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Monday Market Movement – Nasdaq 11,000 and Bust, Again?

Apple $425, Nasdaq 11,000 – Yipee!!!

As you can see on the chart, AAPL is up almost 40% for the year and AAPL is 15% of the Nasdaq so it's responsible for 6% of the Nasdaq's rise from 9,000 to 11,000 (22%) for the year so 27% of the Nasdaq's rise is due to one stock and then you have to consider the suppliers Apple boosts along with their own stock.  

Apple is having a break-out moment as $425 per share is a $1.8Tn market cap so we're just 10% away from $2Tn in valuation at $470 – get your party hats ready.  $2Tn is the GDP of Italy (#9 in the World) or Brazil (#8) with France, India and the UK, with population of 65M in France, 1.4Bn in India and 67M in the UK doing a piss-poor job comared to Apple's 137,000 employees.  Is the average Apple employee 10,000 times more productive than the average Indian?  If so, it's hard to explain the valuation of Infosys (INFY). 

Speaking of companies that are worth $1.5 Trillion (yes, there's more than one now), Microsoft (MSFT) is trying to buy TikTok's North American operations so they can have something cool in their portfolio (now that's they've given up on Bing).  President Trump has been helping Microsoft by threatening to ban TikTok in the US, devaluing their platform and scaring the company enough for MSFT to swoop in and make an offer – good old-fashioned strong arm tactics from your favorite Oiligopolists:

“Microsoft appreciates the U.S. Government’s and President Trump’s personal involvement as it continues to develop strong security protections for the country,” the company said in its statement.

Big Brother Isn't Watching You — You're Watching Him! – LobeLogThe deal would land Microsoft the breakout social-media player of this decade. It would give Washington a win over Beijing by bringing a Chinese technology crown jewel under U.S. ownership. For TikTok parent ByteDance it would resolve the national-security concerns that threatened to thwart its U.S. operations.  The proposed transaction gained the blessing of senior Trump officials, including Treasury Secretary Steven Mnuchin, who saw value in an American company getting access to sophisticated TikTok algorithms that decide what videos users are served.

“Now I will tell you the answer to my question. It is this. The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power, pure power. What pure power means you will understand presently. We are different from the oligarchies of the past in that we know what we are doing.

All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives.

They pretended, perhaps they even believed, that they had seized power unwillingly and for a limited time, and that just around the corner there lay a paradise where human beings would be free and equal.

We are not like that. We know that no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship.

The object of persecution is persecution. The object of torture is torture. The object of power is power. Now you begin to understand me.” George Orwell, 1984

Despite the glorious leadership of Big Brother Trump, we will be shorting the Nasdaq (/NQ) Futures at the 11,000 line with tight stops above, any time we get a break below this week – starting with this morning.  Apple had their eanings report but now we hear from the rest of the Qs and some of them are bound to be ugly.

We have our Non-Farm Payroll Report on Friday, PMI, ISM and Contstruction Spending today, Factory Orders tomorrow and PMI & ISM Services on Wednesday, so some good data to chew on along with 4 Fed speeches but the real news is the earningspalooza this week with about 1/4 of the S&P 500 reporting:


God money's not looking for the cure.

God money's not concerned with the sick among the pure.

God money let's go dancing on the backs of the bruised.

God money's not one to choose

Head like a hole.

Black as your soul.

I'd rather die than give you control.

Bow down before the one you serve.

You're going to get what you deserve.


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  1. Good Morning

  2. AAPL – market cap comparisons to annual GDP? I believe this Financial Times article gives a better way to compare corporations to various countries' GDP. EBITDA + employee compensation expenses.

  3. No $600 UI checks for millions this week! But have no fear – corporations are still getting bailed out. Apparently, $600 is an incentive to stay home, but $1B is an incentive to go to work. Let's give all unemployed $1B then!

  4. Might become antri-vaxx myself:

    Scientists at the Food and Drug Administration (FDA) are reportedly concerned that the Trump administration will improperly rush the process of approving a vaccine for COVID-19 as a Hail Mary before the presidential elections this November.

