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Tempting Tuesday – Nothing has Changed but Markets Move Higher

Looking good this morning.

As of 8am, the Dow Futures (/YM) are at 25,386 – almost to our weak bounce line and the S&P Futures (/ES) are at 2,768, not at 2,775 but the Russell (/RTY) is back over the DOOM!!! line at 1,552, now 1,561 and the Nasdaq (/NQ) is actually over the weak bounce line (7,100) at 7,150 but AAPL is still warning us to be cautious at $219, still shy of it's weak bounce at $223.50.

The bounce lines of our 5% Rule™ prevent us from running in and buying dips prematurely.   While we do love making bottom calls at PSW, it's best not to do that when the entire market is down – as there tends to be no safe haven in a major sell-off.  While the S&P hourly chart looks like it might be moving higher, it's really just a matter of having low expectations as the index has barly moved off the bottom and, since last Thursday, we've been making lower and lower highs – that's more likely to be consolidation for a move down than up!  

The bounce lines tell us whether or not a move is real and, for the S&P, 2,775 is weak and 2,750 is strong (see Thursday's Morning Report for how we got there) and, although we use a chart to illustrate it, it has nothing to do with those squiggly lines – it's just math!  Math tells us 2,775 is the first inflection point and, other than a brief spike over on Thursday – we've failed at that line Friday and yesterday.  That's NOT a sign of strength – especially when it's the weak bounce line that's failing…

When and if we take back 2,775, we'll begin looking for the strong bounce line at 2,800, which has obviously been significant during the downturn and should be again if we begin to recover.  Once we are over the strong bounce, we can make bullish plays using that as a stop line but, until we are – it's best to just watch and wait and gather more data.

Earnings Data is good this morning with Morgan Stanley (MS) and Goldman Sachs (GS) both turning in very good reports and Uber is looking to price their IPO at a $120Bn valuation – which is making people think anything is possible, though not necessarily realistic.  Speaking of unrealistic, Elon Musk says you should still buy Teslas, despit having the worst self-driving tech of any care because "in six months, we will release a chip that will improve Autopilot performance between 500 and 2,000%"  said the CEO who cries wolf so often that no one believes a word he says anymore.  

Well, not no one – TSLA is up $3 pre-market (1%).  You really can fool some of the people all of the time!  Keep in mind that, unlike other car makers, TSLA relies on cameras rather than more expensive Lidar Sensors to perceive the World and THAT is what most experts consider a fatal flaw.  A faster chip won't fix a basic design flaw and continuing down this path is very disturbing but TSLA can't move to Lidar without admitting they made a mistake on all the "self-driving" cars they've already sold.  

Even if Musk's new chip is 20x faster, “The performance claims are against what they have in the vehicle today, which are three years old,” says NVIDIA’s director of automotive Danny Shapiro. NVIDIA’s latest silicon is at least 10 times faster than that, which would put it on a par with Tesla’s chip.  Musk is essentially claiming he has invented the World's fastest chip but you can't see it for 6 months but you should buy the car now and he'll put the chip in later.  Also, I love this note:

Losing Tesla as a customer isn’t going to impact NVIDIA; the company says sales were so small that it won’t have a material impact.

And speaking of fooling some of the people all of the time.  Electrek is TSLA's PR magazine and releases any BS the company wants to spin as if Christ came down and hand-delivered it.  Yesterday they went a bit to far as they published pictures of great-looking Model 3 Drive Units – holding up very well after 1M miles of driving

The problem with that claim is MATH as 1M is a very big number and, if you think about it, you'd have to drive a Model 3 at 70 miles and hour for 14,285 hours, which is 595 days so – even if you assume they never had to turn or get off the road or change drivers or charge the batteries – Musk is still claiming this model 3 has been driven for about 8 months longer than there was a Model 3 prototype.  

Like our President, Elon Musk doesn't let facts get in the way of a good story but, as in investor – you'd better check the facts and not just jump in on a good story.  That's especially true for Cannabis Stocks, which are on fire but, if you look at the numbers on a lot of these companies and consider what is realistic growth compared to projected growth – you realize that a lot of these valuations are as ridiculous as Tesla's.

