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Tumblin’ Tuesday – FAANG Failure Freaks Out Investors

40%!  

Facebook (FB) is 40% off it's 52-week high ($215) and Netflix (NFLX) is not far behind and even our beloved Apple (AAPL) is down 20% as news spreads that Apple has slashed orders from their suppliers of about 1/3 of the 70M unit production schedule for the iPhone XR, XS, and XS Max models that were unveiled at the September event.  That, of course, is sending ripples throughout the tech sector as Apple's suppliers get hit hard but all tech manufactuers are now selling off in fear of some sort of sudden global slowdown because – if AAPL can't make sales – then who can?

I've been the outlier all year saying that NFLX and Amazon (AMZN) were better shorts than longs and we even made money in our Short-Term Portfolio with shorts on both of those stocks and the Nasdaq Ultra-Short (SQQQ) is the primary hedge in our portfolios but I certainly wasn't expecting Facebook (FB) to fall 40% but they have been plagued with scandal after scandal – that my Mom and her freinds know nothing about.  

Image result for facebook cartoon scandalsIn other words, I don't think many of Facebook's 3.6Bn users are going to delete their accounts over privacy issues, election hacking or whatever until there's a better place to share pictures of their puppies and children.  Likewise, my kids couldn't even contemplate life without Instagram and they have no idea its owned by Facebook and people in Europe aren't going to drop WhatsApp and start paying for their phone calls (much as the telcos who fund the political and media attacks would like them to).  

Unlike Amazon or Netflix, Facebook is a real company that makes real money – not projected future money to justify its current market cap.  FB, in fact, made $16Bn last year and they've made $15.25Bn in Qs 1,2&3 so far this year so call it $20Bn in 2018 and, at $130, the market cap of FB is down to $375Bn, so they are now trading at just 18.75 times their current earnings vs. 85x for AMZN and 100x for NFLX.  FB is being attacked for things that don't really have anything to do with whether or not they make money and it's going to be a great opportunity to invest – once the rest of the market stops collapsing.

When will the market stop collapsing is the question, right?  Well, as I said last Thursday, "...even fixing Brexit wasn't enough to hold the weak bounce line yesterday for the S&P and Powell didn't save us last night so it's all up to President Trump to make a deal with China that will save the markets – what could possibly go wrong?

That was sarcastic, of course, we assume anything Trump is involved in will go wrong and, fortunately, we kept ourselves short into the fake rally and that gave us a nice 50% pop in the Short-Term Portfolio, which is what we use to hedge the positions in our Long-Term Portfolio.  BALANCE is the key to keeping your sanity in these crazy markets – and don't think you don't need to hedge just because we already hit our primary correction goals – there's no limit to how far panicking investors can take down a market – no matter how much the companies actually earn.

We already had our value discussion on Sept 12th, in a Morning Report titled "Will We Hold It Wednesday – Dow 26,000 Edition" where the first line of the report was "No, we won't."  We did carry on until 27,000 on the Dow (/YM) but now we're back below 25,000 and likely to re-test the October lows of 24,000 before we're through. At the time (9/12), I said:

You can short the Dow Futures (/YM) below the 26,000 line with tight stops above – that's a fantastic reward/risk play or you can play the Dow Ultra-Short ETF (DXD) long at $29.85 and the Oct $28 calls are only $2, which is just 0.15 premium for a 37-day play – very reasonable if you want to lock in some gains! 

DXD peaked out at $32 on Oct 12th for a nice double (up just 50% if you waited until the 10/19 expiration) and the /YM Futures, which we reiterested last Thurdsay as our shorting line – just paid us another $5,000 per contract at 25,000 and that's now our stop line as we're already down 350 pre-market at 24,675 (great for the STP!).  Over $32 on DXD will mean a new downtrend for the Dow – so let's keep an eye on that today.  

The S&P 500 topped out at 2,940 on Sept 21st and it's a good time to reveiw the skepicism we had in the week leading up to it (14th-21st):

Fake Money Friday – Weak Dollar Makes Markets Look Like They Are Recovering

The Dollar is testing 94.  That's down over 1% since Sept 1st and 1.5% off it's highs so take the market "gains" with a Lot's wife-sized grain off salt since the indexes have gone nowhere for the month yet the Dollars they are priced in have lost 1% of their buying power – that's not good!

Monday Market Madness – Denial is Not Just a River in Egypt

Holy cow!  I guess it's because I'm one of the last macro fundamentalists left in the markets that I am surprised – no, shocked, by the complete and utter denial the bulls are in regarding what is already the biggest Trade War since the 1930s and will very soon be the biggest Trade War in human history.  As noted on the chart to the right though, it's a very normal psychological phenomena – especially when experienced by those unprepared for a loss and, after 10 years of stimulus – there's a whole generation of traders who don't even know what a market loss is…

The market is clearly in denial and the Financial Media is merely a tool of the Investment Banks, so don't expect them to explain things to you and, unfortunately, very few people know what a Trade War actually is or what it does – thanks to a very poor education system – especially when it comes to Finance in this country.

Tariffic Tuesday – Markets Ignore Another $200Bn Drag on Global Trade

So what?  $200Bn here, $200Bn there – after a while it might add up to something but investors only react AFTER something is a problem and these tariffs don't even take effect until next week (24th).  Our wise Negotiator-In-Chief has decided to hit China (ie. the suckers who voted for him and actually have to pay this tax) with a 10% tax on $200Bn worth of Chinese goods that are bought in the US and that tax will rise to 25% – taking another $30Bn out of the pockets of the poor so Trump can continue to give tax breaks to the rich.

Will We Hold It Wednesday – S&P 2,915 Again

While it's been fun watching the Dow 30 blast higher, the S&P 500 has been struggling to get back to where we were at the end of August when I warned on "Toppy Tuesday – S&P 2,900 so it’s 3,000 or Bust!" as well as "Will We Hold It Wednesday – Record Highs Edition" and we were shorting the S&P (/ES) Futures at 2,915 and we got another entry yesterday as we topped out at 2,917 just before 3pm.  

At the time, we were shorting Gasoline (/RB) at $2.10 and now it's $2, which was good for gains of $4,200 per contract if you rode it out all the way (we were in and out several times since) and we shorted Oil (/CL) at $70 (and we're short again now) and went long on Coffee (/KCN9) as it tested $100, which worked at the time but now it's down to $94 so a lot of things are not improving – including the Nasdaq, which is down from 7,700 to 7,500 (2.5%) while the S&P has bounced back.

Thursday Failure – Shanghai Stocks Down 20% for the Year and Social Security Closer to Failure

Harmless trade war?

