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Testy Tuesday – Shorting the S&P 500 at 3,350

All going as planned so far.  

As you can see from our chart, we're consolidating right in that zone between the 200-hour and 50-hour moving average and 3,350 is also the 50-day moving average, so it's a lot harsher resistance than you would think.  We gapped into that zone last week so we didn't "earn" it and we probably have very little support below the 50-hour moving average so, if we can't get back over 3,350 this week – that short bet on the S&P Futures (/ES) we discussed making yesterday could make a vey nice pay-off.

It would be one thing if we were moving up on good news but there's really not any good news to report – it's kind of depressing actually, as noted by John Oliver this weekend:

Here's the front page of the Wall Street Journal this morning:

Not exactly rally fuel is it?  205,000 (20%) of those 1M Global Deaths are in the USA, which has 4% of the Global population so Trump is killing his citizens at a rate which is 5x greater than other World leaders – GREATNESS!!!   President Ponzi will debate Sleepy Joe Biden this evening and that's going to be depressing.  Much as we need to get rid of Trump, Biden is simply not an exciting alternative.  He's "safe", not exciting.  Jimmy Carter was safe – at least he won.

Of course if Trump only loses by 2%, like Ford did, do you think he's going to go quietly?  He lost by 3M votes (5%) last election and he STILL became President.  This is the most important election of our lives, of America's life and we're all trapped in our homes while the votes are being suppressed.  My daughter is in college and someone she'd been in contact with got the virus so now she's quarantined for 2 weeks along with all the other people that person crossed paths with.  Is this our new normal?  Is this going to be a thriving economy?

Students draw their self-portrait, including their masks, in Mrs. Hoganis kindergarten class on the first day of in-person...

Texas (Trump Country) has withdrawn their shchool virus tracking data after two weeks citing "issues", one of those issues likely being that 3,735 students (1%) already tested positive in the first two weeks.  Florida is also hiding their virus data and what Florida and Texas have in common is they are big states that don't have tight control over all of their media outlets so we know when they do sneaky stuff.  

One month into the forced reopening of Florida's schools, dozens of classrooms – along with some entire schools - have been temporarily shuttered because of coronavirus outbreaks, and infections among school-age children have jumped 34% to 10,513 children as of two weeks ago – the last update.  Gov. Ron DeSantis (R) has pushed aggressively for schools to offer in-person classes, even when Florida was the hot spot of the nation, and threatened to withhold funding if districts did not allow students into classrooms by Aug. 31. In the state guidelines for reopening schools, officials did not recommend that coronavirus cases be disclosed school by school.

I'm sorry, I wish I could be more positive but all I can, in good conscience do, is to warn you that things are NOT as GREAT as they seem and you need to be very, very careful with your investment money.

Please.

 

 


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  1. GM!  Adding 1 ARNA Apr21 75/100 BCS at < $8.


  2. Phil-where is the rest of your comment?


  3. Good Morning.


  4. Good morning!

    3,340 is now the stop for 1/2 on /ES, 3,342.50 the stop on the rest

    Rest/Pirate – I always save in the middle of writing and sometimes I don't finish on schedule.

    Waiting on Consumer Confidence at 10.  

    John Williams speaks at 1pm and 2 more times this week – should be good for gold and silver as he's a fan of letting inflation run.

    I like /GC at $1,892.50 with a stop below $1,890 just as a risk/reward play.   Be careful though, it's $1,000 per $1 move!


  5. Oh, and don't do /CG if the dollar is over 94!


  6. Phil based on your comments on BRK.B last week in the webinar, can you please advise me on what to do with this trade I have on.

    All are Jun 17, 2022

    Sold $155 Put at $19--now $8.70 (last trade)

    Bot $150 Call at $46.75 now $73

    Sold $200 Call at $20.75 now $36.50

     

    As I look out to 2020 or even 2023, I cannot get near $36.50 on rolling that short call.  Thanks in advance.

     

    TH


  7. Oops, sorry, only $100 per $1 move.  Should have bought more….  

    Since I just have 2 longs, I'm going to let them ride to $1,880 then, as that was good support.  Then I'll add a bunch more and set tight stops below $1,880.


  8. typo…..'As I look out to 2022 not 2023.


  9. Phil – What is your view on JWN?  Thanks


  10. Phil / CLF – MT deal – What's your view on the acquisition and added debt / obligations coupled w/ Rev / EPS – Does this change you target on this ?


  11. hicket

    If your BCS is Jun 22 do nothing just sell monthly calls against it to make more money. Like selling Nov 220 or 225 caller, always only max half of your BCS. But today I see Stock is down 1.52. In principal I do not like to sell calls if the stock is down.


  12. Phil / T  morning Phil.  With a payout ratio of 126%, are you concerned about a dividend cut?


  13. Hi Pharm, any interest in MIST? Not something Im yet.. interesting chart I like the field.


  14. jeddah62

    T any thing can happen now and these days even a clown becoming president!


  15. MIST/kust – not a cardiologist so would like a feeling from JeffDoc.  Their drug is a nasally delivered calcium channel blocker for a faster onset of action in peroxisomal supraventricular tachycardia.  Interesting, but ablation is the main way to stop this.  Not sure of the overall uptick into this population vs other agents either.  When their data came in March…..someone did not like it.  Looks fine to me, but seems that it was not as robust as needed.  I am gonna pass.


  16. BRK.B/Hicket – As long as you REALLY want to own BRK.B at $155, you never have to worry about the short put.  The $150/200 spread is in the money and net $36.50 out of a possible $50 so there's not much to do but wait for it to mature.  These things take time to play out.  You started at net $7 and now it's net $36.50 (ignoring the puts if you REALLY want to own the stock) so $29.50 (420%) gain so far and only $13.50 (37%) left to gain against the remaining risk but almost 200% of your original $7 left to gain.

