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Monday Market Mayhem – Limit Down (Again) as Fed 0% is NO HELP!

We are limit down – again.

Since Europe is down about 7.5%, it's very likely we have further to fall at the open since Europe did not partake in Friday's "rally" and is now 5% below Thursday's lows so we could be looking at 20,000 for the Dow (down another 1,800 points from the Futures and down 3,000 points (13%) from Friday's close), S&P 2,300, Nasdaq 6,300 and Russell 1,050 – horrifying numbers.  

Of course, things got much worse in 2008, when the Dow fell from 14,000 to 6,000 – that was down 57% and, so far, we're only down from 29,500 to 20,000 (expected) – that's "only" 32% so whoa, whoa, we're halfway there – maybe…

This is happening DESPITE the fact that the Fed cut their base rate to 0-0.25% over the weekend but they also cancelled their scheduled meeting this week and that bothered people as well as the Trump Administration's continuing inept response and lack of leadership.  THIS is why I have been anti-Trump since the 2016 election – what did you really think was going to happen in a crisis with this President?  Did you really think he was going to step up and provide the clear leadership and vision this country needs in a time of crisis?  

So we have a complete crisis of confidence and that's why EVERYTHING is liquidating, including gold ($1,475), silver ($12.00 – a buy at this price!), copper, oil ($29.50 – a buy at this price), cattle (yes, cattle is down 45%), corn, soybeans, wheat – no asset is safe as people go to cash but the Fed Funds rates are now so low that you will soon have to PAY the banks to hold your money – yet another stealthy way Trump is going to tax the American people (and the tariffs are still on too).  

The Dollar, as you can see, is down 1% today but up 3% in the past week, that's making it very expensive to convert your assets into CASH!!! but that's what people are doing at an alarming rate.  Why, because they have NO CONFIDENCE that the Government can fix the virus problem and, as I said to our Members over the weekend:

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.

People in the bottom 99% don't care about the Fed Funds rate and they don't care about cutting their payroll taxes when their jobs are being cut (there are MASSIVE lay-offs going on everywhere) – they care about STOPPING the virus and, so far, that's seemed to be pretty low on the Trump Administration's Agenda and meeting with "Tech Executives" and announcing they have a web site (Friday's idiocy) isn't quite the same as meeting with DOCTORS and HEALTH EXPERTS and coming up with a plan.

Remember 9/11 – there was a plan.  We formed a Department of Homeland Security who put out a color-coded threat level indicator which we did make fun of at the time but it was actually reassuring when it wasn't orange or red.  The response to 9/11 was immediate and MASSIVE – people volunteered to help out as firefighters, charities raised hundreds of millions of Dollars for relief efforts, the National Guard was mobilized.  In short, America did what it had to do to deal with a threat. 

NYC Mayor Rudy Giuliani urged people to try to get back to their normal lives, but with new precautions.  He even appeared on Saturday Night Live on Sept 29th, just over 2 weeks after the attacks – to let people know it was still OK to have a little fun.  When, Lorne Michaels asked if it was okay for the show to be funny at such a sad time; Giuliani replied, “Why start now?”.  That's why we USED to love Rudi.  

Meanwhile, back in Washington, President George W. Bush was able to win a broad mandate to act in the nation’s defense. In a speech on September 20th, he asked citizens to be “calm and resolute, even in the face of a continuing threat,” and promised that the United States would triumph over terrorism–“stop it, eliminate it, destroy it where it grows.”  Bush spoke to Congress for a full hour 9 days after the attack and helped to calm the nation – and the markets.  

Now Bush Jr was no great President and no great communicator but he certainly pulled it together in a time of crisis as many Presidents have done before – until now.  ?

Leadership matters!  Elections matter!  And if you elect a Democrat to replace Trump in 2020 but then re-elect a Republican Senate to block him every step of the way, what have we changed?  That was Trump speaking two weeks ago, when the US had 15 cases and he was calling the virus that had already infected 100,000 people around the World "a hoax" perpetrated by his enemies.  Two weeks later, the US has 3,774 confirmed cases yet we have no idea how many actual cases because the Government still hasn't been able to provide testing kits.

Meanwhile, cases outside of are now exceeding those in China for the first time and we are still rapidly accelerating while still less than half the people infected have recovered at all and, of the people with outcomes to date, 77,257 people have recovered and 6,513 have died – that's a 7.7% mortality rate on the outcomes and that's what it's been since the beginning yet Trump FAILED to take it seriously and now 3,774 Americans are infected, which means hundreds are likely to die due to his ineptitude – hopefuly not thousands – which would be worse than 9/11 in a self-inflicted wound.

This virus will get worse but it will also get better at some point but we need leadership that is able to address the reality of the situation as well as show us the light at the end of the tunnel.  As Peter Coy noted over the weekend, "you can't fight the virus without harming the economy" and, so far, the Trump Administration has been more worried about the economy than the virus and that is NOT the right message to send to investors, who KNOW the economy can recover over time – but they don't know if there will be a future with a virus running rampant and no actual plan to deal with it.

