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Monday Market Movement – Dow 25,000, S&P 2,700, Nasdaq 7,000 and Russell 1,500 Must Hold!

Well, we've made a bit of progress.

Unfortunately, it was almost entirely due to Wednesday's Fed Meeting and Powell's doveish statements after but what worried me that night (as I said on TV) and what worries me still – is what is the Fed so afraid of that they feel they have to prop up the markets at levels that are 300% HIGHER than when they began to intervene back in 1999?

Intervention is expensive and intervention is destabilizing and usually used as a last resort and it's not just the 666 lows on the S&P that we're miles above but the pre-crash highs of not even 1,600 that we're beating by 1,100 – that's 68.75% higher than we were than the levels the Fed was supposed to be getting us back to and NOW they think falling back to not quite 100% higher is some kind of crisis?  

S&P 500 MAs

What I worry about is that the Emperor has no clothes and thank goodness I'm not taking about The Donald but the markets in General, which have been pumped up on artificially low rates, monetary stimulus, lower taxes, repatriation of overseas funds (also at low tax rates) and, of course, Corporate Buybacks.  None of those things are supposed to be permanent and, USUALLY, a government will do one thing or the other – not all of the above!  

It costs real money to do these stiulus packages and it's money we're borrowing from the Future in order to what? in the present?  Again, where's the beef in this economy that it can't stand even a little bit of price correction?  Consumer Confidence has rarely been higher though it's significantly off the December highs – before the Government shutdown.

It's not the present situation that's going down – if you ask people how they are doing, economically, they will generally tell you they are feeling good because 96% of the people are employed and we're all fairly surprised to be alive in year two of the Trump Presidency.  However, if you has people about their forward economic expectaitons – they are plunging, down below 100 from a high of 117 in November.  

Expectations index fell to a two-year lowBack-to-back declines in expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019,Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement released with the data, citing uncertainty over the Trade War and the Fed, who had been warring with the President in the Fall.

Another weak spot was household plans to spend on big-ticket items. Measures of the share of consumers who plan to buy cars, homes and major appliances such as refrigerators in the next six months all declined.  The drop in confidence “is not a disaster, as the level of the headline gauge is merely back to near where it spent the first seven months of this year,” Stephen Stanley, at Amherst Pierpont Securities. “However, it will definitely be worthwhile to keep a close eye on the various measures of consumer attitudes over the next few months to get a feel for whether and how the dive in stock prices might be affecting consumers’ collective psyche.”

Our game plan for the moment is to wait for 2 of the 4 indexes to cross blow their support lines at 25,000, 2,700, 7,000 and 1,500 and go short on the laggard(s) as they cross below their suppor line and then put tight stops on our Futures shorts and see what kind of pullback we do end up getting.

We're still waiting on about 40% of the S&P 500 to report and this week we have plenty of fun ahead:

The data stream is getting back to normal as the Government gets back to work and, in fact, we'll get some double reports like Motor Vehicle Sales today are for December and January (noon) and we're catching up on November Factory Orders at 10 and International Trade will be tomorrow along with Productivity and Costs for Q4.  There's not much Fed Speak this week but Powell is spreaking on Wednesday – so yet another chance to boost the market then which means we're just playing for a quick rejection at our short lines and won't be greedy.


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  1. VXXB / Robert – Here are some answers to your questions:
    1. VIX Options – I have not studied them but what appeals to me with VXXB (old VXX) is the built-in decay. No matter what, that instrument goes to close to zero. 
    2. What happens if the VXXB spikes to 50. You have multiple cases here:
    a. You are low on margin, in this case, roll higher or further in time. The reason I am willing to be more aggressive now is that you have more escape routes. You don't even need to increase your position.
    b. Expiration is close, in this case, you also roll!
    c. If you have the margin and expiration is far, you can stand or roll depending on your pain threshold.
    In all cases, sell more if you can on any spike!

    My plan now is to close any calls that show 80% gains unless it's close to expiration to help with the margin. At the end of the year, I'll post a recap of what happened.

  2. Money laundering banks:

    Since the financial crisis, dozens of crackdowns have targeted money launderers who effectively rely on banks, shell companies, and other mechanisms to cover their tracks. Fines have surged into the billions of dollars, but it’s unclear whether the enforcement efforts—some of the more notable ones are described here—have made much of a dent. According to the United Nations Office on Drugs and Crime, shady transactions continue to reach as much as $2 trillion a year.

    Good chart at the link – lots of money going through Deutsche Bank! 

  3. Global valuations:


    As value investors, the most intriguing regions/countries are those with current valuations (blue triangle) below the historical average (red triangle) and low relative to the rest of the global market. Based on this chart, Japan and Emerging Europe, Middle East, Africa (EMEA) fall into this group. On the flip side, the U.S. stands out as being one of the most expensive markets relative to other regions and its own history. Given the massive run in the U.S. market over the last decade, this is no surprise.

  4. The guy hardly works:

    A White House source has leaked President Trump's private schedules for nearly every working day since the midterms, showing that Trump has spent around 60% of the last three months in "Executive Time."

