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Thursday Thoughts – Holding Nasdaq 7,000 is up to Apple (AAPL)

Well, we got our weak bounces – now what?

October ended with a bang with the indexes rushing up to the weak bounce levels which, for the sake of an update from yesterday's (and last week and the week before's) predictions are:

  • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
  • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
  • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
  • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
  • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

So the only change from yesterday, despite the "massive" rally, is that we have now turned the S&P and NYSE weak bounce lines green with /ES at 2,723 (still the low end of the bounce range) and the NYSE right in the middle this morning at 12,250.  Until the Nasdaq and the Russell confirm their lines – it would be crazy to buy into this bounce and anything less than strong bounce lines is still a very dangerous market to go long into.

This is the worst part of my job because I have to be like the parents telling the kids not too eat too much candy as there are so many good stocks finally in a good position to buy but it's a little too early to jump in.  Not that we're avoiding everything.  In Yesterday's Live Trading Webinar, we picked up longs on GE at $10 and IBM at $115 – as I think they have suffered enough and, of course we can still have some day-trading fun and, yesterday morning, we made a couple of calls in the Futures with me saying:

So we expect to see 96.1 again and a pullback in the Dollar is a boost for the indexes as well as commodities.  Silver (/SI) is getting interesting again at $14.30, having never really had the same rally as gold in October.  You can play the Futures bullish over the $14.30 line with very tight stops below ($50 per penny per contract!)

As you can see, we're already up $900 per contract and, hopefully, we can do a bit better with a $14.57 goal, but that one was a gift so – you're welcome!  Our Gasoline longs, on the other hand, did not work out at $1.79 failed but TIGHT STOPS BELOW saved us from damage in the morning  but, in our Live Trading Webinar, we added /RB back at $1.76 (4 contracts) and they are down about $250 each this morning as it's more of a conviction play but we'll take our $1,500 on /SI at $14.57 and that gives us cushion hold onto /RB for the longer haul.

During the Webinar, we also went long on Coffee (/KCN19) with a long-term play on 2 July contracts at $121.65 but, as I noted to the attendees, that's one I have conviction in so I almost hope it goes lower before it goes higher so we can double down and bring our average down closer to $115 but no such luck as we're already up over $1,500 this morning and now it would be irresponsible not to lock in those gains with a stop below $123 but hopefully we get closer to $125 before taking a profit.

I'd be more enthusiasic about our gains (and the indexes) but they are Dollar-driven and not due to a proper change in sentiment as the Dollar falls 0.7% this morning and the indexes are up just 0.4%, so they are actually losing ground in steady-dollar terms and the BOE just held their rates steady, which is Dollar-bullish (as we are still raising) so we're going to lose that catalyst and that means shorting the Nasdaq (/NQ) at the 7,000 line with TIGHT STOPS ABOVE is the best-looking play of the morning.

The lines that count on the Dollar are 89, 93.5 and 97 per our fabulous 5% Rule™ and that's how we're able to accurately call the top but it doesn't end there since we can see we had good consolidation at 93.5 (we also called the move up when the Dollar was 89 back in the spring) then the move to 97 was expected as was/is the pullback of that 3.5 run and surprise, surprise a weak pullback is 0.7 (20% of the run) to 96.3 and a strong pullback is another 0.7 to 92.6 and, if 92.6 holds, then it's a signal that we're consolidating for a move higher – but then we'll be looking for short-term bounce lines there.  

See how easy it is to call the markets when you know exactly what's going to happen?  Of course the 5% Rule™ is just another factor we take into account in our overall analysis but, in absense of market-moving news or data – those lines serve us well to give us good entry and exit indicators.  I've been "showing off" a bit with our predictions this week and last to impress upon you the strength of our predictive ability and, HOPEFULLY, get you to take our continued warnings of market caution a bit more seriously.  

Futures trading is fun, making $1,000 here and $1,000 there while you wait but the real money is made in our portfolios and those need to be balanced according to the longer-term trends we're monitoring.  The last big market wild-cards are tonight's Apple (AAPL) earnings and tomorrow's Non-Farm Payroll number, which take on additional importance as only 134,000 jobs were filled in September and, if we're trending down from there – all the consumer sentiment in the world isn't going to save us from a stagnating wage pool.

Consider that you have to give 25 people 4% raises to make up for 1 missing job but wages are only rising 2% so that's 50 raises lost per job so 100,000 missing jobs need 5M raises just to keep the economy static.  But then those 5M raises impact the margins of the companies handing them out and then that's not good for the indexes and wage pressure has been climbing and it's beginning to become a concern to reporting companies — and the Fed!  

So, given that premise and since the BOE did not hike rates this morning, we don't think the Dollar will fall that far so it won't be that much help to the indexes which means it's going to be all about Apple earnings and the data so we'll sit and wait for another day and poke at the Futures a little more so we can have some fun while we wait.

 

We're certainly not going to hit our strong bounce lines by tomorrow unless AAPL gains about 5% and that means we're likely to lean a little bearish into the weekend and certainly we're not going to want to be less hedged into the elections on Tuesday so it's going to be a pretty dull week until next Wednesday – when we see which way the country has decided to go for the next two years.  

Until then – please be careful out there!  

 


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  1. Good Morning.


  2. Good Morning



  3. Phil I hope u don't mind my promoting the site Vote Save America set up  by my daughter and Crooked Media—guides one thru the voting for  initiatives and candidates



  4. Of course raising the minimum wage didn't kill jobs:

    https://ritholtz.com/2018/10/seattle-studys-shocking-conclusion-minimum-wage-increases-benefits-workers/

    Those ideologically opposed to mandated minimum-wage increases freaked out when a Seattle pizza parlor closed. Meanwhile, they ignored data showing Seattle-area employment in the restaurant industry on the rise. The critics even blamed Seattle’s minimum wage law for unemployment in suburbs not covered by Seattle’s laws. Despite their dire forecasts, not only were new restaurants not closing, they were in fact opening; employment in food services and drinking establishments has soared, as the chart below shows:

    When people have more money, they spend more – it doesn't just work for rich people and tax cuts. Actually, the top 1% doesn't spend more, they save more!


  5. Thoughts on HBI earnings? stock down 8% this morning


  6. Phil   What do you think of BABA or BIDU after their pullbacks?  The spreads are wide and prices expensive because of volatility. I wanted your thoughts as I don't see a good play on them with the margin also  Any thoughts?  Thanks


  7. FU HBI!!!!

    another FU stock crashing after earnings…unreal


  8. Good morning, All!

    The webinar replay is now available!

    https://youtu.be/qt8vU8rWeRw


  9. Good morning!  

    Wheee on /NQ shorts already (was up $1,000 per contract for a moment at 6,950) and stopped out of /KC and /SI and still waiting for /RB to do something but not likely this week.  I've already been a bad boy as we were close enough to even ($1.7595) earlier that I should have lightened up but I was finishing my post and missed it. 

    Hopefully we'll improve, /CL seems more enthusiastic than /RB so far.

    96.30 is the weak retrace and that's acting as a ceiling so next stop is 95.60.

    On the whole, I'm a lot quicker to stop out a profit than a loss – especially when I still have open losses that the profit will erase!  

    Big Chart – Dow 25,132 is the first 200 dma to come back into play so watch that and Nas MUST get over that 200 dma at 7,066 with conviction to avoid the 20dma death cross lite. 

    I don't think it's very likely the RUT can be saved from a proper death cross, which does not bode well for the end of the year.   The RUT can't even get a weak bounce going and it was the RUT that led us lower in the first place.  

    Voting/Savi – Not at all, I encourage it!  

    Construction Spending and ISM both disappoint.  

    • ISM Manufacturing Index57.7 vs. 59.0 consensus and 59.8 prior.
    • Employment 56.8 vs. 58.8 prior
    • Prices 71.6 vs. 66.9
    • New Orders 57.4 vs. 61.8
    • Production 59.9 vs. 63.9

    SBUX/StJ – Those bastards!  

    Data/StJ – The problem is no one holds these assholes responsible when they make idiotic predictions that turn out to be completely wrong.  No, next week they'll make another ridiculous prediction not because they believe it, but because some GOP policy-maker wants economic predictions to justify his pre-determined (and pre-paid) vote.  It's disgusting and I really don't know how this happened.  It used to be that Gallup was the definitive poll, for example, and that company's reputation was impeccable but then people didn't like the results, so they created their own polling companies to give them better-spun numbers but now the numbers are just completely bogus – with the questions tailored to give people whatever answers they desire.  I don't understand how people don't care about these things or how they can keep going to "experts" who are never right about anything.  Same with the media – there's no journalism (other than the NYT, which is accused of being liberal but is just being accurate), just spin.  

