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Tumblin’ Tuesday – Back to 2,880 Again

A bit of a roller-coaster, right?

Since we posted this chart last week, we've been right in the range predicted by our 5% Rule™ and, unfortunately, that means we're likely to test 2,850 again and likely to fail it on the way down to 2,700 at the moment, we can blame escalating trade tensions between the US and China or, as noted yesterday, the Hong Kong protests which Cramer now says are serious (since reading my report) and, of course, yesterday, the Argentine Stock Market fell 48% in a single day – something that's got to make investors in the Developed World Markets reconsider the lofty valuations they are paying for stocks in countries run by tyrants-in-training.

I have been warning people to stay away from Argentina since 2013, when the index first spiked up to ridiculous levels and we had a correction but then spiked to even more ridiculous levels but now Argentina has given up all those gains and more and it's still a stay-away country with a President who lost an election and refuses to leave office (shades of futures past for the US?) and a bond market that's showing a 72% chance of default within 5 years – 50% higher than the chances were on Friday.

And this is why we told you to stay far away from 100-year bonds:

Meanwhile, Argentina is only one of many things on the Global Radar we should be paying attention to and, quite simply, when there are a lot of macro issues to be worried about – we should be a lot less willing to pay higher forward multiples for stocks – in case one of those issues becomes a bigger problem than it is now.

ImageAs you know, the bond market is already pricing in a Recession with the inverted Yield Curve, Germany and South Korea are both very close to recessions already, with almost no growth in the first half and Global Industrial Production and Manufacturing is also very near the contraction line below 50.  Trade Growth is, of course, negative and not looking like it's going to get better with Trump in charge.  Tariffs are driving up the cost of materials while wages are rising due to lack of workers (no more immigrants to fill gaps) and that's leading to inflationary pressure, as evidenced by this morning's CPI Report coming in hot at 0.3% despite a calming in oil prices.  

Higher prices eroded workers’ wage gains, a separate report showed Tuesday. Adjusted for inflation, average hourly earnings for all private-sector, nonfarm workers slipped 0.1% in July from June. For production and nonsupervisory employees—a category that includes most blue-collar workers—wages fell 0.2% in real terms.

Notice on the inflation chart that the only things getting cheaper are TVs and Phones (and the Toys kids no longer want because they all have Phones) – no wonder we've become a country of internet/entertainment addicts – it's all people can afford to do!  Coporate Profit Forecasts have turned a bit negative this quarter and the writing is on the wall for an Earnings Recession as Consumers are forced to cut back as prices are outpacing wages.  With record-high employment – they can no longer get jobs to make up the difference and, as we discussed last week – household debt has already hit all-time records that are now as bad (as a percentage) as they were just before the last crash, 11 years ago. 

It's really just low rates keeping all the plates spinning at the moment, which is why Trump is so desperate to keep them that way but low rates cause their own problems, not the least of which is making the Fed unable to reaction if we find ourselves back in a real recession and now Goldman Sachs is cutting their Q4 US Growth Forecast by 20 basis points, to just 1.8%, saying the Trade Wars are leading to escalating Recession fears. 

“The policy uncertainty effect may lead ?rms to lower capex spending as they wait for uncertainty to resolve. Relatedly, the business sentiment effect of increased pessimism about the outlook from trade war news may lead ?rms to invest, hire, or produce less.  Supply chain disruption of rising input costs may lead U.S. firm to lower their domestic activity.” said Goldman's Hatzius.

Goldman Sachs said it expects the new round of tariffs to go through in September and it no longer expects a trade deal before the 2020 election.  Even self-inflicted wounds can become fatal if you let them get worse and worse – as we've been doing…

Be careful out there.

 


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  1. Good Morning!


  2. Wow – Market shooting up – I can't find any news ?


  3. Trade talks –  China says will hold talks in two weeks 


  4. GE

     

    General Electric (NYSE:GE) CEO Larry Culp scooped up 331,684 shares yesterday at $9.04, putting the value of his purchase at nearly $3M.

    A $500K deal was also disclosed by lead director Thomas Horton, who bought 55,248 shares at $9.02.


  5. Good morning!

    Futures have come back a bit but it's all about 2,880 on /ES for now. 

