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Valentine’s Day Virus – Dow has 30,000 in Site

Happy Valentine's Day!

64,456 people are now infected, 1,384 are dead, 7,155 (11.1%) have recovered in the month since this virus began.  There are over 8,000 people hospitalized in "serious" condition, that's almost 15% of those infected – especially if you include the dead, who were probably considered "serious" at some point as well.  Still, the markets are generally ignoring not only the actual virus but the effects it is having on the global economy

The Nasdaq is, in fact, 5% higher than it was before the virus oubreak and 7.5% higher than it was when it sold off on that news.  I guess you can say it simply resumed it's climb, now up almost 20% since December because, you know, that's how the stock market works now.

Unfortunately, that's also how viruses work and I'm not going to bore you with any doom and gloom stuff other than to point out that we are heading into a 3-day weekend in the US (President's Day on Monday) and, even if we are only adding 4,000 new cases per day, that means we'll be at about 80,000 on Tuesday and around 100,000 by next Friday so I'm still very concerned about next week – as people tend to freak out about 6-digit numbers.  

Last Friday, there were 31,523 (1/2) infected, 638 (1/2) dead and 30 in Singapore (1/2), 25 in Thailand (.75), 25 in Hong Kong (1/2), 25 in Japan (.86) and 24 in South Korea (.86).  That's what we have to watch closely as Singapore and Hong Kong are a huge worry with a 100% gain in a week and, of course, you can see how 100,000 by next Friday is OPTIMISTIC as we're projecting a 50% slowdown from the current pace of the spread.  

Even as the virus is mostly contained to Japan, the economic impact is already spreading across the globe with Germany reporting ZERO (0) GDP growth in Q4 and, due to the virus, possible NEGATIVE GDP in Q1 – pretty much a recession with 2 non-positive quarters.  

"The impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing sector as it at least temporarily disrupts supply chains," Carsten Brzeski, chief German economist at ING, told clients Friday. "Stagnation, with a risk of a technical recession, currently looks like the only dish served," he continued.

The big picture: The world's fourth largest economy, and Europe's biggest, had a feeble 2019 amid weak global auto sales, the US-China trade conflict and the prospect of a disorderly Brexit. The spread of the new coronavirus means that it won't start off 2020 in better shape.  Similar fears spring up when looking elsewhere in Europe. GDP for the eurozone grew by just 0.1% in the last three months of 2019, according to data published this morning.

Needless to say we're heading into the weekend with our index hedges.  In the Futures, we had a chance to short the Dow (/YM) at 29,500 yesterday, along with 3,376 on the S&P 500 (/ES), 9,615 on the Nasdaq (/NQ) and 1,689 on the Russell (/RTY) and all the indexes are still above our entry except the Dow this morning – so I still like those shorts for weekend protection – just in case…

Have a great weekend, 

- Phil


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  1. Good Morning!

  2. BTAI – Major squeeze in pre-market.  Shorted some at 41.50.   Risking 2 points on a scalp trade.  

    Very speculative to say the least !

  3. This Is How Scandinavia Got Great

  4. Happy Valentine's Day!

    I love you all very much but not as much as I love my daughter, who is also celebrating her 18th birthday.

    I'm off to meet her up in Orlando and I'll try to touch base later but no promises as it's going to be hectic today.

    I have 2 of each of the above hedges and I'll sleep better this weekend knowing they are there.  

    SQQQ and FXP in the STP still make nice hedges if you need them:

    FXP Short Put 2020 18-SEP 50.00 PUT [FXP @ $56.10 $0.00] -5 1/24/2020 (217) $-2,065 $4.13 $-0.38 $-4.13     $3.75 $0.00 $190 9.2% $-1,875
    FXP Long Call 2020 19-JUN 52.00 CALL [FXP @ $56.10 $0.00] 20 1/23/2020 (126) $15,000 $7.50 $-0.65     $6.85 $0.00 $-1,300 -8.7% $13,700
    FXP Short Call 2020 19-JUN 65.00 CALL [FXP @ $56.10 $0.00] -20 1/23/2020 (126) $-5,000 $2.50 $-0.21     $2.29 $0.00 $420 8.4% $-4,580
    SQQQ Short Put 2021 15-JAN 20.00 PUT [SQQQ @ $16.62 $0.00] -15 1/17/2020 (336) $-6,900 $4.60 $1.70 $0.00     $6.30 $0.00 $-2,550 -37.0% $-9,450
    SQQQ Short Call 2020 19-JUN 20.00 CALL [SQQQ @ $16.62 $0.00] -40 1/17/2020 (126) $-9,200 $2.30 $-1.08     $1.23 $0.00 $4,300 46.7% $-4,900
    SQQQ Long Call 2021 15-JAN 15.00 CALL [SQQQ @ $16.62 $0.00] 60 2/10/2020 (336) $25,500 $4.25 $-0.30     $3.95 $0.00 $-1,800 -7.1% $23,700