    By the way, the age of Trump has been great for the "failing" NY Times, as more and more people realize it's the only place to get the actual facts.  They were at $10.42 when Trump was elected.  

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 1,595 1,577 1,589 1,579 1,555 1,676 1,698 1,722 1,801 +1.0%
    Operating Profit $m 97.7 154 89.4 136.6 101.6 112.4 129.7     +2.8%
    Net Profit $m 135.8 65.1 33.3 63.2 29.1 4.30 21.0 136 162.9 -49.9%
    EPS Reported $ 1.07 0.36 0.21 0.38 0.19 0.45 0.55     -16.1%
    EPS Normalised $ 1.35 0.45 0.42 0.60 0.52 0.86 0.88 0.81 0.97 -8.6%
    EPS Growth % +110.4 -66.3 -7.9 +43.8 -14.0 +66.4 +32.2 -5.51 +20.0  
    PE Ratio x           30.7 30.2 32.5 27.1  
    PEG x           n/a n/a 1.62 0.96
    Profitability

    I wouldn't pay $4.5Bn for them, but I'm very glad to see them doing well as it would be a tragedy if we lost them.

    NYT/Terra – I don't know what Slim/Gortaris is up to with the NYT (very disturbing though) but Buffett's play is sensible as he's looking at the move the major news sources are taking to consolidation and sees a huge gap in local reporting that can only be filled by local newspapers.  I imagine, if he gets enough of them, he'll want to set up  a Reuters-like service that feeds local news to the nationals but that's what's lacking from the Web experience, the national news services have no idea what's going on in your town anymore and can't afford to cover it.  Hard to imagine people won't be interested in local news for the next few decades so it's a typical Buffett investment with a huge moat and good profit potential if he consolidates the infrastructure and leaves the reporters in the field (easy with the web these days).  

    As to a play on NYT, I'm too personally vested in their continuation as a going concern (they are one of the last real papers in America) to play the stock.  I like to think their turn-around will work and that content is important to people but their regular subscription revenues sucks and if they start to lose ad revenues – it won't be pretty.  Also, Murdoch circles like a buzzard, looking for a weak spot to strike at or just hoping they will die so he can pick up the pieces. 

    We haven't played them since they were $5 back in the big crash, when I was banging the table on them - got out with a triple and never went back.

    HBI/Crs – They took a bad-debt charge due to Sears inventory so major over-reaction to the earnings.  They'll still make over $1.50 for the year – even after removing SHLD's massive sales from their guidance.  This should put in a nice bottom for HBI and $15 (10x earnings) should be a very solid floor.

    BABA/Tx – Well, I hate them less now that they've pulled back 30% but maybe 30% more to go though the Chinese Government has stepped in with stimulus so maybe they go higher but higher based on stimulus in a company where I can't get good data from a country where I can't read the papers does not appeal to me at all.  And yes, the options are silly – too silly to even take advantage of the volatility so they are just "no plays" for me – along with pretty much everything else in China – except my beloved CHL – but we sold that too in the OOP (still in the LTP) as China was getting too worrying. 

    Submitted on 2018/10/18 at 2:27 pm

    • CHL – Though they should expire worthless, China is still bad and they are up 84% so let's cash them out.  

  10. NYT / Phil – Fox would love to do as well as the NYT is doing since Trump got elected! Only up 75%.


  11. We had 2 corrections where the VIX peaked over 50!


  12. Damn, got out of /SI too early!  

    Adding 4 more at $1.74 to bring the avg down to $1.75 but very tight stops on the new 4 below $1.74.


  13. Not only is the Dollar breaking down but I think they are going to move on Iran sanctions over the weekend.  Being tough on Iran is another thing Trump thinks will get them some votes.


  14. Phil – thoughts on my new HBI trade.  Sold 10 of 2021 13 Puts at $1.70.  Used that premium to buy 2021 15/20 bull call spread at $1.70.  Executed this in my IRA account.


  15. While we're on the HBI trades, I currently have 

    -10 $18 2020 puts 

    +15 $18/$23 2020 Bull spreads

    was thinking of rolling the spreads down to 15/20 spread in 2021, thought about just leaving the current puts , or potentially rolling to 15 $15 2021 puts?

    thoughts on those adjustments? 


  16. Phil,

    Do you think the Iran sanctions will push up /RB? Also we had a decent net draw on /RB so I would have expect a little bump up 


  17. /RB stopped out quickly, will try again at $1.73, $1.72, etc.  Small losses on each try but basis goes from $1.76 to $1.75 (fail) and then $1.745, $1.74 (at $1.72), etc so we keep the bounce zone in range though, at some point, you have to account for all the small losses you take along the way.  

    Trump is claiming progress on China Trade Talks – that's what popped us but probably BS as there were no scheduled talks of any kind.   Another guy who gets to lie constantly and is never held accountable…

    Also good Brexit news:

    • Britain and the European Union are close to a deal giving UK-based financial services firms basic access to the EU's markets after Brexit, Reuters reports, citing a UK official.
    • The agreement would be based on the EU's existing system of financial market access known as equivalence--under which the EU grants foreign financial firms access to its market if it considers the foreign nation's rules equivalent or similar enough to the bloc's rules.
    • The difference between UK's current relationship with the EU and the equivalence system is that some financial sectors, such as insurance and commercial lending, aren't covered by equivalence.
    • As a result, some firms that operate their European businesses out of the UK may still have to set up operations in the EU to continue serving the European market.
    • Previously: BOE rate decision, Carney Brexit comments (Nov. 1)
    • There were 16 down days in the S&P 500 in October, the most for any month since 1970, and the 3rd most since the S&P's inception in 1928, according to Schwab's Liz Ann Sonders.
    • Meanwhile Sentiment Trader has some interesting reads on what October's ugliness means for the future. There are 11 instances when the S&P in a month fell more than 7% while consumer confidence was at a one-year high. In each of those cases, the S&P was higher six months later.
    • Sentiment Trader also notes massive flows into Rydex inverse mutual funds. In other similar instances, the S&P 500 two months later was higher 88% of the time.
    • Central banks bought ~$5.8B worth of gold during Q3 in their biggest buying spree since 2015, the World Gold Council reports.
    • Led by Russia, Kazakhstan and Turkey, central banks bought 148 metric tons of gold in the quarter, up 22% Y/Y, according to the report.
    • "Gold is a good hedge against the U.S. dollar" as central banks seek to diversify their reserves, says Alistair Hewitt, head of market intelligence at the WGC.
    • “We’re now seeing a whole raft of new buyers,” Hewitt tells Financial Times, noting central banks of India, Hungary and Poland have bought gold recently.
    • The central bank purchases were in contrast to the first outflows from gold-backed ETFs since Q4 2016, as investors sold a total of 116 metric tons, worth ~$4.5B, during the period, WGC says.