    Catching up on yesterday's questions first:

    Rentals/CRS – Like any investment, you need to find a good value or you shouldn't buy.  Just because you DECIDED to get into rental investing doesn't mean it's a good time to do so.  A LOT of money has gone into that market for the past couple of years, driving prices higher and decreasing the chances for you to find a real bargain.

    I find the best way to get started in rentals is to buy a multi-family home in which you are the primary tenant – so you know you have at least one occupant that won't leave and you are on-site to deal with problems.  College housing is also a good, overlooked, section of the market because there's always a new batch of students looking for a place to live and they have money from their parents so less likely to not pay you than people think.  Also they are less likely to complain about every little thing that needs fixing…

    CTL/Albo – That article sounds like the ones supporting FTR.

    SIG/John – They have earnings on 9/5 so we'll have to see.  People have clearly lost confidence and they probably will make 1/2 of what they made last year (0.52) so 0.26 for the Q is still on pace for $1 for the year but next Q is a loser for them, historically, of about $1 and it's all about Q4, where last year they made $3.96 and maybe $2.96 this year is still pretty good for a $13 stock.

    Signet: Exceptional Value In The Retail Massacre

    Signet Jewelers' Store Reduction Is Obscuring Underlying Weakness

    ETM/Jeff – I don't mind the dividend cut, it pays for the acquisitions so better than borrowing.  Management thinks the stock is 50% undervalued and they think they are doing shareholders a better service by boosting the bottom line than handing out 10% of the company's value in dividends.  

    LOL, what a rocket on China Trade news!  How silly…

    Oil and Gasoline flying higher too – AND the Dollar.

    Nat gas?  Why not?


  6. Protesters swamped Hong Kong International Airport for a second straight day, blocking the gates to the security and immigration areas and snarling the busy transit hub. The airport suspended all check-in, and advised people not to go to the airport.

    Stocks pop as China confirms trade talks with U.S. within two weeks

    • Stocks jump quickly to the upside on the news that China says it will hold trade talks by phone with the U.S. within the next two weeks; Dow +1.1%, S&P +1.5%, Nasdaq +1.9%.
    • Futures had indicated a lower open as protests in Hong Kong and a political shakeup in Argentina add to tensions over U.S.-China trade and concerns about the global economy.
    • European bourses trim earlier losses but remain in the red, with Germany's DAX -0.4%, U.K.'s FTSE -0.3% and France's CAC -0.1%; in Asia, Japan's Nikkei -1.1%, China's Shanghai Composite -0.6% and Hong Kong's Hang Seng -2.1%.
    • In the U.S., a look at the S&P 500 sectors shows communication services (+0.7%), health care (+0.5%) and consumer staples (+0.5%) leading the advance, while energy (-0.5%) is the lone holdout.
    • Shorter-dated U.S. Treasury yields have edged higher after consumer price data showed steady growth as expected, but the compression in yields continues with the two-year yield up 4 bps to 1.62% and the 10-year yield up a basis point to 1.65%; U.S. Dollar Index +0.1% to 97.43.
    • U.S. WTI crude oil -0.6% at $54.57/bbl.

    Inflation picked up last month

    • July Consumer Price Index+0.3% M/M vs. +0.2% consensus, +0.1% prior.
    • Core CPI +0.3% M/M vs. +0.2% consensus, +0.3% prior.
    • On a year-over-year basis, headline inflation is now at 1.8%, vs. 1.7% expected and 1.6% previously. Core inflation is now running 2.2% vs. 2.1% expected, and 2.1% previously.

    Retail rallies after tariffs delayed

    • Footwear and apparel stocks in particular are on watch after the U.S. Trade Representative includes "certain items of footwear and clothing" on the list of imported Chinese products that will see tariffs delayed until December 15.
    • Gainers off the development include Nike (NKE +1.5%), Deckers Outdoor (DECK+3.6%), Caleres (CAL +9.5%), Foot Locker (FL +4.2%), Under Armour (UAA +2.2%), Capri Holdings (CPRI +4.2%), Tapestry (TPR +4.1%), Fossil Group (FOSL +4.9%), Gap (GPS +6.8%), Abercrombie & Fitch (ANF +8.9%), Skechers (SKX +3.4%), Macy's (M+4.2%), L Brands (LB +6.2%), Ralph Lauren (RL +4.4%), American Eagle Outfitters (AEO +7.8%), Target (TGT +5%), Kohl's (KSS +5.9%), Walmart (WMT +2.3%) and Nordstrom (JWN +5.4%).

