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Federally Fueled Friday – Fed Buys a Rally for $1.5Tn – Will it Last?

After finishing down 2,000 (10%) points on the Dow and 260 (9.55%) on the S&P, this morning the Futures are limit up.

While that's exasperatiing – it can also be very profitable, especially as we played the 2,500 line bullish on the S&P 500 Futures (/ES) and they are now up over $4,000 per contract (you're welcome!) as /ES gains over 100 points in the Futures, hitting the 5% circuit breakers pre-market but there are no upside breakers in regular trading so we'll see how much of that 10% we can recovery now that stimulus talk is beginning to overwhelm virus talk – for today, at least.

We also have our long position on Oil (/CL) which is up another $1,600 per contract this morning as Oil crosses back over $33 and we've been playing those since $30 and already took half off at $32.50 so we're very comfortable letting those ride a bit further with stops back at $32.50 for now.  

While $1.5Tn is nice, it may not be enough to keep things going as we're waiting to see what kind of other measures the Government is going to take and it needs to be something good into the weekend or we might sell back off into the close.  We expected this, that's why we went long on 10 new positions during yesterday's carnage (see yesterday morning's PSW Report) and why we took the Futures longs but nothing has really changed and what we really need is a well-coordinated response to the virus that restores long-term confidence – that is worth more than any rate cut but, for this Government – it's a very tall order indeed.  

Still, it's nice to take a break from all the down days and we've dropped 30% from the top which means, just to get a weak bounce, we need a 6% gain so 5% in the Futures is certainly not enough to get excited about – keep that in mind when people are talking about a 1,100-point (5%) rally in the Dow with bated breath.  

Image result for joker money burning gifPouring more money on the fire is not going to make the virus go away and won't dampen the economic impact of the virus.  It's like giving everyone on the Titanic one Million Dollars and a bucket and claiming you "saved" them.  It's what people who aren't actually able to fix things do to buy time (and votes) but it accomplishes nothing in the end – we need to do better!

So we will sit back today and see what kind of bounce we get from the Fed's action and whatever BS the Government spins out today but none of it matters – even if we move up over 10% to the Strong Bounce line because that then brings us into the weekend, where things could get worse or better – it's a coin flip.  So we'll have to maintain our hedges, no matter how great the rally is going but, fortunately, we added $70,000 worth of longs yesterday that should be in very nice shape, which will offset the losses on our hedges (so we sort of hedged our hedges).

On the virus front, Global infections have jumped overnight by 7,000, which is more than there were in the World TOTAL at the end of January.  Even worse, that's out of 48,000 that were outside of China so a 14.5% jump in less than 24 hours indicates we're nowhere near under control and THAT is what the underlying problem is – not whether the Fed Funds Rate is 0.75% or 0.25% – has it impacted your life since they dropped it last week?  No?  Well – then you see the problem…

We're going to cross 5,000 deaths over the weekend too and possibly 2,000 infections in the US - more numbers that can put people into a panic.  

It's going to be another interesting day in the markets.

Have a great weekend, 

- Phil

 


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  1. Good Morning!


  2. Maybe time to switch to the old lines! Nasdaq shows how narrow the original rally was! NYSE is more than 10% below where it was when Trump took office. That's the broader measure of the market, not the the 10 biggest companies in the world. Most of them are monopolistic (ore close) anyway!


  3. And Trudeau's wife got the virus in the UK but flight from there are OK! UK response has not been the best either. But there are Trump properties there.


  4. Things are getting relatively cheap on a P/E basis – DIS (15), AAPL (19), T (16), AMZN (72?), IBM (9.5). But I am a little worried about the E part in the equation this quarter and next! Parks closed for Disney, no sports to talk about on ESPN! I guess people will subscribe to Disney+! Netflix should do well I guess.


  5. I am wondering if DIS will pay the park employees during the closure! They certainly have the cash!


  6. Phil can you offer an opinion on ET at these prices (which are not as good as yesterdays prices)?


  7. Is $10k invested in SPY the same as investing in 10000/50 ES futures contracts?


  8. DIS- report on local news station last night mentioned DIS will continue pay to employees during shutdown. However, lots of peripheral businesses will get hurt. 


  9. We are going to need bailouts pstas!


  10. Phil,

    On your ES futures play, that you went long (at 2500), did you hold overnight or did you get out with a tight stop and then re-enter when they got back over 2500?  At one point ES was as low as 2380!


  11. Tangled: SPY/Futures: The math you're doing gives you how many contracts you would need to wipe out your entire investment with a 1 point move in /ES – So definitely not the same. 


  12. Good morning!

    We're off to the races and the horses are being held at the gate.  We did exactly hit GS's -15% line so I guess someone is hitting the buy button this morning – it's just a question of how many sellers are left.  

    Volume yesterday was huge:

    Date Open High Low Close* Adj Close** Volume
    Mar 13, 2020 - - - - - -
    Mar 12, 2020 256.00 266.66 247.68 248.11 248.11 390,215,100
    Mar 11, 2020 280.70 281.94 270.88 274.36 274.36 255,316,300
    Mar 10, 2020 284.64 288.52 273.50 288.42 288.42 276,444,100
    Mar 09, 2020 275.30 284.19 273.45 274.23 274.23 309,417,300
    Mar 06, 2020 293.15 298.78 290.23 297.46 297.46 228,667,200
    Mar 05, 2020 304.98 308.47 300.01 302.46 302.46 186,366,800
    Mar 04, 2020 306.12 313.10 303.33 312.86 312.86 176,613,400
    Mar 03, 2020 309.50 313.84 297.57 300.24 300.24 300,139,100
    Mar 02, 2020 298.21 309.16 294.46 309.09 309.09 238,703,600
    Feb 28, 2020 288.70 297.89 285.54 296.26 296.26 385,764,000
    Feb 27, 2020 305.46 311.56 297.51 297.51 297.51 284,353,500
    Feb 26, 2020 314.18 318.11 310.70 311.50 311.50 194,773,800
    Feb 25, 2020 323.94 324.61 311.69 312.65 312.65 218,913,200
    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

    Unless volume is huge on the way back up, this move will be very suspect.  

