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Friday Fade Out – A Wild Week Comes to a Close

What a week it has been.

For the 3rd time in a month we have tested the highs of the Dow only this time we also tested lows that go back to early July, when we ran up from a test of 24,000.  To some extent, we would call this a bullish test of the 50-day moving average at 25,000 (this is an hourly chart, so those are the hourly moving averages) but we also bounced off that in May and went back to 25,400 before falling back to 24,000.

Needless to say, we're still well-hedged in all 5 of our Member Portfolios with strong cash balances for additional protection.  We did use some of that cash to add positions we thought were a bit too low – but they only replaced some too high positions we cashed out during July's expiration week.

Keep in mind, the market has actually gone NOWHERE since the February high of 26,600 and we're still a good 1,000 points below that so perhaps people who say I'm too bearish during this "amazing" bull market need to get a bit of perspective.  I'm not bearish – we have 50 long positions in our Long-Term Portfolios – I'm just CAUTIOUS because cautious traders live to trade another day, and I like trading! 

Even if it's a rising channel, the market is still in a channel and we've been beating the Dow and the S&P and even the Nasdaw all year long by not going crazy at the top of the channel and not panicking at the bottom of the channel.  Just yesterday, at 3:02 pm, I said to our Members:

/YM 25,600 is a very tempting short after this madness.  If I weren't on a ship, I think I'd play it with tight stops above.  

That trade idea isn't rocket science, we're just thinking that a 600-point run from 25,000 (which is just under the 2.5% line at 25,625) should give us a small retrace.  In fact, using the 25,625 line predicted by our 5% Rule™, we expect a retrace of 125, back to 25,500 (weak) or another 125, down to 25,375.  So all we're doing is playing the channel and betting on what is most statistically likely to happen.  In other words, we're BEING the House – NOT the Gambler!

Today is options expiration day and we'll see how things hold up but it's next week that will tell the tale as to whether we are topping out again or finally consolidating for a move even higher.  Congratulations to those of you who followed our trade ideas from yesterday's Morning Report (just $3/day on an annual Membership) like Silver (/SI) long at $14.40, which, as you can see, had a very nice outcome with $15,000 gained on 10 contracts during the session.  

Aside from the Nasdaq longs, we also mentioned /RBV8 (Gasoline), which is still playable at $1.875 – that's a fun one into the weekend and oil is already up 1% this morning.  See, we only ask you to pay for a year what you can easily make in a day using just one of the hundreds of Trade Ideas you'll see reading the PSW Report – it's a good deal! 

Have a great weekend,

- Phil


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  1. How long do investment strategies last:

    This same idea extends to the markets as well. Ideas, strategies, rules, and philosophies which were once considered iron law can become overcrowded and get arbitraged away. And once knowledge becomes widely disseminated, markets and investors adapt, which can change performance going forward.

    My favorite recent example of this comes from the world of high-frequency trading. Profits in these oft-criticized strategies fell below $1 billion in 2017, down from $7.2 billion in 2009.

  2. i hope and pray LB follows JWN and not M next week!

  3. Good Morning.

  4. BABA is quite the falling knife.  Think it's overdone.

    Sold a few Oct puts to establish an initial position.

  5. Good morning! 

    Not much news but it's OpEx day, so anything can happen. 

    I think, rather than take an early day (we're at sea) – I'm just going to take a few long breaks and come back – just in case things get crazy.

    Big Chart – NYSE tested 200 dma and tested the Must Hold and passed on both – remember we talked about the NYSE earlier in the week – it's going to take MUCH MORE damage than that to stop the 50 dma from punching over the Must Hold line, which will force us to be more technically bullish – no matter what the Fundamentals say.  

    Dow flew off the 50 dma, also very bullish and only the RUT seems like it may fail – and it's led us down in the past.

    Half-lives/StJ – I've always felt that way, that's why it's so stupid to invest in Funds based on who performed best last year or even last few years.  Strategies have to change with the markets – we're trading very differently in the low-VIX environment than we did before.

    LB/Jabob – If you think it's a toss-up, you shouldn't be in it.

    Nothing wrong with M anyway, they just got ahead of themselves while JWN has been consolidating for a breakout all year. 

    Stocks cool after yesterday's gain; Turkish lira resumes decline

    • The major market averages are roughly flat in the early going, as stocks pause after yesterday's big move; Dow flat, S&P -0.1%, Nasdaq -0.3%.
    • European bourses are lower, with U.K.'s FTSE -0.4%, France's CAC -0.5% and Germany's DAX -0.6%; in Asia, Japan's Nikkei +0.3% but China's Shanghai Composte -1.3%.
    • In earnings news, Deere (-1.7%), Nvidia (-4%) and Applied Materials (-9.9%) are all sharply lower after issuing below-consensus guidance; conversely, Nordstrom +9.6%after beating earnings estimates and raising guidance.
    • Sector movement is very limited, with no group up or down more than 0.3%; the energy sector (+0.3%) is among the top-performing groups, underpinned by WTI crude oil +1%at $66.13/bbl.
    • The Turkish lira is ~5% lower against the U.S. dollar, on track to end its three-day rebound but still well above the all-time low it struck on Monday.
    • U.S. Treasury prices are higher, pushing yields down, with the benchmark 10-year yield 2 bps lower at 2.85%.