Don't jump in on the bull stories either – a lot of stocks looked tempting in March of 2008, when the S&P had fallen from 1,600 to 1,280 (20%) and seemed to be stabilizing.  By June, we were back up to 1,400, which was the strong bounce (weak was 1,344) but we failed there and collapsed all the way to 666 over the next 9 months.  THAT is why we watch our bounce lines – it's very easy to get suckered into "bargains" that turn out to be just pauses on the way to far lower prices.

Let's be careful out there!  


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  1. We are going to need some big bounces to save the NYSE and Russell!

  2. The minority will rule for a long time unless changes are made:

    Since 2000, fully 40 percent of presidential elections have been won by the loser of the popular vote. Republicans control the US Senate despite winning fewer votes than Democrats, and it’s understood that House Democrats need to beat Republicans by as much as 7 or 8 points in the popular vote to hold a majority in the chamber. Next year, it’s possible that Republicans will control the presidency and both chambers of Congress despite having received fewer votes for the White House in 2016 and for the House and Senate in 2018.[...]

    By 2040, 70 percent of Americans will live in the 15 largest states. That means 70 percent of America will be represented by only 30 senators, while the 30 percent of America will be represented by 70 senators.

  3. Good Morning.

  4. The Sears experiment history:

    Maybe they will determine that Lampert skimped on Sears, cutting costs instead of investing. Maybe he didn't pull the trigger fast enough on any one of his numerous experiments. Maybe he hesitated with the asset sales. Any of these might be true. But that would be good news; that would mean a right choice is still out there to be made. The alternative is worse. Perhaps none of the experiments worked because nothing could have worked. This would mean that nothing can stop the decline of Sears and Kmart. And maybe Lampert did consider selling off assets but couldn't get the price he wanted, even in good times. What then? Sears Holdings has little debt and lots of cash. It is still a $50 billion retailer. If anyone can figure out how to make money off this, it should be the best capital allocator of his generation, Edward S. Lampert. Maybe if he just tried one more test…

  5. Phil/Aapl

    I am short the Aapl Jan $195 calls, sold for $15, now $27…all covered by stock.

    Doesn’t look like Aapl is going to $195 or even $200. Would you roll the calls out to 2020?

    Or buy them back for a loss and  difference between $15 and $27 by buying a call spread?

    But then, I am no longer covering my stock…so, maybe just roll?

    Now the S&P is is over the weak bounce lines

  6. Phil

    And, Good morning too!

  7. Aapl not participating in the rally!

  8. SHLD-What a bunch of bunk. SHLD failed because it was the classic strip, and dump after everything of value was removed. The real estate itself was worth billions not to mention the classic names; Craftsman, Land's End, Martha Stewart, Kenmore and many more. He never updated the stores and never did anything to keep the value up. He had a point system much like WBA is using now where you got discounts for return visits. He needed to keep it going, but that wasn't in the plan. I see M doing well, but they sure don't have the presence SHLD had. Every small town had a Kmart and Sears had great customer service until he let it go down the tubes with everything else. Craftsman were warranted for LIFE!  Where do you find that anywhere? I hate ordering online. I think it is a total rip. Can't return it unless you pay shipping back, can't figure out if it constructed decently, don't know if it fits. Really sad the way this country is moving.

  9. Sears / Pirate – I actually don't agree much with the article, I just posted it for reference. Maybe con man is too tough for Lampert, but he didn't really seem to care that much for customers or shareholders or anyone else not named Lampert. It seems to be way to go now!

  10. lampert – Con Man works for me. Edward's plan is working to perfection….. 

  11. Poor Mary Jane. Not having the best day.

  12. Good morning! 

    Nice pop – now we'll see if it sticks.  Very tempting to short at the strong bounce lines but no particular reason to.  Really have to start taking back 3 of the 200 dmas on the big chart to really get back in a bullish mode now.

    Minority Rule/StJ – That's depressing.