    Big Chart – As StJ notes, the real indexes (NYSE and RUT) that are hard to manipulate are actually down over 3 years, Nas still has a long way to fall if things turn sour.

    PE/StJ – This is like 2008, those earnings estimates are in fantasy land.  40% of Disney's revenues come from the parks and they'll lose 10% of that due to closures, minimum.  If they can't cut costs to keep up then could know off about 30% of the bottom line ($3Bn).  Movies not good either but at least they can be delayed and made up later. 

    I hope DIS pays the workers as that's my Nephew and his girlfriend.  

    ET/Tangled – Very cheap and a good deal at this price ($16Bn) with $3.5Bn in earnings last year.  Their dividend is $1.22 and they should be able to service it so like 17%!    They are already in our Dividend Portfolio.

    SPY/Tangled – On the whole, you get about the same bang for your margin buck in SPY or the Futures but the Futures have less friction cost, which is why I prefer them for short-term trades.  Not sure what you mean by 10,000/50 ES Futures as that seems extremely large but I think you mean $10,000 worth of $50 per point /ES contracts but it's the margin that matters and /ES contracts are $10,000 in margin (maybe that's what you meant?) so let's say you buy one /ES long at 2,600 and it goes up 10% to 2,860 and you make $13,000 vs buying 4 SPY April 260 calls at $25 ($10,000) and SPY goes to $290 and, since the $230s are now $45, you would make $8,000 so less and that's because the premiums are much higher than usual which is again, why I'm playing the Futures during this chaos and not the indexes.  

    DIS/Pstas – Total disaster for Orlando.  Not sure if Universal is closed yet but that city can be killed if those parks are off-line for a month.

    /ES/Pg – I should have stopped out but I went out for dinner and it was already too far down by the time I came back so I just left them – figured I'd DD in the morning but then it had popped too much to chase.  All worked out, fortunately.  Stop is now 2,600.  

    /CL stopped out at $33, still in /SI at $16.33 avg on 4 contracts (now $15.70)

    Remember, this is just the weak bounce line (up 6% – 20% of a 30% drop) – NOTHING to be excited about – especially as it's coming due to more stimulus.  


  13. /es futures. One contract controls 50x whatever the spot price is in notional value. 
     

    http://tastytradenetwork.squarespace.com/tt/blog/introduction-to-equity-index-futures


  14. If only going to trade USO or ET which would you choose?


  15. Mnuchin is talking about "some means of delivering liquidity to hard-working Americans" – do you think this guy has ever met a hard-working American?  Do you think they said "Gosh, Mr Mnuchin, it would sure help me and the Mrs if I had a bit more liquidity"?  That's why the market is tanking again, Mnuchin sounds and looks like an alien impersonating a human when he talks and the BS he's spouting does not make it sounds like the Government has any actual plan.  

    /ES/Palotay – Hence $50 per point, per contract. 

    All stopped out already – thanks Steve!  

    Failed at the strong bounce lines is the story that matters – and that's from the low spike (2,400), not the close, where the strong bounce line is really only the weak bounce line (same 100 points but from 2,500).  Either way, 2,650 is the key line to watch – it's the strong bounce off the spike down and the weak bounce off the close.

    VIX is bouncing too – thanks Steve! 

    Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin came up short of agreement Thursday night on a sweeping aid package for Americans affected by the coronavirus, although the two sides hope to reach a deal by Friday morning.

    "We have, or are near, to an agreement, subject to the exchange of paper. We hope to have an announcement tomorrow," Pelosi told reporters following a Democratic leadership meeting.

    This is a lot like 2008 where the GOP blew up TARP the first time the Dems proposed it and the market dove for a week until they came back to the table.  

    Only/Tangled – ET for sure as they have an actual business that makes money while guessing the price of oil is simply a roulette game.  


  16. Cramer with Mnuchin:


  17. Good time to remind you of Cramer's previous assurances during a crisis:


  18. Mnuchin / Phil – Dems are pushing for paid leave, free testing and unemployment help and Mnuching is probably like – but what about tax cuts for corporations and tax exemptions for capital gains to favor investment!

    These guys were talking about cutting spending in 2009 because they were worried about the deficits in our worst (at the time) financial crisis. They are still kicking people off food stamps and have to be dragged along for the free testing. And of course, get rid of Obamacare. They have no clue how the average American lives! 


  19. Situations like these expose how weak the structure of financials are. How in the world can a stock market bring down the G-damn financial system in a matter of days, again? The stock market has become a conduit for wall street to suck the life out of main street.



  20. Dow up mainly on INTC and BA.   Phil you da man


  21. Phil what are the chances of Macys being bankrupt (or below $5) by 2022


  22. Bio, looks like the Fed is going to need a bigger nuke.
     


  23. Final ET thoughts – My concern on them is oil stays low or even lower so they make less, price war craters US shale industry which I assume is a big customer, they can't service their debt.  Your thoughts?