  5. Bought a few /NG at 266.5   Risking about 2 cents.

  6. 2.665

  7. Good Morning!

  8. It wouldn't be morning at PSW without a cheerful greeting from 1020. Same to you, mate!

  9. Good morning!  

    25,063 is the 200 dma on /YM and anything better than that would be a good day and I doubt, with Powell speaking on Weds (7pm, from the Fed) that anyone has the balls to try so sell this market ahead of that.   If that's not enough, he has another go on Thursday at 7:30, which makes me think they are very concerned about the 10-year (Weds) and the 30-year (Thurs) auctions not going well but also Thurs is the day the Fed releases their balance sheet (4:30) and maybe we're over $5Tn now and he feels the need to spin that more positive. 

    St. Louis Federal Reserve Bank President James Bullard to deliver a presentation on the US economy and monetary policy at St. Cloud State University in St. Cloud, Minnesota, followed by audience Q&A.

    The other indexes are drifting right below the 50 and 200 dmas and I'm not seeing any big catalysts in either direction to break them up or down, nor are any of the earnings particularly market-moving – especially after GOOGL reports this evening – it goes way downhill from there.  

    Jack Dorsey has been pontificating a lot so I think TWTR will have good earnings (how's that for a premise?). 

    TWTR is at $33.30 and the Feb $32s are $3 and the Feb $35s are $1.40 so essentially no premium on the $1.60 spread with $1.40 upside potential at $35 is a fun play so let's put $3,200 into that in the OOP and hope to get $6,000 back

    Japan/StJ – Yes but Japan is also all propped up on stimulus, which leaves the future with a massive debt bomb to diffuse so forward-looking valuations should be lower than "normal".  The strange thing is how are markets ignore what is now $22Tn and, unlike Japan, there isn't enough money in the World to bail us out!  

    Image result for debt bomb

    Not much of an opening sell-off.  Already back over our lines.  

  10. The debt clock is a good thing to contemplate once in a while – it's like pondering the vastness of the Universe – except this is more likely to crash into the global economy and destroy the planet than a meteor….

    And the whole problem is painfully obvious:

    How can anyone look at that and think Corporations are paying their fair share of taxes?  Our entire economy has been destroyed by 40 years of failing to tax the Top 0.1% and Corporations properly.  Before Reagan put us on this path – we didn't have anything like this kind of problem.  

  11. Excellent call on /CL short!  

  12. And now we're slipping below the lines again.  

    Bad Factory Orders is not a surprise!

  13. AAPL off to strong start today…. approaching 172

  14. AAPL/Batman – That's what popped the Nas this morning.  \

    • Talking features on a podcast, Twitter (TWTR +1.5%) chief Jack Dorsey says his team is looking at giving users the ability to edit their tweets and says the current lack of the feature is tied to the company's text-messaging origins.
    • The company's considering let users edits tweets while keeping the original tweet publicly viewable, Dorsey said in an interview with Joe Rogan. That might come through a 5- to 30-second sending delay to keep the flow "conversational."
    • Editing tweets isn't already a feature because company founders were "born on SMS," Dorsey says, while acknowledging increasing character limits (such as the move to 280 characters from 140) means users increasingly want to edit.
    • Twitter development has become notorious for the company introducing some new feature (such as bookmarking tweets) only to be met with a chorus of user calls for "EDIT BUTTON."

  15. Good morning!  I haven't posted for awhile, but extremely busy.  Anyway, last posted trade was TSLA.  That paid off nicely, so we are 4 trades, 4 wins.  I'm considering an earnings trade on GOOG, reporting after close.  Likely a put credit spread or iron condor.  I would post that after 3:30.  Happy Trading!

  16. /NG  – Sold 1/3 up .02 just to ring the cash register.  Stops up to entry.

  17. Thanks for explanation Stjeanluc!

  18. Still looking for suggestions on a NVDA trade.  I did a February straddle .. sold the 150 puts and call for $19.  Stock is currently trading at 148 (after dropping to 130s) .. but there is a tremendous amount of premium left with only 11 days to expiration.  The 150 calls (out of the money) are approx $5.75.  The 150 puts are about $6.90.  Earnings have been announced.  Phil's recommendation on the call was that this is POS highly volatile stock and should take money and run.  If I do so, I realize about $6 out of the $19 I sold .. leaving $11 of premium on the table with 11 days to go.  Thoughts?  Maybe roll to the $155?

  19. Taxes / Phil – Remember when the GOP used to talk about takers (the 47% not paying any taxes)? Payroll taxes (paid by anyone with a job) are close to 5x higher than corporate taxes! Who is the taker now! And I assume that this doesn't cover any sweetheart deals that these corporation get anyway like the exploration grant oil companies get! Sickening…

  20. Speaking of taxes:

  21. Albo, How do you determine your entries and exits?

  22. Jeez those tax plans are scary! 

    How are they going to determine net worth every year for those households? How do they do valuations on non-liquid assets on a yearly basis (private businesses, real estate etc….). If we enter a long period of stagnation people will just be docked 2% of their net worth per year even if their net worth already declined that year????

  23. Pgwicked – To be honest,mainly seat of the pants.  I'm not a great technician, go primarily on feel.  Also occasionally will take some trades from traders that I  know.

    Unlike Phil, I don't stay with trades because I have a strong conviction.  My strong convictions don't seem to have much predictive value.  I always use stops.  And sometimes get whipsawed, but don't take large losses. That's the beauty of futures, your stops are always in place.  As you know stocks can open significantly higher or lower.  Occasionally you can catch a good trend and stay with it.  That makes up for the times you get whipsawed.