    Toy stocks soar after tariffs delayed

    • Mattel (MAT +10.4%) and Hasbro (HAS +5%) pop after the U.S. announces that "certain toys" are on the list of products due to see additional tariffs delayed.
    • The U.S. Trade Representative said the tariffs are delayed until December 15.

    Caterpillar reports retail sales for July

    • Caterpillar (NYSE:CAT) reports that its total machines sales were up 4% Y/Y in the three months ending July, with resources industries up 24% and construction industries down 1%.
    • Energy & transportation retail sales in the same period were up 6%.
    • CAT -0.5% premarket
    • SEC Form 8-K

    Air fares break higher

    • Air fares in the U.S. rose 2.3% in July on a month-to-month comparison, according to data compiled by the Bureau of Transportation Statistics. The significant jump in fares follows a string of down months following the Boeing 737 Max grounding.
    • Air fares were up 1.3% compared to a year ago on an unadjusted basis.
    • BTS data
    • Related ETF: JETS
    • Related stocks: Allegiant Travel (NASDAQ:ALGT), Hawaiian Holdings (NASDAQ:HA), JetBlue (NASDAQ:JBLU), Spirit Airlines (NYSE:SAVE), Mesa Airlines (NASDAQ:MESA), United Continental (NASDAQ:UAL), Delta Air Lines (NYSE:DAL), Alaska Air Group (NYSE:ALK), Southwest Airlines (NYSE:LUV), American Airlines Group (NASDAQ:AAL)

    Cronos Group (NASDAQ:CRON) initiated with Overweight rating and $18 (36% upside) price target at Piper. Shares up 2% premarket.

    Gold futures, miners ramp up in safe-haven trade

    • Gold futures ramp up to a more than six-year high, benefiting from unrest in Hong Kong, a rout in the Argentine peso and the U.S.-China trade war; Comex gold +1.3% to $1,536.50/oz.
    • Goldman Sachs upgraded its gold price forecast for the first time this year, hiking its 3-month and 6-month projections to a respective $1,575/oz. and $1,600/oz. in light of escalating trade war tensions.
    • On the technical front, "a solid breakout and daily close above the $1,525 level is likely to inject gold bulls with enough inspiration to challenge $1,550," says FXTM analyst Lukman Otunuga.

    Moody's downgrades Rolls-Royce on cash flow worries

    • Moody's has lowered its rating on Rolls-Royce (OTCPK:RYCEY) over cash flow concerns, a week after the company reported an extra charge to cover costs for its engine program and said it has spent £100M preparing for a no-deal Brexit.
    • Its rating on long-term senior unsecured debt was downgraded to Baa1 from A3, while its outlook was switched to stable from negative.
    • This reflects the "expectation that target free cash flow in 2019 will include working capital gains, which are not considered sustainable" and that it will be similarly supported in 2020.

    Domino's to deliver by e-bikes in select markets

    • Domino's Pizza (NYSE:DPZ)  says stores across the nation will soon have the option to use custom e-bikes for pizza delivery through a partnership with e-bike brand Rad Power Bikes.
    • The company tested e-bikes in a number of corporate-owned stores across Houston, Miami and New York earlier this year. Management notes the stores saw improvements in overall delivery and service.
    • Domino's says e-bikes, which can hold up to 12 large pizzas,  proved so popular in testing that it plans to utilize hundreds of them across corporate-owned stores throughout Miami, Salt Lake City, Baltimore and Houston later this year.
    • Source: Press Release

    German morale slumps as economic outlook darkens

    • More negative economic stories are being reported across the globe as Germany's outlook worsened for a fourth month after a string of disappointing figures raised recession risks.
    • The latest… ZEW said its monthly survey showed economic sentiment among investors fell to -44.1 from -24.5 in July, its lowest level since December 2011.
    • In recent weeks, major companies including Continental, Lufthansa and Daimler have all slashed their outlooks in a warning that momentum might slip even further.