  24. Margins/Bert (from yesterday) – That's crazy but yes, it turns out it was chewing up a lot of buying power.  Back to options I guess.  It's funny though as these margin increases have the net effect of forcing small investors to take losses near the bottom and then prevent them from taking part in the recovery.  Once the market is overpriced again – then they lower margins and let the small investors overpay for contracts.  You'd almost think it was designed that way to benefit the Top 1%….

    Financials/Kustomz – Because it's all just a giant house of cards that was empty inside and it only takes a slight breeze to knock the whole thing down as it was built up with little or no foundation.   The market shot up from 2,165 in Nov of 2016 to 2,850 in early 2018 on tax cuts and deregulation and then, when we were still at 2,850 last summer, the Fed stepped in and decided we needed to keep the rally going and Trump declared the Trade War over – even though we are still charging the American People $70Bn a year for Chinese goods they buy.  Meanwhile, no one seemed to notice that, other than what they saved in Taxes, American Corporations were not making a penny more than they were in 2016 yet the market was up about 50% in the greatest multiple expansion in history.  

    The market was thinly traded, led by a very small number of stocks, the Dow had been manipulated to make it look like it was performing 30% better than it actually was and Nasdaq multiples were almost as insane as they were during the dot com boom.  It was a bubble – it's not surprising that it burst.  What was really surprising was how long it took to burst.

    And what BDC posted! 

    Dow/Tangled – Good for the moment but there's are reason we wanted to net in 30% below the current prices.  

    Bigger Nuke/Kustomz – I have a suggestion.

    Image result for trump riding nuke animated gif

    Image result for trump riding nuke animated gif

    ET/Tangled – Of course it's a risk, that's why they are so cheap but ET transports /NG, they don't sell it and the demand isn't going to change much so the usage of the pipelines won't change much.  These low prices will cut back production which will raise prices again at some point and ET will simply transport /NG for the survivors.  There may be disruption so it's not something you should look at for quick gains but, long-term, it's a solid entry.

    Dow barely up now.


  25. I have the feeling that this session is not going to end well! Spot VIX up to 76 again – that's not calm and collected territory!


  26. ET – I'm looking at selling the Jan 21 $5 puts for about $1.50. 0.28 more than you'll get from the dividend and worst case is owning them at $3.50


  27. In the STP, we added the $60,000 QQQ spread which is already net $30,000 ($22,000 to start not counting short AAPL puts) but we should take advantage of the pop back over $30 to move the short Jan $25s:

    SQQQ Short Put 2021 15-JAN 20.00 PUT [SQQQ @ $30.58 $-1.69] -15 1/17/2020 (308) $-6,900 $4.60 $0.05 $-49.07     $4.65 - $-75 -1.1% $-6,975
    SQQQ Short Call 2021 15-JAN 30.00 CALL [SQQQ @ $30.58 $-1.69] -40 3/6/2020 (308) $-24,000 $6.00 $6.50     $12.50 $-0.40 $-26,000 -108.3% $-50,000
    SQQQ Long Call 2021 15-JAN 25.00 CALL [SQQQ @ $30.58 $-1.69] 80 3/9/2020 (308) $80,000 $10.00 $3.05     $13.05 $-0.75 $24,400 30.5% $104,400
    SQQQ Short Call 2021 15-JAN 35.00 CALL [SQQQ @ $30.58 $-1.69] -80 3/9/2020 (308) $-60,000 $7.50 $3.45     $10.95 $-0.55 $-27,600 -46.0% $-87,600

    Let's roll our 40 short Jan $30 calls at $11.30 ($10 premium – $45,200) to 50 short April $32 calls at $8 ($40,000 – all premium) and roll the Jan $25 calls at $13.50 to the Jan $20s at $15 (EP too) and add 20 more Jan $20/35 spreads to make 100 of each ($150,000) covered with 50 short calls.  

    As the STP is now $220,000 – even if the LTP goes to $0, another $150,000 would bring us to $370,000 to put back in the $500,000 LTP if things get worse.  

    Remember, that's what I said about these adjustments, they are essentially taking one step at a time.  First we cashed in our winning SQQQ longs, then we stopped out some of the short calls and added more long spreads and now that the weakness is continuing, we're expanding the long spreads (cheaply due to the high VIX) and taking advantage of the high volatility to sell more premium.  

    Of course, before we did this, we went long another $70,000 in the LTP and those profits will cover the moves we're making today if the market comes back on us and hurts the STP.

    Image result for balance animated gif

    "Better learn balance. Balance is key. Balance good, trading good. Everything good. Balance bad, better pack up, go home. Understand?"

     "Lesson not just trading only. Lesson for whole life. Whole life have a balance. Everything be better."- Mr. Miyagi

    Image result for mr miyagi cartoon


  28. And, by the way, this is how the STP ended up being $800,000 last time, we made moves like this when the market dipped and then we hit a 5% Rule Bottom and cashed out but then the LTP recovered before we needed to transfer the money (happened a few times) so we ended up just accumulating a boat-load of cash in the STP and then, because we had so much cash – we were able to make some fun trades like shorting NFLX and BKNG and TSLA that also made a ton of money.  


  29. I went in 1700 sh of GBTC.

    I BELIEVE hahaha (that's never a good sign).

    But it could snap back 30% so…..

    And remember when the weird, tiny bitcoin code was actually released, the Creator said:

    "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"


  30. Phil what are your thoughts on GLD here? safe? not safe?


  31. Phil interesting question. I did not see any comments.

    coulter531
    March 13th, 2020 at 11:04 am | Permalink    | Tweet thisIgnore this user    

    Phil what are the chances of Macys being bankrupt (or below $5) by 2022


  32. https://www.bloomberg.com/news/articles/2020-03-10/coronavirus-conference-gets-canceled-because-of-coronavirus

    Huh ?