While it won't stop the market from going lower, I will point out that China, after two terrible months, is starting to get back to "normal" with very few new cases of the virus and, in January and February, retail sales were down 20.5% but invesments were down 25% – expectations exceeded reality to the downside.  Unemployment in China rose 1%, from 5.2% to 6.2% and home prices were flat.  In retrospect – it's nothing that should have caused a 40% market sell-off, was it?

Of course, the problem is that our market was a good 20% overpriced before we started so the first 20% of the drop, from S&P 3,350 to 2,680 was simply a re-pricing to the correct levels.  Dropping another 20% to 2,144 would be the actual crisis and, as I said last week, I really don't expect us to normalize much over 2,850 for the rest of the year – that's the CORRECT level for the S&P 500 and 10% down from Friday's close takes us down to 2,400 and that means we're pretty close to a dead bottom – but that won't stop people from panicking if our "leaders" continue to fail to step up and LEAD.  

As we did on Thursday, we will take advantage of the dip and roll down our long options contracts when it's worth it (generally 50% or less cost vs the strike positions we gain) and maybe a bit of put selling if we have another high VIX day – those are rare – even in a nice sell-off.

The higher VIX means it's a great time to SELL premium and a terrible time to buy it – so don't buy it!  

Also, Trump can get started on fixing things using my ideas from the weekend Chat Room:

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.

 


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  1. Good Morning.


  2. Good morning?

    I mean, holy crap, I think we're misusing the term now!  devil

    SPY is trading down 10% pre-market so likely we hit the circuit breakers at the bell.  

    "Suffering in silence, they've all been betrayed

    They hurt them and they beat them, in a terrible way

    Praying for survival at the end of the day


    There is no compassion for those who stay" – ELP

    Howard Stern's commentary on the virus has been great – worth listening to if you have Sirus.  Lots of good discussions with real people and experts gives a nice overview of how people around the country are dealing with things.  He's a good interviewer actually.  Also, his 9/11 coverage was Epic – he doesn't get the credit he should for that broadcast.


  3. Good morning, 1020

    And I can't help but think some of what Korea's doing to fight the virus is helping their economy: https://asiatimes.com/2020/03/south-korea-turns-to-tech-to-take-on-covid-19/?fbclid=IwAR00Q2jCmODIInxrMOjTPoNyclrr9xhFGNVRpfOl3Sb5tJlcWlJ18qxjBnA


  4. Phil – No exclamation point!

     

    My suggested reading during a quarantine.

    https://www.amazon.com/gp/product/0525538585/ref=dbs_a_def_rwt_bibl_vppi_i2

     

    sto·i·cism

    /?st???siz?m/

    Learn to pronounce

     

    noun

     

    1.

    the endurance of pain or hardship without the display of feelings and without complaint.


  5. Hi Snow!


  6. Maybe markets would rallye if Trump resigned!


  7. The results if misinformation:


  8. LOL 1020 – Brilliantly subtle(!). 

    Resigning/StJ – I actually think that would work but not if Pence steps in.  They should just let Joe take over now and make Michelle Obama his VP but I think he's going with Liz (to bring in the far left).

    Poll/StJ – Is that recent?  I find it very hard to believe 30% – that's a degree of ignorance I could not comprehend…


  9. The Bug: KAIST, where a number of my friends are on faculty, came up with a mask that works better. I still think masks are useless theater, but a lot of people do not, and this shows the fast innovation that Korea's doing now. Article's in Korean, but plug it into google translate and you'll get the idea – and the illustrations make it pretty obvious anyway: https://www.insight.co.kr/news/273829?fbclid=IwAR32MXSmMAaTDQF6dp9bBZji2Y3LHqFWNU5KOea_8nK21RWT-OfQfsO6G4w
     


  10. TheBug: and this is just lovely: https://blog.naver.com/misael/221842828479


  11. 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.


  12. Poll / Phil – Just last week! There are still stories of people thinking that this is a hoax! But now Fox is on full speed blaming Obama and Pelosi! So maybe they will start taking it seriously but blame the wrong people. George Soros can't be too far from getting blamed as well.


  13. 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.


  14. Good Morning All!! 

    Im seeking advice for hedging my portfolio with SQQQ (if its not too late)

    I want to protect my portfolio dropping any more and happy to pay a premium for that. Wanting to slightly "overhedge" 

    Portfolio size needing the hedge, 200k.

    Could someone kindly offer a revised SQQQ spread as the ones from a few days ago are probably already outdated.

     

    Thanks in advance, and good luck today guys.

    youngy (aussie living in Hong Kong)


  15. WSJ Special Report: The Coronavirus Crisis.

    Fed Cuts Main Interest Rate to Near Zero, Vows Massive Bond-Buying Program.

    Powell Says Fed Has Room to Move, But Outlook Is Murky.

    Central Banks Coordinate to Ensure Dollar Liquidity Around World.

    Global GDP Growth Estimates Are Plummeting.

    Goldman Takes Out The Chainsaw: Cuts US Q2 GDP To -5%; Says Recession Has Begun.

    Hong Kong Cuts Benchmark Interest Rate, Following Fed’s Move.

    China Set for Unprecedented Contraction in Early-Year Data.

    $54 Billion Manager Says He Now Fears a Global Credit Crunch.

    New Yorker Anxiety in Hamptons Leads to Hard Cash Demands.

    Coronavirus and Insurance Policies: What Is Covered?

