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Weakening Wednesday – GameStop and Bust!

$4,000 per contract (you're welcome)!

That's the profit from yesterday's Russell (/RTY) Futures shorts at 2,180 as we're now falling back all the way to 2,100 and we'll stop out 1/2 here to lock in $4,000 per contract and put a stop on the other 2 at $3,500 per contract (2,110) so our worst case is an average exit of $3,750 but we can make another $2,000 per original (4) contract if we have another 80-point drop from here.  

We don't try to make a massive killing on the Futures, they are just bonus protection until our hedges begin to kick in and they allow us to make quick profits when the market has a little dip.  In yesterday morning's PSW Report (just $3/day to make sure you don't miss it!), we also played the Dow Futures (/YM) short at 31,000 and we're below 30,500 now (1/2 stop, rest at 3,600) for another $2,500 per contract win and the Nasdaq paid $20 per point from 13,500 (a GREAT shorting line) to 13,350 ($3,000 per contract) and we set the stop there at 13,375 on the other half and the S&P (/ES) Futures paid $50 per contract from 3,850 to 3,800 ($2,500/contract) and you KNOW 3,800 is going to be bouncy so we stop out there completely and simply re-play it if it fails but why play out the bounce?

You HAVE to have hedges in such a clearly broken market.  We went over our main hedges in our Short-Term Portfolio Review two weeks ago and discussed it in that day's Live Trading Webinar, so I'm not going to get into it here but we had a good $293,000 worth of protection, not including A LOT of additional profit if TSLA and CMG ever come down to Earth.

Thank goodness we didn't bet against GameStop (GME), which left the Earth last week and is now passing Jupiter, not at $147, which was yesterday's close but at $225 now – and that's AFTER pulling back from $350 in yesterday's INSANE after-hours run-up that bought the market cap of GME to over $22 BILLION.   

That's for a Retailer who makes $400M in a good year and 2019 was not a good year, with a $794M loss and 2020 wasn't much better, with a $464M loss but I guess you'd say things are turning around so why not pay them 55 times best-case earnings?

That's the insanity of the market we're in at the moment, where reality and valuations are not on speaking terms.  We've solved the problem by simply not participating in the madness.  Sure, we're still picking up the occasional bargains like IBM and INTC – we love our blue chips when they go on sale – but mostly we're sidelined, watching the madness bubble on.

That doesn't stop us from making money.  Our fairly conservative (for this market) Long-Term Portfolio is now up 214.6%, at $1,573,213, which is up $57,013 from our review 2 weeks ago (Members Only) and $28,500/week is a reasonable salary to pay ourselves while we wait for more stocks to go on sale – don't you think?

It's especially nice when you consider our starting basis was just $500,000 just over a year ago and we've safely stashed $800,000 in CASH!!!, where we're waiting for more stocks to go on sale (they always do – even in a bubble) and notice we have a very low margin requirement as well – we're not taking any chances in this ridiculous market with our main portfolio!  

So PLEASE, trade very carefully as we're clearly in a broken market – GME is evidence of that just as Yahoo was in 1999 – sure it's amazing to see those gains but you also KNOW it doesn't make sense and if that doesn't make sense – then you can lose money on all sorts of things in all sorts of ways that make no sense to you as well.

I'm not a pessimist – anyone who knows me knows that – I'm a REALIST and this is a REALLY dangerous time to be playing the market.  Don't trade with money you can't afford to lose and make sure you are well-hedged.  We know this party is going to end – we just don't know when.

Join us this afternoon (1pm, EST) for our Live Trading Webinar – things are starting to get exciting!  

Also there's a Fed Decision at 2pm and Powell at 2:30 – what a day!  

 


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  1. Good morning, everyone! Here is the link to today's webinar

    https://attendee.gotowebinar.com/register/4262509025846078992


  2. Good Morning.


  3. Phil/Macy

    short squeeze? 25% up

    regards


  4. Good morning and wheee!   Nice dip at the open on /NQ..  

    Note the foreshadowing on Monday.

    M/Pat – Well that was just so undervalued.  

    Any small(ish) cap stock can get shot out like a cannon from these Robin Hood type traders.

    How a Penny Stock Explodes From Obscurity to 451% Gains Via Chat Forums.


  5. Is this the bell being rung signaling the top of the market?


  6. Bell/Kustomz – Today is a Fed day.

    Europe is down 2% already.  