    The New York Times reported on Sunday that several health experts involved in the government’s efforts to find the vaccine fear how politics may interfere with their operations given how the White House had pushed for an October deadline.

    Dr. Paul Offit, a member of the FDA’s advisory panel for the vaccine, told the Times that “a lot” of those involved in the government’s efforts to find the vaccine are “very nervous” about the White House bypassing standard processes of approving new drugs to churn out the crucial vaccine as soon as possible.

  5. Good morning! 

    On Friday, Rookie put up a great list of his notes and I'd like to add a few comments:

    Rolling Down:  When the long call goes down, check to see if you can roll down to a strike where you can get that for 50 cents on a dollar

    Rolling Out:  Similar to the above.  When you see the stock needs more time to recover based on the fundamentals, you want to roll out using 50 cents to a dollar

    When you buy stocks if it is down 20% DD and if it goes down another 20% DD again and keep doing it.

    TSLA/CMG, etc.  Since it is so volatile I don't touch those stocks because I don't have the mental strength to deal with so much action up or down.  Phil used to stay – know your personality before trading

    When to Quit – I just follow Phil on this one.  I am still learning

    FOMO – We all have done that.  One thing I use are the MACD/RSI and trade suggestions before initiating the position.  On INTC, I see 45 has held strongly for the last couple of years.  So I am waiting to initiate a positiion around that price.

    BCS Rolling:  When the price of the BCS you paid is equal to the price of the long call you should initiate the roll.  Any later than that it becomes hard to salvage.

    Rolling Down – 100%.  If you are going to stick with a position then you'd better plan on improving it when you have the chance or what is the point.  Why do people think stock investments don't have to be maintained.  You maintain your car, you maintain your house, you maintain your business, you even maintain your children don't you?  You re-invest in them and pay to keep them safe and protect them and insure them and you work hard to improve them whenever you can.  

    Why then, would we sit passively by and leave our investments to the whims of chance?  Clearly that makes no sense yet that's what almost everybody does and it's a huge mistake.  A lot of stocks we SCALE INTO are fixer-upper opportunities and we KNOW things may not go well at first – that's why we scale in – we EXPECT to spend a lot more money on the position and improve it over time so, EVENTUALLY, it will become strong enough to grow on it's own.  

    I guess it's been too long since I made you watch this:

    Best video about long-term investing ever! 

  6. Good Morning.

  7. GOLD- Have owned shares for a while back to 12/2014 and after trading around the positions and selling callers my cost basis is around $12. Sold some to get my initial money back so now a "free" ride.

    So, do you think this one has more room to run? Cover remaining shares with callers? Convert remaining shares to BCS? Suggestions? 

  8. Rolling Out – 88%.  Rolling out (in time) is more of a retreat and the considerations are more complex than simply 0.50/$1.  It's not a reflexive action but a very important part of a repair process, IF necessary.

    Doubling Down – 50%.  See the article on Scaling In in the Strategy section above.  Stocks go up and down 20% all the time, that's a normal range.  We try to buy at the bottom of our range so, if a stock goes down 20% we need to strongly consider whether it's time to DD or not and GENERALLY, I consider a 20% drop simply time to re-examine our premise and IF we think it's down for silly reasons AND we are only at stage 1, THEN I might decide to DD on a 20% drop.

    More often though, you see me do nothing because we usually have time and if the stock is going to hold 20%, then we don't need to do anything but IF it falls another 20% (40% below our entry) AND we still want it, then we can TRIPLE DOWN at 40% off and have 3x our initial entry and STILL have about half our buying power left on the sidelines.  THAT is why you see me "chase" those stocks that tank – it's just too good to pass up at those levels and we're only risking 1/2 an allocation block so, unless our premise has been shot to hell, I'm more inclined  to stick with it BECAUSE I didn't pull the trigger at -20%.

    If we do DD at -20% it's because I think the sell-off is just plain stupid, like INTC at the moment.  It's only a bit below our $50 entry but, if it did drop to $40, I'm not going to be waiting for $30 to DD!  

