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Technical Tuesday – Dollar Down, Markets Up – Duh!

So what?

The Dollar plunged from 93.95 to 93.25, which is 0.75% and the S&P 500 went up from 2,713 to 2,733, which is 0.75% – that is not a rally, that is the repricing of mechandise against a falling currency!  If you don't keep an eye on the Dollar, you are missing half the story on any market and also missing valuable trading signals that can make you lots of money!

In last Thursday's Report, we noted that the 5% Line™ on the Dollar was at 93.45 and you can see that line acting like a magnet, pulling the index back down for consolidation before going any higher.  While day to day news may pop the Dollar up or down, over the longer-term, it pretty reliably reacts to longer-term macros as the Dollar is the blood that flows through the global economy – it generally stays in a temperate and reliable band as the Global Economy breathes in and out over time.

Meanwhile, WTF is with Donald Trump?  Oh wait, I guess I should specify – WTF is with Donald Trump and this completely crap deal he made with China?  The trade deal he's walking away with is SO TERRIBLE for the US that even the Wall Street Journal has titled their front-page article:  "Beijing Outplays the U.S. in Trade War".  That's right, we got played as China gets everything they wanted in exchange for….  wait for it…  Cutting Import Tariffs on Cars from 25% to 15%.  Ta f'ing da!  

Aside from the fact that this "negotiating point" is one President Xi already said he was cutting way back in April, when it was noted in the WSJ: "Even so, people in the industry said the reshaping of China’s auto industry wouldn’t necessarily hand an advantage to entrenched foreign players that have come to rely on their Chinese partners, many of which are influential state-owned enterprises. Although overseas car companies entered the joint ventures reluctantly, some say they have come to accept them as a fact of life in a country where foreign businesses can struggle without local allies." 

In other words, after a month of tense negotiations by our Business Genius President, we got ZERO additional concessions from China and the one we got is meaningless.  Boy did China get their $500M worth on that Trump bribe, right?

Could you imagine what would have happened if Obama had done something like this?  Aside from completely acquiescing to China literally the day after they give him $500M in "financing" for his new golf course, Trump also dropped the penalties on ZTE – a company that completely violated our Iran Sanctions AND installed spyware on phones they sold to Americans.  ZTE will change their managers and promise not to get caught spying on us again – what a negotiator! 

Since the Dollar has been holding things up, today is a good day to short Oil Futures (/CL) at $72.50 for a quick dip but get out before the API report this evening.  We're just looking for a quick win with VERY TIGHT STOPS above the $72.50 line.  The whole key to trading the Futures is having a good backstop so you can limit your losses.  6,950 on the Nasdaq (/NQ) is also a good line and 2,740 on the S&P (/ES) makes a good stop line with shorting below as we're at 2,738 this morning and it's my contention that 20 points of that is due to the Dollar so we'll look for at least a 10-point drop, to test the strong bounce line at 2,728 again – and that's up $500 per contract against the $100 risk at this level.

Other than the non-trade war, there's nothing in the news today to justify more market gains and not data (just the Richmond Fed at 10) and no Fed speak but there is a two-year note auction and people are very concerned about the inverting yield curve, so that may spark some selling this afternoon.  The yield spread is now 0.5 and notice that the only time we hit the 0 line is before we have a recession (grey bars):

That doesn't mean we can't party like it's 1999 or 2006, because that's about where we are – about a year before things all fall apart for reasons that are always very obvious in hindsight.  Are we buying stocks that are drastically overvalued?  Check.  Are there idiotic investing crazes in paper (or digital) assets that are totally worthless?  Check.  Are oil prices killing consumers?  Check.  Do we have moronic Government policies that are sending us on a road to ruin?  Check.  Well, then it's just a matter of time before one of those things matters and the market collapses, right?

WHEN is always the tricky part but NOT having a trade war that you weren't having in March is no reason for the market to make new highs – we have to do much, MUCH better than that:

That means we're likely to remain range-bound and that means 2,728 remains a TOP, not a bottom and that's why we're shorting /ES this morning and, while I'm writing this and since I posted this half-written article "in progress" as I do for our Members each morning, the oil shorts have already gained over $100 each so a $220 gain on 2 of them in 30 minutes is a good start to our day!  

It only costs $3 a day to subscribe to the PSW Report so there's a trade that pays for 2 months (and you can double-dip if we bounce back!) – almost 3 if you do the money-saving annual subscription!  Remember, I can only tell you what the markets are likely to do and how to make money trading them – the rest is up to you! 


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  1. We truly are in a banana republic now with the president and his cronies (and family) enriching themselves in the office and ruining this country at the same time. Previous president at least waited until they were out of office to enrich themselves… And now we even have the President asking for an investigation of the people investigating him. And not a peep from the GOP in Congress who spent 4 years investigating nothingburgers under Obama! This will not end well!

  2. From,

    “It’s baffling that Trump isn’t taking baseline cybersecurity measures at a time when he is trying to negotiate his way out of a trade war with China, a country that is known for using cyber tactics to gain the upper hand in business negotiations,” said Samm Sacks, a China and technology expert at the Center for Strategic and International Studies.