    U.S. seen near deal with Mexico on revised NAFTA but Canada remains apart

    • The U.S. is close to reaching a deal with Mexico on a revamped North American Free Trade Agreement, but thorny issues are yet to be resolved with Canada, according to reports.
    • Both Mexico and the U.S. are seen as having strong incentives to push through a deal quickly: Mexico wants to lock in an agreement before its new leftist president takes office, and the Trump administration wants a win on trade ahead of the midterm elections.
    • U.S. negotiators this week have been meeting with senior Mexican officials in Washington, and the two sides are said to have have largely agreed to new rules on auto trade – a top White House priority – that could boost investment in the U.S.
    • Canada has shown less urgency to complete a NAFTA revision but is expected to return to the bargaining table once the U.S. and Mexico settle their differences.
    • Pres. Trump says he is "in no rush" to complete a NAFTA deal, remarks seen mostly as an attempt to put pressure on Canada.

    China may be strengthening the yuan ahead of trade talks with U.S.

    • China appears to be propping up the yuan just as its government prepares to restart trade negotiations with the U.S. that likely will include warnings against further depreciation of the currency, which has dropped more than 8% vs. the dollar since March.
    • After falling to a one-year low, the yuan – which has weakened due to escalating trade tensions and rising interest rates in the U.S. that have driven up the dollar – yesterday surged the most since January 2017 as cash supply tightened and the People's Bank of China set its daily fixings at stronger than expected levels amid news of a revival of talks between the two countries.
    • “China wouldn’t want the yuan to slide too quickly before important meetings, and that could be one of the reasons why the policy makers moved to support the currency,” says economist Nathan Chow at DBS Bank Hong Kong. But "the yuan will still face pressures as there are many uncertainties with the low-level trade talks."
    • Pres. Trump has accused China of keeping its currency artificially weak to give it a trade advantage.

    Leading indicators index increased in July

    • July Leading Indicators+0.6% to 110.7 +0.4% consensus, +0.1% prior (revised).
    • Coincident Economic Index +0.2% to 104.2.
    • Lagging Economic Index -0.2% to 105.2.

    E-Commerce Retail Sales

    U.S. could sanction China over Iran oil, State Department official says

    • The Trump administration is prepared to impose sanctions on all countries that buy Iranian oil after November's deadline, including China, says Brian Hook, the newly appointed special representative and chief of a new Iran Sanction Group at the U.S. State Department.
    • China repeatedly has said it will not comply with U.S. sanctions on Iranian oil and some analysts say it could increase Iranian imports, but Hook says the U.S. would issue waivers to countries that have made efforts to scale back Iranian purchases.
    • India and South Korea, two of Iran's biggest customers, have been trying to cut their own purchases from Iran in order to receive a waiver.

    Investors sell lira ahead of holiday

    • Turkish stocks are modestly lower today, but the lira is down about 5% vs. the dollar. In the news, a Turkish court today rejected an appeal from Andrew Brunson as the U.S. threatens more sanctions unless he's released.
    • Stock markets in Turkey will be closed for most of next week.
    • The iShares MSCI Turkey ETF (TUR -3.6%)

    Turkish court ruling sets stage for new sanctions by U.S.: Bloomberg

    • A Turkish appeals court rejects U.S. pastor's bid for freedom, setting the stage for more sanctions by the Trump Administration, Bloomberg reports.
    • Turkish lira is down 4.7% against the U.S. dollar, trading at about 6.12 per dollar
    • The pastor's lawyer told Bloomberg he may appeal the decision.
    • Previously: U.S. stocks poised for a breather after yesterday's spike (Aug. 17)

    More details on Trump's SEC request

    • President Trump asks the SEC to study a system in which companies would report earnings every six months, instead of on a quarterly basis, he said via Twitter this morning.
    • When speaking with some business leaders, Trump asked what would make business even better in the U.S. One participant told him, “Stop quarterly reporting and go to a six month system.”
    • "That would allow greater flexibility & save money," Trump's tweet added.

