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2,800 Tuesday and the S&P – Are We There Yet?

66.6 Thousand

That's the volume the S&P's (SPY) ETF hasn't broken since June.  Yet the S&P, on no volume at all, has gained 100 points (3.7%) in the first 10 days of July and is now just another 100 points away from the all-time high, after matching January's high at 2,872, of course.  Things looked fantastick then – the S&P was on a run from 2,550 so up 322 points was 12.6% and, on the morning of Jan 18th, I noted the following in our report:

Up and up the markets go but we see shorting opportunities this morning IF we cross back below Dow (/YM26,100, S&P (/ES2,800, Nasdaq(/NQ6,810 and Russell(/TF1,585.  The rule of thumb for shorting the futures is wait for 2 to cross below and then pick the next one that crosses and keep very tight stops back above the line and if ANY of the indexes go back above their line – kill the trade and wait for the next set-up.

The Dow is much lower now, at 24,850 (-4.7%) but the Nasdaq is way up at 7,320 (+7.4%) and the Russell is at 1,711 (+7.9%) and we're short both of those indexes on the assumption the Dow and the S&P are not crazy (and the much broader NYSE is down at 12,776 from 13,637 so that's 861 points or -6.3%).  Of course, right after I wrote that note, the market dropped 10% into early February and boy were we glad to have been cautious then!

It was Tuesday, Jan 23rd, when Trump first declared his Trade War and now we're actually starting to fight it and the level of complacency is amazing but we were just a complacent on Jan 23rd, when the markets were blasting along to new highs – as if there wasn't a care in the World – until there was.

The Dollar hit a 3-year low on Jan 24th and fell below the 89 line to 88.50 before recovering back to 90.5 and, eventually, all the way to 95 so the same market levels look over 5% more expensive now to people buying it in foreign currencies.  This is what our Big Chart looked like on the morning of Jan 23rd – very impressive stuff, right?

Some news from that morning was:

Stocks extend gains amid earnings rush

  • Stocks open mostly higher, setting new intraday records for the three major market indexes, as corporate earnings continue to come in strong; Dow +0.5%, S&P +0.2%, Nasdaq +0.1%.
  • In U.S. corporate news, Abbott Labs (+3.8%), United Technologies (flat) and Comcast (+0.2%) all reported earnings and revenue that beat analyst expectations; GE (flat) rose sharply pre-market after reaffirming its 2018 guidance even amid below-consensus earnings and revenues, but has given back its gains on news that the SEC has opened a probe of the company's accounting practices.
  • Most industry groups open higher, led by telecom services (+0.9%), materials (+0.5%) and health care (+0.5%).
  • J.P. Morgan's Jamie Dimon told CNBC this morning that the lower corporate tax rate would lead to higher wages and possibly 4% U.S. GDP growth later this year.
  • The U.S. Dollar Index -0.7% to a new three-year low after Treasury Secretary Mnuchin spoke in favor of a weaker dollar, saying it's "good for trade."
  • U.S. Treasury prices are lower, pushing the benchmark 10-year yield 3 bps higher to 2.65%.
  • U.S. WTI crude oil +0.2% at $64.61/bbl.
  • Holding court in Davos, the Bridgewater founder yesterday made news when he said, "If you're holding cash, you're going to feel pretty stupid." The economy was already going along nicely, he says, and now the tax cut will add a big jolt.
  • Still hanging in Switzerland, Dalio today says the bond bear market has begun, and just a 1% rise in yields would spark major losses.
  • The Fed, he says, is likely to hike short-term rates faster than expected, but that shouldn't hit markets for about 18 months. In the meantime: "It feels stupid to own cash in this kind of environment." There's that word again.

Goldman bearish on Valeant, sees 19% downside risk, shares off 6% premarket

  • Goldman Sachs rates Valeant Pharmaceuticals (NYSE:VRX) a Sell with an $18 (19% downside risk) price target.
  • In a note, analyst Dana Flanders cites the remaining high debt level, legal risks and competitive pressures that will constrain growth.
  • Shares are down 6% premarket on higher-than-average volume.

As noted above, the Dollar went up 5% while the markets went down 10% so Diallo gave the worst possible advice at the worst possible moment and Valeant flew higher against Goldman's bad advice and we're still waiting for any sort of sign of Jamie Dimon's 4% growth so ALL that advice at the Top of a 10% market slide was complete and utter nonsense – just keep that in mind when you read today's batch of complete and utter nonsense telling you to keep buying when the market is topping out again.

