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Faltering Thursday (Again) – Trump Tantrum Spooks Markets

The President is losing it.

Yesterday, he invited the House and Senate Democrats to meet with him to discuss Infrastructure and they had been discussing $2Tn worth of it but, when they showed up, Trump demanded they drop their investigations or he would not spend any money on Infrastructure – even though it's something America desperately needs action on.

Trump is not above holding America hostage to get what he wants – he shut the Goverment down for 35 days last year just to get funding for his wall and, so far, $1.57Bn has bought America 1.7 Miles of fence.  President Donald Trump also commented on the progress of the wall construction on Twitter Wednesday, saying “tremendous work is being done.”  

The Democrats did not agree to stop investingating Russian Interference into the US Elections which happens to also include potential charges of collusion and obstruction of justice on behalf of the President and his inner circle.  One could say Trump's actions yesterday were obviously yet another attempt to obstruct justice by threatening people involved in an ongoing investigation but, regarless of that – this man is clearly not acting rationally and, unfortunately, he's our President.  

It's interesting that Trump is complaining about the Mueller Investigation costing $35M (his estimate, not a fact) when Trump has spent $102M of the taxpayers' money playing golf in the past two years – and that is a FACT.  In fact, Mueller has already collected $47M in fines so there's a $12M+ PROFIT from the investigation, not to mention that there have already been 37 people indicted for criminal activity including 26 Russians who interferred with our Democracy and, so far, 7 people have already pled guilty, including several who were serving directly under the President.   

I know people don't like to talk about politics on investing sites but this is serious stuff, folks!  When this happened yesterday I told our Members to "GET OUT!!!" of the markets as this was clearly going to lead to some serious selling as, if nothing else, we have a completely dysfunctional government which will be doing nothing to address many, many critical things AND we're on a footing to start a war in Iran, threatening Venezuela, in a Trade War with China AND our economy is clealy slowing – how many more things will it take before people start selling in May and going away?

I talked about all this stuff in the Webinar so you can check out the replay when it's ready.  Also, despite being down $1,000 per contract with an average entry of $1.9515 now, we're still holding long on Gasoline (/RBN19) and we just added oil (/CL) at $60 as a long but no conviction there and tight stops below the line.  A lot of our premise to hold is based on the timing of the EIA Petroleum Status Report, which ended on the 17th and came in too soon to see the effects of the holiday weekend demand AND there's a massive math error in the Total Petroleum Stocks:

There's 23.5M barrels LESS oil than indicated – that's quite a big difference and, while it does nothing to change the weak demand picture that's very obvious (we import less and export more and still we have a surplus), it does mean we don't have the kind of glut traders are fearing.  However, this morning the NYMEX traders are dumping their remaining /RBM19 contracts, which expire on Tuesday and that and the strong Dollar (98.06) are putting downward pressure on commodities.  

Despite that pressue, Silver (/SI) is hitting our $14.60 goal this morning from our featured play in Tuesday Mornng's PSW Report and an 0.25 gain on Silver Futures is good for $1,250 PER CONTRACT – not bad for a newsletter you can subscribe to for $3/day, right?  

We are, of course, taking the money and running here – it's very important not to get greedy – especially in Futures trades as they can go down as quickly as they go up.  It's surprising we got this high with the Dollar over 98, so consider it a gift and move on.

Meanwhile, the S&P (/ES) is firmly below 2,860 and the Dow (/YM) is just over the weak bounce line at 25,450 so, if it fails that – GET OUT!!! (or at least short /YM at that line with tight stops above) as it has another 250 points to go before it catches up with the other indexes at the 5% correction line.  As I said yesterday morning, we were taking the "rally" with a huge grain of salt and now we're in BIG TROUBLE if the NYSE fails it's 200-day moving average at 12,500 and we'll be really close at the open – so watch that line very closely.  

The volume is so low this week that none of it matters but these big trend-lines can be self-fulfilling prophesies so we'll be paying attention to what lines get broken and what sticks.  Oil is already down to $59.50 and that's going to be a huge disppointment in the Energy Sector (and our Futures Trades) but we're giving it a day pass with the Dollar soaring to 95.20, even as I write this.  

Be careful out there!

 


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  1. Can you imagine Clinton saying, drop the investigation on Whitewater or I won't sign anything moving forward? I am sure the GOP would have been OK since they seem OK with Trump doing that now. This situation is insane and once again I don't understand why markets are not spooked even more by our current drift toward a constitutional crisis. What will happen when courts decide that the Dems are right and order the WH to release witnesses and documents and Trump refuses? Do we send the marshalls in to get the stuff? 


  2. Good Morning!


  3. personally I think talking about trump goes over and above all politics the man just may end life as we know it.