    Monday the markets are closed but not the rest of the World, and Tuesday I'll still be in Orlando in the AM so I'll do a post there and drive back for the afternoon.

    Have a great weekend, 

    - Phil

  5. Covered 1/2 btai AT 36. Stops down to 40.

  6. Closing some long coffee here – good discussion about that one on the webinar. Quick profit, thanks Phil!

  7. Stopped out of second 1/2 at 40.

  8. Have a great weekend Phil. I remember when one of them was born as you had to run off to the hospital. They definately grow up too fast! Thanks for all you do. Very much appreciated!

  9. SPCE – Still running.  Covered 1/3 with some July 32 calls for $4.20, a huge premium.

  10. Happy Birthday to Jackie! :)


    Enjoy your weekend Phil!

  11. 18th birthday!?!?!  Man I feel old…

    Much love back for all that you do Phil, much appreciated!

  12. Albo – be careful with those CMG 1000 calls, the restaurant's PE is only 74.

    /end sarcasm

  13. MAC

    Added some shares of MAC to my spec income portfolio.  Stock is yielding 13% and goes ex divd on the 20th by .75. 

    Earlier this week SPG acquired TCO, a Class A mall operator, similar to MAC. 

    . In fact, SPG attempted to buy MAC in 2015 for almost $100 per share.

    Barron's pointed out that, if MAC were acquired for a similar 15x FFO that SPG is paying for TCO, then MAC shares would be worth approx. $60.

  14. BDC – Haven't found the courage yet ! 

    Maybe at an 80 PE.

  15. /PA – fell off a cliff near the open, looking for a sign that it's going to reverse and get back on the uptrend. 

    /NQ – long one at 9622.75 with a 10 point trailing stop, looking for a place to reverse the trade going into the weekend but riding it up as long as it lasts.

    /CL – this rally to $52+ seems like it's not supported by reality. Anyone have any thoughts on oil? Looks like support lines are $50.50 and $49.50 and resistance is around $52 so maybe a good place to short?

  16. /NQ – stopped out already

  17. There is probably some money to be made selling TSLA weekly calls if you have the margin and the temperament!

  18. stjeanluc/TSLA – which TSLA weekly call would be good to write? Plus, there is one less trading day next week.

  19. vkat Try the TSLA Feb 21 Vertical credit 820/825 for 1.72 Limited loss of 656.00 and PM marging of 540.00

  20. this is on 2 options just to mention

  21. Happy Birthday to your baby Phil, enjoy the time!!

  22. put an order for 10 of the TSLA Feb 21 825/830 vertical for $1.75 credit, will wait and see if it gets filled

  23. dawgydaddy  when im scalping NQ I watch apple stock  today when Apple went up to 325.50  that is were I shorted  NQ at about  9635   got out at 9620 after enduring alot of gyrations. out now unless it goes back to 3640

  24. motox daught 1.75 will fill more 1.55 but why go straight for 10 your loss is directly 3,500 and your margin goes up to 3000???? always test any MOMo first!!! This for my is just a little gamble but no trading.

  25. Motox – I agree with Yodi.  You're receiving $1.75, which is the most you could make.  But you're risking $3.25.  I don't think that would be a good move.

  26. Thanks for the advice yodi, I have sold a lot of positions lately so I don't have any concerns around margin, this would be just for fun and to have something short through the weekend

  27. Yodi/TSLA – Thanks for the trade idea.

  28. Thanks albo, good point.

  29. albo-Where is SPCE getting money to fund this endeavor? Shows no income and hardly any short interest. Looking to get in as there is no peer comparison. 

  30. Pirate – I have no idea !  It is a complete mystery stock.  They don't even answer the phone that is listed. I'm just relying on the fact that it is Richard Branson and a bunch of space heavyweights.