    C'mon guys get into hazmat suits and re-schedule the conference.


  33. IMO, Macy BK is 100%


  34. looks like rolling TSLA 2021 550 puts to 2020 even money only gets you down to 510 – not great for adding another year (waiting another year) to see if they blow up or not


  35. I still wonder what the market reaction will be when we start getting the actual number of cases in the US! If we ever see the real number. Lots of people will be sick and stay home with mild symptoms I am sure. Probably true everywhere.


  36. Right now people are tossing numbers like 100K to millions! We simply don't know and I hope it's much less because this would be catastrophic! 


  37. While the virus is real and may have some serious consequences I think the biggest epidemic is "panic". Measures for testing/treatment are ramping up and local, state, national powers that be are taking action as appropriate given the also real economic trade offs of shutting down commerce. News reports on LA are hyping empty shelves and lines out the door of stores of people stocking up on canned goods, TP and paper towels. All this consternation is making a bad situation worse. Reminds me of the oil shock way back in the 70's. Remember gas lines, if you are old enough. Plenty of fuel to go around but everyone topping their tanks every day aggravated things. People need to chill. 


  38. This is so frustrating. The market is just floating around at +4%. The MM's know this market is screwed, they are just sucking out all the volatility in the 3/13 options. Annoying.


  39. LYV – Live Nation is up 17% today. 

    Premiums are absurd but i picked up the April 40/30 put spread for $3. Seems reasonable


  40. also, is trump timing his address to coincide with the regularly scheduled Friday-shorts-profit-taking rally that we've seen the last 3 weeks?


  41. Phil—-on SQQQ short april 32 calls—-the highest I see is 31? Am I looking at the wrong strike or exp

    Thanks


  42. potter—Mark Cuban bought some LVY yesterday


  43. Savi – buy the rumor, sell Cuban's news? ;)


  44. I am having to watch my margin level so looking for an good new hedge not using 3X issues since TOS penalizes these . Suggestions?


  45. Some really weird option pricing on my CMG strangle.  The 2021 $650 short puts have basically doubled, but my short calls have increased in value also  Not a bad time to enter.  You can sell 2021 $650 puts for $150!, and offset with $800 calls for $75.  The 2022 $1100 calls have increased from $40 to $55 during this same time period!  WTF.


  46. Palotay – I think that these days algos are going nuts with these volatility swings and also with the bid/ask spreads. And more importantly calculation around standard deviations! When you have 20% moves in a week, your SD might double from what it was a week earlier (or something like that – not a mathematician). Look at Bollinger bands in SPY – it was 320 to 340 last month. It's now 252 to 356. Insane! CMG was 850 to 890 and now 568 to 1001!


  47. Coronavirus: Looking at cases per 1M population, out of the top twenty countries, fourteen of them are in Europe. China now ranked #12 on a per capita basis with 7 European countries ahead of it. For reference China is at 56.1 per million. Italy is at 292.1 per million. Maybe stopping travel from Europe wasn't the dumbest idea ever. Norway, which hasn't even really made headlines, is at 172.1 per million, or about 3x as many as China relative to its population. Denmark 138.1. The USA is at 6.0. But of course we'll probably see that jump a lot higher when we start actually testing. The UK is at 11.8. These all seem like huge numbers but Italy, the world's coronavirus hotspot, has an infection rate of 0.03% currently. I wish toilet paper was a traded commodity.


  48. Look at these stats from Italy:

    Basically, under 50 you are at very low risk of dying. Over 70, it's a 10% chance. 


  49. potter—-went to the same high school a few years apart as Cuban—-but somehow missed out on what he learned :-)


  50. I want to see a version of that chart which says what % of the deaths are those with underlying health condition.


  51. the High School where I teach in PA just closed for next 2 weeks


  52. Can someone get TSLA to pin at 500? One of my last positions from 4-5 weeks ago is 550/500/450 today butterflies. So glad to be out of there. 


  53. Grade/highschools where I'm at are currently going into spring break. Kids were sent home with their laptops/ipads yesterday and we received emails about conducting teleconferenced classes after spring break. Hoo boy…


  54. Phil – Don't you think it's ironic that Putin (Trump's good friend) and Saudi Arabia, whom we've protected for decades  (for their oil), decided to crash the oil market apparently to crush the U S frackers ?

    Where is his vaunted influence ? Trump is truly inept, as his Wednesday night speech proved.  Problem is that he has fired most of the competent people and replaced them with hist toadies.

    Really disgusting and also troubling.


  55. My wife teaches in a private school now and they are conducting teleconference test next week! It's inevitable now. France is closing all schools starting next week. People are making preparation to work from home when possible. It's in our future and in fact should be our present!


  56. All schools in west palm beach closed for 2 weeks.
     


  57. Albo – There is simply too much corruption at the top right now. Do we know if Trump's friends were short oil! I mean Jared is on WhatsApp with MBS! You can see the chat:

    "Yo, Jared, Vova and I will tank the oil market tomorrow! Short 1000 or so contracts and we'll split the profits next time you come for my birthday party!"


  58. not sure how we stay green into the weekend on this


  59. Note – Vova is the short version of Vladimir in Russia!


  60. Yes… teleconferencing… look at GME go :)


  61. Phil. SQQQ – I've sold all my longs and am left with 40 of the :

     

    40X SQQQ Sept 35 '20 $35 Call Short (2.65) now 9 would like a spread for this Please>\?