  4. Good morning, All!

    The webinar replay is now up!

    https://youtu.be/rb8p8cTs-_s


  5.  BMO cuts CMG to Underperform citing rising pork prices in light of the African Swine Fever. 


  6. /RBN19 – Gotta be pounding the table at $1.90


  7.  

    Dollar hitting new multi-year highs. Gold holding support and rallying.





  8. Good morning! 

    Down 400, that didn't take long.

    LB holding up, at least.  

    Brent $68.40, OPEC must be having fits and their meeting is coming up early June.  /CL $58.80.

    /RB down to $1.928 and /RBN19 down to $1.905 – very painful.  

    NYSE 12,496 so danger zone.  /RTY all the way back to 1,505. 

    What happens/StJ – That's why it's a Constitutional Crisis.  We have these "rules" but no one seriously thought they'd be broken by someone as powerful as the President who simply refuses to abide by the rules.  The only real way to address the problem is to impeach him but that concept is based on the notion that there can't be that many Senators and Representatives who would support such a mad man and – even if they did – surely the people would rise up and vote them out of office.  Woops!  

    Image result for jefferson tree of liberty

    Yet they make a show about Hamilton?

    Trump/Tommy – We talk about Trump a lot because he's constantly doing radical things.  We went 8 years with Obama and barely mentioned him.  No scandals, no wars, no crazy BS – just good government…  I guess it was too boring for people.  

    CMG/Albo – I know Pork is on the menu at Chipotle but there are 5 other meats (and then veggies) to put in your bowls/burritos/tacos so I can't see that being a huge impact.  Nonetheless, they were way overpriced (and we are still short the June $600 calls), so any excuse for a sell-off at this point. 

    /RBN19/Buckey – Very, very painful with /RB in free-fall.   There's not really good technical support until $1.80 but the Dollar is calming down so hopefully $1.90 holds up.

    Gold/Albo – Not much resistance for them to $1,300 and, over that, they can easily put up another 2.5%:

    /SI is going to be back in play on the $14.50 line or over $14.60 with tight stops:

    Strong Dollar past 12 months – adds another 10% to our rally from foreign viewpoint:

    Musk says they will beat Q4's 98,000 delivery number!

    Apparently he said it to the AP, not on Twitter.  

    Because a Tesla produces no emissions & filters most toxins, pollen, spores & viruses, it actually cleans up surrounding air as it travels


