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Testy Tuesday – S&P 3,135 Tested from Above for a Change

If it's Tuesday we must be testing the 10% line.

Mostly we've been coming at it from the bottom but, this week, we're trying something different and diving back to it from the top.  We did this back on June 11th (Thursday, actually) when the S&P fell from 3,123 all the way back to 2,965 on Thursday and that Tuesday (9th) was when we began the fall from 3,222, down 8% from the top in two days.  It's only 3 weeks later and no one even seems to remember it happened.  

Certainly not Tesla (TSLA) investors, who have driven that stock up to about $1,400 per share as of this morning, giving the company an implied market cap of $270Bn vs $175Bn for Toyota (TM) whose market cap TSLA passed only last week – adding $100Bn in "value" in just the last few days.  

I'm not going to get into how ridiculous this is but the answer is "SO RIDICULOUS".  This is the kind of behavior you see in a bubble like in 1999, when Yahoo was "worth" more than AAPL or IBM.  When things like this happen, it's a good time to just stay away from the markets.  We've been trimming down our long positions and we will continue to do so as I'd rather miss the end of the great rally of 2020 than be wiped out in the crash of 2020.

Be careful out there.  

 


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  1. Good Morning.


  2. Good Morning


  3. Good Morning.


  4. Good morning!

    In the STP, we are going to roll 5 short TSLA Sept $1,250 calls at $275 ($137,500), which uses $134,672 in margin to 8 short Sept $1,420 calls at $205 ($164,000), using $169,670 in margin.


  5. In the STP, we are going to roll 2 short CMG July $1,050 calls at $82 ($16,400) to 3 short Aug $1,150 calls at $62 ($18,600) and we will sell 2 Aug $950 puts for $17 ($3,400) as we have them covered with our long puts so no harm there.  


  6. Gold heading to $1,800.  

    NAK on fire!  (soon the salmon will be too)

    Our stock of the year is doing OK as well.  


  7. UBER- what is your take on these guys? I had dismissed them as a glorified taxi dispatch service but after digging in a bit more I think there may be more to it down the road. They have established a rather remarkable worldwide network that could have some interesting uses. Current financial issues are being addressed and can be fixed. Ride share has taken a hit but that shall pass. Postmate acquisition could be a plus also if integrated properly. Self driving vehicles are a ways away but could also be a plus as their platform could be a clearing house for these. Thoughts?



  8. Nasdaq chart looks like the Covid chart:

    Image


  9. Uber/Pstas – Uber is a typical dot com "get market share and profits will come" kind of play that I'm not a big fan of.  Yes, it's working for AMZN and NFLX but not worked for thousands of others who are dead on the floor.   

    So I have to give UBER $33 so they can lose $7/share (20%+) in a year?  And now they have to pay their drivers like real workers?   That's why they lost $3Bn in Q1 on 10% LESS revenue than Q4 and Q2 is going to be a total catastrophe with earnings out Aug 6th so, in this environment, my price target for them is $100.  devil

    The payoff for Uber is self-driving cars but, if so and I am GM, why would I sell the cars to Uber?  It's not very complicated to respond to a request for a car and have the car GPS take you to your destination and then self-park until needed again.  Those cars can drive right off the assembly line and go right to work, why pause to be purchased by Uber.  Uber is trying to build a moat but it's not their technology – that's the flaw in their plan.  Having a tremendous market share did not stop Jack's All-Night Candles from being destroyed by Edison's light bulb, did it?  While the delivery side hustle seems clever – it makes them more dependent on drivers again and again – any idiot can deliver a pizza – I used to do it in college…

    Big breakout for the Dow on the Big Chart – as usual waiting for the NYSE (the real market) to catch up – still below the Must Hold line.  RUT chart is a soft proxy but NYSE never hit those highs:

    Oil setting up for a nice short at $41.


  10. HMY advice?? Long 70 jan'22 $1 at cost of 2.62, short the following: 10 Aug '21 $5; 30 Jan'21 $3;20 jan'21 $4; 10 Jan'22 $4. Should I buy Nov '20$3 , Jan 21$5 diagonal to improve strike?



  11. Donald Trump’s Lost Cause




  12. Phil,

    Any thoughts on FDX or UPS? If the virus continues to be an issue for next 4 months, most of the transactions will have to switch to ecommerce mode and last mile delivery will be a blocker


  13. HMY/Millard - Doing nicely now.  I don't see what the issue is really.  You have 70 2022 $1s covered by 10 Aug $5s, 30 Jan $3s and 10 2022 $4s.   The Aug $5s are at the money, I wouldn't worry about them, the Jan $3s at $2.20 can be rolled to the 2022 $4s at $2.20 and that would give you 70/40 2022 $1/4 spreads with 10 short Aug $5s – nothing wrong with that at all.  

    FDX/Harip – You would think AMZN is doing great for UPS, it's like Christmas every day in Covid Land!  I'll tell you what I don't see is AMZN trucks – that project didn't survive or is dormant.  Lots of people using those AMZN hubs though.  AMZNAMZNAMZN!!!!  

    Move over TSLA!  

    Making $23 per $3,000 share – what a deal!  


  14. HMY/Phil -  Jan 22 $1/Jan 21 $3 BCS – When is the right time to roll the Jan21 $3 short calls to Jan 22?  


  15. AMZN trucks/Phil – I see them as often as I see the usual carriers here in LA, Phil.


  16. 3,135 on the button after the close.

    HMY/Fel – I'd say now while the 2022s have nice premium from a strong run.  Nothing left in the short $3s.  Just don't get ripped off – wait for a good price on the roll.

    AMZN/Snow – None around me.

    Not a good day, as usual, Monday is meaningless.