    Americans Fear Worst Is Yet to Come From Virus, Poll Finds.

    "More Violent, More Persistent": Market Fear Worse Now Than In 2008, Man Who Inspired VIX Says.

    Mideast Stocks Drop Despite $47 Billion of Central Bank Aid.  

    Global Oil Demand Heads for Record Annual Drop as Virus Spreads.

    Iran’s Coronavirus Strategy Favored Economy Over Public Health, Leaving Both Exposed.

    Eight Giant U.S. Banks to Suspend Stock Buybacks Through June.

    Fauci Says Americans Must be Prepared to Hunker Down More

    Dr. Fauci Says He's Open To "National Shutdown", Warns Domestic Travel Ban "Not Out Of The Question".

    New York Governor Cuomo To Trump: Mobilize The Military.

    California Governor Issues Executive Order Allowing State To Commandeer Hotels, Motels For Coronavirus Patients. 

    Wynn Resorts to Close Las Vegas Casinos.

    White House signals third relief bill to help airline and cruise industries hit by coronavirus pandemic.

    Not Just Seniors: French Doctors Report 50% Of ICU Patients Under 60 Years Old, Netherlands Under 50. 


  16. Sweeps/Tangled – Well, it's not like 2008, when the actual banks were collapsing but this panic liquidation of assets could cause some major issues if it keeps up as there simply isn't enough cash – even notional cash – to support tens of Trillions of Dollars in market liquidations.  

    Rock solid/Tangled – I'll have to think about it.  BA is not safe because airlines could start going BK and then they lose hundreds or thousands of orders at a clip and how would they get those back?  The planes the airlines do own would go on fire sale by the leasing companies and that would then put pricing pressure on the new planes and lead to more cancellations.  

    WMT, TGT – they can survive retail dropping 20%.  I still like WBA, though no one else seems to.

    SQQQ/Youngy – Well it's very tricky now as you would be paying the highest price in a decade for SQQQ protection.  We have to figure out how to turn that into an advantage.  I'm going to do something for our STP shortly, waiting to see how the pricing settles in.  


  17. Liquidity issues and margin calls
     


  18. I don't mean for me I mean for the market
     


  19. Selling calls on UVXY?


  20. Phil-hope you are surviving.

    Do you have any thoughts on the extent of the overreaction on the indices?  Seems like the movements at the bottom will be more human than bot driven and therefore not conform to the usual lines.  Trump will almost certainly speak again and that won't make things any better.  Thanks.


  21. Seem to be holding 10% but a 2% bounce from 10% is just weak anyway. 

    Surviving/Seer – Waiting to put my kids' college funds back to work.  As I keep saying, 2,850 is the "right" price for the S&P but that was based on pre-virus earnings.  If we assume 20% less sales for 2 Qs that's 10% off the year but that could be 20% of a company's profits easily so we have to look at 20% below 2,850, which is 2,280 (which we just hit) and, if that's "normal" – we could still go 10% lower so 2,000 on /ES might be a good spot to add more but, so far, we're only back to Thursday's lows – where we sold our first round of new puts for the LTP.

    So, other than giving us a chance to get the things we missed Thursday, nothing actually happened other than the 30% drop from 3,400 to 2,400 leading to a 20% weak bounce to 2,600 that was rejected on the first attempt.  Now if we consolidate above 2,400, we could be setting up to break in either direction but 2,400 was good support in Dec 2018 so hopefully there are still buyers out there at this level.  

    Keep in mind this is a weekly chart and we spent two weeks down around this level in 2018 – this is just day 1!


  22. Things look cheap now, but I really don't see anything that I would buy now! How many businesses will need to be bailed out? The E in P/E could be zero for lots of company in the next 2 quarters. I am still waiting to see the real number of cases in the USA and the impact it will have on the health system. By the time we are done, people might actually beg for Medicare for all…


  23. I've got some CLF calls that are up for no reason I can fathom other than volatility, but for some reason I cannot enter an order to sell. Getting an "instrument cannot be traded" error. Is trading halted on certain tickers, options and all?


  24. Key U.S. Health Agency Suffers Cyberattack During Coronavirus Response


  25. BTW, not a doctor, but news from France is that taking ibuprofen to reduce Covid-19 related fever can actually make things worse overall. Something about the anti-inflamatory properties. They recommend acetaminophen instead!



  26. US moves nearer to shutdown amid coronavirus fears




  27. Don’t Feel Sorry for the Airlines


  28. 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 99.64 (so 0.36%). 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. 


  29. Phil, WHR has dropped about 40-45%

    A FY2022 $80P sell for $15-17$, 5 contracts elicit your interest? Thanks as always!


  30. Now that Gov. Newsome has placed over 65 residents under virtual house arrest as of Sunday night (In California, the new orders are “guidelines” that “we have the capacity to enforce if necessary,” Newsom said) along with closing/restricting many small businesses, which will result in real economic pain for many who can least afford it. Makes one wonder how much this action has been thought through and given consideration to the very real trade offs entailed. I get the logic (or is it knee-jerk) but being a cranky old cynic leads me to think it's at least a bit of political CYA. Just my random thoughts from my Orange County "cell". :)


  31. Waiting/StJ – I agree, certainly not the right conditions to dive in at the moment – no clarity.  

    CLF/Dawg – Yes, a lot of long are up only because of the VIX so be careful.  I think the broker systems are overwhelmed (again).  

