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Thrilling Thursday – Drama at the Strong Bounce Lines – Money Talk Portfolio Review

Related imageSchrodinger's Market.

The bouncing cat is either dead or alive at S&P 2,800 and we won't really know which is which until the weekend as the S&P failed to hold it yesterday and our 5% Rule™ demands 2 full days over the strong bounce line (2,800) before we can put our rally caps back on.  Strong bounces are NORMAL – it's what we expect on the way down as each 5% move lower is followed by a 1% (weak) or 2% (strong) bounce in a healthy correction.  The downtrend isn't broken until the strong bounce line is held – a very simple way to tell whether or not it's a good time to jump back in.

Of course, Schrodinger contended that the market was neither dead nor alive until you observed it but the act of observing it causes the outcome to change – that's very true in a bot-traded market where an act of programming made 6-18 months ago determines the movement of the market today as thresholds are crossed on various trading programs which, upon observation of the action, then cause the market to be more alive or more dead as they too kick in and start trading.  

That's why we have the 2-day rule, you have to let the various cross-currents play out before you can say you are really recovering.  Take the Shanghai Composite, for example.  China's market looked like it was bouncing in 2015 but went lower and then made another protracted bounce that collapsed early this year and now it turns out we've been consolidating for a move lower for 3 years. 

I know – who cares about China?  What happens there doesn't affect us, right?  That's the same thing I heard back in 2006 when I told people that we should be very concerned about a slowdown in China.  It took a while, but it did matter in the end…    

Does Europe matter?  Last Wednesday, we were right on top of shorting the market BECAUSE Germany's DAX Index was going to fail the 11,800 line and I pointed out that, in 2015, the DAX had a 20% correction after failing that mark.  Traders may not remember these things but TradeBots never forget!  Well, the DAX failed to get back over the 11,800 mark this week and it turning down again and so are the EuroStoxx – Europe's 50 biggest companies.  Still want to ignore it?

As Banksy would say, "the writing is on the wall" and we are NOT really recovering so this may be a good time to press your hedges if you feel inadequately prepared for a deeper sell-off.  China slowing down is bad for metals, bad for oil, bad for materials, bad for shipping….  To some extent, it's a self-inflicted wound caused by Trump's idiotic trade policies but, as evidenced by last week's Supreme Court fiasco – that's not going to change.   

Change is what we'll be concernd with today as we review our 5 Member Portfolio which have, so far, held up pretty well during the carnage.  One of those portfolios we share with the public and that's our Money Talk Portfolio, which has the odd restriction that we only trade it once a quarter, when I am a guest on BNN's (Bloomberg Canada) Money Talk Show.  The last time we made adjustments was July 19th, when I shared the changes with Seeking Alpha Readers.  At the time, we had these positions:

Money Talk segments #1 and #2

On the show, we cashed out IMAX (IMAX), sold our Nasdaq Ultra-Short (SQQQ) Sept calls (replaced them with a June 2019 spread), cashed out Apple (AAPL), got more aggressive with Barrick Gold (ABX) and GE (GE), Limited Brands (LB) and Wheaton Precious Metals (WPM) and added General Mills (GIS) to get us through the summer.  

As it turns out, those were generally positive changes because, even despite the recent turmoil, the Money Talk Portfolio is now at $97,037, which is up $12,737 in about 3 month, which is 25% of our originally $50,000 portfolio which is, after one year and one month – very close to doubling up.  I will be on the show again next Wednesday (7:30) and we will also put up a printed version of the changes as well.  As of today though – no changes since July 19th but here's where we stand:

Notice we're mostly in CASH!!! as I didn't trust the markets over the summer (S&P was 2,800 then too) and we're currently using $30,000 of ordinary margin to maintain these positions (out of $170,000 of buying power), so we're nice and flexible and, hopefully, we can do a bit of bargain shopping next week – so tune in!  

Also note that ABX, GE and GIS are all trades that haven't even made money yet – so each are still good as new trade ideas.

My goal is to finish the reviews for our other 4 portfolios today but that may be unrealistic, as we have a lot of positions to go over though, given the indecision in the market – I think our current neutral stance is fine and we're likely to mostly maintain what we have.  The Fed Minutes did not give any presents to investors yesterday so the market will have to stand or fall on their own and we'll be watching the same bounce lines I laid out on Monday but, for now, I'd rather error on the side of caution.  

