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Flailing Thursday – Indexes Struggle at the 50-Day Moving Averages

Hold that line!

It's a football term but approprate for the indexes as the moving averages indicate the line at which the bulls and bears are both struggling to gain ground.  As in a football game, sometimes the bulls cross into bear territory and sometimes the bears cross into bull territory but even a game that seems certainly won by one side or the other can suddenly reverse in a last-minute rally.  

While anyone can win a single game, the real measure of a team's strenght is how they persevere over a whole season or even seasons – as that is the way dynasties are born.  The 1927 Yankees were considered the greatest baseball team in history, not just because of that one season but because, between 1921 and 1928 they were in 6 of 8 World Series and won 3 of them (3 of the last 4 as they got better and better).  

No matter how good a baseball team may look during the season, once they enter the playoffs and the World Series, they come up against the best of the best from other divisions and other leagues and that's where they are truly tested.  The moving averages are like that – on one side you have bulls and on the other side you have bears and it's very easy for the bulls to approach the moving averages from below and it's very easy for the bears to approach the moving averages from above but, once they hit those lines – they face only the most determined bulls and bears and that's where the championships are won or lost.

The 50-day moving average is like the playoffs and the 200-day moving average is like the World Series – played for all the marbles.  But, before your team can get to the World Series they have to win the playoffs and, at the moment, that's where the bulls are – struggling to get over the 50-day moving averages before they can even think about taking on the 200-day bears, who took the market down 20% in a single quarter and, though the bulls have rallied back – don't count those bears out just yet.

When we see our 5% Rule™ being adhered to this closely, we KNOW the bots are in charge if this market.  Last week, we failed exactly at the strong bounce line but that's OK – as long as we don't fail the weak bounce line – that would be very, very bad.  Hopefully, we're consolidating for a move back up but, even if we make that, there's the -10% line to contend with just to make a 50% recovery so let's not get too excited just yet…

Related imageThere was A LOT of selling interest over that strong bounce line, two solid months worth of it and we've spent just 1 low-volume month attempting to rally back so far and we haven't even made it over the line yet.   The bears still have the ball and they are well-rested as no one has really challenged them since October.  The bulls are going to need a strong catalyst to get them over the line and fortunately, the bears are looking a little tired with their Murderer's Row of Brexit, Trumpdown, Wally, Tradewar, Obstruct & Fedhike all looking tired after beating down the bulls for 3 months but don't count the bears out because Trump is still pitching and, so far, he hasn't met an economic positive he hasn't been able to strike out!  

Even this morning, Treasury Secretary and Third Base Coach, Wilbur Ross, said we are nowhere near a deal with China and that means Tradewar is ready to play and that sent the the morning line (the Futures) down quickly as bets on the bearsh piled in since Tradewar's health had been questionable into today's game.  No such luck for the bulls so now they'll have to figure out how to hit Trump's twitball, which is technically in illegal pitch but he's been getting away with it all season.

Over in the European League, where they say "Football" but mean "soccer" and they don't say baseball at all but spend 3 days watching a single cricket match in what can only be explained as some ancient way to grind their colonies to a halt, League Commissioner, Mario Draghi, will retire with his steak intact of NEVER raising rates once during his entire career. 

Rates in the ECB have always been week as they have tried everything over the past 20 years in an attempt to keep their made-up currency from going the way of BitCoin but, since the Financial crisis 10 years ago, the Euro has dropped from $1.60 to $1.10, giving up 31% of its value, which has pushed energy and commodity prices, which are priced in Dollars, through the roof and dropping interest rates 95%, from 4% to 0.2% did not help at all!   

Fans will remember Draghi came to the ECB straight out of Goldman Sachs so it's no real surprise that he drove rates lower and lower and lower, which made his former teammates tens of Billions of Dollars while driving the ECB $4Tn addional Euros in debt – that's a legacy those fans are never going to forget!  

As the Government Shutdown goes into extra innings this week and trade talks with China "miles and miles" apart, according to Ross, we certainly have low expectations going forward, we're going to need to put on our rally caps and hope that earnings will save us.


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  1. Good Morning!

  2. Good morning, All!

    The webinar replay is now available!










    Commerce Secretary Wilbur Ross downplayed expectations for an end to U.S.-China trade war when both sides meet in Washington next week, saying the world’s two largest economies are a long way from resolving their differences.

    “We’re miles and miles from getting a resolution,” he said in an interview on CNBC on Thursday. “Trade is very complicated. There are lots and lots of issues.”

  4. Oops !  Sorry for the format.

  5. AMGN for armchair traders if you hold the Jan 25 197.5 caller roll up to Feb 205 as the premium in Jan 25 197.5 is below the div. !!!!!

  6. CenturyLink (CTL) downgraded to Sell from Neutral at Guggenheim.

  7. In the middle of another polar vortex and blizzard up in north country. -20-35 below with the wind chills. Supposed to be out of here soon, but am concerned about the flights safety etc. Climb on board the UNG train.

  8. Morning Phil & all, with comment from Albo re CTL, just wonder what your thoughts are on the position I am holding:

    - CTL Shares bough at 20.95, now at 14.61

    - Short CTL 2020 $17 Call, sold for 4.33, now 0.80

    - Short CTL 2020 $20 Put, sold for 3.06, now 6.31

    I think that the idea in the chat so may have been adjusted so I can't find what was done to it. Any suggestion for how to best adjust this?