    And I still consider myself a novice.

  24. Thanks Albo

  25. GOOGL/IFlan – They have a lot of 10% earnings swings so be careful as that's $100+. 

    /NG/Albo – Good job.

    NVDA/Nom – I recently said I didn't think $130 was such a bargain and they are bouncing a bit but from $280 to $140 is 50% or $260 to $130 so I'd call it $270 to $135 to average it out and that would be down $135 so $26-point bounces but call them $25 means $160 should be the weak bounce and $185 strong and we can see $160 was useful on the way down so it's likely those are the right lines to watch.

    I think selling the 2020 $130 puts for $13.75 is kind of attractive – if you MUST play them.  There should be some support there and, even if not, the 2021 $105 puts are $12 so a good roll if they turn south but you have to REALLY want to own them – otherwise you'll be forced out on a spike down (any bad news at this point) with a big loss.  

    Obviously, with those bounce lines – I wouldn't sell a short call as the June $185s are only $4.60 so I'd rather see them get much closer before selling anything that gives them 5 months to burn us.

    Sickening/StJ – Beyond sickening, simply destroying this country, robbing the people and leaving us drowning in debt.

    Warren/StJ – Well she knows what will play politically.  In truth, people did go into "tax exile" from Europe to avoid 70%, so she's not really wrong.

    2%/Crs – Well only if you stay over $50M, if you have a bad enough year to fall below that, you save $1M!  Still, the real problem is Corporations, not individuals and, until they address that – all these plans are BS.

  26. Phil,

    What are your thoughts on SFM (Sprouts Farmers Market) seems like they have a compelling case as Wholefoods and an Amazon Competitor might gobble them.

    Thanks as always


  27. Nom NVDA  I trust you did sell your straddle against a Leap BCS. In general I do not like to sell puts in an only option play. NVDA does pay a .16 cents div. so who wants the stock?
    Unfortunately the declaration is one day before expiration. I hold the Feb 155 and 165 caller, but only half of my BCS!!!! As Phil says he is more worried about the 150 put than the caller. I will do nothing with my two different callers. Especially with the options still holding a great amount of premium with next to no div., no one will call for the stock.
    Rightfully said you wait till the last day, there are still 11 days to go so many things can happen.. Rolling the put out of danger is the first thing to watch, the caller I think you still can roll on the 15th if necessary.

  28. SFM/Pat – There's steady growth there but only $150M in profits on $5Bn in sales (3%) isn't what I'd call a buying opportunity.  WFM, was dropping almost 10% to the bottom, which made them uniquely attractive in the sector, where 3% is considered "good".  At $23.50, you're paying $3Bn for them so 20x earnings is high for a grocer but at least they are growing about 10%, that's also better than most in the sector.  There's 315 stores in 19 states so would you pay $9M per store to own one?  You'll get back $450,000 in profits but it's a lot cheaper to buy a McDonald's franchise – and safer!  

    So not my cup of tea but you can sell 2021 $22.50 puts for $3 to net in at $19.50 and that's a reasonable start.  If you want to be more aggressive than that, you could pick up the 2021 $22.50 ($5)/27.50 ($2.50) bull call spread for $2.50 and if you sold 5 puts ($1,500) and bought 10 spreads ($2,500) your net entry on 10 $5 spreads ($5,000) is $1,000 but, since you can only make $4,000 – I'd rather just sell the puts and see how that goes first.

    • It's unusual that both U.S. stocks and bonds rise at the same time--that may have some investors worried that January's stock market rally is destined for a reversal.
    • While major stock indexes rebounded in January, the best first month of the year since the 1980s, falling yields on shorter- and longer-term government debt usually signifies increasing pessimism for the U.S. economic outlook.
    • Most economists don't see an imminent recession--a Wall Street Journal survey estimates U.S. GDP growth of 2.2% annual rate this year. But as tax reform effects fade and the global economic outlook dims, there's not a lot to suggest economic growth will improve.
    • "The question for stock markets is: Are we bouncing back from oversold levels in December, or is it an actual rally?” says Darrell Cronk, president of the Wells Fargo Investment Institute.
    • One factor bolstering the stock market is the expectation that the Fed will pause interest rate hikes for awhile.
    • A force that's weighed on the U.S. stock markets, though, is the slowdown in the world's second-largest economy, China. To make further gains, there needs to be evidence that trade talks with China are making progress, says Art Hogan, chief market strategist at National Holdings, an asset management firm.

