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Monday Market Movement – Back at S&P 2,800 Yet Again

Image result for us drops global statusWell, Friday was a disaster, wasn't it?

Turns out it wasn't about Trump, he is still at large after Mueller did not find enough evidence to convict (still plenty of evidence to suspect but Trump's AG Barr has squashed further investigation) so it looks like Trump's policies will be with us for another two years.  As you can see from the chart, that will give us two more years to work on really pissing off the rest of the World, whose approval of the US is already at or near the record lows set by Bush II.

Isreal still likes us and you can see the GOP working double-overtime recently pandering to them and Nigeria likes us for some reason along with Poland and India.  Of course, Trump and his followers probably don't care if foriegners don't like us because these 320M people don't need the other 7,800M people on this planet and we don't need to trade with them or get along with them or even enter into defense agreements with them because – WE'RE NUMBER 1!  USA! USA! USA!!! 

Image result for global economy cartoonSee, if you say it loud enough and often enough, you may actually start to believe that.  Who needs reasons when we have chants?  Well, I guess the answer is people with globes, people who understand that it's a global economy and not a local one any more but those people are called "Globalists" and they are vilified by the right as if reality is some anti-American agenda.  

We have the same problem in the stock market as US traders think that things that affect the rest of the World don't matter to US markets, despite the FACT that the S&P 500 gets half it's revenues from overseas.  Fortunately, at PSW, we do watch the overseas markets and there was nothing surprising about last week's correction and this morning, we can play long off the support lines as we expect to bounce off Dow (/YM) 25,300, S&P (/ES) 2,800, Nasdaq (/NQ) 7,300 and Russell (/RTY) 1,500 and, of course, we go long the laggards with very tight stops if any of them fail to hold – because that can get really ugly!  

On the whole, we're back to where we were on October 24th, when I wrote:  "Will We Hold it Wednesday – Indexes Struggle to Regain their 200 DMAs."  In that report, we were in the middle of failing our 200 dmas, coming down from the year's highs to what ended up being a 10% correction but it was only a preview to the 20% correction we got 3 months later in December.  Now it's March so it's taken us 3 months to get back to where we were halfway to our correction – that's not actually very impressive, as you can see on the Russell's monthly chart.  

Back in October, I said:

We still have the same problems we have last week:  Crazy President, Brexit, Italy, Trade Wars, Debt, Iran, Saudi Arabia, Venezuela, Inflation, Economic Slowdown… combine the last two and we get the dreaded Stagflation!  NONE of these things have gotten better so the question is whether or not a 10% correction of a record-breaking rally is enough to put us into a rational zone or if we still have another 10-20% correction ahead of us?

That turned out to be true and we made a fortune in the Short-Term Portfolio with our hedges and now we have to ask ourselves is, are things better or worse than they were in October?  Well, it turns out they are BETTER because inflation never caught on, the Central Banks flipped doveish, the Mueller Investigation is over (more investigations to follow), Brexit has become a joke but the same Government survives, commodity prices have remained fairly calm and housing continues to bubble.  I wouldn't say you could strike them all off the list but certainly that list of worries is nowhere near as worrying now.

While I find it ironic that Deutsche Bank puts our the "30 Risks to the Market" list, since they themselves are the riskiest bank in the World – I still think it's a generally good list so, before we get all bullish – we should consider their new list of concerns for 2019:

Image result for risks to the market 2019

The Global Slowdown (2&3) and Yield Curve (10) got us last week and this week we have a record number of Treasury Auctions (4, 5, 6 & 7) to get through.  Goldman's puppet, Draghi has taken the ECB (8) off the table and the BOJ (9) may talk about it but they have done nothing to slow their QE.  I'm more worried about tough comps in Q1 than too many buybacks (11) and the Shutdown (12) did not kill us.  Brexit (13, 14) has been punted and the Trade Wars (15, 16) drag on.  The Fed HAS decided to ignore Acceleorating Wage Growth (17, 18) and the Yellow Vest protests are continuing but may have peaked (19). 

The last 10 items are still up in the air but the bottom line is, after looking at the two lists, is that things now are not as bad as they were in October and I'm less inclined to think we're going to have a major (20%+) correciton though we could still fall 10% (2,580 on /ES, 23,000 on /YM, 6,600 on /NQ, 1,350 on /RTY) and still be in a fairly bullish long-term trend so we are maintianing our hedges but there's no need to be more aggressive unless the 200 dmas fail to hold.

