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Troubling Tuesday – Will Apple (AAPL) Earnings Be Enough to Save the Nasdaq?

$2,300!  

That's a nice win on yesterday's Oil (/CL) Futures shorts this morning (so far, we're expecting $69.50 or lower) but it's NOTHING compared to the gains from Friday, where I said to our Members in our Live Chat Room (as well as our Morning Report, which you can subscribe to for less than $3/day):

Things seem to be holding up so far.  /YM back to 25,550 and also /RTY 1,700 along with 2,845 on /ES and 7,440 on /NQ so shorting the laggard but favoring the /YMshort still.  

/RB testing $2.17 makes a nice short into the weekend but might push higher first. 

/KC back to $109.50 so I like that long and that's $121.20 on /KCN9

/SI below $15.40 so long there if it goes back over (only) with very tight stops below.

The Dow fell back to 25,300 for a gain of $1,250 per contract, the Russell (/RTY) fell to 1,655 for a gain of $2,250 per contract, the S&P (/ES) fell to 2,800 for a gain of $900 per contract, the Nasdaq (/NQ) fell to 7,200, for a gain of $4,800 per contract, Gasoline (/RB) fell to $2.11 for a gain of $2,520 per contract, Coffee (/KC) rose to $112.50 for a gain of $1,125 per contract and Silver (/SI) flew up to $15.55 for a gain of $7,500 per contract.  

That day's report was certainly worth $3, wasn't it?  Of course, those trades are usually exclusive to our PSW Chat Members but, once in a while, when we feel strongly about our positions, we share the wealth with our Report Readers.  If you want to learn how to trade the Futures, join us for our weekly Live Trading Webinars, which are usually Wednesday's at 1pm.  

Today is the last day of the month so we're looking for bounces off of all those bottoms and you can play for the bounces (with very tight stops below), which are 20% of the drop as a weak bounce and 40% of the drop as a strong bounce where failing the weak bounce is bearish and the strong bounce has to be taken back in less than 48 hours, or that's bearish too.  

That means, for example, the 250-point drop on the Dow (/YM) should get a 50-point bounce, back to 25,350 just to be considered a weak recovery and 25,400 is the strong bounce line.  Anything less than a weak bounce today is a strong indication that we're not done selling off – especially on a window-dressing day like today.  On the volatile Russell (/RTY), we fell 45 points so we'll round up to look for 10-point bounces to 1,665 (weak) and 1,675 (strong) but we need a stronger Dollar for the Russell to get it in gear.

Unfortunately, we're not getting it this morning as the Bank of Japan, although maintaining their 0% Rate "Policy" has widened the range around it to let the market set the price, which will be higher than 0%.  It's not much but, for the BOJ, that's considered a hawkish move as the era of FREE MONEY may be finally drawing to a close.  Although the BOJ officially says they are buying 80 TRILLION YEN worth of bonds ($720Bn), they actually "only" bought 43Tn ($387Bn) as demand for Japanese paper – even at 0% – is strong throughout Asia.

Image result for japan debt to gdp 2018Japan itself is over 1.2 Quadrillion Yen in debt (1,200,000,000,000,000), about 250% of their GDP which means if Japan were paying just 2% interest on it's debt, it would cost 5% of their entire GDP just to make the interest payments.  There is no country on the planet worse off than Japan but there are lots of countries that are over 100% of their GDP in debt, including the United states just one year after this chart was printed.  

China may seem like they are in great shape at "just" $2Tn in debt but their deficit is expanding at about $1Tn per year, which is 10% of their GDP as they try to maintain the country's 7% growth rate so the government looks good (aren't dictatorships ridiculous?).  That means China spends more money than they get in growth, as does the US, who is spending over $1.1Tn more than we take in thanks to idiotic tax cuts and our growth, even at 3% (best annualized case) is just $600Bn so $500Bn is being thrown down the tubes – just to make Trump look good.  

The odd thing is that countries like Italy, Spain, Brazil, Portugal, Argentina and, of course, Greece are imploding on their debt load yet we act as if ours is fine and will never come back to bite us.  Those are the famous last words of many former empires.  There's currently this fiction that, as long as all the World's Central Banksters keep printing money and ignoring each other's debts and buying each others' bonds – this can continue forever as we go 300%, 400% and 500% in debt and it won't matter because "everybody's doing it."  

Image result for global debt cartoonDoes that seem ridiculous to you?  That's because it is.  This kind of behavoir is not sustainable in the long run and is more like a mutual suicide pact than a sound economic policy.  We're even watching some of these countries die yet we are "staying the course" and piling on more and more debt.  