That's how the Conservatives are spinning it and many are drinking the Kool Aid and ignoring the stress and strain we are putting on the rest of the World – especially China, where the Shanghai Composite is officially a bear market, down 20% for the year and almost 50% off it's 2015 highs.  2015 was another crisis we ignored in China – until we had a "flash crash" in August and a proper 10% correction in the beginning of 2016 – even as China was "recovering" a bit.

When people tell you that what happens to the second largest economy in the World doesn't effect the largest economy in the World, those people are idiots and you should never listen to anything they say to you – ever again.  Jamie Dimon of JP Morgan, for his part, is doing his best to minimize the concerns of retail investors so he can keep dumping stocks on them:

TGIF – Quad Witching Today, Window Dressing Next Week

China turned around this morning.  

It's funny because everyone thinks they are "winning" the trade war.  The Chinese Government is planning to cut tariffs on imports to their favored trading partners, which we assume will no longer include the US.  This will disadvantage US exporters to China and encourage Chinese firms and consumers to buy goods and services from other trading partners but it's also a nice tax break so it's boosting the Shanghai this morning, up 2.5% for the day at the close.  

Other than that, the news has been very quiet and we're expecting to drift along into the close today as it's a Quad Witching Day in which quarterly options and futures contracts expire (there are 4 kinds), which is often punchuated by high-volume (what is that?) moves and yesterday was already a busy day on SPY as we punched in a new high at 2,945 and we would have liked to short 2,950 but we'll take a cross below 2,940 on /ES to short that with tight stops:

Monday Market Movement – OPEC Blasts Oil Higher, China Walks from Trade Talks

Move along folks, nothing to see here.

Despite a run of bad news over the weekend, so far, the market indexes seem unphased by negative news reports.  Of course it is the last week of the quarter and windows need to be dressed so we'll see what happens when October rolls in, along with Q3 earnings, when we may begin to see some companies begin to choke on higher wages and trade concerns.  As noted in the Wall Street Journal, Industrial and Material stocks are in their own private bear market yet no one is taking it seriously at all.

Image result for predictions crystal ballI know it all sounds like bragging (because I was right AND for exactly the reasons I laid out!) but, hopefully the review reminds you that I might have a clue when I tell you that this is probably it for the sell-off (another 10% in panic, at most) and that we're now heading into another great round of buying opportunities – even if Trump does continue to be our President. 

There's a lot of real growth in the markets and a lot of good things in the economy like more jobs and rising wages but these are painful adjustments for Corporate America – who have to learn to share their profits with the employees again.  That doesn't mean the companies are bad but it does mean that paying 100x earnings for a company is stupid.  Back in the old days (2004), we used to think paying 20 times earnings for a stock was quite high because that's an annualized return of just 5% and things could go wrong while a bank note paid a risk-free 3.5%.  

While historic stock market returns have been about 8% a year, there's the danger of getting caught in the wrong 10-year period and then needed 10 years to catch up (which is what happened to people who started investing in the early 2000s) and, as I noted above, we have now been plagued with an entire generation of traders who don't even know what a down market looks like.  

There's also the danger of thinking that, just because AMZN or NFLX can't justify 100x earnings is NOT a reason to sell AAPL or FB, where you are paying less than 20x earnings.  Not all tech stocks are the same – that's true in any sector – there are great values out there – if you know how to look for them and if you are PATIENT! 

So we will watch and we will wait and we will look for more bargains to place in our Long-Term Portfolio, paid for with the profits we're making in the short-term portfolio – BALANCE is the key to happiness and success….

 


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  1. Only 2 months ago I was talking about adding new lines! Death crosses for the NYSE and Russell although not that statistically significant, more psychological. Important support lines:

    Dow – 24,750 and 24,250
    S&P – 2650 and 2600
    Nasdaq – 6600 and 6500
    NYSE – 12,200 and 12,000
    Russell – 1480 and 1440
     


  2. Where are the chants of Lock her up? Where are the endless Congressional investigations:

    CNN legal analyst Jeffrey Toobin couldn’t contain himself when CNN’s John Berman brought up Ivanka Trump’s use of her private email account for government business.

    “Irony is dead!” he cried, even before Berman could get his question out.


  3. I think that AAPL is going to fine long term, but the story about services growth needs to be amended a bit:

    https://gizmodo.com/tim-cook-defends-apple-being-paid-billions-by-google-1830535039

    In the fourth quarter of 2018, Apple had $62.9 billion in revenue, $10 billion of which came from services like iCloud, Apple Music, and that lucrative deal with Google.[...]

    He did not specifically address the annual revenue Apple takes in from Google, but financial analysts estimate it lies between $3 billion and $9 billion.

    So between 10% and 30% of that service revenues is from a deal with Google for exclusivity on search. 



  4. What do you think of nq long at 6500 for a bounce or rb at lows

    thanks


  5. Good Morning.


  6. FU LB!!!!!


  7. Hey our NAK & CPB are up a little!

    I'm too chicken to go long /NQ here but am adding some /RTY.


  8. Take on TGT earnings? I'm still well in the money on a spread from last year; 50/65 BCS, but getting a bit close now


  9. Short /NQ risking 15.


  10. LB/Jabob – That's why we bought back the short puts in the LTP – now we can sell more.

    Those puts were not trading where you said to buy them back (3.80)..

    They were offered higher. So unless you paid over $4 you were stuck with the short puts which are now 5.20-6.10. 

    Not a complete disaster but I don't think you can say now that we can sell more as if you had covered the other puts.

    I happen to be short the 30s for real and was NOT able to cover. 

    Hopefully, LB will recover.

     

     


  11. /NQ- Closed 1/2 up 45.   Stops to entry on balance.


  12. /NQ -  Out for now.  up 60 on last 1/2.


  13. Jabo Never did like that stock LB.

    Possible did not see my play suggestion on PSA over the week end? Look where they are today!


  14. yodi--you were right..


  15. /CL down sharply.


  16. For what it is worth.
    Yesterday on German TV the rumor was mentioned that TSLA was in talk with Mercedes Benz re collaborating by using the MB Sprinter to convert in to an electric vehicle.
    No comments from MB. Look what is with TSLA today 18 down.


  17. I mentioned the other day that a trader I follow was predicting more downside for oil – down to $47. That sounded far then, but a lot closer now.


  18. Phil AAPL at 177 you are very quiet


  19. Phil nice comments on FB but you did not put a toe in the water? 129!!! I know the day is still young.


  20. Could see $160 for AAPL – on a long term chart, it's a the next line after $180 which we already crossed.


  21. StJ – I'm probably wrong, but I'd play a bounce at 53.


  22. Yesterday I set up a small challenge on NFLX sold the vertical Dec 21 230/235 put. See how low they will go. Just a small bet. Still good today.


