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Non-Farm Friday – Is America Working?

I can only tell you exactly what is going to happen – the rest is up to you!  

On Monday, this is the range we drew for the S&P and, as I said in the Morning Report:

It's like we've simply zoomed in on the exact same chart but that "zoom" means we've cut 1.67% off the range and now the S&P is stuck in a 3% range, between roughly 2,600 and 2,700 and, if we zoom out a bit more, we see that tightening range is wedged right between the 200-day moving average at 2,611 and the 50-day moving average at 2,688 and the narrower this range gets, the more those averages squeeze together leading to a very exciting resolution at some point.

Remember, the 5% Rule™ is not TA, it's just math but we illustrate the math on charts – that's all they are good for, really.  Charts tell you where you've been, not where you're going and, if you want to stay ahead of the market, you should use the 5% Rule™ – because it tells you which way the markets are heading.  In January the 5% Rule™ told us the markets were wrong and the rally was overdone.  That's why our Short-Term Portfolio is up 85% for the year – because we made the right bet at the right time.

On Monday morning, the chart predicted by our 5% Rule looked like this:

As you can see above, it turns out we had a perfect short on at 2,684 on /ES and then we fell right to the Weak Retrace line at 2,596, which was an 88-point drop and the S&P Futures (/ES) pay $50 per point, per contract so the gain from that play was $4,400 on the way down and then flipping positive at the bottom of the range paid another $1,500 per contract at 2,626 and now we'll see if this morning's Non-Farm Payroll Report can push us back to the higher end of the range.

It's useful to know what the trading range of an index is, right?  Of course, using our 5% Rule along with our Fundamental Analysis, we can determine the ranges for commodies, ETFs, as well as individual stocks if they are liquidly traded (doesn't work as well with low-volumes).  That makes it much easier to determine where the good entry and exit points are and it makes our trading MUCH more profitable.  You can't "buy low and sell high" if you don't know what low and high are – right?

This morning we're waiting for the Non-Farm Payrolls report and the usual 200,000 jobs are expected even though last month only 103,000 jobs were added last month and that was supposed to be a one-time slow-down but I don't think it was as we're clearly at full employment (Unemployment below 4%) and rising wages make employers a bit slower to hire.  

8:30 Update:  168,000 is the official number and it's a little light but not terrible and payrolls are only up 0.2% so wage inflation is controlled.  Neither of those things is likely to take the Fed off the table and we'll hear from Williams at 12:45 and then Kaplan, Bostic and George will do a panel at the Hoover Institute at 8pm titled: "Monetary Policy and Reform in Practice" and that will be a Hell of a market-mover.  Too bad the markets and even the Futures will be shut down by then for the weekend…

We'll need to think a bit about what the Fed speakers will say to see if it's going to change our attitude (slightly bearish) into the weekend.  Kaplan and Williams are centrists, Bostic is all over the place and Esther George is a reliable hawk so I'd say, if anything, we can expect bearish notes from the panel or certainly nothing to get bullish over.  The NFP is also nothing to get bullish over and the week has been weak so why should today be any different? 

Image result for get shortyThat means we're going to start out next week with negative spin, below the 20% line on the S&P and tesing the 200-day moving averages on the Dow (23,750) and the NYSE (12,468) and the S&P is only a hair above its own 200 dma at 2,615 and we've already poked below but FINISHING below these averages (2 of 3) would mean it's time to get shorter.  

The Nasdaq is still the index that has dropped the least, still up near the 25% line (6,750) while the broader NYSE has already failed it's Must Hold Line and is now possibly failing the 200 dma!  The Nasdaq's 200 dma is 6,369 so about a 250-point drop at $20 per point, per contract means you can make $5,000 per contract in a 5% dip in the Nasdaq Futures (/NQ) while stopping out above 6,650 would be a 15-point loss from here (6,635) or $300.  

Risking $300 to make up to $5,000 is what we call a positive reward/risk ratio and are exactly the kind of bets we look to make at PSW.  If you can't play the Futures, the Ultra-Short ETF for the Nasdaq (SQQQ) is a primary hedge for us but, as a short-term play, with SQQQ at $17.39, the May $16 calls are $1.50 and the May $17 calls are $1.05 so net 0.55 on the $1 spread that expires on the 18th will pay you 0.45 (81%) in two weeks if SQQQ doesn't fall below $17 (the Nasdaq would have to go higher).  