    Lampert/StJ – I still suspect he'll come out of this OK as stripping out Sears assets was his plan from day one and, as I said from day one – he couldn't just kill Sears or he'd be a villain but now he's the guy who tried to save the American institution before giving up and, silver lining, making a great deal of money anyway (for himself, not the investors).  

    And what Pirate said! 

    But what sets Sears apart from other suffering retailers is something that's not as obvious as the rise online shopping and falling foot traffic in shopping malls. It's the steps that Lampert took when he first acquired the company: putting shareholders like himself in front of everyone else, he drained the company of vital resources. 

    When Sears was flush with cash, this took the form of billions of dollars of share repurchases, even as the stores suffered years of underinvestment. 

    "Unless we believe we will receive an adequate return on investment," he wrote in a 2007 letter to investors, "we will not spend money on capital expenditures to build new stores or upgrade our existing base simply because our competitors do. If share repurchases or acquisitions appear to be more productive, then we will allocate capital to those options appropriately."

    "Eddie has orchestrated for himself, and for the benefit of shareholders, the most protracted liquidation in history," Tawil said in an interview with Business Insider.

    And Eddie's SRG, which keeps buying up SHLD real estate assets for pennies on the Dollar, is doing just fine at $3Bn market cap – just one of Eddie's little perks he's going to walk away with.  Took a hit recently though on fears SHLD won't pay their leases but then they default and he gets more stores from under the Bankruptcy court's nose (as a top-level creditor).

    AAPL/Maya – Well, you have the stock so you can't get hurt so I'd just find a call that's 50% in the money as an even roll.  Jan $195s are $27.50 and June $220s are $26.50 so that's a good roll but you are giving up protection to the downside.  April $205s are $24.50 so you're still selling $12 in premium and you have some downside protection AND you can then roll to June but a bit more flexible.  Whichever of those makes you feel more comfortable or a little of both!

  13. Good article going through Eddie's end game:

    The biggest creditor is also the CEO. ESL Holdings’ CEO is Edward Scott Lampert (that’s what ESL is an abbreviation for, actually). He’s also the Sears Holdings Corporation's CEO. In any rational world, Lampert would be the first man out the door, for running the business into the ground. In our current world, he will be the guy to pick up the bones and shut the doors.

    This exercise in job destruction has made Lampert even richer. And he’s not done yet. In the world of bankruptcy, the biggest creditors end up as the owners of the new entity — or, as we used to say in summer camp, “Second verse, same as the first … a little bit louder and a little bit worse.”

  14. Morning Phil, just to repeat my post-hours question from yesterday:

    Phil, I currently have SQQQ 13/19 Dec BCS (from the times I could still buy ETFs…). It was losing money but now made it back "0" (it was bought for $1.23 and about the same price now with SQQQ at 13.83). What would be your thinking process for when to close it? For me, that's also the last hedge I could have and will need to invent other ways from Dec given that one can't buy any US ETFs in Europe anymore).

    Well, today (Tuesday) it's actually back to losing money (which is sort of the point of hedge at times) but the question still stands. I can't really do anything with it (except "keep" or "sell", no rolls or anything else possible).

  15. Sorry Alter, I must have missed it. I guess it's good insurance for now but I'd pick up maybe some upside plays to offset the anticipated loss – maybe short puts on something you think is on a good sale.  Also, not a terrible time to pick up, if you can, an SPX spread and then you can use that as a hedge, selling short calls when you get nervous.  For example:

    • Buy 2 SPX Dec 2020 2,800 calls for $295 ($59,000)
    • Sell 2 SPX Dec 2020 3,000 calls for $190 ($38,000) 
    • Sell 1 SPX Jan 2,880 call for $39 ($3,900) 

    That's net $17,100 on the $40,000 spread and you sold 93 out of 793 days so 7 more sales for another $27,300 would turn this into a credit spread, even if the S&P keeps going higher.  If you feel more bearish, you can sell 2 of 3 short calls instead of one so up to $10,000 downside protection in any given quarter.