The only people this policy is good for are the Banksters and, numerous times, we've pointed out that lackeys from Goldman Sachs (GS), JP Morgan (JPM) and other major banks are ensconced in positions of power in Central Banks throughout the World and they are the people setting these insane policies that are impoverishing nations for the benefit of the Top 1%.

When the debt becomes unmanageable there is inevitably a call to "privatize" assets, which is a fancy way of saying "give our people's land to rich people for 10 cents on the Dollar."  Thanks to legislation that was passed on Dec 4th in our own country, Trump "scaled back" millions of acres of National Park land and has already, in just 6 months, "Tens of millions of acres of other public lands will be sold to the oil and gas industry under the Trump administration."  Of course "sold" is a funny word, as it's mostly being GIVEN away as claim stakes, in which the Government expects to derive it's revenues from the eventual taxes paid from the profits made off the land that used to belong to the American people.

President Trump and Secretary Zinke are responsible for the single largest rollback of public lands protections in U.S. history, period,” said Chris Saeger, executive director of the Western Values Project. “This is a historic point in which Congress, despite the overwhelming public outcry, rolled over like a dog for special interests in allowing the unlawful, unilateral action by the President.”

Clearly we are sinking into the abyss but fear not investors, we have Apple (AAPL) earnings this evening and they should be a bright spot on the market so it's a good time to play those bounce line and we'll see what we get but make sure you take quick profits – as these bounces may be all we end up with!  

 


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  1. This is insane:

    https://www.motherjones.com/kevin-drum/2018/07/are-you-rich-trump-wants-to-give-you-yet-another-tax-cut/

    Steven Mnuchin, the Treasury secretary, said in an interview on the sidelines of the Group of 20 summit meeting in Argentina this month that his department was studying whether it could use its regulatory powers to allow Americans to account for inflation in determining capital gains tax liabilities. The Treasury Department could change the definition of “cost” for calculating capital gains, allowing taxpayers to adjust the initial value of an asset, such as a home or a share of stock, for inflation when it sells.

    This is completely insane! It adds another $100B to the deficit over time! We are now looking at $1T deficits for years to come. We had lower deficits under Obama during a recession recovery. These clowns have the biggest deficits during a good economy and a bull market.

    On the other hand, it might signal that they take inflation seriously and will index the minimum wage to inflation going forward. Fair enough, right?


  2. Medicare for all actually saves money:

    https://www.motherjones.com/kevin-drum/2018/07/conservative-think-tank-says-medicare-for-all-would-save-2-trillion/

    The libertarians at the Mercatus Center did a cost breakdown of Bernie Sanders’ Medicare for All plan and concluded that it would save $2 trillion during its first ten years.

    Now, as you might guess, this was not the spin the Mercatus folks put on their study. Their headline is “M4A Would Place Unprecedented Strain on the Federal Budget.” This isn’t really true, of course, since M4A would absorb all the costs of our current health care system but would also absorb all the payments we make to support it. That includes current taxes (for Medicare, Medicaid, and Obamacare), premiums paid by employers, premiums paid by individuals, and out-of-pocket costs from individuals. Instead of going straight to doctors, hospitals, and insurance companies, it would go instead to the federal government, which would then pay everyone else. It’s a lot of money, but it’s no particular “strain” on anything.

    $2T is a lot of money!


  3. MAGA:

    https://www.foreignaffairs.com/articles/united-states/2018-07-23/how-trump-repelling-foreign-investment

    This year, net inward investment into the United States by multinational corporations—both foreign and American—has fallen almost to zero, an early indicator of the damage being done by the Trump administration’s trade conflicts and its arbitrary bullying of companies and governments. This shift of corporate investment away from the United States will decrease long-term U.S. income growth, reduce the number of well-paid jobs available, and reinforce the ongoing shift of global commerce away from United States. That shift will subject the entire world economy to greater instability.  


  4. M4A/StJ, "but it’s no particular “strain” on anything", that statement seems incorrect, doesn't that wipe out the market cap of United, Aetna, Cigna, Blue Cross, etc and impact debt and equity investors including pension plans?


  5. Good Morning.


  6. HMNY ? ? ?


  7. M4A / Mikezuela – Not going to happen anyway, but there are options. In any case, the government would need the assets of these companies so a buyout could be engineered. But not worried as this won't pass.


  8. HMNY / Albo – Who needs reverse splits when you are up 50%? Looks to me like some desperate moves but I have been wrong before. What they seem to be putting in place is higher prices and eventually making people pay for first run movies somehow. I think that it does erode the value of the system for casual users  in the long run. But as I said, I have been wrong before.