    This is out of $6Tn in Annual Retail Sales – so what?  Adobe: US online holiday sales will top $124B
    • Adobe (NASDAQ:ADBEreleases its online shopping predictions for the 2018 holiday season, which kicks off today and ends on December 31.
    • U.S. online sales will increase by 14.8% to $124.1B while offline retail spending grows 27%, according to Adobe Analytics data. 
    • Adobe gets its retail insights from trillions of data points going through adobe Analytics and Magento Commerce Cloud, which are analyzed with the AI and machine learning tech Adobe Sensei. 
    • Top online shopping sites that could get a boost from the data: Amazon (AMZN +1.6%), eBay (EBAY +2.1%), Walmart (WMT +0.5%), Etsy (ETSY -1%), Target (TGT +0.1%), and Kohl’s (KSS-0.4%).  
    • A carriage dispute with WarnerMedia (T +0.7%) has blacked out HBO and Cinemax on Dish Network (DISH -0.6%) and its Sling TV, in HBO's first distribution outage ever.
    • In a statement, Dish says AT&T (owner of Dish rival DirecTV) "seemingly intends to cut ties with competing distributors" and that it "attempts to force Dish to pay for customers who do not get HBO, in turn funding AT&T to give away HBO free-for-life to its own customers."
    • Dish attacked the Time Warner merger as the heart of the issue and says it welcomes binding, "baseball-style" arbitration to determine a fair market value for HBO and Cinemax.
    • Updated 11:05 a.m.: AT&T/WarnerMedia responds, “During our 40-plus years of operation, HBO has always been able to reach agreement with our valued distributors and our services have never been taken down or made unavailable to subscribers due to an inability to conclude a deal. Unfortunately, Dish is making it extremely difficult, responding to our good faith attempts with unreasonable terms. Past behavior shows that removing services from their customers is becoming all too common a negotiating tactic for them."
    • Chesapeake Energy (CHK +3.1%) pops at the open after Raymond James upgrades shares by two notches to Outperform from Underperform with a $5 price target, citing optimism over CHK's "transformative" $4B acquisition of WildHorse Resource.
    • "Not only does the transaction solve multiple issues (need to de-lever, increasing oil cut, future growth inventory), we think Chesapeake was able to acquire an attractive early stage operator at a rock-bottom price," RayJay's John Freeman writes.
    • CHK shares bounced more than 7% yesterday after slumping to a five-and-a-half-year low following news of the acquisition.
    • Teva Pharmaceutical Industries (TEVA) Q3 results: Revenues: $4,529M (-19.4%).
    • Key product sales (North America): Generics: $922M (-25%); Copaxone: $463M (-43%); Bendeka/Treanda: $161M (-10%).
    • Key product sales (Europe): Generics: $845M (-3%); Copaxone: $124M (-17%).
    • Net Loss: ($273M); Non-GAAP Net Income: $694M (-31.4%); Loss Per Share: ($0.27); Non-GAAP EPS: $0.68 (-32.0%); CF Flow Ops: $421M (-47.0%).
    • 2018 Guidance: Revenues: $18.6B – 19.0B from $18.5B – 19.0B; non-GAAP EPS: $2.80 – 2.95 from $2.55 – 2.80.
    • Shares are up 6% premarket.
    • Previously: Teva Pharmaceutical beats by $0.13, misses on revenue (Nov. 1)
    • DowDuPont (NYSE:DWDP+4.3% pre-market after Q3 earnings beat expectations and saying it would buy back $3B in shares over the next five months.
    • Q3 revenues rose 31% Y/Y to $20.12B, a bit below expectations, with double-digit gains in all segments and increases in all regions; sales at the materials science business, DWDP's top revenue contributor, rose 13% to $12.4B.
    • Q3 volume grew 6%, with gains in most segments and all regions; operating EBITDA rose 8% to $2.5B.
    • Selling, general and administrative costs rose 49% in the quarter to $1.5B while integration and separation costs rose 88% to $666M.
    • DWDP says it is now aiming for $3.6B in cost synergies and $1.5B in Y/Y cost savings, after previously expecting cost synergies of $3.3B and cost savings of $1.4B.
    • DWDP reiterates its guidance for full-year adjusted earnings in 2018, expecting an increase in the low 20s as a percentage.
    • Separately, the company announced the board of directors for the future companies Dow, DuPont and Corteva Agrisciences.
    • NXP Semiconductors (NASDAQ:NXPIgains 5.9% on Q3 results that beat on revenue. Q4 guidance has total revenue from $2.315B to $2.465B (-6% to flat Y/Y) with $2.225B to $2.375B in Product revenue (-5% to 1% Y/Y).
    • Total NXP revenue came in at $2.45B (+2% Y/Y; +7% Q/Q) with $2.35B (+3% Y/Y; +7% Q/Q) from HPMS and $94M from Corp. & Other. 
    • Segment breakdown: Automotive, $990M (+4% Y/Y); Secure Connected Devices, $717M (+1%); Secure Interface nad Infrastructure, $511M (+5%); Secure Identification Solutions, $133M (-4% on lower demand). 
    • Total Non-GAAP gross margin came in at 53% and the operating margin was 30%. The GAAP operating margin was 90.4% as the result of the $2B termination fee associated with the failed Qualcomm takeover. 
    • Earnings call is scheduled for 8 AM ET with a webcast available here
    • Press release.  
    • Previously: NXP Semiconductors EPS of $5.60 (Oct. 31)
    • The tech giant is expected to report a rise in fourth-quarter revenue and profit after the bell today, helped by demand for its pricey iPhones.
    • Some other things to watch are Services growth (App Store, Apple Music, iCloud Storage and Apple Pay) and Other Products (Apple Watch, Apple TV and HomePods).
    • Even with October's tech pullback, Apple (NASDAQ:AAPL) shares are still up 27% YTD, and trends seem to be in the company's favor heading into its busiest time of the year.
    • See estimates for the upcoming results here

  18. do we believe trumps latest lie about something positive china situation or is 7040  on nq an even better short personally i dont trust him.


  19. Thoughts on LB 1/2019 BCS.  I have a 10 30/40 BCS.  I did not sell puts.  I also have a 2020 20/35 BCS spread with $30 puts.  On the 2019 spread I am down around $1500. I am thinking of either rolling down the 40s to $35 and picking up $1 or selling $27.50 puts to pick up approximately $.85.  Thoughts.    


  20. CRS on your HBI trade. Roll the Jan 20 18 call to Jan 21 15 call. Hold back on selling the Jan 21 caller for a better entry. But then sell only 5 callers and leave the Jan 20 23 caller to possible expire.
    I do have the stock in my armchair trades as the premium on a 3.8% yield stock is little. So one better holds the stock and collects premium and div.
    I would only sell a small amount of Jan 21 15 puts and hold back the rolling of the Jan 20 18 puts.


  21. Here's why oil and gasoline are collapsing – US production now over 11Mb/d!  

    – U.S. monthly crude production exceeds 11 million barrels per day in August

    U.S. oil falls further below $65 after its worst month in more than two years

    But that's August, this is October so that production is baked in already.  

    Holy crap – had to stop out my whole /RB play as $1.72 failed, will get back in 4 long at $1.70 or back over $1.72 but down $5K was enough pain for me!  

    HBI/Trshroy – Looks good to me.  I would have sold the 2021 $15 puts for $2.50 or even the $17 puts for $3.60 as that's net $13.40, which is only 10% more than your net but you get an extra $2 in your pocket.  Also, I'd rather sell 10 of those ($3,600) and buy 25 of the 2021 $13s for $4.20 ($10,500) and sell 15 of the 2021 $17s for $2.40 ($3,600) so you've spent net $3,300 in cash and, for an IRA, I imagine it's $17,000 in margin but it's a $17,500 spread and you can use the uncovered 10 to sell short-term calls while you wait.  Even now, the Jan $16s are $1 but I'd want to be at at least $17 before selling the $18s for hopefully $1 and 10 of those is $1,000 so if you do that 8 times that's $8,000 back on your $17,000 in margin and, of course, there's no upside that can hurt you other than capping some of your gains (but you can always roll the short-term calls.  

    HBI/CRS – The 2020 $18 puts are $3.70 but the stock is at $16 so $1.70 is premium so no point in changing them.  I would salvage the $1.40 from the 2020 $18s and use that to roll to the 2021 $13 ($4.20)/17 ($2.40) bull call spreads for $1.80 and roll the short $23s (0.35) to the Jan $17s (0.50) and then, from now on, whenever you sell more short-term calls, you can use that money towards rolling some of the 2021 $17s up to the $20s (now $1.45) for about $1 so let's say you sell 10 April $18s for 0.50 in the next round – that's $500 and that pays to roll 5 of your $17s to $20s and you can keep doing that until your wider spread is paid for but no sense in paying for it out of pocket if you don't have to.

    Iran/Japar – Well $1.70 just failed and no, looking at the Iran chart above, it's not really enough to impact the global market and they will sell their oil to someone – maybe just not the EU and South Korea but China already told us to F off on the sanctions and I doubt Turkey will comply but maybe India…

    Trump/Tommy – Usually believing the opposite of whatever Trump says makes you right 90% of the time. 