  62. GBTC/BDC – Good luck with that.  Hopefully a nice bottom call but I'm still waiting for $1,000 to get back into Bitcoin. 

    GLD/Coulter – Not safe at all.  What happened to oil and gold in 2008?  They went down, not up.  You have to wait for the Fed to really dilute the money supply and the Dollar to start getting weaker:

    Even GOLD is getting hit (we'll buy back the short calls):

    M/Yodi, Coulter – In this environment, it's possible but it's also always possible that they nuke NY and wipe out their main store so kind of silly to make decisions on M over unproven fears. M is certainly a BK risk but they also have $23Bn in sales and $750M in profits against their $2.2Bn market cap so trading at 3x earnings and, if earnings drop 66%, then 10x earnings.  They have a lot of assets they could sell so not likely to get forced out unless the virus starts killing millions but, as I said, they could also nuke Manhattan so why invest in anything if that's going to be your premise?

    It is absolutely amazing how low things can go.  You guys seem way too impatient to me, this is just one month of just worrying about the virus – that's like being in September of 2008 and asking if it's a good time to buy things – we didn't bottom until March of 2009!

    Stock Market Crash – Year One Review III – March Madness!

    TSLA/Coulter – Well, I hope you have short calls too.  In the STP we sold 5 short 2021 $550 puts for $64 ($32,000) and 6 short Sept $900 calls for $192.50 ($115,500) and now the short puts are $78,750 and the short calls are $20,790 so we'e up quite a bit overall – just not as much as we wish.  

    The short Jan puts have a lot of time left and are at the money, so max premium and, if we rolled them, it would likely be to 7 of the 2022 $420 puts at $1.10  ($70,700) so we'd spend $8,050 to push the puts down $130 but that's not really worth it so better to watch and wait for the premium to drain out of them – half of it is being caused by the VIX and not the positioning.  

    More interesting would be to take the $46,750 loss on the short puts and sell 5 of the July $500 puts for $100 ($50,000) to take advantage of the shorter expiration period.  Then you can sell another 5 later.  

    Chill/Pstas – Good luck with that.  As you say, we see empty shelves in Florida and kids are panicking in the colleges as they've never seen anything like this before so it's crazy.  If I go to the supermarket and see no toilet paper – even though I'm not worried about the virus somehow using all the toilet paper – I'm still going to buy TP whether I need it or not next time it's on the shelf as it's not something you want to run out of – and the cycle continues.  

    LYV/Potter – They will have a rough year but then back to business as usual but they are way overpriced at $8Bn with just $70M of income so not for me.

    Trump/Potter – Is the Manipulator in Chief manipulating the market?  Yes.   He certainly wants to take credit for turning the market around in the very least. 

    SQQQ/Savi – That makes no sense at all, how can SQQQ not have April $32s when it's at $30.08.  There are $1 strikes from $1 to $45.

    Hedge/Pstas – We used QQQ just yesterday for that purpose. 

    CMG/Palotay – Lots of crazy stuff with the VIX this high and stock moving 5-10% per day (so their internal VIX is high too).  

    And what StJ said.

    UK/Dawg – Makes sense because UK people are generally socially distant all the time.  Norway big surprise.  If US goes from 6 to 60 due to testing – LOOK OUT!  


  63. Phil. SQQQ – I've sold all my longs and am left with 40 of the :  

     

    Short 40X SQQQ Sept 35 '20 $35 Call (2.65) now 9 would like a spread for this Please>\?


  64. Testing / Phil – I am more worried that it goes to 250 once we start testing!


  65. Troubling/Albo – In so many ways.  At $32-42/barrel, there are about 2Bn barrels worth of contracts and all MBS and Putin have to do is shove the price down, buy up 1Bn contracts and then drive it back up $20 a barrel and PRESTO! – an easy $20Bn in profit.  I'm surprised they don't do it twice a year…  They could do it in both directions too.

    And what StJ said.

    SQQQ/Batman – So naked 40 SQQQ Sept $35 calls and down about $6?  The responsible thing is simply to cover them with 40 Jan $30 ($11.25)/$45 ($9) bull call spreads at $2.25 as it gives you $12.75 upside protection and the spread shouldn't go much below $1 so you risk maybe $1.25 vs what you took off the table.  As noted above though, I'd roll the short calls to the April $30s at $6.70 since they expire so much sooner and then you will be able to cash out the spread with most of the $2.25 intact or just sell more calls to make up the rest (and still have a hedge).  Mechanically, if SQQQ is at $20 and the April $30s go worthless, you then sell the July $25s for maybe $4 and use that money to roll the Jan $30s to the $20s and maintain a good hedge.  

    Testing/StJ – I'd say it's very possible the US already has more cases than China.  Too much traveling and gathering and total lack of safety coupled with a Government that was in denial of the situation (still is) and and almost total lack of testing and public education – and leadership.  Bad recipe.

    Well, here comes Trump to fix everything…


  66. We haven't looked at the Oil Strips in a while but just look at the turnover rate – almost 300% in the front month, 55% in month 2 and 65% in month 3.  So easy to manipulate a market when you can buy every contract in two days!  