 


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  1. Might need more tax cuts to stimulate that market:

    https://ritholtz.com/2018/10/unsold-luxury-property-piles-up-in-manhattan/

    The number of new homes sold in Manhattan in the year to September is down 39 per cent on the same period in 2017, according to new data from real estate firm Douglas Elliman. Median sale prices fell 9 per cent over the period. “We’re in the middle of a US housing slowdown, with Manhattan’s prime market the first and most sensitive to react,” says Jonathan Miller of Miller Samuel, a local property appraiser.


  2. Examples of Ayn Rand's philosophy in action:

    https://www.pbs.org/newshour/economy/column-this-is-what-happens-when-you-take-ayn-rand-seriously

    Yet devotees of Ayn Rand still argue that unregulated self-interest is the American way, that government interference stifles individualism and free trade. One wonders whether these same people would champion the idea of removing all umpires and referees from sporting events. What would mixed martial arts or football or rugby be like, one wonders, without those pesky referees constantly getting in the way of competition and self-interest?

    Perhaps another way to look at this is to ask why our species of hominid is the only one still in existence on the planet, despite there having been many other hominid species during the course of our own evolution. One explanation is that we were cleverer, more ruthless and more competitive than those who went extinct. But anthropological archaeology tells a different story. Our very survival as a species depended on cooperation, and humans excel at cooperative effort. Rather than keeping knowledge, skills and goods ourselves, early humans exchanged them freely across cultural groups.


  3. Good Morning, All!

    The webinar replay is now available!

    https://youtu.be/4bdd2dA6oUw


  4. Good Morning.


  5. My feelings are that we are not done going down!


  6. Good morning!

    Oil and /RB down lower and lower – $68.63 and $1.885 with Dollar up at 95.41 but I'm surprised they're so weak.  I've got 2 long at $1.892 and $68.98 – not going to add more now but willing to hold a bit more.  Notice that cutbacks are being cut back rapidly – that's hurting the bullish narrative but the Saudis could flip that in a second with one comment about using oil to force the West to back off.

    Big Chart – 3 of 5 over 200 dma is good if it holds.

    Cooperation/StJ – Good point but lost on most.  Forget referees – why have a coach?  22 talented individuals should be able to beat a team wasting their time by working together to achieve their goals, right?  Somehow, in the history of sports, that has never happened.  

    Not much power in the selling, so far.   All about 2,800 though and, now that we're below it, today is 0 full days over the line.  

    Feelings/StJ – I agree:

     

    Image result for force feelings animated gif


  7. Well got back to 1 each on /CL and /RB – even for the moment.  Now if I DD again, basis will be comfortably lower..  


  8. TEVA and GE green today – we live in a bizarro world.


  9. LB too stjean!!!





  10. Phil / Hedge – I"m looking for a SDS or TZA hedge to Dec or Jan can you provide one…  I know you suggested one a few days back but have gone back a week and can't find them…  


  11. Teva/GE/LB could just be a turning away in a monetary lapse of reason   

    "Don't accept that what's happening

    Is just a case of others' suffering

    Or you'll find that you're joining in

    The turning away"

    https://www.youtube.com/watch?v=QNiSKSeJPC4


  12. Bizarro/StJ, Jabob – That's what's supposed to happen when a rally ends – people move into value plays.

    SDS/Batman – It was a Top Trade Alert from 9/6:

    Hedge/Gard – To hedge $1M of SPY positions, I'd go with an SDS hedge.  He'd be looking to offset a $200,000 loss and SDS is at $34 so +20% (a 10% S&P drop on the 2x inverse ETF) is $42 and the March $34 ($2.60)/$40 ($1.50) bull call spread is $1.10 and pays $6 in a big drop so let's say he wants to offset $60,000 worth of damage – he can do that for $11,000 and that's the cost of insurance.  

    I'd pair that with some short puts on stocks he'd REALLY like to own if they get cheap, like 10 MU 2020 $42 puts at $6.40 ($6,400) which drops the net cost to $4,600 on the $60,000 spread, giving it $55,400 (1,200%) profit potential if SDS is over $40.  

    The March $34s are now in the money at $3.50 and the $40s are $2 so net $1.50 is the same as where we started but, of course, we know the $2 is ridiculous.  The short MU 2020 $42 puts are $7, so a bit worse but, on the whole, the same spread is good and the idea was to the puts to offset roughly 1/2 the cost of the longs – not to be 1/2 the number of longs! 