So let's say you put $550 into 10 of those contracts, the return would be $1,000 for a $450 profit at $17 or higher.  That's all it takes to play options and that's why we are able to make such ridiculous returns in our Short-Term Portfolio – we simply take advantage of easy set-ups like this one.  

Hedges like this make nice little insurance policies if you are worried about your longs over the weekend but would prefer not to cash them out.  If all is well on Monday, it's not likely the spread will be below 0.30 and that means you can take a $250 loss and be done with it.  If the Nasdaq is still weak, however, you can just stick with the bet and make 81% in 14 days.  

Have a great weekend, 

- Phil


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  1. Good morning!

    Looks like a weak open but we'll see what sticks.  

    /CL is a good short below $68.50 line but dangerous on a Friday so quick profits should be taken and tight stops should be obeyed!  

  2. Good Morning.

  3. P – Pandora, one of my falling knives, up big.  Closing out 1/2.

  4. Phil, you're killing me on our FTR vs. CTL bet.

    I'll never bet against Phil again.


  5. FTR/Albo – I just couldn't see how other people weren't seeing that one.  

    Will be a fantastic long-term hold when they start paying a dividend again.  

    As a new trade, you can still sell the 2020 $8 puts for $2.55 to net in for $5.45, which was lower than it got so pretty free money.  If you sell 50 you collect $12,750 against $3,385 in margin (non-PM) so you make about 300% on margin in two years or you own FTR for less than 1/2 the current price ($11.40).  

    We already have a bunch in both portfolios, otherwise I'd do it officially. 

    Good call on P.

    Looks like we're popping up after all – despite the Dollar hitting 92.666

  6. Albo – when you y phil bet on FTR and CTL I had to break down and finally buy some FTR. Sorry (but not sorry) 

  7. We still have some cheap gas relatively speaking:

    The results reveal that, in the first quarter of 2018, the U.S. is ranked 12th lowest when it comes to gasoline pricing, with countries including Russia, Pakistan, Iran, and Venezuela offering a gallon of gas for significantly less than $2.99.

    But because we don't care about gas mileage:

    The final measurement, “income spent,” drops the U.S. down to 52nd place, with Bloomberg saying the average driver uses 429.19 gallons of gas each year, spending over 2 percent of that person’s annual salary.

  8. BDC – Good move.  I can be the perfect contrary indicator ! 8-)


    CTL has performed pretty well.  Thank you Albo.  I added to my position when this all started.  We still get the dividend too.  Not sure the risk has disappeared from FTR, but congrats to those that were able to profit.

  10. Up 0.5% now, Trump said we're being nice with China on trade so people are thinking talks are going well (because Trump said so, of all things!).   Trump also says if only Mueller will stop the witch hunt and let him get back to work, he can make this country SO GREAT!

    Nas back over 6,700, /ES right at 2,640 but momentum should take us back over.  

    Gas/StJ – Good point.

  11. Dclark – Thanks.  I continue to believe that CTL is very undervalued and that the dividend is solid.  They report next Wednesday.  Since it's the first quarter where the former LVLT execs are essentially calling the shots, it could be a kitchen sink quarter.  If so, could present another good buying opportunity.  (As if I needed another one.)  We'll see.

  12. Now that DIS has made Star Wars into a commodity, "May the Forth" now just has a capitalistic ring to it…. :(

  13. …Fourth

  14. Phil, 

    Wow, look at the /RTY fly, WTF? just because……any insight this nonsense! Thanks as always

  15. Because/Jasu – Trump said we were working things out with China so that's all it took to rocket the market.  Also Buffett endorses AAPL and has been running around talking them up ($183) so +$6 is 50 Dow points right there and all their suppliers, etc..   Trade's not really that simple so it just ends up being another opportunity to go short but we have to let it run first.