    NFIB small business optimism index higher in July

    Yield curve at flattest level since 2007

    • Investors are jumping into bonds like they're a hot new commodity or even stock, with the U.S. yield curve at its flattest level since 2007.
    • The 30-year Treasury rate tumbled as much as 14 basis points on Monday to close in on its record-low of 2.0882% from July 2016, while the 10-year note fell 10 basis points to 1.65%, and at one point was just 5 basis points more than two-year notes.
    • The pace of the move means 1.318% – the 10-year's all-time low set three years ago – is at risk of being broken, unless the Fed maintains a hawkish stance or if Beijing unveils a stimulus package to counter trade war fallout (China's 10-year sovereign yield is also hitting 2016 lows).

    Yuan at the right level – PBOC official

    • The yuan is at an appropriate level currently and its fluctuations will not necessarily cause disorderly capital flows, according to Zhu Jun, head of the PBOC's international department.
    • China is able to "navigate all scenarios" arising from Washington’s recent move to label Beijing a currency manipulator, she added, and the renminbi will be a "strong currency" over the medium and long term.
    • The central bank set the official midpoint reference rate for the yuan at 7.0326 per dollar on Tuesday, marking the fourth consecutive session above the key 7 level.

    New Zealand legalizes crypto salaries

    • New Zealand has become the first country to legally back companies that are paying employees in cryptocurrencies, bringing the asset class in line with mainstream forms of payment.
    • Conditions: The digital currency of choice must be pegged to at least one regular currency, be able to be converted directly into a standard form of payment and be distributed in regular, fixed amounts.

    Hang Seng -2% as leader warns of 'abyss'

    • Hong Kong is at risk of sliding into an "abyss," according to leader Carrie Lam, who continued to sidestep questions at a news conference about the government’s response to weeks of protests.
    • As she spoke to reporters, the Hang Seng index fell by more than 1% to its lowest level since Jan. 4, and was down around 2.2% soon after.
    • Despite the reopening of Hong Kong International Airport, one of the world’s busiest, flag carrier Cathay Pacific said it had still canceled over 200 flights on Tuesday.

    K-cups will be recyclable by end of 2020

    • "All of Canada has been converted to recyclable K-cups and all of the U.S., which is in process of being converted now, will be converted by the end of next year," Keurig Dr Pepper (NYSE:KDP) CEO Bob Gamgort told Jim Cramer on Mad Money. "It's part of a bigger program to make sure that our environmental footprint is down."
    • KDP shares have climbed more than 11% in 2019.

  7. Sorry, meetings early morning!


  8. So now the tariffs are off so this is a face-saving move by Trump after the disaster reception the market gave his latest pronouncement.  Who knows what will actually happen?

    USTR removes some items from tariff list, delays some tariffs

    • In the latest swing in U.S.-China trade action, the U.S. Trade Representative removed certain items from its list of Chinese goods that were scheduled to face additional 10% tariffs on Sept. 1.
    • The USTR office said items being removed from the tariff list are based on health, safety, national security, and other factors; it didn't name those items.
    • Furthermore, tariffs on other items -- including cell phones, laptops, videogame consoles, certain toys, and some footwear and clothing, are being delayed until Dec. 15.
    • Among the items on the Sept. 1 tariff list are agricultural goods, steel and aluminum items, televisions, musical instruments, firearms, and sporting goods.

    Good time for AAPL to release and ship new phones ahead of the holiday.