  9. Good morning!  

    Wilbur Ross telling Government Workers who have to go to homeless shelters for food that they should just borrow some money until the shutdown is over.  Maybe from Trump's father?

    “Trade is very complicated. There are lots and lots of issues.” – Ross

    Image result for trump best people 

    We're shaking off Ross' comments so that's good, we'll see if the Dow can get green again.  

    • The U.S. is still "miles and miles" away from a trade deal with China, U.S. Commerce Secretary Wilbur Ross told CNBC Thursday.
    • The sticking points aren't a surprise: America's "intolerably big trade deficit" with China; China's plan to dominate global high-tech industries; increasing access for U.S. companies to China's markets; intellectual property rights.
    • The S&P and Dow open down 0.1%, Nasdaq +0.2%.
    • Previously: China and U.S. plan in-depth talks next week: Reuters (Jan. 24)
    • The European Central Bank decides to keep key interest rates unchanged in its first monetary policy meeting of the year, as it had said it would.
    • Marginal lending rate is at 0.25%, main refinancing rate at 0, and deposit rate at -0.4%.
    • Still sees key interest rates staying at present levels at least through the summer of 2019.
    • Reiterates its intention to continue reinvesting principal payments from maturing securities purchased under the asset purchase program for an extended period past the date when it starts raising key ECB interest rates.
    • Previously: Investors look for ECB to acknowledge risks to eurozone economy (Jan. 24)
    • European Central Bank President Mario Draghi says the risks for the eurozone economic outlook have moved to the downside.
    • He cites "persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets, and financial market volatility."
    • Still, the ECB Governing Council is unanimous in the view that "likelihood of a recession is low."
    • The euro bounces off of session low against the dollar; -0.2% against the dollar, earlier it was down as much as 0.6%.
    • Previously: ECB maintains key interest rates as expected (Jan. 24)

    /NGH19 back over $3!  Lined up with /NG at $3.09, about an 0.085 spread at the moment.  

    • January U.S. PMI Composite Flash54.5 vs. 54.2 consensus 53.6 prior.
    • Manufacturing PMI 54.9 vs. 53.5 consensus, 53.9 prior.
    • Services PMI 54.2 in-line with consensus, 53.4 prior.
    • December Leading Indicators: -0.1% to 111.7 in-line with consensus, +0.2% prior (unrevised).
    • Coincident Economic Index +0.2% to 105.1.
    • Lagging Economic Index +0.5% to 106.7.
    • Initial Jobless Claims -13K to 199K vs. +218K consensus, 212K prior (revised).
    • Continuous Claims: -24K to 1.713M vs. 1.735M consensus, 1.737M prior (unrevised).

    • Aurora Cannabis (ACB +1.1%) has closed its offering of 5.5% convertible senior notes due 2024 yielding gross proceeds of $345M.
    • The initial conversion rate is 138.37 common shares per $1,000 principal amount of the notes (~$7.23/share).
    • Freeport McMoRan (NYSE:FCX-5.3% pre-market after missing estimates for both Q4 earningsand revenues, and guiding for sharply lower sales of copper and gold in 2019.
    • Q4 net earnings of $140M, or $0.09/share, plunged from $1.04B, or $0.71/share, in the year-earlier quarter, and revenue tumbled 27% to $3.68B from $5.04B a year ago.
    • FCX forecasts consolidated sales for 2019 – which it says reflects a transition year – of 3.3B lbs. of copper (-13% Y/Y), 800K oz. of gold (-67% Y/Y) and 94M lbs. of molybdenum (flat); for Q1, FCX expects 800M lbs. of copper, 255K oz. of gold and 24M lbs. of molybdenum.
    • In Q4, FCX sold 785M lbs. of copper, 266K oz. of gold and 24M lbs. of molybdenum; FCX's average realized price for copper during the quarter fell 14% Y/Y to $2.75/lb.
    • As Freeport Indonesia transitions mining from the open pit to underground, its production is expected to be significantly lower in 2019 and 2020 vs. 2018.
    • For 2019, FCX expects operating cash flows of ~$1.8B, based on cost and sales volume estimates and certain average prices, and sees $2.4B in capex for the full year.
    • Ford (NYSE:F) believes a hard Brexit will cost the company $800M in 2019 due to WTO tariffs and a softening pound, according to information obtained by Sky News.
    • The company is talking to trade unions about potential job cuts if the hard Brexit scenario plays out.
    • If you're wondering what Ford execs said yesterday about Brexit during the earnings conference call (transcript) the answer is nothing. Not a single analyst asked about the impact.
    • Shares of Ford are up 0.12% premarket to $8.35.
    • U.S. airlines stocks are setting up for a strong day after a trio of earnings reports came in strong.
    • Bank of America Merrill Lynch calls American Airlines' (NASDAQ:AAL) unit revenue forecast "better than we feared" and notes the significant upside for Southwest Airlines (NYSE:LUV) from its RASM guide. "LUV’s 2018 RASM underperformance is reversing in 1H19 as the new reservation system benefits finally begin to flow through," notes the analyst team. While JetBlue (NASDAQ:JBLU) came in largely in line with expectations, BAML notes the carrier's unit costs were better than anticpated.
    • Premarket check: AAL +6.3%, LUV +5.5%, JBLU +2.1%, Delta Air Lines (NYSE:DAL+2.4%, Hawaiian Holdings (NASDAQ:HA+4.1%, Alaska Air (NYSE:ALK+3.4%, United Continental (NASDAQ:UAL+2.0%.
    • Spirit Airlines (NASDAQ:SAVE), Mesa Air (NASDAQ:MESA) and Allegiant Travel (NASDAQ:ALGT) could also see a bounce when they begin trading.
    • Related ETF: JETS
    • American Airlines (NASDAQ:AAL) jumps after reporting Q4 revenue ahead of estimates.
    • Operating revenue came in at $10.94B for the quarter and unit revenue was up 1.7% vs. +1.5% AAL guidance. Load factor was 82.1% vs. 82.8% a year ago.
    • Looking ahead, American sees Q1 revenue per available seat mile growth of 0% to 2% and FY19 EPS of $5.50 to $5.70 vs. $5.88 consensus.
    • CEO outlook: "We are intent upon running the most reliable operation in our post-merger history, pursuing high margin growth opportunities at our most profitable hubs, and executing on a number of valuable revenue and cost saving initiatives. We expect our total revenue per available seat mile to grow faster than our network competitors, and to deliver strong pre-tax earnings growth in 2019. At the midpoint of our guidance, 2019 diluted earnings per share excluding special items would increase approximately 40 percent versus 2018."
    • AAL +6.07% premarket to $33.53.
    • Previously: American Airlines beats by $0.03, revenue in-line (Jan. 24)

