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Thursday Freak Out – Apple (AAPL) Profit Warning Wrecks the Recovery

Only $84Bn?

That's right folks, Apple (AAPL) issued a rare warning last night as CEO, Tim Cook said trade wars (including a Chinese boycott of Apple) have hurt even the World's Greatest Company and they would "only" sell $84Bn in their Q1 (normal people's Q4) which is $9Bn (10%) less than the high end of guidance.  AAPL also guided gross margin lower, to 38% so we can now whip out our iPad Calculator and say $84Bn x 0.38 = $31.92Bn in gross profit which is – GASP!!! – almost $2Bn less than they earned last year in Q1.  OMG – SELLSELLSELL!!!!

That was sarcasm, of course – we're buying.  $84Bn is $4Bn less sales (5%) than last year and $2Bn less profit is 6% lower and of course we don't like to see our companies taking steps backwards but this is another one of those self-inflicted wounds Trump is causing to our economy and Apple is the biggest company in our economy – so of course they are going to feel some pain. 

We already took a long position on the Nasdaq Futures (/NQ) at 6,200 in our Live Member Chat Room as I put out a note at 4:55 am.  Clearly the sell-off is an over-reaction that has no basis in reality, but that won't stop AAPL from going lower as idiot analysts jump on the bandwagon and downgrade it – we will just have to be patient.  The Nasdaq drifted along around 6,200 until just about 7am, when it blasted higher, to 6,250 for a quick $1,000 per contract gain – a nice way to start our day!  

I'm not going to make a case for AAPL as it's boring, I was bored back in May when AAPL droped from $181 to $158 on "disappointing" earnings – which did a good job of flushing out the retail suckers before they blasted to $232 on the July earnings report.  You really can fool some of the people all of the time and all of the people some of the time – especially when they are Apple traders!  Of course when hedge funds need a boost, they like to load up on big stocks like AAPL but how do they get them to be cheaper?  We JUST had this discussion in yesterday's Webinar and today is a great example of that end game as this is the big flush to get you out of Apple so the Banksters can back up the truck under $150.

Remember – "THEY" can't buy the stock if you are holding onto it so "THEY" have to get you to sell it and you've been set up for weeks with rumors of disappointing iPhone sales which were partly true (as all the best rumors are) and now is the denouement, where the Banksters and Fund Manages shout "SEE – DISASTER!" on what is essentially a 5% guide-down from record profits.  

Notice, on the chart above, that AAPL should have good support at $140, which is the 200-day moving average and the MACD line (bottom of chart) shows that they are already tremendously oversold but Cramer is on CNBC right now (8:55 am) saying AAPL can fall to $120 not because he's just another moron jumping on the negative bandwagon but more likely because he wants YOU to sell your AAPL stock, even at $145, in order to enrich his Bankster Buddies – who sponsor his show – where the main purpose seems to be moving Retail Suckers in and out of positions like lemmings to proivde easy marks for Cramer's hedge fund buddies.  

Here's Cramer telling you exactly how he manipulates stocks:

That's how the game works people – we were just talking about it yesterday in the Live Trading Webinar and here's a great homework example for you to study.  As I've been saying all year – these are self-inflicted wounds that can be "fixed" in an instant if Trump shakes hands with Xi and re-opens the Government.  Will that happen?  Who knows – that's why we have hedges but now that there are adults in charge of Congress, we can be pretty sure things won't get much worse as someone finally has the power to reign in Trump and his mad scemes which, so far, have brought us nothing but pain.

Since the Trade War hurts the farmers and the Midwestern manufacturers, including the Kochs – it won't be long before Trump's own party turns against him so the pressure will mount on him to capitulate and, hopefully, things can get back to "normal" and THEN we will find out what things are really worth.

Speaking of what things are worth, we thought Celgene (CELG) was way too low (like AAPL is) back in July and we added the following spread to our Short-Term Portfolio:

Long Call 2019 18-JAN 90.00 CALL [CELG @ $66.64 $0.00] 10 7/25/2018 (15) $6,000 $6.00 $-5.97 $6.00     $0.04 $0.02 $-5,965 -99.4% $35
Short Call 2019 18-JAN 100.00 CALL [CELG @ $66.64 $0.00] -10 7/25/2018 (15) $-2,700 $2.70 $-2.68     $0.03 $0.02 $2,675 99.1% $-25
Short Put 2020 17-JAN 85.00 PUT [CELG @ $66.64 $0.00] -5 7/25/2018 (379) $-4,600 $9.20 $11.58     $20.78 $-0.35 $-5,788 -125.8% $-10,388

When we did the review on Dec 12th, we had given up on the Jan spread.  My comment to our Members was:

  • CELG – Well, this one fell apart.  We're going to take the loss next month but we won't wait to set up a position in the LTP, effectively "rolling" from the STP to the LTP, which is one of the ways we kind of transfer funds to the LTP, taking the speculative loss here and setting up the cheaper long-term position there (this works from taxable accounts to IRAs as well).  
  • Sell 10 CELG 2021 $70 puts for $11 ($11,000) 
  • Buy 20 CELG 2021 $60 calls for $21 ($42,000) 
  • Sell 20 CELG 2021 $80 calls for $11.50 ($23,000) 

That's net $8,000 on the $40,000 spread that's 50% in the money to start so think about that, for $8,000 we're getting a position at $71.50 that's $23,000 in the money.  Don't you just love options?!

