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Will We Hold It Wednesday – Must Hold Line Edition

Wheeeee, this is fun!

Suddenly we're making a lot more money on the way down than we did on the way up on our Futures trades and that's not a good sign for the market.  We played the Dow (/YM) Futures and the Naturar Gas Futures (/NG) for a bounce in the morning and only bounced from 28,000 to 28,100 (up $500 per contract) before we stopped out at the opening bell and we quickly got our bearish crosses which allowed us to play the Dow (/YM) down from 28,000 to 27,000 for gains of $5,000 per contract at 27,000 – now that's a nice hedge!

Sadly, we're still in the index shorts as we haven't had a reason to  stop out as the weak bounce line on the Dow, for example, after a 2,000-point drop in two days, is 27,400 and we haven't gotten over that yet.  More importantly, as noted on our Big Chart, the Dow has failed it's 200-day moving average at 27,223 and, below that, we may be on the way to the -10% line at 24,750, which would be nice for our /YM shorts (another $20,000 per contract) but terrible for the markets and the US Economy – so we're not exactly hoping to make that much money.  

 

That's what the Must Hold lines are on our big chart, they signal the beginning of a bear market and we really need to stay on top of them or things are likely to get much worse indeed as we only capitulated and raised our Must Hold lines earlier this year.  Before that, we had been predicting a fall back to 2,850 on the S&P anyway so, on the whole, "everything is proceeding as I have foreseen".  

As in yesterday morning's PSW Report (except lower), we'll stop out of our shorts at 27,250 and, like yesterday, we can reshort if the indexes cross back under their low supports at 27,000 on the Dow (/YM), 3,100 on the S&P 500 (/ES), 8,800 on the Nasdaq (/NQ) and 1,565 on the Russell (/RTY).  We certainly need to see the Dow back over it's 200 dma and the Nasdaq has to clear 9,000 before I'd consider it bullish again.

The reason the markets fell so quickly was exactly what we had talked about most of the fall as I complained about the rally:  As soon as the volume came back, we found out there were simply not enough buyers out there at those silly prices and the sellers quickly had to capitulate in order to cash out there stocks – leading everyone to finally realize their stocks certainly aren't worth what they thought they were.  

Date Open High Low Close* Adj Close** Volume
Feb 25, 2020 323.94 324.61 311.69 312.65 312.65 217,834,900
Feb 24, 2020 323.14 333.56 321.24 322.42 322.42 161,088,400
Feb 21, 2020 335.47 335.81 332.58 333.48 333.48 113,788,200
Feb 20, 2020 337.74 338.64 333.68 336.95 336.95 74,163,400
Feb 19, 2020 337.79 339.08 337.48 338.34 338.34 48,814,700
Feb 18, 2020 336.51 337.67 335.21 336.73 336.73 57,226,200
Feb 14, 2020 337.51 337.73 336.20 337.60 337.60 64,582,200
Feb 13, 2020 335.86 338.12 335.56 337.06 337.06 54,501,900
Feb 12, 2020 336.83 337.65 336.43 337.42 337.42 43,992,700

Those are the daily volumes on the S&P ETF (SPY) as it fell 8% in four days.  We haven't been over 100M since August 7th and you have to go back to 2018 to see a 200M volume day (also not a good one!).  On quiet days, the Corporate Buybacks, ETF Transfers and Fed Money Printing are enough to give the market a very predictable push – espeically into the close but that volume of automated buying doesn't change when lots of people want to sell and, since there are the same, very small number, of real buyers out there – prices quickly collapse when sales volumes increase substantially.  

That's why people think their brokers are malfunctioning – the brokers simply aren't able to match brokers to buyers.  If you are a buyer – your broker seems to be working great but if you are trying to sell Tesla (TSLA) at $920 while it drops below $900, $880, $850, $800… your sell order might not be able to fill!

8:30 Update:  My mother just called me to tell me she bought me a mask in case I go out – I'm pretty sure we're hitting peak panic over the virus if that's the case but maybe not as my daughter slept on the streets of NY last night (28 degrees) to see Harry Styles on the Today Show and she wasn't wearing a mask.  