    Price check on rails vs. trucks

    • While trucking and railroad stocks are broadly gaining today off positive trade news, IHS Markit is out with some interesting analysis on the the pricing differential between the two modes of transportation.
    • IHS Markit says U.S. railroads saw another drop in their pricing advantage for domestic intermodal shipping in comparison to trucking.
    • IHS: "The dwindling pricing advantage means that there is less financial incentive for shippers to transport cargo 'intermodal'—that is via rail, where it is onloaded and offloaded by trucks—rather than just utilizing trucking for the entire length of the trip. Shippers compare transit times, on-time performance, and total cost between intermodal (truck and rail) and just trucks when deciding how to move their freight."
    • The firm notes that U.S. railroads face slowing freight growth and U.S. trucking spare capacity increases, creating a new buying dynamic for U.S. shippers moving goods via 53-foot containers and trailers.
    • Railroad/trucking stocks: Union Pacific (UNP +1.8%), Norfolk Southern (NSC +2.3%), CSX Corporation (CSX +1.1%), Canadian National Railway (CNI +0.7%), Canadian Pacific (CP +2.1%), Kansas City Southern (KSU +2.2%), Wabtec (WBC -0.1%), Trinity Industries (TRN +1.6%), Knight-Swift Transportation (KNX +5.3%), ArcBest (ARCB+4.1%), Schneider National (SNDR +3.3%), J.B. Hunt Transport (JBHT +2.6%), Covenant Transportation (CVTI +2.2%), Heartland Express (HTLD +2.3%), USA Truck (USAK +2.6%), Landstar Systems (LSTR +2.4%), Old Dominion Freight Line (ODFL+2.5%), Marten Transport (MRTN +2.2%), Werner Enterprises (WERN +1.4%), YRC Worldwide (YRCW +1.1%).

    Oil price pops as U.S.-China trade hopes rebound

    • Crude oil surges out of the red after the U.S. said it was delaying China tariffs on several items including cellphones and clothing while outright removing some items from a list of proposed new tariffs; WTI +3.5% to $$56.84/bbl, Brent +3.7% to $60.77/bbl.
    • Energy stocks (XLE +1.1%), which took a beating yesterday and opened lower today, also are rebounding.

    Agencies may vote on some Volcker rule changes within days – Bloomberg

    • U.S. financial regulators may complete their revamp of the Volcker Rule limits on banks' trading with their own funds as soon as next week, Bloomberg reports, citing four people familiar with the matter.
    • The revisions include easing restrictions on banks investing their own money in private equity and hedge funds, they said.
    • Because the changes won't require re-proposing the rule, the regulators won't need to seek comments on them, three of the people told Bloomberg.
    • The Volcker Rule bans short-term trades that couldn't be shown to meet exemptions for things such as hedging or market making; the burden of proof falls on the bank to show that certain trades shouldn't be banned.
    • The new version is expected to turn that around; regulators have said they expect to have more confidence that the banks are following the rules because the standards will be clearer.
    • The agencies are planning a phase-in period for implementing the changes.
    • Final changes must be approved by the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Securities and Exchange Commission, and Commodity Futures Trading Commission.
    • ETFs: XLFFASFAZVFH
    • Previously: Community banks excluded from Volcker under agencies' final rule (July 9)

    Auto sector revs up on trade news

    • Positive news on the trade front is giving a lift to the auto and trucking sectors. The U.S. Trade Representative has delayed tariffs on certain products until December 15 and China confirmed earlier today that it will hold trade talks by phone with the U.S. within the next two weeks.
    • Advancers include Cooper-Standard Holdings (CPS +7.7%), Navistar (NAV +5.7%), PACCAR (PCAR +4.3%), BorgWarner (BWA +3.3%), American Axle & Manufacturing (AXL +7.7%), Fiat Chrysler (FCAU +2.1%), General Motors (GM +1.9%), Tenneco (TEN+5.5%), Visteon (VC +5.1%), Motorcar Parts of America (MPAA +5.3%), Garrett Motion (GTX +4.4%), Allison Transmission (ALSN +3.6%) and Meritor (MTOR +3.5%).

    Semis, Apple gain after tariff delay

    • The Philadelphia Semiconductor Index is up 2.7% and Apple (NASDAQ:AAPLgains 4.9% after the U.S. delayed the 10% tariff on some Chinese goods (including cell phones, laptops, and game consoles) until December 15.
    • Earlier today, China said it would continue trade talks with the U.S. within the next two weeks.
    • Last month, Apple filed for tariff exclusions for parts related to its Mac Pro line. The company was reportedly planning to move production from the U.S. to China, but Apple denied those reports in its earnings report.
    • Related semiconductor ETFs: SOXLSOXXSMHUSDPSIXSDSOXSSSGFTXLXTH

    GameStop moves off 52-week low after tariffs delayed

    • GameStop (NYSE:GME) rips a 4.55% gain to $3.77 after the U.S. Trade Representative delays tariffs on certain video game consoles until December 15.
    • Shares of GameStop have traded in a 52-week range of $3.44 to $17.27.