    LB/Nom – A Jan spread?  You should have adjusted that ages ago.  Rule of thumb is you salvage the money from the long calls as soon as their price drops below the net of the spread.  Maybe you did only pay $4 for the spread but I doubt you paid more than $5 so not terrible.  You say you are down $500 and the $40s are 0.45 so net $3.50 means I guess you did pay $4 for the spread so I'd take the $4.20 for the short $30s and assume the short $40s will expire worthless and pick up the 2021 $30 ($7.20)/$40 ($3.70) bull call spread for $3.50 and everything is beautiful.  If you can't do the naked short calls, then I'd do the roll and wait for them to expire worthless rather than by them back as 0.45 is a total rip-off for them and it's more than 10% of what you can sell longer calls for AND we think LB will go higher, right?  you can also offset your now-naked 10 short Jan $40 calls by selling 5-10 Jan $30 puts for $1.45 as that's a very nice offset or the $27.50s if it makes you more comfortable.  


  22. Hi Phil, can I get your opinion on MET please. Earnings after the close today.


  23. Brent (/BZ) testing $72.50 is down 3% for the day (charts are delayed).  

    /CL testing $63.50 and would be crazy if they fail that as it's also down 3%, which is a 2.5% drop with a 20% overshoot.

    From a bounce perspective, call the bounces 0.40 but I'd say use the 0.50 lines at $63.50 (weak) and $64 (strong) now. 

    /RB overreacting and down 3.5% at $1.69 which is a 0.06 drop for the day which is a massive move for /RB so the bounces there are 0.0125 to $1.7025 (weak) and $1.715 (strong) so back in with 8 long

    No demand growth for /RB this year:

    And the crazy gets crazier:

    Mexico is warning the U.S that the second caravan of migrant invaders has gasoline and firearms! That my Patriot friends are an act of war. Pray ???? for the safety of our troops.

    Here's a demand booster (long-term):

    1.  

      New GM Engine Coming To Wide Range Of Heavy Trucks: The new 6.6L gasoline motor is slated for at least seven different GM models. Your Source For Automotive News. http://www.automotivetestdrivers.com/new-gm-engine-

    Venezuelans face gasoline shortages amid refinery breakdowns

    Gasoline may just be trading down ahead of the election to keep the voters happy (happy voters vote for incumbants).   ALL the stops are being pulled out by the GOP this week.  I still like the trade into next week at $1.695 but it takes balls to hold it!  

    runs out of crude to refine for domestic gasoline consumption. https://www.bloomberg.com/news/articles/

    This one is stuck in my head today:

    Sweet child in time
    You'll see the line
    The line that's drawn between
    Good and bad
    See the blind man
    Shooting at the world
    Bullets flying
    Ohh taking toll
    If you've been bad
    Oh Lord I bet you have
    And you've not been hit
    Oh by flying lead
    You'd better close your eyes
    Ooohhhh bow your head
    Wait for the ricochet

    Mostly the screaming part….


  24. Well, there's a quick $3,200 back on /RB at $1.70 so tight stop below now and try again at $1.70.


  25. EU bid to sidestep US Iran sanctions hits quicksand

    Commentary: Five reasons why Trump’s Iran sanctions will fail

    bans from food exhibition due to US sanctions

    Denmark consulting allies over possible Iran sanctions – The Local

    Iran sanctions: US silent on granting waiver to India

    Iran's first export terminal project with planned capacity of 10.8 million mt/year stalled due to impact of US , company executive says.

    Rouhani: New Sanctions Will Backfire as ‘Oppressive’ U.S. Is ‘in Retreat’ https://www.breitbart.com/middle-east/20 via

    prices set for 4th week of falls as a wave of supply from and the U.S. combines with global economic gloom

    US agrees to grant India waiver from Iran sanctions http://www.ecoti.in/m-m7jZ78 via

    Though there are conflicting accounts, it does look like India will get a waiver and the fact that there's so much chatter means the sanctions are a go as of Monday so I think this is somewhat of a flush ahead of a strong move back up for oil and gasoline after the election into Thanksgiving.  They certainly made is crushingly painful for all the bears. 

    As expected, stopped out at $1.70 so now reload at $1.69 (4 this time as less to make up) or back over $1.70 on /RB.


  26. Meanwhile, if we're pumping 11Mb/d that's 4Bn barrels a year which is about 20% of our total reserves – talk about robbing the future to make things look good in the present!  

    I have long advocated that we should only import oil and save our last 21Bn barrels for a rainy day but clearly no one listens to me…

    Of course that's conventional oil and about half our production is shale so I guess we're only using up 10% of our reserves but still – if there is an oil crisis before we fully electrify – we're going to be pretty screwed.  


  27. India and South Korea agreed with the U.S. on the outline of deals that would allow them to keep importing some Iranian oil, according to Asian officials with knowledge of the matter.

    No final decision has been made and an announcement is unlikely before U.S. sanctions on Iran are reimposed Nov. 5, the officials said, asking not to be identified because the information is confidential. That opens the possibility that the terms could still be modified or the deals scrapped entirely.

    The waivers would ensure at least some Iranian oil continues to flow to the global market, potentially calming fears of a supply crunch and further suppressing international oil prices just before mid-term elections in the U.S. Brent crude has fallen 14 percent from over $85 a barrel last month on signs that other OPEC producers will pump more to offset any supply gap.

    Of course, if not for the hanging threat of Iran Sanctions and presumed OPEC production cuts – would oil have ever been over $65 in the first place?

    Look how magnetic that $60 line is looking!   Of course that's $70 on Brent and goodbye any shot of an Aramco deal at $70 so I think the Saudis are about at their limit for being nice – even if they are trying to make up for chopping an American citizen up into little pieces…

    Saudi Arabia set for series of privatizations Minister addresses FII panel moderated by Arab News columnist Saudi Arabia plans to sell a stake in oil firm Saudi Aramco, which could raise around $100 billion, plus a number of other privatizations worth as much as $200 billi…

    The need that money DESPERATELY as their $700Bn economy is 80% oil revenues so oil below Brent $70 (and Saudi oil is way lower than Brent) directly comes out of their GDP almost dollar for dollar which then, in turn, makes them more desperate to fill the gap by monetizing Aramco but the lower oil goes, the less they get for Aramco, etc.  Very, very ugly for the Saudis at the moment.


  28. Yodi and Phil, thanks for the advice on my HBI spread! 


  29. /YM getting close the strong bounce line (25,300) it will be the first (and only to test)

    /ES nowhere close to 2,780

    Nas needs 7,080 to be weak:
     

    RUT 1,530 is weak, 1,575 is miles away:

    Yet no one seems too worried:

    11,500 on DAX and 3,200 on Euro StoXX failed today – NOT GOOD

    /NKD failing 22,000 has been not good already:

    The premise of being long on US markets at this time would have to be that rallies never retrace and the people who sold stock in 2017, when prices were as much as 20% lower than we are now – were all completely insane and didn't know how to value companies and the people who sold stocks from 2014 to 2017 were complete mad men, throwing away perfectly good companies for 50% below their actual value.

    I think somewhere between here and there lies the truth but, sadly, I think that truth is another 10% down from here…


  30. I think Beto wins texas. Poor Cruz. He was Dump's main opponent in 2016 primary near the end there, and is now needing to hug up to him and it makes him look like a soy milk beta male. I think he's toast. 


  31. Beto – I agree. Beto has the chops to be POTUS someday.

    Tomorrow's Hero's are starting to emerge…. :)


  32. I do hope Beto wins


  33. don't give the evil eye BDC  ;-)


  34. I'm looking at Alabama special Senate data. The State went 62.9%-34.6% for Turnip in 16, and then 49.9-48.4% for Jones, a monumental +29.8% Dem voter shift. Obviously Moore was a disturbingly flawed candidate, but he still got 73% of the white male vote.

    Looking at Texas the 2016 election is far more "purple" at 52.6-43.4% for Dump. So Beto needs a 9.4% shift. This is really very doable. Jones wasn't so much a charismatic candidate as much as Moore was flawed. In Texas, Beto is far more charismatic though Cruz is nowhere nearly as flawed. The dynamic helps Cruz but the vote shift necessary is only a third of Alabama's.

    If Dems win the Texas the path to 51 is much higher than the 14% that 538 has them at now.

    In general I think the pollsters lose in the other direction this year versus 2016. They have incentive to be conservative because they lose credibility if they make a big prediction like "Dem turnout will be super high this year" and it doesn't happen, because it isn't based on any type of statistical data. It's not that they are bad at what they do, it's just the only poll that is fairly accurate at all is the actual vote tally one. The biggest problem for them by far is the appallingly low voter turn-out in this country at <60% and sometimes as low as 35% in some areas, especially in Texas. This is a huge unknown for the pollsters and is the toughest metric to predict for: who's going to actually vote. This is based on motivation and then armchair guys have to make a prediction on relative motivation which is heavily biased.