  23. LB cut their div by half. To pay down debt. Does anyone think that Black Friday may reverse this for the following Monday?  I was hesitant on buying anything, but FB and AAPL is might tempting. My concern is that consumer credit card debt is stratospheric. If they are maxed out how can anything recover.


  24. I feel two days of shock treatment will bring out some buyer eventually. Did have still a Jan 21 BRK/B 185 put outstanding. Increased it to sell at 11.00 (asking)


  25. Phil- MVEN

    This is one you brought up in the past and has really come down quite a bit.  They appear to be making headway as a media outlet. What’s your take on them today?


  26. the stock market could go down for a better part of a yea rand you guys are talking about buying tech stocks now?


  27. Good morning! 

    2,650 on /ES is a good testing spot.  Lined up with 24,565, 6,485 and 1,475 – we'll see if those hold.  All down 1.25% – 2%.

    If we get some good news, we're at the bottom of nice "W" patterns on the Big Chart.  Good Brexit, Trade War Progress, AAPL dispelling IPhone sales rumors, Supreme Court boots Kavanaugh and makes Bernie President…  Who knows?  There are no rules anymore.

    Image result for shred constitution animated gif

    Meanwhile:

    • 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

    See, we still have two green boxes!  Not good if /ES turns red though.

    Lock her up/StJ – See, that's the Dem's problem, they are not petty or vindictive enough to play this game with the GOP…

    AAPL/StJ – Well, if that's what they command just for having GOOGL be the default search then there's some real value to those phones.  Logically, they sell 200M IPhones a year and there's 1Bn out there so it seems GOOGL is willing to pay $10/phone to be the default browser.  What other defaults can AAPL sell?   Oddly, GOOGL isn't really the default because most kids do "Hey Siri" for everything.  I had to show mine that GOOGL was better for proper searching.

    No one is clean/StJ – Maybe "no one is clean" but we are filthy and Japan is critically dangerous and Italy is simply F'd massively…  Keep in mind that if ANY of those countries collapse – the entire global economy goes with them – so you'd better hope their politicians are as wise as ours….  Oops, we're F'd! 

    /NQ/Tommy – Looks too crazy to play to me.  

    Thank goodness Jabob is back with his brilliant contributions.  blush

    NAK/Ati – They got an approval!  

    CPB was also just a matter of waiting.

    TGT/CRS – Well, we do have 10 left from Sept when we cashed out our longs and left a 2021 $80/95 bull spread covering Jan $85 short calls so now it's time to sell puts and roll the long calls down.  Fortunately, we're up to that in the LTP.  So silly that people treat retails stocks like this with over-reactions to each quarter.  

    hares of Target Corporation TGT are down roughly 10% during the pre-market trading hours, as this Minneapolis-based company reported a negative earnings surprise in the third quarter of fiscal 2018, following a beat in the preceding. However, top line marginally came ahead of the Zacks Consensus Estimate. Moreover, both revenues and earnings continue to improve year over year. Management also reiterated fiscal 2018 earnings projection.

    This operator of general merchandise stores reported adjusted earnings of $1.09 per share that fell short of the Zacks Consensus Estimate by a couple of cents but improved 20.2% from the prior-year period. This year-over-year growth can be attributable to higher sales and fall in interest expense as well as share repurchase activity that to an extent offset rise in cost of sales and higher SG&A expenses. Target maintained its fiscal 2018 adjusted earnings guidance of $5.30-$5.50 per share.



    The company generated total revenue of $17,821 million that slightly surpassed the Zacks Consensus Estimate of $17,814 million, thus marking the seventh straight beat. Top line increased 5.6% from the year-ago quarter. Sales rose 5.7% to $17,590 million, while other revenue climbed 1.6% to $231 million.

    I mean really people (not you guys, just PEOPLE), if you don't understand how business work, you shouldn't be buying stock in them.  There's a poison that's corrupted the view of "investors" for the past two decades that a company isn't successful unless it beats the prior year or quarter's earnings EVERY SINGLE TIME.  That's like your boss expecting you to be more and more productive every single day and firing you if you slow down – no matter what the reason.  That would be an idiotic policy that's insulting to you and bad for the company.  WHY would you think it's good for your portfolio to act the same way?

    TGT is investing in on-line stuff to keep up with WMT and AMZN and they acquired Shipt and have made incredible stride providing same-day groceries and one-day item delivery.  The ramp-up has cost them money and taken time away from other things but, since they are making $5.50 per $80 share (as of yesterday), you would think people would cut them some slack but Noooooooooooooooooooooo………….

    Wow, oil $54!  /RB testing $1.50 – very tempting – have to add one long there!   /BZ $63.50.  

    Dollar up 0.50 to 96.50 – that's not helping.

    LB/Jabob – That was my bad as I didn't get the note up until 3:50.  If we're stuck with them, we sold the 2020 $30 puts for $5.20 and now $5.80 so simply a missed opportunity.  On the whole, the trade isn't terrible – just could have been better:

    Short Put 2020 17-JAN 37.50 PUT [LB @ $29.40 $-5.15] -15 5/11/2018 (423) $-14,550 $9.70 $1.15 $-12.05     $10.85 $2.15 $-1,725 -11.9% $-16,275
    Short Put 2020 17-JAN 30.00 PUT [LB @ $29.40 $-5.15] -15 5/24/2018 (423) $-7,800 $5.20 $0.60     $5.80 $2.00 $-900 -11.5% $-8,700
    Long Call 2021 15-JAN 27.50 CALL [LB @ $29.40 $-5.15] 50 9/21/2018 (787) $34,750 $6.95 $-0.95     $6.00 - $-4,750 -13.7% $30,000
    Short Call 2021 15-JAN 35.00 CALL [LB @ $29.40 $-5.15] -50 9/21/2018 (787) $-21,650 $4.33 $-0.83     $3.50 $-2.10 $4,150 19.2% $-17,500

    PSA/Yodi – I do like them. 

    Too bad we just have the 5 short 2021 $200 puts we sold for $24 in the LTP – only going to make $12,000 for NOT owning the stock… crying

    TSLA/Yodi – That was so blown out of proportion yesterday.  TSLA traders are the biggest idiots of them all!  

    AAPL/Yodi – Lower than I thought but fine with me, happy to roll down lower if they'd like.