  

Meanwhile, we have a good amount of data and TEN (10) Fed speakers this week and, this morning, Evans already mentioned the possibility of LOWERING rates while Harker said one possible (at most) hike in 2019.  Will it be enough to give us more than a weak bounce this morning.  We get revised GDP on Thursday and the month and quarter ends on Friday and then it's Earnings Season yet again – spring is in the air!  

 

 


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  1. “See, if you say it loud enough and often enough, you may actually start to believe that.”

    https://www.youtube.com/watch?v=qjUvfZj-Fm0


  2. Trump Declares Exoneration, and a War on His Enemies




  3. Russell Falls Apart




  4. Good Morning!


  5. Good night!  :P


  6. Good morning!

    Big Chart not bad, only the RUT failed the 200 dma (and the 50) so we need to see 1,523 come back and the rest is just normal bouncing which would be:

    • Dow 26,000 to 25,400 is 600 points so 120-point bounces to 25,520 (weak) and 25,640 (strong)

    • S&P 2,860 to 2,790 is 70 points so 14-point bounces to 2,804 and 2,818

    • Nas 7,525 to 7,300 is 225 so 45-point bounces to 7,345 and 7,370 

    • Russell 1,580 to 1,500 is 80 points so 16-point bounces to 1,516 and 1,532 

    So the opening rally is already dead and now we have to see of the lows will hold up and, if they don't, could be another 2.5% down this week.


  7. Not bouncing very much so far!


  8. BA could rally back if FAA is approving software fixes and they are down 80, which is 320 Dow points (not all in a day!) and AAPL has an announcement today (streaming mostly) at $188 could jump 10 for 80 Dow points today and would still have miles to go if people believe they can add another $10Bn (20%) to revenues.  