  35. Cruz/BDC – Never underestimate the stupidity of the Texas voters.  They elected that pond scum in 2012 so this is his first attempt at re-election (or Texas' first chance to correct a mistake).  According to Trump, Cruz shouldn't even be a citizen as his father is Cuban and his mother is from Delaware but Cruz was born in Calgary, not even in the US, which Trump still wouldn't count.

    So it all depends on how offended the Spanish voters are by the way he's bent over for Trump.  

    In the Republican senatorial primary, Cruz ran against sitting Lieutenant Governor David Dewhurst. Cruz was endorsed first by former Alaska Governor Sarah Palin[76] and then by the Club for Growth, a fiscally conservative political action committee;[77] Erick Erickson, former editor of prominent conservative blog RedState,[78] the FreedomWorks for America super PAC,[79] nationally syndicated radio host Mark Levin,[80] Tea Party Express,[81] Young Conservatives of Texas,[82]and U.S. Senators Tom CoburnJim DeMint,[83] Mike Lee,[84] Rand Paul[85] and Pat Toomey.[86] He was also endorsed by former Texas Congressman Ron Paul,[87] George P. Bush,[47] and former U.S. senator from Pennsylvania Rick Santorum.[88] Former Attorney General Edwin Meese served as national chairman of Cruz's campaign.[47]

    In the November 6 general election, Cruz faced Democratic candidate Paul Sadler, an attorney and a former state representative from Henderson, in east Texas. Cruz won with 4.5 million votes (56.4%) to Sadler's 3.2 million (40.6%). Two minor candidates garnered the remaining 3% of the vote.[92] According to a poll by Cruz's pollster Wilson Perkins Allen Opinion Research, Cruz received 40% of the Hispanic vote, vs. 60% for Sadler, outperforming Republican presidential candidate Mitt Romney with the Hispanic vote in Texas.[93][94]

    Cruz has sponsored 25 bills of his own, including:[98]

    • S.177, a bill to repeal the Patient Protection and Affordable Care Act and the health-care related provisions of the Health Care and Education Reconciliation Act of 2010, introduced January 29, 2013
    • S.1336, a bill to permit States to require proof of citizenship for registering to vote in federal elections, introduced July 17, 2013
    • S.2415, a bill to amend the Federal Election Campaign Act of 1971 to eliminate all limits on direct campaign contributions to candidates for public office, introduced June 3, 2014

     

    On the bright side for Cruz:

    On March 1, 2016, Super Tuesday primary day, Cruz won Texas by 17%, along with Alaska and Oklahoma, providing him with four state primary victories total.[188] In the Texas primary, Cruz received the most votes in all but six of the state's 254 counties.[189] 

    Of course, in 2012, Cruz's opponent was Paul Sadler, who was a very uninspiring sacrificial lamb for the Democrats for a seat they had no chance of winning.  So, if you consider that Sadler got 40% of the vote with no support whatsoever – I'd say Beto has a pretty good chance as he's a great guy and well-backed and now people know what a total tool Cruz is:

    I mean, seriously, 20 to 1?  

    Now that's more like it!  


  36. Beto currently sitting at +430 on bookmaker sportbetting site, thats an implied probability of approx 19%, 


  37. lost under the Title Fights in this election is how awesome Scott Walker's ass is going to kicked in Wisconsin.


  38. It's a beautiful thing…. :)


  39. LB/Phil – OOP currently we're long 2020 $20 calls short $35 puts, with the recent strength is it time to sell some calls, say $35 or $40's or? Sorry if i missed any previous adjustment, I'm using the OOP Oct 18th update. Thanks.


  40. Stjeanluc; Followed your VXX trade from a couple of weeks ago.  Sold December 75 calls (10 delta at the time).  Just wondering when you close these.  I know you roll when they hit 20 delta.  If that doesn't happen, do you hold to expiration?  Thanks for the winning idea.


  41. Gun Control: Australia vs America – Tonightly With Tom Ballard

    https://www.youtube.com/watch?v=rgq3ZfCuRYo&feature=share


  42. Walker/BDC – Good riddance!  

    LB/Air – Oh come on, have a little faith.  Remind me at $35 – especially if we haven't had earnings yet but I'll be really pissed if we cover and they pop 10%.  All about guidance but this year should be $2.50, which is 16x $40, which I think is a fair price for next year.  As long as the bounce lines are holding – I think it's silly to take under $35 money.

    Yay /RB – Already.  Back in black but that was a tummy-turner!  Taking money and running at $1.72, of course, back to just 2 long at that avg with DD at $1.70 if we test it again but, otherwise, I'm comfortable with a long hold at this price – miles better than where we started shorting.   Taking the stops along the way was the key to victory on that one, if we had just kept adding to it – we'd still be down a bit. 


  43. Coinbase has added ZRX and USDC (they already had BTC BCH ETH LTC ETC)


  44. $1.715 is the strong bounce on /RB so still bullish if it holds on a one-day turnaround. 

    By the way, very important lesson on the day:  Rather than giving up on the /RB bet as it moved against us we ran our bounce lines and we read all the news we could to check our premise and that's what kept us bullish rather than capitulating with a big loss.  

    You can't just let a chart scare you out of a position, you need to know why you are in a position and then find out if anything changed or your logic was flawed before taking losses for no reason. 

    On the other hand, the second you find out something new has happened or you missed before – you have to very quickly change to looking for a reason NOT to get out – since there was an error in the original logic.  


  45. NLY looking to buy stock and sell the Jan21 10/10 straddle for 2.00 stock 9.79. Any comments.


  46. LB/Phil – thanks Phil, my thoughts exactly, (i was asking for a friend)! ;) lol 


  47. Interesting on AAPL no one seems to dare making a move. Could be up or down 20$ my guess.


  48. Bio your recommendation on VKTX seems to show sprouts. Just took a blind poke at the time Thanks


  49. NLY/Yodi – Unfortunately, the spreads on the options are so wide (thinly traded) that it's hard to say what you'll get.  The 2020 $8s are $2 and the Jan $8s should be at least $2.50 and I'd rather sell those than the $10s for 0.45 as it's the same premium but better protection and lower cost.  Selling the $10 puts for $1.70 is not terrible and, if you get that combo, 1,000 shares would be net $5.60 so called away at $8 is fine and maybe go 2,000 shares at $9.80 ($19,600), selling 20 $8 calls for $2.50 ($5,000 – full cover) and 10 puts for $1.70 ($1,700) is net $12,900/2,000 = $6.45 with less assignment risk and, most importanly, more $1.20 dividends!  


  50. His / BBBY – Up like a rocket today….  Debt cut to junk yesterday I don't see any news.  Anything that could account for this – other than a happy rising market


  51. What the Constitution Really Says About Birthright Citizenship



  52. The global fallout from the Khashoggi murder is bad news for the Saudis


  53. U.S. Accuses Two Chinese Firms of Stealing Trade Secrets From Micron Technology




  54. BBBY/Batman – I wouldn't call it a rocket – it was just so oversold there wasn't enough bad news to keep it down there.  

    MET/Kustomz – Wow, I meant to answer that earlier but then I thought we just talked about it and went to look it up but then got distracted.  Anyway, it was Monday and I said:

    MET/Coulter – I'm not sure what kind of property exposure they have via hurricanes so no way to know how earnings go but rising rates are generally good for insurance companies, who have to invest their massive reserves in conservative instruments like bonds.  Half of MET's business is overseas so they are well-diversified and, AFTER earnings, I may want to add them but not before.

    We may avoid a sell-off into the close today.  Dollar down 1% and markets up 1% – AMAZING!  /RTY up 2%, that's why they were our long pick yesterday (see the logic there) – they had the most to bounce so they made the best choice.  1,550 failed though (so far) and they need 1,575 to make strong (again, that's why we thought they had the most to gain).  


  55. Phil NLY thanks.  closed before your message very quickly at 10/10  2$ with the stock at 9.79 one has a protection down to 7.79,

    Obviously plus the div. We see how it goes. I do have the Jan 20 already.