    Baird: Election boost to help Twitter Q4 revenues

    • When Twitter (TWTR +2.5%) reports earnings this Thursday morning, it's likely to see a meet-or-beat on revenue expectations from Baird, the analysts say, thanks in part to an audience boost from the U.S. election.
    • Baird's estimate of $874M is already on the higher side of the Street (FactSet consensus is $867.7M). But analyst Colin Sebastian notes the company continues to invest in improvement.
    • “Together with the viral nature of Twitter and the strong push by media companies to engage users on the application, we believe there is solid visibility for growth in number of users and time spent on the application,” Sebastian writes. (h/t Bloomberg)
    • He has a Neutral rating and $35 price target, implying just 2.9% upside from current pricing.
    • Previously: Twitter's Dorsey says they're considering edit feature (Feb. 04 2019)
    • Jaguar Land Rover (NYSE:TTM) says sales in the U.S. increased 15% in January to 7,385 units.
    • Jaguar U.S. sales update: "Our business is well positioned as our SUV sales continue to surge with record breaking sales results for both Range Rover Sport and Land Rover Discovery. With the debut of the Range Rover Evoque SUV in February, we look forward to keeping this momentum going in the new year."
    • Jaguar Land Rover sold 10,463 vehicles across North America during the month, compared to 9,050 units a year ago.
    • Citigroup turns bullish on copper, saying it expects the metal to rally by 10% over the next 3-6 months on expectations of a U.S. trade deal with China and increasing confidence in a global economic recovery.
    • Citi’s forecast follows a 15% drop in the price of copper over the past year to $6,116/metric ton, driven by a slowdown in China’s economy, but the firm sees copper prices hitting $6,700/ton in 2019, driven by a 2% growth in Chinese demand "led by strong growth in late cycle construction completions and power infrastructure investment."
    • Slowing sales of cars in China also will be offset by growth in electric cars, which use more copper, while copper inventories are at a 10-year low and are set to fall further in Q2 of this year, Citi says.

    • Zambia's government is determined to enforce a new 5% copper import duty, the Mining Minister says, as part of a plan to keep a greater share of mineral resource profits for the country and tackle its debt.
    • The new taxes, which also include a royalty on copper production that increases as commodity prices rise, were "well thought-out and logically calculated with the inputs of stakeholders, even the mining companies," the minister says, adding that most miners had accepted them, but he is talking to Barrick Gold (GOLD -0.2%) CEO Mark Bristow and other mining execs about some of their concerns.
    • Bristow says he has "no doubts" that an agreement eventually will be reached to settle a longstanding dispute between Barrick's 65%-owned Acacia Mining and the Tanzanian government but refuses to set a timeline.
    • On the deadly dam disaster in Brazil, Bristow says Barrick is "paranoid about our tailings facilities" and his management team had taken another "quick look" at the miner's waste storage sites to make sure there were no gaps in due diligence.
    • Crude oil futures tumble after briefly touching their highest intraday levels of the year, as prices threaten to surrender much of the gains they scored last week; WTI -1.7% to $54.34/bbl, Brent -0.6% to $62.39/bbl.
    • Crude prices hit "some stiff technical resistance near $56/bbl" for U.S. benchmark oil after the contract settled up 2.7% to $55.26/bbl on Friday, says Price Futures senior market analyst Phil Flynn.
    • The slump appears to be tied to U.S. dollar strength and pipeline movements that suggest a potentially big increase in crude stockpiles at the Cushing, Okla., delivery hub, where WTI is priced, says Citigroup global head of commodities research Edward Morse.
    • ConocoPhillips (COP +0.7%) edges higher as Goldman Sachs upgrades shares to Buy from Neutral with an $82 price target, raised from $76, saying the company's long-term growth opportunities including Alaska, Australia and Qatar are underappreciated.
    • Goldman analyst Neil Mehta boosts COP’s 2019-22 cash flow forecasts by an average of 8%, calling COP a "free cash flow winner" and adding that the company is able to cover its dividend and capital spending as long as Brent oil is $40-$45/bbl.
    • Mehta says COP's better than expected Q4 results reflects better long-term differential assumptions outside of the U.S., a reduced operating cost outlook given recent trends and higher oil volumes in the U.S. Lower 48.
    • Global chips sales rose 13.7% Y/Y in 2018 to $468.8B, according to new Semiconductor Industry Association data.
    • December's global sales were up 0.6% Y/Y to $38.2B, a 7% decrease from November's sales.
    • Q4 sales were $114.7B, up 0.6% Y/Y and down 8.2% Q/Q.
    • Memory was the largest and fastest-growing segment with sales up 27% Y/Y to $158B with DRAM up 36% and NAND up 14.8%.
    • Chips are a cyclical business, but the US-China trade tensions weighed on the industry towards the end of last year.
    • Volkswagen's (OTCPK:VWAGY) Electrify America will use Tesla (TSLA -1.1%) battery storage packs at more than 100 U.S. charging stations in an effort to keep consumer costs down.
    • During last week's conference call (transcript), Elon Musk said he expected Tesla's stationary storage business to grow twice as fast as the automotive business for a while, while CFO Deepak Ajuha noted that margins will improve for the storage business as it scales up.
    • Papa John's International (NASDAQ:PZZA) CEO John Schnatter says the company rejected his $250M investment proposal in favor of the Starboard deal, despite his offer of limited voting rights and a reduced dividend payout rate on shares.
    • The company has a soured relationship with Schnatter since his resignation following negative publicity.
    • Shares of Papa John's are up 8.6% today off the Starboard development.
    • Previously: Papa John's confirms Starboard deal (Feb. 4)
    • JPMorgan is out with a note suggesting that Apple (AAPL +1.2%) acquire Netflix (NASDAQ:NFLX).
    • "We think Netflix is best strategic fit on leading position in engagement level as well as original content, differentiating itself from pure aggregators of content," writes JP analyst Samik Chatterjee.
    • "We believe there is value to acquiring the most successful player in this space, which is hard to replicate with a smaller player in this market," he adds.
    • A deal for Netflix would cost Apple about $189B at a 20% premium, but is seen leading to long-term streaming and advertising revenue upside.
    • Netflix (NFLX) is up 1.45% in early trading, a somewhat muted reaction to the JPMorgan suggestion since it's been kicked around a few times before