We'll be hearing from the Fed's Robert Kaplan at the open and we'll see if he's wearing a mask or if Neel Kashkari is at 1pm, after the 5-year note auction, which should do well with all the panic in the air.  State Street Investor Confidence should be interesting at 10am but tomorrow's Q4 GDP Revision will tell us very little and, strangely enough, the Q1 GDP still hasn't been revised lower by the Atlanta Fed in their GDP Now and that's going to be another market shoe to drop when they do finally downgrade it:

We're doing a little bit of put selling to establish positions in companies we REALLY want to own – even if the economy tanks but, other than that, we're very content to watch the carnage from the sidelines.  This is not an unjustified panic, this is a repricing of the markets to take into account the very real possibility – ALMOST PROBABILITY! – of a Global Recession caused by this virus spreading outside of China. 

I think the Central Banksters do have another save in them and we should hear nice noises from Kaplan and Kashkari today and from Evans tomorrow and Bullard on Friday so the save should be in but God help us if that doesn't work!

 

 


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  1. ,I don't know anyone who would have thought we would see a 27,000 handle on the Dow this week, let alone by Wednesday! 

    Another one for Trump's tweet – "Best 2 day correction ever on the Dow – almost 2000 points. I am sure the LameStream media will find negatives in that again. MAGA"


  2. VXX / Tangle – So far, one for one between the long VIX calls and short VXX calls (about 5-10% insurance cost). The idea again from Palotay is to mitigate the black swan scenario where the VIX would ramp up to 60 for example and create a margin issue. Based on my calculations, that would mean VXX at 32 which is in fact OK as we are selling 30 calls. And I have a lot of margin available. If the VIX goes to 100, VXX might jump to 40 and it starts to get uncomfortable. The VIX long calls would take care of about 1/3 of the margin needed so back to OK.

    And not sure about futures – do you mean VIX futures?


  3. It's webinar day! You may have seen the post already, if not… join Phil at 1pm here:

    https://attendee.gotowebinar.com/register/8027214841666837005

    Special guest Mike Anton from TradeExchange.com with special a demo, free trials and more. 


  4. Good Morning!


  5. Phil,

    Nice, Cramer does not even want to touch XOM….Contrarian in me says 2022 $50 Put sell for $6.75 and see what happens? 5 contracts to start……You did have a late day trade yesterday on XOM. Your thoughts appreciated. Thank you as always.


  6. Thoughts on M post earnings?


  7. Good morning!

    Trump has a news conference with the CDC at 6pm, most likely telling people not to panic as he already tweeted this:

    Donald J. Trump @realDonaldTrump

    Low Ratings Fake News MSDNC (Comcast) & @CNN
     are doing everything possible to make the Caronavirus look as bad as possible, including panicking markets, if possible. Likewise their incompetent Do Nothing Democrat comrades are all talk, no action. USA in great shape! 
    @CDCgov

    And the CDC tweeted this:

    There is currently no reported community spread of #COVID19 in the US. People should follow everyday measures to prevent the spread of respiratory viruses, such as staying home when sick and washing hands with soap and water. Stay informed; visit http://cdc.gov/COVID19.

    I was just telling my Mom the same thing though – there's certainly no current concern about the virus in the US but that's what Italy said last week as well.

    So it's about 2 weeks from infection to recovery but I'm still very concerned that almost 10% of the people who have outcomes DIE – that's not a good number!  50,000 active infected people (that they know of) is a lot of chances for things to go wrong and if 5,000 of those people die – I think my Mom and her friends will quickly use up the US supply of masks.  

    Jackie said she didn't see anyone in NY wearing a mask and she was on the subways and at Rockefeller Plaza and actually looking for them so this is nothing like panic yet but the fact that my Mom and her friends are worried means people watching the news are starting to get very concerned, which is why Trump needs to calm things down.  This is when it's a bad idea to have a President who lies an average of 10 times a day – usually they try to save their lies for calming the public…

    Oops, Dow hitting trouble at 27,500, /NQ at 9,000 (to be expected), /ES at 3,170 and /RTY harshly rejected at 1,590.  We might be in for another dip after all.

    27,000/StJ – I expected it yesterday, does that count?