    Is Robin Hood down again?

    Anti-inflamatory/StJ – I heard that too but wasn't seeing confirmation yet.

    Euro Futures/Palotay – Too exotic for me!  

    WHR/Jasu – Sure I'm interested but I think the rule has to be are they lower than Dec, 2018?  WHR hit $100 so about the same but then we didn't have a World-ending virus so certainly should be watched as one we'd love to buy but cash is king today.

    Guidlines/Pstas – The Government has to consider the trade-offs, which are:

    • Allow the virus to spread:  People panic anyway and self-quarantine.  Hospitals overwhelmed, possible millions die.  US becomes a pariah nation for allowing such suffering and endangering the rest of the World by allowing a deadly virus to progress unchecked through a large population —  This is not a good option, economically or electably 
    • Set up massive screening and quarantine all potential threats (many Asian countries are doing this effectively):  Legally tricky but it allows commerce to continue.  --  Have to trade your political career for economic stability as, either the virus still spreads and you are called a fool or the virus is stopped and your efforts get called "unnecessary".  
    • Mitigate the virus: Wimpy combination of the two that allows the virus to spread but hopefully not so fast that it overwhelms the health care system.  — takes an economic hit but with a full population of live people – that can be fixed by the next election and you can be the guy who led the recovery — WINNER!!!

  32. QQQ is only back to where it was last March.


  33. The Bug – here's a solid twitter thread on the ibuprofen, blood pressure med rumor: https://twitter.com/angie_rasmussen/status/1238946939984416768


  34. TSLA $380 target does that mean the $1200 target wasn't really a great one


  35. Phil / Silver – that was indeed a strong buy at 12. How about Silver at 13?


  36. Full market S&P down 25% but COST only 8%

    My wife went just to do regular shopping during the week at opening time and did not even try to get in because of lines.  Will if go up more than the regular market when things calm down?  Or will it be less since it did not fall as far and no more hoarding?


  37. Phil Congrat on your TSLA 500 theory!!!


  38. Is the market starting to realize this bug isn't such a big deal? We're one pre-emptive vaccine/cure announcement away from a bull market.

    Dems just want medicare for all pushed through. They see this plague as their political ticket. Nothing else matters to them. 


  39. I'm going back in to TSLA looking for 900. Bitcoin 10,000 (then to 25k). Gold 1800 (F that! 2400).

    Not yet though! Timing wise I have no idea but definitely not today, and maybe not until March 2021!


  40. AAPL not bouncing much


  41. Well things here in Spain (where Yodi is too) are in an unknown zone, we have a first in a century coalition government of socialist and communist which is supported by fragile network of small regional parties (separatists, the Spanish Sinn Fein, and some others with just 1 Parlament man! so they are moving bad and late because there is no unity and command, things are out of control, we are now in confinement for 15 days but gossip is that an extra 2 weeks will be compulsory.

    So, the scenario is having 1 million of new jobless that can create a serious social problem, and now the socialist are the ones on command, so no capitalist and liberals to fingering… and a budget that has been frozen since 2017, there is a gossip of a jumbo economic package of 100 billion for tomorrow, not clear how this will fit with EU… but is what it is.

    ….and my portfolio remains -45%


  42. STJ – How's your VXX play doing?  I almost had a heart attack this morning, when VIX wasn't trading at the open, and VXX was up huge.  It finally opened, and the VIX gains came close to negating the loss, thankfully.  I think I'm going to call it quits, and closing today, with a 13% loss to my portfolio.  The fact that the VIX option market can just not open for 45 mins in the morning, and that is what I'm relying on to avert doomsday in my portfolio is just too crazy for me at this point.  


  43. I closed my 2021 TSLA 580 put at 180 — if it goes to $380 i would still end up losing $2000 more

    I am going to sell a 2020 400 put for $150 if I can get it

    thoughts?


  44. Is VIX the only play in town? 


  45. VXX / Palotay – I reduce my position again today. It's down to a very small position now. I closed my VIX calls too soon so the loss is bigger now – probably over 20% when all said and done. So lesson learned there. There are bad days still ahead so have to preserve capital for now. I will make up some of the losses when we start seeing some daylight again! But with more guardrails for sure! Right now it seems like a worst case scenario – financial and health. 


  46. sorry make that a 2020 $450 put for $140 — not even sure I love that

    I have short calls that are paying for the roll

    -1 June 2021 580 C and -1 June 2021 680 C and -2 2022 $1200 C

    I am keeping (for now) my -2 2021 $480 P for now since the $140 premium covers down to $340 which hopefully is safe


  47. VXX / Palotay – I was contemplating rolling to the 95 strike which might have looked safe just weeks ago. But can't pull the trigger – what happens to the markets when they start talking about the number of cases in the US. Another shoe will drop!



  48. Russell 1100, first index to completely erase trump gain


  49. Joe and Liz would probably be a good place to start a hilarious TV sitcom….

     

    I present, once again, your future Vice President!  :)

    https://www.rollingstone.com/politics/politics-features/stacey-abrams-census-voting-rights-vice-president-953173/


  50. STJ – My loss was materially worse when I exited, due to the gigantic bid/ask spreads in the $80 calls.  Repositioning is very expensive when it is like this, as I'm sure you know.