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Cash - 31.50 31.50 31.50 17:00
    Mar 12

    31.50s*
    -1.48

    -
    32.98

    -
    n/a
    Apr'20 30.77 33.87 30.33 32.06 14:02
    Mar 13

    -
    0.56 651225 31.50 221602 Call Put
    May'20 31.35 34.27 30.80 32.44 14:02
    Mar 13

    -
    0.46 275774 31.98 436175 Call Put
    Jun'20 31.80 34.74 31.37 32.94 14:01
    Mar 13

    -
    0.43 172084 32.51 264551 Call Put

  67. US oil rig count up to 12 week high.  Trump should fill the strategic reserve


  68. The roll to April has more premium but is scary … 


  69. Trump is speaking.  Watch out below !


  70. dawgdaddy/toilet paper – Long WY !!!

    Phil/Bitcoin – $1k is definitely a strong buy level 

    This is hilarious. We are truly a global community now. Irritating pro-Trump posts come from a dump in "shi*hole" country. Ironic, isn't it, when certain leaders play the nationalism card. 


  71. Phil / The roll to April has more premium but more scary.  At some point the states will start publishing numbers wi/o the warehouse filtering them and they will be scarrrry.  I think we may take another dive at that point I expect if / when we are testing 10K to 20K /day our numbers will be in the 100K to 300K maybe more.  I think the Whitehouse is purposefully screwing up the test so that the numbers are low and suddenly when testing starts the weather will be helping….. but buy that point thousands will have died….. I wonder if they will test people after they die?


  72. I was watching Trump but my little girl made me go back to My Little Pony. Sadly, it had more coherent adult content.


  73. Trump Talking it was so painful I had to change stations.

    He can not even read a report from a paper. sorry guys.

    But at least the market seems to like it.


  74. Thank goodness he has some experts with him !


  75. Doing a better job at this press conference by having experts speak and CEOs who sound like they know what they’re talking about. At least this will save the week for being a total disaster.  


  76. Roche seems to be winning the testing game.  


  77. Getting drive in testing. up will be key – but need volumes – in CA we have drive throughs set up in different location – hospitals and health insurance companies – but tests not available. 


  78. Time for the Pence suck up


  79. Hey, they are buying oil for the SPR – they do still listen to me!

    Should have kept those /ES longs!  

    What a response but, of course, this is orchestrated to make it look effective but that's OK – good use of the available tools to restore confidence.  Hedged or not, we certainly didn't want to see the market down 40%.


  80. Have a great weekend everyone, 

    - Phil


  81. I guess recognizing the problem is the first step! So good for him. A bit too late I am afraid, but better late than never. He should really shut up and let the expert talks. And stay away from Twitter. Any goodwill will evaporate after the next nasty tweet!


  82. VIX down 20 points from the highs! 


  83. Dow up 8% – almost got yesterday's loss back – good job!


  84. what b*llshit….


  85. Speaking of recognizing problems:

    https://talkingpointsmemo.com/news/fox-news-producer-admit-coronavirus-coverage-irresponsible

    On Friday, CNN anchor Brian Stelter reported that an unnamed Fox producer had privately acknowledged to him earlier this week how damaging the two networks’ excessively-pro Trump coverage of the outbreak is.

    “The attempt to deflect and blame the media and Democrats from Trish Regan, Sean Hannity, Laura Ingraham, Lou Dobbs, Jesse Watters, and Greg Gutfeld instead of addressing the coronavirus is really irresponsible and hazardous to our viewers,” the producer said, according to Stelter.[...]

    “It’s also ironic they’re accusing the media of fear-mongering given our infamous coverage of the migrant caravan back in 2018,” the unnamed Fox producer also told Stelter.


  86. 9%!


  87. He meant BS…. :)

     

    Stay safe everyone!


  88. Good weekend


  89. wow, that QQQ stick saved me $5k in losses in the last 5 minutes. So hard to trade it out though. Good grief. No more front-weeklies for me ever. I'm done with that.









  90. Phil – i thought you said this is what prolonged the crash last time?


  91. If Trump had waited 10 more min before the announcement of filling SPR it would have been great for me.  Never works out that way.


  92. See what a bit less panic can do?


  93. I think that we are all learning new trading lessons this week! Nothing like a stress test to see where the cracks are in the theories. I know I am leaning new stuff. I'll be more prepare for next time. And there will be a next time in my lifetime.


  94. Trump capitulating and working with Pelosi is IMO a huge deal, but I am concerned the legislation will die in the Senate.


  95. Never forget Trump's M.O.: "Overpromise, Underdeliver"

    Trump promised a testing website to be developed by Google by SUNDAY that would inform EVERY AMERICAN on testing facility information.  

    Official statement from Google:

    https://twitter.com/Google_Comms/status/1238574670686928906?s=20

    "Statement from Verily: "We are developing a tool to help triage individuals for Covid-19 testing. Verily is in the early stages of development, and planning to roll testing out in the Bay Area, with the hope of expanding more broadly over time."





  96. Is There Really a Toilet Paper Shortage?


  97. Whatever goodwill Trump was buying died very quickly during the following Q&A session! What an idiot – can help himself. I hoping McConnell will be shamed into doing something quickly.


  98. This is very much becoming a European epidemic now rather than an Asian one. 10 European countries now have higher infection rates than China and 4 more not far behind and gaining quickly. When Italy changed their testing protocol to artificially suppress the number of positive tests, that should have been the very latest that we closed off travel to Europe  


  99. Cases are rising a lot faster than recoveries.  


  100. if you want to cure any FOMO you might have on bounces listen to Raoul Pal's take on the virus.  He calls it the largest economic event of our life time.  People buying on Friday think that this shit is priced in.  The aftermath is what is not priced in.  My friends own a bus service business and they just had to lay everybody off.  Think of all the industries that are going to do that (restaurants, movies, theme parks, airlines, hotels) many of these companies are probably over leveraged.  Then there are the laid off workers who won't have money to spend.  VIX is acting like 1987 not 2008.