    Floyd/Mike – One of my favorites:

    "One slip, and down the hole we fall

    It seems to take no time at all

    A momentary lapse of reason

    That binds a life for life"

    Nice gains on /CL and /RB now!  Ready to stop out on a quick $500 each.


  13. TEVA, GE, LB green or outperforming the market is Value outperforming growth  and momentum.  






  14. Phil / hedge – thank you!


  15. SBUX has had quite the run! Up 20% since July. Was thinking of adding during the dip but it's not one of my most conviction based position so left is alone. And there we are…


  16. Hi Phil, I know you are busy with the portfolio reviews, but when you get a chance, I'm interested in hearing your thoughts on URI.  They disappointed slightly, and are down a lot today as a result.  Even with the miss, annual earnings are expected to be $16+, and they are trading for only $127.  They also have been growing earnings consistently for a long time.  Seems like a good value play to me.  2021 $125 puts are going for $20, which if assigned would be 17% off current prices.  


  17. Butterfly Portfolio Review:  $135,662 is up 35.7% and that's up $1,228 (1.2%) since our 9/19 review, where we did, as usual, very little.  I'm encouraged by the stability though, so I'm ready to add a new position once we get through earnings.  We're currently using $65,000 in ordinary margin out of $185,000 available so plenty of room for more but we are hitting our 40% goal already with just these 4 positions – we don't want to be too greedy!  

    The higher VIX is hurting our short put and call positions (which is most of them) at the moment so we should get a boost when they calm down but our range during this dip was about 32-40%, which is fine and means we can certainly take the stress of a new position – even in an uncertain market.  

    AAPL – We may have to roll the short Oct $215 calls but we only sold 4 so no worries.  Earnings are 11/19 and expirations are 11/16 so it would be silly not to sell Nov puts and calls so let's sell 4 Nov $220 calls for $7 ($2,800) and 4 Nov $220 puts for $9 ($3,600) and we'll simply roll the losing side to Jan whatevers but, meanwhile, it puts $6,400 (31.6%) in our pocket FOR A SINGLE MONTH against a net $20,222 open position – no wonder this portfolio does so well!  

    DIS – When are we going to learn, those short calls burn us every time!  Well, not every time but still annoying when they do.  Earnings are 11/8 and the short calls are Jan so we'll just have to wait and see but, as a 1/3 cover, we were mostly playing to protect our longs, which are well in the money.  If DIS does pop over $120, I'm happy to move to a larger 2021 bullish spread.  Adding positions doesn't have to be new ones – you can just make the ones you have bigger…

    MDLZ – The baby of the group.  We're right on the button with our sale target – at the moment we owe back 0.55 ($275) out of the $1,250 we sold so up $975 on the net $3,340 position is not bad – even if it was 2 months.  MDLZ is a bit of a safety stock, but 20x earnings means I don't expect it to run up much and earnings are 10/29.  The Nov $42 puts and calls are $2.15 and the Jans are $3.15 so not much of a premium out there so let's sell 5 of the Nov $42 puts and calls for $1,075 (32%) for a month and just see what happens.  

    OIH – Took a big dive but that's what we thought would happen.  The short Oct $25 calls will go worthless and we owe about $1 on the short puts, which is what we sold them for.  OIH is an ETF, they don't have earnings but the components do so it will be a bouncy ride.  Still, I think they are cheap so let's buy back the short 2020 $30 calls at 0.90 and let's buy 10 2021 $20 calls for $6.25 ($6,250) and that will give us 25 longs so we can start selling 10 puts and calls each month.  Let's also sell 5 of the 2021 $24 puts for $3.50 ($1,750) and that puts us bullish on Oil Services into earnings.  

    Yawn!  Have you ever seen a duller way to consistently make 3% a month?  I should just retire and teach this portfolio full-time! 


  18. Some people get indicted for fraud for stuff like that:

    https://talkingpointsmemo.com/news/trump-real-estate-deals-ivanka-mislead-buyers

    TORONTO
    Claim: In a 2009 interview, Ivanka referred to the property as “virtually sold out.”

    Reality: 24.8 percent of units had sold, according to a 2016 bankruptcy filing by the developers.

    Result: Built, but went bankrupt; Trump name removed.


  19. Oops, gonna rattle middle-East markets:

    https://talkingpointsmemo.com/news/mnuchin-cancels-saudi-investment-conference

    Treasury Secretary Steven Mnuchin announced Thursday morning that he no longer plans to attend an investment summit in Saudi Arabia, as scrutiny of the death of Saudi journalist Jamal Khashoggi intensifies.