We're already shorting the Nasdaq (/NQ) Futures at 7,300 and, of course, we added to our hedges so we'll see how it goes.  Oil (/CL) is a good short again at $74.50 with a stop over $75 but I'd rather risk the loss than miss the dip – inventories tomorrow are very likely to disappoint.  

At the moment, the charts look very bullish and we don't want to get ahead of them but if the Nasdaq fails at 7,300 and the S&P fails at 2,800, then those "short the laggard" rules go into effect on all of the indexes so stay tuned for the fun!


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  1. Is there any sane bear spread that will work for Tesla?

  2. Need more lines!

  3. This should lead to some interesting questions during confirmation:

    In that document, Kavanaugh argued for a comically broad theory of what constituted obstruction of justice and impeachable offenses. He suggested that Clinton’s efforts to delay being interviewed by the Independent Counsel amounted to obstruction of justice and that lying to his staff and the American people were impeachable offenses. Needless to say, by this standard, President Trump commits numerous impeachable offenses every single day.

    Of course, it probably applies only to Democrats!

  4. Mortgages have been cheap for a while – this should have been very helpful for the housing market had we not destroyed it in 2007/2008!

  5. It's getting tough for the Brexit process:

    Barry says no Brexit will happen –

    And then none of the supposed benefits have come through:

    In 2016, pro-Brexit politicians assured British voters that a post-EU Britain would deploy sufficient bargaining power to impose its will on its European Union counterparties. That claim has proven an illusion. So, too, have the promises that the United Kingdom would realize billions of pounds in budget savings for its health service, or that a new trade treaty could be swiftly negotiated with the United States. (Negotiations on an U.S.-U.K. treaty have not even begun, and a U.S. that has launched a trade war upon Canada hardly looks a satisfactory replacement for an EU that currently takes 45 percent of all British exports and provides 55 percent of all British imports.)

    It’s all around as grim a predicament as Britain has faced in recent memory—and yet simultaneously also one of the most tedious and technical, holding the interest neither of voters nor of politicians. They prefer to focus on the plots and schemes of Westminster, sacrificing the country’s security and prosperity to their own short attention spans.

    They got conned by Nigel and his crew and then he came to the US help Trump con us!

  6. Damo TSLA sell the Aug 285/280 vertical for 1.40. Break even 283.60. Max loss 360$ if TSLA does not hold up over 283.60 for the next month. Limited risk for 140$ per one option play. Lowest drop 3/20 278$

  7. Chart of the day:

  8. Good Morning.

  9. AMZN/Stj – more like chart of the decade!

  10. Good morning!

    I hope that Dow pop was BS as I'm still riding out my /NQ shorts, now 8 @ 7,286 but it's very scary at the moment though "only" down $2,500 now so 50% improvement over where I doubled down this morning.  Of course I plan to get 1/2 out even and then tight stops on another half.  Overall my goal is to have 2 shorts at such a high strike that I don't mind leaving them until I get my 6,500 drop, which would now be worth about $15,000 per contract, which puts my willingness to be down $5,000 total in perspective…

    Overall my premise is that reality is real but it's a very hard one to stick to considering the crap I read in the papers every day!

    More lines/StJ – LOL, that's the conversation we were having in Jan too!  Turned out we didn't…

    Kavanaugh/StJ – Put a fork in this country, it's done!

    Mortgages/StJ – How people don't think rates rising from 3% to 6% won't put a damper on housing is beyond my understanding.  Also, property taxes are out of control as well and utilities are starting to raise rates – I just don't have a good feeling about housing and, therefore, the economy for the next few years.

    TSLA/Damo – We did short TSLA last month for the STP, but much higher than this.

    As I noted yesterday, we exect the S&P to re-test 2,728 so we're right on track this morning and looking like we''ll hit 2,773 so another 45 points to fall from here before we even TEST the top of the range we expected to be in for the rest of the Summer. 

    I'm still expecting Tesla (TSLA) to be the catalyst that wrecks the Nasdaq as it becomes this century's   Already you can see the wheels falling off the wagon as Model S cars spontaneously combust and Musk blames "saboteurs" for delays at the factory.  Now, whether there really are saboteurs seeking to undermine Elon's production goals or whether he is insane and paraniod or whether he's just making it up to cover up the fact that there was never any way they would hit his promised June 30th deadline of making 5,000 cars a week – any of those items is a good reason to get the F out of TSLA stock, right?  