    • Las Vegas Sands (NYSE:LVS) execs highlighted the upside still left in Macau and in particular the opening of the new Hong Kong–Zhuhai–Macau Bridge during yesterday's post-earnings conference call.
    • "We're just very bullish and we are blinded by the extreme size of Macao in terms of the market today, but more important tomorrow. And look at the rest of the rim, look what the bridge has done, the bridge is a game changer. It's a magnificent achievement that accesses all China," noted COO Rob Goldstein.
    • The positive outlook from Las Vegas Sands includes some confidence on the VIP segment despite broad concerns in the industry on slowing GDP and regualtory crackdown.
    • "I think we're more confident of the sustainable growth of the premium mass, mass short term, but I wouldn't rule out VIP. This has proven me very resilient over the years," Goldstein said.
    • The casino company also updated on the London-themed Macau remodel of the Londoner, saying an opening in late 2020 is anticipated. Meanwhile, the St. Regis in Las Vegas is expected to open in the next 18 to 24 months.
    • Las Vegas Sands earnings call transcript
    • Shares of LVS are down 3.10% in premarket trading.
    • Union Gaming analyst John DeCree says the results from Las Vegas Sands (LVS -1.9%) indicate strong Macau fundamentals despite the headlines.
    • "On top of LVS's solid double-digit GGR growth, the retail mall operations are performing very well in spite of reports that luxury goods retailers are seeing softness in Asia. Tenant sales per square foot at the Macau retail assets are up about 5% over the past twelve months," he notes. Also, the shift in focus to VIP by Las Vegas Sands explains some of the concerns over EBITDA margin.
    • DeCree says Las Vegas Sands (Buy, $70 price target) continues to look attractive off its strong fundamentals, under leveraged balance sheet and generous dividend yield.
    • Other analyst actions on LVS: Credit Suisse drops its price target to $58 from $59, Nomura lowers its PT to $54 from $56, Barclays defends its Overweight rating.
    • MGM Resorts (NYSE:MGM) announces the formation of an "ad-hoc board committee" to evaluate the company's real estate portfolio and make recommendations to the full board.
    • MGM says the committee will be composed of three independent directors, each with extensive real estate and financial markets experience. The focus and objectives of the committee will be to remain consistent with MGM's existing strategy to enhance free cash flow per share, maximize value of the owned real estate and equity holdings, preserve the financial stability and position the company for continued growth.
    • MGM +4.22% premarket to $28.99.
    • Source: Press Release

      Restaurants Brands rally extends after BMO upgrade

    • BMO Capital Markets upgrades Restaurant Brands International (NYSE:QSR) to an Outperform rating from Market Perform after digesting the restaurant operator's Q4 earnings report.
    • Shares of QSR are up 0.80% in premarket to follow on yesterday's 9.78% rally.
    • Previously: Restaurants Brands updates on results, management changes (Jan. 23)
    • The Philadelphia Semiconductor Index is up 5% compared to the 0.7% gain for the sector (NYSEARCA:XLK) after yesterday's positive slate of earnings from Lam Research, Xilinx (XLNX+17.1%), and Teradyne (TER +12.3%) and a mixed report from Texas Instruments (TXN +5.1%).
    • On the move: Intel (INTC +3.1%), Maxim Integrated (MXIM +4.3%), AMD (AMD +3.7%), STMicroelectronics (STM +10.5%), ON Semiconductors (ON +7.8%), ASML (ASML +4%), Micron (MU +6.7%), Analog Devices (ADI +5.9%), Cirrus Logic (CRUS +4.3%), Seagate Technology (STX +3.9%).
    • Microsoft (NASDAQ:MSFT) and supermarket chain Albertsons sign an agreement to make Azure the preferred public cloud.
    • Albertsons will also sign employees up for the Office 365 bundle, and the companies could use AI tech to develop cashier-less technology for the stores.
    • The three-year Albertsons agreement comes a week after Microsoft disclosed a seven-year deal with Walgreens.
    • Azure still stands second in the cloud market to Amazon Web Services. But retailers have increasingly turned away from AWS following Amazon's Whole Foods purchase and launch of its Amazon Go cashier-less retail shops.
    • Jefferies analyst Brian Tanquilut says Amazon's (NASDAQ:AMZN) PillPack retail pharmacy business was granted nine new state prescription licenses in the past month with three more license applications pending.
    • But the analyst says Amazon will "have to acquire or build a few more mail pharmacies/grow capacity before being able to go live with a consumer pharmacy offering.”
    • The firm's channel checks show private brand Solimo increasing its offerings.
    • On pricing, Amazon's OTC drugs remain cheaper than Walgreens (NASDAQ:WBA), but CVS (NYSE:CVS) is becoming more competitive.
    • Source: Bloomberg First Word.
    • Amazon purchased PillPack last summer for undisclosed terms, scooping it up from interested buyer Walmart, which was reportedly willing to pay in the neighborhood of $1B.