    • The April job gain of 164K was 25K shy of estimates, but March was revised higher by 22K jobs to 135K, and February down 2K jobs to 324K. We'll call things about inline.
    • The unemployment rate, however, fell to 3.9% in April from 4.1% previously. This was helped along by a 10 basis point dip in the labor force participation rate to 62.8%. The broader U-6 unemployment rate fell to 7.8% from 8%. One year ago, it was at 8.6%.
    • The average workweek was unchanged at 34.5 hours. Average hourly earnings rose $0.04 to $26.84 – about half of what was expected. On a year-over-year basis, they're up 2.6%.
    • Full report
    • U.S. stock index futures remain modestly lower, but the 10-year Treasury yield has dipped 3.2 basis points to 2.917%. TLT +0.45%TBT -0.9%
    • Previously: Jobs a hair soft, UE rate dips below 4% (May 4)
    • Bitcoin (BTC-USD) rose to as high at $9.8K in the overnight hours, but has pulled back to $9,642, roughly unchanged for the day.
    • Since its big rally off of about $6.5K in early April, the crypto has held in a range of roughly $8.8K-$9.2K since – excepting a couple of brief moves towards the $10K level.
    • Cheniere Energy (NYSEMKT:LNG): Q1 EPS of $1.50 beats by $1.03.
    • Revenue of $2.24B (+85.1% Y/Y) beats by $620M.
    • Shares +1.7% PM.
    • Press Release

    • Tesla (NASDAQ:TSLA) CEO Elon Musk is explaining on Twitter why he skipped a few questions during this week's conference call.
    • "First, it’s important to know that Tesla is the most shorted (meaning most bet against) stock on the market & has been for a while," starts off Musk.
    • "The 2 questioners I ignored on the Q1 call are sell-side analysts who represent a short seller thesis, not investors," he explains.
    • "The reason the Bernstein question about CapEx was boneheaded was that it had already been answered in the headline of the Q1 newsletter he received beforehand, along with details in the body of the letter," fires off Musk.
    • Earlier in a Twitter response, Musk said the questions weren't valid or pertinent, serving only to justify a short thesis. You can judge for yourself by viewing the full Tesla earnings call transcript.
    • On the quarter in general, "Yeah, news is actually super good. Model S & X are producing major positive cash flow & Model 3 is about to do same," he extolls.
    • Tesla fell 5.54% yesterday and is now down 17.3% over the last 90 days. Shares are off 0.31%in the premarket session, turning slightly lower as the tweets started coming in.
    • Previously: About that Tesla conference call (May 3)
    • Berkshire Hathaway no longer owns any IBM (NYSE:IBM).
    • Warren Buffett tells CNBC, in response to a question about whether Berkshire awns no more IBM: “The answer is most certain, yes.”
    • Berkshire held 2M shares at the end of last year after having sold nearly 95% of its stake.
    • IBM shares are down 0.5% premarket to $141.28

    NTSB updates on fatal Southwest flight

    • The National Transportation Safety Board issues an investigative update on the engine failure of a Southwest Airlines (NYSE:LUV) flight on April 17 that led to the death of a passenger.
    • NTSB: "The Boeing 737, powered by CFM International engines, experienced a failure of the left CFM-56-B engine after departing New York’s LaGuardia Airport. The engine experienced a failure of a fan blade, which resulted in the loss of the engine inlet and cowling. Fragments from the cowling and engine inlet struck the fuselage, causing a rapid depressurization. The crew conducted an emergency descent and diverted to Philadelphia International Airport. There were 144 passengers and five crewmembers onboard. One passenger suffered fatal injuries and eight passengers suffered minor injuries. The airplane was substantially damaged."
    • Southwest, Boeing (NYSE:BA) and GE Aviation (NYSE:GE) are all parties to the investigation.
    • Full NTSB report
    • Weight Watchers International (NYSE:WTW) jumps after posting a strong Q1 earnings report.
    • Subscriber count rose 28.6% during the quarter and paid weeks were up 27% Y/Y. Average retention is over 9 months.
    • The company now has 2.9M online subscribers.
    • Looking ahead, Weight Watchers expects 20% revenue growth this year and full-year EPS of $3.00 to $3.20, well clear of the $2.57 consensus estimate.
    • In the investment firm community, Craig-Hallum lifts its price target on Weight Watchers to a Street-high $120.
    • WTW +8.18% premarket to $75.66. The 52-week high on WTW is $77.19.