    No, really.  In other news … water is wet.

  3. That tax cut will create jobs and benefit the middle class:

    In September 2017, House Speaker Paul Ryan traveled to a Harley-Davidson plant in Menomonee Falls, Wisconsin, to tout the Republican tax bill, which President Trump would sign later that year. “Tax reform can put American manufacturers and American companies like Harley-Davidson on a much better footing to compete in the global economy and keep jobs here in America,” Ryan told workers and company leaders.

    Four months later and 500 miles away in Kansas City, Missouri, 800 workers at a Harley-Davidson factory were told they would lose their jobs when the plant closed its doors and shifted operations to a facility in York, Pennsylvania — a net loss of 350 jobs. Workers and union representatives say they didn’t see it coming.

    Just days later, the company announced a dividend increase and a stock buyback plan to repurchase 15 million of its shares, valued at about $696 million.

    Maybe someone can explain how the middle class was helped here! And that sure dealt a financial blow to the top 1% right there.

  4. Good Morning.

  5. Covered last 1/2 of CHK with the Jan 5 calls for $.90.

    Still holding some short $3 puts.

  6. With all the yo-yo in the markets that are purely news driven, one has to wonder who stood to profit big time just knowing what the next "announcement" is?   Just think of the nuclear threats, tax reform, trade negotiations.  Those who have the schedule on hand can just clock in and out for billions….

  7. Good Morning.

  8. Good morning and wheeee!  

    Finally got even on /RTX, down to 5 short now @ 1,639 avg.

    Still have 2 short /CL but very tight stops now that we're up 0.15 ($150/contract).

    Honey badger don't care – LNG story growing every day now

    Took the money and  ran on /KCU8 – now waiting for another good pullback.

    Still long 2 /YG, waiting for more 

    Big Chart – RUT in space but, of course, it was way behind the other indexes.  If the NYSE starts catching up – THEN it's a rally. 

    Bananas/StJ – It amazes me how blatant they are about it and how the GOP (and Fox and WSJ) completely ignore what's happening.  No, not ignore – they actively engage in the cover-up.  I realized this weekend, talking to some Conservatives, that my writing isn't really anti-Trump so much that it just seems that way to people who live in the Conservative Bubble and don't know what's really happening.  

    CHK/Albo – That LNG story is finally getting some traction – good for the whole sector but great for CHK!  That's why we kept the faith.  

    Sadly, we already covered in the LTP, but I'm glad we made the sensible play and spent 0.50 more (than the OOP) to pick up an extra $1 on the spread.  It was still a net $3,750 credit and will be good for $15,000 if we stay over $5!  It's "only" net $2,750 now so still $12,250 (445%) to go – we're so spoiled it only feels like we missed the opportunity!

    Short Call 2020 17-JAN 5.00 CALL [CHK @ $4.61 $0.00] -50 1/8/2018 (605) $-4,750 $0.95 $0.39 n/a     $1.34 $-0.02 $-1,950 -41.1% $-6,700
    Short Put 2020 17-JAN 4.00 PUT [CHK @ $4.61 $0.00] -50 1/8/2018 (605) $-6,000 $1.20 $-0.22     $0.99 $0.03 $1,075 17.9% $-4,925
    Long Call 2020 17-JAN 2.00 CALL [CHK @ $4.61 $0.00] 50 2/9/2018 (605) $7,000 $1.40 $1.48     $2.88 $0.15 $7,375 105.4% $14,375

  9. So I'm now watching /RTY closely to see if we strong or weak bounce off the pink line (middle on TOS) at 1,637.50 off the fall from 1,643.  It's 5.5 points so call them 1-point bounces to 1,638.50 and 1,639.50 so, on the whole, as long as 1,639.50 fails, we're probably consolidating for a break lower but over 1,640 again and I should stop out on my remaining shorts. 

    I was way behind so I'm thrilled to get out at 1,640.50 (my call to give it some room) with a small ($250) net loss if I have to.  Better to live to fight another day!  

  10. HMNY news?

  11. HMNY/Jabob – People choose to believe they are going to run out of money and the company has been very cagey and hasn't announced any kind of deal while, at the same time, adding features and advertising for more Members which, I guess, is just going to kill them quicker – according to the general consensus.  I think they are purposely tanking the company and buying back all the shares before announcing a deal.  

    MoviePass still has a few tricks up its sleeve.

    The movie-ticket subscription service that gets members into one showing per day for $9.95 a month is adding features, including the ability to pay more to see formats like 3D or IMAX, pay for plans as a family, and bring a friend to the movies. The company announced the new options on Tuesday (May 15) when parent Helios and Matheson Analytics reported first quarter earnings. It did not say when they would roll out or what they would cost.

    The US-based service, which has more than 2.7 million subscribers, appears desperate to prove its model works after a filing last weekrevealed the cash it had on hand would last hardly more than a month at the rate it’s burning through cash, and that it might need additional funding. Helios and Matheson CEO Ted Farnsworth told naysayers at the Cannes Film Festival that the company has a $300 million line of credit that could carry it 17 months.