    • Stocks open lower as concerns about the global economy that dragged down the market last Friday outweigh any relief that the Mueller probe found no collusion with Russia by Pres. Trump; S&P and Dow -0.3%, Nasdaq -0.5%.
    • European bourses are lower, with U.K.'s FTSE -0.6%, and France's CAC and Germany's DAX both -0.1%; Asian markets fell sharply following Wall Street's Friday rout, with Japan's Nikkei -3% and China's Shanghai Composite -2%.
    • In corporate news, Apple (-1.3%) is expected to introduce a new subscription services and a TV streaming service today and Thermo Fisher (+0.7%) agrees to buy Brammer Bio for $1.7B in cash to expand its presence into gene therapy.
    • Among the S&P 500 sectors, the recently-battered financials (+0.5%) and industrials (+0.5%) are off to good starts, while the energy (-0.3%) and consumer staples (-0.2%) groups are early laggards.
    • U.S. Treasury prices edge higher, pushing both the two-year and 10-year yields 2 bps lower to 2.30% and 2.42%, respectively; the U.S. Dollar Index -0.1% to 96.52.
    • WTI crude oil -0.4% to $58.82/bbl.
    • Special Counsel Robert Mueller's report finding no collusion between the Trump campaign and Russia during the 2016 campaign is positive for markets, as it "further lessens the (already low) odds of President Trump being removed from office via impeachment," Raymond James analyst Ed Mills writes.
    • He expects the end of that investigation enabling a stronger trade deal with China.
    • KBW's Brian Gardner sees the report as "positive for the Trump administration at least in the short term, and a positive for the markets."
    • Cowen's Jaret Seiberg, though, says Congress could become even more partisan, especially in the House, which could make it harder to overhaul the mortgage system.
    • Seiberg will be looking whether there's any bipartisan cooperation on House Financial Services Committees votes on Tuesday, including one on cannabis banking.
    • The end of the Mueller investigation is positive for Republicans, especially in the Senate, says Bernstein's Lance Wilkes; he sees lower risk for dramatic changes to the healthcare system.
    • All three major U.S. stock averages are down in early trading--the Nasdaq (-0.4%), S&P 500 (-0.3%), and the Dow (-0.3%).
    • American Airlines (NASDAQ:AAL) says it expects the FAA's grounding of Boeing's 737 MAX jets to continue to cause "significant disruption" to its customers and to the company's financial costs.
    • But AAL says the financial costs of the disruption "cannot be forecasted at this time and will be dependent upon a number of factors, including the period of time of the aircraft are unavailable and the circumstances of any reintroduction of the aircraft to service."
    • AAL said over the weekend that it is extending cancellations of 737 MAX flights through April 24; the airline's fleet includes 24 737 MAX aircraft, with cancellations of ~90 flights a day.
    • Bank of America Merrill Lynch says Apple's (NASDAQ:AAPL) iPhone order trends are stabilizing, citing visits to "several suppliers" in Asia.
    • The suppliers expect iPhone orders in H2 2019 to be "flat to slightly up" compared to the prior year.
    • BofAML is also optimistic about the new AirPods saying the wearables could "account for over $7B or the equivalent of 10M iPhones, which is not trivial for a relatively new product."
    • Rating and PT remain at Buy and $210.
    • Philadelphia Fed President Patrick T. Harker sees, at most, one rate hike this year and one more in 2020, he said in a speech at the Official Monetary and Financial Institutions Forum in London on Monday.
    • Still, he's careful to point out that his stance "will be guided by data as they come in and events as they unfold."
    • "For the U.S. overall, I would say that, on balance, the potential risks tilt very slightly to the downside, but I emphasize the word `slight,'" he said, though he still sees the outlook as "positive."
    • As for the Fed's balance-sheet runoff,  the central bank wants the reserve supply "no more than necessary," he said. When the runoff plan ends in September, it will be likely "above the level needed to efficiently and effectively implement monetary policy."
    • He says the Fed plans to keep aggregate securities holdings constant for a time and sees a "very" gradual decrease in average reserves and currency and other non-reserve liabilities "grow over time."
    • 10-year Treasury yield relatively steady at 2.446% at 9:08 AM ET; earlier yield rose as high as 2.473%.
    • Lackluster demand and overseas Model 3 delivery problems will weigh on Tesla's (NASDAQ:TSLA) Q1 results, according to a new warning from RBC Capital.
    • The brokerage reiterated its Underperform rating on shares and slashed its price target to $210 from $245, a 14% reduction that implies more than 20% downside over the next year.
    • RBC Capital also cut its first-quarter Model 3 delivery forecast to 52,500 from 57,000, while for 2019 it "forecast about 261,000 Model 3 [deliveries], down from 268,000 prior. Our 2020 forecast of 347,500 remains unchanged."
    • TSLA -2.3% premarket
    • Archer Daniels Midland (NYSE:ADM) says it expects "severe weather disruptions" will reduce Q1 operating profit by $50M-$60M.
    • ADM says extreme winter weather has affected its North American operations "beyond what we would experience in a typical winter," as snow and rain storms this month that have caused flooding are affecting its Carbohydrates Solutions and Origination operations; rail transportation has been disrupted; its Columbus, Neb., corn processing complex was idled due to flooding and now is running at reduced rates; and unfavorable river conditions are severely limiting barge transportation movements and port activities.
    • ADM says it will update investors on the impact during its Q1 earnings call.