    February 25th, 2020 at 11:28 am | (Unlocked) | Permalink |

    Ouch and down we go again! 

    Well, I have to get back to the conference but the 5% Rule goes both ways so 28,000 is the line we should use and 1.05 x 28,000 makes 29,400 on the button (there are no coincidences, only the 5% Rule) so that makes the bounce lines 280 points up or down from there so 27,720 is a strong retrace, 27,440 is the strong retrace, 27,160 is the strong bounce off the -10% line (and the 200 dma) and 26,880 is the weak bounce off the -10% line, which must be 26,600.  

    Since the 200 dma lines up (about) with the strong bounce line of a 10% drop – we need to take that area 27,223-27,160 very seriously.  It would be very bad to lose that.

    And Monday Morning:

    8:30 Update:  Oops, worse than I thought, there are now 833 cases in South Korea, that's up 602 since yesterday.  Sorry to keep circling back to this but this is pretty out of control and the Futures have already stopped out our longs and it looks like we're on the way to a 5% correction (3,230 on /ES, where we can play long for the next bounce but tight stops below) as the markets finally begin to digest the severity of the virus and its potential impact on the Global Economy.  If that fails to hold, this could be the first leg of a 10% correction.

    Certainly I didn't expect it in 2 days, which is why I'm still worried because of course a 10% correction gets a 2% weak bounce so even a "great" day today won't prove anything as the strong bounce line is 4% above where we finished yesterday now.  People just have so much trouble keeping perspective when things like this happen.

    The really important thing today is watching those 200 dmas.  RUT at the line (using IWM on StockCharts), which is 156 so that's the closest cross to keep an eye on.  If they lose it, that's 3 of 5 below and then it's only a matter of time before SPX and NDX join the others and that's still a 7.5% fall for NDX from here.

    Webinar – Please everyone attend and sign up for TradeExchange – we need people to try the Beta version and give feedback so PLEASE help us out!  Thanks.

    XOM/Jasu – Didn't I call that yesterday?  I think that's a good put sale.  

    M/CRS – Haven't actually looked yet.  Will soon.

    I'm encouraged by this note:

    CEO Jeff Gennette said Macy's digital arm is a $6 billion business that accounts for about one-quarter of the retailer's $24.5 billion in 2019 revenue.

    "Digital obviously for us is a big strength, a $6 billion business, and it's one that we fight above our weight in the digital business across all three of our brands," Gennette said. "We have about 6 million customers coming into our digital platforms every day, so lots of opportunity to take advantage of that traffic."

    Macy's has been seeing declining comparable sales at its stores for the last two quarters, and in response to an analyst question as to when the retailer might expect to see sales growth again, Gennette said that digital growth is the No. 1 of four initiatives that will achieve that.

    The other three were:

    • Its expanded loyalty program
    • The Backstage off-price retail concept
    • Destination businesses.

    The entire brick-and-mortar retail industry has faced strong headwinds in recent years not just from changing consumer behavior – traditional customers are no longer visiting malls, or at least not at historic rates, and many of the malls where Macy's stores are located are dead or dying – but also stiff competition from e-commerce giants like Amazon, and flagging tourism is taking a bite out of sales from foreign visitors. Off-price retail stores like TJ Maxx are also increasing their competition with traditional department stores like Macy's and gobbling up market share.

    Macy's recently announced a sweeping strategic plan that would move its headquarters – traditionally bifurcated between Cincinnati and New York City – to be consolidated in Manhattan and close 125 stores in weak or crowded markets.

    Macy's operates about 680 Macy's and Bloomingdale's department stores as well as 190 specialty stores under the Bloomingdale's The Outlet, Bluemercury and Macy's Backstage banners. It reported $24.5 billion in revenue in 2019.

    2nd part not so encouraging as the $6Bn in online sales isn't being added to the retail sales – they are essentially migrating.