    About 72% of MoviePass subscribers also said they’d like the option to pay more to see a movie in a higher-end format like 3D, the company said it found in a survey. Sinemia, a rival service that launched in the US in February, already has some of these offerings. It sells plans for couples and plans that get members into one 3D, IMAX, or other higher-end format a month, which start at $9.99 a month.

    MoviePass’s upcoming “Bring-a-friend” feature aims to prove the so-called “halo effect” it has been arguing it has on admissions, to convince theater owners to cut it deals on the tickets it buys or share in the revenue. MoviePass pays theater owners the full cost of the tickets its members use. In 2017, the company claimed to have been responsible for $256 million in ticket sales—$146 million of which were made by non-MoviePass customers, which MoviePass says subscribers brought or influenced to see the movies.

    MoviePass only really started in Q4 last year and I buy that $256M logic so, in a full year with their goal of 5M subscribers, they could easily be responsible for 25% of the US box office ($4.5Bn last year).  I think that puts them in a pretty good negotiating position, don't you?

    So 5M subscribers pay them $60 each is $300M and they spend $1.2Bn buying them tickets is a $900M loss but then maybe $200M in data sales and they are -$700M so, for the amount of money TSLA or Uber burn in a quarter, you can fund these guys for a year while they take over the movie business with a subscription model.  I honestly don't think it's that dumb of an idea…

    Wow, glad I gave myself the headroom on /RTY, broke below so pink (1,637.50) is my stop now (3 left as I did stop 2 out).  As with anything though, I wait a good 5 mins to see if they are forming a real candle over the line.  

  12. Squeezed $800 more out of /RTY but done now.

    Happy to hit the green line at this point and /ES still working anyway. 

    Back in /CL at $72.50 for 2 short. 

  13. Jill has been running strong.

    Phil, we both made good plays back in March. ;-)

  14. HMNY use/abuse not as bad as people think it is:

    Good call on JILL, Albo and that's how this site works best – you guys find things that are interesting and we see if there's a good play to be made!  

    03-Jan-18 09:06 ET


    J. Jill target raised to $15 from $11 at Deutsche Bank; Buy  (8.14).

    Also OOPS !    Think its worth a shot at $3.85.

    JILL/Not too many around us but looks good.   Small but good growth and I like the fact they aren't over-expanding.

    Debt peaked out at $254M in 2016 and they paid down $33M last year but still had $60M in cash flow.  Options only go out to Aug, unfortunately, as it's a fairly new $200M stock.  Still, you can sell the Aug $5 puts for $1.20 to net in for $3.80 and leave it at that as it's a nice 6-month return or you can add the $2.50 ($2.15)/$5 (0.70) bull call spread for $1.45 and you net into the $2.50 spread for 0.25 and your break-even is about $3.75.  

  15. GE catching some nice bids today – I had to pinch myself when I saw them at my best position today!

  16. Looking back at the recent armchair trades, they do not make a couple of K per day, but I hope you have studied some of them.

    Like AMGN On the 5th of May I gave you Stock at 168 and Jun strangle 165/170

    On the 15th I gave you AMGN at 173 and the 170/175 Jun strangle.

    I trust on Jun 15th you might have a hard decision to make, get punished with a 2$ capital gain on both entries and they will return the cash back to you at 170 and 175 or you might have to wake up from your snooze in the armchair and have to add some cash to roll the caller. On the other hand with the US leadership you might even land up with some more stock.

    In any case things looking good today.

    I set up new trades on KO, KHC, PG, and WFC. Even that I still did have WFC at a lower price.

    So as you can see there are still fishes in the pond.

  17. Stj, keep on pushing GE I still have a Jun 19 put in the ofen.

  18. Ways to go Yodi! Would be better for you if it was June 2020 puts.

  19. How Living Abroad Helps You Develop a Clearer Sense of Self

  20. Robots fight weeds in challenge to agrochemical giants

  21. Stj, With the original credit on the put and even getting the stock assigned will not be to bade but obviously rolling is the other option.

  22. Adding to the above IP is an other contender for the chair 3.42% yield and a PE of 8.7 could set you up nicely for an other snooze.

  23. Trump works to cut high-skilled visas in NAFTA deal

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     Phil, I have this position in GE:

            Bought 30 2020 $30 calls @ $3.58, now $3.92       

            Sold 10 2020 $20 puts @ $3.11, now $5.00

            Sold 10 June $15 calls at $ .16, now $ .72   

    I know you said to wait before selling calls on this position, but the first few times went so well…  I couldn't resist to keep selling them.  I even fell behind quite a bit during the last earnings call, but I remained patient and sold more Calls on the spike up and they have all expired worthless.  However, with this June position, I am not feeling the warm fuzzies GE is going to pull back enough to save this position.  While, I probably waited a bit to long to ask,  I feel it is time to roll this position, but not sure A) the most cost efficient way to do this; and B) did I wait entirely to long to consider rolling?    