In the STP, we took pokes at MJ and CELG as short-term plays and it would have been nice if they popped but they didn't and we took a $7,500 loss on CELG and an $8,000 loss on MJ so the loss is booked in the STP so, if it were a taxable account – tax losses, while the gains will show up in the LTP, which could be the IRA account.  

That's another way scaling into positions can work very much to your advantage.  

This morning, BMY put in an offer to buy CELG at $100/share, which happens to be our target.  Pre-market, CELG is at $90 already (from $66) so not only is our new trade going to make the full $32,0000 way ahead of schedule but we may also have a win on the original tade. 

Congratulations to all who played!


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  1. Draining the swamp:

  2. Good Morning!

  3. good morning.  

  4. Good morning, All!

    The webinar replay is now available!

  5. Good morning! 

    CELG did a nice job of offsetting the loss from AAPL in the LTP.  

    We also had a CELG trade from November:

    CELG/Alter – Like STT, they are down with their sector more so than having their own troubles.  

    Trump threatens to reign in drug pricing (which is really a threat to step up GOP contributions) and Revlimid sales are still a big part of their Revenues that is going away over time as they lose exclusivity – but it's a long way off, so shouldn't be considered by shorter-term investors:

    Currently, Revlimid is about 1/2 of CELG's sales and essentially all of it's profits so they've acquired Juno to pump up their pipeline but, at the moment – there is no immediate replacement for Rev:

    They can also reformulate and re-package Rev to improve its lifetime – any announcement to that effect would be a market-booster.  Even in their pipeline presentation – 3 of their 5 main rollouts depend on Revlimid variations:

    CELG may be a one-trick pony, but it's a great trick:

    He's a one-trick pony

    One trick is all that horse can do

    He does, one trick only

    It's the principal source of his revenue

    But when he steps into the spotlight

    You can feel the heat of his heart

    Come rising through

    He's just a one-trick pony, that's all he is,

    But he turn that trick with pride

    He's a one-trick pony

    He either fails or he succeeds

    So we're paying $48Bn at $70 with $4Bn in earnings and we should hit $5Bn, maybe $6Bn at the peak of the Rev cycle so anything else they figure out between now and 2022 is bonus money.  I don't know that I'd want to play them aggressively but we can add the following to the LTP:

    • Sell 5 CELG 2021 $65 puts for $9 ($4,500) 
    • Buy 15 CELG 2021 $70 calls for $14.20 ($21,300) 
    • Sell 15 CELG 2021 $85 calls for $8.60 ($12,900) 

    That puts us into the $22,500 spread that's 1/3 in the money for $3,900 so our upside potential is $18,600 (476%) at $85 but, as you know, the reason I generally go with 15 longs is because I like to sell 5 short calls that I could easily split if they go against me and still not be in trouble.  At the moment, of course, they are too low but I have my eye on selling 5 of the Jan $80 calls, now 0.80 for $1.70 (the price of the $75s) if CELG gets back over $75 soon. 

    If not, we can always sell 5 of the April $75s ($3.75) for $1,875 and use that money to roll the 2021 $70 calls ($14.20) to the $65 calls ($16.80) for $2.60 ($2,900) so two short call sales and I pay for my roll to a $5 (7,250) wider spread.  That's the kind of trade we like to get involved in!  

    I know it's hard to stick with value plays when they go out of favor.  That's why you have to REALLY like the stock you're trading – not just because someone picked it for you.  If you can't read enough to cut through the BS, you're always going to be kicked around by market moves you don't understand and that leads to bad trade decisions – often at the worst possible moments.

    Big Chart – Good opportunity to retest those lines.   AAPL is responsible for -100 Dow points, all of the /NQ losses and about 1/3 of the /ES losses but we're still holding 2,480, which is all that matters anyway.

    Swamp/StJ – It's like some Black Mirror episode where Society has gone to hell and the Oilgarchs have taken over the Government.  

    40% of S&P profits are from overseas but I doubt more than 10% from China.  AAPL was 20% China – that's why they are taking such a hit.  