    Year End 2nd Feb 2014 2015 2016 2017 2018 2019 TTM 2020E 2021E CAGR / Avg
    Total Revenue
    $m

    27,931 28,105 27,079 25,778 25,641 25,739 25,449 24,543 23,807 -1.62%
    Operating Profit
    $m

    2,678 2,783 2,039 1,315 1,769 1,617 1,405     -9.60%
    Net Profit
    $m

    1,486 1,526 1,072 619 1,566 1,108 964 855 766 -5.70%
    EPS Reported
    $

    3.86 4.22 3.22 1.99 3.20 3.50 3.04     -1.93%
    EPS Normalised
    $

    4.01 4.40 3.77 3.18 2.65 3.18 2.60 2.75 2.46 -4.53%
    EPS Growth
    %

    +16.0 +9.79 -14.4 -15.6 -16.7 +20.0 -18.3 -13.6 -10.7  
    PE Ratio
    x

              4.59 5.62 5.31 5.95  
    PEG
     

                       
    Profitability

    AMZN has 10x Ms sales ($280Bn) and profits ($11.5Bn) and it's all on-line but they are getting 20x M's $4.5Bn valuation.  I guess, if M can transition all their sales to on-line then they should be worth about $100Bn, right?  Possibly, that's their best move, just start dumping all the stores and becoming a massive on-line brand.  That's what SHLD should have done ages ago.


  8. Phil//  Any trade suggestion for airline stocks?  Thanks.


  9. Goal at 27,400 and 9,000 for weak bounces with 3,170 and 1,585 lined up.  If they fail, we can short the laggard but I'd go /NQ with tight stops over 9,000.


  10. DIS down to 127 possible parks closing is my short Jun put 110 and 100 still safe???


  11. Airlines/Rookie – I think ALK is a good buy down here at $59.  I think we came in around $55 last year and they are a very solid stock with a p/e of around 10 at $7.25Bn.  Like many stocks though, the virus is going to kill Q1 and maybe Q2 so I'm really not a big fan of jumping into things at the moment – just because they sold off – unless you REALLY are going in 1x and will be thrilled to DD at 20% off ($48) and again at 40% off ($36).  If that's your plan – I love them.

    At the moment, I see no pressing need to own airlines in the LTP when there are thousands of stocks that are on sale and many of them are in less precarious industries than ALK. 

    DAL is in the same boat at $51 – very tempting.

    DIS/Yodi – I was just talking to BNN last night (not the show, just a staff interview) about Iger stepping down and I said he was wanting to retire anyway and I could see how he doesn't want to be at the helm of this thing (to end his career) if they trace a massive outbreak to one of his parks or even a Disney/Marvel/Pixar movie that ends up being an epicenter in some theater (they are 40% of the box office).

    Imagine the stress of having to make these decisions.  Filming on Mission Impossible 7? was just halted in Italy due to virus concerns – that's going to happen a lot around the World.  These aren't just company decisions, Iger is making life and death decisions regarding his employees and his customers against the demands of the board to make another Billion Dollars.  

    My guess is he quit over Japan – that park and Paris should be shut down now – it's a foolish risk to keep them open.  On the other hand, parks are 40% of the company's revenues – despite the massive box office last year.  

    Still, in the long run, owning DIS at $110 is not a tragedy and you can roll them to longer, lower strikes but, when in doubt, buy back half is a very good rule right now.


  12. DIS Thanks for the extended comment Yes I would not like the be in the shoes of these Guys,

    cruseships plans all are effected. Very hard. Italy has become a problem. Possible Olympics in Tokio will be cancelled? In Germany a Kindergarden nurce and her husband are effected man is in very serious condition. In in one Hospital the head doctor has been submitted with the virus. It looks to me like the game with a rice corn on a chess board.


  13. Back to this chart:

    I know it's tempting to want to jump in as it's been so long since things were cheap but thousands of stocks are selling off and even if 90% of them bounce back fast, that still leaves us with hundreds of stocks (like SKT) that will be cheap for a while to choose from and our portfolios (other than Yodis) fill up with 20-40 stocks – so this is not a process that needs rushing. 

    The biggest thing that hurt people in 2008 was jumping in too soon when the market was "on sale" at 20% off, then 30% off, then 40% off…  Many stocks ended up losing 60-80% of their 2007 highs but, no matter how cheap AAPL got ($12) – it doesn't matter if you don't have the cash to take advantage.  