  25. Grass GE I take it you bought the Jan 20 13 call and not 30! I see the putter is still OK and the Jun 15 caller has still .22 cents of extrinsic value. I always milk any extrinsic value out of a sold option, provided the forcoming div is not more then the extrinsic value. My two cents possible Phil sees better in his crystal ball.

  26. I don't know anything about them but look at Dycom (DY) today – down 20%. Might need to have a closer look. Bad report I guess but growth expectations are good so forward valuation is not that bad. I guess the 3 day rule has to go in effect.

  27. In the same field, we have FLR! They were punished on earnings as well but have recovered since then with also good growth expectations. Still not cheap based on current earnings but looking OK on expectations.

  28. What is your opinion of PEP. A boring dividend payer.  

  29. Tx plaid PEP while 113 has come down quite a bit 99.75. possible as you say boring div payer, an other good contender for the armchair.

  30. Yodi — thanks.  It was the 13 caller.  And, my initial thoughts were to hold off for the exact reason you point out.  It seems to work out quite often for me, but this one feels different.  While I don't mind waiting longer and probably will…  I didn't want to wait to much longer before asking about it either.  Is there a rule of thumb, you use like the DD at the 20% mark?    

    I have a couple other short positions in my portfolio that expire within 90 days and if we don't get a market pullback, I might need to roll.  So, how long do you wait?  or, do you consider how far behind to allow the position to go before taking action?    

  31. /CL at $72.80!  I'm still in 5 short at 72.64 – back to 2 if I can.  

    GE/StJ – Was so stupidly cheap under $15.

    In the OOP, we started with 20 GE 2020 $18/25 bull call spreads in Jan and sold 10 $20 puts, which are still open.  We took a quick $600 loss on those on 1/24, rolled to 20 2020 $15 calls , took a $2,200 loss on those on 2/15 and rolled to 30 2020 $13 calls that we have now (uncovered).  So we're down about $4K on the position at the moment.  Wasn't going to let an opportunity like that slip away just because the trade went against us!  From starting at $18, we now have 30 $13s for $4,000 more so we spent $1.33 per long for a $5 roll into the money – why wouldn't we do that with stocks we like?

    Short Put 2020 17-JAN 20.00 PUT [GE @ $15.49 $0.23] -10 1/8/2018 (605) $-3,500 $3.50 $1.50 n/a     $5.00 $-0.05 $-1,500 -42.9% $-5,000
    Long Call 2020 17-JAN 13.00 CALL [GE @ $15.49 $0.23] 30 2/15/2018 (605) $11,250 $3.75 $0.18     $3.93 $0.13 $525 4.7% $11,775

    Same in the LTP, where we have 50 long $13 calls and 20 short $18 puts

    Armchairs/Yodi – Thanks, you have been on fire this year with the good trade ideas – much appreciated! 

    GE/Grass – I can't reconcile the $30 calls, do you mean $13?  I assume you do since that's the right price and, if that's the case, it's only a 1/3 cover so you are fine.  The 2020 $20 puts can be rolled to 14 or 15 of the $18 puts and I'd do that as your net entry is 1,500 x $18 = $27,000 vs $20,000 (less the $3,110 collected) and, if you don't want 500 more shares of GE for $7,000 ($14/share) – why are you still in this stock at all?  Aside from that, all you are doing is capping your gains but, if you want to get more bullish, you can roll the 0.72 June $15s to 5 2020 $18 calls ($1.50) better than even and then you are only covered with a $5 spread on 5 out of 30 longs (so you can still do a 2x roll to the $22s, now 0.60, for example).  That keeps you flexible enough to sell 10 July $15s (now 0.95) if GE fails to hold $15.  

     And what Yodi said, no rush but you can just watch the roll to make sure it's still makeable until the premium dries up on the short calls.  

    DY/StJ – They are in a huge turf war with MasTec (MTZ) and both of them are killing each other with low bids on contracts.  Even after this fall, these guys are dropping just $157M to the bottom line and the company is $3Bn so 20x earnings is still outrageous for a service company in a normal market.  Now they are downgrading revenues by $200M and, as you well know, in a service company – you generally are not cutting your expenses when revenues fall just a bit so $200M can wipe out all of their profits. 

    Managers seem to be saying it's just a timing issue with contracts but for sure I'd give the downgrade police a good shot at them before even selling $80 puts.  

    FLR/StJ – Very similar to DY, came down but still way too expensive for a service company. 

     At $7Bn, you're banking on their projections for a big turnaround that gets them back to $300M this year and $465M next year and they are in a good part of the cycle so I'd be more inclined to give them a shot since, unlike DY, they have actually made that kind of money before (2012-2015) and it is a cyclical business.

    So, on FLR, I'd sell 5 of the 2020 $45 puts for $4.50 ($2,250) and pick up 10 2020 $40 ($13.50)/55 ($5.30) bull call spread for $7.20 ($7,200) to net in the $15,000 spread for a bit less than $5,000 with 200% upside potential – it's a nice way to give them a look.