    November 19th, 2018 at 2:16 pm | (Unlocked) | Permalink 

    • AAPL – More cowbell!  ("Guess what? I got a fever! And the only prescription.. is more cowbell!") How could you not want more AAPL stock when it goes on sale?  We have a big spread already but why sell 10 June 2020 $160 puts for $12.88 ($12,880) when we can sell 15 2021 $170 puts for $18.80 ($28,200) and I know I said I wanted less margin but hey, $10,000 more (so we roll).  Now we can use that $10,000 to roll the 40 2021 $190 calls ($33) down to the $180 calls ($37.50) for net $4.50 ($18,000) so we've added $40,000 of potential upside for net $10,000 AND improved our position for when we do want to sell more short calls (and we're likely to collect the full $31,000 from the June $200s at this rate).  More cowbell baby!  

    As of yesterday, we still had another $12,225 to collect from the 10 short June $200s so we'll spend that money ($3/contract) to roll our 2021 $180 calls (now $33.50) to the $170 calls (now $37) and the short $240 calls are $14.25 so we could buy those back and wait for a bounce but better safe than sorry and I'm QUIETLY waiting for a good time to pull the trigger and pick up another $40,000 in strike on my spread for $12,500 that I collected selling short calls.  

    FB/Yodi – Also quietly waiting for people to stop panicking, HOWEVER, 

    For the LTP, let's sell 5 FB 2021 $140 puts for $25 ($12,500).

    Consumer credit/Pirate – $1Tn more than 2008 but more jobs and more salaries mean we should set the bar higher.  

    Image result for consumer credit chart

    Image result for consumer credit chart

    Related image

    Don't forget high gas prices killed Q3 and expenses from storm damage in parts of the country used up disposable income, as did higher taxes as trump killed homeowner's deductions.  So a lot of attacks on disposable income recently, some of which will abate.  


  28. Albo – Maybe a bounce at $53 but looking at the long term charts, still not very bullish and the next line of real support is more like $50. But there is no straight line up or down…


  29. Taking bets /es will turn green today!






  30. Merkel Casts Doubt on Brexit Summit as Germany Says No New Talks





  31. very Interesting article on GE:

    http://aswathdamodaran.blogspot.com/2018/11/the-ge-end-game-bataan-death-march-or.html

    also has it in a presentation format which is what I watched;

    https://www.youtube.com/watch?v=_p1mxkW1Fls


  32. Green / Yodi – it looks like we went from buying dip to selling rips! Tough to get green.


  33. It's really upsetting that they don't have more expiration options for VXX! January 19 is the furthest we can go now. 


  34. Lots of volume around the 53/54 strikes on the call side. That would correspond to VIX above 30 or so. 


  35. STJ Just watch this crazy market. A weather cock would be a better indication.


  36. I think we'll fill the gap Yodi. Not sure if it'll stay up there – not sure about anything of course.


  37. That's true Yodi! In all honesty, doesn't bother me much. We are getting close to good deals :-)


  38. My play of the day WY a stock really on the lower side of the scale, still wood is a desirable market and they pay a div. of 5 %.

    I would like to add it to my armchair trades buy the stock at about 26.75 and sell the Jan 19 26/28 strangle for 1.45. Shows a combined return of 2.76% per month. Just a small entry will do at present.


  39. C – Wow, doing very poorly at the moment.  We'll take advantage of the cheap 2021s and roll the 25 2020 $62.50 calls at $9.20 ($23,000) to the 30 of the 2021 $60 ($12)/75 ($5.50) bull call spreads at $6.50 ($19,500) and we'll roll the 10 short 2020 $70 puts at $11 ($11,000) to 15 short 2021 $65 puts at $9 ($13,500) so we're pocketing $6,000 to make up for a bit more margin and now we have $45,000 worth of longs.

    Phil- are you keeping the short 77.5 calls 2020? sounds like it when you have $75 target 2021


  40. FedEx expands fleet to add 1,000 Chanje electric vans


  41. TXN looked it up the other day these are stocks who moving up in this market. Did ear mark it for an armchair trade up 2% today???


  42. Phil / What's ur take on AGNC? 


  43. what is going on with HBI?


  44. Long-Term Portfolio Review (LTP) – Part 4:

    • NLY – Hanging around $10 but paying a nice dividend, so we don't really care.  If we are assigned another 2,500 shares we'll have 5,000 shares at net around $8.50 (we already bought back short calls with a profit) so $10 is fine with us.  They just paid a special dividend of 0.22 in addition to another 0.78 so we collected 0.30 ($750) in Sept and we're merging with MTGE (but NLY remains the ticker) – essentially acquiring them for stock so things will be messy for a bit.
    • NYCB – Like NLY, we'd love to be assigned more.
    • OPK – Overhang of SEC investigation is keeping them down.  From the CC:  "I will make some remarks about the SEC complaint filed on September 7, that named both the company and Dr. Frost. Most of you know we had no warning that such a complaint was coming. The SEC did not provide us with a Wells notice or any other indication of its intent to file the action. We disagree with the SEC’s allegations as we’ve said publicly. We have spent considerable time over the past two months working closely with our advisors to address the allegations in the complaint. We have always prided ourselves on adhering to a high standard of excellence at every level. We are particularly frustrated that this incident has impacted our investors so deeply. Even worse, it came at a time when we were seeing quarter-over-quarter momentum on many fronts."  So waiting and seeing on this one….

    •  PZZA – It's only a $30,000 spread and we can pull $23,000 out now so is it worth waiting a year for $7,000?  I say take the $23.50 and run on the 20 2020 $35 calls ($47,000) and cash out the 15 short 2020 $42.50 puts at $1.40 ($2,100) and that leaves us with 20 short 2020 $50 calls at $11.25 and we'll cover them with 30 2021 $55 ($10)/70 ($3.40) bull call spreads at $6.60 ($19,800) so that's net $25,100 off the table and room to sell short puts down the road.  Now we've gotten almost all our potential cash off the table and still left a nice $45,000 spread as upside potential.
    • QCOM - Let's buy back the 20 short 2021 $80 calls at $2.10 ($4,200) and roll our 2021 $55 calls ($8.20) to the $50 calls ($10.50) for net $2.30.
    • SBUX – It's already net $13,840 (because we're 2/3 covered) out of $11,250 if we were fully covered so let's be thankful and close it.

    • SKX – On track.
    • SPWR – So unloved but I still love them.  Good for a new trade.  
    • T – While I'm not worried about the short Jan $34s coming back, we may as well buy them back to free the slot if they pop.  May as well spend $3.50 to roll the 2020 $30 calls ($2.25) to the 2021 $25 calls ($5.75) to widen the spread and buy a year.  That's $12,500  of intrinsic value we're buying for $8,750 and we just collected $500 for the first 5 short calls we sold.  Now, with a wider spread, next time we can sell 10 for $1 ($1,000), which would currently be the April $31s but we're a bit low in the channel to make the sale now.