    BA with a $6.5Bn loss somehow surprises people?  That's a sign that investors are completely unrealistic in their expectations.

    Boeing’s fourth-quarter loss lifted its annual deficit to $11.94 billion, with sales for the year slipping 24% to $58.2 billion. 

     

    Chicago-based Boeing didn’t provide any financial guidance on Wednesday. Analysts expect sales to increase this year with the resumption of 787 deliveries following quality problems that halted customers taking any new jets since October.

    The return of the MAX will also boost revenue. It restarted deliveries of the MAX in December from a backlog of 450 finished planes. European regulators on Wednesday approved the aircraft to resume commercial flights.

     

    Boeing burned through $18.4 billion in cash last year as aircraft deliveries halved from 2019. It doesn’t expect to be cash flow positive until next year.

    It's still down from $400 pre-crashes but I wouldn't get in until we're sure they can keep the 777s in the air this time.

    Meanhwhile SKT BABY!!!

    I'm going to make an exception this time:  I TOLD YOU SO!

    Earnings aren't even until 2/17.  They just put in a new CEO but $20 is time to cover.  We 1/2 covered at $10 so we'll sell 40 more SKT 2023 $17 calls in the LTP for $7 ($28,000) because it would be insane to turn that down (see how we make $28,000/week?).   In the Dividend Portfolio we were too conservative with a full cover – not much to do about that.

     Keep moving those stops down on the index shorts.   -2% lines should be bounce and certainly -2.5% lines.


  7. 30,300.

    3,770

    13,200

    2,100 (still).

    13,500 should be bouncy as we've overshot 2.5%

    3,500 HAS to be bouncy on Euro Stoxx – that would be a great play, actually.  It's also the -2.5% line.

    Someone is worried.

    Yesterday's BS sell-off reversed

    Honey Badger don't care….


  8. GME Jan $300 puts are $190 and you can sell the March $160 puts for $75 so net $115 on the rollable $140 spread works for me as a fun play.


  9. Phil / T (AT&T) – what's your take on earnings ?


  10. IBM/Phil/Yodi   I also have 10 '23 IBM $100 calls @$25.25. Wondering about selling some $130calls around $14 vs $120c around $17.50?

    Thx.


  11. SKT – You can thank the reddit crowd for that one!


  12. ….sounds like a Hollywood script to me….


  13. Phil/MAC/AMC

    are MAC and AMC candidates of short squeeze? any play on that one. Again this is just for a couple of options. Or we can wait and take advantage of the rise by the way it did for GME.

    regards



  14. Russian lawmakers approve New START nuclear treaty extension



  15. Tensions rise as AstraZeneca, EU hold vaccine delivery talks


  16. Pushed by pandemic, Germany seeks to boost technology use



  17. The new use for abandoned oil rigs



  18. wingwalker IBM for me much to early especially when the market is down /ES -60!!!!!



  19. IRBT big move also


  20. this is crazy,  GME, AMC, even RIG, PETS, 

    they just looked at the shorted stock list 


  21. CLF has about a 18% short too. 6 days to cover BUT the options in these other stocks are amazing. When they run out of shorts surely these stocks will come back to earth. Reminds me of Tsla and BYND? Amazing how much they are ALL up. My hedges are killing me.


  22. if GME announces a press release that they've gotten into global decarbonization then we've come full circle.


  23. pirate – holding AMYZF to see if this one runs


  24. T/Batman – Everything is distorted by the virus.  T had a huge increase in customer growth and huge numbers for HBO Max but will those people stay on after the pandemic?  Guidance certainly wasn't exciting.   Still, they made 0.75/share for the Q and that's $3 per $30 share for the long-haul so, as usual, I buy T when it's around $30 and sell it if it gets close to $40 and, otherwise, enjoy the dividends. 

    Of course their movie and production numbers are sucking so very solid going forward but it's the same thing as it was 10 and 20 years ago – a utility play that pays a good dividend.  

    IBM/Wing – How about cash them for $28.50 ($28,500) and buy 30 of the 2023 $120 ($17.45)/$140 ($10.45) bull call spreads for $7 ($21,000) and sell 5 April $120 puts for $5.50 ($2,750) and sell 5 April $125s for $4.50 ($2,500).  That puts net $12,750 in your pocket and puts you on a path to selling $5,000 per quarter in premium for the next 8 quarters for a bonus $40,000 potential.  

    SKT/1020 – I should start putting my picks there.