  10. Wilbur Ross on Fed employees visiting food banks: “I know they are, and I don’t really quite understand why. Because, as I mentioned before, the obligations that they would undertake, say borrowing from a bank or a credit union are in effect federally guaranteed.”

    See? All those people have to do is go to the bank to get a loan !  It should be easy since they don't have any income right now.  Let them eat cake!

  11. Connecticut made it easy, "Legislature approves loans for unpaid federal workers"

  12. albo/CTL

    You still holding shares?

  13. Now that we've had 3 good airlines quarterly reports today, what do I do with 10 ALK short $60 Jan 20 puts that I sold for $9.00 and have now dropped all the way to $4.45?  Normally I would close out with 356 days remaining and a 50% profit not wanting to mess with $4,550 in profits.

    I am considering buying to close and then selling Jan 2021 puts after the earnings calls with an accompanying bull call spread.  Much less open interest that far out so may be harder to fill.  

    Are we still positive on FCX after earnings?

  14. Alter CTL Not all div paying stks are good I have warned before on that stock, as one member was very exited about the stock.
    On the stock you just have a paper loss so no problem you hope they still pay the 14.8 % yield.
    The Jan 20 caller is about .40 and you can close. The Jan 20 20 put you roll to Jan 21 15 put for a debit of 3.80 against the Jan 20 20 put now 6.50, in the hope the stock will still go up.
    So with the original credit of the put you sold and the credit on the caller you do not look to bad at all.
    Wait for selling further callers against the stock and if you sell calls sell shorter term calls OTM.
    My two cents.

  15. Dclark -Yes, and way too many.  CFO said on last conference call that they were comfortable with the dividend, so I would expect that the the next dividend would be announced sometime in late February.  Beyond that,,who knows.  But if they cut it next quarter to pay off debt, the stock may well go up. I don't believe they'll eliminate it.

  16. UNG/Pirate – Hopefully a nice drawdown today.  Safe travels.

    CTL/Alter – My opinion hasn't changed since last Jan:

    Submitted on 2018/01/02 at 12:36 pm

    CTL/Willsons – Well we already have FTR, thanks, so no CTL exposure as they are in a similar boat with $33Bn in debt and $222M in cash though CTL appears to be cranking out profits ($626M in 2016, about $400M in 2017) but not enough to justify and $18Bn valuation on $17Bn in sales, not when I can buy FTR, with $9Bn in sales for $560M at $7.16.

    Now down to $16Bn at $14.50 but not really low enough for me to get excited about them – especially after seeing FTR go down and down and down and down, despite $9Bn in revenues (1/2 of CTL), they have a valuation of just $215M at the moment, that's 1/84th CTL's.  CTL should make $1Bn this year so it's not about value for me – just the sentiment in this sector means I'd be more comfortable around $12Bn – so 20% lower, which would be the Fall 2017 lows around $12.

    So, for your position, you will effectively have 2x shares at avg $20.475 – 1/2 $7.39 you sold so $16.78 on 2x is not terrible.  Rather than be assigned though, I'd roll the short 2020 $20 puts at $6.60 to 1.5x the 2021 $15 puts at $3.80 ($5.70) so you give up 0.90 of the $3.06 you collected and then that means you effectively sold 1.5x 2021 $15 puts for net $1.44 so your assigned basis would be net $13.56 – that's acceptable.

    If you buy back the short calls ($3.53 profit), you're left with 1x the stock at net $20.95-$3.53 = $17.42 with the stock at $14.68 but I'd rather trade that for 2x the 2021 $13 ($3)/18 ($1.10) bull call spreads at $1.90 ($3.80), which will make 2x $3.10 ($6.20) if all goes well and suddenly you'll have a profit and, if not, you still have $11 in your pocket to adjust with.  

    ALK/Rperi – The 2020 $60 puts are now $4.50 and seem pretty safe.  I don't see why ALK won't go higher after earnings this evening but you can hedge by taking 1/2 off the table and, worst case, you make 75% of the full gain (if ALK goes up and there's no point in buying the 2020s back) but, if ALK goes down, you have an easy roll to 2x the 2021 whatevers.  Locking in 75% gain and negating the likelihood of a loss on earnings is a smart way to play.  