  16. Thoughts about CMG BCS January 2018 (approx 90 days) .. 300/400 BCS .. Currently 100% ITM, for $85.  If closes above $400 (currently $420 ish, but falling) 15% return in 90 days.  Thoughts?  I still think CMG is overpriced, but think it will find support before another dive down.

  17. Phil / AM post correction- The '2750' should be '2800' correct?

    "The bounce lines tell us whether or not a move is real and, for the S&P, 2,775 is weak and 2,750 is strong"

  18. Soma

    On Wednesday, Canada will become the largest country in the world to legalize cannabis. 

    Seeing a sell-the-news reaction ahead of recreational cannabis officially being legalized tomorrow.

  19. ETSY

    I've been selling far out of the money puts on ETSY for the past few years.  Stock has pulled back 20% from it's high in the last three weeks.  Put on a small BCS in the Jan 40/50 spread.

    FWIW – ETSY raised their transaction fees by some 40% in July.  Should have a beneficial  effect on Q3 and Q4 earnings.

    Very speculative, as the stock's not cheap.

  20. Thanks, Phil.

    Surprisingly, I can actually trade SPX options so will look into this.

  21. thx albo – do you have an opinion on continued selling tmrw? 

  22. Soma – I wish I knew.  Reaction could be somewhat muted, as it has been expected.

  23. OK, now this is starting to look like a recovery!  

    Strong bounce lines are: 25,700 (120 short), 2,800 (10 short), 7,250 (44 short) and 1,590 (14 short) is weak on the Russell with 1,630 strong.  AAPL $218 is $5 shy of weak so still a concern there – we're not out of the woods yet! 

    /RB finally taking off.

    CMG/Nom – Bird in the hand I think.  A lot can happen in 90 days.  

    2,800/EMike – I thought I already fixed that?  Please refresh and check again.

    Cannabis/Albo – I thin this is going to be a massive story for years.  Kind of like saying now that someone bought a pizza with Bitcoin the party's over…  In fact, the difference between BitCoin and Pizza is that people actually want to use pizza and understand it!

    ETSY/Albo – I've never been a big fan.  Massively overpriced compared to Ebay.

    SPX/Alter – I thought you would like that.

    25,600 and 2,800 have hit resistance, not at 7,250 yet on /NQ and /RTY just getting past 1,585.

  24. Taking the money and running on /RB if it fails $1.97 – not willing to risk overnight. 

  25. GE up 3c!!!! WOOOHOOO!

  26. Phil,

    In trying to read the tea leaves associated with today's rally, does the low volume concern you and suggest the real move may be down? 


  27. Tea/8800 – I don't think we can draw any conclusion from one day but, if we take back and hold our levels – then we have not choice but to steer a bit more bullish which, since we still have our hedges, would mean adding some more longs.

    The volume is a big thing as we had 1Bn shares traded down from 293 to 270 on SPY and now back to 279 on about 1/3 of that.  

    Date Open High Low Close* Adj Close** Volume
    Oct 16, 2018 276.60 279.55 276.07 279.53 279.53 53,285,827
    Oct 15, 2018 275.55 277.04 274.30 274.40 274.40 102,073,100
    Oct 12, 2018 276.77 277.09 272.37 275.95 275.95 183,186,500
    Oct 11, 2018 277.08 278.90 270.36 272.17 272.17 274,840,500
    Oct 10, 2018 286.83 286.91 277.88 278.30 278.30 214,731,000
    Oct 09, 2018 287.39 288.86 286.77 287.40 287.40 74,339,000
    Oct 08, 2018 287.05 288.22 285.50 287.82 287.82 87,742,200
    Oct 05, 2018 289.69 290.27 286.22 287.82 287.82 105,951,700
    Oct 04, 2018 291.18 291.24 287.66 289.44 289.44 111,545,900
    Oct 03, 2018 292.74 293.21 291.32 291.72 291.72 64,694,600

    Of course we're still not halfway back (281.5) so none of this really matters yet.

  28. Phil – Are you playing /YM long over 25700?  It seems to be the laggard.

  29. At the moment, LTP is 93.3%, so that's fine.  STP has dropped back to 180% but also fine.

    Butterfly 36.8% barely changing (yawn!),  OOP 58.2% is holding up and Money Talk is 95.4% – chugging along without ever being touched!