    Short squeeze/Pat – I'm certainly not going to start guessing who can be short squeezed.   This is a brand new thing and my 10,000 hour clock is starting right along with yours.  You know I'm a Fundamentalist, I'm not going to chase after something like AMC when it pops like that.  Now IMAX, on the other hand, is still interesting as $20 ($1.25Bn) is reasonable at their usual $50M earnings and it's one of those things (stocks people have heard of that are not particularly high in share price) that the Redit/Robin crowd could latch onto.  


  25. BDC- this one I have a nice gain on. I am debating with myself to sit tight. Hard when you've made 200% but I believe lithium batteries have to have this mineral and I don't think we produce any. Looking for cobalt producers also as we must import what we need. Clf might be a sleeper too especially in this crazy market. Sold my NWBO for a big profit  and looking to get back in. It should be reporting any day on the glioblastoma final study since the third phase was done in the fall. However I read that the last test subject had not died yet and FDA won't make a determination until all final longevity studies are in. This study has been going on for 20+ years. Talk about patience.


  26. Phil – picked up a few Feb IMAX 22 calls just in case…


  27. reddit – We just need them to pick up on FTR ;)


  28. NWBO – I'll do 1000 shares. It might be were at the top and the whole thing falls apart, but the trend is still: find the next runner and get in first.


  29. and The Trend is Your Friend Until it Ends…

    I think crypto ended. I'm clearing out for now.


  30. Kerry aims to talk US back into a lead role in climate fight



  31. BDC-Bought all of NWBO under .40 so it is hard now to buy. Today low was low of 1.39 this AM to high of 1.75. Anyways the DC VAX sounds very promising for the big C. You were right on for bitcoin this summer. Amazing the numbers of company's getting on the bandwagon like PYPL?


  32. Sadly, FTR is a far better play than a company that sells software… on physical disks. In malls. During Covid.


  33. I thought about the FTR story too. Bought it along with many of you held till the end…

    For every GME story there're probably hundreds of companies that got short and bankrupted. Maybe at some point a PE fund buys them on the cheap, sells assets, cuts cost, and refloats for a profit.  (Sears?…) and that's the norm in corporate america

    I'm not saying the GME situation is right or wrong, and we here also recognized the value of the business at the right price.

    But in the minds of the WSBers, this is using the rules of wall street against them and making a statement


  34. WOW

    The stock market is seeing a huge amount of buying action in stocks that have been heavily shorted over the last few months.

    Tootsie Roll Industries (NYSE:TR) is up 52.95% in early trading.

    Dillard's (NYSE:DDS) is 22.1% higher.

    Express (NYSE:EXPR) is adding to its gains with a jump today of 123.68%.

    National Beverage (NASDAQ:FIZZ) is soaring with a 39.05% jump already.

    iRobot (NASDAQ:IRBT) is 33.85% higher to carve out a new 52-week high of $175.35.

    Virgin Galactic (NYSE:SPCE) is 4.25% higher and is now up 34% over the last five sessions.

    PetMed Express (NASDAQ:PETS) is flying with a 28.87% gain and printed a new high of $51.15.

    GSX Techedu (NYSE:GSX) blasted 33.89% higher to reach a new high.

    Tanger Factgory Outlet Centers (NYSE:SKT) is up 24.72% as shorts are being pressured.

    New to the scene is DoorDash (NYSE:DASH), which is up 17.17%. DASH has a higher level of short interest than most IPO stocks in their first year of trading.

    Fossil (NASDAQ:FOSL) is showing a gain of 26.48% to trade as high as $16.00.

    Macy's (NYSE:M) is 17.85% higher as the heavily-shorted mall name sails on heavy volume.



  35. any idea why GOLD is down so much today?  Thanks.


  36. 23andMe in Talks to Go Public Via Branson SPAC, Sources Say











  37. GOLD/Rookie – Global demand worries as virus coming back in Asia – all metals falling.  Dollar bounced back on Fed inaction.

    Nothing wrong with consolidating.

    Barrick’s Production Rose as Costs Fell in the Fourth Quarter

    Oh yeah, and traders are idiots.  


  38. Any thoughts on what market reaction may be to after close earnings on apple, microsoft and facebook?


  39. JUst some info on covid. Had the blood work done and yes I have the covid antibodies that's why I didn't get sick when the family was down. Only time I remember being ill was a year ago before going to Fla and I was working with some friends at the food bank and they were ill with bad coughs etc. It maybe that the length of protection may be longer than what we have heard which I see AS GOOD news. Doc said could be we  contracted a variation of the covid early. This was Jan for us. My friends have not been ill either. FWIW.