    Old favorite doing well:  Sotheby's up 3% post Q1 results

    • Sotheby's(BID +2.8%reports Q1 revenue of $195.8M (-1.8% Y/Y) of which 

      Agency commissions & fees $165.5M (+49% Y/Y) ; Inventory sales $16.2M (-77% Y/Y); Finance $9.9M (-23% Y/Y) & Other $4.2M (+6% Y/Y).
    • Statistical Metrics: Aggregate Auction Sales $827.7M (+46% Y/Y); Net Auction Sales $691.4M (+46% Y/Y); Private Sales $246.6M (+70% Y/Y) & Consolidated Sales $1.1B (+39% Y/Y).
    • Q1 results are significantly impacted by the movement of certain Spring Hong Kong sales in Q1 2018 after occurring in Q2 2017. The schedule change added $130M in Net Auction Sales.
    • Operating margin improved 1,057 bps to 3.5%; Adjusted Net Income of $5M (+145% Y/Y).
    • Previously: Sotheby's beats by $0.31, beats on revenue (May. 03 2018)
    • Newell Brands (NYSE:NWL) reports core sales fell 3.5% in Q1.
    • Segment net sales: Live: $1.1B (+0.4%, Core sales: -3.1%); Learn: $495M (-13%, Core sales: -14.3%); Work: $641M (+4.4%, Core sales: +5.5%); Play: $617M (-1.8%, Core sales: -2.6%); Other: $193M (-50.2%, Core sales: -4.1%).
    • North America net sales declined 9.5% to $2.23B
    • Normalized gross margin slipped 120 bps to 33.3%.
    • Normalized operating margin rate down 190 bps to 8.7%.
    • FY2018 Guidance: Net sales: $14.4B to $14.8B; Core sales: flat to down low-single digit percent; Normalized EPS: $2.65 to $2.85; Share count: ~489M; Tax rate: 20% to 21%; Operating cash flow: $1.15B to $1.45B.
    • NWL +4.35% premarket.

    Our Stock of the Decade is back on track:  Axon to buy body camera provider Vievu, enter long-term pact
    • Police technology company Axon (NASDAQ:AAXNagrees to acquire Vievu, its main competitor in making body cameras, for an undisclosed sum comprised of cash, stock and stock earn out.
    • Axon and Vievu parent company Safariland also enter into a long-term strategic partnership in which Safariland will become the preferred holster supplier for Axon's Taser electric weapons.
    • Vievu provides public safety cameras and other services to hundreds of law enforcement agencies, including the New York City Police Department.
    • AAXN +1.1% premarket.