  51. StJ,

    I spoke with other physicians in France a few minutes ago and they confirm they are saying to stay away from NSAIDs.  This would be advil like products.  No cautions against Tylenol.  Some websites are claiming this is a hoax, however, I am not so sure.  Once article I read about COVID-19 stated part of the respiratory response seems to be this virus attaches to one of the pulmonary ACE receptors in the lung.  This is not new (https://pubmed.ncbi.nlm.nih.gov/16581295/).  This happened with SARS.  Part of our renal control is related to the lung.  Long process, but likely isn't worth going into.

    At this point, I will not be putting my patients on NSAIDS for fever.

    Don't forget, I've been saying on here for weeks they have been lying to us.  Sadly, this is all proving me right :-(  

    We need to take this seriously and that includes us on this board. 


  52. CNBC had a guy on that said "mortgage your house, take the money and buy stocks"!
    Amazing, that advice was completely free.


  53. For those who want to keep tabs real time

    https://ncov2019.live/data


  54. TOL has gotten cheap in a hurry….


  55. Thanks Snow.

    TSLA/Coulter – Weren't people saying $5,000 or something?  Peak idiocy….

    /SI/BDC – No thanks!  Happy to take $5,000 per contract off the table and be done with it!  

    Very tight stops here ($13) or if /GC fails to hold $1,500 (now $1,508).  

    /CL back to $29.50 but those I'll hold ($29 avg) as I think that's a good price.

    COST/Tangled – Holding up very well.  I don't think they'll go up much as their earnings aren't really affected by shopping – just memberships.  They pretty much break-even on the shopping.

    Thanks Yodi – I only wish I had taken better advantage of the move but they broke my conviction when they went back from $600 to $800 that last time.   

    Submitted on 2020/02/19 at 3:03 pm

    TSLA/Coulter – I'm a lot more worried about TSLA triggering our short $550 puts than our short $1,000 calls.  That's enough risk for me (unless we can sell $1,000 calls for $100+ again).  

    Good luck with those trades BDC! 

    Spain/Advill – Sounds nuts.  Jumped up to almost 10,000 cases really fast.  Speaking of fast:

    That's a lot more since this morning (above).

    Down 45% is about right, Advill.  A lot of it is premium though (assuming you are doing LTP-type plays.

    TSLA/Coulter – Who knows where the bottom is if the market keeps tanking.  Unless they do an auto bailout based on market cap rather than number of cars actually sold – these guys are in big trouble!

    VIX/StJ – And that's why I stopped playing them (not that the stuff I am playing is any better).  

    Cool stuff Dano.  I'm hearing from way too many medical people that they think it's a lot worse than the Government is admitting though I can't say I'm seeing that from the numbers in Asia – perhaps we're more susceptible?  More likely it's Westerners don't habitually cover themselves when they are sick or avoid getting others sick to any great extent and certainly we don't know how to self-quarantine and the Government is too spineless to act in loco parenti.  

    Good advice Kustomz. 

    TOL/1020 – I don't think home buying will be high on people's list for a while.  People don't even want to look at houses for fear of catching the virus and people don't want to sell houses out of fear of infected people coming into their home.  

    So many ways our economy is fragile! 


  56. Phil – In a scenario like the one we are facing, there is simply no safe play besides cash! Like I said Friday, we are learning valuable lessons. Not cheaply, but limiting the damage now. Hopefully we can assume that this is a once a in decade crisis! But we'll plan for once every year…


  57. As predicted earlier:

    This is just so predictable!


  58. Any thoughts for how this might all play out in regard to inflation 6+ months out, especially if there's a credit crisis?

    I'm looking to short TLT again if we see the 170s and am considering some long TIP against it, maybe 2:1.


  59. Thanks all for your intelligent and calming attitude and information that is shared. Just want to remind everyone to use wipes on credit card terminals for debit cards. And many grocery stores were out of the sanitizing wipes. Florida restaurants are still packed and those coming in on flights said there were nothing as far as cleaning so you have to carry it with you. That was Frontier. Anyways trying to get out early from Fla in fear that will shut down all flights. Knew that 2000 up Friday was a complete facko move then the Feds making a move on SUNDAY? Nothing move contived than that!


  60. Next line of support for NYSE is around 9500! Then 9000.


  61. Travel/Pirate – one of my top two fav youtube posters, railcowgirl, a Norwegian train driver, went to Florida for a Norwegian sky-diving skills seminar. I have no idea why or what, but that's what she said. Anyone she arrived before the travel ban and is now stuck in Florida – but getting much better at sky-diving…..


  62. Still, we're just trading back in the old range really:

    CASH!!!/StJ – That's why I cashed out last year and we reset with smaller amounts for the duration – this being the duration, of course…

    Inflation/Ati – Well they are flooding the market with liquidity and, if it turns out it wasn't necessary, then inflation could snowball fast but, other than a mild case of virus that affects far less than 10% of Americans and disappears – I imagine we're not going to worry about inflation through Q2 at all.

    Be safe in your travels, Pirate.  