    Momo's/High Flyers – 100%.  I like to F around with these WHEN WE ARE WAY AHEAD.  I don't mind gambling with house money and some of our most spectacular gains have come from these trades but also our most spectacular losses so not for the feint of heart – or margin!  

    When to Quit – 50%.  Don't follow me, I'm as bad as anyone sometimes (FTR springs to mind).  I'm a sucker for believing annual reports since it's a criminal offense to lie on them but that doesn't seem to stop anyone these days, unfortunately…

    FOMO – 90%.  Enemy of all of us.  Doug at the hedge fund is a big RSI believer while I tend to not care much about technicals and focus on buying bargains and then being patient.  I think my FOMO fear is driven by you guys more so than my own desires as I'd be very happy to be in cash and hanging out in New Zealand or somewhere else that's pretty and unpopulated until this virus blows over.  As it stands, we all have nothing better to do all day so we sit down to trade but that is NOT how I like to trade.  I am very Buffett-like in my style as I'd rather just sit on CASH!!! until there's an opportunity to buy a bargain – even if it takes years for there to be one.  

    BCS Rolling – 100%.  Back to the maintenance thing again.  You buy an asset, that's the long call and you sell premium, the short call – and that's your net.  If the asset drops to the price of your net entry then either you are going to pull the plug or (surprise) REINVEST in that asset and move it to a better location in time and strike – depending on what you are willing to add to it.  

    Great job by Rookie – thanks!

  9. FCEL has been a fun little cash machine – I didn't sell the puts as in the future portfolio but went with covered calls instead. I'm currently several rounds into trading calls against the stock and my basis is about $0. Very healthy options premium for a $2.50 stock. 

  10. NTAP, Phil thoughts?

  11. NLY- current take on this?

  12. US manufacturing improves in July, future clouded by virus

  13. FDA’s Shifting Standards for Chinese Face Masks Fuel Confusion

  14. Phil,

    Thanks for the suggestions with the Rookie posts. Any guidance/ insight on what to do with positions that are ahead of schedule in our overbought market. Should the higher strikes in call spreads be rolled up sometimes or just take most of the profits and go to cash? ( Asking for a friend)

  15. Phil / SIX

    What's your take on Six Flags?  Obviously they are getting crushed with COVID.  Looks like revenue, gross profits were trending up but so is debt.  do you think they would be a buy out candidate or even survive this mess and continue to grow?  I suspect they will hit $10 again as there is no end in sight.  Thinking 3-5 years down the road will they be back on track?  TIA!

  16. Ahead of Schedule/Randers – This is a good training week.  My rule of thumb is cash things that are up 60% with more than a year (1/2 the time) to go and up 75% with 6 months (1/4 time) to go and 85% with 2 months (10%) to go.  So the percentages apply to even day-trading.  Whatever your time-frame, if you get far ahead of goal quickly – TAKE THE MONEY!!!  

    Like this morning, I made a very quick $325/contract on the NQs but then they went up and now waiting to short them again (11,071 now) but my goal was $500 so I stopped out before it went back to $250 – Greed Kills!

    SIX/Jeddah – They are water park/amusement parks – too scary for me.  Even when they re-open, what about potential liabilities if they become a known hot-spot?  Not for me…

    So they are good for a solid $200M and $16.50 is $1.4Bn so 7x at this price but they lost $85M in Q1 and $137M in Q2 so bleeding a lot of cash and now $4Bn in debt is up $400M since 12/31 so $137M/Q is roughly their cash burn which makes sense as they do $1.5Bn in revenues and make $300M pre-tax so running costs are $400M/Q and figure they are able to save 1/2 to keep the lights on but who knows how long this will go on and if people will race back to pools with 500 people in them and get in lines for rides with 100 people within 6 feet of you (and passing 1,000 more) for fun anymore?  

    Waiting in line for the new VR coaster at Six Flags got me like ...

    Six Flags Will Reopen Its First Park On June 5, Requiring Masks ...