    U.S. housing market may be shifting, say some real estate economists

    • U.S. homebuyer demand may be slipping a bit, according to some recent real-estate studies. Here's a roundup of some observations:
    • "The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly," said Zillow senior economist Aaron Terrazas.
    • Year-over-year price growth rate for U.S. home sales has been dropping for five straight months and hasn't been this low since September 2016, says Redfin.
    • According to Redfin:
    1. Median home sale price in July at $307,400 fell 1.4% from June;
    2. Number of homes sold at 277,100 fell 8.2% from June.
    3. Months of supply at 2.7 is up 0.2 M/M and median days on the market rose 1 to 35.
    4. 28% of homes on the market in July had a price drop, the largest share on record since Redfin began tracking this metric in 2009, and a 3.2 percentage-point increase over last July; homes with price drops typically peaks each year in July or August.
    1. Median sales price of 54 metro areas $250,575, down 3.1% from June.
    2. Four metro areas saw  Y/Y price declines including Wilmington/Dover,DE, and Trenton, NJ;
    3. Months supply of inventory increased to 2.9 from 2.7 in June, 42 of the 54 metro areas had a Y/Y drop in inventory.
    1. About 14% of all listings across the U.S. had a price cut in June 2018, its latest data, up from a recent low of 11.7% near the end of 2016.
    2. Since the beginning of the year, the share of listings with a price cut increased 1.2 percentage points, the greatest January-to-June increase ever reported, and more than double the January-to-June increase last year.
    3. U.S. home values rose 8.3 percent over the past year, and Zillow expects home value growth to slow to a 6.6 percent appreciation rate by this time next year.
    • "In some markets the combination of ascending home prices, limited affordable inventory, and this year’s higher rates are curtailing homebuyer demand,” says Freddie Mac's chief economist, Sam Khater.

    Energy prices lift Canada annual inflation higher

    • Energy prices lift Canada's annual inflation rate to 3.0% in July from 2.5% in June, compared to the forecast of 2.5%.
    • Core inflation ticked 0.1% higher to 2.1% in July.
    • The Bank of Canada rose interest rates in July for the fourth time in a year has an inflation target of 2.0%.
    • All eight major components rose Y/Y including energy prices rose 14.2% Y/Y helped by a 25.4% jump in gasoline prices.

    Ford's sales in Europe improve

    • Ford (NYSE:F) announces passenge car sales in Europe rose 5.9% to 74,300 units in July. Double-digit sales growth was seen in Spain and Italy during the month.
    • Commercial vehicles sales were up 2.5% to 27,500 units.
    • The automaker cites strong demand for SUV models, the EcoSport (+110% Y/Y) and Fiesta (+63%) during the month,
    • Ford's market share fell 40 bps to 7.0% during the month.
    • Shares of Ford are up 0.74% tp $9.58.

    Duh!  $35K Tesla Model 3 envisioned by Musk not profitable, UBS says

    • The Model 3's profitability is a critical issue for Tesla (NASDAQ:TSLA), and UBS analysts say the company would lose about $2,300 per car if it sells the vehicle at its long-promised $35,000 price tag while a more expensive version at $42,000 would eke out a $670 profit.
    • The Model 3 price currently ranges from $49,000 to about $80,000, and UBS estimates Tesla's operating profit is $3,420 per vehicle at the low end of the range, which would help explain why CEO Elon Musk is forecasting a profit in Q3.
    • The lack of a $35,000 base model in Tesla’s lineup, as well as early demand for the more expensive versions, should set up the company for its best quarter of profitability from the vehicle ahead of less-costly versions down the road that will reduce the lineup’s margins, says Colin Langan, who wrote the UBS report.
    • “Q3 is Tesla’s best shot because of this pricing dynamic,” Langan said of the company's profitability. “I’m very clear that I don’t think that’s sustainable.”

    America's Car-Mart +18% after earnings

    • America's Car-Mart (NASDAQ:CRMTshoots up 17.7% after posting Q2 numbers ahead of expectations.
    • Average retail sales price rose 6.1% to $11,015 during the quarter.
    • Gross profit margin edge up 20 bps to 41.6% of sales.
    • CFO update: "Our efficiencies are showing up in our sales volume productivity, which was up 5.7% for the quarter, and we were especially pleased with the same store revenue growth of 12.1%. The average sales price increased 6.1% due to more sales of SUV’s and trucks coupled with an increase in vehicle purchase costs which in turn results in higher selling prices. Charge-offs as a percentage of average receivables remained flat and our collections as a percentage of average receivables increased to over 13% for the quarter."
    • Previously: America's Car-Mart beats by $0.25, beats on revenue (Aug. 16)

    Air France -5% as unions revolt against CEO hire, Dutch pilots set to strike

    • Air France-KLM (OTCPK:AFRAFOTCPK:AFLYY) is down nearly 5% in Europe, sparked by a hostile reception from unions to its new CEO and as the airline’s Dutch pilots threaten to strike over working conditions.
    • Unions representing workers at Air France are reacting with open hostility to the appointment of Air Canada COO Benjamin Smith as the new CEO, accusing the company of handing control to a foreigner and not protecting its interests.
    • Smith, who will take the reins before the end of September, is faced with labor troubles that have cost the airline €335M ($381.7M) this year and forced the resignation of his predecessor.
    • Meanwhile, in the Netherlands, Dutch pilots union VNV says it will strike unless the airline’s management comes up with improved offers to ease their workload