  9. STJ – I agree.  And they still have to find a way to raise money.  Too hot to handle !


  10. QCOM

    ~~QCOM +3% (commences modified Dutch auction tender offer to purchase up to $10 bln of shares of its common stock).


  11. And that HMNY rally fizzle… Looks scammy now!


  12. CMG – another restaurant closed.  any thoughts on a new position here?   Still falling at the moment, I'm tempted to sell some puts. at '20 $400


  13. I wonder if HMNY simply pump the price stock and dump some more on the market! There was a big volume surge at the open.


  14. what a POS!

    FU HMNY!!!!!!!!!!!!!!!!!!


  15. Phil/MVEN

    0.65 !!

    are you still investing in them through PSW Investments.

    regards


  16. Good morning!  

    Gotta take back the 50 dma on the RUT (1,670) and the 20 dma on the Nas (7,300) but a nice, sharp bounce off the 50 dma is encouraging, as it preserves the uptrend.  

    Capital gains/StJ – Mostly helps people who own buildings for many years like….

    Medicare/StJ – Great point but they are headlining that Sander's plan would cost $30Tn.

    Strain/Mike – Those companies are most of what's wrong with health care in the first place.  1/3 of what we spend goes to profit-making middle-men and that's why the US's outcomes vs spending is the worst in the developed World so yes, those companies will "suffer" but it's never a good idea to not operate because it might hurt the cancer.  

    HMNY/Albo – Pulling a NFLX and raising prices but not sure how that really helps. 

    QCOM/Albo – Wow, 10% of their stock – amazing.  I bet they make more money per share next year!  

    CMG/Batman – What a roller coaster.  It was way too high anyway.  We're short the Jan $420 calls in the LTP ($54.40) so nice deal for us (and we already took our original longs off the table).

    Short Put 2020 17-JAN 270.00 PUT [CMG @ $449.58 $-2.05] -5 1/2/2018 (540) $-17,600 $35.20 $-28.10 $-115.14     $7.10 - $14,050 79.8% $-3,550
    Short Call 2019 18-JAN 420.00 CALL [CMG @ $449.58 $-2.05] -6 5/24/2018 (176) $-32,640 $54.40 $3.60     $58.00 $-1.10 $-2,160 -6.6% $-34,800
    Long Call 2020 17-JAN 400.00 CALL [CMG @ $449.58 $-2.05] 15 5/24/2018 (540) $143,400 $95.60 $6.40     $102.00 - $9,600 6.7% $153,000
    Short Call 2020 17-JAN 480.00 CALL [CMG @ $449.58 $-2.05] -15 5/21/2018 (540) $-87,675 $58.45 $3.30     $61.75 - $-4,950 -5.6% $-92,625

    MVEN/Pat – PSWI is not investing in MVEN, we are participating on their platform but none of the BS they said they were doing as far as financing has happened yet (was supposed to be 6/30) and I'm not at all impressed with what they've done so far but it's not costing us anything so we're happy to maintain a "channel" on their network (and we do have some stock that was given to us for participating).  


  17. Wow, /CL hitting $68.50!  Congrats to those who shorted!  That's it for me – almost tempting to play for the bounce here.

    /NG going the other way:


  18. Not very impressive bounces so far.  

    Dow is at strong (25,400) but failing it and Dow has been jacked up higher a lot recently – I think they are using it as a prop because it's cheaper than manipulating the broader indexes.

    A little less worried now:

    Image result for a little bit softer now animated gif


  19. What's the deal with REITs – all going up at the moment.


  20. REITs/StJ – maybe the proposed capital gains changes benefit them


  21. Hey Phil, I have a Jan 2019 5/10 bull call spread on CLF. Trying to decide if its worth taking off now nor letting it ride through January. Thoughts? Thank you.


  22. REIT / Tangle – That what I was thinking but too soon!


  23. Don't forget that in the new tax law 20 % of REIT income received is tax free.


  24. So it's a combination of good things for REITs except rising rates!


  25. REITs – Yes, if they pass that insanity it will be such a benefit for the Trumps – I mean REITs.

    CLF/Wilsons – Wow, quite the power move this month.   They were below $2 for a while.  Well the $5s are $5.85 and the $10s are $1.75 so net $4.10 means 0.90 left to gain is 22% in 6 months so the question is how safe is that compared to other ways you might make 22% in 6 months?  I think they are going to be good for $1Bn in profits moving forward and just valued at $3.2Bn so I think $10 is a fair target but could go higher or lower depending on tariff talk so not a sure thing really. 

