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Monday Market Movement – The Climb Continues – For Now

Up and up we go.

No big news over the weekend other than more scandals in Trump Land – but what else is new over there?  As we noted on Friday, the Dow is still miles away from retaking it's February highs so our attention is currently focused on the S&P 500 at the 2,850 line, which is 30% over the Must Hold Line at 2,200 and our February high on the S&P was 2,872.87 on Jan 26th but, sadly, two weeks later (Feb 9th) we were back at 2,532.69, a drop of 340.18 (11.8%) in 10 trading sessions.  

The volume on SPY on the way down was considerably heavier than what we have been getting recently and it's a good idea to do a quick comparison:

Date Open High Low Close* Adj Close** Volume
Aug 17, 2018 283.83 285.56 283.37 285.06 285.06 65,567,700
Aug 16, 2018 283.40 285.04 283.36 284.06 284.06 69,967,900
Aug 15, 2018 282.38 282.54 280.16 281.78 281.78 102,925,400
Aug 14, 2018 282.92 284.17 282.48 283.90 283.90 43,842,000
Aug 13, 2018 283.47 284.16 281.77 282.10 282.10 65,686,900
Aug 10, 2018 283.45 284.06 282.36 283.16 283.16 77,076,000
Aug 09, 2018 285.53 285.97 284.92 285.07 285.07 35,652,400
Feb 09, 2018 260.80 263.61 252.92 261.50 259.29 283,565,300
Feb 08, 2018 268.01 268.17 257.59 257.63 255.46 246,449,500
Feb 07, 2018 268.50 272.36 267.58 267.67 265.41 167,376,100
Feb 06, 2018 259.94 269.70 258.70 269.13 266.86 355,026,800
Feb 05, 2018 273.45 275.85 263.31 263.93 261.70 294,681,800
Feb 02, 2018 280.08 280.23 275.41 275.45 273.12 173,174,800
Feb 01, 2018 281.07 283.06 280.68 281.58 279.20 90,102,500

ALL of last week's volume as we clawed back to the highs (347,987,000) did not equal the volume we had on Feb 6th – forget the rest of the week!  It's very easy for the market to rise when there are no sellers, particularly when it does most of its rising in the very thinly-traded Futures markets.  Movement like this is a pretty good sign that the markets are being manipulated to put on a good show for the retail buyers so the institutions can dump their stocks on you once the trading session begins. 

Since the retail buying is pretty thin and there's no institutional ("smart-money") buying – you end up with very light trading sessions and any attempt as volume selling, like there was on Aug 15th when we had a trade scare – sends the market crashing down quickly as there aren't enough real buyers there to support it.  In Friday morning's report, we felt that the Dow would retrace from 25,625 at least to 25,500 and we did get that early in the morning (good for $750 per contract gains – you're welcome!) 

We also had a little bit of luck with our Gasoline (/RBV8) Futures longs, which we picked up just over $1.88 and 4 of those are already up $1,400 but it's very early as we expect to see $2 into the holiday weekend (next Friday) for a pretty large gain ($4,000 more per contract!) if all goes well so, still playable ($1.89) – even if you are late to join the party

Remember kids, if you like being $1,400 richer on Monday Morning, before heading out to work, you can simply subscribe to the PSW Report for just $99 a month or $995 per year and you'll get these Reports (yes, like the one you are reading now) sent to your inbox most days at 8:30 – while I am writing them (they don't get any fresher than that) and almost always the report is fully done by the open at 9:30.  That's just $2.72 per day to get all these great Trade Ideas when just one pays for more than a year's Membership!  

We like signing up Report Members because they are "passive", in that they give us money and don't participate in our Live Chat Room during the trading day – where the bulk of our trade ideas are published and our 5 Member Portfolios are managed.  There's a limit (500) to how many Live Chat Members we can accomodate, so we're not actively looking to expand that group but Report Members, Top Trade Members and even Trend Watcher Members – who can view the live Chat Room (delayed) but can't chat – those we can have thousands of.  So please – tell your friends!  

Image result for referral incomePassive Incomes are great and, in fact, once you are a Member, you can generate your own passive income by simply referring people to free trials of PhilStockWorld and you get rewarded for each one that decides to sign up.  We have a lot of people pulling down very nice incomes from this side gig!

Meanwhile, in our main gig, we see no reason for the Futures to be up so much and we have some lovely test lines so it's a good morning to go short at the following lines:  Dow (/YM) 27,750, S&P (/ES) 2,860, Nasdaq (/NQ) 7,400 and Russell (/RTY) 1,700.  The best way to short the Futures is to wait for 2 or 3 to cross below their lines and then short the laggard(s) and, when the last one crosses, the bear move is confirmed.  If ANY of the indexes get back above their lines – then stop out quickly and live to short another day!  