    Deere drops as costs squeeze margins

    • Deere (NYSE:DE) slightly trims earlier premarket losses, now -2.4% after saying it will cut costs and raise prices in response to higher raw material and logistics expenses.
    • Jefferies analyst Stephen Volkmann says production cost pressures are offsetting strong agriculture volumes, which resulted in a low-teens incremental margin for the quarter.
    • J.P. Morgan’s Ann Duignan says shares could drop due to "disappointing" margins in the company's agriculture and turf segment, DE’s largest business, contributing 70% of 2017’s annual revenue.
    • But DE says demand in its construction and farming markets is strong, as “Replacement demand for large agricultural equipment is driving sales even in the face of tensions over global trade and other geopolitical issues."
    • DE predicts overall sales of farm and construction equipment will rise by ~30% for the year ending Oct. 31, up from $33.7B in the previous year.
    • On watch are peers AGCOCNHILNNTWITTC.

    Deere -4% after Q3 earnings miss, below consensus guidance

    • Deere (NYSE:DE-3.9% pre-market after reporting mixed FQ2 results, with below consensus EPS and slightly better than expected revenue, but providing disappointing guidance for Q4 sales.
    • DE says FQ3 worldwide equipment net sales rose 36% Y/Y to $9.3B, helped by replacement demand for large agricultural equipment, as an 18% improvement in agriculture and turf sales to $6.29B beat the $6.15B analyst consensus estimate and a doubling in construction and forestry revenue to $2.99B topped the $2.88B consensus.
    • DE issues downside guidance for Q4, seeing revenues rising 21% Y/Y to ~$8.58B vs. $8.82B analyst consensus; for the full year, DE expects net sales to rise 26% Y/Y, while the $33.6B consensus implies 30% growth, and reaffirms its FY 2018 outlook for adjusted net income of $3.1B.

    Dean Foods -7% after JPMorgan cut

    • JPMorgan downgrades Dean Foods (NYSE:DF) to Underweight from Neutral.
    • Analyst Ken Goldman warns that Dean Foods could miss consensus estimates due to the headwinds its's facing.
    • The investment firm takes its price target down by 33% to $6.
    • Dean Foods is down 7.0% to $8.11 on share volume over 8K in premarket action

    DoorDash valuations runs up to $4B

    • DoorDash is now valued at $4B after the food delivery startup's latest funding round of $250M.
    • The extra funds are expected to help DoorDash compete nationally with GrubHub (NYSE:GRUB) and Uber Eats (UBER).
    • DoorDash is on pace to expand to 2K cities in North America by the end of the year,
    • Some of the publicly-owned restaurant chains that use DoorDash are Chipotle (NYSE:CMG), Noodles (NASDAQ:NDLS), Cheesecake Factory (NASDAQ:CAKE), Wendy's (NYSE:WEN), Taco Bell (NYSE:YUM) and Denny's (NASDAQ:DENN).

    Citi tags J.C. Penney as $0.50 stock

    • How low can you go on J.C. Penney (NYSE:JCP)?
    • Citi says below $1.00 as it sets the price target bar on J.C. Penney at a Street-bottom $0.50 after taking in yet another weak quarter of numbers from the retailer.
    • J.C. Penney's misfortunes arrive with various pockets of the retail sector showing vibrant consumer spending.
    • reports that JCP's high yield debt has plunged into distressed territory.
    • JCP -2.56% premarket to $1.71 after a 27% walloping yesterday.
    • Sector watch: Strong earnings from Nordstrom (NYSE:JWN) send its shares up 8.9% in premarket trading, while Kohl's (NYSE:KSS) is 1.7% higher and Macy's (NYSE:M) trades flat. Dillard's (NYSE:DDS) is up 1.1% early to cut into yesterday's sharp post-earnings drop.

    Nokia up after 5G mobility test with Verizon

    • Nokia (NYSE:NOK) shares are up 1.2% premarket after it and Verizon (NYSE:VZ) lay claim to another 5G milestone, the first transmission of a 3GPP New Radio 5G signal to a receiver in a moving vehicle with sector handoffs.
    • That test took place at Nokia's New Jersey campus and followed a number of outdoor data sessions on 5G New Radio.
    • The vehicle achieved seamless handoff of its signal between two 5G radios.
    • “Unlike some of the incremental 5G technology announcements we’ve seen lately, tests like the one we conducted are significant advancements in the development of 5G technology,” says Verizon's Bill Stone.

    Federal judge rejects much of FTC's $4B suit against DirecTV

    • A judge has rejected much of a $4B lawsuit lodged by the Federal Trade Commission against DirecTV (NYSE:T) charging the company with deceptive advertising.
    • The FTC in 2015 said DirecTV didn't adequately disclose that lower promo prices only lasted for year one of a two-year contract. It also said it offered free months of premium channels without informing consumers those channels needed to be canceled at the end of a promotional period to avoid monthly charges.
    • DirecTV argued it was entitled to a favorable ruling without having to put up a defense, and the judge largely agreed: “This case did not involve the type of strong proof the court would expect to see in a case seeking nearly $4 billion in restitution.”