    I guess I'd cash the $5s ($5.85) and pick up the 2020 $10 ($2.75)/15 ($1.15) bull call spread for $1.60 so it's net $4.25 off the table and then keep a stop on 1/3 of the $10s at $2 and 1/3 at $2.40 and 1/3 at $2.80 so the worst case (if it keeps moving up to $13) is that you'd have the 2020 bull call spreads for net 0.75 (what you didn't get off your Jan spread) + an average of $2.40 from the short calls for $3.15 with $1.85 additional upside if they get to $15 (and you can sell short $15s while you wait and maybe some puts) but the key is you get your $4.25 anyway and the rest is gravy.  

    On the downside, the short calls go worthless and whatever value remains on the spread is your bonus.


  26. Phil/IMAX,

    do we still have the IMAX Sep 19/25 BCS in the OOP?

    I might have missed the adjustment. Most of the profit is on the short call.

    regards


  27. Awesome….the beginning of the end…

    Donald J. Trump‏Verified account @realDonaldTrump

    FollowFollow @realDonaldTrump

    More

    The globalist Koch Brothers, who have become a total joke in real Republican circles, are against Strong Borders and Powerful Trade. I never sought their support because I don’t need their money or bad ideas. They love my Tax & Regulation Cuts, Judicial picks & more. I made…..

    3:14 AM – 31 Jul 2018


  28. Phil / CMG – a sold a couple of '20 $420 puts at 47.  will see how this goes, in the past few issues like this, they bounced back fine.


  29. Why is PFE flying today?  Is it company specific?


  30. Innocient question Is FTR still paying a div.?


  31. Phil, with TSN falling further 2.9% today, would you recommend jumping in?

    On a different matter, in many deals here, you suggest selling a put + buying a BCS. Often however the sold position is a half of the BCS – what's the rationale there?


  32. What was the original TSN trade btw? TIA


  33. AlterEgo we did have that question yesterday. My suggestion is wait till ALL the rats have left the ship or better all the foxes have left the hen house!!! At this stage I am waiting to buy possible some Jan 20 55 calls first as well sell puts to add to my present position. No callers yet!


  34. yodi/FTR

    nope..no dividend from FTR. hopefully they start soon…

    regards


  35. Thanks, Yodi! I I must have missed it…


  36. My original trade was Jan 20 57.5/72.5 BCS with 57.5 half putters and sell Aug17 65call, which you can buy back for .10 now but I will not spend .10 cents.


  37. Alterego  – Phil usually sells the puts in a quantity that pays for all or most of the BCS. So if an 1/2 sell gets enough to pay for the spread, that is enough.  


  38. Phil / Soya Beans,

    Any thoughts on Soya Beans looks like China and US resuming talks might be helpful to heal some of the pain but not sure if the damage is already done to the market or not.

    Thanks

    Pat


  39. PFE  Who ever has Aug cherry calls or short calls combined with armchair trades, I have rolled my 37 caller Aug 10, Aug 24 37.5 caller To Sept 21 39 caller and Oct 19 39 caller. Why 39 I feel they are a bit to high, but I might be wrong but good premium. All my plays AMGN, ABBV ( just started) MRK and GILD are all up and running.


  40. IMAX/Pat – No, we cashed it out in last month's review but certainly not worried about the Sept $19 puts – we just chose to close it as it looked toppy near $24 (and it was).

     Trump/Koch/1020 – Wow, I am starting to believe Trump is really just playing a game to destroy the Republican party by exposing the racism and hypocrisy.  Maybe he's like Sasha Cohen, making the GOP think he's their guy when, in fact, he is breaking them apart from the inside?

    CMG/Batman – Nothing wrong with that net and these food things tend to pass. cheeky

    PFE/That – Whoe sector seems happy.

    FTR/Yodi – No dividend.  They bought $10.5Bn worth of Verizon assets and now you can buy FTR for $400M!

    TSN/Alter – I'd wait a bit and see if they form a proper bottom.  As I said yesterday, at $58.50 ($21.5Bn) they make a good value play with $1.8Bn in earnings (p/e 12) and even less as they have reduced their share count so I expect $58.50 to ultimately hold up, but there's no hurry at $57.  

    And what Yodi said.  

    TSN/Soma – I'm pretty sure we don't have them.  

    Soybeans/Pat – I said I would go long at $600 but, unfortunately, they bounced long before there off $800 and now back over $900 where I have no interest.  Hard to say how much damage has been done as China corralled other suppliers.  

      

    Indexes pretty much in synch today with strong bounces but, last day of the month means we can't trust any of it.  