It's normal to get pullback at resistance lines and, as I noted above, the 30% line on the S&P at 2,850 is a very good one.  It has already been rejected twice in the last 30 days so 3rd time may be a charm but what NEW news is going to put us over the top.  I suppose it is hoped that we resolve our trade issues with China this week but I very much doubt that will happen and, more to the point – imagine the tantrum Donald will throw if he doesn't get his way…  THAT is going to be the fun bet and that bet is to the downside!  

We already have plenty of downside bets on our portfolios and, since Options expired on Friday, let's have a look at our hedge in the context of our public Money Talk Portfolio, which we feature on BNN's Money Talk about once a quarter.  We only make changes on the show, so it's a very low-touch portfolio and we're coming up on the one year anniversary on 9/6, as we only begin doing this one year ago but, already, the portfolio is up 86.8% from $50,000 to $93,370 as of Friday's close. 

Remember – every single trade AND adjustment was announced live, on TV, before they were made in the portfolio.  We're simply showing people how to use our Be the House – NOT the Gambler techiques and hedging strategies in real-time market situations:

We cashed out a lot of winners in July as I was too nervous about the summer markets to leave what were, as the time, $34,300 worth of gains on the table and we can't make any adjustments until the next time I'm on the show in September – so better safe than sorry…  We had $34,490 in cash at the time and, as you can see, we raised our cash holdings to $85,740 (91.8% of the portfolio's value) but we still managed to gain another $9,070 from our remaining positions in the past 30 days.  You do not need to keep a lot of cash in the market to make great gains if you know how to properly apply leverage! 

  • SQQQ – Is our hedge yet notice we're hedging for a profit as we rolled our old Sept $16 calls into the new June spread while leaving the short Sept $23 calls to expire worthless, for an eventual $9,000 profit if they expire below $23 in a month (a pretty good bet at this point).  You don't have to lose all your money hedging if you manage it correctly and these are very passively managed hedges – our Short-Term Portfolio is much more active and turns a nice profit hedging.  Still, for budgeting purposes, we assume we will lose the entire $3,550 remaining value on this hedge – anything less than that is an upside surprise.  Hedges are insurance – you have them just to protect the longs and this spread pays $10,000 if the Nasdaq falls (+$6,450) – so that's our insurance policy at the moment.  
  • ALK – That is a leftover short put from a trade we cashed in.  I'm very confident we'll hold $60 so I expect to collect $3,075 by next Jan
  • ABX – We're down $4,289 on this one but I still love them, so great as a new trade.  We need gold to recover but ABX is a solid producer and in for the long run.  While we'll probably have to roll our short puts as $17 is a tall order from $10, I don't see why we can't get back to $13 easily and that would put our 25 $10 calls $3 in the money for $7,500 less a $4 loss on 10 short puts would be $4,000 but that's still +$3,500 from currently -$4,289 so the upside potential here is $7,789 – clearly still good for a new trade!  

  • GE – Kind of baffling how low this stock has gotten.  $12.30/share is a $107Bn market cap for a company with $121Bn in sales which they usually make $9Bn on but they had a lot of restructuring charges last year and showed a $5.7Bn loss but what do we care, we didn't buy them then, we bought them now and that means we'll get that tax write-off down the road.  Last quarter GE had $30Bn in sales and made $789M so not back on track yet but it's a big company and takes a long time to turn around.  As with ABX, we may have to roll the short $15 puts down the line but our 30 $13 calls can easily see $15 (these are very conservative numbers) and that would be $6,000 less a $2,000 loss in the puts is + $4,000 against the current net $540 so we expect to easily make $3,460 on this position – hopefully a lot more.  
  • GIS – Was our new addition last month and we're already up $1,093 (41.6%) from our net $2,625 entry, so pretty good for the first month but it's an $11,250 spread if all goes well so we're only "on track" for our expected $8,625 (328%) profit with another $4,907 left to gain.  And all GIS has to do is hold the $47.50 line!  

If you are looking for a new trade – this one is pretty good still as it's net $3,718 on the way to $11,250 so it can still gain $7,532 (202%) from here in 16 months – that's pretty good and you don't have the risk we took on 7/19 of calling the bottom!  

  • LB – This was our Trade of the Year but, due to timing issues, we switched to HBI but our BNN viewers were fortunate enough to get a crack at LB while it was low, so they never suffered from the crazy ups and downs and this position is already nicely ahead.  Still, it's a big position and we see no reason we won't hit our $35 goal and that would be net $30,000 vs our current net of $5,800 so another one that's great for a new trade with $14,200 (244%) left to gain.  See how easy this stuff is?  
  • WPM – This was our 2017 Trade of the Year and we LOVE IT – even though they are back near their lows.  That's because we knew this would happen and I wish I could buy back the short Jan $22 calls right now rather than risk them going back up but that's not the rules.  Still, if all goes well, WPM stays below $22, the short calls go worthless and the 30 spreads net out for $22,500 from the current $1,560 so $20,940 left tto gain on this one is a very nice 1,342% – not bad for a new trade, right?  