  20. Butterfly/Phil- any trade still good for a new trade?


  21. You're welcome Batman.

    SBUX/StJ – What a powerhouse!   We were asleep at the wheel on that one, only managing to sell 10 Jan $52.50 puts for $4.50 back on 8/21.  It never pulled back enough for us to add the bull spread…

    URI/Palotay – I hear if you drink a lot of cranberry juice it will clear up in a few days… cheeky  URI tends to do better in a bad economy and they carry a lot of debt on the equipment they rent out, so rising rates hurts them but they've been adding more services, which makes them a bit stronger.   Meanwhile, be careful as URI has a $300M tax credit last year on $1.05Bn in sales so showed $1.35Bn in profit vs $750 they should have shown.  Still not bad as the company is $10Bn so pe about 13x on normalized earnings.   

    So $117M in cash and $10Bn in debt with rising rates is not pretty and they burned $161M last Q alone, which is why even a small misstep is freaking people out.  Their growth is coming from acquisitions, which is piling on debt so it's not something I'd jump into though it is worth watching.  

    Butterfly/Dave – Anything but AAPL is good for new as AAPL longs are too far in the money.  The Butterfly portfolio is all about selling front-month/qtr premium, so the longs are essentially just backstops.  As a rule of thumb, choose 2021s whenever possible for new longs as the longer we hold the positions – the more money we make!  


  22. Cancellation – Hey, A Rational Move!  Woo Hoo!


  23. Awaiting Moderation - I guess that's due to something good for once…. :(


  24. Phil: I am in a really bad whole on the /rb trade.  Didn't get out when you said to get out the other day (when it went down by $.10)  .. and now down $10k. Thoughts on /rb.  I always seem to get caught in these holes when I get bored and trade futures with you on the conference calls .. then get busy doing something else. Need help  Do I take the $10k loss .. look for something else?


  25. /RB/Nom – Ouch, that's no good.  Still two weeks to expire but very painful.  You can't trade Futures if you have to go to the bathroom or leave your station for any reason unless being down $10,000 doesn't bother you at all.  There SHOULD be some support at $1.90  but look at the ugly support at $1.95 so it depends on your basis, how many contracts, etc.  

    $1.88 was bouncy this morning and now $1.90 but could be the middle of a major breakdown if $1.90 fails to hold.   Don't forget, /RB was about 0.30 lower last year! 

    There's not more demand this year and more supply as last year we got jacked up in Oct/Nov on the OPEC meeting where they cut production.  As I noted earlier – that seems to be fading out.  I still like poking longs as we have Saudi and Iran tensions so either of those could give us a fun pop but, without them, it's going to be a slow grind lower, I think.

    You say down $10K so I'll assume you have 2 contracts at about $2.02 but there's no point in holding them if you don't think we'll pop back there soon.  Then math comes into play and back at $1.885, if you add 2 more and stop them at $1.875, you risk $840 more than just the two you have but, if we do bounce, the basis drops to a more realistic $1.95 but, if we fail there – you have to think hard about whether you want to go into the weekend in this position.  

    Below $1.85 (where you'd be down $15,000), I would DD until $1.80 (down $20,000) to average 4 at $1.90 but it's still a long climb from there and super-tight stops below $1.80 in any event.  So, if you are not willing to lose $20K working the position down another 0.10 – best to take a loss now and try to win it back one trade at a time, rather than all at once on this one.  

    Meanwhile, 25,250 should bounce on /YM so that's a good long with tight stops below as is over $69 on /CL and over $1.90 on /RB/ES 2,762, /NQ 7112.50 and /RTY 1,557.50 are the checks – all the indexes have to be above there to play /YM long and /BZ is at $79.50 so it has to be over that to play /RB or /CL long.  /DX at 96.65 so, like yesterday, we can assume the Dollar is pressuring things somewhat. 

    OOP Review next.


  26. Phil/Butterfly — Can some of those trades be simplified to have three legs – more like the "classic" Butterfly that you often use? OIH, for example. For those of us with smaller accounts, margin requirements can make it tough to have multiple trades with a bunch of short legs.


  27. Let's take money in OOP and STP on SQQQ longs:

    SQQQ – I think today's sell-off was a gift horse so let's cash these out and wait and see where we top out on this bounce (goes for STP SQQQ longs too!).  