    Gogo -6.3% despite Q1 beats, in-line guidance

    • Gogo (NASDAQ:GOGOdrops 6.3% on Q1 results that beat EPS and revenue estimates with a 40% Y/Y revenue growth. In-line FY18 guidance has revenue from $865M to $935M (consensus: $887.58).
    • Key metrics: Service revenue, $150.7M (+3%); Equipment revenue, $81.1M (+329%); net loss, $27.4M (-34%); capital expenditures, $62.7M (-$8.9M); cash and equivalents, $299.7M. 
    • Press release  
    • Previously: Gogo beats by $0.24, beats on revenue (May 4)
    • Celgene (CELGQ1 results: Revenues: $3,538M (+19.4%); Net product sales: $3,531M (+19.6%); Other revenue: $7M (-30.0%).
    • Net Income: $846M (-9.2%); Non-GAAP Net Income: $1,572M (+16.0%); EPS: $1.10 (-4.3%); Non-GAAP EPS: $2.05 (+22.8%); CF Ops: ($325M).
    • Top sellers: REVLIMID: $2,234M (+18.6%); POMALYST/IMNOVID: $453M (+24.5%); OTEZLA: $353M (+45.9%); ABRAXANE: $262M (+11.0%); IDHIFA: $13M; VIDAZA: $157M (-0.6%); THALOMID: $31M (-13.9%); ISTODAX: $19M (-5.0%).
    • 2018 Guidance: Total Revenue: ~$14.8B from $14.4B – $14.8B; non-GAAP EPS: ~$8.95 from $8.70 – 8.90; GAAP EPS: ~$7.36 from $7.26 – 7.66; REVLIMID Sales: ~$9.5B from ~$9.4B; POMALYST/IMNOVID: ~$2.0B from ~$1.9B; OTEZLA: ~$1.5B (unch); ABRAXANE: ~$1.0B (unch).
    • Shares are up 2% premarket.
    • Alibaba (NYSE:BABAgains 3.8% on Q1 results that beat EPS and revenue estimates with a 61% Y/Y revenue growth. FY19 guidance has revenue growth above 60% to over $63.8B (consensus: $54.5B).
    • Revenue breakdown: Core commerce, $8.18B (+62% Y/Y); Cloud computing, $699M (+103%); Digital media and entertainment, $840M (+34%); Innovation initiatives, $158M (+8%). 
    • Key metrics: Annual active consumers on China retail marketplaces, 552M (+37M); Mobile MAUs on China marketplaces, 617M (+37M Q/Q); income from operations, $1.47B; Adjusted EBITA, $2.68B (+11%); net cash from operations, $2.26B; FCF, $1.37B. 
    • Earnings call began at 7:30 AM Eastern with a webcast/replay available here.
    • Press release.       
    • Previously: Alibaba beats by $0.03, beats on revenue (May 4)
    • The WSJ reports that licensing contributed greatly to Apple’s (AAPL +3.4%) 31% Y/Y jump in Services revenue in the recently reported quarter.
    • Some analysts think Alphabet’s Google (GOOG +1.2%)(GOOGL +1.2%) was the largest contributor to that licensing revenue. *Google told its investors that growth in traffic acquisition costs paid to distribution partners should start slowing this year, hinting that Google plans to pay less to Apple. 
    • Election ad change: Google will now screen advertisers wanting to purchase a US election ad through the company. 
    • Google will verify that the person is a US citizen or lawful permanent resident. The ad will display who paid for the spot and the name and payment amount will appear in an election ad transparency report that Google will release this summer. 
    • Google also plans to launch a searchable online library where users can search for specific ads and find out the payment source. 
    • YouTube metrics: At YouTube’s annual Broadcast event, CEO Susan Wojcicki revealed the service now has 1.8B monthly logged-in viewers. 
    • Wojcicki also said that YouTube plans to have over 10K human moderators looking at “violative” content to avoid further controversies over inappropriate content and ads placed next to that content.  
    • Previously: Google Assistant can now control over 5K smart home devices (May 3)
    • The Apple (NASDAQ:AAPL) iPhone X was the world’s most popular smartphone in CY Q1, according to Strategy Analytics data.  
    • Strategy Analytics estimates 16M iPhone X units shipped in the quarter, marking the second consecutive quarterly victory for the premium smartphone.
    • Apple took the top four spots rounded out with the iPhone 8 at 12.5M, iPhone 8 Plus at 8.3M, and iPhone 7 at 5.6M.
    • Xiaomi and Samsung (OTC:SSNLF) rounded out the top six with 5.4M units for the Redmi 5A and 5.3M for the Galaxy S9 Plus, respectively
    • Buying buzz: Apple paid to exclusively premiere a new show from BuzzFeed News on Apple News.
    • The three episodes of “Future History: 1968” premiered on Apple News one week ahead of competing platforms.
    • Apple agreed to provide a cut of the pre-roll ad revenue, highlighted the show in video galleries, and sent push notifications to Apple News users who follow BuzzFeed News.
    • Apple shares are up 3.2% to $182.53, continuing to gain on this morning’s Berkshire Hathaway news. 
    • Previously: Berkshire bumped up Apple stake in Q1 (May 4)

  16. FTR/Phil,

    Need your advice.  So what do you think is their value at this point?  My cost is $12 on stock, sold the 2019 call 12's for $0.70 yesterday in the excitement (too early .. arghh) but have a few naked 2020 call 5's so about even.  I'd hate to get called away so could sell the 5's / buy back the 12's for about even or hang tight and see where we are in 2019.  The naked 5's will not keep up with the short 12's if it blasts past 12 very far.  As usual, I'm stealing failure from the jaws of success.

  17. /CL almost $70! Phil, when can we short?

  18. Yes, Crude! So tempting so high 69.8!

  19. Scottmi -  Your OLED is on fire !

    I'm short a few September 90 puts but wish I were long.

  20. Phil:   I have 30 HBI Jan 19 15/20 spreads for $3.28; I also sold 18 Jan 19 18 puts for $2.07 and 15 Jan 19 15 puts for $1.03.  Any suggestions in terms of how I might adjust this?  Thank you.

  21. OLED/Albo – thanks.. i added another bit when kicking around 90.  Just seemed a nonsense pullback on a profitable company, in a hot market, with no debt.  Yet in this market, who knows? 

  22. FTR/Jeddah – I think $10-12 is the right range for them until they steady out and prove a couple of quarters but, if they re-instate the dividend, they could rocket to $20.  The stock is only at $11.50 so why would you pay $1.80 to raise your net basis to $13.80 so you don't get called away with an 0.70 profit at $12?  I do like to help people but you need to work with me at some point and explain why you hate the idea of making a 6% profit so badly that you'll spend 15% of the stock's price to avoid it?  You have long 5s, they are $6.50 and you can take 1/2 off the table by covering those with the $10s at $3.50 and you still get another $5 if $10 holds.  What will it take to make you happy?