    AAPL/Batman – I decided (chart above) that $700 is where AAPL split 7:1 so $100 is our base-line for AAPL and that makes $200 the 100% run and $220 the 20% overshoot with pullbacks at $180 (weak) and $160 (strong) and $140 a 60% retracement, which makes it the strong bounce off $100.  So, unless we fell that $100 is the right price for AAPL – I think $140 (the bottom of the pullback series) should hold and we're very likely to be back over $160 by earnings.

  6. Profits / Phil – Maybe 10% from China but it's not like the rest of the world is doing great now. Europe and UK could get really messy in 3 months. And the threat of more trade issues will come up I am sure.

  7. AAPL Only yesterday I put the question forward to sell April 19 175 call for some 2.50. I should have sold a million and would have been at least a million richer today.
    Monday mornings quarter back!!!!
    So I ask you is AAPL a one trick pony?
    Today I passed on my bike ride three teenagers sitting on a bench. All three had I phones in their hand. Possible three different makes. Do you really think they will buy new I phones tomorrow again.
    However on the other bench an older man lighting up a cigarette, possible one of MO or PM, will he buy on other packet tomorrow again? Yes.
    Look at Kodak, great stock one day in the past, today any one still trading it?
    I ask you where are all the flowers are gone.
    Possible today we do look a bit closer to all the AAPL puts we sold.

    "I know we losing money but we make it up on volume"!!!!

  8. Sorry I ment AAPL Feb 175 call now .31 cents so make it 2 million!!!!

  9. Oh Yodi of little faith….

    Tim Cook's warning letter to investors:

    January 2, 2019
    To Apple investors:
    Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following:
    • Revenue of approximately $84 billion
    • Gross margin of approximately 38 percent
    • Operating expenses of approximately $8.7 billion
    • Other income/(expense) of approximately $550 million
    • Tax rate of approximately 16.5 percent before discrete items
    We expect the number of shares used in computing diluted EPS to be approximately 4.77 billion.
    Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance. 
    While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates. 
    When we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter. As you may recall, we discussed four factors:
    First, we knew the different timing of our iPhone launches would affect our year-over-year compares. Our top models, iPhone XS and iPhone XS Max, shipped in Q4’18—placing the channel fill and early sales in that quarter, whereas last year iPhone X shipped in Q1’18, placing the channel fill and early sales in the December quarter. We knew this would create a difficult compare for Q1’19, and this played out broadly in line with our expectations.
    Second, we knew the strong US dollar would create foreign exchange headwinds and forecasted this would reduce our revenue growth by about 200 basis points as compared to the previous year. This also played out broadly in line with our expectations.
    Third, we knew we had an unprecedented number of new products to ramp during the quarter and predicted that supply constraints would gate our sales of certain products during Q1. Again, this also played out broadly in line with our expectations. Sales of Apple Watch Series 4 and iPad Pro were constrained much or all of the quarter. AirPods and MacBook Air were also constrained.
    Fourth, we expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected. 
    In addition, these and other factors resulted in fewer iPhone upgrades than we had anticipated
    These last two points have led us to reduce our revenue guidance. I’d like to go a bit deeper on both.
    Emerging Market Challenges
    While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.
    China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.
    Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world. Our products enjoy a strong following among customers, with a very high level of engagement and satisfaction. Our results in China include a new record for Services revenue, and our installed base of devices grew over the last year. We are proud to participate in the Chinese marketplace.
    Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year
    While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements. 
    Many Positive Results in the December Quarter
    While it’s disappointing to revise our guidance, our performance in many areas showed remarkable strength in spite of these challenges. 
    Our installed base of active devices hit a new all-time high—growing by more than 100 million units in 12 months. There are more Apple devices being used than ever before, and it’s a testament to the ongoing loyalty, satisfaction and engagement of our customers.
    Also, as I mentioned earlier, revenue outside of our iPhone business grew by almost 19 percent year-over-year, including all-time record revenue from Services, Wearables and Mac. Our non-iPhone businesses have less exposure to emerging markets, and the vast majority of Services revenue is related to the size of the installed base, not current period sales
    Services generated over $10.8 billion in revenue during the quarter, growing to a new quarterly record in every geographic segment, and we are on track to achieve our goal of doubling the size of this business from 2016 to 2020.
    Wearables grew by almost 50 percent year-over-year, as Apple Watch and AirPods were wildly popular among holiday shoppers; launches of MacBook Air and Mac mini powered the Mac to year-over-year revenue growth and the launch of the new iPad Pro drove iPad to year-over-year double-digit revenue growth. 
    We also expect to set all-time revenue records in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands and Korea. And, while we saw challenges in some emerging markets, others set records, including Mexico, Poland, Malaysia and Vietnam.
    Finally, we also expect to report a new all-time record for Apple’s earnings per share.
    Looking Ahead
    Our profitability and cash flow generation are strong, and we expect to exit the quarter with approximately $130 billion in net cash. As we have stated before, we plan to become net-cash neutral over time.
    As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business. We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result. 
    Most importantly, we are confident and excited about our pipeline of future products and services. Apple innovates like no other company on earth, and we are not taking our foot off the gas.
    We can’t change macroeconomic conditions, but we are undertaking and accelerating other initiatives to improve our results. One such initiative is making it simple to trade in a phone in our stores, finance the purchase over time, and get help transferring data from the current to the new phone. This is not only great for the environment, it is great for the customer, as their existing phone acts as a subsidy for their new phone, and it is great for developers, as it can help grow our installed base. 
    This is one of a number of steps we are taking to respond. We can make these adjustments because Apple’s strength is in our resilience, the talent and creativity of our team, and the deeply held passion for the work we do every day.
    Expectations are high for Apple because they should be. We are committed to exceeding those expectations every day.
    That has always been the Apple way, and it always will be.