  9. How some states are ripping off people who try to save for college



  10. Phil, I thought memorial weekend was the biggest driving day of the year? Is all thi because of the rollover in RBN?


  11. Trade tensions, soaring U.S. stockpiles send crude oil prices plunging

    • Stocks tumble at the open as increasingly harsh rhetoric stirs fears of a protracted trade war between the U.S. and China; S&P -1.2%, Dow -1.3%, Nasdaq -1.5%.
    • "The trade landscape looks bleaker than ever," says J.P. Morgan executive director Adam Crisafulli. "Anyone bullish on the SPX has to be conducting a lot of soul searching at the moment."
    • European bourses also are falling sharply after the eurozone flash manufacturing PMI for May declined further into contraction and Germany's Ifo Business Climate Index for May fell to its lowest level since 2014; France's CAC and Germany's DAX both -1.5% while U.K.'s FTSE -1.2%.
    • Asian markets also close with losses, with Japan's Nikkei -0.6%, Hong Kong's Hang Seng -1.6%and China's Shanghai Composite -1.4%.
    • In the U.S., 10 of the 11 S&P 500 sectors show losses, led by the energy sector (-2.5%) amid plunging oil prices, while the utilities sector (+0.4%) is lone gainer in early trading.
    • The risk-off mindset and general uncertainty in the market boosts U.S. Treasury prices, sending the benchmark 10-year yield down 4 bps to 2.35% and the two-year yield 3 bps lower to 2.19%; U.S. Dollar Index +0.3% to 98.34.
    • WTI crude oil adds to yesterday's sharp loss, -3.4% to $59.34/bbl amid a spike in U.S. crude inventories.
    • May U.S. PMI Composite Flash50.8 vs. 52.4 consensus 52.8 prior.
    • Manufacturing PMI 50.6 vs. 52.3 consensus, 52.4 prior.
    • Services PMI 50.9 vs. 52.8 consensus, 52.9 prior.
    • Tesla (NASDAQ:TSLA) opened up 0.70% after posting a drop of as much as 5.5% in the premarket session. At last check, shares are back in negative territory at -1.25%.
    • leaked e-mail purported to be sent from Elon Musk to employees last night is making the rounds. In the email, Musk claims that the company has a chance this quarter to beat its all-time deliveries record of 90.7K set in Q4 of last year.
    • "We need sustained output of 1,000 Model 3’s per day. Almost all parts of the Model 3 production system have exceeded 1000 units on multiple days (congratulations!!) and we’ve averaged about 900/day this week, so we’re only about 10% away from 7000/week," reads the e-mail.
    • The company has not confirmed if the e-mail was actually sent or if the deliveries estimate is accurate.
    • Deutsche Bank (NYSE:DB) is prepared to make "tough cutbacks" at its struggling investment bank, CEO Christian Sewing said at the German lender's annual shareholder meeting.
    • The bank will focus on profitable and growing businesses, he said without providing details.
    • Sewing, though, did focus on Deutsche's transaction bank, which finances companies' global trade flow and handles cash for corporations and governments; executives have discussed breaking that bank away from the investment bank to highlight its stronger profit margins, theWall Street Journal reports, citing people familiar with the matter.
    • Deutsche Bank also has "big plans" for DWS, its asset-management unit, said Sewing, and wants it to become a top-10 global asset manager.
    • The German lender may consider a merger involving DWS to help reach that goal.
    • Addressing the bank's regulatory and compliance issues, Sewing also acknowledged that the company must "further strengthen our controls."
    • Deutsche Bank shares fell 1.8% in premarket trading in New York.
    • Tilray's (NASDAQ:TLRY) wholly-owned subsidiary Tilray Portugal Unipessoal has received a standard manufacturing license and a Good Manufacturing Practices (GMP) certification, in accordance with the EMA's standards, for its Biocant Park manufacturing facility in Cantanhede, Portugal.
    • This license and certification will allow Tilray Portugal to manufacture and export GMP-certified dried cannabis as an active substance for medicinal products from Portugal to Germany, other EU member states and international markets.
    • Shares are down 1% premarket.
    • Chipotle (NYSE:CMG) and Bloomin Brands (NASDAQ:BLMN) are most at risk for margin pressure thanks to African Swine Fever, says analyst Andrew Strelzik, downgrading both to Underperform.
    • His Street-low $18 price target on BLMN suggests about 10% downside. His $620 price target on CMG suggests about 12% downside.
    • Strelzik figures the impact from ASF could begin to leak into CMG results as early as Q3.
    • CMG down 2.55% premarket to $688.
    • Best Buy (NYSE:BBY) is up 2.64% in premarket trading to $70.51 after issuing strong guidance that takes into account at least some impact from tariffs.
    • The U.S.-China trade battle is a significant wildcard with Best Buy as an estimated 68% of its merchandise comes from China.
    • Despite the China syndrome, analysts note that underlying sales at Best Buy have been strong and shares are up 31% YTD.
    • Previously: Best Buy beats by $0.15, revenue in-line (May 23)
    • Best Buy (NYSE:BBY) is on watch after reporting Q1 EPS ahead of estimates and setting mixed guidance.
    • The retailer reports U.S. comparable sales were up 1.3% to beat the consensus estimate of +0.9%. Comparable sales of appliances rose 10.5% during the quarter. Domestic online revenue increased 14.5 percent to $1.31B to account for 15.4% of total domestic revenue. Total domestic revenue was up 0.8% to $8.48B, while international revenue fell 5.2% to $661M.
    • Best Buy says domestic gross margin was 23.7% of sales during the quarter vs. 23.3% a year ago. The gross profit rate increase was primarily driven by the impact of GreatCall's higher gross profit rate and improved product margin rates to partially offset higher supply chain costs.
    • Looking ahead, Best Buy sees full-year revenue of $43.9B vs. $43.6B consensus and EPS of $5.45 to $5.65 vs. $5.63 consensus. "This outlook balances our better-than-expected Q1 earnings, the fact that it is early in the year and our best estimate of the impact associated with the recent increase in tariffs on goods imported from China," says incoming CEO Corie Barry. "Specifically, I am referring to the increase in tariffs from 10% to 25% on the products on the $200 billion List 3 that originally went into effect last September," she adds.
    • Shares of Best Buy are up 0.12% premarket to $69.25.
    • Previously: Best Buy beats by $0.15, revenue in-line (May 23)

