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Thrilling Thursday – The View From the Top

Here we are again.

For the past year we've been topping out around 2,800 on the S&P 500 (/ES) and yesterday we closed over at 2,820 and, if we can hold it through the weekend, we may be looking at a real move above the line and the top of the range may become the new bottom BUT, I don't see the economic data to support that yet – so I remain a bit skeptical.

Fortunately, not too skeptical and our Long-Term Portfolio added $42,172 (8%)  since our 2/15 Review while our Short-Term Portfolio (where we keep our hedges) has remained fairly flat and that's exactly what we like to see in our paired portfolios.  

There's not much going on and not much news – well, no new news so we'll just have to see how the indexes hold up at this critical juncture but just being over the 200 dmas (all but the Russell) is a nice, bullish sign as we head into expiration day tomorrow.

With the NYSE holding the 200 dma (pretty much) on the last pullback – these are very strong charts and the rising 50 dmas almost guarantee a bullish cross is coming and, for the Dow – if not for BA's troubles this week – it would have already come so, for purely technical reasons (which I hate), we're going to have to stay bullish – even at these lofty levels.


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  1. Still ways to go!

  2. Some crazy investing facts:

    7. At the low in 2009, U.S. stocks were back to where they were in 1996.
    Stocks for the long-run. The very long-run. Usually. Sometimes.

    8. At the low in 2009, Japanese stocks were back to where they were in 1980.
    See above.

    11. Gold and the Dow were both 800 in 1980. Today Gold is $1,300/ounce, the Dow is near 26k.
    Cash flows > commodities.

    12. Over the last twenty years, Gold is up 340%. Stocks are up 208%, with dividends.
    You can support any argument by changing the start and end dates.

    18. 96% of U.S. stocks generated a life-time return that match one-month treasury bills.
    The reason why so many mutual funds fail to beat the market is because so many stocks fail to beat the market.

    19. Dow earnings were cut in half in 1908. The index gained 46%.
    The stock market ≠ the economy.

  3. Good morning! 

    Not sure what my schedule is today, possible breakfast w/Ken from New Age and maybe a meeting out there in the afternoon.  Tomorrow is last day in LA and then back to normal(ish) next week.

    We're raising $10M to build out a New Age Greenhouse/Manufacturing facility in Massachusetts and Manufacturing in Nevada (Vegas and Tahoe) along with a retail operation.  If people are interested in participating, contact Greg (Admin @ philstockworld dot com) but, of course, you have to be a qualified investor.  

    Unwind/StJ – Going very well so far. 

    Indexes are a bit red but not too much damage.  Still the potential for people to change their minds into expiration.  One trick is to jack the price of a stock up into expriations, then buy cheap puts to lock in gains and then sell the crap out it into expiration day.  Hasn't happened in a while.

    Talk about a uniform recovery:

  4. Good Morning!

  5. I guess the Boeing CEO needs to up the donations:

    According to Trump, the 737 model “sucked.”

    Trump told aides that specific type of jet was nothing compared to the Boeing 757, the model of his Trump Force One private jet, White House officials told the Post. Trump suggested that perhaps Boeing should stop making the 737s after one crashed in Ethiopia killing more than 150 people.

    And make Trump product manager because clearly he knows more about planes than anyone else!

  6. Dollar General will open 975 stores this year

  7. We use these guys in our application and they have a good product but look at the numbers:

    Market cap over $5B with $215M in sales… Growth is good but they will face some competition from Amazon soon. 

    Twice in recent months MongoDB shares have plunged on concerns about competition from Amazon. On Jan. 10, the stock tanked on news that Amazon was rolling out cloud-based software called DocumentDB to directly compete with MongoDB.

    For people using AWS (many of them), there will be some choices to make.

  8. Interesting cashflow projection for Tesla. Explains why they are rushing out the Model Y announcement.  They desperately need cash, and are hoping the deposits for the new model will keep them afloat.  Only problem is that it may cannibalize sales of the Model 3, when they are having a very hard time finding buyers already.

  9. This VP of engineering resigned the day after the Model Y reveal date was announced, without another job lined up.  Among dozens of other high level departures over the the last 6-12 months.

  10. Long-Term Portfolio Review (LTP) – Part 3:  After deleting the extra set of CMG short calls and yesterday's other gains, the LTP now stands at $1,276,665.  

    • GIS – I knew I liked these guys!  We rolled down when they dipped and now we are reaping the rewards. 


    • GNC – This one we're waiting for to come back.   Good for a new trade.
    • GOLD – I'm relieved they are not buying NEM, partnership just as good without all the debt.  Good for a new trade and we're very aggressive on them.

    • GPRO – Another one that took off since we got aggressive.  Let's sell 30 (of 80) July $6 calls for 0.80 ($2,400) to pick up a little income.
    • GS – I hate them, but it's a good stock…  On track.
    • HBI – Wow!  Kind of irresponsible not to cover a bit so let's sell 25 (1/2) Jan $18 calls for $2.05 ($5,125) as I don't want to see these profits slip away.  