  40. FAM/Tommy – All of them should do well with everyone trapped in their homes.  Can go long /NQ at 13,100 if you're feeling frisky.

    Antibodies/Pirate – I think I must have had it but who knows?  It's crazy we can't all get simple tests to determine if we've already been exposed. 


  41. Phil-the blood test is easy and came back within a day. I was going crazy wondering and I would like to get to Fla to visit with my last surviving sibling, but sure didn't want to expose them to anything. This feels good about getting on a plane etc.


  42. AAPL – Earngings coming up….


  43. AAPL Earnings - 

    EPS: $1.68 vs $1.41 expected, according to Refinitiv consensus estimates

    Revenue: $111.44 billion vs $103.28 billion expected, according to Refinitiv consensus estimates


    • Regulators are looking into the short and gamma squeezes that are sending some shares rocketing higher.
    • "We are aware of and actively monitoring the on-going market volatility in the options and equities markets and, consistent with our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants," the SEC says in a statement.
    • GameStop (NYSE:GME) closed the day up 130%, while AMC (NYSE:AMC) notched a gain of nearly 300%.
    • Wells Fargo is banning its advisers from recommending GameStop, CNN reports.
    • Heavily-shorted stocks are being championed by retail investors, particularly those on Reddit, leading to snowball effect of short sellers covering and call option writers hedging.

    It's great to know that, some time after something happens, the SEC will get right on it and see what happened.  So helpful….