  28. Options Opportunity Portfolio Review (OOP) – Part 1:  $166,008 is FANTASTIC considering all this chop.  That's up 66% for the year and up $29,000 (29%) since our 9/18 review, when we really didn't make too may changes – other than getting a bit more aggressive on our underperformers.  We have about the same amount of cash – it's our positions that have improved.

    Of course, like the LTP, we cashed in our winners, which were bubbling up with the market, and we pressed our bets on our "losers" – which were the value plays that people are now running back into as the market starts to look scary again.  The simple discipline we use to no be greedy taking profits and to scale into losing positions we still like effectively forces us to sell high and buy low – which is what you are supposed to do!  

    • HMNY – I think they are being investigated!  Being up so much makes me want to DD for 0.017 – just to get our basis down to 0.06 but now I hear they want to do a 1/500 reverse split so our 80,000 shares would become 160 at $10 but, after the last round, I think we will just put them under a pillow and wish for something good to happen (wishing is not a valid investing strategy).  
    • SQQQ – I think today's sell-off was a gift horse so let's cash these out and wait and see where we top out on this bounce (goes for STP SQQQ longs too!).  
    • AAPL – Just leftover short puts, expect to collect the full $5,100.
    • CHL – Though they should expire worthless, China is still bad and they are up 84% so let's cash them out.  
    • BJO – Finally popped.  Well in the money now and good for $6,000 if all goes well, currently net $4,700 so $1,300 more to go.  
    • TZA – This hedge we'll keep in place.  
    • FTR – Hurricane knocked them back but short calls are too expensive to buy back so we'll just leave it.  

    • ABX – Finally back from the dead and we're pretty aggressive.  Let's cover 1/2 with 20 2021 (yes, 2021) $15 calls at $2.30 ($4,600) as it drops a lot of money in our pockets and it's only a 1/2 cover so we can do a 2x roll much higher when 2022s come out (and we'll need to buy longs then too with the money from our 2020 calls – how's that for long-term planning?  

    • ALK – On track.
    • BBBY – Very glad we sold the short calls but no changes for now.  
    • BHC – Used to be VRX.  They are in the money at net $3,700 ish and, if all goes well, it's a $7,000 spread so good for a new trade still.  
    • C – Almost all in the money way ahead of schedule (because we were very conservative).  Net $5,850 on the $20,000 spread is also good for a new trade.  

    • CDE – We got way more aggressive with them last month.  I'm inclined to wait and see how well they do into earnings (10/31) as our downside isn't too bad and the upside could be epic.  

    CHK – They are chugging along under $5 but our goal is only $5 so we're good and this is good for a new trade as it pays $5,000 and is currently net $925 so $4,075 more if all goes well.  

    You can see how we make all this money in choppy markets.  CHK make $4,075, C makes $15,000, BHC makes $3,300, etc – when your portfolio is full of positions that make over 100% in a flat market – time is very much on your side!  


  29. Butterfly/Tom – Are you just trying to avoid selling short puts?  If you are selling short calls, the margin should offset somewhat but, if it's in an IRA, I guess it's cumulative.  The Butterfly Portfolio is not very margin-intensive – even for an IRA.  As a $100,000 portfolio it's only using $65,000 of IRA-type margin and still does well.  You can opt not to sell short puts and simply cover short puts and calls with a bull call spread – you just won't make as good a percentage on each play and you may have to scale down your short sales as you effectively are giving up some upside protection from the short puts.

    Not much of a bounce but I intend to take MORE aggressive SQQQs into the weekend if the Nas can't hold 7,100.   Overnight we can risk flipping a bit more bullish.  


  30. Phil – I'm holding the SQQQ Jan 18 2019 10 calls and probably should have taken the profit on the last drop. Today's drop has not put me in the green yet (down $500). Would you recommend selling some calls if we think this selling rout is going to subside a bit?


  31. So far Dow, S&P and Nasdaq bouncing off the 200 DMA. Too late for NYSE and Russell. Who is right? Is this the second leg of a move down?


  32. AAPL    looks like earnings are Nov. 1.  Cant find where they are 11/19


  33. Options Opportunity Portfolio Review (OOP) – Part 2:

    • FNSR – Good for a new trade, disappointing so far but still halfway to goal as we had low expectations.  
    • GE – OMG, a profit?  So confusing…  We're a long way from celebrating or wanting to cover.  Good for a new trade.
    • GNC – On track again.