    So no reason for any violent action – we'll just have to see where things settle out.

  30. Part 2 of the plan is going to start soon:

    Senate Majority Leader Mitch McConnell (R-KY) called on Congress to rein in major government programs like Medicare, Medicaid and Social Security in order to slow America’s spiraling national debt on Tuesday, ignoring the fact the tax plan he recently passed has fueled further growth in that number.

    Part 1 was to create the crisis to begin with!

  31. R = Evil Cult $$$$$

  32. /YM/Fel – No, too chasey.  I'd rather short.  

    Biggest positive news is May getting her Brexit vote but not really worth 500 points.  

    Plan/StJ – That was always their plan.  SS and Medicare would have a booming surplus if they had simply allowed an 0.25/gal gas tax when Gore wanted it or if they just took out the contribution limit.  Either of those would have fixed it decades ago.  As with climate change, their goal is to make a problem so bad that it becomes unfixable – then they can throw up their hands and say "it's unfixable so why bother?" 

  33. Phil – I agree with your assessment on ETSY   i've thought for the past two years that it was overpriced, which I why I only sold deep out of the money puts.  Meanwhile, the stock just kept going up.  As Dennis Gartman would say the chart goes from the lower right to the upper left.

    Speculative, no doubt.

    • After solid Q3 earnings reports from Goldman Sachs Group (GS +2.5%) and Morgan Stanley (MS +5.4%), the big banks are rising strongly today. They were the last of the six big U.S. banks to report.
    • JPMorgan climbs 2.0% in afternoon trading, as Bank of America (BAC +1.8%), Wells Fargo (WFC +0.8%), and Citigroup (C +0.9%) are all up as well.
    • Financial Select Sector SPDR ETF (NYSEARCA:XLF), a broad financial ETF including JPM, BAC, WFC, C, and GS as components, is up 1.4%.
    • Regional banks are mixed. Most regional banks have yet to report; Comerica (CMA -1.4%) Q3 revenue fell short of expectations when it reported Tuesday. On Friday, PNC Financial Services (PNC -1.1%) posted disappointing loan and deposit growth.
    • The SPDR S&P Regional Banking ETF (KRE -0.1%) slips a bit.
    • BlackRock (BLK -4%) slumps as the asset manager saw $3.1B net outflows during the quarter. Most other asset managers are on the rise, including AllianceBernstein (AB +2.4%), WisdomTree Investments (WETF +2.6%),  Franklin Resources (BEN +1.3%), and T. Rowe Price Group (TROW +1.2%).
    • Previously: Goldman gains 1.4% in premarket on `solid' Q3 results (Oct. 16)
    • Whirlpool (WHR +2.1%) trades higher amid reports that Association of Housing Appliance Manufacturers data showed a 1.1% increase in AHAM 6 shipments for September.
    • AHAM data has been weak over the last several months amid tariff and pricing issues, including a 1.2% drop in major appliances shipments in August.
    • Previously: Whirlpool slips after appliance data dump (Sept. 17)
    • Lyft (LYFT) is going with JPMorgan (JPM +2%) as lead underwriter for an initial public offering in the first half of next year, with a valuation that will likely top $15B, The Wall Street Journalreports.
    • Credit Suisse (CS +0.3%) and Jefferies (JEF +1.8%) have also been hired for the offering, according to the report, and other banks will hold smaller roles.
    • That's following quickly on discussion today about Uber (UBERexamining an IPO in the first half of next year as well, setting up a race to the public market.
    • Lyft's losses are widening even as third-quarter revenues jumped to $563M from a year-ago $300M, the WSJ says.
    • Rising mortgage rates are pushing down Freddie Mac's (OTCQB:FMCC) Multifamily Apartment Investment Market Index across most markets in Q2 2018 and over the past year.
    • The analytical tool combines multifamily rental income growth, property price growth, and mortgage rates to provide a single index that measures multifamily market investment conditions.
    • At the national level the AIMI fell 2.6% in Q2; 12 out of 13 local markets tracked by the index also slipped, with the largest declines in Phoenix (-4.77%), Houston (-3.79%), and Atlanta (-3.36%). Only Boston(+0.39%) experienced an increase.
    • The biggest factor was a 29 basis point increase in mortgage rates during the quarter. Net operating income, though, grew in every market and the nation. Seattle saw the biggest quarterly increase, up 4.6%.