    • TGT – Such a silly sell-off.  Fortunately, this is a defensive position to cover leftover short calls but now we've accomplished that we can effectively close out this trade (up $2,950 plus what we already took off the table) and our new trade will be 10 short TGT 2021 $70 puts at $11.50 ($11,500) and 25 long TGT 2021 $65 ($13)/82.50 ($6.25) bull call spreads at $6.75 ($16,875) so that's net $5,375 on the $43,750 spread with a $38.375 (714%) upside potential if TGT can claw back to $82.50 in two years.  And we can sell short calls along the way!  
    • THC – Another one where we took the winning calls off the table and covered the losers.  In this case the losers were 10 short Jan $28 calls and those are now winners and the least we can do is widen the spread now, while it's cheap.  Let's roll the 15 2021 $27 calls at $7 to 20 of the 2021 $20 calls at $9.50 for net $2.50 ($3,750) + 5 new are $3,500 so $7,750 total spent but we made $3,100 on the short Jan $28s from 9/26 so lots of money to be made on this one.  

    • UCTT – This is supposed to be a nice, simple business.  They sold 4.7M sshares of stock for $100M back in Jan but the company has really fallen apart since.  $141M is still in the bank and sales are running over $1Bn and you can buy the whole company for $350M at $9 so I'm willing to stick it out. There are no 2021s so nothing to roll to yet.
    • WBA – This one was another cover after we cashed out longs but, so far, no pullback.  Let's buy back the short 2020 $65 puts for $2.90 ($2,900) to clear that slot for now.  Let's also roll the 20 short 2020 $75 calls at $11.30 ($22,600) to 20 short Jan $75 calls at $7 ($14,000) so we're spending $8,200 on that roll but clearing up slots to make 4 more sales like the Jans ($56,000?) for the rest of the year.  Short Jan $80s (top of part 1) will hopefully go worthless too.  

    • WHR – On track
    • WPM – Hopefully this is a bottom, love it as a new trade. 


  45. LOL, Yodi has talked about cocks and wood today – are things slow in the camper?  cool

    C/Dave – Yes, at $2.40, they are too expensive to buy back as I don't have anything I'd rather sell and I don't expect C to come back fast enough for it to be a bother.  We have plenty of room to sell 10 or 15 shorter-term calls if things improve.  

    AGNC/Soma – They are mortgage carriers with a different model than NLY or ARR that I didn't like as much.  Though I've like AGNC in the past – the rising rate environment may not be good for their model. 

    HBI/Jabob – Also out of favor but, today, down 3% as XRT is down 3% so just keeping up with the index carnage.  

    Hanes Launches 2018 National Sock Drive to Help the Homeless


  46. NLY – I didn't think NLY advanced enough to sell short calls? I think you are actually referring to the NYCB Jan 19 $11 calls sold on NYCB on 05/23/18.


  47. Don't fight the trend – time to sell now, not to buy. 


  48. Phil,

    Any interest in playing /RB now? Or too late?


  49. /RB 1.48! I’m steering clear Jpar, waiting for it to stop dropping and catch small moves on the way up. It’s lookimg like a mess. 


  50. /CL – Bought some at 52.94.  Close stop.


  51. Slow in the camper NO it is raining!!!


  52. Stops up to entry on /CL.


  53. I wonder if /RB getting flushed ahead of data tomorrow that I think may show a draw for the holiday. Thoughts?


  54. Stopped out.  And back in !


  55. NLY/Winston – You're right, we never did get a price for our short calls so they remain unsold.

    Trend/Winston – As I keep saying, the "trend" has nothing to do with what a stock is worth.  While I'm hoping for lower entries, there's no sense in not doing reasonable rolls on positions we do have.  As a rule of thumb, I'm generally happy to roll down $5 for $2.50 and it very rarely gets to $2, so not many regrets for going early so, on the way down, I'll do a roll to improve a long (that I want to stick with) any time it presents itself.

    /RB/Japar – As I said earlier, too dangerous to play.  We got a quick 0.02 off $1.50 earlier but then it failed so done for the day as far as I'm concerned.  

    I don't think there's anything wrong with poking long at $1.48 /RB and $53 on /CL but I picked up $1,000 so why risk losing a penny when I got lucky once?  

    As to a holiday draw, I will be pissed if it rockets tomorrow, right  before Thanksgiving but the way it's been performing lately, it's simply too hard to call and logic seems to have nothing to do with it.

    Dollar 96.75 – that's doing about half the damage today so not as bad as it looks.


  56. /CL – Sold 1/2.  Up .50.

    Stop @ entry,  (I'll try this again. )


  57. Phil, you're absolutely right to make the rolls when you can improve the position in a sensible way without increasing your risk too much. I just now is not the time to start to establish new long positions. Even when your buy list may be screaming 'ACTION' I think you will get better prices before Q1 2019. Jan 19 expiration is going to be a hell of an event.


  58. T/Phil- any reason why you left the 2020 short 35 calls unrolled? they only worth $0.7 now


  59. OK, let's take some money out of the STP:

    • The 100 TZA April $7/11 bull call spreads are worth $70,000 over $11 (now $12.25) but showing net $26,000 ish, so a lot of upside there ($44,000).  
    • We have 160 SQQQ $12 calls and 80 short $14 calls but the $14 calls are March at $3.70 and we can roll them to the June $17s about even so let's do that and sell the extra 80 SQQQ June $12 calls for $5.40 ($43,200) and we'll still have $40,000 protection on our $12/17 spread that's mostly in the money and currently showing net $14,000 so $26,000 protection there.  
    • We have 100 DXD April $27 calls at $6.50 covering 100 Jan $34 calls at $1.75 so let's cash the $27s ($65,000) and roll the 100 Jan $34s ($17,500) to 40 April $35s at $2.75 ($11,000) and, of course, we'll cover them aggressively if there's no bounce.  That takes net $58,500 off the table here and leaves us unprotected.  

    So we're taking about $100,000 off the table on the STP and flipping a bit bullish for a hopeful bounce but, if we don't get it, we will re-deploy that $100,000 to buy another $200-300,000 of protection.  We still have about $100,000 of downside protection and don't forget we sold $100,000 worth of short calls in the LTP last month – anticipating this.  Now is a good time to have some flexible cash to play with!  


  60. Trump is going nuts with trying to cover up for the Saudi – read that statement. It reads like the vagaries of a deranged would-be dictator:

    https://talkingpointsmemo.com/edblog/wild-even-for-trump

    And the level of lying:

    After my heavily negotiated trip to Saudi Arabia last year, the Kingdom agreed to spend and invest $450 billion in the United States. This is a record amount of money. It will create hundreds of thousands of jobs, tremendous economic development, and much additional wealth for the United States. 