  63. BREAKING NEWS: White House considering cash payments to U.S. workers




  64. SQQQ/Youngy – Well, I'm not ready to change the STP.  Our current hedge looks like this:

    SQQQ Short Put 2021 15-JAN 20.00 PUT [SQQQ @ $28.29 $5.17] -15 1/17/2020 (305) $-6,900 $4.60 $0.95 $-50.93     $5.55 $0.25 $-1,425 -20.7% $-8,325
    SQQQ Short Call 2021 15-JAN 35.00 CALL [SQQQ @ $28.29 $5.17] -100 3/9/2020 (305) $-81,000 $8.10 $2.80     $10.90 $3.69 $-28,000 -34.6% $-109,000
    SQQQ Short Call 2020 17-APR 32.00 CALL [SQQQ @ $28.29 $5.17] -50 3/16/2020 (32) $-42,500 $8.50 $-2.10     $6.40 $3.40 $10,500 24.7% $-32,000
    SQQQ Long Call 2021 15-JAN 20.00 CALL [SQQQ @ $28.29 $5.17] 100 3/13/2020 (305) $120,000 $12.00 $2.10     $14.10 $4.64 $21,000 17.5% $141,000

    The main spread ($20/35) is still only net $3.20 so a good deal on the $15 spread that's half in the money – that's what I'd go with.  On the short put side, let's say you wanted $100,000 worth of protection.  Well it's a $15 spread so 60 of them would pay $90,0000 for net $19,200 and then you can offset the $19,200 by selling puts on stocks you REALLY want to own if they get cheaper (see last Thursday's post for 10 ideas) and there you go!


  65. Speaking of the STP – as this may end up being all we have left from the $600,000 LTP/STP combo – we need to think hard about whether it's good enough (LTP down 66% at the moment but paper losses).  Keep in mind we just spent money on the LTP and sold those puts last week so it's hurting with the VIX over 70 and another 10% drop in the market isn't helping.

    The idea of the STP/LTP is to maintain the buying power so, if the market drops 50% and we have net $300,000 left – we can still buy $600,000 worth if stock, right?  It doesn't feel good at the time but, IF we recover – it works out fantastically.  So far, we've always recovered but maybe this is the end of all things…  Probably not… 

    • MUB – Great call by BDC – let's cash it out.

    • AAPL, CHL, FXP – What are 3 short puts I'm not worried about?  CHL should transfer to the LTP and turn into a full trade but not in the mood to spend cash at the moment.

    • QQQ – We're comparing it to SQQQ and, so far so bad.  The higher VIX hurts the play but, realistically, it's a $60,000 spread and we can roll the short $175 puts and it's currently showing net $15,855 so $44,145 left to gain if QQQ goes just a tiny bit lower.  

    • SQQQ – We have the $150,000 spread that's $80,000 in the money at a net  $8,325 credit so $158,000 left to gain if SQQQ pops 15%, which would be a 5% drop in the Nasdaq.

    • TLT – Geez, we got killed on these.  Still, I like the play long-term but it's just crazy at the moment.  Not much to do but wait.

    • TSLA – So funny, now the short puts are hurting us.  Since we sold them for $64, our break-even on that side is $486, which is about where they are and we can roll 5 Sept $550 puts ($94,000) to 10 Jan $400 puts at $100 ($100,000) so we have $150 in cushion before we're in real trouble and, of course, by then we could sell other short calls to cover so I'm not worried – just annoyed.  And, of course, at $188 per contract, they are almost all premium, which is ridiculous so I'm not inclined to do anything here.  

    • UNG – We only need it to get to $15 to collect $15,000 and it's net $5,410 now so about 200% left to gain means it's good for a new trade too and yes, we expect to collect the whole $9,590.

    • USO – This is amazing.  We are down $13,500 and the question is do we want to play USO to recover.  Sure we do – this price is silly and not likely to last so we close this and take the loss and we sell 20 2022 $10 puts for $4.50 ($9,000) and we buy 100 of the July $3 ($3.25)/$6 ($1.15) bull call spreads for $2.10 ($21,000) so that's net $12,000 on the $30,000 spread and all USO has to do is hold $6 (well, we'll have to roll the short puts) and we expect to make $18,000.   That's worth sticking with.  And it is making $18,000 as the $13,500 loss is already in the net of the portfolio.

    So there's $229,000 left to gain if the markets keep going lower and we're at net $208,747 now so we'd have about $440,000 in the STP plus whatever is left in the LTP out of $600,000 we started with if this disaster continues.  And, of course, the stocks would be 50% cheaper so, when we re-deploy the cash, we should get a lot of great entries.  

    As I pointed out last week, our March 2009 set of plays were 13 trades that made 350% over the next 6 months – I believe off a $69,000 investment at the time.  That's the key to good hedging – make sure you do have cash available when the market hits the bottom but we don't know when it will bottom so we add more stock along the way and, if that floor fails – it's more hedges and then more stock and we wash, rinse and repeat until we REALLY find the bottom.


  66. Maybe you should only do STP :)


  67. TheBug/danos – ummmm COVID-19 causes LFT elevations and acetaminophen is hepatotoxic. Bit of a worry if you're recommending that over ibuprofen, no?