    • For the past 12 months, the national AIMI declined 7.1% with declines in every local market it tracks.
    • Previously: U.S. mortgage rates jump to highest level in more than 7 years (Oct. 11)
    • Blink Charging (NASDAQ:BLNKannounces it has teamed up with Google Maps to assist electric vehicle drivers in locating Blink charging stations.
    • Google Maps has integrated the feature showing the stations on its map and Blink is ensuring that the information is updated and relevant. 
    • BLNK shares are up 53% to $3.35.  
    • The first round of analyst estimates on Macau casino gross gaming revenue for October are arriving in.
    • Bernstein expects Macau GGR to to be up between 4% and 7% for the month.
    • Nomura Instinet forecasts a 5% to 10% increase in October GGR based off the firm's early channel checks.
    • Macau revenue was up only 2.8% in September after Typhoon Mangkhut closed most casinos for 30 to 40 hours.
    • According to NYPost, Carl Icahn is reportedly accumulating a significant stake in Dollar Tree (DLTR +6.4%).
    • Icahn’s plans for the Dollar Tree stake weren’t immediately clear
    • In 2014, Icahn acquired a stake in Family Dollar pressuring it to seek a buyer; profit of ~$200M was incurred on the investment when Family Dollar was acquired by Dollar Tree for $8.5B.
    • The survey conducted between Oct. 5 to 11 with investors managing $646B revealed that a net 38% of respondents expected the global economy to slow, the worst outlook on global growth since November 2008, with 35% of participants identifies trade war as the biggest risk.
    • Investors were also gloomy on corporate earnings, with A fifth of respondents are expecting global profits to deteriorate in the coming year, while in January a net 39% of investors predicted an improvement.
    • Investors have been focusing on U.S, Treasury yields with 10-year yields hit seven-year highs recently amid expectations of more policy tightening and signs the U.S. economy and company earnings could slow from the sugar-rush provided by tax cuts.
    • All those fears were among factors which triggered a sudden selloff on Wall Street last week, putting the S&P500 on track for its biggest monthly loss since mid-2015.
    • Cash stands at 5.1%, a net 36% overweight and well above than the 4.5% 10-year average, a dramatic 17% drop in U.S. equity allocations to a net 4% overweight, with Japan ousting the United States as investors' most favored market with an 18% overweight.
    • Source:
    • IBM (NYSE:IBM) is set to report Q3 results aftermarket today. Here’s what to watch with consensus estimates provided by FactSet.
    • Revenue consensus breakdown: Total, $19.1B; Cognitive Solutions, $4.3B; Global Business Services, $4.06B; Technology Services and Cloud Platform, $8.43B; Systems, $1.79B; Global Financing, $408.7M. 
    • Gross margin consensus breakdown:  Cognitive, 78%; Global Business, 26.9%; Technology Services and Cloud, 41.2%; Systems, 52.7%; Global Financing, 29.4%. 
    • EPS is expected to come in at $3.39. 
    • Segments to watch: Cognitive Solutions (the house of Watson) had revenue down 1% Y/Y in the last quarter so investors will look for improvements. The strategic imperatives and cloud business (cloud computing and AI) represented over half of last quarter’s revenue and Nomura expects a 7% growth here. 
    • Past performance: The past two quarters have featured revenue and EPS beats while gross margins fell below estimates. Revenue has beaten consensus 9 of the past 20 quarters while EPS beat 18 and had one in-line performance.
    • IBM shares are up 2.3% to $144.48.   
    • Previously: IBM -7.8% in worst day in years as analysts parse margins (April 18)
    • Previously: IBM +1% on Q2 revenue beat (July 18)
    • A Department of Energy plan to prop up ailing coal companies has run aground in the White House, a setback to an industry that had hoped for a major resurgence after Pres. Trump's election, Politico reports.
    • Energy Secretary Perry has spent more than a year pushing various plans that would invoke national security to force power companies to keep their economically struggling coal plants running, but the White House reportedly has shelved the plan amid opposition from Trump’s own advisers on the National Security Council and National Economic Council.