    Not a lot to go on huh ?  BTW, it still looks to me that those warrants can be called at any time to buy the the stock at $11.50 with a max cap of $18 on the stock.  The way they're trading would seem to refute that.

  31. Thanks. Reminds me of TSLA which I got into early and made great bucks for years. Same with Crox, etsy etc. My kids would ask for money and I'd say "wait." I have to make this tsla payoff first.

  32. Thank you for the good wishes.

    Looks like today is well in hand, nice steady selling.  We will see what kind of bounce we get into the close but I feel better with the hedges on than off for the weekend. 

  33. To anybody 

    if TSLA is going to offer shares at $767 why would anyone buy the stock for more than that?

  34. TSLA / vkat – I wouldn't but given the current moves, I would look far in the strikes. If you make 1% a week, it adds up! You can sell the Feb 28 weekly 1000 calls for $300 against $8000 of regular margin. That's 3.75% for 2 weeks. Earlier, next week's 1000 traded over $1 so more than 1% for the week.

    Disclaimer, I would not do it myself as it's not really my cup of tea! But if you got tons of free margin and are not afraid to have to roll… 

  35. ‘I Cannot Remain Silent’

  36. How Private Equity Ruined a Beloved Grocery Chain

  37. Daytona 500 postponed due to rain

  38. TSLA – If the $767 shares are oversubscribed, there's no chance for retail investors to get any at that price. Not that Tesla is worth $767….

    /NQ – short two at average 9649.75. The weekend hedge didn't work out but maybe I can get back after DD. Got a trailing stop in so it doesn't get me too badly. 

  39. /NG short one at $1.930

  40. Well this should make for a fun day tomorrow 

    Apple warns it will miss quarterly revenue target due to effects of coronavirus

  41. Wow, who could have seen that coming?   cool

    it is amazing how you have to slap Investors in the face to get them to acknowledge some thing that is so obviously going to happen.  

  42. Good morning!

    I'm actually home already – decided it was silly to sleep in Orlando and head home in the middle of the day today as my kids had early flights anyway and I wouldn't see them for more than a few minutes this morning, so I drove home last night and, other than being tired – I'm back on track…

    Nice little sell-off this morning, good for our index shorts.  I'd say stops should be 3,370, 29,275, 9,575 and 1,683.5 though it's kind of likely we do get a push back into the open so maybe take 1/2 off the table at 29,200, 3,360, 9,550 and 1,680 but then I'd add back if we do fail those lines.  RUT is the laggard at the moment.

    We went from 64,456, 1,384 and 7,115 Friday morning to 73,336, 1,874, 13,054 so that's 13.7% more infected (that ship is a nightmare), 35.4% more dead (we knew that was coming) and 83.4% more recovered – there's a bright spot but almost 2,000 dead is certainly not.  SARS killed only 744 in a much longer period of time.  

    At some point, investors are going to start taking this seriously, I think.  130+ S&P 500 companies have mentioned Coronavirus as affecting them somehow but only 40 guided down over the issue but now AAPL is one of them so it's making things interesting.

    I'm also concerned BECAUSE I was right and it does seem like they re-classified 15,000 people as infected to dilute the huge amount of dead they had to add to the count.  Even with that effort, we're now at a 2.5% death rate.  

    The other thing we really have to watch is whether the virus is vectoring elsewhere:

    Place                        # on 2/12          # today       % change 

    Cruise Ship               175                    454              159%   

    Singapore                  50                      77                 44%

    Hong Kong                50                      61                 22%

    Thailand                    33                      35                   6%

    South Korea              28                     31                  11% 

    Japan                        28                     66                 135%

    Malaysia                   18                     22                   22%

    Taiwan                      18                     22                   22%

    Germany                  16                     16                     0%

    Australia                   15                     15                     0%

    Vietnam                    15                    16                      7%

    US                            14                     15                     7%

    Macau                      10                     10                      0%

    So mostly the viral spread is in-line but Japan is a concern now – we used to be able to read all the letters in Tokyo but now 3/5 covered in red!  

    A lot of countries are putting in preventive measures and that's good, but not so good for the economy as they are preventing travel and trade.  A lot of major spring conferences are shutting down – also bad for commerce.

    I think the Cannabis Capital Conference is still on – I'm heading to that on Monday in Miami.