    PEP/Tx – I'd love them at $75 but I can't pay 20x for a snack company – not when there are so many better things to buy.  They do pay a 3.73% ($3.71) dividend, so I wouldn't mind aggressively selling the 2020 $85 puts for $3.90 to keep an eye on them but, unless they drop below $90, so I could sell a bull call spread covering some short calls for income – it's not compelling to me.  That's pretty consistent for me:

    Submitted on 2015/05/06 at 2:23 pm (PEP at $96.50, they hit $90 in July) 

    PEP/Yodi – I would love them if they got cheaper.

    Wow, oil finally worked out!  

  32. Nice, took $1,000 and ran on /CL!  

  33. Armchair Trades – Yodi --  Thank you for your trade ideas and feedback – much appreciated!  Your posts have led me down a few rabbit holes and I am watching paint dry with these leaps, so I play futures to stimulate my heart-rate.  But, after noodling on your plays making 1-3% a month, I Initially thought… 2% didn't sound like a lot, but compounded over a year, it adds up to 27% and stretch that to 4% a month and your are nearly 60% annualized.  WOW…  I mean wow…   anyway… thanks for all the posts and feedback.   

    GE/Phil,  Damn, you make it sound so easy.  Thank you – wasn't even close to what i was planning on doing.  Better to ask the pros – Always!   Thanks again! 

  34. Yodi, Phil wants to go to cash in his virtual portfolios but apparently you disagree? 

  35. Grass further to the comments of Phil, I wish to add the rolling of options. As mentioned above as long as there is still sufficient extrinsic value in the option I would not worry to roll. Stocks go up and down in todays market. In 90 days the world can go.

  36. Pstas. As you possible did see the other day Phil's remarks re "gas" he had the chick to call me buying gasoline “as quoting this was the only drawback in my lifestyle”. During the last dip and due to some differences with TOS I just about reduced all my ports before the dip. Even today I hold some 60 to 75 % of cash in my different holdings. So picking up specially stocks at the bottom line, is not a bad deal. Take PFE as one for example, bought at 32 33 and 34. The company has over 90,000 employees. If the market dips and PFE goes to 25 I only have a paper loss and receive even more shares due to my short armchair put, if I do not liquidate the put before. For me I enjoy my trading, I did learn a lot from this site and its members, and today if I can help or even add my two cents of opinion, it is a pleasure for me to help.

    I would say reduce your holdings down to the best of 20 to 30 % if you want to play. For me I cannot sit all day in the sun, so I do weed my portfolios as others work in the garden.

    I am just looking to buy another property here and I must tell you, you might be buying a house, but try to sell it again. I buy a PFE and with the click of the mouse my "PFE house" is sold!!!!

    Further I notice some members buy in 10 and 20 even 30 options at the time. I find it wrong. I hold at least 120 to 140 different stocks. So if some go down they are in line with what I have bought, in small quantities. So this is how I have worked up my present holdings. It can be hard to get rich slower.

    I hope this answers your question.

  37. ETM – starting a new position in ETM.. completed a merger deal last year, big new stock grants/insider buys last week. 4.65% div yield.  buying shares, covering with July $8 calls for net 7.35 entry. .09 dividend coming in June. If called, is a net 10% gain in 59 days (63% annualized). If not called, write new calls or puts depending. For sizing, ultimate 'get out' stoploss if goes below $5.

  38. GE & CHK have been great. Covered some stock this morning!

    Anyone see this? I'm sure some of your kids are playing Fortnite on their PCs or gaming systems… that's a lotta moolah.

  39. Phil/THO, What are your thoughts on THO?

    THO/WGO/CWH are all down a lot from their 52 week highs…Thanks.

  40. FLR / Phil – Thanks, the $40 to $45 range looks like a good long term floor for these guys. 

  41. You're welcome Grass.

    Damn, oil hit $72 in the end.

    One click/Yodi – Good point on the houses – not liquid at all.  Good point on cash and diversifying.  Too many people take CASH!!! to mean 100% cash but, when you have 25% positions you'd love to double down on if they drop 40% and 75% in cash which would case you to use 15% if you did DD at -40%, leaving you with 2x the positions and 60% still in cash – that's just as good as 100% cash.

    ETM/Scott – I'm surprised that business does well these days.  Sometimes the regular radio goes on in the car and the kids scream "Ewwww!"  I guess they sold off to the right price with a p/e of 5 – sounds like a good call to me and even better as they have good options prices.  

    We could use another dividend payer in the LTP so let's grab 2,000 shares of ETM at $7.65 ($15,300) and sell 20 of the 2020 $8 calls for $1.50 ($3,000) and 20 of the 2020 $8 puts at $1.90 ($3,800) to net in for $4.25 ($8,500) with an obligation to buy 2,000 more shares at $8 ($16,000) which would put us in for an average of $6.13 on 4,000 shares ($24,520) – so still a 1/2 allocation, worst case. 

    Meanwhile, we'll collect $720/yr (8.47%) in dividends against our $8,500 initial entry while we wait to see if we get called away with a $3.75 (88%) gain at $8 so 105% total potential return in 20 months on this "boring" dividend play!  