    We were hoping it would get back to $380 before we shorted it (see last week's notes as well as this good article by Dave Pinsen) but that's not looking too likely now so the trade idea we'll put in our Short-Term Portfolio is:

    • Sell 3 TSLA July $380 calls for $18 ($5,400) 
    • Buy 4 TSLA July $435 ($70)/$400 ($42) bear put spreads at $28 ($11,200)

    That's net $5,800 on the $14,000 spread and we'll make $8,200 (141%) if TSLA is below $380 on July 20th (expiration day).  In a bear put spread, we buy the July $435 puts and sell the July $400 puts so anything below $400 pays us the full $35 and that's $14,000 but we owe back money to the short caller for anyting TSLA is above $380 so could be $6,000 if they are at $400 – but that would still be a nice profit.  

    Currently, I'd wait a bit and see if Musk can talk the stock back to $340 before jumping in again (our short play expired next week and looks like a full winner – so we'll be looking to re-load too.

  11. Also in the WSJ Scott – Someone is pushing that narrative really hard!  

    [$$] The Spectacular Rise and Fall of MoviePass

  12. The Helios and Matheson CEO is unbothered by naysayers. He says he expects MoviePass will reach 5 million subscribers and break even by the end of 2018. He’s focusing on growth, he said, and expects to begin rolling out MoviePass in Europe and Asia by the end of the year.

    “Whenever you’re disrupting an industry, you’re going to have things come up,” he said. “We are building an entertainment company. Nobody grows this big and this fast without hiccups.”

  13. hiccups???

  14. The mistake HMNY did was to do this as a public company.  Imagine if people had held Google or AMZN or NFLX or PCLN accountable for a few hundred million in losses early on?  Or TSLA, they burn that every month!  As long as they can keep raising cash, they can keep going and now they'll hopefully have $1.2Bn to last into 2019 so we'll just have to see if it's going to be enough.

  15. Netflix Earnings: Investors Watch Happily as Money Pit Blazes …

    That's just from last July, when the stock was at $150 and losing $2Bn a year…

  16. Nice call on Oil short though I missed it

  17. Oil/Bert – You only missed the first part, now we watch for a bounce to short again or a break below $74 lets you use that line with tight stops.  

  18. Phil they rolled my SCO Sept. 15 call from 15 to 13 for 1.10 still following your nose hope you right have no callers yet.

  19. SCO/Yodi – My assumption is the draw was from retailers filling up their tanks over the holidays in anticipation of more demand than actually came so there will be a disappointment this week and, of course, all this Iran nonsense has to calm down and there's that North Sea strike too….  Meanwhile, that's a lot of bullish factors and they can't take $75 back, so a good sign…

    I'm sure you wouldn't rather be in the $15s for $1.10 less, right?

  20. Good day to short some UVXY puts!

  21. Giuliani works for foreign clients while serving as Trump’s attorney

  22. Analysts Still Bullish on China Profits

  23. Does Russel lead the SPY or SPY leads the Russel?

  24. Phil we see it is one of these poker games SCO !!!!

  25. Kennedy Bombshell – That's some serious DemPorn…let's hope it's right… :)

  26. US job openings slip in May, as quits reach 17-year high

  27. DemPorn- Looks like NBC is carrying the Kennedy story too.  Maybe (hopefully) legit!!

  28. These VXX Sept 100 calls sold for $1 10 days ago, now at $0.20. A quick 80% win…

  29. UVXY/  – This is about as low as it usually goes.

    /RTY coming down but not the other indexes so far.

    Russell/That – RUT tends to move first but only matters if it breaks something, like 1,700.

    Still, I'm back to 4 short /NQ at 7,304 avg and 4 short /YM at 24,892 avg.

    Kennedy/1020 – No coincidence Trump picked his assistant, that was obvious.

    “No president has ever consulted more widely, or talked with more people from more backgrounds, to seek input about a Supreme Court nomination,” Kavanaugh said.

    Yikes, sounds like Trump is already putting his hand up Kavanaugh's ass and pulling the string!

  30. Phil, The other indices are holding up except the /RTY. Why would you not go long /RTY at 1700? Just trying to fit the data to what I see. Wrong yes! but then what the hell do I know? Thanks

  31. Apparently there was poor demand at today's 3-year note auction – that's unheard of for short-term notes.

    Below 120 on the 10-year is very bad:

    Why not long/Jasu – Because I generally feel we SHOULD be going lower so I'm looking for downside leadership and then to short the lagards.  Once /RTY fails 1,700, THEN I'm confident shorting /YM 24,900 and /NQ 7,300 and /ES 2,795 and if /RTY goes back over, I stop out (or if any of them go over, of course).