    /CL/Japar – Did seem to top out at $70 but it's Friday so I'd rather short /RB if they hit $2.13 again but you can short /CL with tight stops over $70 if you are so inclined.  Keep an eye on /BZ @ $75 too! 

    • The total U.S. rig count surged by 11 to 1,032, according to the latest weekly survey from Baker Hughes.
    • Oil rigs rose by 9 to 834 for a fifth consecutive weekly increase, while gas rigs gained 1 to 196 and two rigs are classified as miscellaneous.
    • U.S. WTI crude prices remain sharply higher, now +1.9% at $69.75/bbl.

    HBI/John – The Jan $15s are $2.60 and the 2020 $15s are $3.40 so for 0.80 you can buy a year to make more money – that's a no-brainer.  It also means if HBI does take off, you can roll the short $20s higher in 2020 to widen the spread.  Although, since the Jan $20s are just 0.80 and the 2020 $18s are $2.10, I'd swap those for +$1.30 and use that money to pick up the 2020 $13s at $4.60 so then you've moved from the Jan $15/20 spread at $3.28 to the 2020 $13/18 spread at $3.98 less $1.50ish on the puts is $2.48 and you have a double above $18.  Doesn't seem like there's any point in adjusting the puts with the stock at $16.70 and the Jan $18 puts are $2.50 so $1.20 of that is premium and you can roll them to the 2020 $15 puts (now $1.90) when that premium burns off and then your break-even on the trade would be about $15.50. 

    That's why we like these kinds of trades – as long as HBI doesn't go drastically lower, you can drop your basis by 20% after a year and another 20% next year so as long as they don't go to zero sooner than $5 years – any time they recover we can still get a nice profit out of it.

    OLED – Long way to go if they are recovering:

    • The day of ahead of Capitalist Woodstock, The Oracle says Berkshire Hathaway added 75M shares of Apple in Q1, bringing its stake to more than 240M shares, or $42.5B. That, and a report about stronger-than-hoped iPhone X shipments has Apple breaking out its recent range to a new all-time high.
    • In macro news, the April jobs report showed unemployment dropping below 4% for the first time since late 2000.
    • The Nasdaq (NASDAQ:QQQ) is ahead 1.5%, the S&P 500 (NYSEARCA:SPY1.15%, and the Dow (NYSEARCA:DIA1.25%.
    • Average daily transaction value on the cash order book stood at €7.876B (-8.8% Y/Y) (–11.2% M/M).
    • At the end of April 2018, 1,053 ETFS are listed on Euronext compared to 1,048 at the end of December 2017.
    • In April 2018, The overall average daily volume on derivatives reached 574,010 contracts (-3.9% Y/Y) (–2.3% M/M).
    • The average daily volume on the spot foreign exchange market of FastMatch, of which Euronext owns 90% of the capital since August 2017, stood at $19.37B (+1.7% Y/Y) (+3.2% M/M).
    • In April 2018, €101.3B was raised on Euronext in bonds.
    • Eurozone retail sales rose 0.1% in March, missing estimates of 0.5%, following 0.3% gain in February.
    • Retail sales rose by an annualized 0.8%, compared to the consensus of 1.9%, following 1.8% gain in February.
    • Source:

    • The central bank today hiked for the third time this week, boosting its benchmark rate another 675 basis points to 40%.
    • On the fiscal side, the Treasury promised reduced spending, targeting a primary fiscal deficit of 2.7% of GDP vs. the current 3.2%.
    • After posting its largest one-day decline in three years yesterday, the peso is up more than 5% today (still off 15% YTD vs. the greenback).
    • ARGT +0.5% today, down 8% YTD.
    • Shares of Fred's (NASDAQ:FRED) are down 5.74% after FQ4 results disappoint.
    • The retailer also updated that it's evaluating options for its retail pharmacy portfolio and pursuing a sale of the specialty pharmacy business.
    • Fred's management called the company's results over the last two years a disappointment.
    • Fred's traded at a multi-year low of $1.55 earlier.
    • Cheniere Energy (LNG +4.6%) surges to a 52-week high after Q1 earnings crushed analyst expectations and jumped by nearly 7x from the year-ago quarter, driven by higher liquefied gas cargoes from its Sabine Pass LNG terminal.
    • LNG says Q1 adjusted EBITDA rose to $907M from $483M in the year-ago quarter, and raises its FY 2018 adjusted EBITDA guidance to $2.3B-$2.5B from its earlier view of $2B-$2.2B, as well as guidance for distributable cash flow to $350M-$550M from $200M-$400M previously.
    • Q1 revenues rose 85% Y/Y to $2.24B from $1.2B a year ago and easily beating the $1.78B analyst consensus estimate, as Cheniere's LNG cargoes headed to overseas buyers rose to 67 from 43 in Q1 2017 and volumes rose 61% to 244T Btu.