  6. BABA / Albo – I guess some support here:

    BABA Alibaba Group Holding Limited daily Stock Chart

    Target prices are way up there but I have some reservations about these guys' numbers. Not on my list!

  7. Albo   ditto

    BABA   seeing 5000 Jun'19 $150 puts and $220 calls trade

  8. Not much of a follow through on yesterday's move! So many of these big days up and down are simply reactions to political events nowadays. Or more likely tweets… It's no way to run a railroad!

  9. STJ & Stockbern – Thanks, yeah, almost all Chinese stocks that I follow, and unfortunately some that own, are down sharply.  i.e IQ, HUYA, WB, etc.

    May have further to drop, so I'm staying small.

  10. What, no comments about TSLA?

  11. BABA     my wife told me she ordered something on Alibaba. I didn't even think she knew what it was.  Decided then was time to start looking for a position. 

  12. @anyone – Is Constellation Brands into the edible cannabis market?

  13. …or any thoughts on Constellation Brands as a long term play on cannabis legalization?

  14. Evidently, STZ owns 30% of CGC and have warrants to increase ownership to 50+% after 4 billion investment closed this week. Should be all over the cannabis industry in Canada and eventually the US.

  15. TSLA/Stock – Well to me it's like BitCoin – they're done for, even if some people (the ones you can fool all of the time) don't realize it yet.  Musk has blown all his credibility, which is what was keeping them afloat:

    Elon Musk says 'the worst is over' for Tesla

    For me, it's not about whether or not he has a fake buyer – it's about the simple fact that there is no such thing as a $35,000 model 3 or even a $45,000 and probably not a $50,000 Model 3 that can be built profitably and, if that's the case – then it doesn't matter how many he can produce – there simply won't be enough buyers.  If there were, they could simply knock down the cost of the Model S a bit and sell those – but they don't make money selling those either! 

    BABA/Stock – Good premise!  My daughter bought a really great shirt for $5 in St Thomas but it's poorly made but I suggested she hook up with someone on BIDU and have them make 100 and see if we can sell them at a flea market for $20 each.  Could be a nice business and a good education in commerce in any case.  

    STZ/Some – Hmm, do I want to own 0.00001% of STZ or 27.5% of New Age?  I think I'll stick with New Age!  That's PSWI's MJ Manufacturing deal – we're just about done with the paperwork and hope to fund it next week.  If anything, that price shows what an incredible deal we're getting on this opportunity.  Hopefully one day we'll get $1Bn for our stake!

  16. Stockburn TSLA we all waiting for 300 to come. I think the man run out of straw to spin his gold.

  17. somavision/ my post here a couple of days ago from Morgan Stanley: 

    Dara Mohsenian, CFA – Morgan Stanley

    August 15, 2018 2:45 PM GMT


    STZ Increasing its Stake in Canopy Growth: STZ announced it is expanding its strategic partnership with Canopy Growth (CGC) with the goal of positioning Canopy Growth as the global leader in cannabis production, branding, intellectual property, and retailing. Our Thoughts Up Front (Details on the Deal Below)-We'd note these thoughts and accretion numbers are preliminary with a lot to digest here. Our thoughts on the deal are that it creates short-term risk and EPS dilution to what was otherwise in our minds an attractive stock with high visibility, but that STZ is essentially buying a call option into an entity that is likely well positioned as a leading player in the potentially sizeable cannabis market over time. We are not surprised to see the stock down 8% intraday as a result of the deal (we expected a HSD market reaction) given the expensive price and dilution, but after this reaction we view the near-term risk as priced in, and remain OW post this fair pullback. We still view STZ as an attractive stock ex the Canopy investment, as well as now having a call option on the global cannabis market, which could end up being a significant opportunity, with market skepticism (particularly with STZ's historical acquisition track record) already now priced in. Conceptually, thinking about the bear arguments or quantifying stock downside on this deal, there are two primary areas, EPS dilution and deal value destruction risk: EPS Dilution: We expect near-term mid to HSD EPS dilution (including a lack of share repurchases) at STZ, with roughly a 4-5% direct EPS dilution from interest expense (using a 3.25-3.5% blended interest rate), and 3% EPS dilution from an indirect assumed lack of share repurchases vs our prior model, although this would potentially be offset Canopy's losses potentially turning to profit over the next few years, with STZ highlighting they expect EPS accretion by 2021. STZ guidance seems a bit aggressive to us (and likely does not include the loss  

  18. BABA / Albo – On the other hand, CTL is relentless and I am wondering if we will get another opportunity to add more cheaper!

  19. STJ – Don't know, but it's gone straight up for the past 8 days.  Happy to report that I am still heavily over weighted both in the stock and in the options.  I think it has to pull back in here.  Yield is approaching 9% which would seem to be a good level for it.  But it's obviously overbought.

