt of oil flow through pipelines





  46. The Dream of a Republican New Deal





  47. U.S., U.K. and France Launch Strikes Against Syria


  48. Why bombs falling over Syrien, I still looking at some plays. Here a more conservative play on on our dog box FB iron condor with controlled loss! sell the May 11 170/175 call and sell the 155/150 put for 2.79.

    Credit 2.79. Break even 152.21/172.79. I am conservative as FB could be going up more than down. But like to cover my behind in both direction. The credit per one option is 275.00 and the max loss is 221.00 acording to TOS. As I can see it you receive more than you can lose.


  49. FB condor – if FB touches 150 on the downside or 175 on the upside then the $500 position loss is offset by the credit of $279 – so you end up losing $221. It's true that the risk reward is favorable (risking $221 to make $279). 




  50. FYI — Bloomberg so called experts are touting $80 a barrel for Brent.  


  51. NFLX/Phil,

    Any suggestions for an earnings play?  thinking of selling a 330 call.  maybe hedged with a 350/400 september spread. TIA.




  52. Out of CL short  and NG long



  53. Good morning! 

    Not much going on.  Our futures are up half a point but Europe is down and I don't know what we're excited about although just reversing Friday's close anyway. 

    Please re-ask anything I missed in the new post.


  54. Yodi, Good morning, have any armchair trade with  REIT´s ?

     

    Best


  55. Hi Advill, yes I do have a lot, but they are not at the right price to enter. I did have an eye on D but not sure if they still will go lower. I did set up a put play on them for starters. Did you see it?

     I see you do like some relaxing good returns? Somehow the future trades on this board are too time consuming. Love to have your email address again, to get some more info to what is actually in the mind of the Catalans. Mine is yodiet@live .com.