  23. natural gas shortage in china. I heard the price there went up 7x last year.

  24. FTR/Phil,

    Thx!  My issue is having done well averaging down (bought too early) and the second they pop, I cover too much / early.  Tail wagging the dog syndrome.  What would make me happy is if we could USB 50% of your brain to mine.  Just glad to be here as always.

  25. Phil// Any suggestion on a trade on LB (trade of the year)?  I don't have any position on LB.  Thanks.

  26. 15 years hard labor printed right on the bill. Now that's numismatics at its best!

  27. China/BDC – That's why LNG exports are going to drive up global prices.

    USB/Jeddah – Can't wait to get a memory chip in my head.  If I can make copies, I'll be happy to send you one…  devil

    Wow, up 400 to finish the week with a bang but still, only back to where we started:

    Trump is speaking to the NRA.

    TSLA up $10 – short memories…

    LB/Rookie – We just adjusted that trade so good for new as:

    • 15 short 2020 $37.50 puts at $9.40 ($14,100) 
    • 30 2020 $30 calls at $7.60 ($22,800) 
    • 15 short 2020 $40 calls at $3.70 ($5,550) 

    As a new trade it's net $3,150 on the $30,000 spread that's only half covered and the idea is we'll sell some short calls when they recover to make up the rest of the $3,150.  

    LOL BDC – now THAT is how you back a currency! 

  28. AAPL/Phil   Hi Phil.  Bought 10 AAPL 170  July calls late Monday at 6.85 (protected by some short QQQ), which has worked out so far.  With a nice gain in hand, does it make sense to now sell or sell 190 July calls at around 3.70?  Something else?   Thanks.

  29. AAPL/Taihu – If they are up a lot, why not just cash out for $15.50 (up 150%)?   It was a great run and they are short-term calls, you can use the profits to establish a long-term spread if you want but really – you don't want to take 150% gains off the table?  

    Well I know when to take things off the table so I'm outta here!

    Have a great weekend, 

    - Phil

  30. phil/call?

  31. Phil//:  Any suggestions on LNG or natural gas related trades?  Thanks.

  32. Call/BDC – Were we supposed to have a call?  I'm sorry, I didn't schedule it and ran out after work.  Call me when you get up.

    LNG/Rookie – Well we're still long CHK and LNG hasn't been cheap so we haven't gotten back in.

    I like this video:

  33. STJ-couple of weeks back you posted a link to some research which compared the results of a simple buy the index and sell 20% delta strangles to various hedge fund strategies.  I can't seem to find the post or link again and hoped you had it handy. The results looked compelling and I wanted to look into it further.  Thanks.

  34. Best bitcoin explainer. I learned something about transaction ordering in this one:

    recommend watching the full 22 min video he references as well, if you enjoy the technical.

  35. The Future of News

  36. Insights Into Apple’s March Quarter 10-Q

  37. Strategy / Seer – Sorry, don't have the link anymore.

  38. Time to invest in solar:

    There's no question that solar power is entering the mainstream, but California is about to give it a giant boost. The state's Energy Commission is expected to approve new energy standards that would require solar panels on the roofs of nearly all new homes, condos and apartment buildings from 2020 onward. There will be exemptions for homes that either can't fit solar panels or would be blocked by taller buildings or trees, but you'll otherwise have to go green if your property is brand new.

  39. Stj FSLR has lost quite some feathers.

  40. WDC  a stock which from Mar 17 to now has reached  5x its bottom line. Now with a yield of 2.59 it does not really qualify for my armchair trades, as well as for my liking  it is a high priced stock, I have looked at two different plays.