That is a nice, well-balanced portfolion and I'm thrilled we cashed out all of our less-certain positions because just the ones we have left are positioned to make us another $54,371 into Jan of next year less $3,550 on the hedges (though there will, of course, be more hedges and more positions over time) for net $50,821, which is over 100% of our original $50,000.  If we can gain 100% every year – we'll be in pretty good shape, right?  

Trading doesn't have to be hard and trading doesn't have to be stressful if you learn to Be the House – NOT the Gambler!


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  1. Good Morning!

  2. Good morning, I took a poke at RUT at 1700 with tight stops!

  3. Not a good sign:

    Many of these 45,000-plus educators in the U.S. are presumably using Airbnb to supplement their regular income, as teachers struggle with stagnant, if not declining, pay. The average annual salary for K–12 public-school teachers is roughly $58,000, and they typically spend a sizable chunk of that on classroom supplies integral to their jobs. Teachers’ frustration with the situation has become so acute that it drove educators en masse to the picket lines in certain parts of the country this past spring.

  4. Go to a single payer system now – save billions!

    This year, Capitol Hill’s official scorekeeper predicts that Washington will spend an average of $6,300 on each individual who purchases subsidized health insurance through the Affordable Care Act’s exchanges. Meanwhile, it’s set to spend just over $4,900 for each Medicaid recipient who enrolled thanks to the law’s expansion of the program.

  5. Too many Teachers have been picking up the tab for sometime now….:(

  6. /KCN9 – Phil are you accumulating more here?  

  7. Good Morning… Phil -  What are your thoughts on CC – Chemours for a BCS  with a put sell?

    > $7.5 billion market cap.

    > Annual sales of ~$6.0 billion, and gives roughly $800 mln-$1.0 billion in earnings annually.  

    Currently trading at sub 10 PE valuations.  Beat earnings, raised dividend, announced $750 mln stock buyback.   New product momentum is in Opteon refrigerants for auto and home a/cs which EU has mandated into law for lowering emissions.  US might follow.  

    Risks are a crash in Titanium oxide prices which is 50% of the business.

  8. TSLA gets a significant downgrade and is now green for the day?

  9. Good morning (not for TSLA)!  

    Big Chart – Good line on /ES (30%), /YM (22.5%), /NQ (37.5%) and /TF (17.5%) and NYSE is holding the Must Hold so nothing to be technically bearish about at the moment but I'd really like to see some confirming volume.  

    RUT/Dave – Good call, they took a quick 5-point dip, good for $250/contract! 

    /NQ fell off the table as well testing 7,350 (almost) for over $800/contract.  Tight stops all, the bulls are still in charge – we're just sniping at resistance.  

     Medicaid/StJ – If only FACTS mattered…

    /KCN9/Grass – I have 5 @ $115 and they are down $6K at the moment – not looking to go too crazy on those as they'll make a fortune if they do recover as $1,200 is down $3 and I'm hoping for up $5 so about $2,000 per contract and then I'd go back to 2 and hope for $140, which would be up $8,000 per contract(ish).

    USDA graph 2

    Regional Pre Rust Coffee Production Levels


    Revised 2017/18:

    • World production is revised down from the December 2017 estimate by 100,000 bags to 159.8 million.
    • Vietnam is reduced 600,000 bags to 29.3 million due to harvest losses related to late rains.
    • Peru is up 575,000 bags to 4.4 million as rust damage was lower than anticipated. World bean exports are raised 800,000 bags to 111.2 million.
    • Ethiopia is up 600,000 bags to 4.0 million on greater exportable supplies.
    • Peru is 575,000 bags higher to 4.2 million on larger available supplies. Worldending stocks are raised 100,000 bags to 29.4 million.
    • European Union is up 600,000 bags to 11.1 million.
    • Indonesia is raised from 42,000 bags to 835,000 due to higher imports and lower exports.
    • India is reduced 900,000 bags to 1.2 million on lower output and higher exports.
    • Brazil is down 300,000 bags to 2.3 million on lower production and higher consumption.

    The next publication of this circular will be on December 14, 2018. Past editions are available here

    Brazil had a great crop and no major damage to other crops so far so no guarantee we'll go higher but I expect a bounce off the long-term lows, at least.  