    • HBI – Back to the lows so let's buy back the short 2020 $23 calls for 0.55 ($550) and roll the 10 2020 $15 calls at $3.10 ($3,100) to 20 of the 2021 $13 ($4.50)/$20 ($1.80) bull call spreads at $2.70 ($5,400) so now we have $14,000 potential at $20 and we started with $600 and spent $550 to buy back the short calls and another net $2,300 on the new spread so we're in for net $3,450 on the $14,000 spread with $10,550 (305% upside potential).  
    • HRB – Right on track.
    • LB – Back on track
    • MU – Brand new, still cheap.

     

    • NAK – Very speculative gold play – another wish for under the pillow.  
    • OIH – As with the Butterfly Portfolio, I feel bullish going forward.   Good for a new play.
    • SCO – Halfway there.  
    • SPWR – We're aggressively long – good for a new play. 

    • WBA – Easy money on that one, over our goal already. 
    • WPM – Big improvement from last month (+$3,500) and I love them as a new trade. 

    Surprisingly few changes but maybe not a surprise as it's a very diverse, well-balanced portfolio!  


  34. Nice pop on the Dow, hit 25,400 so shame on you if you let too much of $750 per contract slip away!  

    SQQQ/Soma – We have other protection so I'm treating this as excess and allowing for a expiration rally to close out the week.  If we don't get it, the net of the new spread we will replace it with won't have changed much as the short calls we'll sell will gain premium faster than the long calls we'll buy.   In the OOP, those were Jan $10 calls, pretty much even so short-term insurance at best.  In the STP, we had March $8 calls that were up 40% and I very much regretted not locking that in the other day so I'm not going to blow a 2nd chance.  

    AAPL/Stock – Yahoo now says 11/1 – I think it changed but maybe I read it wrong.  I may reconsider the shorts but not right now.


  35. No way I get to the LTP today but I will have the STP done.  


  36. Short-Term Portfolio Review (STP):  $284,184 is up 184% and we're up $52,059 (52%) from our Sept 19th review where we got more aggressive with TZA but SQQQ we had pushed the time before and just those calls are up over $20,000 today – which is why I took them off the table as they were up $40,000 last week and then were flat yesterday morning – which broke my heart.  So even getting back to $20K today is a nice gift and, since the LTP held up well during the downturn, it's a hedge we don't really need so CRAZY not to take that money and run.  

    Our TZA hedge also did it's job, going from down $1,000 to up $22,000 and then we added that XRT hedge and we have the DXD hedge that went from -$6,000 to + $10,000 – so there's another $16,000 gained there.  That's how hedges are supposed to work – we keep nursing them while the market goes up and they spring back to life when the market goes down.  They are INSURANCE POLICIES that we INVEST A PORTION OF OUR PROFITS INTO – capisce?

    So, to summarize, our 3 index hedges made $58,000 on a very small downturn in the market and, since we think the market might bounce AND since the LTP didn't get the damage we thought it might during the downturn (thanks to all those hedges we added last month) we're a bit overhedges so we're taking $20,000 of the gains off the table and we'll see how tomorrow looks.  Simple strategy…

    • Short puts – IBM and WHR should be moved to the LTP – someone remind me tomorrow.  
    • IQ – I forgot about this crazy thing.  We're flat and we should be selling short-term calls if we're going to stay in it.  Nope, it's tying up $18,000 and the Nov $25s are only $1.55 so 10 short would be $1,500 – I'm just not interested enough to bother so let's cash out.  
    • AMZN – Wow, we shorted AMZN and won!  Well, still a month to go but looks good.  Max return is $15,000 and currently net $13,020 and there is earnings so let's call it a day as it was a net $1,100 spread so a very nice gain to lock in.  Also – always keep in mind these age generally your worst-case cash outs.  Since there's no hurry, make sure you get good prices for your exits!  

    • CELG – Back to the bottom of their range with earnings on the 25th so, if they do poorly, we'll move them to the LTP (as long as it's not too poorly).  Moving, by the way simply means closing them and taking the loss in the STP and then opening in the LTP which effectively transfers money from the STP to the LTP – very useful tactic if you need to move things around from time to time between accounts!
    • DXD – As noted above, it's a hedge that took off but, unlike SQQQ, it's well-covered, so we'll leave it.
    • MJ – Pot ETF still good for a new trade.  
    • MSFT – Max payout is $20,000 if MSFT is still under $115 in Jan, currently net $13,285 and we paid about $8,000.  I'm iffy on this one, will have to see how tomorrow goes.  