  68. Wow, the second Trump opens his mouth the markets tank


  69. Thanks Phil re the SQQQs.

    Had a nice win today with my SPY long PUTS. Will look at an SQQQ position this week.


  70. Looks like he won't be signing this stock chart speech !


  71.  Selling picked up when President Trump mentioned July/August as a possible time for recovery; Feels like an overly conservative outlook but curious to see if markets can hold near the session lows.

     

    And he's too dumb to realize that every time he opens his mouth, the market sells off.

    Unless his buddy Putin is running a short account for him.


  72. Hi Phil,

    Unprecedented times! Hopefully we'll get more testing done and with the aggressive social distancing help to flatten the curve of cases.

    Do you have any adjustment suggestions for MIDD:

    18 Dec 2020 120 Call   (-10) @$9.60  (now $1.775)

    18  Dec 2020 100 Call (+10)@$20.60. (now $2.62)

    18 Dec 2020 110 Put    (-10)@$8.60 ($45.25)

    Thanks.


  73. TLRA – Best short of the last 10 years !


  74. Trump is just so far out of his league here! The lack of empathy is just evident now. And being completely disconnected from the lives of regular folks!


  75. I sure did pick a hell of a month to try and short VXX, (and to quit sniffing glue).


  76. The Must Hold line for the Dow from 2017 was 21,000! How cow, we might need to go back 4 years to find the appropriate lines!


  77. VXX / Palotay – But it was a good month to go long the VIX, right! So as I said, lesson learned for me. Still going to do it moving forward because the system will work 9 out 10 years. But with more protection for sure and less risk.


  78. Wow, 3000 points on the button! Best market ever… #TooMuchWinning #SickOfWinning #CanIJumpOfTheWinningTrainNow


  79. LOL Tangled.  Well, I've been such a skeptic it was getting boring.  I guess I should have been more relentless.  If it wasn't the virus, it would have been something else, this market is collapsing because it never should have been that high.

    I am very pleased that the vast majority of our Members are not in a panic over this thing.  Our hedges keep us well-prepared and we didn't over-commit to the rally – but it's still painful to ride this out.

    Trump is not helping at all.

    Now he's saying "this is so contagious – it's a record-setting type of contagion."  Great!

    You're welcome Youngy!  

    Trump says he will back airlines 100%.  Even Spirit?  

    Russell down 13% – which is the 2nd circuit breaker.  

    Trump says avoid gatherings of 10 or more people.  Was 50 this morning.  Tomorrow it will be "avoid human contact".  

    OMG, 179,000 confirmed now, 7,079 dead, 78,078 recovered – big jump in infections and deaths since this morning.

    MIDD/Scout -  Since we don't know where a bottom is, you don't want to over-commit though this position is pretty-well shot.  You were in for net $2,400 and you committed to buy 1,000 shares for $110 ($110,000) so that's where you are.

    Effectively, you now own MIDD.  Did you REALLY want to? With MIDD at $64, doubling down would only take you down to about $87 so still not too attractive, right?  

    The short $110 puts are $45 and the $75 puts are $18.50.  You sold the puts for $8,600 so the loss at $45,000 is $36,400 so you can roll down to 20 short $75 puts for $37,000 and that's net even (ish) but, of course, now your buy obligation increases from $110,000 to $150,000 at $75.

    If you were to combine that with 15 of the Dec $50 ($22.50)/$70 ($11.50) bull call spreads for $11.50 ($17,250) and sold 5 April $75 calls for $3 ($1,500), that would be net $15,750 plus the $2,400 you put in before is $18,150 that you are in for and, at $75, you collect $30,000.  So it maintains an upside that's reasonable and considerably lowers your strike.  

    For sure, Palotay:

    Image result for i picked the wrong week to stop animated gif

    Good old Trump, he tripped the circuit breakers at the bell.  Another useless press conference that accomplishes nothing.

    Now both my kids lost their jobs.  Sure – things are just fine…


  80. Phil/jobs – we're going to need a create a new social-economic order. There's no way we survive this economically using the old model.


  81. Trump / Phil – Can you imagine being a Trump follower and listening to him today and trying to reconciliate with what he was saying just a week ago. This must take some incredible mental flexibility! We went, from "No worries, just like the cold or the flu" to "Most contagious thing ever, stay away from each other".  Thankfully the virus is not evolving as fast as Trump's lies!


  82. BDC – There goes the small government GOP and deficits hawks!


  83. Best short was TLRY, not TLRA.  Another fat finger


  84. DOW down 3000 is the Fake News Media conspiring against Dear Leader Trump!

    (it was down 2,997.10)


  85. And right on time:

    https://talkingpointsmemo.com/news/gop-senators-romney-cotton-democrat-coronavirus-responses

    Sen. Mitt Romney (R-UT) and Sen. Tom Cotton (R-AR) have some ideas for helping American individuals and families handle the economic fallout of the COVID-19 outbreak–ideas that hew close to Democratic ideology.

    On Monday afternoon, Romney issued a variety of proposals that included a decidedly non-conservative universal basic income measure.

    “Every American adult should immediately receive $1,000 to help ensure families and workers can meet their short-term obligations and increase spending in the economy,” Romney said in a press release.