    Best Buy +8% on tariff relief

    • Best Buy (NYSE:BBY) is up 8.40% after the U.S. Trade Representative delays tariffs on certain cell phone, laptop, video game console and computer monitor products until December 15.
    • During the retailer's last earnings call, management discussed some of the tariff mitigation strategy that it was already deploying.

    Retail rallies after tariffs delayed

    • Footwear and apparel stocks in particular are on watch after the U.S. Trade Representative includes "certain items of footwear and clothing" on the list of imported Chinese products that will see tariffs delayed until December 15.
    • Gainers off the development include Nike (NKE +1.5%), Deckers Outdoor (DECK+3.6%), Caleres (CAL +9.5%), Foot Locker (FL +4.2%), Under Armour (UAA +2.2%), Capri Holdings (CPRI +4.2%), Tapestry (TPR +4.1%), Fossil Group (FOSL +4.9%), Gap (GPS +6.8%), Abercrombie & Fitch (ANF +8.9%), Skechers (SKX +3.4%), Macy's (M+4.2%), L Brands (LB +6.2%), Ralph Lauren (RL +4.4%), American Eagle Outfitters (AEO +7.8%), Target (TGT +5%), Kohl's (KSS +5.9%), Walmart (WMT +2.3%) and Nordstrom (JWN +5.4%).

    Even LB!

    So hard to take this market seriously when it goes up and down 5% based on whether or not we're going to speak to China on the phone in 2 weeks.  It's like High School!


  9. Hong Kong police stormed the airport in riot gear.  That took a little steam out of the rally.


  10. stjeanluc 

    How are you trading the VIX, I know you mentioned selling calls ?

    Thank you for the information


  11. Still holding up?  

    I'm running through all the portfolios – updates to follow.

    Wow, I just found out this whole China thing is based on Trump's claims as he was boarding a helicopter – no confirmation from China.





  12. VIX / qcmike – Some of us are selling calls against VXX when the VIX spikes. VXX decays all the time so selling calls as worked well for me at least. I am still testing to see what works best – short term calls or higher premium on long dated ones. Right now I have a mix of them – from September all the way to Jan 21. These can be rolled easily but you have to be careful not to be too aggressive because they can be margin intensive on a spike. I am using 10% of my portfolio at the moment and sold about 9% of the portfolio in premium in 8 months. My goal is 10% return using 10% of my available margin. So almost goal so far!


  13. The market indices look really flat. Is something weird going on again like at the close of market the other day?


  14. They seem very desperate to keep indexes up in this range.  Volume still pretty low but a full reversal of yesterday's damage.

    Date Open High Low Close* Adj Close** Volume
    Aug 13, 2019 287.74 294.15 287.36 292.68 292.68 63,885,656
    Aug 12, 2019 289.96 291.61 287.02 288.07 288.07 62,629,500
    Aug 09, 2019 292.58 293.24 289.65 291.62 291.62 93,730,000
    Aug 08, 2019 289.62 293.62 289.01 293.62 293.62 87,713,900
    Aug 07, 2019 284.40 288.82 282.04 287.97 287.97 140,572,300
    Aug 06, 2019 285.91 288.04 284.28 287.80 287.80 120,711,700
    Aug 05, 2019 288.09 288.21 281.72 283.82 283.82 178,745,400
    Aug 02, 2019 293.85 294.12 290.90 292.62 292.62 116,749,700
    Aug 01, 2019 297.60 300.87 293.96 294.84 294.84 142,646,600
    Jul 31, 2019 300.99 301.20 295.20 297.43 297.43 104,245,200
    Jul 30, 2019 299.91 301.17 299.49 300.72 300.72 45,849,000
    Jul 29, 2019 301.88 302.01 300.85 301.46 301.46 38,126,500
    Jul 26, 2019 300.76 302.23 300.62 302.01 302.01 45,084,100

  15. Russian military orders village evacuation, then cancels it


  16. Options Opportunity Portfolio (OOP) Review – Part 1:   $330,610 is down $5,764 since our July 17th review and up 230.6% since our 1/2/2018 start with $100,000 .  We've successfully gotten ourselves very neutral as the S&P was at 3,000 on July 17th and now back to 2,929 this afternoon so we'll take the $6,000 loss off our all-time high and be very happy, right? 