    It grows each week – will be $1T next month. Completely batshit insane! And wow:

    Representatives of Saudi Arabia say that Jamal Khashoggi was an “enemy of the state” and a member of the Muslim Brotherhood, but my decision is in no way based on that – this is an unacceptable and horrible crime. King Salman and Crown Prince Mohammad bin Salman vigorously deny any knowledge of the planning or execution of the murder of Mr. Khashoggi. Our intelligence agencies continue to assess all information, but it could very well be that the Crown Prince had knowledge of this tragic event – maybe he did and maybe he didn’t!


  61. Phil/THC adjustment — just making sure I understand the roll…the new 5 (at $9.50) are actually $4,750 additional instead of $3,750, right?  Total increase of $8,750?


  62. New longs/Winston – No, I'm certainly not looking to add anything except maybe a few short puts if things are compelling.

    T/Dave – Simply because I think 0.70 is an outrageous price and I don't see T coming back very fast so I'd rather let them rot and then, in Jan 2020, they will either expire worthless or we'll roll them and, if worthless, THEN we'll sell some 2021 calls to re-cover.  The bottom line though is, would I pay 0.70 to bet T is over $35 in 12 months?  No.  That's the decision process.  If I had something I'd rather sell – that would be different but why buy it back just to be naked when we're 15% from goal in a weak market?

    Trump/StJ – The reporters are spineless.  If Trump says "King Salman and Crown Prince Mohammad bin Salman vigorously deny any knowledge of the planning or execution of the murder of Mr. Khashoggi." and you know he's lying, then just say to him "What are you going to do if it turns out they lied to you then?"  That's journalism 101! 

    It's amazing, whether true or not, that Trump considers $450Bn in arms orders a reason to excuse murder.  The bottom line is his morality has a price – and it's probably a hell of a lot less than $450Bn!

    Image result for trump khashoggi cartoon

    THC/Idi – Yeah, don't know where I got that number.  $4,750 is correct.  


  63. Oh, I see, the $27 calls were $7, that's where I got mixed up.


  64. Aapl/Phil- never added apple yet, I wish to sell some puts at this point, what strike would you recon? still the 2021 $195?


  65. AAPL/Dave – There's no need when you can sell 2021 $170 puts for $22 at the moment.  That's a total gift at that net ($148) so it would be rude not to accept it!  


  66. In fact, let's sell 10 AAPL 2021 $170 puts for $22 in the STP ($22,000).  It will help pay for our next hedge! 


  67. Nas still looks like the best short because it could drop back to 5,000, down more than 20% from here.  That still wouldn't take AMZN or NFLX below 50x earnings – nor half the rest of the index.  

    SQQQ is at $16.45 and, in the STP, we now have 80 of the June $12 ($5.40)/17 ($3.40) bull call spreads at $2 and that's going to pay over 100% UNLESS The Nasdaq goes higher than it is now.  

    As a hedge, however, we're more worried about a correction between now and Jan earnings so something higher than here would be appropriate so, as a new hedge, I'd go with:

    • Sell 5 AAPL 2021 $170 puts for $22 ($11,000) 
    • Buy 80 SQQQ March $15 calls at $3.40 ($27,200) 
    • Sell 80 SQQQ March $22 calls for $1.60 ($12,800) 

    That's net $3,400 on the $56,000 spread that's $12,000 in the money to start so you can't lose you're $3,400 unless the Nasdaq improves and, if it does improve, it's not likely AAPL will be much lower.  If, on the other hand, AAPL is below $170, it's not likely SQQQ isn't paying you most of that $56,000 back and you are only obligated to own $85,000 worth of AAPL stock so, as a stand-along – the worst likely case is owning 500 shares of AAPL for net $29,000 ($58/share) but more likely you have some very good downside protection.

    MTP holding up very well considering (down 15% from highs):

    Note the SQQQ spread is $10,000 and and currently net $5,500 so more coming if we stay down but not much. I'm not too worried, they are all good positions but I wish I could make adjustments.  


  68. Journalism / Phil – Remember, can't ask more than one question now! The first question will soon be "Can I ask a question"! The answer will be "Yes, next person"


  69. The Good News Hidden in China’s Slowing Economy






  70. Not sure if the below title is posted above, but a good read! 

    Opinion: Misguided share buybacks are hollowing out companies’ balance sheets and will lead to even bigger stock-market trouble

     

    Happy Thanksgiving all.  

    Biotechs I like:

    LQDA – no options.

    ARNA

    VKTX





  71. Why We Sold Apple Stock



  72. Getting a bit late to turn green Yodi!


  73. green waved bye bye at 11:30 AM


  74. You right must be color blind!


  75. 24,500 seems to be the goal.  2,650, 6,550 (maybe) and 1,475.  

    Buybacks/Pharm – Well how long have I been saying that?  Hey, I'll be in CA mid-Dec, let me know if you're around.  