    • Independent research boutique New Street starts Uber (NYSE:UBER) at Buy with a $50 price target.
    • Analyst Pierre Ferragu thinks the company can quadruple its bookings by 2025 and drive margins as a percentage of bookings towards 7%.
    • The analyst says the near-term might seem rocky as ARPU and take rate drift down for a couple of years, but Uber remains not a taxi service "but a transportation revolution."
    • Uber shares are down 1.9% pre-market to $40.45.
    • TD Bank Group (NYSE:TD) plans to buy back up to 20M of its common shares, or about 1.1% of its common shares outstanding.
    • At Wednesday's closing price of $54.97 per share, the full amount of the buyback would come to ~$1.1B.
    • Under its last normal course issuer bid, as amended, TD repurchased 30M shares at an average price of C$74.29 per share for a total of C$2.2B.
    • TD Bank Group's (NYSE:TD) fiscal Q2 reflects Y/Y revenue growth in Canadian and U.S. retail businesses and stronger Q/Q growth in its wholesale business.
    • Q2 adjusted net income of C$3.20B (US$2.38B), or C$1.75 (US$1.30) per share beats the consensus estimate of C$1.68.
    • Compares with C$2.88B, or C$1.57 per share, in Q1 and C$2.99B, or C$1.62 per share, in the year-ago quarter.
    • Q2 adjusted net interest income of C$5.87B improved from C$5.86B in Q1 and C$5.40B in Q2 2018.
    • Q2 adjusted return on common equity of 17.0% improved from 15.0% in Q1, but fell from 17.6% in Q2 2018.
    • Canadian retail adjusted net income of C$1.88B increased 2% Y/Y and revenue rose 8% on increased volumes, higher margins and more assets under management in its wealth business.
    • U.S. retail adjusted net income of C$1.26B rose 20% Y/Y, with TD Ameritrade contributing C$258M; the U.S. retail bank net income of C$1.01B increased 17% Y/Y on an adjusted basis.
    • Wholesale banking net income of C$221M fell by C$46M from a year ago due to higher non-interest expenses, partly offset by lower provision for credit losses; wholesale bank continues to invest in the global expansion of its U.S. dollar strategy.
    • Conference call at 1:30 PM ET.
    • Previously: The Toronto-Dominion Bank beats by C$0.07, beats on revenue (May 23)

    Annaly Capital's Dividend, BV, And Valuation Versus 19 mREIT Peers (Post Q1 2019 Earnings) – Part 1 

    • Slowing iPhone demand, trade war headwinds and possible ripple effects from a Huawei battle don’t bode well for Apple (NASDAQ:AAPL), according to UBS, which cut its 12-month price target on the iPhone maker to $225 (from $235).
    • UBS still has a Buy rating on the stock, but cited evidence from a survey of 8,000 people across six countries that suggests consumers are in no rush to upgrade their phones, and for iPhones specifically, "purchase intention" looks to be stabilizing at a low level in all regions except China.
    • Shares are down 2.2% premarket to $178.73/share, taking losses to 15% for the month of May.
    • Apple currently has a Sell-side average rating of Outperform, Seeking Alpha Authors' average rating of Bullish, and Quant Rating of Very Bullish.
    • Aviation regulators from 30 countries are meeting today in Dallas to discuss progress in fixing the software of Boeing's (NYSE:BA) 737 MAX.
    • However, the closed-door meeting, originally described by FAA officials as a way for the agency to secure an international stamp of approval, is now shaping up largely as an information-sharing exercise.
    • Ahead of the gathering, acting FAA chief Daniel Elwell said he couldn't predict when the MAX fleet would be back in the air, stressing that the return to flight would be driven by analysis rather than the calendar.
    • "If you said October, I wouldn’t even say that" was a realistic deadline at this point, he declared, because "we haven’t finished determining exactly what the training requirements will be."
    • Theresa May's job is hanging by a thread after Andrea Leadsom, a high-profile pro-Brexit Cabinet minister, resigned on Wednesday.
    • Pound investors are bailing out of the currency - down another 0.4% overnight to $1.2612 – amid increasing uncertainty about who will be running the country, and who will handle further negotiations with the EU.
    • The Times newspaper reported that May would name a date for her departure tomorrow, but would remain as prime minister while her successor is elected in a two-stage process.

    Lots of Fed speeches today:

    So we might turn up in the afternoon – the minutes sure didn't help yesterday and now they have to spin it.

    Image result for frog in a blender  animated gif


  12. Memorial Day/Jomp – Watch the webinar replay for the full story but the EIA report was through the 17th (last Friday) and it wasn't likely that gas stations would top off with a full week to go before the holiday so the inventory report "ahead of the holiday" was a disappointment yesterday and that was compounded by a huge addition mistake of our Total Product Storage Level (about 1% – see above).  At the same time, the Dollar is rising, which puts more downward pressure on oil and key technicals ($75, $72.50, $70) on Brent failed and OPEC+ failed to make an agreement so – on the whole, this just isn't our week BUT, HOPEFULLY (not a valid trading strategy), next week there will be a "surprising" drawdown and everyone will start scrambling for July contracts.