  10. I thought AAPL had over $230 B in net cash.  Did they spend $100B buying their stock back?

  11. Phil I give you credit on CELG. Guess you can not win them all.

    For me desposibles and consumables are still better even Toilet paper!!!

    But as said you can not flood the market with I phones any more, as every one is already walking the streets like sombies with I phones in their hand, not even watching where they go.

    For all of us I hope I am WRONG!!!

  12. I see Tim Cook left Africa out. There you have a potential market, they even do not have food!

    Will they spend a 1000$ for an I phone? Boy I hope I will be the only one being WRONG!

  13. After shutdown talks go nowhere, officials to try again

  14. Chinese Spacecraft Nears Landing on Far Side of Moon

  15. Phil / AAPL – Thanks for the feedback on the AAPL price points —- I'm looking at taking my position up once we see if 140 holds AAPL already holds a 21% position in my portfolio and I'm OK with taking this to 25% —-.  I have confidence in the management team and the business model.  I think Buffett is buying and he typically provides info n early Feb this should provide some catalyst for the stock so if there is not a pop by then I can cover some longs at that point.   This year will be a flat to down year for the phone (  -2% to -4%) and next year should pick up for the phone with 5G launching.  Services should keep growing at a +20% clip ( we'll see the GM on these at earnings announce but they will be higher than phones) and the battery extended warranty program ( $50) repair is now complete I think this took down sales by 16M to 24M last year this should provide some cushion for this year.  Random thoughts.

  16. Wow, those ISM numbers really tanked us.  Still, not changing our boxes so – it just doesn't matter!  

    • Dow 27,000 to 21,600 is 5,400 points so 1,080-point bounces to 22,680 (weak) and 23,760 (strong) 
    • S&P 2,950 to 2,360 is 590 points so 120-point bounces to 2,480 (weak) and 2,600 (strong) 
    • Nasdaq 7,700 to 6,160 is 1,540 points so 300-point bounces to 6,460 (weak) and 6,760 (strong) 
    • NYSE 13,200 to 10,560 is 2,640 points so 528-point bounces to 11,058 (weak) and 11,586 (strong) 
    • Russell 1,750 to 1,400 is 350 points so 70-point bounces to 1,470 (weak) and 1,540 (strong)

    We're at 22,740, 2,454, 6,191, 11,190 and 1,330 – no change from yesterday morning.

    I still like /NQ if we cross back over 6,200 for another go at $1,000+

    AAPL/Rookie – $130Bn is NET of $100Bn in debts.

    IPhones/Yodi – There are 1.2Bn in use and figure a 3-5 year turnover so that's a lot of annual sales – even if they don't grow penetration.  It's still a disposable – just has a longer shelf life.  Also, don't get hung up on the $1,000 phone, entry phones are $350 and those are 6's, which are more powerful than a super-computer was in 2005.

    Services/Batman – Cook says they will grow $40Bn over the next few years, that's more than most companies' total sales!   I agree on the battery replacement, extended the lives of a lot of phones that would have rolled over otherwise. 

  17. Just sold a couple of VXXB Jun 80 calls to test the water! The spreads are not great and the delta is higher than what I like but they don't have higher strikes so making lemonade with these lemons. I imagine they'll add strikes if we go higher.

  18. AAPL / Batman, Phil – Don't see 5G in an iPhone for a while:

    This won't be a catalyst for them in any case. But 5G won't rollout very fast and tests so far are underwhelming. On the other hand, AAPL is stuck with Intel for 5G modems and they are behing QCOM as far as technology.

  19. Hi Phil, for CELG, would you close it now or wait? I have Jan'21 sold puts (now at 2.00) and 55/80 BCS. Thanks a lot!