    Essentially, if you are PATIENT and wait for good signals, it's not really possible to lose much (maybe $100 per contract before stopping out) while, on occasion, you can get lucky and make thousands.  As long as you pick about as many winners as losers – then you stay even and make good money when you hit a big one.  

    In my case though, I'm playing with more conviction so I just got back from lunch where I ignored the market for 30 mins…

  32. ….you were watching msnbc instead, right?…. ;)

  33. Phil:  What are your thoughts on selling UVXY puts.  The Jan 2019 7 puts can be sold for around 1.45 or so.  The trade is margin efficient, at least with Portfolio Margin.  UVXY was as low as 8.52 in Jan 2018 and it is currently 9.94.  We live under a sword of Damocles with a sky-high market and a Trump Presidency, not to mention trade wars and Kim Jong Un, so it seems like the VIX has plenty of potential to go up.  Is there something wrong with my thinking?  Is the decay so considerable that a Jan short put sale at these levels is too risky?  Any other ideas?  Thank you.

    • Johnson Redbook Chain Store Sales:+5.2% Y/Y vs. +4.3% last week.
    • June sales were up 4.3% through July 7.
    • German investors mood worsened in July to -24.7 from -16.1 in June, compared to the forecast of -18.0.
    • The economy’s current conditions fell to 74.2 from 80.6 last month, compared to the consensus forecast for a decrease to 78.2.
    • Eurozone economic sentiment decreased to -18.7 in July from -12.6 in June.
    • Source:

    Mountain of private-equity cash reflects shift away from public markets: WSJ

    • Private-equity firms have piled up about $1.1T globally in funds available for investment, a stash that has grown sharply in the last five years, the Wall Street Journal reports, citing data from Preqin.
    • A big reason for the growing pile of cash is that investors are finding relatively few attractive options. They're nervous as major stock market indexes hang out near record highs, and many stocks are at high levels when looking at p/e multiples, according to WSJ's Moneybeat column.
    • The movement of money of course illustrates the shift of power from public markets available to all investors to private markets. The number of publicly listed U.S. companies fell by about 20% over the last 10 years and by half over the last 20 years, according to Credit Suisse.
    • Previously: Private equity execs talk about recession, regions with potential, defaults (June 6)
    • Over the weekend and into Monday, Bitcoin (BTC-USD) appeared poised to make a run at $7K after tumbling below $6K late last month. That bounce has been nixed in the past few hours, with the crypto retreating to $6.3K, down 4.5% for the day.
    • Ethereum (ETH-USD), Ripple (XRP-USD), Bitcoin Cash (BCH-USD), and Litecoin (LTC-USD) have all dipped by even higher percentages today.
    • Junk bonds tightened the most in four weeks across all ratings, while CCCs close at three-week low, Bloomberg reports.
    • Commitments were due yesterday for Thomson Reuters (NYSE:TRI) $5.5B equivalent senior bridge loan as the market waits for the notes offering after Labor Day to fund the company's buyout.
    • Low supply boosted yield, with $15B priced in June, the lowest amount for that month since 2013, Bloomberg says.
    • Supply is down 23% YTD; CCCs with YTD returns of 3.40%,  outperformed BBs and single Bs as well as investment-grade bonds, which were down 2.8% in the same time period.
    • Previously: Blackstone selling two jumbo loans to pay for Thomson Reuters F&R deal: Reuters(June 29)

    TD Bank Group to become largest money manager in Canada with Greystone deal

    • Toronto-Dominion Bank (TD) will buy Greystone Managed Investments for C$972M from Greystone Capital Management, a deal that will make TD the largest money manager in Canada.
    • The net purchase price consists of C$730M of enterprise value, seed capital of about C$105M, and some other net adjustments.
    • GCMI shareholders will get 30% of the net purchase price in TD common shares, with the option to elect up 50% of the consideration in TD shares. The rest of the price will be in cash.
    • The transaction will add C$36B in assets under management to TD's existing C$357B under management.
    • TD expects to recognize goodwill and intangibles of about C$550m on the transaction. Including one-time charges, TD sees the deal adding to reported EPS by year three and adding to adjusted EPS in year one.
    • About C$170M of TD common shares issued to employee shareholders as part of the purchase price will be escrowed for two years--subject to continued employment--and charged to earnings over the first two years after closing.
    • "Greystone's leadership in alternative investments is a perfect complement to TD Asset Management's traditional investment products," says Leo Salom, group head of wealth management and TD Insurance at TD Bank Group.
    • TD sees the proposed deal cutting its CET1 on close by less than 10 basis points.