    While it's encouraging that Chinese infections are topping out, the rest of the World infections are sloping up and it took about 6 weeks for China to ramp up from the first 1,000 cases and we're clearly right about 6 weeks behind them so I'd want to give it a good 2 weeks before giving the all clear signal on this thing.

    Then you have to deal with the repercussions.  Q1 is a wipeout – especially in Asia but the supply chain issues will hit hard down the road and we have to wait until April to hear about Q1 earnings, except for companies that are issuing warnings.

    As I noted above, they haven't even adjusted the GDP projections yet and the Fed is a full 1% over what other Economists think it's going to be.

    As I've been saying since November – there's just too much uncertainty to risk a lot in this environment and the virus isn't even one of the things I was worried about at the time!  

    Nov 18th:  Monday Market Momentum – Still Going Up!

    Here was me on Money Talk on Nov 14th – very appropos of this week's action:


  14. So far, I'm right on track up 10% and then a correction:


  15. Bought some MLPQ, 2x Long Energy MLP ETN, which is currently yielding 26%.

    Does not come with a K=1.


  16. K-1


  17. Do we have a link to the Webinar or did I miss it? My daughter's freaking out about th virus. She's in NJ and right now I'm in Fla. She said not to get in plane to get to TCI. my next stop. Anyways there was one person in the plane DAL that had a face mask on which I read don't help anyways. My sister is not going to plays, symphony's or any movies here "just to be  safe." Sighhhh!


  18. The Lancet is confirming in an article that COVID-19 is a virus designed artificially from a bat virus and the SARS virus, " that requires an innumerable cycle of interactions in Nature to occur"

    In the article is the link to the original.

    How can this be handled with China? life losses, economic problems, sanitary expenses, etc.

    https://www.nextbigfuture.com/2020/02/coronavirus-is-bat-coronavirus-with-sars-receptor-and-likely-joined-in-a-lab.html



  19. TSLA's dead. The ETHE scam finally died. This market bounce pushes volatility down and allows us to patiently enter later dated downside options on indexes. Today is a great day!


  20. Phil, thoughts on CC, I have small position. Was thinking abou BCS 8/17 Jan 22 and selling 3 month straddles against it


  21. DIS long put options, IMO. Nothing is cheap yet. I think it'll be cheap in 18 months…


  22. It took 3 months to go up 10% and only 3 sessions to give it back – don't look for the correction to be over after 3 days of selling – that's why we watch our weak and strong bounce lines!  

    • Dow 29,500 to 26,550 is 10% and that's 2,950 so call it 600-point bounces to 27,150 (weak) and 27,750 (strong)

    • S&P 3,400 to 3,060 is 10% and that's 340 so 70-point bounces take us to 3,130 (weak) and 3,200 (strong) 

    • 9,700 to 8,730 is a 10% correction and that's 1,000 points so 200-point bounces to 8,900 (rounding, weak) and 9,100 (strong).

    • Russell 1,700 to 1,530 is a 10% correction and that's 170 points so call it 35-point bounces to 1,565 (weak) and 1,600 (strong).

    So we just need to take back AND HOLD (without breaking under) the strong bounce lines for 2 days and the correction is officially over.  So far, it's been 0 hours over the line and already people want to buy things?  

    Cruise ships/Yodi – Right, I forgot about those too.  Iger is smart – he has the potential to be in charge of so many disasters it is smart to get out now.  DIS has 4 ships sailing maybe 6 times a week so 300 chances a year to have an outbreak there.  They operate 12 parks in 6 countries so call that another 300 chances for disaster and 500,000 visitors per day across all 6 who stand on long lines and eat in crowded restaurants and touch all the same rides (and think of all the railings you touch!)….   It's like a disaster movie that writes itself! 

    I'm very concerned that they (World leaders) are, at the moment, simply trying not to panic people while they "figure something out" but we're possibly right at the cusp of a Global Pandemic that can send the entire World Economy into a recession. 

    If so, I'll be glad I'm cautions and, if not – there's always something to buy.

    MLPQ/Albo – That's interesting.  Certainly a nice sale.

    The investment seeks to provide two times leveraged long exposure to the compounded monthly performance of the Alerian MLP Infrastructure Index (the “index”). The index, comprising 22 energy infrastructure master limited partnerships, is a subset of the Alerian MLP Infrastructure Index. The index constituent securities earn the majority of their cash flow from the transportation, storage, and processing of energy commodities.