  56. MET/No worries Phil, appreciate the input.


  57. VXX / Options – I generally hold until expiration. These are 60-90 days trades anyway so no big deal. You can of course close them earlier but who needs another transaction fee! Unless it's under $0.05 and I believe free in TOS. It's a fun trade no matter what, and has been even better the last 2 weeks! Go VIX…


  58. Interesting:

    The £70,100 Tesla Model S 75D – the car with the fourth longest range between charges – has a real range of 204 miles, which is 100 miles shorter than Tesla advertises on its website, according to the old NEDC test cycle. 

    Arguably a more realistic range figure would be produced under the latest WLTP test standards, but Tesla is still knowingly telling potential customers that this particular car can cover 304 miles between charges.


  59. Bigger picture on /RB I would ignore the spike to $2.25 as BS and say we fell 20% from $2.12 ($1.696) so that's 0.42ish and we should call them 0.08 bounces to $1.77 (weak) and $1.85 (strong) so, at $1.72, we almost certainly should see $1.77 and then we'll have to see how things go there.  


  60. Remind me tomorrow we should cash in those SCO longs in the OOP and STP.  Should have done that when we flipped bullish on /RB earlier.  

    LTP back to $933,000 STP still $300K so that's better than the 19th's $933,000 + $284,000 by a bit but we were about $70,000 lower in the LTP for a while – mostly due to the high VIX penalizing us for all the shorts we sell.  Now that that's calmed down, we snapped back nicely and our bullish adjustments are working well.  All in all, I'd say we're in fine shape for a nice rebound but we should spend money on more hedges to take the edge off that $70,000 loss if we dip again.


  61. And check out the MTP – so well-balanced I want to frame it!  

    Was $94,000 on the 18th and, don't forget, this was just a $50K portfolio so making another 20% during a rough two weeks is fantastic!  


  62. And F GE for pulling us down, right?  cheeky


  63. There we go….

    https://www.washingtonpost.com/business/2018/11/01/president-trumps-top-economic-adviser-calls-federal-minimum-wage-terrible-idea/

    The White House’s top economic adviser said Thursday that he opposes the federal minimum wage, arguing that the decades-old law is a “terrible idea” that drives up costs for small businesses across the country.

    Even though proven wrong many times! But CEOs being paid 500x the average worker doesn't drive the cost of business.


  64. AAPL – Good news and Bad ( or conservative not) maybe we can buy some now

    CUPERTINO, Calif.--(BUSINESS WIRE)-- Apple® today announced financial results for its fiscal 2018 fourth quarter ended September 29, 2018. The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. International sales accounted for 61 percent of the quarter’s revenue.

    Services revenue reached an all-time high of $10 billion. Excluding a one-time favorable adjustment of $640 million recognized in the fourth quarter of fiscal 2017, Services revenue grew from $7.9 billion in the fourth quarter of fiscal 2017 to $10 billion in the fourth quarter of fiscal 2018, an increase of 27 percent.

    Apple is providing the following guidance for its fiscal 2019 first quarter:

    • revenue between $89 billion and $93 billion
    • gross margin between 38 percent and 38.5 percent
    • operating expenses between $8.7 billion and $8.8 billion
    • other income/(expense) of $300 million
    • tax rate of approximately 16.5 percent before discrete items


  65. How does the largest company in the world post 20% revenue growth, and the stock drop? They throw off $1.5B in cash per week. Why the hit for guidance at the low end of the range?


  66. Deano / AAPL – It's a gift from the idiot analysts….  I buy at a bit after hours if it hits 210 – I'll also look at some spreads… Im sure Phil will have ideas


  67. AAPL disappointed – no help for /NQ there.  

    I'm out, will catch up later. 


  68. Oh, it's a buy, they had lower IPhone sales for the Q but so what.  First people complain they're a one-trick pony and then they have a Q with 20% revenue growth from things other than IPhones and people panic.  People are idiots! 


  69. ASP up everywhere ( except Mac) strong growth YOY in a ll regions ( as well as sequentially). Huge performance numbers…. we'll see what they say about next qtr – 212….


  70. looks like MET did well up 3.5% after bell


  71. BOOM!


  72. AAPL – no unit sale reporting only rev and Cogs ( this is added) but. units removed…..  Analyst are taking this as a sign that phone volumes are going down and apple wants to hide this.  AAPL – thinks install base is more important as are services ….


  73. well down day tomorrow for markets ( I think). glad hedges are in place


  74. Aapl

    OH oh….no more unit sales guidance for iPhones, iPads or macs….that is not helpin the stock in AH.

    Idiots or some truth  to them hiding declining numbers…doesn’t matter how Cook and company think of the company, it’s what Wallstreet thinks….for now, at least.


  75. AAPL – bought some at 210 sold at 209 – small loss wait for tomorrow….  I bet buffet is a buy-in in the low 200s.


  76. Phil / AAPL 10% line is about 207 – correct?  next support at about 185?  I'm squinting at this and calling 230 the recent  high


  77. I really don't care that much about unit numbers from AAPL. The facts are that update cycles are getting longer with the higher prices. AAPL has seen that coming for a while I think and the pricing model reflects that reality. Obviously, there is a limit to how far you can stretch that – there will be a time when you can't raise the average price that much and unit numbers don't grow so revenues don't grow either in that stream. But it looks like it won't matter as much since other revenue streams will increase.


  78. AAPL/Batman – Just doing what we expected:

    October 12th, 2018 at 9:42 am | (Unlocked) | Permalink

    Nasdaq 7,700 was the high-water mark and that is exactly 42.5% over the old Must Hold level of 5,400, where we topped out in 2000.  As we know, it's really the AAPLDAQ so let's consider AAPL's high of $233 and 5% below that is $221 and AAPL blew that but they really topped out at $230 since 9/1 so better to work with that and call it $218.50 which is $12 so $2.50 bounces and $216 is the overshoot.

    Pretty much we can watch AAPL for the story of the whole market.  Is the most valuable company on Earth (by a wide margin now) and the only one that comes close to justifying it's $1Tn valuation able to attract bidders after a 5% correction.  If not – what hope can the rest of them have?  If AAPL fails to hold $216 – then the 10% line on AAPL is $207 and below that is a 20% correction = all the way to $184 but, as you can see on the chart – AAPL was obeying those lines on the way up – so why wouldn't it on the way down?

    So, getting back to /NQ, we're in a 10% correction (which is why SQQQ was our primary hedge) from 7,700 to 6,930 and the 5% correction was 7,315, which held on 10/8 but wasn't even a pause yesterday so I hesitate to even used 7,315-6,930 as a range.  If I did, the strong bounce of that drop would still be the weak bounce of the 10% drop so I'd have to say that NOTHING less than the weak bounce of the 10% drop on the Nasdaq would be in the least bit bullish.

    7,700 to 6,930 is 770 points and 20% of that is 154 points so 7,084 we can call 7,100 and that's our primary goal and 150 over that is 7,250 and that's where we start to recover.  Given that AAPL $184 is RIDICULOUS and would cause me to sell everything and buy AAPL, I'd say we're not going to get a 20% correction or, if we do – it will be a brief one.  

    We are, however, in a panic and there are other Nasdaq stocks that deserve to be much lower so AAPL may get dragged down with the index – I just don't see it lasting.  We're checking our bounce lines mostly to know when to cash out our hedges – not so much to get bullish too quickly!  

    So NOTHING less than 7,100 on /NQ is going to be a bullish indicator and the same 150-points below 6,930 – call it 6,800 would be an overshoot to the downside on a 10% correction but below that is – DOOM!!! 

    AAPL breakdown at $216 – if it happens.  Of course, we're betting that, into earnings, they move closer to $220.  

    October 19th, 2018 at 12:17 pm | (Unlocked) | Permalink

    AAPL – We got way more bearish last month and sold those very aggressive June calls, which have already dropped $33,000 so let's buy back 15 of the June $200 calls ($31.70) and turn this into a more normal spread, locking in 60% of our quick gains.  Of course, if AAPL does pop on us, we're happy to roll and DD the longs and, if they go lower, we're still happy to roll and DD the longs so it's hard to lose…

    And we're at $207 exactly at the moment in overnight trading so 5% Rule rules!  

    Meanwhile, AAPL is down 6.5% and /NQ is only down 0.85% and AAPL is 17% of NQ and 17% of 6.5% is 1.1% so the drag by AAPL alone is not being reflected properly in the /NQ Futures at 7,020 so it makes a good short with tight stops above!  