  41. Well, it looks like we finally have an official deal for PSWI's investment in the Pot Processing Company (New Age Ventures) and Jade House Genetics.  Like the Hedge Fund, PSW Investments will be doing a preferred round at $4/share which currently yields a 5% distribution (0.20/share) but we hope to be at 10% (0.40/share) next year.  In addition to ordinary distributions, there will be special distributions of 20% (0.80) share until such time as the full investment has been repaid so at least 25%/year returns, after which there will still be a preferred return of 10% (0.40/share) for Preferred Shareholders, over and above their normal distributions.  

    If all goes well, that's going to be nothing but that's what we're comfortable with at the moment.  We're more than halfway to goal and funding will be due by the 17th.  If you have not gotten your paperwork to Greg (at philstockworld dot com) or you have not sent a note (AFTER having your paperwork) committing your contribution – DO IT NOW!!!  

    Also, this is just for CA, we are going to then expand to NJ, MA and other states as legalization rolls in so hopefully will be HUGE!  If you are interested in working with us in your state to get licences when they are available, let us know or if you know people who need manufacturing – we will be able to act as a solution to help integrate the grower to retailer process.  

    In fact, in NJ, we have a partner in Colorado willing to match up to $10M to set up a licensed NJ operation so that's another one PSWI is working on at the moment.  There will be deals like that in every state as they come on-line.

    The great thing is, we don't have to grow anything – the growers send us truckloads of pot and we process it into medicinal and retail edibles and such – and we don't have to sell it – we just get a percentage of the profits from the products we white label (though Jade House is our House brand).  

    Meanwhile, not all that impressive for a window-dressing day.  /YM 25,400 (strong), RTY 1,673 (strong), /ES 2,817 (strong) and /NQ 7,247 (weak) is not much of a recovery.  We'll see what sticks tomorrow.


  42. SYF- Phil, any opinion on Synchrony Financial?


  43. Bought some FTR shares. There last two quarterly reports showing some stabilization and paying down debt.


  44. Sold some AKS Jan $4 puts for .31.


  45. Denlundy / FTR – right there with you both  a bit myself a yesterday


  46. SYF/Pstas – Not a lot of growth but they drop $2Bn to the bottom line and you can buy the whole company for $21.5Bn so a very fair price at $29.  I'm surprised they sold off so hard but they did lose WMT and ToysRUs and it's not clear how much of their business that was.  Also, net charge-offs are climbing towards 6% 

    They are buying back 10% of the stock so they should keep looking good, worth a toss down here and you can sell 2020 $25 puts for $2.35 so 10 of those ($2,350) can help pay for 10 of the 2020 $25s at $6.34 ($6,340) and 10 short 2020 $32s at $2.95 ($2,950) for net $1,040 on the $7,000 spread that's $4,000 in the money to start.  


  47. aapl!!!


  48. CAKE with a miss, down 10%.

    Nas 7,263 ahead of AAPL earnings. AAPL $190.29

    Oil taking a dive – $68.15 – should have stayed short! 

    AAPL $2.34 is a beat ($2.18) revenues beat by $1Bn.

    As expected, it's just nothing that wasn't expected so not much movement and unlikely to break $200 but the Nas is relieved not to have another big miss and it's up to 7,284 at the moment.


  49. AAPL – Solid Quarter beeating top and bottom lines as well as providing solid outlook for Q4 – May be heading to 205 + by end of year.


  50. ftr earnings


  51. Not going to be happy Jabo… FTR down 7%.


  52. Phil / FTR – have not reviewed this…ftr small miss on earnings rev in line ….  not sure why this big hit 

    What's your take on it


  53. Interesting take on FTR from someone who is actually long:

    https://seekingalpha.com/article/4192744-save-frontier-communications

    The comparison with Altice (ATUS) is striking:

    There are many similarities from a financial standpoint. Both companies had gross income of between 9 to 10 billion USD in 2017. Long-term debt at the end of 2017 was $17.9 billion for Frontier and $21.4 billion for Altice. While Altice had nearly 20% more debt its interest expense in 2017 was $1.6 billion compared to $1.5 billion for Frontier or only 6.7% higher than Frontier's interest expense. This signifies the higher cost of borrowing for Frontier due to its financial and operational problems.

    In terms of differences, Altice was able to charge its average customer approximately $138 per month compared to $81 per month for Frontier. Most strikingly, Frontier has a market capitalization of $387 million compared to $12.3 billion for Altice.

    The debt to equity ratio is much higher for FTR so that's one factor but the disparity in valuation is amazing. In any case, the guy is long FTR so he is hoping that with time FTR gets valued like ATUS.





  54. Donald Trump’s very weird polling problem