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Monday Market Movement – Down for a Change


As I noted on Friday, it doesn't take much to mkes a lot of money on the Futures shorts and Friday's plays are all paying off in spades this morning and we only just crossed back under the 13,000 line on the Nasdaq (/NQ), which pays us $20 per point, per contract – on the way down from here.  By keeping a tight stop (13,005) over the line, we limit the loss to $100 per contract but we have no such limit on a potential win and the Nasdaq is more than 1,000 points over-valued at 13,000 – so it doesn't take much of a push to get us lower.  

Of course, we don't want to be greedy and we lock in gains of $500 or $1,000 per contract by putting tight stops on 1/2 and, if those trigger, then tight stops on the other half so we don't lose more than 25% of our total gains.  Then we follow the 5% Rule™ to see if we have a weak or strong bounce and that tells us whether we should get out or double back down for the additional ride.  That's how we played the Nasdaq, which dropped to 12,940 on Friday before giving us a ride back to 13,120 and sticking with that has put us in a fantastic position on that index as well.

According to our fabulous 5% Rule™, the Nasdaq topped out at 13,060 and 12,900 is the 7.5% line up from 12,000 and 13,200, of course would be the 10% line and a rejection of that 1,200-point run would be 240-points but we'll call it 250 and that make 12,950 the weak retrace line.  If that holds, we should be worried but, if it fails, the next support is way down at 12,700 so that's the next shorting zone we can play.

Since we expect a bounce at 12,950 however, it's a good place to take 1/2 our profits off the table and, if we head higher, we set a stop on the rest at no less than 75% of our maximum gain, which will be $1,000 per contract.  Then we calculate a bounce off the 12,950 line, which would be a 110-pont drop so 22-point bounces and we'll call that 12,975 (weak) and good old 13,000 (strong) again.  

So, if 12,950 holds, we cash out 2 of our 4 shorts and we have a stop on the other two over 12,975 but then, if that fails, we can get right back in and use that for a stop line or we can play again at 13,000 if we get back these.  Very simple and, as I mentioned above – there's no limit to our downside gains – we just keep lowering the stops to the next bounce zone using simple math.

Political Turmoil is going to be the theme of the week but also Earnings Season kicks off in earnest on Friday and a record-tying 14 Fed Speeches lined up to boost the market in these tumultuous times.  With this much effort being put in to prop up the market – don't expect a huge sell-off – even if Trump does get impeached, again.



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  1. Good Morning.

  2. Well, up and at 'em 1020!  Good morning!

  3. Good morning! 

    Lots of turmoil this week – should be fun.

    Market sentiment is dimming at the start of the new week as investors confront a number of risks. On the political front, House Speaker Nancy Pelosi (D., Calif) said the House may move to impeach President Trump as soon as this week. That is prompting concern that fresh rancor in Washington may diminish support for other important measures.

    Recent economic data also showed that the U.S. labor-market recovery stalled in December, ending seven months of job growth and adding to concerns that the short-term outlook is getting worse. Covid-19 infection rates also remain elevated. Experts have warned this month of surges in new cases, hospitalizations and deaths after December’s holiday gatherings and travel.

    “Everything is a little bit bumpier than we expected it to be a week ago,” said Luca Paolini, chief strategist at Pictet Asset Management. “It feels like 2020 hasn’t really ended. We are in the middle of a pandemic, we are still talking about U.S. politics even more than before. The underlying story is still pretty much the same.”

    The expectation of additional stimulus has pushed government-bond yields higher in recent days as investors bet that on an uptick in economic growth and inflation. There is also a growing expectation that the government will issue more notes to pay for additional stimulus.

    On Monday, the yield on the 10-year Treasury note edged up to 1.112%, from 1.105% Friday. Yields rise when bond prices fall.


    The rise in yields is raising questions about how the Federal Reserve may respond, investors said.

    “Rates markets have been working with an assumption that the Fed is going to intervene to prevent a sharp increase in yields,” said Hani Redha, a portfolio manager at PineBridge Investments. “All eyes are going to be on the Fed to understand what their reaction is going to be.”

    Shares of Twitter fell 10% on concern that the social-media company may face a backlash from regulators or users after it banned Mr. Trump’s personal account, citing the risk of further incitement of violence. Facebook declined over 3%.

    Eli Lilly shares jumped more than 11% after it said an experimental Alzheimer’s drug helped patients in a small trial.


    The broader market may be taking a breather after a rallying for much of last week, he said. The Dow on Friday notched its third record close of 2021.

    “You have to step back a little bit and see the phenomenal run we’ve had over the past week, especially post the Georgia results,” said Mr. Redha. “This was a natural consolidation, some profit-taking perhaps.”