    From $85 to $50 is $35 so $7 bounces to $57 and $64 (strong) BUT $85 was a spike we should ignore, and really it was an $80 to $60 drop ($20) so $4 bounces still takes you to $64 (weak in this case) but $68 is the strong bounce.  In either case, $64 is very significant support so, if $68 doesn't hold up – that's what we'll look for but I think $68 holds (so you can go long /BZ here with tight stops below) – especially with the OPEC Meeting, though it's not until June 25th, it turns out and is probably 2 days. 

    So, if you want to play /BZ, /CL (now $58) or /RB (all /..N19) (now $1.895) – it's likely to be a rough ride but history says it could be very rewarding in the end.


  13. Thanks Phil, are you buying another one at 1.88. RBN?


  14. Spot VIX still under 17 so no huge panic… 


  15. Wow Air Collapse Decimates Iceland’s Economy



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  17. Boeing Max Crisis Ruins Credibility of the FAA




  18. /RBN19/Jomp – Yeah have to add one down here but every time I try it jumps up so I doubt these levels are real – just trying to force out the weak hands.  4 long at $1.935 avg now and down about $8,500!   Crazy when you need an 0.05 move up just to get even…

    VIX/StJ – Good point but the bad news is we have a lot more room to panic.


  19. Good morning.  Anyone know why the panic FTR today?  Two super strong down days….


  20. Panic / Phil – Still time to hit that panic button! 

     

    Image result for panic

    BTW, both the NYSE and Russell are still below where they started 2018 (not 2019). An entire 1.5 year lost so far on these 2 markets. Dow is only up 2.5% and the S&P about 4%. So we have not made much progress. On the other hand – good for premium selling.


  21. FTR/Robert – People are questioning whether they violated a loan covenant on their 2031 debt by using the revolving line last Q over a certain amount.  I don't think it's a big deal as they have a cure period of some kind – even if they did – but it's easy to spook people by saying this big chunk of debt may accelerate.  

    Panic/StJ – that's why I wanted to just liquidate — so hard to protect overbought portfolios in a toppy market. 


  22. Speaking of protection though, STP is at 656.9% so up about 28% ($28,000) for the week and LTP is right at 150% ($1,249,921) and Friday we were at 159.4% ($1,297,222) so down about $50,000 on the LTP so the balance is perfect.


  23. Gotta laugh…missed the /rbn19 trade so jumped in this morning just above 1.88  Had my default set to 5 contracts  LOL  So Glad is popped up.  FAT FINGER PANIC


  24. OIH / Phil – Down in sympathy with oil…Should we be looking to roll any long calls down?  For example, 2021 $15 down to $12 for $1.40?


  25. Good fat-fingering Wilsons!

    OIH/Buckey – On the whole, I'd rather be liquidating so I'm not looking to put more money IN at the moment – even on sensible rolls like that one.  Listening to CNBC and Bloomberg, the tone has really shifted bearish, the guests are all bearish (Tepper says everyone should get out of equities now and he's returning his fund money to the investors) and we haven't even gotten really bad news yet.  

    China could suspend rare earth shipments and the Nas would be down 10% at the open – it's that kind of market.

    A graphic showing rare earth element mines production.

    Even if you declared a national emergency, it would take YEARS before we could cover China cutting us off on rare materials.

    A graphic showing the uses and properties of rare earth elements.

    Interestingly though, the elements aren't actually RARE, they call them rare because they are found in very small concentrations is the rock and soil so you have to do MASSIVE amounts of strip-mining to get at them – something the US phased out a few years ago (BECAUSE China was a reliable trading partner).  

    A map showing the global distribution of rare earth elements.

    China cut us off in 2010 when they were having a spat with Japan and we went to the WTO to get them to remove export quotas.  That's why it's such a big deal that China is saying we are violating the WTO now – it frees them up to retaliate in kind.  

    Putin could not have planned it better – take two rivals and find a weak point where one can exert tremendous pressure over the other and then just stir the pot to start an unnecessary trade dispute -  Brilliant!  

    Well, the Fed better save us at 1pm, this is very ugly and we can't blame Europe anymore.

    Down 1.5% on Dow and S&P and down 2% on Nas and Rut..  Europe down in between.


  26. At least honey badger don't care:

    That's back to 100 on /KCZ19, where we sold last time so – DON'T BE GREEDY!  That's $2,000 per contract from last Friday that helps offset the /RBN19 losses (and puts cash in pocket to DD with). 


  27. What a freakin' joke:

    https://talkingpointsmemo.com/news/bale-out-sonny-perdue-donald-trump-china-tariffs-short-term-one-time

    When the Trump administration announced last year that it was giving farmers hurt by the President’s multi-front trade war a $12 billion “bale out,” the government insisted it would be a one-time event.[...]