    Weighing The Week Ahead: Fresh Data On Housing – At Last 

    Facebook: 10 Reasons Why I Have Sold All My Shares 

    • In a letter to shareholders, Bristol-Myers Squibb (NYSE:BMY) reiterates the benefits of its $74B bid for Celgene (NASDAQ:CELG). Key points:
    • Management believes the deal is a good fit with its three pillars of business development: strategic alignment with well-known therapeutics areas, compelling science and financial discipline.
    • Combined company will be #1 in oncology and cardiovascular and in the top five in immunology and inflammation.
    • It will have nine blockbusters (at least $1B in annual sales), six near-term launch candidates and more than 50 Phase 1 and 2 clinical programs.
    • Significantly reduced concentration of BMY's top 3 products, from 70% of total sales to ~45% of total sales in 2025.
    • Celgene's late-stage pipeline represents more than $15B in non-risk adjusted revenue potential. Three (ozanimod, luspatercept and fedratinib) are substantially de-risked with completed Phase 3 studies and completed or near-term U.S. marketing applications.
    • The tie-up will deliver $2.5B in sustainable synergies.
    • The transaction will be 40% accretive to EPS in year one and 10% accretive each year thereafter through 2025, internal rate of return of 11% will be above its cost of capital.
    • The deal will enable BMY to buy the "whole necklace" instead of stringing together "the pearls."
    • This was supposed to be the week the U.K. left the EU, but following a Brexit extension, Britain will now have until April 12 to offer a new plan or decide to leave the bloc without a treaty.
    • The next few days may also see MPs decide on a variety of Brexit options, including a third vote on Theresa May's Brexit deal as she faces pressure on all sides.
    • There are new signs of disarray as May was the subject of what the Sunday Times called a weekend "coup" by senior ministers seeking to oust her.
    • Sterling -0.3% to $1.3171.
    • As it looks to return the 737 MAX to commercial service, Boeing (NYSE:BA) has invited more than 200 global airline pilots, technical leaders and regulators for an information session on Wednesday, in a sign that a planned software patch is nearing completion.
    • Meanwhile, American Airlines announced it will extend 737 MAX flight cancellations, totaling 90 per day, through April 24.
    • American is the second-largest U.S. operator of the MAX in the U.S. with 24 jets, behind Southwest Airlines with 34.



  9. Now we have signs of life – just have to watch those bounce lines for trouble spots.  All the weak bounces have been taken back, no strongs yet. 


  10. No Collusion, No Obstruction, Complete and Total EXONERATION. KEEP AMERICA GREAT!

     

    (UPDATE) The minimum number of active investigations targeting Trump, many involving pre- and post-election multinational collusion: ?SDNY ?EDNY ?EDVA ?USDC-DC ?NYCDA ?NYAG ?NJAG ?MDAG ?DCAG ?SCO X FBI ?CIA ?HPSCI ?SSCI ?HJC ?HOC ?HFSC ?HWMC

    “The Special Counsel did not find that the Trump Campaign, or anyone associated with it, conspired or coordinated with the Russian Government in these efforts, despite multiple offers from Russian-affiliated individuals to assist the Trump Campaign.”

    This guy really could shoot someone in Times Square and get away with it. 

    Stephen Moore,Trump’s latest pick for the Fed’s board thinks ‘the Fed is a disaster’ and Chairman Powell is ‘totally incompetent’ and should resign. Here's more on Moore in his words, much of them from an WSJ interview


  11. Phil

     What are your thoughts on

    Huntsman Corporation (HUN)

    Any Trades ?

    Thank You


  12. Phil/Trump,

    It is not about him I think, it is more of the failure on the democrats side…as they are just a whimp…allowing the other side to do whatever they want. So this will continue till the other side is more powerful…

    regards


  13. Phil:  Regarding the BMY purchase of CELG, I wonder if you have any thoughts regarding how likely the deal is to go through.  There is some declared opposition, about 8% of the float, but many other big BMY shareholders hold stock in both companies and thus have an incentive to see the deal go through.  CELG is selling way under the $102 value of the deal, and it seems that it offers some good option plays before the deal is voted on on April 12.  What is your take?



  14. GOLAN!!!!!!


  15. Hedges – how much per month or quarter or year should be spent to protect $100K in gains?   How do you calculate the gains on something like SPY puts at some out of the money strike?  Rookie questions I know.


  16. HUN/QC – Nice, old-fashioned chemical manufacturer that I don't play because there are very complex supply/demand issues for base chemicals that would be a full-time job to keep track of.  I think, on the whole, you could treat them like a cyclical so the low p/e (15) is about right but sales trends are strong and they are low in the channel so, as long as you are willing to stick to your guns if they drop 30% – this ($22) isn't a bad place to get in.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 11,079 11,578 8,139 7,518 8,358 9,379 9,211 9,575 -3.3%
    Operating Profit $m 459 605 686 660 791 1,035     +17.7%
    Net Profit $m 128 323 93.0 326 636 337 657 750.5 +21.4%
    EPS Reported $ 0.55 1.35 1.61 1.44 1.79 2.36     +33.9%
    EPS Normalised $ 0.94 1.80 2.06 1.91 2.10 2.39 2.76 3.30 +20.5%
    EPS Growth % -54.8 +91.0 +14.3 -7.3 +10.0 +14.0 +15.1 +19.6  
    PE Ratio x           9.06 7.87 6.58  
    PEG x           0.60 0.40 0.98
    Profitability

    I'd sell 5 2021 $18 puts for $2.20 ($1,100) and buy 10 of the 2021 $20 ($4.50)/27 ($1.80) bull call spreads for $2.70 ($2,700) for a net $1,600 commitment on the $7,000 spread and see how that goes.  If they get back over $25, you could bulk up the longs and if they fall back to $18 (and hold it) you could DD on the puts (maybe $3.50) and roll the $20s to the $15s for $2.50 so then, for net +$800(ish), you'd have the $15/27 $12,000 bull call spread for net $2,400.