  20. Phil, another quick one. In futures (although I do remember your and Yodi's advice not to trade for now, except as paper trades), you mentioned you are long /NG19 (July 2019). Why this particular month and not something much closer (say, March)?

  21. Trump’s Freewheeling and Fact-Free Cabinet Meeting

  22. For some perspective – on a weekly chart, AAPL is closing on it's 200 MA at 138. It has not gone below in the last 10 years. BTW, going over the 50 MA has been a pretty good bullish signal.

  23. Cursive Is Dumb

  24. I'm sticking to AAPL at 90.

    In the meantime ETH is 150, that's a strong buy. It could go to 2500. Global markets get shaky and folks run to the yen? That should set off some alarm bells, IMO.

  25. Wow, clueless… Looks like the biggest tax increase in history now!

  26. still, can't help nibble on a rebound. AAPL weekly 147 calls @ 0.75

  27. BDC, just wonder what's your premise for ETH?

  28. ETH is a smart contract system, which is useful

  29. /NG/Alter – I want to give summer a chance to kick in.  AC use can cause big drawdowns in /NG and also, more time means more export terminals can start up.  

    Speaking of commodities, /KC gave us another pop today.  

    Yen/BDC – That was weird this morning.

    Tariffs/StJ – Surely by now someone has explained to him how tariffs work so I guess he's just lying in order to convince his base?

    Volume not very strong so no real meaning to these gyrations:

    Date Open High Low Close* Adj Close** Volume
    Jan 03, 2019 248.230 248.570 244.040 246.425 246.425 64,466,164
    Jan 02, 2019 245.980 251.210 245.950 250.180 250.180 126,312,300
    Dec 31, 2018 249.560 250.190 247.470 249.920 249.920 144,299,400
    Dec 28, 2018 249.580 251.400 246.450 247.750 247.750 153,100,200
    Dec 27, 2018 242.570 248.290 238.960 248.070 248.070 186,267,300
    Dec 26, 2018 235.970 246.180 233.760 246.180 246.180 218,485,400
    Dec 24, 2018 239.040 240.840 234.270 234.340 234.340 147,311,600
    Dec 21, 2018 246.740 249.710 239.980 240.700 240.700 255,345,600

  30. STjeanluc / AAPL – 5G – I don't see them launching 5G in 2019 ( many other carriers will do so) I look them to sell 5G in the '20 product line-up – I have several data points that say they are out of this year coupled  ( intel is sampling parts for development ) with the historical lag, as well as slow roll out by carriers this year.  However I'd be surprised if they were not in the '20 lineup –  

  31. STjeanluc / AAPL – 5G – I don't see them launching 5G in 2019 ( many other SMART PHONE companies) I look them to sell 5G in the '20 product line-up – I have several data points that say they are out of this year coupled  ( intel is sampling parts for development ) with the historical lag, as well as slow roll out by carriers this year.  However I'd be surprised if they were not in the '20 lineup –  

  32. Other things to think about on Apple .. I still think it is a good company .. but Netflix is refusing to play the Appstore tax .. what happens if other companies revolt.  Also Huawei makes a very competitive phone for a fraction of the price.  We don't see it in the US, but seeing more and international users with Huawei.  I like apple and think it is a long term hold .. but I think these are imprtant considerations going forward.

  33. Phil, thanks for the /NG comment. I think you may have missed the question re CELG: would you close it now or wait? I have Jan'21 sold puts (now at 2.00) and 55/80 BCS. 

    Thanks a lot!

  34. Ouch, another failure to rally back.  

    AAPL/Nom – Not many companies are as big and popular as Netlix.   We're developing an App and there's no possible way to no be in the App store.  Also, the Huawei Mate 20 Pro is about $150 less than the IPhone X (retail) but you can already get X's for less than that – really doesn't seem to be a deal-breaker for people at that level.

    CELG/Alter – In this case, premium is not our friend and we don't think the deal won't pass so I think waiting is better for the moment though – especially as they are back to $80 because BMY offered cash and stock and their stock just dropped hard. 


    See, people say AAPL should buy another company but look what happens then! 

  35. Just for fun, here are the old lines we had for the NYSE:

    Looks like we could have kept them :-)

  36. AAPL:   Phil, I'm firmly with you on this one,.  AAPL just reported earnings last night, by way of Cook's announcement.  The down side is now cooked in and the late Jan earnings report won't even matter,  AAPL holds 140, plus/minus a few points here and there.  My this week's AAPL play came only partially in, thanks to Tim's 4 p,m. conference ( I TOLD him he should wait till Friday!), but I've already sold some 11 Jan 140 put spreads and will just double/roll down/out till they come in, which they will.,  Happy Trading!