    Oil right on the $50 line, by the way:

    • EIA Petroleum Inventories: Crude +0.5M barrels vs. +2.0M consensus, +0.4M last week.
    • Gasoline -2.7M barrels vs. -2.2M consensus, -2.0M last week.
    • Distillates -2.1M barrels vs. -1.7M consensus, -0.6M last week.
    • Futures +0.24% to $50.02.

    How/Advill – It's a brave new world we're in.

    CC/Millard – Not on my radar at all. Nice, boring specialty chemical company but very erratic earnings though I can see why you'd be willing to take a chance as they should justify $2.7Bn at $16.25 pretty easily.  As with many though, Q1 will be a disaster so I wouldn't over-commit.

    Turning down a bit as the EU closes.  They actually ended flat though, but much improved off their lows.


  23. The Bug – a stat I have not seen anywhere is attack rate – the proportion of people exposed to the virus who develop symptoms. By this point, probably from Korea, we should be able to calculate that.
     


  24. Economy / Phil – I am sure that markets might react somewhat differently if we have someone sane and rational at the helm. This is really worst case scenario – a possible global pandemic and the leader of the free world contradicting his science team! Not exactly the sure hand that the markets are looking for.



  25. Trump tightens his grip on intelligence


  26. How Much Money Does the World Owe China?


  27. ALK – I'm assuming airlines get cut in half and some will go BK (as airlines seem to do every 10-15 years), when looking at a 12 to 18 month timeframe. Even a best case scenario of an immediately, and widely, available vaccine wouldn't stem current losses to date. Also, there's something to be said for how mentalities change. Lot's of folks who are about to make a price-performance decision might ask themselves "do we really need to fly anywhere?" 



  28. StJ – if you can't beat them, join them? Think of it as an investment in silver….  hahaha!

    As for me, I'm stocking up on some zinc. Much cheaper!


  29. Chinese virus;

    The military viruses normally have a vaccine available, it is not the case to have your own troops infected, but if they provide it then are accepting the virus design, the lack of controls and their responsibility with the world.

    If they have it they are allowing their own people to die to cover up this mess


  30. StJ – I was wondering why you protect your VXX call sale with a VIX long position and not just a VXX long call position?  So sell the VXX 30 calls and buy near term 50 calls for example instead of nearterm VIX futures?


  31. ALK/ BDC

    You are perfectly right, why to travel if I'm risking to be confined there or my own country, for 2-3 weeks risking job, business?

    I´m having a trip to Istambul in May with some friend getting all of us together, …what if, is the chat question now., so there must be thousands asking the same question


  32. Bug/Snow – Lots and lots of things we still don't know.  Bug spreads faster than knowledge.  

    Science/StJ – Big trouble tonight if the CDC doesn't tell everyone things are going to be great (again).  

    ALK/BDC – Yes and it will take a long time to see what the long-term effects are but everyone wants to buy things now, based on very limited information.

    Virus/Advill – Well it could be an attack from another country or it could be a means of addressing the issues of their aging population.  Pick your own conspiracy theory…

    Turkey/Advill – That's why conferences are being cancelled all over the place – too much risk for top management to go to these things.  


  33. Italy had virtually no cases a week ago. They currently have 374 with 12 dead, 19 serious, and only 1 recovered. This is not good.

     Economically, it is even worse. Major population centers are under quarantine. The incubation time is a minimum of to weeks, so quarantines need to last that long to have chance of effectiveness. That's two weeks, minimum, of no work, no tourism, no consumerism, nothing. It's a total shutdown.

    This market is perfectly priced for QE-forever (top 1 to 10% free cash gibe-away) combined with the rosiest forecasts of expanding consumerism. We're in this coronavirus cycle for 12-18 months. The mentality is shelter-in-place, conserve, hug loved ones and enjoy life which is precious. Bald, naked consumerism is not a part of that BTW. This market is toast.