  101. Spain is going to go on lock down as well! I think that every European country will be soon! And I am worried that we are probably only a week behind. In 2 weeks, we might be the epicenter.


  102. "I think that we are all learning new trading lessons this week! Nothing like a stress test to see where the cracks are in the theories. I know I am leaning new stuff. I'll be more prepare for next time. And there will be a next time in my lifetime."

    That's for sure. I am OK, even up just slightly overall, but it's been an eye opener. 


  103. coulter: I would have to agree.  This is the first time we've ever witnessed the total economic shutdowns of almost every major developed nation in the world.  Unprecedented in modern history. People are saying its not as bad as 2008-2009.  Maybe not in terms of financial and credit risk, but in terms of total economic risk it certainly has the potential to surpass it.


  104. I am now thinking we will see the relief rally continue (hopefully) Monday but then the recession reality which now seems inevitable will start another leg down . That could be brutal. Hope I am wrong.


  105. Phil I am still interested in the comparison of ET and USO.  Looking at the charts for any time frame from months to 5 years USO appears to outperform ET.  I do not however know how dividend and expense ratios factor into these charts???


  106. I don't think that you are wrong pstas! We might need massive government intervention to avoid a major recession. Businesses are going to close, people will lose their jobs and consumption will be lower. 

    That 2017 tax cut that's adding $2-300B to the deficit each year will start to look pretty stupid as it limits what can be done now!


  107. It's also infuriating to see what is going on – Italy just said that cases are getting worse because people ignored the isolation rules, went to the beaches, to parties and so on. And here we are in the USA – idiots tweeting about being in crowded bars or restaurants – including the governor of OK in a since deleted tweet after he got slammer for being irresponsible! This is not being taken seriously by the average American mostly because it was not taken seriously at the top. Someone posted something that went like that:

    Once this is over, many predictions will be seen as alarmists and what has been done will be seen as insufficient.


  108. Relief/Pstas – I don’t find this relieving. And keep in mind that today is just starting:

    https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

    Cases/StJ – we have the combination of western culture not being as easy to control and western leaders not being willing to admit that the population needs to be controlled.  Better to let people die than risk losing the next election I suppose…

    You know where Trump stands on that equation.  



  109. In Market Rout, ETFs Are Where the Action Is


  110. How Trump’s presidency has played for Russia



  111. Mexico holds big music festival despite coronavirus concerns



  112. Prayer Will Not Stop Coronavirus




  113. Estimating the impact of school closure on influenza transmission from Sentinel data



  114. If the virus overlaps with tick season we get Corona with Lyme


  115. Ah, trying times brings out the gallows humor :)

    I read on Jeff Miller's post a good one- price gouging as "retail arbitrage".


  116. LOL Tangled!  

    We do need to laugh.  




  117. Fauci open to a 14-day ‘national shutdown’ to stem virus


  118. Fed to the rescue. Just cut to zero. 


  119. Gave tdump what he wanted and the market appears none too pleased….


  120. markets just hit limit down--anyone know when it re opens


  121. What prolonged the crash last time Coulter? 

    Fed 0!  What will they do at Wednesday's meeting – start paying us to borrow money?  Put me down for a Trillion!

    Lockdown/StJ – Illinois and Ohio already closed all bars and restaurants as of tonight (no notice) – that's stupid as it puts more pressure on the supermarkets, who are not ready at all.

    2008/Kinki – Well it's all in the way you handle things.  In 2008, they were too late with TARP and it was misdirected because, rather than aid the companies who couldn't afford the rent or the landlords, they bailed out the banks to make them whole while everyone down the chain just kept suffering.  

    • Declare a one-month mortgage and CC payment holiday.  100M homes x 3,000/month is $300Bn – even if we just paid it but a skip is like 1/10th of that and skipping CC payments is only an interest issue so not much impact either.
    • Set up hotels as quarantine areas for virus patients – I'm sure there are plenty of hotels that aren't very busy and would love the revenues.  Set up a "Virus task force" and hire 100,000 people to staff the quarantine hotels and maybe another 200,000 people to take care of shut-in elderly needs like shopping, etc.
    • Put Purell sanitizer stations on every block where commerce is done and inside every store so people wash their hands before and after using every door.   There are 1M retail stores in the US and less than that many restaurants (660,000) so even if the sanitizers cost $500 (they are $100-$300), that's not even $1Bn.

    There's 3 things I would do tomorrow if I were President and then I'd make sure we had our industry making masks, disposable clothing and respirators (as we're going to need a lot of those!) by the end of the week. 

    ET/Tangled – I simply prefer to invest in a company that actually makes money rather than a commodity that could go either way.  The dividends obviously tilt things way in ETs favor.

    Futures limit down again.  

    They don't re-open, Savi, they're not allowed to go down more than 5% so no trades are allowed below that price but you can trade over that price, oddly enough.  

    /RB testing 0.815 – that's crazy – especially as I just paid $3.25 at the pump!

    And this is all with the Dollar dropping 1% too:

    At least it's good for my /SI longs:

    Oops, no it's not, I forgot I got out!  


  122. How about that Powell folding under pressure from Trump?  We need Yellen back!


  123. The Federal Reserve lowered its benchmark interest rate to a range of 0% to 0.25% and said it would buy $700 billion in Treasury and mortgage-backed securities.34625 minutes ago

     

    It’s Dangerous to Test Only the Sick

    New York City’s public school system, the largest in the country, will close in order to stem the spread of the novel coronavirus, Mayor Bill de Blasio said Sunday.