    • NASA will conduct a review of Boeing (BA -1.3%) and SpaceX (SPACE) to assess "anything" and "everything" that could impact the safety of astronaut space missions, according to The Washington Post.
    • Sources indicate that the review of the corporate culture was prompted in part by the video of Elon Musk smoking marijuana (legally) and taking a shot of whiskey during a podcast.
    • NASA officials haven't confirmed that report, but have stated that the agency needs to show the public it's leading itself as well as its contractors.
    • NASA awarded contracts in 2014 to Boeing ($4.2B) and SpaceX ($2.6B) to fly astronauts.
    • Northern Dynasty Minerals (NAK +9.3%) surges as much as 13% after saying the Pebble Partnership had finalized a right-of-way agreement with Alaska Peninsula Corp., an Alaska Native village corporation with extensive land holdings near the Pebble Project site.
    • NAK says the agreement secures access to the Pebble Project site for construction and operation of the proposed mine and "represents a significant milestone in the developing relationship between Pebble and the Alaska Native people of the region."
    • NAK shares have climbed more than 50% this month, also benefiting from the election of a new Alaska governor considered likely to support development of the Pebble Project.
    • Pres. Trump says the U.S. will continue to stand with Saudi Arabia despite the murder of journalist Jamal Khashoggi, apparently ruling out new punitive measures against the country after already sanctioning 17 individuals known to have been connected to the killing.
    • The U.S. "may never know all of the facts surrounding" Khashoggi's death, Trump says, but "our relationship is with the Kingdom of Saudi Arabia," also saying the Saudis have been responsive to his oil price requests.
    • On the alleged involvement of Crown Prince Mohammed bin Salman, Trump says "Maybe he did and maybe he didn't!"
    • The news has no effect on crude oil prices, with WTI and Brent both remaining ~5% lower.
    • Reasonable quarterly results from the likes of Target, Kohl's, Best Buy, TJX, and Lowe's aren't preventing major selling in those names, as well as the likes of Walmart, Gap, Ross Stores, and other big brick & mortar names.
    • Retail landlords are mostly underperforming in the REIT sector (IYR -0.9%) today: Simon Property (SPG -1.9%), Tanger Factory (SKT -1.1%), Macerich (MAC -2.4%), PREIT (PEI -1.2%), CBL (CBL -2.4%), Washington Prime (WPG -2.2%), Taubman Centers (TCO -3.5%)
    • The S&P energy sector (XLE -2.6%) supplants tech as the stock market's worst performer, as U.S. crude oil futures sink to fresh one-year lows, falling alongside stocks as investors dump risk assets; WTI -5% at $54.35/bbl, Brent -5.1% at $63.38/bbl.
    • "When the stock market comes off 8%-9%, it tends to conjure up images of a weak global economy and that feeds into expectations of weaker than expected oil demand," says Jim Ritterbusch of Ritterbusch and Associates.
    • Expectations for a ninth straight week of U.S. crude inventory increases also weigh on prices; seven analysts polled ahead of today's data from the American Petroleum Institute estimates crude stocks rose 2.1M barrels last week.
    • Some popular cannabis stocks are managing to stay in positive territoty despite the broad market decline today.
    • Cronos Group (NASDAQ:CRON) is up 3.4%, while Aurora Cannabis (NYSE:ACB) is 2.1% higher. Aphria (APHA +2%), Hexo (OTCPK:HYYDF +2.4%), Tilray (TLRY +0.1%) and Canopy Growth (CGC +0.5%) are also showing gains.
    • Earlier today, there was a minor bit of M&A in the sector when ICC International Cannabis (OTCPK:KNHBFsnapped up Green Gene Research for an undisclosed amount.
    • Some brokers at Bank of America (BAC -1.2%) Merrill Lynch claim that a new compensation plan may reward them for increasing their clients' debt load and sometimes punish them for reducing it, the Wall Street Journal reports.
    • Some of Merrill's financial advisers complained internally to management about the pay structure, saying it urges customers to take on more debt when interest rates are rising. Others point out that the policy may set advisers' interests against those of their clients.
    • The pay policies include changed targets for attracting new business and cross-selling certain products. One target focuses on increasing clients' new assets and liabilities, including securities-backed loans and mortgages, by at least 2.5% a year.
    • Merrill's head of wealth management, Andy Sieg, says management considered risks for conflicts of interest and designed the plan so it doesn't favor one product over another.
    • Previously: More on Bank of America Q3 (Oct. 15)
    • Morgan Stanley analyst Joseph Moore tells Bloomberg that weaker demand and growth prospects might not be fully priced into semi stocks even after the recent declines.
    • Moore: "There is still too much optimism from the companies and from investors. It feels early to call a bottom on fundamentals when we’re really just looking at the first weak quarter.”
    • Moore downgraded the sector to cautious in August.
    • The analyst continues to like Nvidia, Xilinx (XLNX -2.1%) for its growth drivers, and says Lam Research (LRCX +3.6%) could be among the first to recover. He's generally more optimistic on semi equipment stocks than memory players.
    • Moore thinks NAND chip stocks might not recover until 2H19 while DRAM companies follow in 2020.
    • Previously: Micron -5% after two-notch downgrade (Nov. 20)
    • Previously: Nvidia +3% as Citron turns buyer (Nov. 20)
    • Post updated to rephrase title

    • Barnes & Noble (NYSE:BKS) is down 5.3% after the company reports Q3 earnings.
    • Revenue was down 2.5% during the quarter and comparable sales were off 1.4%.
    • Only a few analysts are covering B&N these days, meaning that the company's earnings beat holds a bit less weight. Still, the EBITDA loss of $2.3M compares favorably to the consensus mark of -$12.1M.
    • Looking ahead, Barnes & Noble reaffirms full-year EBITDA guidance at a range of $175M to $200M vs. $167M consensus.
    • TransCanada (TRP -0.5%) says it has halted construction of two natural gas pipeline projects in central Mexico that are worth more than $1B combined, citing numerous delays, runaway permit costs and alleged acts of extortion.
    • Construction in the state of Hidalgo was stopped on the Tuxpan-Tula pipeline and the Tula-Villa de Reyes pipeline, TRP's Mexican subsidiary said in an open letter published in several Mexican newspapers.
    • The projects have encountered strong opposition and legal challenges from farmers and indigenous people citing landowner rights issues as well as environmental and safety concerns.
    • The company says it is continuing work on both projects in other regions while evaluating its pipeline routes with the state of Hidalgo.
    • The selling in equities is picking up, with all three major averages now down by more than 2% in early action.
    • That's boosting the flow into long-dated Treasurys, with the 10-year yield down another three basis points to 3.03%. It's been two months since the yield was less than 3%.
    • In economic news this morning, housing starts rebounded a bit in October, but not as strongly as hoped.
    • Checking short-term rates, traders are now pricing in about a 2-in-3 chance of another rate hike in December, and only about 1-2 rate hikes for all of 2019.
    • Goldman Sachs analyst Rod Hall maintains a Neutral rating on Apple (NASDAQ:AAPL) but drops its target from $209 to $182.
    • The analyst noted rapid smartphone demand deterioration in China in a note on October 15 but now sees additional twists.
    • Hall: "It also looks like the balance of price and features in the iPhone XR may not have been well-received by users outside of the US."
    • Hall says the two-week period starting a week before Christmas day has historically provided a disproportionate chunk of December quarter demand, which could change the iPhone demand picture. But Hall doesn't expect this to happen.
    • The firm's estimates stay at the lower end of Apple's guidance range and think the company likely included the more negative scenario in the guidance. But there is material risk to the March quarter guide if current demand trends continue.
    • Apple shares are down 3.1% to $180.11.
    • Square (NYSE:SQslumps 11% in premarket trading after Nomura Instinet cuts its price target to $107 from a Street-high $125 as the tech selloff continues.
    • Still, Nomura sees Square benefiting from its Cash App's "parabolic success"; long-term vision for the app sees it co-existing with PayPal's Venmo.
    • Nomura nudged up 2018 EBITDA target to $260M from $259M, but reduced 2019 estimate to $464M from $508M.
    • Source: Bloomberg First Word.
    • Analyst ratings: 16 buys; 18 holds; 3 underperform/sells.
    • Previously: Square falls 6.1% as Q3 could `embolden' shorts, Morgan Stanley says (Nov. 8)
    • The retail sector is on watch this morning after a busy morning of earnings reports. Despite some strong comparable sales numbers (Kohl's +3%, TJX +7%, Best Buy +4.3% in U.S., Target +5.1%), investors are bidding the group down right in front of the holidays over broad margin concerns tied to freight and labor costs.
    • Shares of Target are down 11.2%, while Kohl's (NYSE:KSS) is off 12.1%. TJX is showing a 6.6% loss and Best Buy is hanging in there with a 2.2% drop. Amid the flurry of reports, Walmart (NYSE:WMT) is down 2.6% and Gaps (NYSE:GPS) is 3.5% lower. Abercrombie & Fitch (NYSE:ANF) is down 3.3% and Ross Stores (NASDAQ:ROST) is 7.8% lower. Even Costco (NASDAQ:COST) is peeling off 1.4% in the early session. The collateral damage is likely to extend further after the market opens.