    • SCO – Well all the turmoil has made me less bearish on oil and we have a slight profit so I'd say if $70 oil comes back ($80 on Brent), we should pull the plug on this one while it's still green.
    • SQQQ – As noted earlier, we're cashing in the 160 March $8 calls and we'll decide tomorrow what we want to do but we don't need to be $5.30 in the money on a hedge.
    • TSLA – Damn, should have bet $1Bn on this one!  I should sue Musk for sticking to that ridiculous story of his and keeping me from doing 10x more shorts…  Anyway, it's a $9,000 spread but only net $5,549 so we're going to leave it on and wait for our other $3,451.  
    • TZA – Another wonderful hedge with plenty left to give us but let's cash out the extra 20 Jan $7 calls.

    XRT – Brand new and already making good money (about $5,000).  On track and I haven't seen any earnings or data that worry me.  

    Keep in mind that the main purpose of the $100,000 (initially) STP is to hedge the $500,000 (initially) LTP so we are generally looking for bearish bets but, on occasion, we also put in short-term gambles when we feel they are likely to generate some CASH!!!, which is always useful in a downturn.  


  37. F – At new multi-year low.  Now yielding 7 %.



  38. A mild winter could be in store for many Americans, NOAA says



  39. Albo- ‘F’ –  I have been watching that one.  Jan 21 Put sales for $7 if allocated will give a net price of $6 and a 10% yield.  Still think there may be a better opportunity.  But not bad to start an initial position.   Thoughts from Phil? 


  40. Nomigp;  Just want you to know that I have been where you are with /RB  Phil makes it seem very easy to be profitable on the futures trades.  It takes a lot of practice to see and execute trades like he does.  You need to decide if a trade idea is going to be quick in and out or they are conviction trades.  For example if Phil says "I expect a bounce off xyz line" you need to be prepared to exit if that doesn't happen or be prepared to take quick profits.  I generally stay away from those trades as I don't want to be glued to my work station.  The conviction trades are more to my liking as I reduce my exposure by hedging that position with something else if it starts to go against me.  For example, with /RB, I went long but sold an out of the money /CL Call once /RB wasn't cooperating.  By doing so I give up some potential gains on /RB but it also lowers my basis which limits my need to DD.  


  41. F – fwiw, Morgan Stanley has been cutting price targets for GM and Ford due to China exposure.  Reduced target for F is still $14.  GM more exposed compared to F. 


  42. Phil and/or others,

    I sold 20 short term $12 Oct 19 calls against my 40 long 2020 $10 calls

    how do you handle something like that when you have 2 different time frames?

    I assume roll them but how do you figure out the strike and the day

    should i add an additional bull spread to balance them ?

    thanks


  43. Phil / AAPL earnings definitely 11 /1 .


  44. Coutler531   need to the stock to get an answer.


  45. Tesla launches new $45,000 Model 3


  46. Early Voting ‘Off The Charts,’ Outpacing 2016 Election


  47. Good morning!  

    China had a huge 2.5% rebound into the close but Italy is still dragging down Europe.

    In a letter published Thursday, the European Commission said Italy’s spending plans were “unprecedented” and a “serious concern.”

    The Italian FTSE MIB was down 1.22%. The yield on the Italian 10-year note was up 0.1% at 3.778%, the highest since early 2014, according to Refinitiv. Yields move inversely to prices.

    Investors are concerned about a potential downgrade in Italy’s credit rating, said analysts at UniCredit in a note to clients.

    This was China as their weak GDP was announced at the open:

    A Chinese woman monitors stock prices at a brokerage in Beijing on Friday.

    A rebound in Chinese stocks Friday came after an intervention from regulators that calmed investors despite disappointing economic data.

    China’s central bank governor and banking and securities regulators said recent volatility in Chinese stocks didn’t reflect the nation’s economic fundamentals and “stable financial system.”

    That reassurance boosted Chinese assets, despite data released Friday that showed China’s third-quarter GDP had slowed to 6.5% from the previous quarter’s 6.7%. Growth in industrial output and consumption also slowed, but exports held.

    Investors in Asia are still nervous of the brewing trade war between the U.S. and China and the yuan’s steady depreciation, said Sophie Huynh, cross-asset strategist at Société Générale , but she added that looking ahead, Chinese equities still have something to offer.