    Fortnite/Atitlan – My kids play it and I play it too, sometimes.  It's actually a fun family activity, slaughtering villages together…  I spent $25 on a cool dragon glider and armor!  

    Image result for fortnite dragon glider

    Actually not $25, I got like 10,000 tokens for $25 and spent some on those items – but they still got my $25!    It's funny as there's another game called PUBG (Player Unknown, BattleGrounds) that came first and the actual combat is better/more realistic but the Fortnite guys made it simpler to play and monetized it way better (celebrity endorsements were key to rocketing them higher). 

    THO/Ayyaps – They are basically a car company and gas is way high and they guzzle so I can see why they sold off.   Now ($100) they are priced right as they make about $9/share and it makes for a good, solid, long-term hold as there is little competition and huge barriers to entry (though I'm sure Musk will announce one soon).  

    THO has the best options of the group and nice premiums due to the volatility but $100/share means you have to be careful and don't sell puts unless you REALLY want to own them because they were $50 two years ago so $100 is still 2x (but justified with revenues and earnings so far).  As a trade on them I'd sell 5 2020 $85 puts for $11 ($5,500) and buy 10 of the 2020 $90 ($24.50)/$115 ($15.60) bull call spreads for net $8.90 ($8,900) to net into the $25,000 spread for just $4,400.  You could then work off the $4,400 by selling (not yet) 2 or 3 of the July $120 calls (now $1.50) for the price of the $105 calls ($5) on a $15 move back up – I think that's likely.

    You're welcome, StJ.

  42. PUBG is very difficult to play on a phone. The game is great on a PC though but the mobile experience is not practical. Waiting for Fortnite to come to Android though.

  43. And BTW, all the mobile games are based on our hoarder instinct – none of them are really fighting games. Sure, there is fighting but mainly the goal of these games is collecting – will it be the latest weapon, outfit or character. And these guys make a ton of money simply based on that!

  44. ETM/Phil – very boring. ;-)   i'm starting as a 1/3 (only 1/4 filled so far) position, looking to add more if stock drops to 7, and sell puts if drops to 6. not that I expect that… but is plan if it goes there. Fear of course if is taken away with 8 call and then continues on to 12 and beyond. Will add uncovered shares if shows signs of recovery (like closing a week above 8 for example, then 8.5, 9, etc…)

  45. Phil / AM Post- Not sure if its worth correcting but the '7.5%' figure in the AM opening post should be '0.75%'

    "The Dollar plunged from 93.95 to 93.25, which is 7.5% and the S&P 500 went up from 2,713 to 2,733, which is 7.5%"

  46. IQ , sometimes referred to as the Netflix of China, with a very strong day.  No resistance ahead.

  47. That's goaaaaaaaaaalllllllllllllllll on /ES, 2,728 on the dot.  If it holds up – it's kind of bullish.  

    PubG/StJ – I play it on my big IPad and actually prefer that to the PC (works in HD too).  Android sucks!   Good point on hoarding but I'd be happier if everyone had the exact same weapons when they drop and you have to fight to get good ones – kind of like Hunger Games.  That's the most annoying part about Fortnite is too many people have sniper guns and you're walking around and poof – you're dead.

    Scaling in/Scott – Very wise. 

    Correcting/Mike – Thanks, always worth it.

    I'm still deeply concerned about the AI Art in BusinessWeek – way too good already considering how young AI is.  What will be the point of us in 20 years?

    • Redbook Chain Store Sales+3.2% Y/Y vs. +4.2% last week.
    • May sales were up 4.0% Y/Y through May 19. An earlier Memorial's Day holiday could boost this week's sales tally.
    • U.S. companies announced new stock buyback programs totaling about $183B in April-May earnings season, MarketWatch reports, citing Trim Tabs Investment Research.
    • That follows the $191.4B of buybacks announced in the January-February earnings season.
    • “The buyback boom early this year confirms our view that the main use of corporate America’s tax savings will be takeovers and stock buybacks rather than capital investment or hiring,” Trim Tabs said.
    • Five companies accounted for 75% of the amount: Apple's (AAPL) with a $100B program, Broadcom (AVGO +0.1%) at $12B, Facebook (FB -0.1%) at $9B, Qualcomm (QCOM -0.2%) at $8.8B, and T-Mobile (TMUS +0.2%) at $7.5B.
    • Previously: Dunkin' Brands approves new $250M buyback plan (May 22)
    • The growth in the German economy continues to be robust but the underlying momentum has likely weakened and the risk of a global trade war still remains.
    • The slowdown comes at a sensitive time for the European Central Bank, which is debating whether to end a 2.55 trillion euro bond purchase scheme, satisfied that growth is strong enough now to generate much needed inflation.
    • But the Bundesbank dismissed some of these worries, arguing that the slowdown has to be seen in the context of exceptionally strong momentum since mid-2016.