    FCX/Rperi – I'm going to have to look carefully but I think it's pretty easy to see why they got killed this Q – not really their fault and that's why cyclicals get low valuations – there's nothing they can do about it:

    Freeport McMoRan (NYSE:FCX-5.3% pre-market after missing estimates for both Q4 earnings and revenues, and guiding for sharply lower sales of copper and gold in 2019.

    Q4 net earnings of $140M, or $0.09/share, plunged from $1.04B, or $0.71/share, in the year-earlier quarter, and revenue tumbled 27% to $3.68B from $5.04B a year ago.

    FCX forecasts consolidated sales for 2019 – which it says reflects a transition year – of 3.3B lbs. of copper (-13% Y/Y), 800K oz. of gold (-67% Y/Y) and 94M lbs. of molybdenum (flat); for Q1, FCX expects 800M lbs. of copper, 255K oz. of gold and 24M lbs. of molybdenum.

    In Q4, FCX sold 785M lbs. of copper, 266K oz. of gold and 24M lbs. of molybdenum; FCX's average realized price for copper during the quarter fell 14% Y/Y to $2.75/lb.

    As Freeport Indonesia transitions mining from the open pit to underground, its production is expected to be significantly lower in 2019 and 2020 vs. 2018.

    For 2019, FCX expects operating cash flows of ~$1.8B, based on cost and sales volume estimates and certain average prices, and sees $2.4B in capex for the full year.

    Bottom line is, despite the struggles they expect $1.8Bn in cash flow and you can buy the whole company for $16.6Bn at $11.50 which is less than 10x FCF in a down cycle but about $15x earnings more likely:

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 18,010 20,921 20,001 14,607 14,830 16,403 19,985 18,696 14,890 -1.9%
    Operating Profit $m 5,646 5,316 -225 -13,512 -2,766 3,654 5,927     -8.3%
    Net Profit $m 3,041 2,658 -1,308 -12,236 -4,154 1,817 3,158 2,316 1,082 -9.8%
    EPS Reported $ 3.19 2.64 -1.37 -11.3 -2.96 0.93 1.89     -21.8%
    EPS Normalised $ 3.27 2.75 1.55 -3.45 -1.16 0.89 1.82 1.61 0.77 -22.8%
    EPS Growth % -32.2 -16.0 -43.6       +103.7 +79.9 -52.3  
    PE Ratio x           13.8 6.75 7.65 16.0  
    PEG x           0.17 0.084 n/a 0.39

    In the LTP, we just have 20 short 2021 $15 puts we sold for $4.85 on 12/4, when they were even lower, so this doesn't change our outlook and we're likely to add a spread now that the bad news is being digested.


    Speaking of things you can't control but CAN predict:

  17. Good advice, thank you.  Formulating plays for the next yearly cycle.  January week after expiration is always my favorite week.

  18. albo/CTL

    I bailed on holding shares.  Made a lot selling calls plus dividends, but sentiment sucks.  Decided I was more comfortable just keeping sold puts and rolling down for an even better re-entry price.

  19. ftr under

  20. FWIW, I think there's a world of difference between CTL and FTR.

    Phil posted :

    Submitted on 2018/01/02 at 12:36 pm

    CTL/Willsons – Well we already have FTR, thanks, so no CTL exposure as they are in a similar boat with $33Bn in debt and $222M in cash though CTL appears to be cranking out profits ($626M in 2016, about $400M in 2017) but not enough to justify and $18Bn valuation on $17Bn in sales, not when I can buy FTR, with $9Bn in sales for $560M at $7.16.


    Phil, I would point out that on 01/02/18  CTL closed at $17.41. vs FTR's $7.61.  So the stock is down less than 2 points since then.  But stockholders have received $2.16 in dividends.  As opposed to FTR which is down some 70% in the same period with no income.

    On May 2, I posted.

    Swap FTR into CTL and pick up that nice dividend.  I'm just saying.





  21. Democrats To Offer Deal On Border To End Shutdown

  22. How Nancy Pelosi beat Donald Trump at his own game (and why it matters)

  23. Thanks Phil & Yodi re CTL. Reviewing my Jan '2020 positions now to see what needs adjusting. In terms of those not doing too well, in addition to CTL are:

    ABX/GOLD (despite what a thought was a rather ambitious $10/$20 BCS I had after the previous adjustment).

    MU has been another disappointment need to roll down BCS (current price below long call…) and I still think they have a chance in a longer term.

    SPWR is another one I am adjusting. In 5/10 BCS (with sold put at 7).

    Strangely enough, despite the recent correction, most naked short puts are doing quite well so far with current prices quite a bit higher than the strikes. A lot can change in a year of course but so far my success ratio with those is quite good. The approach however has been quite conservative on this (generally targeting 1%-1.5% per month in premium and net purchase price if assigned at least 15% lower than the current price, which I should already like at the time of the transaction)…

  24. Puts/Alter – Well the VIX calming down has helped a lot too.  

    $3.05 on /NGH19 – Ka-ching!  

    Indexes still weak overall but /NQ might be looking to break back over 6,700 but AAPL at $152.25 not helping.

  25. Phil – where do you get the stock earnings info from such as the SIG snapshot from your webinar? I like the format of it better than some others I have been using. Thank you.