    Norway’s oil fund sells out of Buffett-owned utility, citing coal business

    • Norway’s $1T sovereign wealth fund has sold out of the bonds of U.S. utility PacifiCorp while placing parent company Berkshire Hathaway (BRK.ABRK.B) and MidAmerican Energy under observation, meaning that it could exclude them from its portfolio in the future.
    • The fund is pulling out of PacifiCorp because the company derives more than 30% of its business from coal.
    • Among other actions, the fund says it will exclude JBS (OTC:JBSAFOTCQX:JBSAY), the world’s largest meatpacker, which has been engulfed in corruption allegations in Brazil.
    • The oil fund owned $164M in bonds in Berkshire Hathaway Energy at year-end 2017, $129M in PacifiCorp and $33M in MidAmerican, as well as $143M worth of shares in JBS.
    • CME Group (CME) says it reached agreement with Cheniere Energy (LNG +0.1%) to develop the first physically deliverable liquefied natural gas futures contract with delivery to Cheniere’s Sabine Pass export terminal in Louisiana.
    • CME says the agreement "will be the foundation for developing a new LNG risk management tool for producers, consumers and traders around the globe, while further cementing the role of Henry Hub natural gas futures as the global gas pricing benchmark."
    • The deal could make the growing market for U.S. LNG more transparent as other companies move toward exporting it.
    • Nevada regulators have approved a new 40-acre industrial hemp research and development project in Nevada for consortium including Cannabis Science (OTCPK:CBIS).
    • The main R&D focus will be on cancer, PTSD, chronic pain, arthritis, Parkinson's disease, epilepsy, autism and HIV/AIDS.

    • Boeing (BA +1.5%) says it recorded 460 net aircraft orders after cancellations in the six months through June, well ahead of rival Airbus' (OTCPK:EADSFOTCPK:EADSY) 206 during the same period.
    • H1 deliveries rose 7.4% Y/Y to 378 commercial aircraft, led by strong demand for its single-aisle 737 jetliners, while total Q2 deliveries gained 6% Y/Y to 194.
    • Last week, Airbus said it delivered 303 aircraft during H1, 1% lower than the prior-year period.
    • Defense stocks are in focus as President Trump travels to Brussels for a NATO summit that has military spending and burden-sharing high on the agenda.
    • In 2014, NATO allies agreed to increase and move towards spending 2% of GDP on defense within a decade, but only six member countries have so far met that goal: the U.S., the U.K, Greece, Estonia, Poland and Romania.
    • The U.S., which spent $685.9B on defense in 2017, currently makes up 51.1% of NATO's combined GDP.
    • "The U.S. is spending many times more than any other country in order to protect them [Europe]. Not fair to the U.S. taxpayer. On top of that we lose $151B on Trade with the European Union. Charge us big Tariffs (& Barriers)!" President Trump tweeted before the trip.
    • Related tickers: (BA +1%), (LMT +0.8%), (HII +0.5%), (GD +0.4%), (HON +0.1%), (NOC -0.1%), (ITT +1%), (UTX +0.1%), (TXT +0.3%), (UTX +0.1%), (LLL -0.2%), (RTN -0.9%), (COL +0.2%), (AVAV +0.6%), (KTOS +0.9%), (ITA +0.2%), (PPA +0.6%), (XAR +0.5%)
    • Amazon (NASDAQ:AMZN) Prime members who spend $10 at Whole Foods from July 11 to the end of Prime Day will receive a $10 credit to use on Prime Day.
    • Whole Foods will also have concurrent discounts on produce, seafood, and other products. 
    • Prime Day kicks off July 16 at 3 PM ET. 
    • In other news, Amazon announces plans for a new fulfillment center in an Ottawa, Ontario suburb. 
    • The 1M square foot facility will create more than 600 full-time jobs and will be Amazon’s fifth in Ontario. 
    • Amazon shares are up 0.2% to $1,742.13.  
    • Shares of iRobot (NASDAQ:IRBT) head lower after Raymond James downgrades on valuation and competition concerns.
    • Analyst Brian Gesuale takes the Roomba maker to a Market Perform rating from Outperform after taking in the 90-day rally of 22%.
    • IRBT -4.59% premarket to $77.20.
    • New published research showing that vaping doesn't help smokers quit cigarettes is dissected by Height Capital Markets analyst Stefanie Miller.
    • "We view news of the latest tobacco research funded by the FDA — on whether ecigarettes can actually help smokers quit — through the lens of what we continue to see as a public health community that remains divided on the role of e-cigarettes and JUUL Labs specifically. One side argues that JUUL and other vaping devices are a public health benefit that will save current smokers' lives. The other perspective is that these devices represent a public health harm that will hook a new generation while not meaningfully helping existing smokers quit."
    • "We continue to see JUUL as most directly at the center of these ongoing disagreements surrounding the role of e-cigarettes as potentially a public health opportunity versus a public health threat. While some in public health will continue pointing to JUUL as creating an "epidemic" of youth use, others in public health are applauding JUUL for being the first company to enter the tobacco space and quickly disrupt the combustible cigarette market. Neither side has yet provided conclusive evidence supporting their claims, and today's study announcement does nothing to change that fact."
    • Another order for Axon (NASDAQ:AAXN) is sending the stock up 1.3% in premarket trade.
    • The Honolulu Police Department will deploy 1,200 Axon Body 2 cameras with unlimited storage on digital evidence management solution,
    • It's the 45th major city to join the Axon network.
    • Previously: First major Canadian city joins Axon Network (Jul. 09 2018)
    • "The stock does not reflect the reality of where the minority sports stake will sell," should CEO James Dolan and team follow through on plans for a spinoff, says analyst Brandon Ross, lifting his price target to $385. That's 20% upside even after the 20% run for the stock since spinoff plans were announced two weeks ago.
    • Ross sees MSG's sports assets as being worth $238 per share and entertainment at $147.
    • Source: Bloomberg