    Trump/Pat – I think the Dems have a thing where they feel they have to respect the office – at least a little.  We went through total disrespect under Clinton and nothing got done and they (stupidly) tried to be nice under Obama to hopefully reverse all the negativity but that was way too whimpy and now they are paying for it but the GOP will ultimately pay as, like the GOP did with the tea party, the radicals in the Democratic Party are gaining power.  Bottom line is things are not likely to get better any time soon.

    BMY/John – I think it's very likely as CELG wants the deal and, even together, BMY/CELG is only about $130Bn vs $203Bn for Merck and $230Bn for PFE – very unlikely to be held up on anti-competitive issues.  The problem is you never know what the EU or Asia will say so it could get held up or blocked and it's not just about whether or not CELG wants it or not.  Also, the deal is for one share of BMY stock + $50 in cash, which BMY has to borrow for 700M CELG shares so $35Bn in debt for the new company – yay!   There's also "Contingent Value Rights" that have to be squared due to deals CELG made to acquire certain drugs – that's also going to require payouts and could end up in court.  Then you have activist shareholders on both sides who could derail the deal so I don't think $88.14 is way too low, given the issues.  

    If you wanted to play it bullish, I'd go with the 2021 $75 ($19.50)/90 ($11.50) bull call spread at $8 as you can make $7 (87.5%) at $90 and you'll get paid if it closes over that mark and, if the deal looks shaky, you can sell the Jan $97.50s for $4.50, which would knock you down to net $3.50 on the $15 spread and, if you sell some puts (2021 $80 puts are $6.50), you could pull a lot of money from this one.


  17. So, how were those bounces?

    • Dow 26,000 to 25,400 is 600 points so 120-point bounces to 25,520 (weak) and 25,640 (strong)

    • S&P 2,860 to 2,790 is 70 points so 14-point bounces to 2,804 and 2,818

    • Nas 7,525 to 7,300 is 225 so 45-point bounces to 7,345 and 7,370 

    • Russell 1,580 to 1,500 is 80 points so 16-point bounces to 1,516 and 1,532 

    Well, that all fell apart REALLY fast!  Not a good sign.


    • Cook plugs Apple hardware, but says, "We've also been creating a world-class selection of services, and that's what today is all about."
    • Cook going in with a definition of "services." Looks like we're getting a very high-level view of how Apple looks at these types of products. 
    • Same approach to services as hardware products: "they have to be easy to use," Cook says. Designed to "keep your personal information private and secure," too. 

    • Cook says Apple's approach to news is different than other publishers. "Apple News prioritizes a news sources' reputation and value of its content over the propensity of its headlines to garner tweets and likes."
    • Apple News prioritizes a news source's credibility and attention to detail over propensity to sensationalize. Clear shot at Facebook there.
    • We're bringing magazines to Apple News," Cook says. 
    • Seeing Wired, The Wall Street Journal, Vanity Fair, and other pubs as participants in the new service. 
    • (Your homework for tonight is considering what a magazine even really is when you've unbundled all the stories and put them in a news app that suggests content from a range of publications organized by topic. This is some lightly magical thinking.)

    I like that you can now read magazines cover to cover – I hate feeling like I missed stuff. 


    • Not sharing demographic and subscriber info with publishers was a big point of contention apparently between Appel and some magazines/news orgs. 
    • Rosner talking about not violating user privacy to make recommendations. "We don't know what you read, and we don't allow advertisers to track you." 

    • "In Australia, we've achieved an amazing 99 percent acceptance (rate for banks)," Cook says. He says Apple is on track to pass 40 countries this year. 
    • Apple is bringing Apple Pay to transit to major cities in the US, starting with Portland, and moving to Chicago and New York City later this year. 
    • The new service is called Apple Card. 
    • Bailey says you'll sign up on your iPhone, and you'll get a software version of a card in minutes that you can start using. 