    “We think that China is a medium-term bullish story and we would keep Chinese assets in portfolios,” Ms. Huynh said.

    “The gradual integration of China equities and bonds in global benchmarks acts as a support, while we also believe that China could play a role of anchor for emerging markets.”

    I don't put a lot of stock into jawboning by Chinese officials but, unlike our BS Government – they often back up their words with actions.  On the whole, I'd call it "encouraging" and say I'm glad we sold those SQQQ longs but I'm not going to run out and spend money until we clear our technicals – which is at least 2 trading days away.

    Meanwhile, nice pop in /RB – all the way back to $1.92, so a good time to review my notes on how to handle a drop which we had yesterday at 1:49, when /RB was $1.897.  

    /CL is still in play at $69.25 – not a big move yet off our $69 entry – especially if /RB keeps going.

    Great point made by Options Alpha too, after the bell.  Part of all that practice is having seen the situation a lot of times – kind of like a race car driver getting more comfortable with riding up by the wall on a curve – you get used to what the machine can handle over time.  For me, there's conviction trades – which can be very painful and there are quick trades with tight stops and it's never good to forget which one you are in!   

    I think a mistake people make is turning a stop trade into a conviction trade simply because it goes against them – that's usually not a good idea.  A conviction trade is when the market over-reacts – like it did to /RB this week and I said on Wednesday at 10:33:

    Oil up 6.5Mb, Gasoline down 2Mb – not good so we'll wait and see what holds.  /RB will be oversold, now $1.942 – as they had a draw and oil build was likely due to storms and refinery shutdowns.  

    October 17th, 2018 at 10:59 am | (Unlocked) | Permalink

    Oil maybe bottoming out at $70.  We can play /CL long over $70 with tight stops below but REALLY – tight stops!  /RB at $1.925 – same thing.  /BZ bounced at $79, so watch that line and Dollar at 95.11 for reference.  

    October 17th, 2018 at 12:54 pm | (Unlocked) | Permalink 

    Took money and ran on /RB and /CL – nice pop for combined $500/contract.

    Want to start fresh in Webinar…

    Tight stops means tight profits too!  

    October 17th, 2018 at 3:01 pm | (Unlocked) | Permalink

    Hey guys!  

    Well we made $1,500 trading Futures in the Webinar – not bad for 2 hours' work…

    Still a chance to long /CL over $70 again and /RB over $1.92 – tight stops below.  

    /ES can be shorted yet again at 2,815 (tight stops above) – so you didn't miss anything – that's how we made our money!  

    October 18th, 2018 at 7:33 am | (Unlocked) | Permalink

    I agree with Buckeye, taking a long on /RB at $1.895 but tight stops below.

    /CL over $69 also a fun play.

    October 18th, 2018 at 9:50 am | (Unlocked) | Permalink

    Oil and /RB down lower and lower – $68.63 and $1.885 with Dollar up at 95.41 but I'm surprised they're so weak.  I've got 2 long at $1.892 and $68.98 – not going to add more now but willing to hold a bit more.  Notice that cutbacks are being cut back rapidly – that's hurting the bullish narrative but the Saudis could flip that in a second with one comment about using oil to force the West to back off.

    October 18th, 2018 at 9:52 am | (Unlocked) | Permalink 

    Well got back to 1 each on /CL and /RB – even for the moment.  Now if I DD again, basis will be comfortably lower..  

    October 18th, 2018 at 10:44 am | (Unlocked) | Permalink

    Nice gains on /CL and /RB now!  Ready to stop out on a quick $500 each.

    Practice, practice, practice – that's all you can do and, over time, you get used to the ebb and flow of the market and, like a good surfer, you can tell a good wave from a bad one but even the best surfers know they rarely catch a big one – so you have to make the most of what you get and cut your losses when it moves against you!  


  48. Phil:  Just wanted to thank you. I have lost quite a bit of money since trying to trade with you .. but each and every one of those were my fault and I have tried to learn from them!  I have learned more from you in one year than thirty years being in the "business".  I just think of these losses as being part of the cost of education.  I appreciate your help 100%.  You have an amazing sense of the markets and the timing of the markets.  That takes years and years to gain.  My advice to newbies .. Phil makes it look so so easy .. it is not (or maybe it is, but not for me).  But if money matters, always limit your losses.  Phil is right, it takes a lot of little wins to make up a big loss.