  37. BMY--ouch!!!!

  38. Winning!

    The ongoing partial government shutdown will cut U.S. economic output by about 0.1 percent every two weeks, the chairman of the White House Council of Economic Advisers said.

  39. NYSE/StJ – So funny how many times we felt the need to revalue those lines yet here we are again.

    AAPL/Iflan – Down 10% on the button now at $142, usually a move like that gets follow-through but we'll see.  Long-term, unless Trade Wars escalate significantly, this should be a blip in retrospect. 

    BMY/Jabob – People think they are overpaying, so bad for both companies as the value of BMY's stock drops.   Best thing for CELG would be a counter-offer or BMY moving to all cash.

    • Fiat Chrysler Automobiles (FCAU -1.4%) and Nissan (OTCPK:NSANY) were two of the biggest gainers of market share during December with sales growth of 14.0% and 7.6%, respectively – while Ford (F -0.8%), Toyota (TM -1.6%) and General Motors (GM -3.9%) lost ground. Subaru (OTCPK:FUJHY) and Volkswagen (OTCPK:VWAGY) also posted solid gains of 10% and 5%, respectively.
    • estimated industry-wide full-year sales of 17.3M vehicles, while Cox Automotive forecast a "modest uptick" to 17.2M vs. 17.1M in 2017 and the record high of 17.6M in 2016.
    • Auto execs reported stronger pricing during the month on a higher mix of SUVs and trucks, but there are some concerns for the new year with higher interest rates and some sales potentially having been pulled forward due to tariff concerns or the U.S. tax overhaul. There is a general sense that the industry will fail to reach 17M sales again in 2019, although with half of all sales expected to be a SUV or crossover pricing could be even stronger.
    • As far as recordkeeping, Ford is joining General Motors in shifting to reporting quarterly sales numbers, instead of monthly.
    • Another weak month of Ford (F -0.1%) sales in the U.S. has turned the spotlight on how the automaker's suppliers may shake out amid the softer volume numbers (December units -9% Y/Y, 2018 units -3.5%).
    • Wells Fargo says the suppliers in its coverage universe with the highest exposure to Ford production are Tower International (NYSE:TOWR) at ~35% of revenue, Visteon (NYSE:VC) at ~28%, Magna International (NYSE:MGA) at ~16%, BorgWarner (NYSE:BWA) at ~15% and Tenneco (NYSE:TEN) at ~13%. All five stocks have dismal 52-week returns – TOWR -27%, VC -58%, MGA -38%, BWA -38% and TEN -57%.
    • Previously: Ford U.S. sales fall 9% in December (Jan. 3)
    • Citi's chief U.S. equity strategist, Tobias Levkovich's Panic/Euphoria Model has dipped into"panic" territory – a contrarian signal suggesting "high probabilities" of the market moving higher over the next 12 months. According to Levkovich, the average return from these spots is 18%.
    • Also in the market's favor, says Levkovich – year 3 of the presidential cycle has proven to be the strongest, with average return since 1900 of 10.5%, and median return of 14%.
    • Williams Cos. (WMB +1%wins approval from the Federal Energy Regulatory Commission to begin full service on the Gulf Connector Expansion Project, which will serve Texas liquefied natural gas export terminal expansions under development by Cheniere Energy (LNG +0.8%) and Freeport LNG.
    • The Gulf Connector expansion consists of three new compressor stations, a new pipeline interconnect and modifications to two compressor stations in southeast Texas.
    • The expansion marks the second Transcontinental Gas Pipe Line project to serve Gulf Coast LNG terminals and follows WMB's early 2017 start of the Gulf Trace Project feeding Cheniere's Sabine Pass liquefaction project.
    • Exxon Mobil (XOM -0.9%) says it permanently shut production at its Sable Island Offshore Energy Project offshore Nova Scotia, although exploration efforts in the play will continue.
    • With Sable Island production sliding over the past several years, XOM in 2015 acknowledged the project was nearing the end of its productive life and announced decommissioning plans.
    • Combined with the shut-in of production from Encana's Deep Panuke platform earlier this year, the XOM news closes a chapter on offshore Nova Scotia gas production.
    • Albemarle (ALB -6.1%) falls sharply after Berenberg downgrades shares to Hold from Buy with a $90 price target, slashed from $130, saying it had not anticipated "what appears to be a concerted attempt by national governments" to pressure lithium prices in order to promote local battery production.
    • Last month's announcement by state-owned Bolivian miner YLB that it will cooperate with German partner ACI Systems to produce 40 kt of lithium hydroxide from 2022 could mark the start of a fundamental shift in supply, Berenberg's Sebastian Bray says.