    We're so well-balanced, in fact, that I decided not to change anything into the weekend and the up and down action of the last two days has proven the point – this portfolio is locked down.  But is that a good thing?  Not if we can't decide whether we want to be bullish or bearish as we only have $100,000 in CASH!!! and about $200,000 in buying power, which is nice but not great.  If opportunities do come along – we want to be in a position to take advantage of them.

    • HMNY -  Dead.
    • HOV – Well, it's only $2,232 and I'd love to add to it but they got a de-listing notice from the NYSE for falling below $50M in market cap ($32M at $5.66) so I guess we'll just wait and see how earnings are (Sept 9-13).
    • WBA – Earnings not until mid-Oct and we bought back the short calls so just waiting for now though we may as well sell 5 of the 2021 $55 puts for $8.20 ($4,100) while they are still expensive.

    • LB – Still like the target.
    • PLAY – Good for a new trade.
    • THC – We just doubled down on these.
    • DXD – $40,000 spread now net $11,125 so $28,875 potential on a 25% move in DXD (8% drop in the Dow).  
    • FNSR – On track.
    • SQQQ – $100,000 spread now net $23,750 so $76,250 potential on a 52% move in SQQQ (17.5% drop in the Nasdaq).  Realistically, we're looking for a 10% drop so a 30% rise to $43.68 would be $68,400 so net gain potential of $44,650 is the number we should use but nice to know it has more kick than that if we need it.

    • TZA – $60,000 spread (1/2 uncovered) on just a 10% gain, which would be a 3% drop in the Russell so lots of immediate protection here.  Since the net is $38,300 and we want to have more cash, I'd rather save some by closing this spread and adding 50 more of the DXD Jan $25 calls at $3.20 ($16,000) so we drop $22,300 back in our pocket and add ($40,000 – $16,000 =) $24,000 protection on the DXD spread so the same coverage we had with TZA but now one less position and half as much cash being used.  

    • TLT – While it's fun to fight the Fed in the STP, we can't afford that kind of fun in this smaller portfolio so let's kill this position.
    • SKT – Still has that new trade smell.
    • AAPL – Hit $195 but came back hard and fast.  I think we are sensibly positioned.  

    • ALK – I feel better about this trade without the put.  We're already up almost 50% with 16 months to go and the bull call spread alone can pay us $8,000 more so let's ditch the risk for now and buy back the short 2021 $50 puts.
    • AXL – They are getting killed by tariffs so it's a waiting game here.  They still made $52M last Q so $200M for the year means why would we sell this $800M company at $7.60?  I love this one as a new play – much cheaper than our entry though I'd sell lower puts.  
    • BBBY – End of Sept earnings will tell the tale but these guys are priced for bankruptcy at right about $1Bn at $8.25 and they've lost over $500M in the last 2Qs but more cash ($700M) as it's all paper, restructuring charges.  In theory, they'll make about $1.50 per $8.25 share so I'm for sticking with them and the 2021 $5 calls are only $3.70 so $2.10 to roll means we'll do that for $5,250 and we'll stay uncovered and hope for an earnings pop.
    • BHC – Still stuck in the channel but that's how we're playing them into Jan.

    • C – On track but another one I'd rather buy back the short put on as it's only $2,845 vs $30,000 potential on the spread so about $14,000 potential gain on just that.  Buying back the puts is a cheap way to get more bang for the buck out of our hedges!  
    • CDE – Wow, what a run!   Now that it's green let's kill it and focus on GOLD, which held up much better in the downturn.  There's $9,000 off the table.
    • CHK – Back to the lows.  Let's buy back the short calls but offer only 0.15 – no reason to be ripped off.  The short puts are too low to buy back but we can sell 20 of the 2021 $3 puts for $1.75 ($3,500) while we wait to get out of the short Jan $4 puts close to even on a pop (otherwise we roll).  
    • CLF – Another victim of the tariffs.  Still good for a new trade.  