  34. Chart / Albo – I guess you mean lower left to upper right? Lower right is rarely the sign of a good chart… 

  35. The Saudi Crown Prince tells Trump he had nothing to do with the killing so that's sorted. On the other hand, Obama had to produce a birth certificate! Go figure…

  36. stj/Saudi prince

    I think it is the problem of the democrats and not republicans. they are allowing the R's to do whatever they want without any opposition….so why not. I fail to understand if this is issue with D or the R


  37. wow glad i couldnt force myself to short indexes today

  38. BOOM!!!

  39. I'm ashamed to say I belong to a party of wimps…. :(

  40. STJ – Absolutely correct ! ! !

    Apparently, I was thinking of most of my portfolio. 8-)

  41. FU IBM!!!!!!

  42. Saudis/StJ – Well, they did it but they didn't mean to actually kill him – just torture him a bit.   Oops!  And Trump flat out said one dead journalist is not worth blowing an arms deal over.

    Dems/Pat – It's not really a Democracy anymore, the Dems have been voted out of power and the Reps changed the rules of Congress so the minority party can no longer block bills or do any of the things they used to do to get a concession.  

    Shorting/Tommy – Nope, you just have to let things run.  Super-strong finish – like the whole sell-off was some kind of glitch they fixed.

    I guess Trump should blame the Fed for their terrible policies?

    IBM not hurting the Dow, still about 25,800.

    IBM stock falls after revenue misses Street view

    IBM misses revenue estimates as server sales slow


    • GAAP EPS from continuing operations of $2.94; Operating (non-GAAP) EPS of $3.42
    • Revenue of $18.8 billion, down 2 percent (flat adjusting for currency)
    • Strategic imperatives revenue of $39.5 billion over last 12 months, up 13 percent (up 11 percent adjusting for currency)
    • Cloud revenue of $19.0 billion over last 12 months, up 20 percent (up 18 percent adjusting for currency)
    • As-a-service annual exit run rate for cloud revenue of $11.4 billion in the quarter, up 21 percent year to year (up 24 percent adjusting for currency)
    • Strong services gross profit margin expansion year to year
    • Maintains full-year operating (non-GAAP) EPS and free cash flow expectations

    Not so bad.  

    Short Put 2020 17-JAN 145.00 PUT [IBM @ $145.30 $4.17] -5 1/17/2018 (458) $-6,250 $12.50 $3.15 $-12.50     $15.65 $-0.70 $-1,575 -25.2% $-7,825
    Long Call 2020 17-JAN 120.00 CALL [IBM @ $145.30 $4.17] 15 6/28/2018 (458) $36,075 $24.05 $4.15     $28.20 $3.25 $6,225 17.3% $42,300
    Short Call 2020 17-JAN 150.00 CALL [IBM @ $145.30 $4.17] -15 7/6/2018 (458) $-14,850 $9.90 $1.78     $11.68 $2.88 $-2,663 -17.9% $-17,513

    2021 $110s will hopefully be below $35 or maybe $100s close to $40 (last $43.50/48) if they stay low tomorrow.  Only 5 short puts so not worth rolling yet.

  43. LOL Albo! You have to tip the dumpster the other way when you go bottom fishing so that it comes out higher on the right.

  44. So silly:

    17.60 still a lot for the VIX, isn't it?