  20. albo – if CTL should pullback, what is your general strategy for selling calls? Number of contracts compared to position size? Would you sell the weeklies, monthlies? TIA

  21. Phil – too late to get into the New Age venture? 

  22. Phil/TSLA

    Also doesn't help when you're CEO who just blatantly lied about funding secured and only needing shareholder approval to take your stock private at 420, basically has a nervous breakdown during an interview with the NY Times.  And Kudos to Jim Cramer for having another don't sell Bear Stearns moment when he got on TV and told shorts don't SHORT TSLA, you don't bet against them when the stock was in the 360's a few days ago.

  23. Speaking of TSLA, remember my premise was that TSLA would blow up after earnings and take down the Nasdaq?  That's what's happening…

    Speaking of being at sea, forget that – I just went up on deck and there's a whole island out there – Disney's Private Island in the Caribbean.  

    Image result for castaway cay

    So, if we're calm into lunch, I will take an early exit! 

    New Age/Soma – No, as we started with $1.25M and now $1.5M so room for more.  Contact Greg (at philstockworld dot com) and get forms filled out over the weekend though.  Let him know how much you are interested in committing.  

    Cramer/Rustle – Another guy that needs looking into.

  24. Somavision – I have no plans to sell calls on CTL.  The only way that I would do that. is if I decided to sell some  higher strike calls against some of the calls I hold.  This is unlikely because the premiums are so low.

  25. /RBV8 round-tripping from this morning's 0.02 move up.  I'm in again at $1.885 and will leave it into the holiday weekend or $2, of course.  This chart is for /RB, which is almost exactly 0.10 higher (because this gas is being delivered in Sept, when there should still be demand).

    Dollar almost back to 96.



    • The University of Michigan's preliminary Consumer Sentiment Survey for August showed a decline in the Index of Consumer Sentiment to 95.3 ( consensus 97.8) from 97.9 in July.
    • The decline pressured the Index to its lowest level since September.

    Key Factors

    • A less favorable view of buying conditions due to prices was largely responsible for the pullback. The biggest decline was recorded among households in the lower third of the income distribution.
    • Vehicle buying conditions were viewed less favorably than at any time during the last four years while home buying conditions were viewed less favorably than anytime in the past ten years.
    • The Current Economic Conditions Index declined to 107.8 from 114.4 in the final July reading.
    • The Index of Consumer Expectations remained at 87.3.

    Big Picture

    • The key takeaway from the report is that the overall decline was driven by concerns about the prices of large household durables.



    Category AUG JUL JUN MAY APR
    Sentiment 95.3 97.9 98.2 98.0 98.8
    Outlook 87.3 87.3 86.3 89.1 88.4
    Present conditions 107.8 114.4 116.5 111.8 114.9

  27. Hi first time posting here – how about Micron (MU)? Down a lot and they announced $10B share repurchases on $55B market Cap, Jan 2020 $40 Puts for about $4.20

  28. vkat/MU- I've been following Micron for sometime… IMO you wont go wrong with selling the $40 puts

  29. daveH – Thank you. I already have some stock that I bought at $53 a few weeks ago. $40 puts for $4+ look appealing – MU has to lose another 25% before $40 puts start losing money.

  30. vkat, welcome to the club!

    MU trading this one myself. You could start as well on a BCS, but at this point only buy the 42 call for 12.10 and sell the 47 put for 7.50. Wait to sell the 55 caller (now 6.60 for better entry). I even slod  the Jan 20 50 put.

  31. yodi/MU- I sold some 20 $45 and $50 puts… I thinking to sell more… which strike you think it's more worth to sell?

  32. Welcome VKat!  Good target Dave! 

    At $47, they are at $54.5Bn in market cap and, although they did $5Bn in profits last year on $20Bn in sales, they paid no taxes and we can't assume that keeps going but profits are fantastic, $7Bn for the first half on $15Bn in sales so, even considering the cyclicality of the business, $54.5Bn is a fair price.

    RAM should be a growth industry going forward – if you are an artificially intelligent being, what would you want for Christmas?

    So, for the Long-Term Portfolio, let's:

    • Sell 15 MU 2020 $42 puts for $5 ($7,500)
    • Buy 20 MU 2020 $40 calls for $13 ($26,000)
    • Sell 20 MU 2020 $55 calls for $6.65 ($13,300) 

    That's net $5,200 on the $30,000 spread that's 1/2 in the money to start.  Upside potential at $55 is $14,800 (284%) in 18 months and TOS says net margin on 15 short $42 puts is $5,797, so it's a very margin-efficient trade as well.

    And what Yodi said! 

    Good group effort on that one….

  33. Things are taking off again – MADNESS!

    25,700 on /YM but I'm done for the day – heading to the pool, will check back into the close.

  34. Even GE is up 2c! Wooohooo!!!

  35. Nice bounce in BABA.

  36. Concerning Tesla – In a recent article in Bloomberg it stated that Ford spends about 30 hours of human labor to produce a car.  Tesla spends 90 hours. At those rates they will never be profitable.

  37. GE/Jabob – Now we know things have gone crazy! 

    BABA/Albo – And I think we made a bottom on MU too.