    • The U.S. corporate earnings season hits the mid-point this week, with around 234 companies in the S&P 500 so far reporting results.
    • Collective earnings per share have grown by around 18% compared to the same period last year, just ahead of the 15.5% estimate for the entire reporting season, according to Refinitiv data.
    • 71% of companies have also reported earnings that have beaten analysts' estimates, a figure that is firmly ahead of the long-term average of 64%

    • Vale (NYSE:VALE-3.1% pre-market after a Brazilian court reportedly orders the company to suspend production at its Brucutu mine in Minas Gerais state, which has an annual capacity of 30M metric tons of iron ore.
    • The move follows the recent rupture of the company's Brumadinho tailings dam that killed at least 100 people.
    • Separately, the company that certified the safety of the dam that collapsed has worked as both a consultant and an independent safety evaluator for Vale, raising questions among experts over potential conflicts of interest.
    • Yelp (NYSE:YELP) is up 2.5% premarket after Goldman Sachs reinstated coverage at Buy.
    • The firm's set its price target to $42, implying 13% upside.
    • Since its leg down around early November earnings — shares slid 27% after a revenue shortfall -- the stock is up 16.4%. It's up 7.5% in the past month.
    • Maxwell Technologies (NASDAQ:MXWL) soars after announcing its acquisition by Tesla (NASDAQ:TSLA). Under terms of the transaction, Maxwell share will be swapped for fractions of Tesla shares.
    • Shares of Maxwell are up 52.2% premarket after coming off a trading halt to $4.66 vs. the deal price of $4.75.
    • Looking ahead to the implications for Tesla, Maxwell's primary focus is on ultracapacitors. The company says the energy storage devices that are characterized by high power density, long operational life, the ability to charge and discharge very rapidly and reliable performance at a wide range of temperatures. Maxwell also thinks its dry electrode technology has the potential to be a revolutionary technology within the battery industry with a substantial market opportunity, particularly for use in electric vehicles.
    • Tesla is down 0.2% in premarket action to $311.75.
    • Previously: Tesla acquires Maxwell Technologies (Feb. 4)
    • Deutsche Bank (NYSE:DB) falls 1.6% in premarket trading after the Wall Street Journal reports that Congressional investigators expect the House Financial Services Committee to look at Deutsche Bank's (DB) efforts after the 2016 election to sell a loan it made to a large Russian state-owned bank.
    • Deutsche Bank reportedly sought to cut its exposure to Russia in late 2016 and tried to sell a $600M loan it had outstanding to VTB Group.
    • The German bank sold $300M of the loan to Russia' Alfa Bank in December 2016, but wasn't able to sell the rest of the loan. VTB paid it back in August 2017, the WSJ reported.
    • Separately, MarketWatch reported that Deutsche Bank turned down a request from the Trump Organization in March 2016 to increase a loan for Trump National Doral, a Florida golf resort, because of concerns about expanding the bank's relationship with then-candidate Donald Trump or his company.
    • Previously: Fed investigating Deutsche Bank – report (Jan. 23)
    • Papa John's (NASDAQ:PZZA) shoots higher after The Wall Street Journal reports that Starboard Value is making a $200 investment in the company.
    • Sources indicate that Starboard CEO Jeffrey Smith will step in as the chairman of the Papa John's board.
    • Shares of Papa John's are up 9.06% premarket to $42.00.
    • Papa John's International (NASDAQ:PZZA) confirms the $200M investment being made by Starboard Value. The activist hedge fund will also have an option to invest another $50M.
    • In addition to Starboard CEO Jeff Smith jumping on the board, former Pinnacle Entertainment CEO Anthony Sanfilippo is being added as an independent director.
    • Board statement: "Our agreement with Starboard concludes a comprehensive strategic review conducted over the past five months to better position Papa John’s for growth, improve the Company’s financial performance and serve the best interests of our stakeholders. This transaction provides the Company with financial resources and strong and experienced directors on the Board in order to position the Company for success over the long term."
    • Papa John's is up 5.40% to $40.60 in premarket trading vs. a 52-week range of $38.05 to $64.18.
    • Previously: Papa John's soars on Starboard report (Feb. 4)
    • Lifting his price target on Chipotle (NYSE:CMG) to $440 from $400 after the stock's big run higher over the past 6 weeks (from $385 to $527), Wedbush's Nick Setyan nevertheless maintains his Underperform rating.
    • Setyan acknowledges that CMG is seeing an acceleration in same-store sales, but argues the pace is nowhere near what bullish buy-siders are hoping for.
    • "We have never seen such a divergence between our checks and buy-side expectations in the history of our coverage of any restaurant."
    • Sears' (OTCPK:SHLDQ) unsecured creditors get their day in court today, protesting Eddie Lampert's $5.2B transaction to buy the 126-year-old retailer out of bankruptcy through his hedge fund ESL Investments – the only deal that would stave off liquidation.
    • In a litany of filings that piled up over the past two weeks, they have accused Lampert of everything from "stealing assets" to "years of misconduct" that reads like a "Shakespearean tragedy."
    • It's a rough start to the week for Sony (NYSE:SNE) after the company cut its revenue outlook for the fiscal year on the back of weaker-than-expected sales of cameras and smartphones.
    • Operating income from gaming also fell 14% to ¥73B during the holiday quarter.
    • Sony shares tumbled in Tokyo, falling 8.1% to ¥5,055, echoing other large technology companies that have lowered forecasts on slowing global economic growth.
    • Alphabet (NASDAQ:GOOG) is scheduled to announce Q4 earnings results on Monday, February 4th, after market close.
    • Union Gaming looks ahead at the Macau sector with the January numbers now in the bag.
    • Analyst Grant Govertsen says the firm expects "flattish to modest growth" with the March and April comparables looking rather tough.
    • Macau GGR growth of +2% is expected for Q1. "However, as comps ease a bit during the spring we look for growth to begin creeping up into the mid-single digits and generally expect it to remain there or better for the balance of 2H19," writes Govertsen.
    • "For the whole year, we are still forecasting growth in the mid-single digits (aka a GDP-like story), with mass market outperforming VIP by several hundred basis points," he adds.
    • Related ETF: BJK