    • Google (GOOG -2.7%)(GOOGL -2.7%shifted 19.9B euros ($23B) to Bermuda in 2017 through a Dutch shell company to reduce foreign taxes. The amount was about 4B euros higher than in 2016.
    • The company's Netherlands subsidiary shifts royalty revenue from outside the U.S. to Bermuda-based Google Ireland Holdings, which doesn't have to pay any income tax.
    • The "Double Irish, Dutch Sandwich" tax strategy is legal, but Ireland started backing out of the arrangement in 2014 amid pressure from the U.S. and EU and will be entirely out by next year.
    • Traders and strategists are trying to figure out what caused Thursday's flash crash in the $5.1T-a-day forex market. Bloomberg reporter Katherine Greifeld found three theories:
    • 1. Robots. During the period between the Wednesday close in New York and the Thursday open in Tokyo, few human traders are involved in the market. “If you’re trying to source liquidity with an algorithm that doesn’t have the proper constraints and controls, then you can see a situation where the market can move very quickly,” says Vanguard Group's global head of foreign-exchange trading Andrew Maack.
    • 2. Apple. The yen rally occurred about an hour after Apple's announcement, adding to the strain already caused by disappointing Chinese manufacturing data. “The yen is reinforcing itself as a more traditional safe haven beyond the dollar,” says Jane Foley, head of currency strategy at Rabobank.
    • 3. Shorts. Hedge funds' and other speculators' overall bearish stance on the yen vs. the U.S. dollar were close to the most extreme levels of 2018, according to the latest U.S. Commodity Futures Trading Commission. One problem--there's been no new CFTC data since Dec. 21 due to the partial government shutdown. Since the last update, “longs have almost certainly been cut substantially,” wrote Adam Cole, chief currency strategist at RBC Europe, in a note to clients.
    • And with Japanese investors still on holiday, swings in the market are exacerbated.
    • Previously: Flash crash in dollar/yen (Jan. 2)
    • The National Football League says Caesars Entertainment (CZR -1.6%) will be the first official casino sponsor of the league.
    • The multi-year sponsorship will include Caesars having the exclusive right to use NFL trademarks and to promote its properties through unique fan experiences at casinos and entertainment events. Seven NFL clubs already have casino relationships with Caesars Entertainment, including the Falcons, Ravens, Bears, Colts, Saints, Raiders and Eagles.
    • Caesars will also host elements of the 2020 Draft in coordination with the city of Las Vegas.
    • Source: Press Release
    • Blackstone's Byron Wien issues his annual "ten surprises" list, events he sees as having a better than 50% likelihood of occurring this year.
    • Topping the list: The Fed stops interest-rate hikes, the 10-year Treasury yield remaining below 3.5%, and the yield curve remains positive.
    • Consumer and government spending drives GDP growth, while capital spending and housing make "only modest gains" in 2019.
    • Sees S&P 500 rising 15% for the year and gold dropping to $1,000 as equity markets in the U.S. and elsewhere improve.
    • No Brexit deal is reached by March 29, Theresa May stays in office, and under a second referendum, the U.K. votes to remain in the EU.
    • Apple (AAPL -8.2%announces that App Store spending topped $1.22B between Christmas Eve and New Year's Eve, a new holiday spending record.
    • Customers spent over $322M on New Year's Day alone.
    • The announcement follows yesterday's Q1 warning on iPhone weakness in China, which has the Street seeing red. But notable analysts including Morgan Stanley's Katy Huberty have remained bullish on Apple's Services potential even as weak iPhone data poured in.
    • Apple's warning on a drop in traffic to stores in China amid an economic downturn and trade squabble with the U.S. has the full attention of the Wells Fargo analyst team covering the retail sector.
    • Wells compiled a list of the companies in its coverage universe with the highest exposure to China as a percentage of sales, including six with double-digit exposure.
    • China exposure as a percentage of sales: Adidas (OTCQX:ADDYY) 18%, Tiffany (NYSE:TIF) 16%, Nike (NYSE:NKE) 15%, Skechers (NYSE:SKX) 14%, Tapestry (NYSE:TPR) 13%, Fossil (NASDAQ:FOSL) 12%, Farfetch (NYSE:FTCH) 9%, Michael Kors/Capri (NYSE:CPRI) 8%, PVH (NYSE:PVH) 6%, Under Armour (NYSE:UAA) 5% and VF Corp (NYSE:VFC) 5%.
    • Looking to skip the China drama completely? Retailers with no exposure to China include Stitch Fix (NASDAQ:SFIX), Dick's SPorting Goods (NYSE:DKS), J. Jill (NYSE:JILL), Ross Stores (NASDAQ:ROST), Urban Outfitters (NASDAQ:URBN), Ulta Salon (NASDAQ:ULTA), Foot Locker (NYSE:FL) and Boot Barn (NASDAQ:BOOT).