  79. Comment content omitted because it is too long.


  80. These earnings swings are extreme:

    • There's a notable rally in the lodging sector after several earnings reports arrive in strong amid talk from management on improving room demand and RevPAR trends.
    • Gainers spread across hotel chain operators and timeshare companies include Wyndham Destinations (WYND +18.2%), Extended Stay America (STAY +11.8%), Bluegreen Vacations (BXG +5.8%), Red Lion Hotels (RLH +6%), Hyatt Hotels (H +4%), Choice Hotels (CHH +2.8%), Marriott International (MAR +3.1%), InterContinental Hotels Group (IHG +2.8%), Hilton Worldwide (HLT +2.2%), Wyndham Hotels & Resorts (WH +1.9%), Hilton Grand Vacations (HGV+16%) and Marriott Vacations Worldwide (VAC +8.1%).
    • The same type of vibe is being felt with cruise line stocks as Carnival (CCL +2.8%), Norwegian Cruise Line Holdings (NCLH +4.4%) and Royal Caribbean (RCL +2.4%) all shoot higher.
    • Lodging-related names Playa Hotels & Resorts (PLYA +3.6%), MGM Resorts (MGM +4.9%) and Boyd Gaming (BYD +5.6%) are also pushing up.
    • Ballard Power (BLDP -19.6%) plunges as much as 20% after reporting a slight Q3 earnings miss but issuing downside guidance for FY 2018, seeing revenue of $90M-$95M vs. $116M analyst consensus estimate.
    • BLDP says Q3 revenue of $21.6M fell 32% Y/Y, far short of consensus, as "near-term headwinds" in China resulted in a material reduction in MEA sales to the Guangdong Synergy-Ballard joint venture in Q3 and in the company's outlook; slower growth in market demand has been primarily the result of the relatively modest pace of hydrogen fueling station roll-out.
    • Given the uncertainties regarding Synergy-Ballard JV's ability to meet its take or pay commitment under its contract with BLDP, the company says it is removing the remaining value of the contract from its order backlog and 12-month order book.
    • OncoMed (NASDAQ:OMED): GAAP EPS of $0.16 beats by $0.36.
    • Revenue of $19.52M (+282.0% Y/Y) beats by $12.14M.
    • Shares +5.08% AH.
    • Press Release
    • Tanger Factory Outlet (NYSE:SKT) lifts lower end of 2018 FFO per share guidance range by 2 cents to $2.42-$2.46 from $2.40-$2.46; consensus estimate of $2.43.
    • 2018 same-center NOI guidance: down 1.5-2.0% vs prior view of down 1.5-2.5%.
    • SKT -0.7% as CEO Steven B. Tanger sounds a note of caution approaching 2019. "There may still need to be selective adjustments to rents and term as we aggressively work to ultimately further increase occupancy with productive tenants," he says.
    • Q3 adjusted FFO of $61.9M, or 63 cents per share, beats consensus estimate by 3 cents; flat vs. year-ago quarter.
    • Q3 consolidated portfolio occupancy 96.4%, up 80 basis points from Q2-end.
    • Portfolio NOI rises 2.2% for the quarter and 1.1% YTD; same-center NOI fell 1.0% for the quarter and declined 1.5% YTD.
    • During Q3, Hurricane Florence caused seven Tanger Outlet Centers, or 13% of its overall portfolio, to close for a cumulative total of 27 days in 2018. 
    • Previously: Tanger Factory beats by $0.03, beats on revenue (Nov. 1)
    • Caesars Entertainment (NASDAQ:CZRrallies 8.8% after posting an unexpected profit in Q3 on revenue of $2.19B (+2.9% Y/Y) and EBITDAR of $600M (-2.1% Y/Y).
    • CEO update: "Despite soft demand in Las Vegas during the third quarter, our booking pace is up meaningfully in the fourth quarter and we expect to deliver approximately 4% to 6% adjusted EBITDAR growth for the full year. Our results demonstrated continued broad-based strength across our regional properties and momentum in our operational efficiency efforts. Our performance this quarter shows the benefits of our portfolio approach and the balance between destination and regional assets."
    • Previously: Caesars Entertainment beats by $0.18, misses on revenue (Nov. 1)
    • Previously: Caesars CEO to step down next year (Nov. 1)
    • Apple’s (NASDAQ:AAPLdrops 6.8% on Q4 results that beat EPS and revenue estimates with revenue up 20% Y/Y to $62.9B. The report comes after the iPhone XS and XS Max releases in late September and roughly the first week of those sales appear in the quarter.
    • Q1 guidance (holiday quarter) has revenue from $89B to $93B (consensus: $92.88B), gross margin from 38% to 38.5% (consensus: 38.6% ).
    • IPhone: Shipments, 46.9M (consensus: 47.5M); Revenue, $37.18B (consensus: $35.56B); ASP, $793 (consensus: $750.78)
    • IPad: Shipments, 9.7M (consensus: 10.53M); Revenue, $4.08B(consensus: $4.62B); ASP, $421.5 (consensus: $435.25).
    • Mac: Shipments, 5.3M (consensus: 4.87M); Revenue, $7.4B (consensus: $6.92B); Blended ASP, $1,398 (consensus: $1.43K).
    • Services revenue was up 27% Y/Y to $10B (consensus: $10.2B).
    • China: Greater China revenue grew 16% Y/Y and 19% Q/Q to $11.4B.
    • Gross margin was 38.2% (consensus: 38.3%) and operating expenses came in at $7.96B (consensus: $8.02B).
    • Earnings call is scheduled for 5 PM ET with a webcast available here.
    • Press release.
    • Suppliers that can move on the prints of Apple and Cirrus Logic: (NASDAQ:SWKS), (NASDAQ:AVGO), (NASDAQ:FNSR), (NASDAQ:QRVO), (NASDAQ:QCOM), (NASDAQ:LITE), (NYSEARCA:SMH).
    • Previously: Apple's Q4 numbers to beat (Nov. 1)
    • Previously: Apple beats by $0.13, beats on revenue (Nov. 1)
    • Previously: Apple declares $0.73 dividend (Nov. 1)
    • Update: On the earnings call, Apple says it will no longer provide unit sales figures for the iPhone, iPad, and Mac. Investors don't like that idea and shares have now dropped 6.4%.
    • Regarding China, Apple says the iPhone had strong double-digit growth in the region and that China isn't one of the emerging markets feeling pressure (those would be Turkey, Russia, India, and Brazil.)