  34. Attack rate/Phil – the problem is, people talk like you get sick if you get exposed. Not true of any disease.


  35. new hats for Turnip = MCEVGA

    Make Chinese Engineered Viruses Great Again*

    (* made in China still)


  36. HBI – Getting interesting again.  $13.07.  7.67 forward P/E and 8.15 trailing.  4.47% dividend. 






  37. Trump Hits Media on Coronavirus but Looks to Bolster Government’s Response



  38. Congress warns Pentagon not to move money to fund Trump wall









  39. VXX-VIX / Tangled – Palotay did the research but I think that you get much better bang for your buck with cheap VIX calls rather than VXX calls. Also, go back to my chart to see what VXX calls you should buy if you go this way. VXX at 50 would be VIX at 130 or so! For a more reasonable protection, you might need to buy a lower (and more expensive call). You can experiment for sure but I trust Palotay's research.


  40. If you look at the NYSE chart for the last 3 years, we started 2018 at 12,900! We are today at 13,050. That's a 1% gain if you had bought in the market then. We had big moves in 2019 but off that big correction…


  41. Phil / All / covid19 

    my wife is a school teacher in Manhattan and she had a briefing with the other heads of dpt yesterday about what the virus will mean for the PS system.  She said it was mostly worst case scenario but everyone was taking it seriously. 

    I also just received a letter from my 6 month old kids pediatrician – outlining their opinions on the virus and how they plan to handle it. 

    if these are calming measures or not remain to be seen but NYC is certainly bracing for impact. 

    Go Nicks. 


  42. Phil

    Would you please post some shorts trades on apple or should we use SQQQ

    Thanks


  43. I just did a good summary of why I'm still concerned in the webinar.  If you use the live Hopkins chart you'll see that in the past two weeks, daily global additional cases have gone from 100 to 200 to 300 to 400 per day while China has "calmed down" to 400 new cases per day but that's still a global 800 new cases per day with the rest of the World accelerating rapidly. 

    How is that a buy the dip premise?  We need to trade under the reality of the situation – not the BS spin we're about to get at 6pm.

    /RTY 1,550 at the moment – nasty!

    And what BDC said.  Sorry to be doom and gloom but reality is heading that way with our leaders putting their heads in the sand and, even more dangerously, you know if Trump has his "Mission Accomplished" delusional moment about the virus this evening – his whole Administration will move right into denial mode if things do get worse and that can lead to a total disaster in the US – all for the sake of Trump's ego…

    Attack rate/Snow – It seems to spread very like the common flu, which is alarming with a 20x mortality rate, don't you think?

    HBI/Stu – True because my Mom used to say you don't want to be taken to the hospital if you don't have clean underwear and the chance of being taken to the hospital is increasing so….

    That's a great investing premise – I wish I had a TV show!  cool

    1%/StJ – Good point.  I'm sure Trump will brag about it tonight.

    Russell is actually down over that time – I imagine the NYSE is as well so a very narrow "rally" based mainly on our tech leaders, which doesn't trickle down to the average American – even in jobs created.  

    NYC/Potter – Run by Democrats.  I'd be curious to see what middle America is doing?  

    AAPL/QC – I'd stick with SQQQ because it's not AAPL I don't believe in particularly, they are just the ones that usually hold SQQQ up so, if APPL falters, there's nothing to stop the rest of the over-priced nonsense from collapsing.

    As to a new hedge – I HATE chasing but, if you don't have any protection, SQQQ is still good as another 10% down will take them to $26.  Jan $20 calls are $5.30 and the June $24 calls are $2.55 so that's net $2.75 on the $4 spread so not a huge upside but the June $24 calls can be rolled to the Sept $30s ($2.55) or the Jan $40s ($2.55) so the idea is it is a very big hedge if SQQQ goes way up and you have a chance to sell more calls and roll if it stays flat or down.  A nice, flexible hedge.  You can pair it with short puts on something you REALLY want to own 20% below the current price like:

    • Buy 20 SQQQ Jan $20 calls for $5.30 ($10,600) 
    • Sell 20 SQQQ June $24 calls at $2.55 ($5,100) 
    • Sell 10 CSCO 2022 $35 puts for $3.15 ($3,150) 

    That's net $2,350 on the $8,000 spread but, as noted, can easily be rolled to a $20,000 spread or more so great return and CSCO is currently $42 so $35 is a 16.66% discount from here.  You can, of course, substitute any stock you REALLY want to own on the short put side.