  26. There's lots of good stuff if you're willing to pay for it:

  27. MU – Up big today.

  28. Comment content omitted because it is too long.

  29. MU/Albo – As I keep saying, "Still good for a new trade"

    Short Call 2020 17-JAN 55.00 CALL [MU @ $37.19 $2.95] -20 8/17/2018 (358) $-10,000 $5.00 $-2.92 $-0.45     $2.09 $0.79 $5,830 58.3% $-4,170
    Short Put 2020 17-JAN 42.00 PUT [MU @ $37.19 $2.95] -15 8/17/2018 (358) $-7,500 $5.00 $3.95     $8.95 - $-5,925 -79.0% $-13,425
    Long Call 2021 15-JAN 35.00 CALL [MU @ $37.19 $2.95] 40 10/23/2018 (722) $48,000 $12.00 $-1.05     $10.95 $2.20 $-4,200 -8.8% $43,800
    Short Call 2021 15-JAN 55.00 CALL [MU @ $37.19 $2.95] -40 10/22/2018 (722) $-26,800 $6.70 $-2.00     $4.70 $1.10 $8,000 29.9% $-18,800

    We took a $9,000 hit on our original 20 2020 $40 calls from 8/17 but the rolled position is now + $3,705 so we're down about $5,300 overall and the net of the position is currently $7,405 out of potentially $80,000 at $55.  As a new trade I'd sell maybe 10 of the 2020 $55s and 10 March $38s for $2.10 so you'd have something shorter-term to play with.

    As you know, I don't like to push penny stocks but this one and NAK are exceptions.  LQMT, as noted in the report, has 70 patents and works has worked with AAPL for many years (but no phones made out of it yet).  This year, they are making watch parts for Omega, which is nice progress.


    Is LQMT setting itself up for another run? It sure looks like it.


    For those that are not familiar with Liquidmetal, here’s a little background. Liquidmetal Technologies is the leading producer of parts made with amorphous alloys, also known scientifically as Bulk Metallic Glasses or BMGs. The non-crystalline atomic structure of these materials imparts unique performance properties, including the ability to injection-mold with micron-level precision, lustrous finishes, high strength, hardness and corrosion resistance, and remarkable elasticity. Liquidmetal Technologies is the first company to produce amorphous alloy parts commercially, enabling significant improvements in products across a wide array of industries.

    Q3 results

    During the third quarter of 2018, the Company generated $253,000 in revenue through completion of the production tooling portion of commercial orders for both the AMM and MIM platforms. During the third quarter of 2018, LQMT finished validation procedures for the Company’s first eight-cavity mold.

    Cost of goods sold was $884,000 in Q3 2018 and $87,000 in Q3 2017. This increase was primarily attributable to markdowns of raw materials inventory, which was slightly offset by improved production throughput.

    Selling, marketing, general and administrative expense was $1.4 million in Q3 2018 and $1.7 million in Q3 2017. The decrease is primarily due to slightly lower costs associated with employee compensation, inclusive of non-cash stock-based compensation.

    Research and development increased to $601,000 from $500,000 in Q3 2017. The increase is mainly due to increases in internal projects related alloy and molding machine development.

    Cash and restricted cash totaled $36.4 million at September 30, 2018, as compared to $41.3 million at December 31, 2017.

    Partnership with Omega

    The new Omega Speedmaster Racing Chronometer utilized Liquidmetal Technologies. Omega, with support from its parent company, the Swatch Group, spared no effort in developmental work. The tachymeter scale along the bezel is fabricated from Liquidmetal, a patented material that’s poured into the milled indentations while still molten, allowed to harden, and then matte polished on its upper surface. Ceramic has a greater surface hardness, so polishing the Liquidmetal leaves no unwanted tool marks or other traces on the ceramic. This method allows Omega to give the bezel a completely smooth scale consisting of both polished ceramic and matte metal.

    The partnership with Omega is just a start with the Swatch Group. The Swatch Group is one of the world’s largest watch companies owning brands like Breguet, Harry Winston, Blancpain, Omega, Longines, Rado, Tissot,  Balmain, and many others. Swatch Group also prefers to keep all manufacturing in-house. Swatch Group now controls the entire gold processing chain internally. Its own foundry, which has just been granted a Responsible Jewellery Council (RJC) Code of Practices (COP) certificate, is now able to manage all of the gold requirements within the Group.

    All of the Group’s gold will be processed in a totally closed cycle and under strict internal control. In other words, the entire transformation process – from the foundry to the semi-finished and finished products – is controlled within the Swatch Group.

    Why this matters?

    This could be the start of Swatch Group eyeing Liquidmetal Technologies as a takeover. While we and others speculated that Apple might make a play for the company and its over 70 patents, Swatch Group might be the ideal acquirer now that it is incorporating Liquidmetal Technologies into its watch-making process.

    Bottom Line

    Currently trading with a market cap of $133 million, LQMT is an exciting story among small caps. With its $36 million in cash and over 70 U.S. patents, we believe it’s not a question of if LQMT will be bought, but when. As we’ve said before, CEO Lugee Li knows what he is doing and he didn’t invest $63 million into the company for nothing. He knows the value of Liquidmetal Technologies and is eyeing a huge payday. Patient shareholders will reap the rewards as well. This new bull run looks to be just getting started.

    My kids have 40,000 shares each at an average cost of about 0.16 ($6,400) so it's back where we came in.  I consider this a pillow stock, the kind you just buy some and forget about for 10 years and maybe it becomes a 10-bagger or maybe it goes worthless – not worth a big bet or worrying about but a fun poke on cool technology.


