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Which Way Wednesday – Nasdaq 10,000 Edition

You've got to short the Nasdaq at the 10,000 line!

The first time we hit 5,000 on the Nasdaq was back in 2,000 – and we all know what happened then!   It took us 17 years to get back to 5,000 and that was good consolidation and we popped right over it and stayed there.  Well, we didn't stay there – the Nasdaq took off like a banshee and gained another 50% in 18 months and now, another 18 months later, another 33% move higher and we're at 10,000.

Even a small retracement from here can spell big money shorting the /NQ Futures, which pay $20 per point, per contract.  At the moment, the Nasdaq is over 10,000 so we play it when it crosses back under and use the 10,000 line as a stop line.  We're just looking for psychological resistance or profit-taking at this point – there's no particular Fundamentals behind shorting the Nasdaq – especially if Apple (AAPL), which makes up 15% of the index, is heading towards $350/share.  

Without taking into account a very slow 2nd quarter, which winds down this month, the price/earnings ratio on the Nasdaq is now over 30 times earnings vs 23 times earnings last year so, even without the damage done by the virus, the Nasdaq has gotten 30% more expensive to buy now.  Oddly enough, that's nothing compared to the Russell 2000, which is trading at a whopping 55 times earnings at 1,500 vs "just" 36 times earnings last year.  So, if the Russell can blast 50% higher from 35 times earnings – why can't the Nasdaq?  

Is the bond market embarking on a 1946-like 35-year cycle of ...Keep in mind that stocks are an alternative to bonds and, since bonds are paying less than 2%, what is 50 times earnings but a 2% annualized return.  While stocks are risky, there's also a chance the stock becomes more valuable over time and stocks make a better hedge against inflation as Corporate Profits are likely to inflate along with everything else.  

Housing hasn't been a good investment since 2007 despite the low rates and that's because property taxes are eating into the gains in property value – forcing the monthly cost of the homes to rise more rapidly than they can appreciate in price.  Gold and Silver have gone up in price as has Bitcoin but, on the whole, there's really no good place to put your money other than US equities and the Fed is now buying ETFs and boosting the market as are other Central Banks around the World plus there is all that FREE MONEY the Government is tossing around.

Today is the Fed Meeting (2pm) and we'll see what they have to say about things.  Until then, it's a watch and wait kind of day…

 


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  1. Good morning, All! It's webinar day!

    Join Phil at 1pm (Eastern), here:

    https://attendee.gotowebinar.com/register/887436033486292496


  2. Switched the Nasdaq to our previous lines as it's simply out of step with the other indices!

    Someone commented yesterday that trading the Nasdaq or US Treasuries seems to be the same now!


  3. Good Morning.


  4. Phil / TSLA

    TSLA taking off!

    I have uncovered TSLA July $950 calls. 

    Would it makes sense to do a BCS $950/$1100 2022 for $51.?


  5. PHARM/ RMED – always looking for interesting penny stock opportunities especially especially as related to elderly patients/ (a growing market base). Not an expert by any means but eximer lasers have been around for a while so what is the premise for RMED? What is, if anything, unique to their product? Thx


  6. Good morning!

    No chance to short yet but indexes look super-toppy.   /RTY failing 1,500 – I guess 55 times revenue might be too much after all? 

    Big Chart/StJ – I guess we should go back to all the higher lines at this point.  That makes it easier to spot a breakdown.

    Bottom/SK – I think these charts are understating the downside.  Shut down 50% of the GDP for 1/4 and the most contraction you expect is 10% overall for the year?  I think 50/4 is 12.5% and sure, you can say we were going to grow 3% but what if Q3 and Q4 don't bounce back fast and what if we have to shut down again in Q3 as the virus rages out of control?  I guess they are counting on $20Tn in global stimulus (25% of Global GDP) to erase all that but are we really going to do $40Tn if we have another wave?

    TSLA/Sk – It's a stock, stocks are going up.  July $950s are $107 and let's say you sold them for $30 and you are down $77 so you can buy them back or pick up the bull call spread for $51 and then TSLA tanks and you save the $77 but lose $25 on the spread – that's not bad so it's a good cover but do you really think they top $1,000 because the Oct $1,100s are $115 so I wouldn't consider the short July calls to be in real trouble until AFTER I did that roll and AFTER those too began to worry me – THEN I would cover with the 2022 $1,000 ($300)/1,200 ($235) bull call spread at $65.

    But, if it makes you feel better, why not do a 1/2 cover of the 2022 $900 ($337)/1,100 ($265) bull call spread at $72 so you are only spending $36 per long for $100 (per long) of upside insurance and you would be 100% in the money if you were forced to roll and DD on the long spread later.  If not though, then the short calls go worthless and you only lose $13 per short call on the cover.


  7. YOu might want to take a look at fuel cell FCEL. It is about clean energy, supply, storage and recovery. I've been in it for awhile, but it is moving higher with good options. SureSource power plants using fuel cells.


  8. Phil, what do you think the Fed will say/do today?  


  9. pirate – FCEL – I remember them from The O.B. ("original bubble," i.e., 2000). Being in this industry personally I've watched them ever since. One very positive thing that can be said is they survived all this time. They might have a run in them. If they did, it would be substantial. Risk/reward is there IMO, so I'm with you.