    • Summit Insights is in line with JPMorgan on what to do with Twitter (NYSE:TWTR): Monday's drop was a buying opportunity with some misunderstanding flowing around reports of millions of account suspensions.
    • Twitter CFO Ned Segal noted that most suspended accounts wouldn't show up in reported monthly metrics, and Summit's Jonathan Kees urges investors to focus instead on daily users, engagement, earnings and cash flow. The company's quickly evolving into a content distributor with breaking news, sports partnerships and a deal with Disney. (h/t Bloomberg)
    • He's maintaining a Buy rating and $52 price target, implying 18% upside.
    • Previously: Twitter -8.4% after report of mass suspensions (Jul. 09 2018)
    • Previously: Post: Twitter suspension pace could hit user growth (Jul. 06 2018)

    BofAML raises Apple target on $8B AR potential

    • Augmented reality could be an $8B revenue opportunity for Apple (NASDAQ:AAPL), accordingto Bank of America Merrill Lynch.
    • Analyst Wamsi Mohan says AR apps and increased iPhone sales due to the tech could create $6B to $8B in additional revenue within the next two years. Apps are expected to contribute $1B of the total. 
    • The analyst puts the revenue upside as high as $11B if Apple introduces AR-specific glasses. 
    • Firm reiterates its Buy rating and raises its Apple price target by $5 to $230, a 21% upside to yesterday’s close. 
    • Apple shares are up 0.3% to $191.12

  34. MSNBC/1020 – No, too depressing. 

    UVXY/John – Well, these ultra-ETFs can go to zero and reverse split, etc., so not bullet-proof but, this low, I would expect that, even if you get assigned, at SOME point UVXY will pop and make you money.  

    Of course, we had that logic once and used to play it and then we were ground down to $0 a couple of times and we got fed up and quit playing.  The decay is horrible and it's amazing how long the market can remain complacent.  

  35. Nasdaq red!  Now I wish I still had 8 short…  blush

  36. Good illustration of /TF's downside leadership using the pivot point charts.  Note it's down at S2 while the others haven't even failed their pink lines yet so NOW, either /RTY bounces at 1,696 or /NQ fails at 1,785 and that will indicate the next leg.

  37. As you can see from the charts, /YM is still lagging so it makes the best downside bet (24,870) as long as we're below 2,790, 7,285 and 1,695.  That's how we have chances over and over again to short the laggard – which is why it's always a good idea to take quick profits as there's going to be another set-up right after it if you got out too early!