    “We’re having another market facilitation program in 2019, once these [trade] talks [with China] broke down,” he said.

    “China’s going to pay for this $16 billion through tariffs coming in,” Perdue asserted, before confirming that the money would really be coming from his department’s Commodity Credit Corporation program.

    One-time deal – check!
    Paid by China – check!

    No lies there….


  28. CMG – good call Phil on $720 as a good shorting point. At whatever price it seems a crazy stock to short or go long on! 


  29. Dollar down on Fed commentary but not helping anything.  

    Joke/StJ – Money not going to farmers – check!  

    CMG/Winston – Not worth more than $650 and I expect to see $600 again – that's why we kept the short $600 calls.  That's been a huge help to the LTP today.


  30. Man, all these Trump tweets about Rex Tillerson have not aged well… Like most of his tweets. I don't really care for Rex Tillerson, but you don't get to be CEO of Exxon by being dumb as a rock! Unlike inheriting hundreds of millions and losing it all…


  31. Every time we see some buyers, we end up going lower. Of course, there are buyers all the time lol, it's just that sometimes buyers are willing to pay more, but few of them today.


  32. Days like today remind me why I largely stopped trading energy (oil/gas) futures with conviction, sometimes just too crazy to play and can move wildly. I've moved to paper trading them most of the time and then scalping quick wins when I really feel like I have a position I would quadruple down on paper trading. It's helped my win/loss percentage tremendously and essentially killed any overtrading or overthinking about it that I used to do. 

    For example, in my paper account I am long 12 /RBN19 (avg. 1.925) and down anywhere from 15 to 20k. I'll follow this position through and keep working it for practice and to keep my hand in the game, but in real life I've picked up one contract at 1.88 and now profitable. I won't hold that contract overnight either. 

    Just thought it was a good day to share this since I've been burned in the past and found that I really can't be comfortable holding multiples of these things overnight or for days on end.  Just doesn't work for me.

    Plus it's been awhile since I posted here!  


  33. /RB in at 2 x 1.8845 stop at 1.885 and we'll see what happens. 

    RE: Trump – he went nuts over Pelosi slamming him minutes before their meeting. Core issue is their are no adults in the Romper Room. I don't know what Trump did during the election, or what the Dems did, but they need to both stop playing games and figure some of this out. We used to be able to disagree and still get things accomplished but now the government is completely paralyzed by its own idiocy. Pointing fingers at the side you don't like is fun – I do it too, but if you step back and try to see it the way an outsider would, we look like a bunch of petulant children.


  34. Not doing too much today – bought back short LB $22 puts and bought some VXX calls for the day. OK so far…. either equities or VIX will get smashed, not sure which. 


  35. Buyers/StJ – That's the real end of a rally, when the dip buyers get burned.

    Paper Trading/Jeff – That's a good system, I should do that!  It forces a discipline.

    Trump/Dawg – Ah but the point I was making yesterday is there wasn't a sign shop between where he was supposed to have a meeting and the podium where he picked up his sign – the whole meeting with the Dems was a sham from the start to set up his bitch session.  Imagine actually going to the lengths to prepare a staged event like that just to burnish your image – that's a really sick guy!  

    I know everyone does seem like petulant children but you can't appease a psychopath – ask Chamberlain…  

    Either or/Ati – I wouldn't be getting long into this weekend.  We're closed, others are open – could get ugly(er).




  36. Jeffdoc – Good to hear from you and happy that you are having success with your futures trading. 


  37. Wow, just when we thought the market was dead it pops 100 points!  Such fun…


  38. Phil,

    SQQQ has announced a 1 for 4 reverse split before the market open on 5/24.

    Holding current positions or close them out today?

    Thanks.


  39. Phil, I realize not directly related but what would a 20% S&P decline mean for SQQQ?  And what would that SQQQ change do to ATM SQQQ calls?


  40. SQQQ/Brian – Arrgh, I hate that.  I had no idea they were doing a reverse split but it's too late to change things now so we'll have to just deal with the split in our portfolios.  Also, I would not want to go unprotected overnight, which is what you'd have to do to flip to the new options but, next time we roll, we'll roll to the new ones.

    SQQQ/Tangled – Well it depends what the Nas does but, assuming they are in lock-step, then 20% down would be 60% up on SQQQ, from $10.50 to $16.80 but, if it changes, then we have 1/4 as many at $42 and 1.6x $42 is $67.20 x 25 = $168,000 vs $16.80 x 100 = $168,000.  See, no actual change to us at all – just a numbers game.