    Crypto in the news: Security clearance issues, CFTC's derivatives guidelines

    • As the Pentagon strives to recruit more tech workers, it must decide if investing in Bitcoins or other cryptocurrency indicates a tendency toward risky personal behavior, Bloomberg reports.
    • Some see cryptocurrencies as new investments and payment methods, while others see them as potential vehicles for illegal activities.
    • "There is no current Department of Defense guidance related to reporting of ownership of cryptocurrencies," the Defense Security Services states on its website. It says it's working with DoD policy offices for further clarification.
    • If cryptocurrency ownership does become a red flag, it's sure to bog down a system that already has a backlog of more than 700,000 background investigations.
    • Separately, the Commodity Futures Trading Commission has issued guidelines for listing virtual currency derivative products for exchanges and clearinghouses registered with the CTFC.
    • The advisory addresses areas such as: enhanced market surveillance, large trader reporting, outreach to member and market participants, and Derivatives Clearing Organization risk management and governance.

    Toll Brothers -6.8% after earnings disappoint

    • Toll (NYSE:TOL) -6.8% in pre-market trading after  FQ2 EPS of 72 cents missed estimates by 4 cents.
    • Q2 homebuilding deliveries 1,886 units, up 15% from a year ago,
    • Q2 cancellation rate 5.2% vs 3.5% a year ago.
    • Sees Q3 deliveries 2,100-2,200units  at average price of $830,000-$850,000.
    • Sees Q3 adjusted gross margin about 23.4% of revenue.
    • Narrows FY2018 deliveries forecast to 8,000-8,500 units from prior range  7,800-8,600 units at average price $830,000-$860,000.
    • Reaffirms prior views for FY2018 adjusted gross margin, SG&A as a percentage of revenue, and tax rate.
    • Source: Press Release
    • Previously: Toll Brothers misses by $0.04, beats on revenue (May 22)

    Freeport McMoRan spikes as Rio Tinto said ready to accept Grasberg deal

    • Freeport McMoRan (FCX +3.3%) spikes as much as 6.5% following a report that Rio Tinto (RIO-0.4%) is ready to accept a $3.5B deal with Indonesia's government for its interest in the Grasberg copper and gold mine.

    Model 3 to get a redo at Consumer Reports

    • Consumer Reports says it will retest the Tesla (TSLA -3.2%) Model 3.
    • "If Tesla can update the brakes over the air – an industry first – we’d be happy to retest our Model 3," says Consumer Reports director of testing Jake Fisher.
    • Tesla CEO Elon Musk also wants the retest to be done with a later version of the Model 3.
    • Whether you love the publication or hate it, ratings from Consumer Reports do show a correlation with sales volume over a long tracking period.
    • Previously: Tesla Model 3 falls short in Consumer Reports test (May 21)
    • Used-vehicle prices are seen falling 20%-22% this year, according to Bloomberg, citing a note from Height Capital Markets analyst Ed Groshans. That compares with the average annual rate of 12%-18%.
    • Height cites higher interest rates, credit normalization, record volumes of off-lease vehicles, and more new-car incentives.
    • Lower vehicle prices increase risk of loss from vehicles coming off lease and defaulted loans, Groshans says.
    • Subprime auto lenders that may be affected: CACCSCCPSSCOF,ALLY
    • Previously: Used car value depreciation rises again (Aug. 21, 2017)

    • Wolfe Research updates on the all-important capacity trends in the airline sector.
    • The research firm says domestic seat growth is still tracking at a 4.0% Y/Y pace, comprised of a 4.5% domestic increase and 0.4% international rise.
    • "The lack of capacity cuts for this summer schedule is not a big surprise given the supposedly successful recent price increase and because we expect fuel-driven capacity actions will start in earnest in a couple weeks," advises analyst Hunter Keay.
    • Raytheon (RTN -2.7%) is lower after Credit Suisse downgrades shares to Neutral from Outperform with a $219 price target, trimmed from $250, as part of a wider downgrade of the defense sector whose stock gains the firm thinks have topped out.
    • While RTN has a number of solid opportunities in front of it, including the new Long Range Stand-off Weapon and hypersonics, the current share price largely reflects this upside, says Credit Suisse analyst Robert Spingarn.
    • "After six consecutive years of relative outperformance, defense hardware stocks have reached valuation multiples not seen since 2001," Spingarn writes. "But whereas in 2001 those multiples were deserved in light of the beginning of a major land war and the end of an industry consolidation wave, today's market appears to have gotten ahead of itself."
    • Along with the RTN downgrade, Spingarn cuts price targets for Northrop Grumman (NOC-2.3%), General Dynamics (GD -0.6%), Lockheed Martin (LMT -2%), Harris (HRS -2.2%), Huntington Ingalls (HII -1.1%) and L-3 Technologies (LLL -1.1%).
    • Spingarn reiterates Outperform ratings on HRS, HII and LLL, saying they "trade at reasonable valuations with clear program visibility and international exposure."
    • Truck drivers in Brazil are on strike for a second day against a sharp rise in fuel prices, blocking highways and urban traffic in a country that relies heavily on road transportation.
    • The Abcam national truckers association says 200K of Brazil’s nearly 1M self-employed truck drivers are demanding that Petrobras (PBR -2.3%) stop letting rising international oil prices trickle through to the pump.
    • The state-controlled company says it will cut diesel prices 1.54% and gasoline prices 2.08% starting tomorrow, but fuel prices have surged nearly 50% at Brazilian refineries in less than a year.
    • Brazil's government forced PBR to keep pump prices stable and bear the brunt of higher costs when oil prices hit $100/bbl in 2012-14, sending the company’s debt load past $100B in 2016; PBR has since been permitted to adjust its sale price according to global markets, helping reduce its debt to ~$77B this year.
    • Any return to government interference to resolve the situation "would be very negative,” says analyst Rafael Passos at the Guide Investimentos asset management firm.
    • Thousands of members of the Culinary Workers Union Local 226 and Bartenders Union Local 165 could go on strike in Las Vegas today, reports Las Vegas Review-Journal.
    • Bartenders, housekeepers, bellmen, cooks, cocktail and food servers, porters and other kitchen workers are included in the two unions.
    • The unions have been unable to reach a new five-year deal that covers about 34 casino properties in Las Vegas.
    • More than half of the properties with the potential to see a strike are owned by MGM Resorts (MGM -1.1%)and Caesars Entertainment (CZR -1.6%).
    • The unions are looking for job security amid the threat that robots and artificial intelligence will lead to fewer jobs in the future.