  29. Iflan Still looking for your GOOGL play. Did roll my 1150 Feb caller out of danger I hope to Mar 1200,

    Even obviously the caller is still OTM, But my overall play of GOOGL is up 9K today, so I do not mind spending 1K in rolling. We see.

  30. MJ way up since the beginning of the new year. Can't slow this one down!!

  31. yodi…… Good idea rolling those callers.  GOOG could easily pop upward +100, as Phil noted.  There's little or no negative news on the company, so I expect upward movement.  Technicals support this as well.  I'll work on what I think is the appropriate play and post around 3;30.  

  32. Iflan/AAPL,

    what do you think about today's AAPL move and the support/resistance points.

    thanks as always


  33. Phil Please,

    I would like to better understand what the criterias are or where I find the literature that explains how, why and when to make the transfer from Short term Portfolio to long and vice versa?

  34. GOOGL – options pricing in an approx $50 move on earnings.

  35. Phil Please,
    (The other question I sent was incomplete, sorry)

    I would like to better understand what the criterias are or where I find the literature that explains how, why and when to make the transfer from Short term Portfolio to long and vice versa?


    Is the long-term portfolio to recover and give more time to the short-term operations that were not in the expected direction?


    When you say that the worst scenario is to be exercised, but why do you not  consider the sum with the initial spread loss the worst scenario? 


    Thank you for your clarification.

  36. AAPL right on track:


    Happy Pearl Harbor Day!

    AAPL/Batman – Those lines are good.  I was going from $230 down so 95% = 218.50, 90% = 207, 85% = 195.50, 80% = 184, 75% = 172.50, etc 

    Of course, once you drop that much you need to zoom out and think about where the upside support was so that's about $175 but then we go back further and say AAPL consolidated around $100 and then broke up which means $150, $200, $250 and $300 should be the big numbers but those don't fit so we should check our premise (keeping in mind the reverse split probably screwed up the lines anyway).   

    So now let's assume AAPL never should have been to $230 and that was an overshoot.  We did get consolidation at $150 so that's a clean line and $180 is 20% up from that then $210 is 40% and $225 is 50% so it looks more like we got a pullback off the 50% run from $150, which was 75 so our retrace lines would be 15 points back to $210 and $195, where it certainly had trouble on the way up – so it's likely to be a good line.  Also, we always expected to see a pullback at $1Tn ($204) – that's the level I based my original assumptions on which led us to shorting the Nasdaq at the top and they served us well. 

    We did get a little consolidation at $210 and very little at $195 but those failed so we're back to looking at the 5% lines off $150 so $7.50s are $157.50, $165, $172.50, $180, $187.50 is the 25% line off $150 so likely an overshoot from $180 there so that now (assuming we consolidate around here) makes $180 the new center of our expected trading range for AAPL and we still use the 5% lines from the bigger consolidation at $150 but now we calculate the series from $180 which is +/- 9 so $162, $171, $180, $189 and $198 so now we will look to see which series AAPL seems to obey and if it's the $150 series, then, sadly, that is likely to be where we're going but if it's the $180 series, then we can expect it to stabilize around here.  

    That means, if you are bullish, you'd rather see AAPL finding support at $171 than $172.50 as $172.50 is coming from the $150 set and $171 is from the $180 set.  So, when I begin to see AAPL obeying the $180 set in the short term, I become more bullish at $171 than I would be at $172.50 if I saw it obeying the $150 set. 

    This is how much work I do every time you guys say "So what do you think AAPL is going to do today."!!!

    You can't just apply the 5% Rule right away unless you have very clear lines, you have to first observe and make sure you are working with the right series first.  

    The Fibonacci series around the $162 line is very similar to what a 5% Rule would be (and saves me a bunch of time!) so you get the idea of what we expect.  It's very possible we pull back a bit here and consolidate before making a run back to $180 but holding that zone above $162 is a very good sign.

    Transfers/Marco – It doesn't come up often so it's not written down but, at the moment, we have over $500,000 in the STP and $1.5M in the LTP and we only need about $250,000 to hedge the LTP – even if we fully invested it, which is very unlikely, so we could transfer half the cash into the LTP BUT, if we're not going to use it anyway, I prefer to keep it in the STP, in case something fun with margin comes along – like the times we sold calls on TSLA, NFLX, AMZN, CMG….  when someone gets a ridiculous pop on earnings and we can sell short-term, over-priced calls – that's a fun thing to do in the STP, but it's very margin-intensive.  