    • Apple (NASDAQ:AAPL): Q1 GAAP EPS of $1.68 beats by $0.27.
    • Revenue of $111.43B (+21.4% Y/Y) beats by $8.19B.
    • iPhone $65.6B vs. $59.86B consensus.
    • Mac $8.67B vs. $8.68B consensus.
    • iPad $8.44B vs. $7.61B consensus.
    • Wearables, Home and Accessories $12.97B vs. $11.91B consensus.
    • Services $15.76B vs. $14.85B consensus.
    • “Our December quarter business performance was fueled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices,” said Luca Maestri, Apple’s CFO. “These results helped us generate record operating cash flow of $38.8 billion. We also returned over $30 billion to shareholders during the quarter as we maintain our target of reaching a net cash neutral position over time.”
    • Shares +0.3%.
    • Apple (NASDAQ:AAPL) reports FQ1 results with all-time high revenue of $111.4B (+21%) and EPS of $1.68, up 35%. IPhones, Services, and Wearables all hit new revenue records.
    • Revenue breakdown: iPhone, $65.6B ($59.86B consensus); .Mac, $8.67B ($8.68B consensus); iPad, $8.44B ($7.61B consensus); Wearables, Home and Accessories, $12.97B ( $11.91B consensus); Services, $15.76B ($14.85B consensus.)
    • The iPhone strength reflects the iPhone 12 release delay, which pushed the devices into FQ1. Wearables were expected to get a holiday shopping boost from strong AirPods sales.
    • Mac and iPad sales continue to catch pandemic tailwinds, but Mac sales in particular are slowing, driving the roughly in-line performance. .
    • Greater China sales recovered from last quarter's 29% Y/Y decline to a 57% gain to $21.3B.
    • “Our December quarter business performance was fueled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices,” says CFO Luca Maestri. “These results helped us generate record operating cash flow of $38.8 billion. We also returned over $30 billion to shareholders during the quarter as we maintain our target of reaching a net cash neutral position over time.”
    • Press release.
    • Apple also declared a $0.205 dividend.
    • Levi Strauss (NYSE:LEVI) says sales fell 12% Y/Y in Q4 as it battled through reduced store traffic and ongoing closures of company-operated and third-party retail locations for portions of the quarter in certain markets.
    • E-commerce sales were up 38% Y/Y to help offset the store weakness.
    • Adjusted gross margin increased 30 basis points to 54.6% of sales, primarily due to price increases, a higher proportion of sales in the higher-margin direct-to-consumer channel, lower promotions and healthy inventory.
    • Adjusted EBIT was $113M and adjusted EBIT margin was 8.2% vs. 7.9% a year ago.
    • Levi Strauss ended the quarter with total available liquidity of $2.3B; cash and cash equivalents at quarter end were $1.5B.
    • CEO update: "We will double down on elevating our iconic brand, investing in direct engagement with our fans, advancing our fast-growing digital business and further diversifying our portfolio. As we continue to accelerate these strategic focus areas, we will emerge a stronger, more profitable, more agile company."
    • Shares of LEVI are up 0.55% AH but have been swinging around wildly. The stock hit a high level of $22.49 on January 12.
    • Facebook (NASDAQ:FB) has pulled back to positive ground after hours, now up 0.8% and gaining, following declines in the initial aftermath of its Q4 earnings - where it beat revenue consensus (as it has for several quarters now) and announced a further $25B in buybacks.
    • Digging further into operating metrics shows some reason for sellers' concerns: While daily and monthly active user growth topped analyst expectations (at 1.84B and 2.8B respectively), daily users in the U.S./Canada disappointed for the second quarter in a row, landing at 195M vs. an expected 195.3M. Engagement in North America also slipped to 75.6% from Q3's 76.9% (and vs. expectations for 76.8%).
    • That was made up mainly in Asia-Pacific, where regional revenues came up less than expected but teh region saw 744M daily active users vs. an expected 731.1M, and 1.199B monthly users beating an expected 1.176B.
    • That's an indicator that international growth is mitigating a slowdown at home. Europe also added 308M daily users (vs. an expected 306.2M), and "rest of world" had 598M daily users (vs. an expected 598.9M).
    • Meanwhile domestically, average revenue per user jumped to $53.56, well above expectations for $49.36 and significant growth from a prior-year $41.41. ARPU in the faster-growing Asia-Pacific was just $4.05, while ARPU in Europe was $16.87 (above an expected $15.63) and in rest of world it's $2.48.
      • Conference call to come at 5 p.m. ET. Listeners will be looking for color about specific advertising trends, including the contribution of political revenue during a tumultuous quarter.
      • Press release
    • Las Vegas Sands (NYSE:LVS) trades slightly higher posting a 67% drop in revenue in Q4 and an operating loss of $211M.
    • Net income was $376M during the quarter vs. $783M a year ago. Total property EBITDA was $141M vs. $145M consensus.
    • Macau property EBITDA was $47M vs. $79.8M consensus.
    • Las Vegas property EBITDA was -$50M vs. $4.7M consensus.
    • CEO update: "We remain optimistic about the eventual recovery of travel and tourism spending across our markets. We are fortunate that our financial strength supports our previously announced capital expenditure programs in both Macao and Singapore, as well as our pursuit of growth opportunities in new markets."
    • Shares of LVS are up 1.15% in AH trading to $49.60 after peeling off more than 6% during the regular session.
    • Earlier today, Las Vegas Sands announced that Robert Goldstein would be the casino operator's new CEO.
    • Tesla (NASDAQ:TSLA) reports it produced 179,757 vehicles in Q4 (+71% Y/Y) and delivered 180,667 vehicles (+61%).
    • The company says it recorded its 6th quarter in a row of being profitable through volume growth and regulatory credit revenue growth.
    • Automotive gross margin came in at 24.1% vs. 27.2% consensus and 22.5% a year ago.
    • Tesla says the Gigafactory Shanghai has the ability to sustain a run rate at or above 250K Model 3 s a year.
    • Tesla expects to achieve 50% average annual growth in vehicle deliveries over a multi-year horizon, depending on equipment capacity, operational efficiency and the stability of the supply chain. The company expects Tesla Semi deliveries to start this year.
    • Shares of Tesla are down 1.28%% AH to $853.12 vs. the 52-week trading range of $72.24 to $891.50.
    • The conference call is scheduled for 6:30 p.m. ET and should feature some confidence on global deliveries. Looking ahead, Wedbush expects that Tesla will top 1M deliveries in 2022 and thinks the EV beast will start to approach 5M deliveries annually by the end of the decade if global EV demand continues at the current pace.
    • Whirlpool (NYSE:WHR): Q4 Non-GAAP EPS of $6.64 beats by $0.23; GAAP EPS of $7.77 beats by $1.99.
    • Revenue of $5.79B (+7.6% Y/Y) beats by $150M.
    • 2021 outlook includes earnings per diluted share of $17.80 to $18.80 on a GAAP basis and $19.00 to $20.00 adjusted basis; cash provided by operating activities of ~$1.55B and free cash flow of $1B or more.
    • Shares -4.1%.
    • Press Release