  41. And the market quickly gives back 1/2 the 100 points!


    • U.S. interest rates are at the correct level for now, said Dallas Fed President Robert Kaplan, but rising trade tensions and the potential for rising inflation make it difficult to know whether the next Fed action will be a hike or a cut.
    • "I'm agnostic at this point about whether the next move is up or down," Kaplan told reporters at a conference in Dallas.
    • He said he's carefully watching how the trade situation unfolds and is concerned that the U.S.-China trade conflict could reduce growth.
    • Meanwhile, as the labor market tightens, inflationary pressures are "intensifying," he said.
    • Earlier, San Francisco Fed President Mary Daly said she expects inflation will reach the central bank's 2% target this year.
    • A tight labor market and businesses looking to protect profit margins should bring inflationto the Fed's 2% target later this year, San Francisco Fed President Mary Daly said in a Fox Business Network interview.
    • Still, she doesn't expect inflation to rise above that 2% level.
    • Daly sees steady, though subdued, growth continuing to lift wages.
    • Meanwhile, businesses are "starting to think" about passing some price increases to customers as they seek preserve profitability, she added.

    • AK Steel (AKS -3.8%) is downgraded to Underperform from Neutral while Steel Dynamics (STLD -6.4%) is cut to Neutral from Outperform at Credit Suisse, which cites lower prices for hot-rolled coil steel.
    • Credit Suisse's Curt Woodworth also notes additional domestic capacity of HRC steel has pushed the U.S. market into a surplus despite Section 232 support and strong demand, and says the removal of Canada tariffs also is bearish for steel prices and will allow Stelco and others to become more aggressive in targeting the U.S. market.
    • Woodworth also cuts stock price targets at Nucor (NUE -2.8%) to $62 from $70 and at U.S. Steel (X -4%) to $9 from $11.
    • AKS currently has a Sell-side average rating of Hold and a Seeking Alpha Authors' average rating of Neutral; STLD currently has a Sell-side average rating of Outperform and a Seeking Alpha Authors' average rating of Neutral.
    • Deutsche Bank (DB -1.7%) plans cuts at its U.S. equities business, including prime brokerage and equity derivatives, in an effort to win over shareholders unhappy with the stock's lagging performance, Reuters reports, citing four people familiar with the matter.
    • Most of the expected U.S. job cuts will come from its unprofitable equities business, which includes cash equities trading. Other areas, including U.S. rates trading, have also been marked for reductions, they said.
    • No number was specified for how many of the 9,275 U.S. employees will be affected and no final decision has been made, according to the sources.
    • At the German lender's annual meeting, held today, CEO Christian Sewing said the bank's prepared to make "tough cutbacks" at its investment bank, but didn't give any details.
    • The yield on the 1-year Treasury bill, at 2.33%, now exceeds that of the 10-Treasury note, at 2.305%.
    • "Investors are resetting expectations on global and domestic growth, margin compressions, and, of course, multiples," said RSM US Chief Economist Joseph Brusuelas, via Twitter.
    • He points to the 10-year less 3-month U.S. yield curve inverting on today's market volatility.
    • And Bloomberg's Lisa Abramowicz observes that "markets have seen the biggest two-day drop in 5-10 year inflation expectations since mid-2017," according to trading in futures contracts.
    • As investors turn to safety, the 10-year yield falls 8 basis points today vs. a 4.5-bps drop for the 1-year yield.
    • The past five sessions haven't been kind to homebuilders.
    • Though the iShares U.S. Home Construction ETF (ITB -0.9%) is outperforming the S&P 500 Index YTD, in the past five days it has fallen 2.5% vs. the S&P 500's 0.7% decline. (That exclude's today's market slide.)
    • Earlier in the week, April existing home sales unexpectedly fell and Toll Brothers warned that slower demand and higher incentives would dent its home sales gross margin for the rest of the year.
    • And today isn't any better, with April new home sales falling short of estimates.
    • Among today's biggest decliners are Hovnanian (HOV -6.8%), Toll (TOL -2.4%), Beazer Homes (BZH -2.4%), and William Lyon Homes (WLH -1.5%).
    • Two homebuilders — D.R. Horton (DHI +0.4%), and KB Home (KBH +0.4%) — manage gains.
    • Google (GOOG -1.7%GOOGL -1.7%) is greasing the wheels toward faster food ordering by forging closer ties between its key services to online delivery companies.
    • In a blog post, the company says its Google Assistant (as well as Maps and Google Search) can be used to order food from a variety of services, including popular firms DoorDash, Postmates, Delivery.com, Slice, and ChowNow, with others to come.
    • Restaurant searches in Maps or via Google's main search app will come with an "order online" button aimed at easing the order completion process. Customers can check out via Google Pay.
    • The Assistant will respond to voice requests like "Hey Google, order food from …" and quickly reorder regular meals with "Hey Google, reorder food from …"

  42. Wow, sell all those delivery companies.  Now they'll have to sit side by side on GOOG and compete on price – that's not going to be good for them. 