  30. NAK is a different story and we do have 10,000 shares of them at $1.40 in the OOP, along with 50 short 2020 $2 puts we sold for 0.95 so we're down about $8,000 in this one but they are sitting on the World's largest untapped gold mine and just cooling their heels for the past decade trying to get permission to strip-mine the Alaskan wilderness.  

    |About: Northern Dynasty Minerals Ltd (NAK)|By:, SA News Editor 

    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.

    Good article on the subject from a skeptic:

    Everyone tends to focus on the enormous size of the mineral resource at the Pebble Mine project: 57 billion pounds of copper and 71 million ounces of gold.

    But the new smaller design for the Pebble Mine plan will only actually mine 6.3 billion pounds of copper and 7 million ounces of gold out of the ground over 20 years.

    That only amounts to 11% of the total copper resource and less than 10% of the total gold resource, a small fraction of the numbers usually quoted when talking about the size of the Pebble Mine.

    This idea was discussed in more depth with members of my private investing community,Stock & Gold Market Report.

    The author focuses on the downsized permitting but ANY permitting puts them in business and 350,000 ounces of gold is $455M and 315M pounds of copper is another $819M $1.25Bn/yr is more than double RGLD ($450M) or FNF ($672M) at $13Bn, 50% more than Kirkland ($747M) at $7.9Bn….  So, to me, buying NAK here for $220M is well worth a shot as becoming a 10-bagger only takes them to $2.2Bn.

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue C$m 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.00 1.00  
    Operating Profit C$m -16.5 -3.82 -34.1 -34.9 -27.1 -64.2 -64.6      
    Net Profit C$m -15.7 -2.52 -31.3 -33.8 -27.0 -64.9 -14.8 -13.0 -14.0  
    EPS Reported C$ -0.16 -0.027 -0.33 -0.23 -0.11 -0.22 -0.053      
    EPS Normalised C$ -0.16 -0.061 -0.33 -0.23 -0.11 -0.22 -0.053 -0.11 -0.040  
    EPS Growth %                    
    PE Ratio x           n/a n/a n/a n/a  
    PEG x           n/a n/a n/a n/a

    The big problem is they are down to $21M in cash so they will have to raise cash yet again.  Rather than sell stock, they've generally partnered up with people in exchange for capital – giving them 3-5 year options that have, so far, all expired as we wait and wait and wait for permission to destroy the environment…  cheeky


  31. Meanwhile, things are weak but not too much damage.  50 dmas are:

    • Dow 24,239, now 24,457 on /YM (was black on Thursday last week)
    • S&P 2,615, now 2,631 on /ES (was red)
    • Nasdaq (100) 6,604, now 6,882 on /NQ (was black)
    • NYSE 11,877, now 11,990, (was red)
    • Russell 1,440, now 1,460 on /RTY (was black)

    So nothing to complain about as we made great progress for the week, now above our 50 dmas on all 5 indexes (though the 50 dmas themselves are a bit lower than they were last Thursday).  There's nothing wrong with rattling around between the DMA's – that's good, healthy consolidation and it could go on until Q2 – so get used to this…

    The bounce lines are, of course, all green too – except the RUT – that's why I've been watching that closely.  S&P and Nas are BARELY over and Dow is "only" 250 above – it can lose that in an hour so consider any cross of /RTY below 1,450 (now 1,461) to be BAD.  

    • 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)

  32. Senate voting to end shutdown so we'll see how many Republican's break with Trump.  Unless the Senate has 60 votes though, it's likely the bill won't pass by Trump's veto but maybe Trump won't veto as he gets to pass the buck to the Senate and say "well, if that's what they want" – so he can make them look like THEY didn't want to fight for his wall, not him.  

    TSLA finally stopped falling:

  33. Stockopedia – I signed up for it over Christmas ( 50%) discount for 2 years –  Really good information and formatting of data –  also some canned screens that can help with ideas….


    PG&E shares moved higher (prior to getting halted for volatility) following report that California investigation has cleared the company from issues surrounding 2017 wildfire.

  35. Yawn, we're just drifting along.  All green but /YM, which is only down 55 at the moment.

    I know you like your data, Batman…

    PCG/Albo – Still liable in civil court but should mitigate damages to a large extent.

    Michael Cohen subpoenaed to testify before Senate Intelligence CommitteeThe Senate Intelligence Committee on Thursday issued a subpoena to Michael Cohen to appear before the panel, a day after the former Trump attorney postponed scheduled…

    Mr. President, I hope by saying “near future” you mean you will support the House-passed package to that the Senate will vote on tomorrow. Please accept this proposal so we can re-open government, repay our federal workers and then negotiate our differences.

    Breaking News: A Trump-backed bill to reopen the government and fund a border wall failed in the Senate, which will take up a Democratic measure next

    Was 50-47 rejecting Trump's bill and there's 53 Republicans so that's 6 defectors at least.

    After rejecting Trump’s plan, the Senate is voting on a Democratic measure already passed by the House, that would reopen closed agencies until Feb. 8.


    Schumer says “we are staring down a very long and very dark tunnel” if the Senate can’t agree on proposals to end the government shutdown today

    This is good stuff:


  36. Now the Democrat bill failed to – what was the point of even voting?

  37. gooble gobble

  38. The Dem bill was supported 52-44 (with 6 wimps not voting) but they needed 60 to pass it since it was a House Bill, not a Senate Bill.  Still, says a lot that Trump can't get a majority of his own Senate anymore.