    So easy to goose the markets:

    • Chinese and U.S. negotiators are working on a plan to try to end their trade impasse before President Trump and Chinese leader Xi Jinping are scheduled to hold multilateral summits in November, the Wall Street Journal reports.
    • Midlevel talks are scheduled for next week in Washington. A nine-member Chinese delegation led by Vice Commerce Minister Wang Shouwen will meet with U.S. officials led by Treasury undersecretary, David Malpass, on Aug. 22 and 23.
    • Xi has reportedly instructed his lieutenants to try to stabilize the relationship as soon as possible, the WSJ reports.
    • Japan's core consumer inflation rate likely rose 0.9% Y/Y in July, from 0.8% in June but due mostly to rising energy costs rather than robust demand.
    • Subdued wage and price growth have forced the Bank of Japan to extend its massive stimulus program despite the rising risks of the policy, such as the hit to bank profits from near-zero rates.
    • The BOJ last month conceded that inflation will miss its elusive 2 percent target until early 2021 and took steps to make its policy framework more sustainable.
    • Real wages rose at their fastest pace in more than 21 years in June, offering policymakers some hope that consumption will gain momentum and encourage firms to hike prices, however, some companies are indeed raising prices as they see their margin hit by labor shortages, fueled by solid economic growth and a shrinking working-age population.
    • The U.S. leveraged loan market is expected to nearly double in M&A-related issues after the Labor Day holiday, according to data compiled by Bloomberg.
    • About $27.3B of M&A loans are in the pipeline plus $7.5B for other uses; that compares with $13.9B of M&A loans and almost $4B of other-purpose loans that were scheduled at at the same time last year. Among the big deals being financ
    1. Blackstone (NYSE:BX) acquiring Thomson Reuters's (NYSE:TRI) unit majority stake may include $8B of term loan B, with $5.5B in U.S. dollars and $2.5B equivalent in euros.
    2. Carlyle Group (NASDAQ:CG) and GIC's acquisition of Akzo Nobel's (OTCQX:AKZOY) chemical unit for about EUR6.5B.
    3. T-Mobile (NASDAQ:TMUS) financing for Sprint (NYSE:S) merger may consist of $7B in seven-year term loan B, $4B in five-year revolving credit facility and $27B in bridge loans.
    4. Envision Healthcare (NYSE:EVHC) LBO by KKR (NYSE:KKR) expected to start $7B financing.
    5. Previously: Blackstone gets EU approval for Thomson Reuters unit deal: Reuters (July 23)
    • The U.S. government's borrowing has risen by $500B, while foreign holdings of debt are roughly flat. The result is: U.S. investors, so far, are financing all of this year's increase in the federal government's borrowing, the Wall Street Journal reports.
    • Foreign demand for debt at U.S. government bond auctions is the weakest since 2008, even as yields on Treasury securities rise to multiyear highs, the WSJ says.
    • Lower foreign demand is mainly due to two issues:
    1. The stronger dollar has made it more expensive for Japanese and European investors to hedge the currency risk, and
    2. Concern that the government is increasing debt to fuel growth when unemployment is at about 4%, risking an overheated economy that can lead to recession.
    4. Previously: U.S. government posts $77B deficit in July (Aug. 13)
    • The last time the U.S. Treasury was this flat was before the 2008 financial crisis. That doesn't mean there's a serious risk that the same thing will happen this time, Goldman Sachs said in a research note, according to Bloomberg.
    • Three of the last 10 times the yield slope inverted, no recession followed over the next two-year period, strategists led by Praveen Korapaty wrote in a research note.
    • The spread between the 2-year and 10-year Treasury note yields narrowed to 23.4 basis points on Friday, the narrowest since August 2007; the last time the curve inverted was in June 2007.
    • Things that are different this time: Fed's portfolio reduction, a more gradual pace of interest rate hikes by the Fed, and a late-cycle fiscal stimulus, according to the note.
    • “The impact of flattening in the term spread on bank profits, while significant for smaller banks, is marginal for larger institutions," the analysts wrote.
    • In late morning trading, New York time, 10-year U.S. Treasury note yield was at 2.861% and the 2-year yield at 2.62%.
    • (TLT +0.3%), (TBT -0.5%)
    • Eurozone annual inflation increased to 2.1% in July, confirming the rate was above the ECB target close to but below 2.0%.
    • The ECB aims to end a bond purchasing program by the end of the year and has signaled a possible interest rate hike next year.
    • Core inflation excluding energy and unprocessed food prices rose by 1.3% Y/Y.
    • Estonia, Latvia, and Belgium saw the highest price increase, while the Greece and Ireland saw the smallest price increases.
    • Louisiana's State Bond Commission votes 7-to-6 to prohibit Citigroup (C -0.2%) and Bank of America (BAC -0.2%) from participating in an upcoming bond sales due to their "restrictive gun policies," Louisiana State Treasurer John Schroder said in a statement.
    • “I personally believe the policies of these banks are an infringement on the rights of Louisiana citizens,” said Treasurer Schroder.
    • In March, Citi said it would requirethat new retail sector clients don't sell firearms to someone who hasn't passed a background check; don't sell to anyone under 21 years old; and don't sell bump stocks or high-capacity magazines.
    • In April, Bank of America said it would stop lending to clients that make military-style weapons for civilian use.
    • "No one can convince me that keeping these two banks in this competitive process is worth giving up our rights,” Schroeder said.
    • Previously: Eleven more states join 3D-printed gun lawsuit (Aug. 3)
    • Previously: BlackRock to offer guns-free funds (April 5)