    The ICE U.S. Dollar Index, which tracks the strength of the greenback against other currencies, strengthened by 0.6%. The dollar often rises when broader markets decline because many investors view it as a safe-haven currency.

    The only thing I find surprising is how people can be surprised at this.

    Also, Chinese New Year starts in a month (2/12) and that shuts them down for a week.

    Poor planning among a constellation of government agencies and a restive crowd encouraged by President Trump set the stage for the unthinkable.

    Since his resounding defeat in the presidential election in November, Donald Trump has done everything but concede to the democratic will of the American people. He unleashed an avalanche of lies and baseless claims of fraud — conspiracy theories that filled his supporters with a delusional belief that the election had been stolen from him. He filed a bevy of absurd lawsuits. He attempted to cajole and intimidate officials at all levels of government into subverting the election and keeping him in office. And then, running out of recourse, legitimate and illegitimate, he incited an insurrection against the government and the Constitution that he swore to uphold.

    The attempted coup at the United States Capitol last Wednesday, which took place as lawmakers inside counted the electoral votes that would formalize Joe Biden’s overwhelming election by the American people, marks one of the lowest points in our country’s 245-year experiment in democracy.

    From Andrew Jackson to Richard Nixon, we have seen presidents abuse their power, but we had never witnessed an American president incite a violent mob on the citadel of our democracy in a desperate attempt to cling to power.

    We cannot let this go unanswered. With each day, Mr. Trump grows more and more desperate. We should not allow him to menace the security of our country for a second longer.


    Once the House opens for legislative business, my co-authors — Representatives Ted Lieu and Jamie Raskin — and I will introduce an article of impeachment to remove Mr. Trump from office for incitement of insurrection.

    Arizona, California, Oklahoma, Rhode Island and South Carolina are now averaging the most daily new cases per person. Here’s the latest pandemic news.


  4. Pharm – The cat has a 5am wake up call….lucky me… ;)

  5. Bitcoin from 42k Friday to 32k today?   



  6. It's looking more and more like the printing press will be running full time in 2021! We might finally have our infrastructure week (our month or year) after all!

  7. High demand for PC continues 

    PC Sales Remain on Fire as Fourth Quarter Shipments Grow 26.1% Over the Previous Year, According to IDC

  8. PC sales – Yup, One new Alienware (Dell) desktop, and a Lenovo (Costco) desktop in December…..

  9. Yodi,

      I know you sold some CHL puts recently.  I see that CHL has been halted.  What happens to your put positiion?  Are you forced to put up the entire strike price now?  Curious to hear from you and others to see how they are trading CHL or managing their CHL positiion


  10. Bitcoin/1020 – It's very exciting to own, isn't it?

    Ifrastructure/StJ – We've needed to do that for a long time so why not now?

    CHL/Rookie – Back to $27.50 at the halt, interestingly.  

  11. Today’s numbers: The COVID economy – Marketplace

  12. The next round of PPP loans – Marketplace

  13. Bitcoin: be prepared to lose all your money, FCA warns consumers

  14. Corporate America pulls the plug on President Trump

  15. On CHL, by the way, if you have shares and don't want to wait to see what Biden will do, you can convert the ADR shares to the underlying traded on the Hong Kong Stock Exchange – it's 5 shares per ADR share with the symbol 941:HK.  They are up 5.7% today as the panic-selling in the US has stopped. It's something you need to talk to your brokers about – rules may be different.

  16. rookie, Phil
    CHL well I had  30 put Mar 20 and 35 and 25 puts Jan 23, the puts ITM have been assigned and I hold the stock. The 25 put is not ITM and they have not assigned would be nice. I am just waiting to see. I am sure the US will have learned it's lesson on rearranged president clowns and surely will not throw a stock like CHL out of the country. I feel this would have repercussions with China.  
    One thing I can not understand Phil you talking about ADR ??? symbol of what. International Market Index?? So how would this work need some more explanations. TIA

  17. hoping to see bitcoin pull back to 18k and ETH to 600

  18. BDC .. what price would you be a buyer of ETHE?

  19. What a bitcoin weekend, wow. Over the weekend bitcoin high-tick was 41,999.99. A long way from 7.83 in August 2012: 177.69% APY over 8.4 years (if you don't lose it, sell it, etc).

    Crypto takes long sabbaticals in the desert between bubbles. It's only common knowledge of the peak values in hindsight though. I don't feel like we've bubbled over yet, even though I'm mostly out. So it's kind of nerve-wracking being on the sidelines. We could see BTC run to 70-150k if it really runs. It would be so "me" to hold bitcoin for 8 years and miss the biggest bubble of them all.

    jeddah62 - I bought a small ETHE position at 12.36 last week and going to hold it. I don't love it. But i see opportunity cost not owning it right now (FOMO?).  