    CC/Learner – I love those boring stocks and I get the sense that specialty chemicals are doing well but CC only made $750M last year after losing net $83M in the previous two so I'd take the p/e with a grain of salt as they are highly cyclical.  Still, I don't mind a cyclical business when it's priced like one and they are and you can sell the 2020 $35 puts for $3.20 and buy the 2020 $40 ($8.60)/$50 ($4.50) bull call spreads for $4.10 so that's net 0.90 on the $10 spreads that are $3.30 in the money – not too risky as your net entry would be $35.90 (almost 20% off) while the upside is $9.90 (20% of the whole stock).

    NXPI/Albo – They are interesting again down here:

    In the LTP, let's pick up our monthly income by selling 5 NXPI 2020 $85 puts for $10 ($5,000) to remind us to keep an eye on them.

    TSLA/Tangle – JPM still gave them a $195 target, that's pretty generous.  

  10. Phil; thoughts on NLSN.  TIA

  11. I guess Pepsi sees some value in SodaStream… 

  12. STJ – Shows you what I know 

    I was very tempted to short SODA at about $110. 8-)

  13. NXPI / Albo; nice idea, keep 'em coming. The madness of the $2 billion termination fee paid by Qualcomm makes it even more interesting.

    This morning's WSJ also had coverage of the sector mentioning AMAT ($43.15) – sell Jan 2020 $40 puts for $4.25, and LRCX ($167.78) – sell Jan 2020 $140 puts for $11.95.

    But Phil's put trade on NXPI looks better.

  14. SODA / Albo – Lucky for you, you didn't. I really can't play the short game for that reason. What you see as trash is someone's else treasure I guess.

  15. TSLA – so the Jan 19 $10 Puts are trading at .12.  I sell 10 for $120.  Is this just stupid or is this free money.  Is TSLA really going to go below $10 per share by expiration?

    • The 2018 global corporate default count rises to 55 as Turkey-based fleet leasing company Fleetcorp Operasyonel Tasit Kiralama ve Turizm defaults, says S&P Global.
    • While the overall global default number is lower than it was as this point in 2017, defaults in emerging markets have more than doubled so far in 2018--to 12 compared with five at the same time last year.
    • Last year, there were 95 defaults, the lowest since 2014 and down 41% from 163 in 2016.
    • So far this year, the oil and gas sector accounts for the largest proportion by industry category-- with 18% of the total, followed by consumer products with 15%.
    • By region, the U.S. has the highest number, with 32 defaults so far in 2018.
    • Global speculative-grade default rate fell to 2.40% as of June 30, 2018, from 2.48% as of May 31.

    Big Questions on Global Economy Hang Over Jackson Hole Gathering

    Treasury yields lower; Gundlach warns of short squeeze

    • Jeff Gundlach over weekend took note of a massive increase in short interest in 10- and 30-year Treasury bond futures. "Highest for both in history, by far," he says. "Could cause quite a squeeze."
    • The current action isn't exactly a squeeze, but the 10-year yield has been trending lower this month. It's down another 2.5 basis points today to 2.83% after starting August at just above 3%.
    • TLT +0.6%TBT -1.2%

    Tech Firms Account For 60% Of Profit Margin Growth In The Past 20 Years.

    China Tells Its Finance Firms to Boost Infrastructure Support

    As Euro Crisis Ends, Italy Stokes Fear of a Revival.

    Venezuela In Chaos After Maduro Announces Massive 95% Devaluation, New FX Rate Tied To Cryptocurrency.

    Venezuela's Key Refineries At Risk Of Seizure.

    U.S. set to roll back restrictions on coal-burning power plants

    • The Trump administration is set to roll back restrictions on coal-fired power plants, likely announcing plans this week to replace restrictive Obama-era climate policies with new rules designed to help coal-burning plants run harder and stay open longer.
    • Pres. Trump will hold a rally on Tuesday in West Virginia, a heartland of U.S. coal mining, and the administration is expected to announce its plan to coincide with the event.
    • The rules likely will offer a range of options for regulations on a state by state basis, offering the ability to require coal-fired plants to become more efficient so they have lower emissions for every megawatt hour they generate.
    • But the move to boost U.S. coal may not be enough to help the ailing sector, which is being overshadowed by cheaper and cleaner fuels including natural gas and wind and solar energy that have driven consumers and power companies away from coal.
    • Environmental groups and others who support action to address the threat of climate change are sure to challenge the administration’s plans in court.

    SpaceX shareholders weigh in on Tesla

    • Axios says it has talked to several SpaceX (SPACE) shareholders about reports that the company could be involved in helping to finance a go-private Tesla (NASDAQ:TSLA) plan.
    • "They will go nuts if SpaceX itself tries to finance the Tesla buyout, at least in any meaningful way," reports back Dan Primack.
    • "They have the Musk company with profits and a deep management bench, and see no reason to marry it with the opposite. Particularly given all the conflicts of interest and possible regulatory headaches," he adds.
    • Of course, Musk as a very large SpaceX shareholder could pledge his own shares as part of a Tesla privatization bid.