    Bailey says the Apple Card will include some Mint-like features that help you "live a healthier financial life." 

    Apple says it's using machine learning to eliminate those confusing transaction names to identify shops and rename them in your transaction history. 

    Bailey now talking about points. "Every time you spend with Apple Card, you get cash back and you get it every day," Bailey says. It's called Daily Cash. 

    Turning into a financial services company represents the final step in Apple going from any kind of upstart to absolute behemoth.

    My kids are going to love this!  Perfect for people starting out.

    • As previously reported, Apple is partnering with Goldman Sachs for this card, and it's powered by Mastercard on the payment processing end. 
    • Interestingly, Apple says it's giving you a per-device card number that's stored securely, and PINs that are covered by Face ID and Touch ID.
    • "Apple doesn't know what you bought, where you bought it, and how much you paid for it," Bailey says. All spend tracking and similar features are done on-device, not on Apple servers. 

    Wow, so instantly accepted anywhere!  Can't believe AAPL is still down ($188.50).  They are offering privacy the CC companies can't touch.  

    • The card has "no card number, no CVV, no expiration date, and no signature and is made of titanium." All that info is securely stored in your wallet app. 

    Wow, now I want one!!


  18. That Apple News looks great but my biggest problem is that I can't keep up with my existing reading so can't see adding more magazine. I used to use Zinio and get 3 or 4 mags that way – I ended up cancelling it all because I had such a long reading queue!


  19. More stuff:

    • Apple Arcade will be a subscription that grants you access to 100+ games at launch. They're exclusive too. Not on any other platform or any other subscription service. 
    • You'll be able to play these on iPhone, iPad, Mac, and Apple TV, and all games will be offline-only. So you can play whenever you like, regardless of internet connection. 
    • Apple hitting the privacy angle hard again here. No data collection from any of these apps. 
    • Launching this fall in 150+ countries. But no pricing! That's lame. 

    After talking about doing a TV thing for a decade or more, Apple is about to announce a TV thing.

    The new product is technically called Apple TV Channels. Coming with a big slate of options. 

    Nothing too exciting about Apple TV, no NFLX connection is going to be a big war (they do have HULU). 

    Now they are having a huge star-studded video but I can't figure out where it's going.


  20. Magazines/StJ – I agree, no time.  Waiting for that app!  

    Spielberg on stage – still don't know what they are doing….


  21. $187.35 – going down!  Silly sellers, they just announced a good $10Bn a year in new stuff, at least. 

    Oh OK, Spielberg is in charge of "Amazing Stories" – an Apple original scifi show.  

    Now these two (and Steve Carrel shows up):

    Same problem I have with NFLX, why does everyone have to be a production company?  Especially for AAPL, who can have their whole $300Bn product line tainted by having "lame" shows.  

    Aquaman has a show:

    So strange, the World devastated by a virus leaving just a few million people – all blind and they look at the society that evolves from that hundreds of years later.  Sounds interesting but really risky.  

    True stories about immigrants in the US.  Nice. 

    Yikes, now this is dragging on too long.


  22. Now they are playing a song from one of their shows.  

    Who has time for all these shows?  I still haven't seen Breaking Bad… 


  23. TV / Phil – Unless they have exclusive content, not sure that it can make a difference. A lot of people already have Hulu with many channels listed there or the best shows on Prime or Netlfix. Adding HBO, Showtime and Starz is not a big seller for me. 

    Netflix doesn't make a lot of money, why would Apple go into such a low margin business. It might to revenues but not much to earnings. Especially when they can take 30% on what other people do…


  24. These are the people they are doing shows with:

    Looks like a lot of costs up front and uncertain returns to me.  

    Montage looks like no superhero shows at all and not one person with a gun!  

    Why/StJ – I guess it's just another way to get people into the eco-system as they are stressing the 100+ country thing.  Maybe not in the US but if they lowball prices in the 3rd world and sell the service with IPhones and IWatches and get those people to use their credit cards, etc. - that can be powerful.

    Ah, Apple got Oprah!  Crowd goes wild because… Oprah!  

    See, now we all have to buy it….