    You could sell the Jan $220 calls for $7.70, that's collecting 100% of your starting cash in 3 months and you can do that 4 more times in 2021 for another $35ish in total potential gains – does that make it more interesting to leave on?  

    That's one way to make money with your $36.50 that you could take off the table besides waiting for a 37% return – you just need to weigh out the risks and rewards and decide where the best overall place is to deploy the capital.  

    JWN/1020 – I thought they were BK?  They are performing worse than other retailers, they should recover but I don't have a compelling reason to play them.

    CLF/Batman – It's a big pill to swallow and adds a lot of debt. Long-term I love it.  I don't think we have them at the moment but I'd love it if they came down.

    T/Jeddah – If they cut dividends due to a temporary situation and the stock drops, I'll be loading up the truck.  People treat dividend cuts like a disaster but it's just managing cash-flow.  Companies don't make profits ALL the time – shareholders need to carry the burden too.  What I really don't like is companies that wreck themselves paying unaffordable dividends just to keep some greedy shareholders happy.  

    Mist/Pharm – Sounds interesting.


  17. Thanks Phil!  It's the reason I'm here is your perspective.  And Yodi, I think the clown was even surprised he got in .. doesn't leave us in a very good place.


  18. Pharm, thanks for your input.


  19. MIST/Pharm – so you're talking about A fib, basically – tach with flat p-wave? That's becoming common, for unknown reasons. With my epidemiologist hat on, I don't think there's much out there beyond "older folks get it", and as you said, it's mostly ablation or symptomatic tx only. But my sense is the incidence is rising. If I weren't retired I'd look into it. Maybe I will anyway…


  20. Exactly what Phil said he would say:

    FED'S WILLIAMS: I AM NOT WORRIED ABOUT INFLATION AND THE FED HAS PROVEN ITS ABILITY TO REIN IN HIGH INFLATION.


  21. /GC doing nicely:

    I would  have done more but I thought it was 10x bigger!  Oh well.  $1,900 is the stop now. 

    /ES is a stop at $1,250 per contract after almost hitting $1,500 per contract.  

    Thank you Mr Williams!  

    Gotta know your Fed speakers…  cool


  22. Phil, anything you'd play into tonight's debate for a bit of fun?  Thank you! 


  23. Phil,
    what's your opinion about MO ?
    I'm considering a Jan23 BCS 35/45 with a Jan23 35 Put.
    It's been trending down for a while and I'm waiting for around $37 to get in.


  24. Phil / ALB – I know you had these in a portfolio is it still there?   – A leader in Lithium mining, with most efficient cost structure in Li and Br production….  Are t here any other redeeming qualities?  and what is you target / price for this?  I've been looking at this one an I keep coming back to there being no substitute for Li in EV battery production, and this looks like a 115 to 125 stock…. am I missing something here?


  25. ALB/Batman    for what its worth dept. On Sep 24th someone sold 2500 Dec $80 puts for $5.60 ( now $5.00 )


  26. Stockbern.   Alb.  Interesting 







  27. Debate/Monk – Not a particular thing.  We'll just have to see how things go.  

    MO/Gardling – I like them long-term but it's a generally tricky environment.  As long as you REALLY want to own them for net $35, then it's a good play.

    ALB/Batman – I think we cashed it out in the prior LTP when it ran up to $100 and became speculative.  Then it went to $50 and then back to $100 and now back to $86.  If they come back down again I'll be happy to get in but this is clearly higher in the channel.  Other sources of lithium are coming on-line while, at the same time, automakers are trying to use less so I prefer to be disciplined with my entry on ALB.


  28. Funny, now the White House supports an investigation into the leak of Trump's tax records. Trump himself said that it was fake news. If it's made up phony documents, why investigate the leak? These idiots are validating the veracity of the documents.


  29. ALB/Batman/Phil

    I have been keeping up with a lot of the developments in grid scale storage, EVs, and I am an electrical engineer by trade.  There are two competing ideas on this.  1) I expect batteries to become significantly more energy dense over the next several years and Toyota, Tesla, and good ol' John Goodenough are pushing some pretty revolutionary breakthroughs in batteries which are reducing the amount cells that need to be produced and increasing the longevity of the ones that are produced. 2) The better batteries get, the faster and more widespread grid scale storage and EV adoption becomes.

    I expect #1 is going to outpace #2 because I don't think grid storage is going to end up being predominantly battery based and there are major diminishing returns on increasing range in EVs for consumer applications and trucking would ultimately be better served by hybrid systems.  That is, at least, if anybody ever pulls their head out of their ass and throws a natural gas turbine into a big rig with electric motors to handle acceleration.  The other factor in this is that old EV batteries are going to be reused in grid scale storage where their reduced energy density is less of a factor than their cheap cost and peaking capabilities prior to be recycled.

    I am running zero numbers for this projection, but I am guessing that while Lithium production will rise, it isn't going to be as dramatic as you expect.  If graphene ever gets out of the lab, expect all projections to be rendered meaningless because that is a game changer.


  30. Jph. Alb.  Thanks for the summary.   I agree with the storage Home space.  Makes more Sense to run generator off ant gas.   I don’t see a viable alternative to li in the next 5 t9 10 years.   Anything else is less efficient and or far off.  So alb May double output from ‘19 to ‘21 And then again by ‘24 ish. Margins are the highest in industry due to scale and processing.   graphemes is in very early stages.