    Image result for apocalypse now someday this war is going to end


  17. Nope, not going to get the rest of the OOP done.

    I'll have it up by tomorrow morning.


  18. Concern over Macri’s future again hits Argentina markets



  19. Judge bars Trump from taking energy panel’s advice


  20. Options Opportunity Portfolio (OOP) – Part 2:   

    • FCX – Good for a new trade
    • FTR – We just sold the short puts and that's not hoping.  Moody's just trashed their credit rating to Caa2 with a negative outlook – this is how, if you get enough people to believe it – fear of bankruptcy can turn into actual bankruptcy.  It's possible the company is doing this on purpose to force their creditors to restructure the debt but it's a very risky way to go.  Our average cost per share (if assigned) is now $1.69 so there's no point in selling $1 calls for 0.20 so just a "ride or die" position at the moment.
    • GNC – They were improving but dove back down though they beat on 7/29 at 0.11/share.  As we can still sell our 2021 $2.50 calls for 0.50, let's roll those down to the 2021 $1 calls at $1 and sell the 2.50 calls to someone else for 0.50 so the roll costs us nothing but puts us 0.74 in the money and, though it caps our returns to $1.50 – it makes it a lot more likely that we get there!  
    • GOLD – On track.

    • HBI – Sold off a lot since early July.   Fortunately, we came in low so still in the green and earnings were a beat with revenues up so no reason to bail.
    • INTC – Fairly new and on track.
    • JO – While we can recover $3.20 from our 20 Sept $30 calls ($6,400), we should roll out to 20 March $28 ($6)/34 ($3) bull call spreads at $3 ($6,000) and for a $400 credit, we're now 2/3 in the money.  We're going to eventually sell the March $35 puts ($4.20) so we may as well do it now, selling 10 for $4,200 and we'll keep a stop on the Sept $35 puts, now $2.85, at $3.50 so our worst case is gaining $700 on the roll but, hopefully, they expire worthless and we get a double win.
    • KHC – Well, earnings didn't help on this one but we think the new CEO tanked the corner so he'd look good going forward (this one he can blame on his predecessor).   Not much to do but wait it out.

     

    • LB – Another retailer at the lows.  Earnings are on the 21st and we're aggressively long.
    • M – Another one in the dust.  Earnings are this evening.
    • MJ – This index took a dive as a lot of the pot companies didn't live up to high hopes but, long-term, it's a great way to play them as they eventually figure out how to turn a profit.  

    • MU – Still flying high and on track for us.
    • NAK – Had some excitement last week but can't get over $1.  
    • NLY – On track.
    • OIH – Not catching a break but I think we'll get back to at least $16 this year.

    • SEE – On track.
    • SIG – Ridiculously under-priced at just $700M at $13.40.  We can roll the 5 2021 $20 puts at $10.05 ($10,500) down to 10 of the 2021 $13 puts at $4.70 ($9,400) for net $1,100 but we originally collected $5,850 so still net $4,750 or net $8.25 per long.  On the long side, let's roll our 10 2021 $15 calls at $3.40 ($3,400) to 20 of the 2021 $13 ($4.10)/22.50 ($1.80) bull call spreads at $2.30 ($4,600) so spending just $1,200 more to move into a $19,000 spread that's at the money.  
    • SPWR – We should be able to get at least $18,000 from the $3/7 spread out of a possible $20,000 so no reason to wait this one out – let's close it.  The short puts aren't worth closing as we don't need the margin.  

    • T – Already at our goal.
    • UNG – So crazy low, good for a new trade.  Let's buy back the Jan $25 short calls.  
    • WPM – Been a money machine for 3 years for us but it's cyclical so let's cash in our 30 Jan $15 calls at $11.50 ($34,500) and buy back the 10 short Jan $20 puts at 0.35 ($350) and we'll sell 15 2021 $22.50 puts for $2.30 ($3,450) to balance out the short calls and, eventually, we will buy a cover on a pullback.  Nice $37,600 off the table, meanwhile – very good for a net $7,350 position.  

    So we dropped a lot of cash to the bottom line and lowered our overall long exposure.  I'm very happy with that adjustment.