    So with /NQ, I'm back to 2 as 7,285 is likely to be bouncy but I'm keeping my 4 /YM shorts as long as /RTY fails to weak bounce.  Weak bounce on fall from 1,715 to 1,695 is 20 points so 4-point bounces to 1,699 or call it 1,700 is my stopping out line now on my remaining shorts.

  38. Not promising:

    President Trump's Supreme Court nominee argued last year that net neutrality rules violate the First Amendment rights of Internet service providers by preventing them from "exercising editorial control" over Internet content.

    In many places, they have a monopoly so they could simply block PSW because they don't like Phil's call on their stock! How about power companies choose not to provide electricity to gay couples as an exercise of editorial control? It's freakin' insane.

  39. Insane/StJ – What's insane is that he calls it "editorial control" when they do not provide actual content.  This is a real attack on the First Amendment but, of course, these Conservatives only care about the 2nd – the rest are just nonsense liberal "rights" they'd love to take away…

  40. Content / Phil – Some like Comcast own content providers like NBC. But they could block Netflix for example and promote their own streaming service. And since they have no competition in 90% of their market, what can consumers do? Of course, the way it's going now, Netflix will be able to buy Comcast soon – they have a higher market cap by some $30B!

  41. Phil, lesson learned…..just beautifully timed……10,000 hours resets again!

  42. Dollar down 0.4% during the session to mask traders heading for the exits.  

    Got a bounce off 120 — also a relief:

  43. Sadly, we could write something similar about Nixon…….

  44. Phil – A trader on Briefing Trader pointed out how there is a fairly sharp backwardation in WTI.  According to him, because of this, oil ETFs should be selling high and buying low as they roll over positions  That bakes in a 5%+ edge if oil just goes sideways for the next couple of months.

    Is this something you would subscribe to ?

  45. DDD/phil – haven't looked at these guys for a few years. low debt, has revenue, running a little negative on earnings, in various market segments, has some cash.  anything to make these guys interesting? a 2020 $15 buy write can get you in at net $7.63 or so (buy stock, sell $15 puts/calls)

  46. Backwardation/Albo – Well, we can see it in the chart and it is more severe than usual:

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Aug'18 74.04 74.70 73.65 74.09 14:32
    Jul 10

    0.26 496662 73.85 341953 Call Put
    Sep'18 72.19 72.98 72.08 72.54 14:32
    Jul 10

    0.58 149637 71.98 326008 Call Put
    Oct'18 70.06 71.05 69.96 70.62 14:32
    Jul 10

    0.77 59597 69.85 217271 Call Put
    Nov'18 69.35 70.33 69.33 69.84 14:32
    Jul 10

    0.66 24089 69.22 128640 Call Put
    Dec'18 68.92 69.81 68.85 69.32 14:32
    Jul 10

    0.57 51057 68.75 296556 Call Put
    Jan'19 68.58 69.34 68.58 68.82 14:32
    Jul 10

    0.49 18937 68.32 143808 Call Put
    Feb'19 68.31 68.72 68.11 68.22 14:32
    Jul 10

    0.43 7609 67.80 69656 Call Put
    Mar'19 67.61 68.26 67.61 67.75 14:32
    Jul 10

    0.39 9319 67.34 81084 Call Put
    Apr'19 67.50 67.79 67.23 67.27 14:32
    Jul 10

    0.38 5717 66.92 51185 Call Put
    May'19 67.10 67.36 66.85 66.86 14:32
    Jul 10

    0.36 3458 66.54 40323 Call Put
    Jun'19 66.45 67.03 66.45 66.53 14:32
    Jul 10


    0.36 17460 66.17 152683 Call Put
    Jul'19 66.14 66.15 66.06 66.09 14:32
    Jul 10


    0.34 2943 65.75 38321 Call Put



    66.00 * 14:30
    Jul 10



    65.36 37092 Call Put



    65.10 * 14:32
    Jul 10



    64.98 60282 Call Put



    64.00 * 14:32
    Jul 10



    64.63 32841 Call Put



    63.80 * 14:07
    Jul 10



    64.29 28801 Call Put
    Dec'19 64.27 64.75 64.23 64.32 14:32
    Jul 10


    0.32 17203 64.00 201557 Call Put

    I'm not sure what he means by what the ETF's "should" be doing – they don't have a choice.  When money flows in, they buy oil at the day's spot and, when money flows out, they sell oil at the day's spot (or a rolling futures spot for the day, actually).  The ETF can't really take advantage of anything but you can watch the in and outflows and figure out if they'll be strong or weak going forward.  