    China’s top lithium producer set for Hong Kong IPO to fund SQM purchase

    • China's Tianqi Lithium has chosen Morgan Stanley and CLSA for a Hong Kong initial public offering to fund its $4B purchase of a stake in Chile’s SQM, according to a prospectus.
    • The transaction has raised concerns in Chile about Tianqi’s dominance in the lithium market, and Chile’s national competition authority has opened an investigation into the deal; the company's listing prospectus says, “As a result, the SQM transaction might be delayed, modified or entirely blocked if the [authority] determines that it entails antitrust risks and refers the SQM transaction to the Chilean Antitrust Court."
    • Tianqi mines lithium in China and at the Greenbushes hard rock mine in Australia, the largest lithium mine in the world.

    PepsiCo only bidder for SodaStream

    Teva continues rebound, up 4%

    • Teva Pharmaceutical Industries (TEVA +4.3%) is up on modestly higher volume in early trade. Shares have rallied ~13% since last week when the FDA OK'd its generic EpiPen and it announced positive late-stage data on fasinumab.

    Amazon’s No Bargain. Here’s Why Investors Keep Buying.

  16. Thanks, Winston.  What I failed to mention is I'm already short some 90 puts, which at present are underwater.

  17. NLSN/Options – I think they are reasonably priced here but I also think they have a bit of a fading business where there's been no growth in top or bottom line for many years.  They made some moves to modernize and increase sampling rates and that's already clipped their bottom line in Q1 and Q2 by 25% so the drop is well-deserved.  They have a lot of debt ($10Bn) for a $9Bn company and, since they make just $400M before this year, a 2% increase in interest would cost them half their profits.  So, on the whole, not for me.

    PEP/StJ – I'm tempted to short them off that purchase.  It's just a drop in the bucket for PEP (and notice no one else bid) but WTF are they thinking?

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 436.3 562.7 511.8 413.1 476.1 543.4 612.6 568.6 618.7 +4.5%
    Operating Profit $m 45.5 48.9 15.0 10.2 54.5 81.4 101.8     +12.3%
    Net Profit $m 43.9 42.0 12.3 12.1 44.5 74.4 90.0 66.0 68.7 +11.1%
    EPS Reported $ 2.09 1.96 0.58 0.57 2.07 3.26 3.91     +9.3%
    EPS Normalised $ 2.14 2.05 0.92 0.69 2.15 3.45 4.10 2.96 3.46 +10.0%
    EPS Growth % +53.6 -4.3 -55.2 -25.3 +213.3 +60.1 +52.4 -14.0 +16.6  
    PE Ratio x           37.7 31.6 43.8 37.6  
    PEG x           n/a n/a 2.64 3.21

    How is this even worth the time it takes PEP to fill in the paperwork?   PEP has $63Bn in sales and makes $5Bn, this adds 1% to sales and 1% to profit for $3.2B?  Are they on drugs?  It's 50x SODA's earnings though PEP trades at 32x, which is also ridiculous.

    Seems to me like PEP is officially out of ideas….

    TSLA/Tshroy – Well, they'd have to go BK between no and then, which is a non-zero probability but not very likely at all.  So let's say you sell 1,000 contracts for $12,000, that's nice but you risk $988,000 so it has to go your way 82 times without one of the dogs you pick actually going BK for more than a quarter.  Per the above news, 55 companies defaulted so far this year – not BK but let's say it's a fair indicator.  So there are about 9,000 publicly traded companies in the World so there's a 0.6% chance one you pick will go BK and you're effectively rolling the dice 82 times.  

    So, statistically, you should do well but the problem is that you can't actually survive a negative outcome – especially if it comes early in the cycle and certainly not if you hit two negative outcomes in a row, which is as likely to happen as hitting one (after the first is hit) while 82 consecutive wins is simply what you need to make sure you can absorb your first loss.  

    On the whole, not a game I like to play but, if you're the kind of guy who will stand outside in a lightning storm for $20 – why not?  

  18. QUIK was my 2017 stock of the year.  It was up 24%.

    It is also my 2018 stock of the year.  So far it's down a whopping 42% !

    Have been selling some CTL long calls and buying more QUIK.

    The stock is very speculative, and despite all the delays I still believe it has a bright future witht a very large increase in revenues coming.  We know they are designed in with several large and recognizable OEMs.  Just waiting for product releases.  Anyone interested in taking a look can read the transcript of their latest conference call on Seeking Alpha.  At this price, I look at it like an option, which hopefully doesn't expire.  I've been so wrong for a long time, but keeping the faith. Perhaps foolishly.