  81. GoPro -7% after margin miss

    • GoPro (NASDAQ:GPRO) is down 7.4% in AH trading after the company's gross margin rate missed estimates.
    • The company reports gross margin was 33.2% of sales vs. 34.1% consensus and 40.1% a year ago.
    • Revenue was down 13% Y/Y during the quarter to $286M.
    • Shares of GoPro were up 9.3% at the closing bell before the earnings report .
    • Previously: GoPro beats by $0.02, beats on revenue (Nov. 1)
    • Shake Shack (NYSE:SHAK) reports same-shack sales fell 0.7% in Q3 to miss the consensus mark of +0.9%..
    • Guest traffic was down 4.0% during the quarter.
    • Shake-level operating margin came in at 25.8% of sales.
    • Adjusted EBITDA increased 17.5% to $21.3M.
    • The company plans to open 33 to 34 new domestic company-owned shacks.
    • Shake Shack reiterates that it expects 2018 revenue of $450M to $452M vs. $452M consensus
    • Shares of Shake Shack are down 6.15% AH to $51.26 after a 3.61% gain into the earnings report.
    • Previously: Shake Shack beats by $0.08, beats on revenue (Nov. 1)
    • Universal Display (NASDAQ:OLEDplunges 18.9% on Q3 results that missed revenue and EPS estimates. Downside FY18 guidance has revenue from $240M to $250M (consensus: $304.62M).
    • Q3 material sales revenue increased 9% Y/Y to $51.2M. Royalty and license fees revenue increased 94% to $23.3M. Cost of materials increased 17% to $13.8M. Operating income was up $10.2M to $26M. 
    • Management warns that the “magnitude of the second-half pick-up in our material sales is not shaping up to the degree that we had earlier forecasted. 
    • Earnings call is scheduled for 5 PM ET with a webcast available here.
    • Press release.  
    • Previously: Universal Display misses by $0.18, misses on revenue (Nov. 1)
    • Starbucks (NASDAQ:SBUX) pops in AH trading after strong FQ4 results.
    • Global comparable store sales rose 3.0% during the quarter to top the +2.4% consensus estimate. Transactions were down 1% during the quarter, while ticket/pricing added four percentage points of growth.
    • Global comparable sales by region: Americas +4% vs +2.9% expected, China/Asia-Pacific +1% vs. +0.1% consensus, EMEA +2% vs. +1.0% consensus.
    • The company's consolidated operating margin fell 270 bps to 15.2% of sales. Operating margin in the Americas segment was down 110 bps to 21.9%.
    • Starbucks expects FY19 EPS of $2.61 to $2.66 vs. $2.63 consensus. Consolidated revenue growth of 5% to 7% is anticipated (in-line with expectations). The company continues to expect to add ~2.1K net new Starbucks stores globally.
    • Shares of SBUX are up 8.13% AH to $63.34.
    • Previously: Starbucks beats by $0.02, beats on revenue (Nov. 1)
    • Previously: Starbucks declares $0.36 dividend (Nov. 1)
    • Weight Watchers (NYSE:WTW): Q3 Non-GAAP EPS of $0.94 misses by $0.05; GAAP EPS of $1.00 beats by $0.02.
    • Revenue of $365.8M (+13.0% Y/Y) misses by $13.57M.
    • Shares -5.1%.
    • Press Release
    • Kraft Heinz (NASDAQ:KHC) trades lower after posting Q3 profit below expectations.
    • Sales were up 1.6% to $6.4B, including a 1.6 percentage point hit from currency swings. Kraft saw a net 0.6 percentage point benefit from acquisitions and divestitures.
    • Adjusted EBITDA of $1.62B was tallied up vs. $1.75B consensus.
    • Organic sales were up 2.6% Y/Y in Q3 as volume gains offset lower pricing.
    • CEO update: "This reflects our strong pipeline of marketing, new product and whitespace initiatives now in the marketplace, backed by investments in capabilities we have been making for brand and category advantage. While a number of one-off factors – as well as our desire to insure customer service – held back profit in the quarter, we remain confident that we are well-positioned to deliver sustainable, profitable growth going forward."
    • Shares of Kraft are down 6.46% in AH trading to $52.55.
    • Previously: Kraft Heinz misses by $0.03, beats on revenue (Nov. 1)
    • Crude oil prices tumbled more than 2%, with U.S. WTI settling -2.5% to a nearly seven-month low $63.69 and Brent -2.8% at $72.97/bbl, after both benchmarks in October posted their worst monthly drops since July 2016, with WTI down almost 11% and Brent sinking nearly 9%.
    • The Energy Information Administration reported U.S. stockpiles of crude rose for the sixth straight week, up 3.2M barrels to 426M, the highest total since June, and the EIA's monthly oil production data showed August output surged by 2.1M bbl/day Y/Y to a record 11.3M bbl/day.
    • “U.S. oil production in August far exceeded expectations, potentially indicating a more than adequately supplied market,” wrote analysts at Simmons & Co.
    • Analysts say last week's comments by Saudi oil minister al-Falih that the Saudis would 'meet any demand that materializes' also set the tone for this week. “With those statements, al-Falih caused Iran supply disruption fears to go away and prices collapsed,” says Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management.
    • Goldman Sachs says demand concerns and diminishing fears over Iran supply losses prompted crude oil’s fall over the past month, but reiterates its year-end Brent price forecast of $80/bbl, still expecting Iran exports "will fall further in the face of low OPEC spare capacity and that oil demand growth will prove resilient."
    • McDermott (MDR +15.5%) rebounds off two-and-a-half-year lows that followed disappointing quarterly results and news of the company's plan to sell its tank storage and U.S. pipe fabrication businesses.
    • MDR today announced it won a large contract award by Petrobras (PBR -1.5%) for the Rota 3 natural gas pipeline project in support of the Brazilian company’s Santos basin pre-salt field program in Brazil; MDR defines a large contract as $50M-$250M.
    • MDR says the scope of work includes design and detailed engineering, procurement, construction and installation of six miles of a 24-inch rigid concrete coated pipeline from the already installed shallow water segment of the new pipeline system to the shore.
    • Automakers says higher interest rates and elevated transaction prices are pressuring demand, although the sales shift to a higher mix of SUVs and trucks is helping profitability. Higher input costs on steel and aluminum due to tariffs are only partially behind the price bump.
    • "It’s getting harder and harder for shoppers to afford a new car, and if the economy starts to slip, we’re at a point now where we really could start to see some significant impacts in the auto market," warns Edmunds' Jeremy Acevedo.
    • An overall sales drop of around 2% is expected for the month across the industry.
    • Fiat Chrysler Automobile (NYSE:FCAU), Toyota (NYSE:TM), Subaru, Hyundai (OTCPK:HYMLF) all posted Y/Y sales gains during the month – while Ford (NYSE:F), Honda (NYSE:HMC) and Nissan (OTCPK:NSANY) all fell compared to a year ago to lose market share. While Tesla (NASDAQ:TSLA) isn't a monthly sales reporter, the Model 3 ramp has been accounted for in the industry-wide forecasts.
    • In a positive sign for the industry, J.D. Power estimates that the ratio of average incentive to average transaction price fell 50 bps to 10.6%.
    • Encana (ECA -15%) plunges to a 52-week low, suffering its biggest ever intraday drop, as investors revolt against the $5.5B all-stock deal for Newfield Exploration (NFX +12.4%) over dilution concerns and the reversal of the company's years-long strategy of slimming down its oil and gas portfolio.
    • “While we see the strategic and financial merits in the acquisition, we suspect it will take some time for the market to digest this transaction and the addition of a new play to the company’s portfolio,” says Raymond James analyst Chris Cox.
    • NFX shares have struggled YTD because investors have soured on its Oklahoma assets in the Mid-Continent region, suggesting risks to ECA, says Wood Mackenzie's Roy Martin. “They’ve got their work cut out for them as far as applying Permian best practices on the Mid-Continent.”
    • CEO Doug Settles stressed during today's earnings conference call that the deal adds to ECA's key metric of cash flow per share; he believes shareholders will realize the benefit of the acquisition over time.
    • Investors ignore generally positive Q3 results; ECA reported Q3 non-GAAP operating income of $163M vs. $24M last year,

     


  82. U.S. Wades Into Mideast Oil Spats, as Iran Sanctions Loom


  83. Weather will be much warmer by 2050. See how these US cites will change.



  84. The Big Blockchain Lie





  85. Junk Bond Bubble in Six Images


  86. Holy crap – Nothing new but the story of Trump tweeting that he's making a deal with China is traveling the World (with Bloomberg and CNBC headlining it like it just happened every 15 mins) and boosting everything overnight and everything spiked up at 1 am. 

    Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!

     

    Europe isn't following suit yet and the VIX isn't down all that much and we KNOW it's complete BS to goose the market but what can you do?  You have to respect the technicals….

    I'd say 11,500 on the DAX and 3,200 on EuroStoxx are the last lines of sanity but, if those pop – we're probably off to the races again and Trump and Xi don't actually meet until the end of the month – so who's to say it's not going to happen until then.

    At least /RB is blasting up, now $1.726 so we got our penny and keep a tight stop on profits but hopefully we can do a bit better.  

    Dollar still weak, which makes no sense if we're "winning" on Trade Talks….

    And we're here:

    • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
    • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
    • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
    • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
    • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

    So all our indexes added a green box since yesterday morning and that's all you can expect in a single day so if one more box goes green (25,512, 2,757, 7,114, 12,500 and 1,553 at the moment) you can go long the laggards until/unless one of the boxes goes red.  

    I have a short day today as I'm flying to Puerto Rico on the way to taking a cruise tomorrow so I'll be working from a boat next week.

    Meanwhile, AAPL has not improved at all and it's a huge discrepancy with the Nasdaq (/NQ), so still my favorite short but I said that at 7,020 at 10pm and we only got  down 10 points before wiping it back out and then blasting off at 1am.  Fortunately, it was bed time and I didn't trust it enough to go to sleep with an open trade.  

    /RTY is still the lagging long at 1,554 at the moment and you can play it long over the 1,550 line, risking up to $200 if it fails as the goal is 1,575, which would be good for $750 but, of course, I'd rather get in closer to 1,550 or over 1,555 with tight stops below that line to lower the risk.  


  87. Trump Asks Cabinet to Draft Possible Trade Deal With China




  88. Global Stocks Rebound Gathers Pace on Trade Hopes: Markets Wrap