    Before the Vote, Pence was hustling to keep the troops in line:

     Congress Reporter  daniel_flatley
    Outside the Senate chamber, intense discussions are happening among members from both parties. Vice President Mike Pence is on hand to lobby GOP senators, who are having a vigorous debate over next steps, according to Senator Mike Rounds of South Dakota.

  39. /KC taking off again!  

    Could be what we've waited for if we can get over $107.50 or about $113 on /KCN19:

  40. SKM/StJean – sorry to be slow, I just noticed your question. Go for it – SK is a good solid company, a chaebol (family-owned corp) like so many others, a pretty good reputation. I'd feel comfortable investing in them.

  41. That's going to hurt:

    • Intel (NASDAQ:INTCdrops 7% on Q4 results that beat EPS estimates but missed on revenue despite a 9% Y/Y growth. Downside Q1 and FY revenue guidance pair with a Data Center revenue miss for a shaky quarter.
    • Intel says Q4 revenue was below October 2018 expectations due to a mix of weaker modem demand, slowdown in China, cloud customers absorbing capacity, and the weakening NAND environment.
    • Downside Q1 guidance has revenue of $16B (consensus: $17.34B) and EPS of $0.87 (consensus: $1.02). The data-centric business is expected to dip in the low-single digits Y/Y while PC-centric grows the same amount.
    • Mixed FY guidance has revenue of $71.5B (consensus: $73.11B) and EPS of $4.60 (consensus: $4.51). Data-centric expected up mid-single digits Y/Y and PC-centric down low-single digits.
    • Q4 revenue breakdown: Client Computing, $9.82B (consensus: $10.01B); Data Center, $6.1B (consensus: $6.35B); IoT, $816M (consensus: $812.7M); Non-Volatile Memory Solutions, $1.11B (consensus: $1.12B); Programmable Solutions, $612M (consensus: $518.7M); Other, $231M (consensus: $297.5M).
    • Desktop unit volume dropped 7% Q/Q and 8% Y/Y while ASPs rose 5% and 13%, respectively. Notebook units dropped 10% on the quarter and grew 1% on the year with ASPs up 3% and 6%. Data center units fell 3% Q/Q and grew 9% Y/Y with ASPs up 2% and 1%.
    • Earnings call is scheduled for 5 PM ET with a webcast available here.
    • Press release and Earnings presentation are here.
    • Previously: Intel beats by $0.06, misses on revenue (Jan. 24)

    But, some good news too:

    • Starbucks (NASDAQ:SBUX) rallies after the restaurant operator posts strong FQ1 results.
    • Global comparable store sales rose 4.0% during the quarter to top the +2.9% consensus estimate. Ticket/pricing added 3 percentage points to growth during the quarter.
    • Global comparable sales by region: Americas +4% vs +3.2% expected, China/Asia-Pacific +3% vs. +1.5% consensus, EMEA -1% vs. +1.9% consensus.
    • The company's consolidated operating margin fell 180 bps to 17.4% of sales vs. 17.6% consensus. Operating margin in the Americas segment was down 100 bps to 22.0%. Cost of sales came in at 41.5% vs. 41.8% anticipated.
    • Starbucks opened 541 net stores during FQ1 to take its total store count to 29,865 (+7% Y/Y).
    • Starbucks expects FY19 EPS of $2.68 to $2.73 vs. $2.61 to $2.66 prior view and $2.65 consensus. Consolidated revenue growth of 5% to 7% is anticipated, in-line prior guidance.
    • SBUX management has a conference call scheduled for 5:00 p.m. ET.
    • Shares of SBUX are up 2.99% AH to $65.81.
    • Previously: Starbucks beats by $0.10, beats on revenue (Jan. 24)
    • Previously: Starbucks declares $0.36 dividend (Jan. 24)
    • Alaska Air (NYSE:ALK): Q4 Non-GAAP EPS of $0.75 beats by $0.04; GAAP EPS of $0.19.
    • Revenue of $2.06B (+6.2% Y/Y) beats by $10M.
    • Alaska Air (NYSE:ALK) reports revenue per available seat mile increased 5.2% in Q4.
    • Operating revenue was up 6% Y/Y during the quarter, while operating expenses rose 12%.
    • ALK's load factor fell 10 bps to 83.3%. Passenger yield rose 5.2% to $0.1424.
    • Previously: Alaska Air beats by $0.04, beats on revenue (Jan. 24)

  42. Thanks Snow! Being in meeting all day and didn't get a chance to post at all… Same tomorrow!

  43. Tomorrow's line tonight! Won't be able to post then…

  44. Individual Investors Bullish Again

  45. Phil,  SQQQ Hedge – I think that I need to roll and while I would leave the short caller to expire worthless it is an IRA and protecting a 100K.  

    I have 20 June 15/30 BCS $2.47/$6.07 (Now $0.53/$1.93)
    Roll to 20 Sept 12/20 $3.50/$1.75.  So, about $0.36 cents to roll and I reduced my spread to (30 to 20) to be more bullish & save a few coins, if that makes sense.



  46. Thoughts on /NG dipping below $3 again? 

  47. Global stocks rise on optimism over China-US trade talks