    • IBM – Our stock of the year for 2019!  On track for our very conservative spread but that conservative spread is already at net $30,950 from a net $5,725 start (on the adjusted spread) so up $25,225 and it's our very normal system of selling a short put (in Jan) and then adding a bull spread (in Oct) when we get a nice dip.  

    • IMAX – Another one we got very bullish on and it paid off.  So many good, big movies are out this year – it's hard to short them.  Still, it's a nice gain and we want to lock it in so let's sell 13 (1/2) the Jan $22 calls for $3.90 ($5,070) which is good downside protection and easy to roll if we go higher.

    • IP – On track
    • KHC – Our recent disaster.  We already made our adjustments and they got whacked too.  I'm sticking with them though.

    • LB – Languishing is the word…  We're fine as our target is only $30 in 22 months.
    • M – What Retail Apocalypse?  This is a long-term real estate play but the business is solid.  Could be a long wait though.
    • MJ – Nice, relaxing way to play Marijuana Companies.

    • MO – Over our goal already.  
    • MT – Very aggressive bet on trade being settled eventually.

  11. TSLA/Palotay – Seems to me they are desperately flailing about trying to do anything to raise cash but last Q they said they had $3Bn sitting around – where did it go?  Model Y seems rushed – more vapor-ware from Musk, most likely.

  12. The suspicion is that the $3B cash balance was highly window dressed, judging by the tiny amount of interest income they generated on that balance during the quarter.  There are reports of delayed payments to suppliers, long waits to get deposits returned, and very slow state registrations (which means Tesla keeps the tax/registration payment until the last second).  Why do all of this if they could just sell more shares and raise a couple billion?  The Twitter $TSLAQ hive mind thinks it is because he can't raise due to open SEC/FBI investigations and/or an inability to get any of the big banks to underwrite the raise due to cooked books.  There is also a very real possibility that the SEC removes him as a director/officer from Tesla because he violated the terms of their settlement.  If they go BK this will make Theranos look like tiny in comparison.

  13. TSLA – Tesla is a dumpster fire. I've been sitting on my hands hoping for a better entry but I'm not sure it's ever going to go much higher.

  14. Phil/KHC:  Those 2021 $45 Calls you said to buy back are long calls.

  15. 2021 $450 calls on TSLA still have a lot more premium than they should. You can sell them and buy long dated put spreads. The $100-50 spreads have a very attractive risk/reward. 

  16. TSLA/Palotay – I agree, substantial risk of BK down the road.

    KHC/LTP, Kinki – Sorry, that's a mistake – I don't want to buy back long calls, thought they were short calls.  

  17. CLDR

    CLDR is down 15 % today. Nevertheless, several analysts are unfazed.

    Cloudera: 4QFY19 Messier Than Expected; Still Believe LT Opportunity Intact – Needham 
    Needham reiterates Strong Buy, lowers tgt to $28 from $31.

    From D. A. Davidson : We maintain our BUY rating, but reduce our price target to $23 from $27 on Cloudera, Inc. after the company reported solid F4Q19 results.

    Cloudera (CLDR) PT Lowered to $20 at Citi –

    Raymond James' Michael Turits maintains an Outperform rating on Cloudera with an unchanged $16 price target. 

    Analysts were obviously taken by surprise. Not willing to buy this falling knife,
    but I sold a few Jan $12.5 puts for $2.40.

    Will look to add on additional weakness.

    Don't know where this font came from. 8-)


  18. Never mind the font mention, it was very bold but didn't carry over.

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

    • MU – Chip sector getting hammered but too many devices need chips and it's bound to come back.  This spread is very conservative with the 1/2 cover short calls and a low net entry (about $3,000) on a spread I wouldn't mind improving $10 for $5 ($20,000) if MU goes lower.

    • NLY – On track and paying dividends.  Good for a new trade.
    • NYCB – Another on-track dividend play.
    • PZZA – Hopefully they've found footing here, our timing was great on the new calls. 

    • QCOM – Getting their footing back. 
    • SKX – Though we are deep in the money, this spread is only net $8,400 out of a potential $16,000 so plenty more to gain if they hold $30. 

    It kind of gets lost in the shuffle but here's an example of being able to take an options spread now, that pays 100% in two years – as long as the stock doesn't drop 10%.  Your only risk is being assigned 1,000 shares of SKX at now $38ish but when we started, it was a credit spread, so net $30ish was our max risk against $16,000 possible gain.

    • SPWR – In the early running for my 2020 Stock of the Year so good for a new trade.  
    • STT – Nice bank that stays out of trouble, good for a new trade, halfway to goal.