  19. PEP / Phil – It seems to me that they are all out of ideas! Look at all the buybacks, most of them at all time high prices! All these S&P companies are sitting on piles of cash and they seem to a) either lack the confidence in the economy to invest in expanding their businesses or b) the board are simply looking for a quick financial reward and buybacks do that… Or a combination of both.

  20. Hey Phil, not sure if you are back from cruise yet? but you suggested I ask this again when you were back as you'd have access to all your charts and financial etc and can look at it in more detail. 

    You already gave some good feedback to my original post, but if you've got anything else to add, or for specific things we should look at in the upcoming earnings it would be much appreciated, thanks!

    August 16th, 2018 at 11:00 am | Permalink | Tweet thisIgnore this user

    Phil, couple questions on LB;

    I've been interested in putting a position on in LB recently, a lot of what i've looked at in terms of their relative multiples vs what they've traded at historically is definitely bullish. (currently Below the low end of their historical P/E range; past 5 years their average low P/E has been approx 14.5, average high P/E 23.5). And the same can be said for their price/sales multiples. 

    I've recently gone through some of the financial statements and wanted to get your take on a couple things; Since 2016;

    Net income has been dropping

    Cash flow from Operations has been dropping

    Cash/current assets have been dropping

    Is the current dividend safe? It seems like if the turnaround doesnt start to take form soon the dividend may need to be cut? 

    I do realize there are some structural changes going on, they recently dumped the swimwear lines and are re-vamping some stores. And although growth at the traditional victoria secret stores has been poor, some of their other brands like Bath and Body have been growing nicely. 

    Just wanted to get your take on the above points, do you think the dividend is safe for a while or no? General thoughts on their turnaround? 

    Anything we should be looking for in the upcoming earnings? 

    As I said, i still like LB and am looking to get in, just wanted your take on the above. Thanks!"

  21. Could Pep be buying SODA to take the company and bury it in the backyard?? Maybe they think their increased revenues will cover the cost? My laugh for the day! They must be thinking of one way or the other. Sell the syrup for the machine? I think buying one would be a hoot just in case. We don't drink soda but I guess it makes carbonated water.

  22. meanwhile

    TEVA new 52 week high

  23. Any comments on STZ Jan20 BCS 185/210 cost 13.10 and sell the Jan20 190 put for 15.10.

    The Spt 21 205 cherry call sells for 3.40.

  24. STZ catches a downgrade today with the price target lowered to $171

  25. QUIK/Albo – The problem is they lost as much last year as they have in the bank ($15M) and they never actually execute.  Still, a fun one to speculate on.








    LB/CRS – Yes I'm back but I did answer most of that stuff the day you asked it.  While we're looking for progress in earnings but not expecting miracles as it's still early innings  but the bottom line is this is a company with steady, though slow, growth that's making $770M a year ($2.80/share) that you can buy for $33 ($9Bn) KNOWING that, in the past, they have dropped $1.2Bn to the bottom line on just $12Bn in sales when they were not restructuring, which would make the p/e more like 7!  

    Year End 03rd Feb 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 10,459 10,773 11,454 12,154 12,574 12,632 12,822 13,088 13,474 +3.8%
    Operating Profit $m 1,573 1,743 1,953 2,192 2,003 1,728 1,674     +1.9%
    Net Profit $m 753 903 1,042 1,253 1,158 983 937 772.3 789.4 +5.5%
    EPS Reported $ 2.54 3.05 3.50 4.22 3.98 3.11 2.97     +4.2%
    EPS Normalised $ 2.81 3.05 3.50 4.22 3.98 3.11 2.97 2.79 2.87 +2.1%
    EPS Growth % -7.2 +8.7 +14.7 +20.5 -5.7 -21.9 -21.5 -10.3 +2.89  
    PE Ratio x           10.5 11.0 11.7 11.3  
    PEG x           n/a n/a 4.04 4.89

    So net income has dropped since 2016?  Wow, that sounds bad but 2016 was only 6 quarter ago and they began restructuring in 2017 (which impacted earnings) and said it would take 2 years so we're about halfway there and people are extrapolating DOOM!!! – and you know how I feel about that.

    Image result for extrapolation cartoon

    SODA/Pirate – I don't think so as SODA has had 10 years to catch on and they have just $500M in sales and that's not even the soda – that's the machines at $99/each.  The soda these things make taste like crap as they are made with powder, not syrup.  Now, if KO sold those FreeStyle machines with 127 flavors – THAT would be cool to have!

    Image result for coke soda machine

    Maybe that's what PEP actually needs, a way to get around KO's patent on this machine?   That I could see being worth $3Bn to PEP as these machines are popping up everywhere.  

    TEVA/Stock – Another one I got sore from banging the table on.  

    Submitted on 2017/12/14 at 10:01 am

    TEVA/Seer – People are loving it, up 14%.  This is why I love beaten-down businesses with good cash-flow – so many ways to fix things.  