  10. FATE/Pirate – interesting science in using natural killer cells to do the work. Basically taking out the NK cells from someone, priming them then putting back in with different targets to destroy whatever the pathogen is (eg., cancer).  I would wait for a pullback…as it will happen.

    RMED/pstas – the company is after PAD, and it is less invasive than a diamond blade drill, that grinds up the plaque.  The laser uses the light energy to break things up, so it is more 'gentile' and also has an anti-inflammatory component based on the wavelength.  They have a large clinical trial ongoing, and it should be positive.  From there, they give the laser to the clinic or hospital, and the consumable is the money maker.  Other equipment makers charge 4-10X for the consumable, so RMED is undercutting them considerably.

    Not that it matters….but, as for the Fed, my prediction is more free money. This whole game started months ago with Morgan Stanley, and the pandemic and now blatant racism only has intensified the situation.  The Oligarchy/Plutocracy needs to maintain control, and the markets are the only outlet they can call out for a success.  This is all to help Trump.  Hands down. Powell and Munchen are at Trump's disposal.  He needs the free money to keep the interest rates low (family business), and markets up (so everyone else in his circle can benefit from shorting and longing the market before he/they act). After the election, and Trump's Game of Thrones ends, then the market tanks.  Blame it on Biden for the house of cards Trump built.


  11. BDC-yes they are certainly moving in the right direction with clean energy. They have earnings today and have a deal with XOM. They have survived and once had a price of over 200? Amazing.


  12. I know that everything tech is taking off but I am starting to get some bad vibes regarding INTC. These guys are falling behind as far as technology is concerned. Apple will roll out their own ARM processors, Windows already run on ARM. Better performances in some cases, better battery life… Danger signs for INTC methink.


  13. Pharm-Thanks for the info on FATE. I was fascinated by what they were trying to do which sounds plausible to some extent. Yes your right it has had a run up so still an iffy outcome. Your RMED seems a much safer alternative also. Thanks.


  14. Pharm-thx


  15. Gambling money…BIIB weekly 305Cs.  Just a few. If BIIB takes off, it will be a big move…


  16. 310s are also ok to try.  Again, gambling….


  17. WTF do we move markets? Got into FCEL at 2.72 and now it's 2.98 in less than an hour….


  18. Another gamble, BDX Jun 19 250c.  Small size.  Needs to move and should.


  19. Pharm, what's BD?


  20. Bdc-we probably do. Doesn't take much on small caps.


  21. bdc Think he meant BIIB


  22. FCEL now 3.23.!! Now I'm laughing.


  23. FCEL/Pirate – We sold puts in our Future is Now Portfolio, been on the Watch List from day one.  

    PLUG Short Put 2022 21-JAN 2.50 PUT [PLUG @ $5.73 $0.63] -50 3/12/2020 (590) $-5,500 $1.10 $-0.53 $-1.10     $0.58 $0.05 $2,625 47.7% $-2,875

    It never came back down so the short puts is all we got.

    Fed/Jeff – I don't know what they can do other than stay the course.  Going negative would be nuts with the market in orbit.  They will likely do one of those "whatever is necessary" statements and punt until the next meeting. 

    INTC/StJ – I think Moore's Law stopped working and that means their chips are not significantly better enough to merit company's spending the extra money.  Also, companies like AAPL are so big they can have their own chip division – that wasn't possible 10 years ago.

    Wow Webinar time already?!?

    Once something small starts trending on Robin Hood – it's all over.  


  24. Apologies, BDX.


  25. JFIN….lol.


  26. FYI…MNUCHIN SAYS CAPITAL GAINS CHANGES HAVE BEEN DISCUSSED

    Told ya….


  27. Lost audio on Phil on Webinar.


  28. Wow, so we ended up down after all.  

    Not the Nas, of course.  

    Mnuchin/Pharm – Well we certainly don't want to pay taxes on our 40% monthly gains, do we?  

    Audio/Pirate – Hopefully it's good in the replay.


  29. Hahahahahahahaha Pharm:

    Relaxing the tax treatment of capital gains to encourage investments during the novel coronavirus pandemic wouldn't be the best relief the government could provide to employers and workers, Treasury Secretary Steven Mnuchin told a Senate panel Wednesday.

    That would again benefit the top 1%. How does that help the economy restart! These guys know that the gig is almost up, they are going to try to pack as many gifts as they can for their friends in the next 6 months, damn the country and the rest of us. Then the next administration will be made to look bad because they'll have to raise taxes!


  30. This says would NOT be the best relief StJ


  31. Tangled…. remember, do the opposite of what I say….. surprise


  32. Tangled – I saw that, but my point was that they were thinking about that before they were told by Congress that this will not pass. Then they decided that it might not be best. But not for lack of trying, for lack of being able to get it done…




  33. Why this is the weirdest recession ever


  34. pharm – I got into APOG because randers1 dated the CEO's daughter in high school. All you need to do is mention a ticker and I'm in…



  35. Grubhub to be acquired for $7.3 billion as food delivery wars heat up