  20. DKNG…out at 2.75.  TY V much.

  21. Yeah I took that DKNG play. I'm staying in though!

    TSLA: might be time for OTM puts from now until crash. E.g., 500 weeklies are 0.15. Just do it every week until it hits. TSLA will lose 50% in 5 days no problem. 838*0.5 = 419, or $81 per contract, 540X over 0.15. You can do this play every week for 10 years and only hit it once and still break even.

  22. Is it time to start selling some calls against the open WBA position?  

  23. Phil / Jets – As I look at airline stocks – I think LUV and ALK are the best run companies …..   Both have come back nicely and look to have little upside.  If you look at Jest out to .23 do you see any position that looks appealing?   Or is Luv or ALK a better position(s) to look for on a pull back?

  24. Another chance to short /NQ at 13,000 and /ES at 3,800 and /YM at 31,000 and /RTY at 2,100 and we can stop out if any of them break back over.  



    ADR/Yodi – Means "Advanced Depository Receipt" – what you buy on a US exchange is a US certificate that represents a certain number of shares on a foreign exchange.  Most Asian companies are not direct-listed but are ADRs.  In the case of CHL, the underlying security is held by the broker and you can demand the conversion from the broker.  If a lot of people do this – it can cause a squeeze, in fact.  

    TSLA/BDC – Ya think?

    WBA/Jeff – We will have to consider that in our Portfolio Reviews.

    The runner-up is doing better than our Stock of the Year at the moment.

    And Macy's is beating everyone:

    ALK/Batman – Been my favorite for years.  LUV is good too but weren't cheap, ALK was way too cheap a while ago.  We just played Jets as it was obviously too low at $17 and we spread our bets.  I wouldn't want to play any airline specifically until we see earnings and get some insight as to how the bailout is working for them.  

  25. Phil / Jest Airlines – I agree, I think the Quarter will be OK not gang busters, and they will not outlook much so maybe a dip there might be good timing….

  26. Thanks Phil.

  27. Phil / WBA – I'm thinking of just exiting this position instead of covering ( maybe keeping the Shares and selling short calls and puts around  them) There's a pretty sizable gain already and not sure if it will be much higher that 50 at end of year do you see them higher than this ?

    .  ….   Any other way to play this?   I've also make about a few K on this getting in and out of short callers as well over the last year.

    I have the following : 

    1K sh at 37/sh 

    Long 100X Jan'22 $35 Call ( 8.1) I scaled into this one between April and May..  

    Short 15X Jan'22 $40 Put (9) 

  28. AAPL – I'm looking at some numbers coming in on apple, and think the fiscal year may be going well…   I've updated my models for the Quarter and they year .  

    For FY Q1. Prior to this I had this Quarter at 101 to 102 / 1.30 ish eps……  I now  have them at Rev of  102 to 104B with an EPS of 1.37 to 1.46 and the full year EPS at between 4.6 and 4.8 / Sh.  I've taken this up due to strong iMac sales this Quarter and probably next ( north of 20%), and iPad Sales up as well at 20%.   Phone sale this quarter at a 4% growth Y/Y for this Quarter and north of 25 to 30% Q2 and growing strong Q3 ….    with a multiple of 20 to 30 X you get to a price price point of a fairly conservative 110 to 115 and an upper end of  140 to 145 sh…. 

  29. AAPL –  Pulled down run numbers on above class… will up date later….

  30. Selling a few Jan21 120 P on AAPL for 20c.  If AAPL falls another 8%, then we have bigger problems and my puts will pay for them!  ;P

  31. AAPL – I'm looking at some numbers coming in on apple, and think the fiscal year may be going well…   I've updated my models for the Quarter and they year .  

    For FY Q1. Prior to this I had this Quarter at 101 to 102 / 1.30 ish eps……  I now  have them at Rev of  102 to 104B with an EPS of 1.37 to 1.46 and the full year EPS at between 4.1 and 4.5 / Sh.  I've taken this up due to strong iMac sales this Quarter and probably next ( north of 20%), and iPad Sales up as well at 20%.   Phone sale this quarter at a 4% growth Y/Y for this Quarter and north of 25 to 30% Q2 and growing strong Q3 ….    Shares out at 17B Q1, and 5 Cash  $.25 Div  with a multiple of 20 to 30 X you get to a price price point of a fairly conservative 95 to 110 and  mid range  of  140 to 145 sh, with upper range  of 160.  

    Another note, is that Memory suppliers are noting constrained sales in PCs, and Phones due to issues w/ TSMC capacity as well as other silicon production…. if this is the case I think Apple will do better than others in securing supply and possibly improving market share in these areas….    