    NORMALLY (what's that?), if the STP is making good money it's because the LTP is losing money so the transfer is very obvious.  In other words, if the STP popped to $500,000 but the LTP fell to $250,000 — then of course, we'd transfer $400,000 back to the LTP and start buying more longs (as they would certainly be cheap!) with the money we made from our hedges.  

    Also, in a "normal" market – if the LTP was at $1M and the STP fell to $50,000 – again, we'd take $100,000 from the LTP and repopulate the STP so we'd have enough money for the next round of hedges.  

    It's only confusing because we brilliantly made money in both directions last year.  

    Not sure what you mean by "When you say that the worst scenario is to be exercised, but why do you not  consider the sum with the initial spread loss the worst scenario?

    They key is that the STP is simply a hedge for the LTP and we begin with $500,000 and $100,000 for the hedges – that's the ratio I find works best and that's the ratio you want to keep if you're re-balancing but, as I said, there's no way we're going to come close to using $1.5M of buying power in the LTP so I'd rather keep the flexible cash and margin in the portfolio that's more likely to need it for the short-term opportunity.  

  37. pat-swap.   AAPL is going to continue its move upward.  I took profits today on most of my AAPL positions today  because, well, because taking profits is a good thing, and I'd made >50% on a bunch of put sales.  I will reload as we move along. At the moment  I'm liking ATM puts a couple of months out on AAPL.  By the way, my trading style has changed a lot over the past 5 years.  I used to buy premium a lot.  Now I sell premium most of the time.  But however you trade AAPL, I think it's going to keep moving up for a time.  

    • Cronos Group (CRON +18.1%) is leading a rally in pot producers. Shares have more than doubled this year. Short sellers are, no doubt, feeling some pain, at least in the short term.
    • Selected tickers: (TLRY +7.5%)(CGC +4.5%)(ACB +10.9%)

    The Money Talk Portfolio – October 24, 2018


    A late addition for the live show is the Cannabis ETF (MJ), which TD Bank was kind enough to let us include in the show:

    • Sell 10 MJ 2021 $30 puts for $7 ($7,000) 
    • Buy 20 MJ 2021 $25 calls for $9.50 ($19,000) 
    • Sell 20 MJ 2021 $45 calls for $5.25 ($10,500) 

    That's net $1,500 on the $40,000 spread that's currently $16,000 in the money with a $38,500 (2,566%) upside potential.  It's crazy volatile but a lot easier than trying to pick an individual winner in the Cannabis Industry!  

    In fact, it's a little early but I think this may be my 2019 Trade of the Year and that means, since it pays $40,000, which would be a 4-year Premium Membership at PSW, I can tell you that if you buy an Annual  Premium Membership this month (October) and this trade doesn't make at least $10,000 by next November 1st (2019), we will give you another year of PSW Premium FOR FREE!!!!   You don't have to make the trade, we'll honor it anyway but I think it will be $1,500 in cash (plus margin) well spent!

    See, investing isn't really that hard.  Just figure out what's likely to happen and find an intelligent way to bet on it…

  38. GOOG….I can't find an earnings trade I like.  I'll watch this one and plan a post-earnings trade if it looks appropriate.  Happy Trading!

  39. Iflan GOOG Mar sell vertical call 1165/1170 for 1.90 or sell the 1080/1070 put 2.55

  40. Market just keeps heading higher…

    Oil recovering a bit too – just under $55.  No such luck for /NG, sitting at the -2.5% line at $2.666 – bad sign!

  41. Well……Sold April put spread on GOOG.  1100 sell /1050 bought. for 1.75

  42. that was a very unusual trading program they ran today 

  43. anyone know what that pop was

  44. QUIK – Up 29% today on huge volume.

  45. Albo- QUIK- you have been in this one forever. Are you in the green yet?

  46. GOOG beat but did not make people happy.

    • Alphabet (NASDAQ:GOOGdrops 2.5% aftermarket on Q4 results that beat EPS and revenue estimates with a 22% Y/Y revenue growth.
    • Revenue breakdown: Google Properties, $27.02B (consensus: $26.75B); Google Network Members' Properties, $5.6B (consensus: $5.56B); Google Other, $6.5B (consensus: $6.43B); Other Bets, $154M (consensus: $187.4M).
    • Traffic acquisition costs or TAC were $7.4B (consensus: $7.62B; up from $6.58B in Q3) or 23% of revenue, down a percentage point from last year's quarter. Google Properties paid clicks grew 86% Y/Y and cost per clicks fell 29%.
    • Other key metrics: Operating income, $8.2B (consensus: $8.61B); Operating margin, 21% (consensus: 22.1%).
    • Earnings call started at 4:30 PM ET with a webcast available here.
    • Press release.
    • Previously: Alphabet beats by $1.91, beats on revenue (Feb. 4)