  76. I have to zoom out to a meeting – later all! 

    If anyone is worried they are under-hedged, aside from SQQQ above – let me know and we'll see what we can come up with. 


  77. Going to try to carry /CL long overnight, but with stop in place.


  78. Phil, as always, would welcome any hedging ideas not involving ETFs. Thanks!


  79. Hi Phil I need help with more hedge for large position of ABx and WPM major under water > 40K under 

    Thanks 


  80. WPM- on your update, you still like WPM for a new trade. I see 10 putters Jan 2020 – $22.50's? Is that correct? Seems awfully optimistic. 


  81. WPM / pstas – Cut and paste error? Not much premium in these puts.


  82. Sold another 1/4 CL up 120 ticks.


  83. WPM- I must be missing something. The summary shows short Jan '20 , $22.50 strike sold short. 

    Seems aggressive with the current stock price at $15.80.


  84. My support lines from this morning:

    Dow – 24,750 and 24,250
    S&P – 2650 and 2600
    Nasdaq – 6600 and 6500
    NYSE – 12,200 and 12,000
    Russell – 1480 and 1440

    So 1/2 way through… Amazing how close we came to some of them, even bouncing off in the case of the Nasdaq.


  85. Good morning!

    A little bouncy but that's what we expected – the question is how much of a bounce will we get.  Failing the weak bounce lines is still consolidating for a move lower. 

    Good /CL long Albo.  We finally had a draw in oil on API:

    Private Weekly US Crude Oil Inventories Surprise Crude DRAW! -1.545 (+2.941 exp) +0.706 (-0.918 exp) -1.832 (-2.754exp)

    Hedging/Alter – Well the same AAPL short puts can be sold and, if you can use index futures, the /NQ March 6,620 ($350)/6560 ($330) bear put spread for $20 pays $60 if the Nas is lower so if you sold 5 of the AAPL puts for $20 ($10,000) you could buy 3 sets of the spreads for $6,000 and you'd have an $18,000 upside if the Nasdaq falls 70 points (and stays down) and still you have a $4,000 credit if AAPL stays over $170.

    Hedge/Gucci – Well hedges don't fix losses you already have.  There is a 3x bearish ETF for gold miners (DUST) that would have made a great short in Sept, when the miners were way out of favor.  Still, if you want to protect yourself, knowing it can spike to the $40s is useful at $32.50.

    I don't follow this ETF but we can assume decay will cost you maybe 20% a year ($6) but you really only need to get through one year as you're just looking to stop bleeding if they go lower, right?  The bid/ask spreads are wide so you have to be patient but I like the 2020 $26 ($9.90/11.50)/45 ($4.90/5.80) bull call spread at I'd guess $10.75/5.30 so net $5.45ish on the $19 spread is good protection and you already have longs that make money on the way down so just 10 of those ($5,450) will pay you back $19,000 if the miners keep dropping – a good way to mitigate the damage and, of course, if you make your $40,000 back – you'll lose the $5,450!   Since we're $6 in the money to start – it's not likely you lose on this spread without your miners improving.  

    WPM/Pstas – Well, you certainly don't need to be as aggressive with the short put sale on a new trade but I'm still good with the target because it's the same company doing the same thing they were doing last year and the year before – only now you can buy them for $15.80 ($7Bn):

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 849.6 706.5 620.2 648.7 891.6 843.2 840 797.1 882.3 -0.1%
    Operating Profit $m 600 387.7 202.9 -157.3 223 74.7 303.8     -34.1%
    Net Profit $m 586 375.5 199.8 -162 195.1 57.7 282.6 275 263.3 -37.1%
    EPS Reported $ 1.65 1.05 0.56 -0.41 0.45 0.13 0.64     -39.8%
    EPS Normalised $ 1.65 1.05 0.68 0.22 0.56 0.46 0.61 0.52 0.57 -22.3%
    EPS Growth % +6.5 -36.0 -35.6 -67.2 +151.4 -17.0 +7.7 +10.9 +10.1  
    PE Ratio x           34.0 25.8 30.7 27.8  
    PEG x           3.13 2.38 3.03 3.02
    Profitability

    This year, so far, they've dropped $400M to the bottom line. 

    In the third quarter of 2018, Wheaton generated close to $110 million in operating cash flow, and completed the acquisition of a gold and palladium stream on the Stillwaterand East Boulder mines (collectively "Stillwater"). During the third quarter, Wheaton received its first deliveries of gold and palladium from Stillwater. Through the first nine months of 2018, Wheaton had record gold production and sales volumes, and is on track to meet annual production guidance, and is currently on track to exceed annual production guidance.

    • The decrease in silver sales volume for the three months ended September 30, 2018, was due to the lower production levels, partially offset by positive changes in the balance of payable silver produced but not yet delivered to Wheaton.

    I do get very, very tired of making the same case for our stocks over and over again.  People have no idea how to read a report (if they read it at all) and bail out based on what some lazy analyst says about a company.  I prefer to focus on whether or not the company makes money and whether the financials are improving and whether the outlook is good or bad.  Seems to make me a madman in this market…

    Reconfirming 2018 Production Guidance

    ·   Wheaton's estimated attributable production in 2018 is on track to exceed its guidance of approximately 355,000 ounces of gold, 22.5 million ounces of silver and 10,400 ounces of palladium.

    Subsequent to the Quarter

    ·   On October 24, 2018, Vale S.A. ("Vale") announced the approval of the Salobo III mine expansion, which if completed as proposed, would increase processing throughput capacity from 24 million tonnes per annum ("Mtpa") to 36 Mtpa once fully ramped up (the "Salobo Expansion").

    "Our robust precious metals business continued to grow in the third quarter with the first production of gold and palladium from our latest stream, Stillwater, exceeding our expectations. With the addition of Stillwater, Wheaton had record gold production and sales volume in the first nine months of 2018 resulting in operating cash flow of almost $370 million." said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. "In addition, we believe we are currently well positioned to exceed our production guidance for 2018.


  86. Morning Phil

    Maybe I missed it, is there an OOP Review floating around here?