    Dr. Anthony Fauci, the federal government’s leading voice on infectious diseases, said Americans will need to do much more to prevent community spread of the novel coronavirus, urging them to avoid unnecessary public outings.1,572

    Shutdowns reshape society, unmooring people from the routines and activities that typically provide comfort in moments of crisis. “An invisible-but-present blizzard.”65

    Domestic Box Office Has Worst Weekend in Nearly 20 Years

    Saudi Aramco Cuts Spending, Hikes Dividend Amid Price War

    Why Supercars Are Doing Away With Windshields

    REM’s classic 1987 song “It’s the End of the World as We Know It (And I Feel Fine)” reentered the charts on iTunes Tuesday amid the global coronavirus pandemic. 

    The song reached No. 72 on the iTunes top 100 chart Friday


  124. Several cruise ships are delayed at sea after ports denied them entry as governments tighten travel rules in the wake of the coronavirus pandemic.

    Industry executives say there are about 10 such vessels, each carrying thousands of passengers, that have been denied entry from the South Pacific to the Caribbean.


  125. Thanks Phil--so they can trade above weird—i thought halted means no trading but i guess going up is ok and any re-open is tomorrow at 9,30


  126. Fed meeting on 17 and 18 cancelled


  127. I’m confused. I’m holding euro dollar futures (ticker /GE in TOs), that allow you to speculate on the fed funds rate. We just cut to 0-0.25 so my expectation was that they would be at 99.75 at least, but my December contracts are only showing 99.67 (so 0.33%). Anyone have any idea?  This is my first time trading these, and am realizing I’m a little out of my depth. Haha. Fortunately I’ve been long them for a couple months, and they have offset a lot of loss elsewhere. 







  128. A new sign of the times….  :)



  129. Global infections have now passed China, 167,044/81,000.  6,065 dead (50/50), 76,000 recovered so 8% of the outcomes are death. And that’s before our Healthcare Systems are overwhelmed.  24,747 in Italy – WTF!  


  130.  


  131. The real % will turn out to be MUCH lower.  When they first started trying to track the seasonal flu they found they were initially highly undercounting infections because of those that did not seek any help and even felt well enough to go to work.   There will be a large undercounting of infections here too, but it will not be known unless this also becomes seasonal in which case it will become part of the vaccine set like H1N1 did.  I am concerned the economic impact of shutting down the world will ultimately kill more than the disease.   And where do you get 8% ?  6065/167044 = 3.6%    It is currently 7.3% in Italy though they are skewed higher in both age and number of smokers.


  132. I also think they should just shut down the market for a while.


  133. Bars and restaurants / Phil – They had to! If people can't be disciplined enough not to pack bars, they need to do something. It's the reason they closed them in France, Italy and Spain. People are not taking this seriously enough. They were sent home from work and closed the schools and everybody thought it was a vacation and went out! Of course, 40% of the people here think it's just like the common cold… 


  134. Balance is needed.   If they take away all the income sources for a business they need to do something about the expenses (as I think Phil commented a couple of days ago).


  135. Clearly, we'll need some "bailout" package for businesses! We did it for the banks in 2008. Airlines, tourism and entertainment will need one now for sure! 

    Closing the markets might generate even more panic! But it's not very tradeable wiith 1000 points in botb directions almost every day. Not sure what was worse, 2008 or today. Today we have both financial and health system failures. Not a great combination! Other countries have pulled through so I am sure that we can as well. But it's going to require some strong leadership and we are short of that now.

     

  136. 8%/Tagled – I’m saying 8% of OUTCOMES!  More people get sick every day and, so far, in two months, less than 50% have recovered or died and, of those outcomes, 8% are dead.  The others we are waiting for data on.  

    i’m not sure what there is to be gained by these talking points that there are unaccounted, mild cases out there. I don’t think that matters much to the people who are dying.  I am sure the seasonal flu is under counting as well since not every person who has a sore throat and sniffles runs to the doctor to get diagnosed.

    I’m just keeping an eye on progression but more importantly looking at the reaction in other countries who are willing to tank their economies to stop this virus indicates to me that this is much worse than our government is letting on.   Our government does not get it, they only care about saving the economy when it is the people who need to be saved.


  137. The Washington Post has an great simulation on why lockdowns are so effective in controllng epidemics:

    https://www.washingtonpost.com/graphics/2020/world/corona-simulator/


  138. Phil I meant prolonged by people keep buying the dips like it's still a bull market 

    like they did on Friday



  139. 7-Hour Waits at U.S. Airports Due to Coronavirus Screening


  140. I do have concerns.  I am in the high risk group.


  141. How bad does it have to get to affect sweep vehicles in brokerage accounts?  Mine at TDA is PTTXX.  I have no idea how secure its NAV is.   Even money markets had their complete safety removed after successful lobbying by banks some years back.


  142. What are 2 or 3 really rock solid stocks that have the best chance of a big boost when things get more "normal"?  Is that INTC and BA?  Seems like both could still be further impacted by long term recession.  People stop buying upgrades for gadgets and orders get cancelled for planes.


  143. Holy crap silver down 17%!


  144. tangled: Well I know in my case, with interest rates at zero, anything with a dividend is suddenly VERY attractive to me.  Utilities, REITS, etc..


  145. Nothing is terribly attractive to me right now after we hit limit down on all the indexes on Sunday afternoon. But I'm also going to be looking at dividend-paying companies, especially those that are very unlikely to cut the dividend.