    • T – On track
    • TGT – On track
    • THC – On track
    • UCTT – Was going great but pulled back from $13 to $10.  Same semi issue and we already got pretty aggressive so no changes. 
    • WBA – Love this as a new trade, let's buy back the short callers and sell 10 2021 $65 puts for $11 ($11,000) as it's nice bonus money.  

    • WHR – Already in the money but it's a $45,000 spread netting $22,000ish at the moment so another 100% to gain and all they have to di is hold $130!  
    • WPM – Top of our range already and this one is a $37,500 spread netting $23,800 so another $13,700 doesn't sound sexy but it's 57.7% in 22 months and you have to factor in how little I'm worried about this one (our 2016 Stock of the Year) so there's value to that too as I don't have to hedge it and I don't have to allocate the unused capital for the trade – so I can release it and open another block. 

    So still a good bunch of trades with few adjustments to make.  Nice relaxing portfolio…

  20. Phil

    What are you thoughts on Innovative Industrial Properties, Inc. (IIPR)

    Any trade ?




    Description  ( from Yahoo)

    Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017.

  21. CLDR/Albo – Coal is dead and if it looks like Trump won't be re-elected, people won't wait to pull the plug on the sector so be careful.

  22. Phil

    Any trades on Mylan  MYL  ?


  23. CLDR – Phil you must have it confused with another company.

  24. Albo – Coal, cloud… same thing! But cloud companies might go the way of coal mines long term with only Amazon, Microsoft, Google and Alibaba left. I posted an article about that 2 days ago.

  25. P.S: ARR play of other day buy stock and sell the Oct 17.5/20 c/p strangle was not such a ood idea.

    Today already call was assigned. Pd. 15 $ assignment fee and lost 4 $ plus trade commission.

    Today I made an offer to buy the stock and sell the Oct 20 caller for .55, which is my normal play not to be toooo greedy.. The puts are obviously still standing.

  26. Thanks, STJ.  Not looking at CLDR as a long term play.  Only until January.  If what you say is true, i don't think it's going to happen this year.  And there could be some consolidation mergers along the way.  Betting that the analysts with egg on their faces will stay with this name for awhile.  Just looking for a $10.10 entry.  which is 50% or more below most of their target prices.

  27. CLDR/Albo – Sure did, I was thinking of CLD!  CLDR is simply over my head – I don't understand their business well enough to have an opinion.

    And what StJ said!

    MYL/QC – Fortunately, we're close enough to the weekend for me to ask you to ask me again Sat/Sun when I have the time and screens to check them out.  It's been a while since I looked at pipelines and MYL isn't one I follow closely, so I'd have to research but I don't mind as it's good to check them all out once in a while. 

    ARR/Yodi – Yes but you got called away and $20 cost per 100 is 0.10 but it it on each lot or the whole trade?   On the bright side, you are buying the stock back at $19.50  vs $19.80 yesterday ($19.63 at the close) so that's at least +0.13 plus the premium you collected on the short calls should be more than the dividend by itself.  In fact, July $17.50s just sold for $2.26 so, if you buy the stock for $19.58 now, you net in for $17.32 so + 0.18 if called away is only a penny short of the dividend.  

  28. Phil ARR I was looking at the cost of the call pay (400 stk and 4 calls) It's only pennies but I think one will get that hassle every month, as they pay monthly Div. Remember armchairs play with comfort.

  29. Earnings season is growing to a close, but AVGO, ADBE, and ORCL report this afternoon.

  30. Growing to a close ?   I don't think so.

    Meant to say "drawing to a close" or "coming to a close"  but not growing to a close. 8-)

  31. Hassle/Yodi – Well, as we talked about, I consider the safety worth the hassle.  

    Earnings/Albo – Actually, they are all going to give us early indications for Q1 (since it's almost over and we will get live updates) so will be very interesting to hear what they have to say.

    Getting the usual push up into the close but not even getting green so far.  Very ho-hum day.

    /NG done at $2.85 – not worth a weekend risk after an 0.08 gain.

  32. Phil / Holding the following AAPL spread:

    10 Jan 2020 130's
    10 Short Jan 2020 140 Puts
    10 Short Jan 2020 155 Calls

    Spread is up about 30%. Is there more room to run on this or is it time to close and move on? I was asking a more experienced trader (then myself) about this and this was his response:

    "Basically when the price of the stock reaches close to or exceeds the strike price of the calls that you sold then the spread is pretty much maxed out. In your case you sold the 155 calls and the stock is in the 180s. At the time when the stock price reaches your call strike that you sold the amount of money you make on your long calls pretty much equals the amount of money use lose on your sold calls. Time to exit and reestablish another spread."



  33. AVGO – Beats by .32.  Revenues in-line.  Re-affirms 2019 outlook.

    Stock up 5% after hours.   

    Core holding.

  34. NY attorney general: Evidence shows Trump misused charity

  35. Court rules gun maker can be sued over Newtown shooting

  36. Exclusive: Uber plans to kick off IPO in April – sources