    TEVA – Cantor Fitzgerald reiterates Hold rating, $10 PT. This price target represents a -36.31% downside over the stock’s previous closing price of $15.70.

    Submitted on 2017/12/15 at 10:23 am

    TEVA/Jeff – That's why we generally stick to 1/2 sells.  The Dec $15s are $3.20 and you have Jan $15s so that was not a good sell in the first place – those are just $3.55.  Essentially, all you end up doing is closing the position for net 0.35 – don't fool yourself into thinking a roll is somehow better.

    As a new, SENSIBLE position on TEVA, I'd go for:

    • Sell 5 2020 $17.50 puts for $4.10 ($2,050)
    • Buy 10 2020 $15 calls for $6.70 ($6,700)
    • Sell 10 2020 $22.50 calls for $3.25 ($3,250) 

    That's net $1,400 on the $7,500 spread so $6,100 (435%) upside potential and you don't have to keep guessing what it will do month to month and risk losing everything when you get it wrong.  TEVA's at $18 now, we're not asking much of it over 2 years. 

    Submitted on 2017/12/27 at 2:50 pm

    TEVA/Jabob – Oh F them!  Don't tell me you were cursing them out and complaining about how bad there were at $11 and now, at $19, you want to buy them???  If you want to be bullish with $4.50, I'd buy the 2020 $15 ($7.25)/$25 ($3.20) bull call spread for net $4.05 and, if they fall back to FU territory, then, rather than cursing at them, I'd sell the $12.50 puts, now $1.70, for $2.50 or better and use that money to roll the $15 calls down to the $10 calls (now $10.50) and THEN you could do 1/2 sales to pay for the whole thing – like March $20 calls for $1.40.  The March calls are 79 days out of 751 so 10% means you can collect $7 per long on 1/2 sales, which means the net $0 spreads would be a $7 credit at $12.50.  So, in that scenario, would you rather TEVA go up and you make $10 or go lower first and maybe you make $22.50?

    Submitted on 2018/01/11 at 10:04 am

    TEVA/Jabob – That's it then, they just needed a good push to get over $20 and now they can move back to $25 with little resistance.

    Remember: I can only tell you what is going to happen and how to make money trading it – the rest is up to you!  cheeky

    STZ/Yodi – Nice opportunity to pick them up while they are cheap but maybe just weak-bouncing at $200 as I think their investment in a pot company is getting them dumped by some funds who have issues with it.  

    This is exactly the kind of stuff New Age are experts in.  STZ paid $3.8Bn for 28%, which is amazing as they took 9.9% of CGC for $190M in October so $1.9Bn valuation at the time and STZ is paying more than 8x for this round just a year later.  

    PSWI is going to be sending out final forms to investors this week so we can complete our own initial pot deal – a bit more modest than STZ so far but who knows what the future will bring?

    • Arabica coffee futures have fallen to their lowest level for an active contract since August 2006.
    • The contract for December delivery is down as much as 3.9% to $1.006 on the Intercontinental Exchange.
    • Lower coffee input costs impact a variety of companies across sectors.

    Yikes – Thank goodness /RB balanced that out.  

    • Speculators are net short on gold futures for the first time since December 2001, when gold was priced at $275/oz., according to Bleakley Financial chief investment officer Peter Boockvar, adding "it's tough to find a more contrarian indicator" for the yellow metal.
    • The level of gross contracts held by shorts has jumped to a record 215K and has resided at all-time highs for several weeks, an extreme level of positioning that "should be the signal we're close to bottoming out in gold in days or weeks," Boockvar says.
    • Boockvar notes the positioning comes ahead of the Fed's Jackson Hole symposium Friday, and the shorts in gold have grown as dollar long positions and shorts in Treasurys also have grown to record levels.
    • "It ties into dollar action. It ties into perceptions about growth," he says. "There are so many different messages you can blame for the inevitable reversal in these positions. If gold reverses, it will mean that the dollar is topped out."
    • Copper rebounds back above $6K/metric ton after data showed orders to withdraw metal from London Metal Exchange warehouses rose by the most in three years.
    • Copper canceled warrants jumped 47% to 36,050 tons, the biggest percentage increase since 2015, LME data showed.
    • The biggest driver for the market remains sentiment around China’s economy and the outcome of the U.S. trade war, and China's plans to send a delegation to the U.S. later this month has renewed hopes of a revival of trade negotiations.
    • Investors "could be thinking it’s a good sign and the risk of a full-blown trade war will be averted,” says Capital Economics commodities economist Simona Gambarini, adding that last week's downward price correction in metals was overdone.
    • President Trump tells donors at a Hamptons fundraiser over the weekend that he had expected Federal Reserve Chairman to be a "cheap money" guy, Bloomberg reports, citing three people who attended the event.
    • But since Trump took office, the Fed has hiked interest rates three times last year and twice more this year.
    • U.S. Dollar Index is down 19 basis points to 95.94, its weakest point of the day so far.
    • The Fed's widely expected to boost rates again at its September meeting.
    • Powell will talk about monetary policy at Jackson Hole,WY, on Friday.