    Credit Suisse cautious on GameStop

    • Credit Suisse trims estimates on GameStop (GME -0.8%) and lowers its price target to $15 to adjust for reduced expectations.
    • "We have yet to see clear signs that earnings can stabilize," warns analyst Seth Sigman.
    • 'Key initiatives around collectibles are not enough to slow the decline in other parts of the business,' he notes.
    • The $15 PT from the investment firm works out to 5X the 2018 EPS estimate, which is a level that GameStop trades at during cyclical lows, according to CS.

    Goldman Sachs: Hedge funds betting against Nvidia, Intel

    • Goldman Sachs lists the stocks hedge funds are short selling the most in the “Hedge Fund Trend Monitor” report. 
    • Top 10: AT&T (T +0.5%), Intel (INTC +0.3%), Walmart (WMT -0.8%), Nvidia (NVDA -1.3%), CVS Health (CVS +0.6%), Walt Disney (DIS +0.1%), Target (TGT -1.6%), Chevron (CVX +0.5%), Johnson & Johnson (JNJ -0.7%), and Pfizer (PFE +0.3%).
    • See the dollar amount of the short interest for each company at CNBC. 

    Zuckerberg holds court in Europe

    • Facebook (FB -0.1%) CEO Mark Zuckerberg's prepared remarks to a EU parliament committee covered much of what he told U.S. lawmakers a couple of weeks back. He's in the process of wrapping up the Q&A, with a couple of members frustrated that they can't seem to get straight answers. Zuckerberg promises to soon get them written responses.
    • Live blog here
    • The ACLU of Northern California obtains documents about Amazon’s (NASDAQ:AMZN) facial recognition project Rekognition.
    • Police in Orlando, Florida and Washington County in Oregon currently use Rekognition to use its real-time facial recognition system on police body camera footage and municipal surveillance systems. 
    • Key quote from the ACLU, airing concerns: “By automating mass surveillance, facial recognition systems like Rekognition threaten this freedom, posing a particular threat to communities already unjustly targeted in the current political climate. People should be free to walk down the street without being watched by the government.” 
    • The ACLU and other groups want Amazon to stop providing Rekognition to law enforcement and government agencies. Rekognition, part of the AWS cloud, also serves enterprise clients like Pinterest and C-SPAN for object recognition and analytics. 
    • Amazon shares are down 0.3% to $1,581.10.   

  48. Yikes, ugly close!   2,724 is the final on /ES – congrats to the players and now we'll see "Which way Wednesday". 

    That was a close one – it took all day Tuesday to make Monday meaningless.  And check out the low SPY volume:

    Date Open High Low Close* Adj Close** Volume
    May 22, 2018 273.96 274.25 272.24 272.57 272.57 46,665,574
    May 21, 2018 273.01 273.98 271.35 273.37 273.37 57,142,500
    May 18, 2018 271.62 272.03 270.93 271.33 271.33 64,368,000
    May 17, 2018 271.94 273.23 271.13 272.01 272.01 56,536,400
    May 16, 2018 271.14 272.76 271.11 272.24 272.24 53,942,600
    May 15, 2018 271.59 271.61 270.03 271.10 271.10 87,036,100

  49. AI / Phil – Forget about art, it looks like the Google AI can drive cars better than a lot of people! 

  50. How AI Is Making Prediction Cheaper

  51. Jason Rezaian: Pompeo gives a silly speech on Iran

  52. Good morning! 

    Futures down another 190 on the Dow and 17 on /ES but stabilizing at the moment.  Just have to wait and see but NOW Monday is fully erased.  

    Gold finally popped back to $1,295, we'll see if that has legs.  

    Unlike yesterday, plenty of news today (see above).