  44. We're going to do about 180M on SPY today and, so far, not too much damage.  That's a sign things are calming down but it's possible that's because of Trump's 6pm conference and who knows what happens if he fails to reassure his fellow Americans in this time of crisis.  

    Image result for remain calm animated gif


  45. Speaking of all being well – I just got a "Severe Thunderstorm Warning" on the TV and I've never seen that before and we've been in some very nasty storms so I can't wait for this one but, if I suddenly go off-line – that's likely to be why…

    /NG diving back to $1.82, where we had a great entry earlier in the week on the old contract:


  46. VLO   someone sold 700 of the 2022 $55 puts.  Now about $6.00 or so. Not a bad entry, looking back on a long term chart


  47. VLO… I had an alert set to sell some 70s when it hit $73, but completely chickened out. Waiting more…


  48. Winston,  just wondering how your new strategy is working, re buying those protective puts 


  49. Trump officials try to ease concern on virus before remarks – BNN Bloomberg




  50. Things have headed lower since the close.


  51. If things take a turn for the worse in the U.S., you're going to see an explosion in online purchases and home delivery services.  In Japan, restaurant patronage has been cut in half, but food delivery has more than doubled.  Every business that has an online and delivery presence is going to be super busy and those that don't better hope they have enough cash to ride out a rough period.


  52. RCL from 130 to 81, wowzer. I cleared out of the Jan21 90 put a little too soon!

    Take out / delivered food might be made and delivered by sick people. So maybe not a great option. The best option is to stock up the pantry and also to have some prepper reserve. I was thinking about UBER/LYFT short but perhaps some people would want to get around in a one-person ride as opposed to public transportation, so there's an argument either way on stuff like this.


  53. TSLA March 400 puts are only a buck. I'll keep an eye on that one tomorrow morning


  54. Trump offloads responsibility for the virus prep to Pence. If stuff goes bad, Pence gets canned off the ticket. It is interesting Bernie has traded down and Biden is up over the last couple of days. Biden appears to be a more stable government head figure if Stuff Gets Bad.

    However, Trump is hosed, IMO. His nasty, derogatory insults on twitter might work when everything is peachy, but not when 10's or 100's of million of people depend acutely on a highly competent and functional government during a crises. On Predictit.org you can buy Trump No (for re-election) for 43 cents (max $850 "investment" yields $1976 before fees). That's starting to look like a good bet.


  55. BDC? The delivery services are taking some pretty strict measures to at least ensure the appearance of prevention.  Like delivery people wearing masks, goggles, gloves and carrying around disinfectant spray and spraying themselves down after every delivery.  There is also a policy of no direct contact, so placing the delivery in a designated area, alerting the customer and having the customer come pick up the delivery later. 

    IMO this is much safer, much more controllable option than squeezing into a crowded restaurant and spending an hour or two eating next to people not wearing any masks being served food by chefs who are also in the same facility with said customers.    Of course stocking up and cooking is the safest option, but lets face it — some people can't or don't want to cook.


  56. This is in China


  57. Dow futures down another 300 points! 


  58. StockBern – new strategy – let's just say I'm happy I implemented this strategy across most of my portfolio.

    The fact that it was implemented some while ago, then there is a  distance between the pre-corona levels and the strikes that I bought the synthetic stock at. But in terms of protection and flexibility it's working well and should let me take advantage of lower prices when all this blows over. Also the selling of front month short calls helped to reduce the cost of the insurance. But that strategy is over for a while until things stabilize.

    In the spirit of trying things I also had a small number of long DIA and SPY put spreads for the March expiration, which I'd forgotten about as they were far out of the money  last week, but now are suddenly moving towards ITM.

    The strategy works for me – but certainly I've nothing against the classic PSW Artificial/Buy-Write as it  has a defined risk approach as long as you're willing to own the stock at the short LEAP strike.

    But I still need to up my game to manage the downturns better – but the speed and veracity has probably caught a few people out.




  59. Gunman kills 5 at Milwaukee brewery before taking own life