  40. Phil — I still have AAPL short long calls against a spread which I did not Buy back

    would you recommend buying back now or wait to see if 140 holds over next few days

  41. Phil/group – I have a March SQQQ 10/17 spread in IRA rollover so can't sell just the 10s

    What price should I put in to close it out? 80% would be 5.60 so I was thinking limit order there

    And (if it doesn't fill) as it gets closer to march how do you adjust what you try to get for it provided we are still above $17 at that point

  42.  It depends which short calls you have. Are they mostly gone?  Are you worried they can bounce back? Do you have something better to sell?


     Are you worried they can bounce back? Do you have something better to sell?


    Well this is the very bad day for the market, with a bad finish.  Would be crazy if we bounce tomorrow. 

  43. SQQQ/Coulter – If you are up 80% this far from expiration, that’s worth cashing in.  

  44. thanks

    I have 25 2020 155/185 AAPL spreads

    (I had 50 but rolled down 25 to a 2021 140/170 spread a week or 2 ago)

  45. Anyone have an opinion on the bond move? Is this just the market hoping that the fed won't hike? TLT has gone from 112 to 124 with hardly a down tick. I wonder if it's time for some short TLT…

  46. Crazy bounce – looks like it's coming!

  47. Fact-checking Trump’s freewheeling Cabinet session

  48. Phil – congrats on the Celgene pick, and for sticking with it even if it didn't work out at the first attempt.

    I have a question on an AAPL Top Trade idea from back in August 2018:



    Top Trades for Tue, 28 Aug 2018 15:42 – AAPL


    As a new spread on AAPL, I'd go for:

    Sell 15 June 2020 $185 puts for $11 ($16,500) 

    Buy 80 June 2020 $180 calls for $54.50 ($436,000) 

    Sell 80 June 2020 $240 calls for $22 ($176,000) 

    Sell 40 Jan 2019 $210 calls for $18.20 ($72,800) 

    That $480,000 spread that's $320,000 in the money nets you in for $170,700 but, hopefully, it will produce a pretty steady $40,000 per q in profits while you wait and whittle that $170,700 down quickly.  If AAPL goes lower, the short calls go worthless and you sell more for another $80,000 and then you have $10 per long to roll down $20 and widen the spread.  If AAPL goes higher, just remember to stop 1/4 over $20 and 1/4 over $25 so you would only be 1/4 covered (easy DD roll) if AAPL made a big move up.

    I prefer the smaller, more manageable size to start as you can easily DD on these if you have to and they'll still make over $300,000 (200%) in two years with not much of a move from AAPL required.  

    This is a HNW trade for large portfolios, of course.  You may want to divide the amounts by 5 or 10 to size it for a more modest portfolio and, don't forget, you have to REALLY want to own AAPL for $185 to sell the short puts!


    It would be good to get your thoughts on whether this position would benefit from an adjustment (I would think so) and the best way to adjust it. The Jan 19 short calls will expire worthless which is great. The next set of calls to sell and deliver around $80k will be 40 contracts of the Apr 19 $130 calls for $18.50. But I wouldn't sell those before adjusting the main spread.

    Top Trades for Tue, 28 Aug 2018 15:42 – AAPL


    As a new spread on AAPL, I'd go for:

    Sell 15 June 2020 $185 puts for $11 ($16,500) 

    Buy 80 June 2020 $180 calls for $54.50 ($436,000) 

    Sell 80 June 2020 $240 calls for $22 ($176,000) 

    Sell 40 Jan 2019 $210 calls for $18.20 ($72,800) 

    That $480,000 spread that's $320,000 in the money nets you in for $170,700 but, hopefully, it will produce a pretty steady $40,000 per q in profits while you wait and whittle that $170,700 down quickly.  If AAPL goes lower, the short calls go worthless and you sell more for another $80,000 and then you have $10 per long to roll down $20 and widen the spread.  If AAPL goes higher, just remember to stop 1/4 over $20 and 1/4 over $25 so you would only be 1/4 covered (easy DD roll) if AAPL made a big move up.

    I prefer the smaller, more manageable size to start as you can easily DD on these if you have to and they'll still make over $300,000 (200%) in two years with not much of a move from AAPL required.  

    This is a HNW trade for large portfolios, of course.  You may want to divide the amounts by 5 or 10 to size it for a more modest portfolio and, don't forget, you have to REALLY want to own AAPL for $185 to sell the short puts!

  49. Solar energy that doesn’t block the view

  50. Gold Bursts Above $1,300 as Slowdown Tremors Spur New Year Rally

  51. Chinese Consumers’ Confidence Sags, Casting a Pall Over the Global Economy

  52. Property Markets From Hong Kong to Sydney Join Global Slump

  53. Good morning! 

    Running late, will get to Qs in new chat.

    A bit of a recovery in the Futures but NFP at 8:30 will matter a lot.