    • Truck manufacturers trade higher after industry data shows higher demand in July.
    • ACT Research reports that North American freight-haulers ordered more than 300K Class 8 trucks YTD and are on track to order a record 450K of the heavy-duty vehicles for the full year.
    • Sector watch: PACCAR (PCAR +2.1%), Allison Transmission (ALSN +1.4%), Cummins (CMI+1.4%) and Navistar (NAV +1.1%).
    • Deere (DE +3%) reverses earlier losses, gaining as much as 3.7% after saying farm economic conditions for 2019 have strengthened for several crops such as corn, wheat and cotton; as a result, DE sees total cash receipts for its large agriculture sales for 2019 to be higher than for 2018.
    • During its earnings conference call, DE said that given anticipated commodity prices and input costs, it expected net returns per acre for major crop farmers and large agriculture customers to come in higher in 2019 than in 2018.
    • Peers AGCO (AGCO +2.9%) and CNH Industrial (CNHI +1.5%) also have turned green alongside DE.
    • Earlier: Deere drops as costs squeeze margins (Aug. 17)
    • Source: Bloomberg First Word
    • Restaurant same-store sales edged up 0.5% Y/Y in July as the industry stayed on a positive trend line, according to data from TDn2K.
    • Higher guest spending helped offset the 1.8% decline in comparable traffic during the month.
    • "While expectations are for restaurant spending to continue to expand slowly, the risks appear to be on the side of a moderation in demand as we go into 2019" says TDn2K economist Joel Naroff.

    • TiVo (NASDAQ:TIVO) is off 3.9%, bouncing off a near-10% dive on a Bloomberg headline that (AMZN -0.5%) is reportedly planning a live television recorder.
    • Shares in TiVo are down 31% over the past 12 months.
    • The company has in recent weeks been engaged in patent skirmishes with Comcast and has been examining strategic alternatives ranging from "transformative acquisitions" to mergers to going private.
    • Updated 3:28 p.m.: More details from Bloomberg note that Amazon's Lab 126 (makers of Fire TV and Echo products) is working on the DVR, which may not get released at all. It would likely include features more like a networked DVR that could stream to mobile devices and work with existing Fire TV devices. TIVO now down 4.5%.
    • The total U.S. rig count finished flat at 1,057 after surging by 13 last week, according to the latest weekly survey from Baker Hughes.
    • The count of active oil rigs and gas rigs also came in unchanged at 869 and 186 respectively, with two rigs still classified as miscellaneous.
    • September WTI crude oil currently +0.2% at $65.60/bbl.
    • Gilead Sciences (GILD -3.2%) slips on below-average volume. Shares have retreated 5% since the company reported the departure of CMO Andrew Cheng, M.D., Ph.D. on Tuesday after the close. He was a company veteran, joining in 1999 to lead the HIV/AIDS program.
    • Another veteran, Diana Brainard, M.D. was promoted to SVP, HIV and Emerging Viral Infections to assume some of the duties of Dr. Cheng.
    • Also, attorney Gregg Alton was appointed Chief Patient Officer and will assume some of Cheng's duties as well.

  38. Have a great weekend folks, back in the command center on Monday!

    - Phil

  39. have fun Phil!

  40. U.S., China Plot Road Map to Resolve Trade Dispute by November

  41. German rail operator, Deutsche Telekom end Iran projects

  42. Throwing Away Electricity

  43. Gold Trading Volumes Double in Turkey Amid Currency Crisis

  44. My question today, is it worth having a toss at BLK. Relative a high priced stock. Trading today at 474$. For my liking too low to buy the stock for div. 2.6% p.a.

    So here a BCS would be better one to look at.

    Jan 20 430/500 at 36.80 and sell the Jan20 440 put at 31.60. Risk on the put you lend up with 44K on 1 option only.

    Cherry calls? The ex. Div. is 9/6 so I would wait to sell any cherries.

    So only on a 2x BCS your net capital outlay is 4200$ on a spread of 7000. X 2 = 14000.

    If and if nothing goes ridiculous wrong, you should land up with 9800$

    Like to hear you opinion.

  45. Giuliani: ‘Truth isn’t truth’

  46. Trade war puts new strains on America Inc’s factories in China

  47. US says conserving oil is no longer an economic imperative

  48. Ten Years After the Crash

  49. TSLA 287 before market!!!! I think Phil will get his 150 soooon.