    Seagate +2.8% on Q2 EPS beat

    • Seagate Technology (NASDAQ:STXgains 2.8% after Q2 results that beat EPS estimates, met on revenue, and included only a slight Y/Y capacity drop in a quarter with a challenging demand environment.
    • Revenue breakdown: HDD, $2.49B (consensus: $2.51B); Enterprise Systems, Flash and Other, $225M (consensus: $188.6M).
    • Capacity shipped: Total, 87.4 EB (last year: 87.5 EB); Enterprise, 36.4 EB (last year: 37.4 EB) with Mission Critical up from 2.1 EB to 3.4 EB and Nearline down from 35.1 to 33; Client Non-Compute, 32.6 EB (last year: 30.9 EB); Client Compute, 18.4 EB (last year: 19.2 EB).
    • Earnings call is scheduled for 5 PM ET with a webcast available here.
    • Press release/Supplemental information
    • OPKO Health (NYSEMKT:OPK) slips 5% after hours on the heels of its planned offering of $200M aggregate principal amount of Convertible Senior Notes due 2025.
    • Price, yield and terms have yet to be released.
    • Sears Holdings (OTCPK:SHLDQargued in front of a bankruptcy judge today that a sale to Eddie Lampert's hedge fund would keep at least 425 stores open.
    • The judge is considering objections from creditors for several days this week on the sales process itself and the deal price that Sears agreed to accept.
    • The final decision from the judge could arrive by the end of the week.
    • Gilead Sciences (NASDAQ:GILDQ4 results ($M): Revenues: 5,795 (-2.6%); Product sales: 5,681 (-2.7%).
    • Key product sales: Genvoya: 1,206 (+13.8%); Truvada: 823 (+3.3%); Epclusa: 453 (-19.8%); Harvoni 232 (-64.0%); Descovy: 411 (+12.6%); Odefsey: 448 (+37.8%); Biktarvy: 578; Yescarta: 81 (+999%).
    • Net income: 3 (+100.1%); non-GAAP net income: 1,873 (-20.1%); EPS: 0 (+100%); non-GAAP EPS: 1.44 (-19.1%).
    • 2019 guidance: Product sales: $21.3B – 21.8B.
    • Shares are down 3% after hours.
    • Previously: Gilead Sciences misses by $0.26, beats on revenue (Feb. 4)
    • DraftKings (DRAFT) tells CNBC it recorded 300K mobile sportsbook apps bets on the Super Bowl in the state of New Jersey. DraftKings partners in New Jersey with Resorts Casino Hotel, owned by Mohegan Gaming & Entertainment.
    • FanDuel (OTC:PDYPFOTCPK:PDYPY) says it took down 350K bets on the Super Bowl. The company has a partnership with Boyd Gaming (BYD +0.6%) that covers U.S. mobile sports bets.
    • Meanwhile, Vegas bookmakers reportedly took in about 10% more in volume last year, which could translate to additional ancillary revenue for MGM Resorts (MGM -0.8%), Wynn Resorts (WYNN -1.5%) and Caesars Entertainment (CZR -0.6%). The bookmakers also benefited from the small point total in the game on prop bets
    • U.S. banks tightened lending standards for commercial real estate loans, while standards and most terms on commercial and industrial loans remained basically unchanged, according to the Federal Reserve's January 2019 senior loan opinion survey on bank lending practices.
    • Meanwhile, demand for loans to businesses reportedly weakened. The survey covers the past three months, roughly corresponding with Q4 2018.
    • As for loans to households, lending standards for most categories of consumer loans and residential real estate loans remained basically unchanged. Credit cards, though, were an exception, with standards reportedly tightening. Demand for all categories of loans to households weakened.
    • As to what they expect for 2019, banks see standards tightening for all types of business loans as well as credit card loans and jumbo mortgages.
    • Demand for most loan types is expected to weaken, though credit card loan demand is seen as remaining unchanged.
    • Banks foresee loan performance deteriorating for the surveyed categories.

  47. Separating fact vs fiction in Trump’s State of the Union

  48. MJ/Phil – With the recent rally, I'm trying to figure out the best way to adjust my jenga'd position.

    Back in October i picked up 6 2020 $35/$50 BCS for $5.50 and sold 3 2020 $35 Puts for $6.60

    Between Christmas and New Year I:

    Rolled the puts and doubled down to 6 2021 $20 Puts

    Covered the $50 short calls

    Full disclosure, I ran out of margin at that time rolling and adjusting all of my other positions as the market was bottoming and felt most confident MJ could come back, otherwise I would have taken advantage then.

    So, with this remaining long call, If feel like I should be covering it with this rally.  Would you recommend:

    Sell near term calls x4 (Mar, Jun, Oct, Jan) as we work toward 2020 (I believe the potential for this to pop makes it too risky)

    Sell the $35 calls $6.35 today for 2020 $30/$45 BCS for $6.45

    Sell the $35 calls $6.35 today and just take it out to 2021 $30/$50 BCS for $6.55

    ?I have a few other positions like this as well (thankfully I was able to roll down the long call on those), so I'm very interested in the best way to lock in those gains.


  49. oh geez…just in case anyone is double checking…the prices I said I paid for the original position were prices from my MU holdings rather than MJ, but they are close enough and not relevant to the question at hand. ;)

  50. Pstas – You're right, QUIK has been a serial disappointer.   Have taken tax losses and bought lower, and am  currently up a little.  But huge opportunity cost !

    I'm keeping the faith.

  51. I should say I'm up a little on current position, but have taken tax losses, so overall it's been a loser so far.