  26. Coffee/Phil- any reason that coffee prices falling like a sharp knife? I know you probably got 6 longs, I am thinking to go long now as I am sideline 

  27. Phil/Gold,

    can we enter GLD at these levels? not finding a bottom but maybe gold moves up eventually. maybe orange orangutan (oops…) will help.


  28. Coffee/Dave – I don't see anything in particular – perhaps they see us buying and they are trying to shake us out?  

    GLD/Pat – Bostic just said the Fed will hike again this year, could make the Dollar stronger and send gold lower.  I still prefer ABX to gold or GLD but all of them suck at the moment.

  29. Coffee / Phil – I assume that this is good for SBUX! Looks like $48 was another great entry point.

  30. Phil-reminder CHL have sept 47.50 puts-hold into expiration?

  31. Phil/WPM,

    I have the 2020 BCS 17.5 (4.42) / 25 (1.87) currently at (2.90) / (0.76). Value of the long is still above the net of the BCS so no roll here I guess. Do you think it is good idea to buy back the 0.76 hoping for a bounce in silver from these levels? Understand that dollar going up might bring it down a bit more.

    thanks as always


  32. SBUX/StJ – Maybe they are manipulating the prices down though I doubt the actual coffee is a big part of their cost of sales, though they do sell the 1lb bags and I'm sure they don't drop their prices just because the price of coffee falls.  $48 was a good deal for SBUX but now $54.  That's another one we can add to the LTP by selling 10 of the SBUX 2020 $52.50 puts for $4.50 ($4,500) to keep an eye on them (or just keep the $4,500). 

    Speaking of the LTP, no changes since last week but up 41.2% now ($705,914) so up $25K since Thursday (16th) at noon!   Since we sell a lot of premium, we were getting poor nets while the VIX was high on Thursday and just having it calm down again popped the portfolio almost 5%!

    That's why we much prefer to enter positions when the VIX is high – we get way better prices for the premium we sell…

    CHL/Tstep – They are right on the money at the moment – why pay a premium to bail early?

    We sold the puts hoping they would expire worthless (and, if not, we'd just roll them to a longer month) but CHL is still very cheap and profits are on the march.  Nothing that makes me worried about having them assigned to us.

    BRIEF-China Mobile Posts 4.7 Pct Rise In HY Profit Attributable

  33. Some Tesla Suppliers Fret About Getting Paid

  34. Is New Jersey About To Legalize Pot? Lawmakers Say They Have The Votes

  35. Good morning!

    Back where we started (almost) on /NQ but /ES 2,863 is almost back to the high and 25,800 on /YM is a very good effort along with a reset on /RTY to 1,700, which was a great short yesterday as long as you didn't wait too long to take a profit! 

    • The S&P 500 will tie the record for the longest U.S. bull market in history today at nearly 3,500 days, rising more than 320% since March 9, 2009.
    • It's a record that few would have predicted when stocks struggled to find their footing after a 50% plunge during the financial crisis.
    • There are no shortage of bearish warnings out there as analysts debate the future, but many investors still see plenty of gas left in the tank for stocks.

    Europe is happy and the VIX is low so more of a watch and wait day as, technically, it looks like we're consolidating for a break higher.

    If the VIX pops 13, then it might be good to short but Trump is talking down the Dollar – supporting the markets. 

    • U.S. gold futures climbed above $1,200 an ounce overnight on the back of a weaker dollar, after President Trump said he was "not thrilled" with Fed Chair Jerome Powell for raising interest rates.
    • Base metals also joined the party, with London copper advancing for a second day and crossing the $6,000-a-tonne mark, along with big price moves for zinc, nickel and aluminum.

    Trump Accuses China, EU of Currency Manipulation. 

    Exclusive: President Trump says the Fed should do more to help him boost the economy

    Fed's Raphael Bostic said prospects for an inversion in the Treasury yield curve would prompt him to dissent against further interest-rate hikes

    Trump Vows No Concessions to Erdogan for U.S. Pastor's Release.

    Which is great for /SI and /YG – both hit goals so back to watching and waiting there too:

    At least /KC not going lower:

    $2.02 was goal on /RB too – it's $1.92 on /RBV8 for another $1,000 per contract.   Hopefully we get another pullback on inventories this week but maybe not as they top off the retail tanks into the holidays.

    Honey badger don't care:

    Volume yesterday was a joke at 39M on SPY so we'll see if anyone shows up today.