  32. TSLA's all time chart is simply something to behold. We've discussed TSLA at length on here going back to 2013 to 2014 when it first popped from (split adjusted now) 7.60 to 45 (market cap was single billion to ~$30-40B). Even at that low price, when compared to now, that was considered nuts. When I went looking for an explanation how a car company that barely sold any cars could be worth as much as major car companies that did sell cars, like toyota, GM, ford, etc, I theorized that people weren't really investing in a car company, they were investing in an emerging renewable energy economy. At the time there were very few profitable, publicly traded renewable energy companies around.

    We were also discussing the real macroeconomic head-scratcher at that time: why do bond prices continue to rise (yields fall) despite nation-states issuing more debt? This runs counter to the Economics 101 principle of getting less for something the more you sell of it. While I was licking my wounds from TBT calls and interest rate shenanigans that I "knew" I couldn't be wrong about, but was, that's when I developed my crypto theory of currency replacement which I've discussed in great detail herein, and which is now so obvious it no longer requires further explanation.

    But with TSLA, and analyzing how short term put positions might still be a bad move, that is, attempting to provide counterpoint to investments I "know" must be winners –  when I see articles like this I take pause. TSLA is now effectively being paid to take additional capital. This is like the head-scratcher from the debt burden 7 years ago. 

    Fiat currency cannot create money fast enough (or with necessary efficiency) in the Knowledge Economy. That's why when the mid-decade fracking investment scam (a.k.a. modern junk bonds) finally gave up the ghost the petro-dollar derivative construct (PDDC) emerged, and which is now the primary international currency. Then in 2020 the PDDC, which is an artifical construct created in the USD to attempt to supply money into the larger economy that fiat currency cannot efficiently support, resulted in negative oil prices temporarily. This construct is unstable and isn't going to work and runs counter to one of the major economic shifts the Knowledge Economy allows for: Energy is becoming free and decarbonization is becoming valuable. So you have TSLA now and they are on the opposite side of this, and it's amazing how right this theory was going back 7 years now. They are now not only larger than all of the auto manufacturers combined (by a huge amount) they're also larger than XOM and several other oil majors COMBINED. Oxy and their CEO Vicki threw some lip service at green CO2 but mostly the oil majors "renewable energy" and decarbonization activity is mostly PR. It must be interesting now to be a fly on the wall in an XOM boardroom while someone (if anyone dares) brings up the tiny little fact that TSLA is worth 4 times what they are worth and oh-just-maybe they should've taken a look at this whole "green" thing….

    Of course, just like the PDDC, the TSLA/fiat-currency over-supply construct is unstable because the fiat currency paradigm it's based on is an order of less valuable than what the new construct is trying to approximate for. This is an unmitigated disaster, not if, but when. We saw this in the 1920's when the industrial revolution vaulted the need for a dynamic money supply far beyond the constraints of metal based currencies. It resulted in fascist wars, miserable stock market crashes and 15 years of all that Great Depression shit. Hopefully that can be avoided this time around, but I'm not hopeful based on what I'm seeing.

  33. Pharm, I assume you meant buying a few AAPL puts….for .20 

    Like Biodiesel's idea of buying TSLA  $500 weekly puts for .15.   

    LUV. today someone bought 3000 March $45/$55 bull call spreads on LUV 

  34. stockbern…nope, STO the short week puts.  Pocket change. I have SPY puts (a lot of them).

  35. LMT…buying Feb 350Cs …. 

  36. TRIL Jan21 $15 Ps that were STO in December. Buy them back for a nice profit, roll them (Feb 12.5 for a small credit), or watch closely to do one of the two to squeeze out a little more of the premium.  TRIL is currently at 14.50ish. I am gonna roll to Feb 12.50 for 15c or better net credit.

  37. MYOV….selling the Feb $20P for 1.50 or better.  Just a few.  This one will be a LT hold and should pay nicely in years to come.  KPTI and TRIL as well.

  38. JHFC seriously? Bitcoin is turning around at 31k? 

  39. WBA/Batman – I think they are good for $4/share easily so $47.70 – $50 is still cheap and that's without a sentiment shift.  I hear Covid is, in fact, re-infecting and, since it's much worse than the flu, we can probably add Covid shots to our ANNUAL things to do check-list.

    Of course, with a huge position you should of course move to sensible covers and spreads – I'm certainly not advocating you leave that on the table.

    Not that this market stays down for more than an hour or so…

    AAPL/Batman – Like all PC sales – what else are the shut-ins going to do with their money?  

  40. So Phil, WBA has a 12.5 5yr avg P/E.  With projected EPS of $4, that's 4 x 12.5 = $50.  You indicate $50 is low.  Can you share your math to calculate a projected future price?  TIA.

  41. The S&P 500 has a 16.5 avg p/e and now it's 24 and I expect WBA to do better as time goes on so I'm playing for $5, which is $60 or $100 with the current p/e trends but $60 is good for me.