    Armchair. You sell the Jan 19 75/77.5 p/c at 16.05, giving you a protection in a range of 58.95 to 93.55, the stock price of Nov. 2016.

    Obviously buy the stock at 77.28. (Fridays close) Please note anything can happen in the next day’s environment. Over the 257 days period give you a combined return of 2.57% per month.

    Confusing is TOS gives it a PE of 58.55 and finviz gives a PE of 13.04.

    You could go for a shorter time period like Jul same p/c for 8.12, returning 4.36% p.m. However your protection goes down to 66.88/85.62.

    Now if you do not wish to spend any cash and still have enough margin, you could go for the tree planting concept by going for the 60/80 BCS Jan 2020 € 9.00 and if you brave you can sell the same amount of puts Jan 20 for 9.75, getting a credit of .75 cents. Or selling the 65 putter for 8.50 where you spend .50 cents. Obviously conservative you sell only ½ the puts in you 2020 play, giving you more room to move, but you will spend some more money.

    Further I would sell ½ the option amount set up in the BCS and sell a Jun18 80 (cherry) call for 2.28. If WDC goes over 80 in June you might have to roll. But the idea is to sell cherry calls on a more monthly basis until 2020, filling up your pocket, while you patiently wait for the big bang of 2020, with the hope the stock will go over 80 and you receive the fruit of waiting on a 20$ spread, depending how conservative you have set out and sold your put.

    Now the above is simple for the old hands on the board, but if the new once and not sure, we all are there to help. Just ask.

    Another stock is AFL, PE 7.7, a more steady stock a bit high in price for 44.81 but again worth looking at.

    At 2.3% yield not the greatest but has potential good growth.

    I would sell the Jun 18 straddle 45/45 for 1.83 and buy the stock. A short run 39 days for a combined return of 4.33%. Ex div. 5/22/18.

    You can work out the tree planting on AFL for yourself, possible come up with some suggestions, which we all would like to participate in.

    Have fun.

  41. Good morning! 

    Link/Seer -

    FSLR/Yodi – I never liked them.  SPWR still the best to me – also beaten-down.  Maybe I'm too big a fan of the technology but, it seems to me, efficiency sells in the end and they have the best cells.  

    Image result for sunpower vs

    Image result for best solar panels compare

    Image result for best solar panels compare

    Here's the thing – if you have lots of roof space, then cheaper is fine but if you don't, then 20% less SPWR panels have the same output for 10% more cost.

    WDC/Yodi – I think they are still pricey with a questionable future as they have made a huge bet on cloud storage amidst huge competition.  Investors didn't like their plan and they got killed after earnings (5/3) despite putting up BTE numbers.

    On the brighter side for them, WDC does have low-cost storage for IOT devices and, if they take off, it may be a second-life for their main division.  NAND pricing is very low and if BitCoin mining doesn't come back – it may fall lower.  That's taking down the whole sector and, if I were going to go long on anyone, I'd rather go long SOXL and spread my bet.  

    SOXL goes out to November and we'll have Christmas shipping by then.  The Nov $120s are $38 and the Nov $160s are $20 so $18 on the $40 spread that's $17 in the money is not a bad way to play.  

     Indexes continuing to climb and we'll see if /ES makes it back to the weak bounce line (long-term) at 2,684.  Needs another 0.5%.

    /CL is $70.45, /BZ is $75.64, /RB is $2.13 ahead of the Iran Accord decision.  The deadline is May 12th and that takes us into the holiday so tough to short this month.  Iran have been the ones trying to keep oil reasonable:

    Iran has come out against higher prices, after a rally of over 12 percent this year on output cuts by the Organization of Petroleum Exporting Countries and its allies as well as rising geopolitical risks in the Middle East. Crude at $60 to $65 a barrel is “suitable,” an official from the OPEC producer said on Sunday, signaling a split with fellow group member Saudi Arabia that’s said to be aiming for $80 oil. The group will meet next month in Vienna.

    “The market at this stage is pricing in a U.S. stepping away from the nuclear deal, so it’s allowed the risk premium to build even further,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “If Trump should decide either to postpone or go for a surprise renegotiation of the deal, oil price could slump by $5 quite easily.”

  42. hi phil i think theres a typo on l brands trade five puts at 5.20 is 2600 not 1600

  43. sorry disregard i was looking at an older l trade

  44. Phil

     Do you think FTR is moving because of the FTRPR transfer to FTR in June?