    I think the best overall play would be to buy (long) July 2021 for $59.13 and then you can short front-months (now $73.85) with impunity for the next 3 years!  

    DDD/Scott – As I think you know, I was never a fan since there were too many contenders and HPQ or IBM or DELL will take over the space once it matures anyway.  DDD doesn't make any money and they are not a start-up.  Sales are frozen at $650M and they might squeak out 0.10-0.20 profit next year but they are valued at $1.6Bn and that's like a 70x p/e.  Way too much for me to be interested at $14.64 but back at $10 – if I can net in for $5, then maybe worth a toss.    

  47. Bitcoin $2.1Q in 12 years. Appreciation would need to be 125% per year to get to this level.

    Though personally I think the total market cap of all blockchain can reach these levels (though I'd go a couple more decades out), there's no way to predict which ones will dominate in the future. Bitcoin's only "value" is that it's a known known, however, crypto's value the useful work of the activity within a social group, and social groups can and do shift. In order to try to predict the future of any given project and its value, you have to try to predict how the social group dynamics will shift (which of course is impossible, but that is what you;re really trying to predict with crypto IMO).

    I'm still looking for entry on GBTC, but raising my buy trigger from 4 to 6.

    Meanwhile, chalk up another $8T for fiat.

  48. Thanks, Phil !  I think what he meant was that they should be able to roll to lower prices.  

    ETM – Has been acting well.  This was a Scottmi pick.  Thanks again, Scott.

    OLED also acting well.

    And CTL is trading above 20 for the first time since last October.

  49. Oh, and Gartman's bearish ! ! !

  50. Phil/GRE,

    anything moving on that front? it is available at its lowest price again.


  51. Thanks for CTL Albo – finally jump in for my IRA and looking good so far. 

  52. You're very welcome, STJ.  Hope it continues to act well, and more importantly continues to pay that high dividend.

  53. $8Tn/BDC – Yikes, this is so out of control.  

    You're welcome Albo.  

    GRE/Pat – No, down with all of crypto and off the exchange.  BDC and I aren't sure it's worth saving and we're considering an alternative and I will, of course, let everyone know.

    A little pump into the close and /RTY back to 1,700 but not very impressive – essentially we're back to scratch tomorrow. 

  54. Phil,

    What do you think of API report? Predictions for tomorrow EIA?

  55. And France is in the final of the World Cup! Who cares about Trump, Putin and the markets?

  56. Sharp drop as the Futures re-opened, down about half a point.  Sadly, I only had 2 shorts left:


    API/Japar – It just depends on when they did the survey but nothing unusual about a holiday draw.  I'm glad API shows a big draw so EIA can disappoint.

    ????????Weekly API Oil Inventories:

    Crude: -6.796MM Distillate: +1.952MM Gasoline: -1.59MM Cushing -1.925MM

  57. Here's why, stage II of Trade Wars has started:

    • Pres. Trump is preparing to release a list of an additional $200B in Chinese products to be hit with tariffs, likely this week and possibly as soon as today, Bloomberg reports.
    • The publication of the list would launch a weeks-long process including a period of public comment and hearings.
    • Financial markets so far have shrugged off the first round of tariffs, with U.S. stocks higher in recent days, but a new list would mark an escalation of a budding U.S.-China trade war.

  58. Took the money and ran on the bounce off 7,250 on /NQ – nice $1,000 per contract!

  59. Nice wish i had stayed in but I dont like holding overnight.  can always get back in tommorrow

  60. Phil,  A reminder on QSR.

    SBUX reminds me I was considering QSR because Tim Horton's is rapidly expanding (they also own Burger King and my personal favorite – Popeye's).  They are priced about where SBUX is so not "cheap" at $60 (p/e 21) but I don't know if they'll get any cheaper.  I think we should take a good look after the 10th but I think expanding Tim Hortons down from Canada is going to be a home run because DNKN really, really sucks and my teens and their friends get very excited when they hear a Tim Horton's is coming near them (and by friends I mean US-based chat groups).   So far, there are 850 Tim Hortons in the US (3,600 in Canada with 1/10th the population) and it's a pure franchise model so they aren't taking a hit on the rollout but, on the downside, it makes it a very slow grind…

  61. Turning into a real bloodbath, our indexes are down more than 1% and 
    China hasn't even announced retaliation yet.

  62. Oil is down a dolllar  also

  63. Hurricane Chris strengthens, stays well off U.S. Atlantic Coast

  64. China auto sales growth weakens in June amid trade battle