    • The U.S. Department of Agriculture announces a $16B aid package for the U.S. farm sector, including $14.5B in direct payments to farmers to offset losses resulting from the trade conflict with China.
    • The USDA says farmers will receive the first direct payment in July or August, with further payments in late fall and early 2020, and payments will be based on the counties in which farmers live, not by crop.
    • The program is a reprise of a similar initiative in 2018 which had authorized $12B in funding.
    • Commodity prices have climbed in other parts of the world as a result of U.S.-China tariffs – Brazil especially has capitalized by selling soybeans to China – but prices have plunged in the U.S. market; the S&P GSCI Agricultural Commodities hit its lowest level last week in more than 10 years.
    • Morgan Stanley led Uber's (UBER -1.8%) IPO, and now CEO James Gorman advises investorsto take the longer view after the rocky start.
    • Gorman admits that Uber "came to market during a very difficult week" as US-China trade tensions flared, but calls Uber "a great company."
    • He brings up the fact that Morgan Stanley's role in Facebook's 2012 IPO was questioned when that stock slid after debuting.
    • Gorman: "I went on TV and said within a year it will be back to flat. And it took a little longer, it took about 15 months, and now it’s $180-something."
    • McDonald's (MCD -0.8%) Global Chief Marketing Officer Silvia Lagnado says the restaurant chain has no plans to disclose yet on a plant-based burger, although he confirmed that the concept is being looked at and talked about internally.
    • The chain has been making efforts to simplify its menu at the request of franchisees, but is also under some pressure to think meatless with the initial launch of Burger King's Impossible Whopper considered a success and Carl's Jr. selling a Beyond Meat (NASDAQ:BYND) veggie burger. McDonald's does sell a Big Vegan TS burger in Germany in partnership with Nestle.
    • Barclays raised some eyebrows earlier today by forecasting the market for alternative meat can reach $140B over the next decade.
    • A hemp cultivation bill has passed muster with Texas legislators and is now headed to Governor Greg Abbott's desk for signature.
    • Texas House Bill 1325, if signed into law, will legalize hemp farming, processing and hemp-derived extracts, including cannabidiol, in the state.
    • Related ticker: Village Farms (VFF -0.1%)
    • Cleveland Research lowers its FY19 and FY20 estimates for Micron (NASDAQ:MU).
    • The firm cites softer demand and channel work that show some timing push-out for the DRAM and NAND pricing recoveries.
    • Micron shares are down 3.5% to $33.53.
    • Continuing a trend of declining since late last year, the 30-year fixed-rate mortgage averaged 4.06% for the week ending May 23, 2019, down from 4.07% in the prior week and 4.66% at this time a year ago, according to Freddie Mac's Primary Mortgage Market Survey.
    • "The drop in mortgage rates is causing purchase demand to rise and the mix of demand is skewing to the higher end as more affluent consumers are typically more responsive to declines in rates," said Freddie Chief Economist Sam Khater.
    • 15-year FRM averaged 3.51% vs. 3.53% in the prior week and 4.15% a year ago.
    • 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.68%, up from 3.66% last week and down from 3.87% at this time a year ago.
    • JPMorgan pitches the case for investors to buy Target (TGT +1.3%) even after the 19% YTD rally in share price.
    • "We believe the shares are undervalued and we see potential upside to consensus. TGT is currently valued in the lower end of the 'middle bucket' of retail while we believe it should revalue towards the best-in-class, AMZN-safe bucket, especially in light of its strong comps, now expanding operating income after three years of declines, and its +HSD EPS growth algorithm," notes the firm.
    • JP also points to Target's gains in the home and apparel categories and margin rate inflection point.
    • Target is lifted to an Overweight rating at JPMorgan from Neutral and tagged with a lush price target of $100. Target has never traded in triple digits.

  43. Volume today was double yesterday (and so was the fall) but it's a little encouraging that things weren't worse.  If we have a big-volume sell-off tomorrow – that would be bad, but 2,821 is still over 2,800 (May and March lows) and over the 200 dma at 2,777 so 45 points down from here and we fell 33 points today – so it's not very likely we'll fail the 200 dma tomorrow.  

    NYSE finishing at 12,525 – so above the critical 12,500 line thanks to Mr Stick!

    Image result for mister stick



  44. China ramps up war of rhetoric in trade standoff with US


  45. Trump denies ‘temper tantrum’ in angry public episode


  46. To Get Boeing 737 Max Flying, Global Consensus Will Be Hard




  47. Donald Trump falls for Nancy Pelosi’s trap