  86. How does that WHO idiot still have a job? Remember when he said we shouldn't be banning flights from China as fearmongering? Oops.


  87. St Jean/Snow thanks for my laugh of the day!! I'm bummed because my HOA shut down the pool!!  Don'rthave my sanitizing swim and stress reliever plus can't get my socializing done! I cashed out way too early on Sqqq and Vxx. Join the club, right? 


  88. One picture, one thousand words:


  89. I've been saying that for years anyway, BDC.  Yang is right, we must move to UBI, the bottom 80% will not survive.

    Small Government/StJ – Yes, the Government is now so small it's dysfunctional and that leads to budget-busting multi-Trillion Dollar disasters.  SMART!

    TSLA down $100!  

    Pools/Pirate – There's always the beach – haven't shut that down – yet.  

    RUT/StJ – The Trump Error is drawing to a close.  Scary though with rates already at 0 and the Fed with a bigger QE than they had in 2008 and it's not helping at all.  


  90. we're watching a deprecated system of currency creation die.

    Hudson puts all of the elements together, but he is still thinking of changing the system from within the system, and not replacing it. He's close, but he doesn't quite get it.


  91. To Battle Coronavirus, 6 California Counties Order Everyone to Stay Home



  92. U.S. Cannabis Market Sales Reach $13.6B




  93. This is worse than a case of "the black shit".

    https://www.youtube.com/watch?v=4diIC2MRjiA


  94. If Amazon hires 100,000 workers, Trump will have to praise Bezos! Gonna be fun to watch…



  95. Hong Kong (and to a lesser extent, Taiwan and Singapore) went through SARS and the lessons they learned during that time helped them nip CovID-19 in the bud despite being directly connected to China.  

    Many things in our daily lives will change in order to stop the infection, but the lessons we learn and the new institutions we build in order to deal with the outbreak is like an analogy for the human body building antibodies and immunities against pandemic outbreaks in the future — in the same way that we have built up immunities against terrorism. Its not just us, but all countries including China will have better daily hygiene standards and habits after this is all over (including, hopefully, less consumption of wild animals).  By that very virtue we should have less occurrences of these type of coronavirus pandemics.  And even if we do, we will be much better prepared to deal with it, like Hong Kong and Taiwan did.

    Its only painful for us this time, because its the first time we've had to deal with it.  The next time, our immune systems will kick in, literally and figuratively, to prevent it from getting as bad again.  Sure our lives will change after this is all said and done with and there will be a "new normal", but in many ways I think it will be for the better.


  96. Glimmers of hope:  had to go to two markets today.  In one with self checkout touch screens they wiped them down after each customer.   In both even though cold and flu season and they were moderately crowded I heard not a single cough or sneeze.  Maybe the sick really are keeping away.


  97. Oh and if the coronavirus becomes a seasonal virus like the flu, then paid sick leave and telecommuting might become a common thing.  It will be in a company's best interest to have their infected workers stay home and work remotely rather than have it spreading throughout the office infecting everyone.  In that case, sick people in self-quarantine will want to have their food and groceries delivered to them (which small and local businesses will have to consider) so they don't need to go out and their kids will want to keep up with classes, so remote learning systems will need to be implemented.  This is ALL GOOD for companies like CSCO, INTC, ZOOM etc. who are the deliver these kinds of services, as well as any BtoB services that help develop and run online ordering and delivery services for small businesses.  


  98. Also cashless payment systems! Because who wants to touch dirty, filthy virus-covered money.  More people will want to go cashless so companies like Venmo, Stripe, PYPL, V, MA, DFS, etc…


  99.   A small positive anecdote- all is not halted – I just dropped a package at the local FedEx Office and there was a waiting line. The clerk said he did not see any drop off in business today. Every little bit counts!                  



  100. BREAKING NEWS: San Francisco announces three week lockdown





  101. Sorry for all the rambling but staying locked up at home is so boring that I've basically just been speculating about where to put my money once this is all over.  "Social distancing" has quickly become the big buzzword, so what better way to socially distance yourself than to put actual distance between yourself and others by moving from densely populated urban centers to sparsely populated rural areas. 

    There has already been a trend of millenials migrating out of high cost urban centers out to lower cost suburbs. Thanks to the social distancing, remote working, online business boom that the coronavirus is going to kick off, one would speculate that Generation Z (Zoomers) who are just entering adulthood right now, will expand on that trend and start migrating out to even more rural, low-cost areas.  Now that EVEN REPUBLICANS are bandying about UBI as a serious policy (#YangGang2024) and interest rates at zero, wouldn't once vaulted homebuilders like HOV, TOL, LEN be at the receiving end of a huge tailwind?


  102. On and if a public option/Medicare for All type bill gets passed, that means you are no longer tied down to your job for healthcare and that opens even more opportunities for migration out to less populated areas!


  103. Feds need to kick out a billion masks and get them out to everyone.  In Hong Kong and Singapore who both stopped the spread quickly every single person out in public wore a mask so if they have it they do not easily spread it.


  104. What tripped the circuit breaker at 9:20



  105. New York’s Nightlife Shuttered to Curb Coronavirus



  106. A Guide to ETF Liquidation


  107. Hit by virus, US airlines seek aid far exceeding post-9/11