    • Oprah says she's working on two documentaries: one called Toxic Labor about workplace harassment, and another multipart series focusing on mental health.

    Well, interesting but not a game-changer but sets a new course for AAPL that will play out over many years.  NFLX is "worth" $158Bn with $15Bn in revenues and $1Bn in profits – AAPL will make $3Bn this year on TV services and they are down 2% today.

    RUT is green but the rest down half a point.


  25. Phil- I have 600 GOLD shares that were assigned from a short put in Jan. Since it broke out today do you think this will continue to run up and should I wait to cover?


  26. GOLD/Calch – Well, it's going to be hard to get over $15.  Gold's (/YM) been as high as $1,350 and now just $1,320 so this is more about NEM and GG merging, which is going to make it more of a gold cartel for the majors and should be good for long-term pricing.  While gold has room to run, if you got assigned at $12+ and get to sell for $14.50 in two months – it's a bit greedy not to take the money or, at least, cover at least half of your gains.  You could sell 1/2 the 2021 $12 calls for $3.80, locking in a $15.80 sale and covering all the stock with $1.90 of protection.  If it keeps going up, you get the average of $15.80 + whatever you sell the other half for but, do you really want to hold it that long as it was just an assignment and now you got lucky?  


  27. This is comforting from Stephen Moore:

    https://talkingpointsmemo.com/edblog/1208423

    Moore’s own words are hardly re-assuring. “I’m kind of new to this game, frankly, so I’m going to be on a steep learning curve myself about how the Fed operates, how the Federal Reserve makes its decisions,” Moore told Bloomberg Television. “It’s hard for me to say even what my role will be there, assuming I get confirmed.”

    Welcome to the clown car!


  28. God a little boost into the close so the day doesn't seem too bad.  Now we'll see how tomorrow shakes out when some real trading happens.  

    BA up $8 for the day and AAPL settles at $188.74?

    /KC recovered from a scary dip.




  29. Avenatti charged with trying to extort millions from Nike




  30. WPM/Phil – I have 2020 15/20 BCS with half quantity of short puts at 20.  I’m already >85% of the gains to be gained.  Just looking for confirmation on taking the gains now rather than wait 9 months.  Plus, in a situation like this where WPM breaks out to the upside, because it’s WPM, do we just wait for it to pullback (better entry point) then reload?  Thanks!


  31. Kamala Harris’ teacher pay price tag: $315B







  32. Good morning!

    Indexes up about half a point, hopefully it will stick as we're dangerously close to failures.  

    Nothing market-shaking news-wise. 

    WPM/Buckey – So in 9 months you will make 15% x what degree of certainty?  I'd say there's an 80% chance WPM holds $20 (unless silver and gold collapse) but very, very likely to pull back and consolidate around $22, which is down 10% from here.  So, you need to consider your own temperament as well as what do you have better to do with $85 than make $15 (17.6%) in 9 months that has a better than 80% chance of success?  THAT is how you have to decide whether it's a good time to pull the plug or not.

    It's funny how spoiled you guys are because I could start a very successful web site simply going on and saying "Hey, do you want to know a great way to make 17.6% on your money in 9 months with very little risk and no margin requirement?" and they would think I was a genius for coming up with the trade you want to throw away.  

    Since WPM has broken out, I might consider going for a higher spread, like the 2021 $17.50 ($8.45)/25 ($4) bull call spread at $4.25 and, if I were to buy 2x of those and sell the 2020 $15s for $10.25, that would put net $1.75 in pocket and then you could roll the short Jan $20 calls at $5.65 to 2x the June $22.50 calls at $2.80 about even and put a stop at $3.50 on half.  If the $3.50 gets triggered, you end up with no cash (as it would use the $1.75 you pocketed + another $1.75 per original long) but you'd have $15 worth of 2021 spreads for a potential 3x return to your $5 spread – that might be worth waiting for…


  33. Phil, how would you set up a new Dis play today?


  34. Also, there are now two sets of options reflecting the fox merger. Which ones are the newer version?


  35. Phil, 

    WPM 10 contracts currently have a sold 2021 15P for 2.20;

     Looking at the above WPM write up on the bull call spread of 2021 17.5/25 for $4.45, would it be better to buy back the put and sell another 2021 20P for $1.51 (take about $1.53 of the original put profit off the table). Your feed back appreciated always.