  45. Wow, NFLX… I guess they were cheap then!

  46. cheaper than IBM ;-(

  47. You just cannot short these guys by principle – yes they are way overpriced, but it's like AMZN. A no short zone.

  48. I wonder how long can you add 3M subs each month before you reach saturation:

  49. This is why we don't short NFLX:

    • Netflix (NASDAQ:NFLX) soars in AH trading after a big profit beat and strong subscriber growth guidance.
    • The company reports 1.09M domestic streaming additions vs. 674K consensus and guidance for 650KM.
    • International streaming additions were up 5.87M during the quarter vs. 4.46M consensus and guidance for 4.35M
    • Total streamings adds were 6.96M for the quarter. Total memberships were 130.14M at the end of the quarter.
    • Q1 U.S. streaming contribution margin increased to 39.3% from 39.1% last quarter. The international contribution margin rate came in at 17.1%.
    • The company's operating margin improved to 12.0% from 11.8% in Q2.
    • Netflix on free cash flow: "We anticipate that FCF will be closer to -$3 billion than to -$4 billion for the full year 2018. We expect our quarterly FCF deficit will increase sequentially from Q3 to Q4 as our year to date FCF is -$1.7 billion. We currently see next year’s negative FCF as roughly flat with this year 5%."
    • Looking ahead, Netflix expects Q4 total streaming adds of 9.40M vs. 7.64M consensus.
    • Of note, Netflix says part of the Q3 EPS beat is attributable to marketing costs being pushed into Q4.
    • Source: Netflix Q3 shareholder letter
    • Upcoming: Netflix earnings call webcast
    • Previously: Netflix beats by $0.21, revenue in-line (Oct. 16)
    • NFLX +13.23% AH to $393.00


    Those are huge numbers!

    • "My biggest threat is the Fed," says the president, speaking with Fox Business. "The Fed is raising rates too fast, and it's too independent."
    • The Fed has jacked the Fed Funds rate three times this year, and shows no sign of backing away from a fourth hike in September. The "dots" point to another three rate hikes in 2019.

    Is that what rocketed the market into the close?

    • Tesla (TSLA +6.5%) officials are telling interested bankers that the company has no "near-term" financing pressure, despite the upcoming convertible bond payments that are in the spotlight, according to Fox Business Network's Charlie Gasparino.

    Should have held those /RBs:

    • The U.S. Treasury Department identifies a network of Iranian businesses as specially designated global terrorists, saying they provide financial support to a paramilitary force known as Basij Resistance Force that's linked to the Islamic Revolutionary Guard Corps.
    • The Iran-based network is known as Bonyad Taavon Basij, translated as Basij Cooperative Foundation, and is comprised of at least 20 corporations and financial institutions, the Treasury Department says.
    • Companies now listed under the designation include: Mehr Eqtesad Bank, Bank Mellat, Mehr Eqtesad Iranian Investment Co., Tadbirgaran Atiyeh Investment Co., Negin Sahel Royal Co., and Technotar Engineering Co.
    • "This vast network provides financial infrastructure to the Basij’s efforts to recruit, train, and indoctrinate child soldiers who are coerced into combat under the IRGC’s direction,” said Treasury Secretary Steven Mnuchin.
    • As a result of the action, all property and interests in property of these entities that are in the U.S. or in the possession or control of U.S. persons must be blocked and reported to the Treasury Department's Office of Foreign Assets Control.

    Nas up 4% – WOW!  /ES up 2.5% just as wow.

  50. Fed / Phil – It's pretty unreal when you have comments by Trump like this:

    "My biggest threat is the Fed. The Fed is raising rates too fast, and it's too independent."

    And no conservative blinks. I guess next, is the Justice system, they are too independent, then the press, they are too independent and so on until we have a Putin type regime here.

  51. Wow – What a blowout close…. what is happening?

  52. End the Fed. They don't really set rates, they can dump or withdraw money from the system causing booms and busts and they do have quite a bit of control but the market actually sets rates and the Fed usually follows, usually lagging. Comparison charts over the long term show it to be true. Still, many right things have been done for wrong reasons and I'd love to see him take on the Fed. He probably wouldn't survive the attempt but hey, perhaps enough would then wake up to the scam being run? Just my 2c.

  53. Mueller Ready to Deliver Key Findings in His Trump Probe, Sources Say