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Flip Floppin’ Friday – Closing out a Wild Week

What a ride.  

GameStop (GME) went from $75 to $483 to $112 and now $335 pre-market and it's like watching a ball bounce around a roulette wheel at the moment except, at least on a roulette wheel – the numbers fall within a particular range.  This, on the other hand, IS CRAZY!

But it's also a great lesson in valuation as, clearly, the business of GameStop hasn't changed this week and even the perception of the value of GME hasn't changed this week ($100 is a stretch) but the SENTIMENT has been all over the place, hasn't it?  

The GME debacle is nothing more than what goes on every day in the markets but this is a close-up look at what happens in high-speed mode with running commentary from 1,000 analysts trying to dissect every move (I'll be on Bloomberg at 11 am, in fact).  What's fascinating about GameStop is that, rather than Wall Street Criminals manipulating the stock, ordinary traders are now doing it.  If we allow ordinary traders to manipulate stock prices, how will Goldman Sachs make money?  And if "Government Sachs" can't make money – Congress springs into action.  When this guy does it, they just yawn:

Let's keep in mind that, for 20 years, Jim Cramer, a self-confessed market manipulator, has gotten on TV and told his army of followers to BUYBUYBUY or SELLSELLSELL stocks every day and, very clearly, they do exactly that at the open the next morning.  Not one investigation has ever been launched yet the moment some ordinary traders do the same thing – CONGRESSIONAL INVESTIGATIONS!

Why Value Investing Works | Seeking AlphaThat's because Jim Cramer works for the elites, sending the beautiful sheeple into the slaughterhouse for the benefit of his Wall Street buddies but the second the sheep object and try to take matters into their own hands, the Wolves of Wall Street cry FOUL! and beg the SEC to step in and stop the madness.  Even our brokers turn against us because we retail invesors are nothing compared to the hedge fund money that drives their revenues.  

The longer you’ve been around, the more you realize that something like this is less a massive break in the functioning of markets and more a reflection of risks that were always there,” says Michael Cembalest, the chairman of market and investment strategy at JP Morgan Asset Management. Manias have been parts of markets for centuries. So have short squeezes. And in this case, the hedge funds betting against GameStop might have received just deserts for a really dumb bet.

All this excitement has helped the first month of 2021 just fly by and, before we know it, it will be September and we'll all have been vaccinated (hopefully) and the virus will not have mutated enough to re-infect us anyway (hopefully) and the economy will recover (hopefully).  So we have that to look forward to.

Have a great weekend,

- Phil

 


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  1. Behind AstraZeneca’s Covid-19 Vaccine Stumble


  2. Inside the Reddit army that’s crushing Wall Street





  3. Good Morning.


  4. VIH stock  for Bakkt  I mentioned yesterday gets nice writeup in Fortune.  Article explains how it works.  Stock at $14.90  August $15 covered call pays $4.25    speculative position 

    https://fortune.com/2021/01/27/bakkt-digital-wallet-rewards-points-bitcoin-stocks-jeff-sprecher-gavin-michael-kelly-loeffler/


  5. Good morning!

    • Personal income up 0.6% but Personal Spending down 0.2% – interesting.
    • PCE Price up 0.4%, way past Fed target.  Even core up 0.3%.  
    • Employment cost index also very hot at 0.7%.

    Lots of inflationary signs are going to matter.  

    •  
    • 10:00 ET:  Pending Home Sales

      For: Dec | Trading Impact: Low | Actual: -0.3% | B.com Forecast: -0.1% | B.com Cons: -0.5% | Prior: -2.5% | Revised From: -2.6% --
    • 10:00 ET:  Univ. of Michigan Consumer Sentiment – Final

      For: Jan | Trading Impact: Low | Actual: 79.0 | B.com Forecast: 79.4 | B.com Cons: 79.2 | Prior: 79.2 | Revised From:  --
    •  

    Neither one of those are good either. 

    09:45 ET:  Chicago PMI

    For: Jan | Trading Impact: Medium | Actual: 63.8 | B.com Forecast: 58.5 | B.com Cons: 58.0 | Prior: 58.7 | Revised From: 59.5 --

    That one is good.


  6. 2,100 is a good shorting line on /RTY if it fails. 

    Make sure /ES is below 3,750

    Dollar off the lows.

    Another nice try by oil but back to good old $52.50


  7. GME  Doing a small trade on GME that is not a big risk for me.  With it at $330, sold the 2/19  $500 C for $150.  So it needs to go over $650 to cause a loss for me with the spike peak at 450.  Seems like a good gamble in this crazy game being played. 


  8. StJean mentioned LMT last week    Yodi, Phil  anyone have a play 


  9. IB still banned opening positions on GME and its options. Otherwise the premium is so crazy rich…


  10. Phil, all,

    Anyone have any news on DG (Dollar General)? EPS, fundamentals appear solid but yet…

    TIA








  11. Phil,

    Did Bloomberg have you on? Is there a link? Inquiring minds/Fans want to know.


  12. Same time I sold a 2/19 $800 GME call for 117$. Already +$1500$


  13. stockbern LMT playing this stock since 2013 have various play including still a Feb 400 short call, worked up my position to about 70k so we sit tight.



  14. Could TSLA be at 400 next week? I wonder as I wander…


  15. Some of Melvin Capital holdings.  "They" are saying this is whats being sold off to raise cash 

     

    https://whalewisdom.com/filer/melvin-capital-management-lp#tabholdings_tab_link


  16. BDC did research on cobalt another essential mineral used in batterys etc. It apparently is a byproduct of other mining activities for copper, silver, gold whatever and usually teams up with nickel and has to be extracted. The companies that we can buy are WPM, VALE, GLCNF. The deal is VALE has an agreement with wpm for 42% of the cobalt for the first year then it levels down to 21-23 for another 4 years. There are other Canadian Co that are in it and that would be easier as most of the mining is in the Congo which has political instability. However, China has mines and that is where we used to get it from until they found out they needed it. There is a newer silver and gold miner AG that has mines in the US, Nev and Oregon and it is a guess if if it has cobalt. Since it is a by-product could be I suppose. FWIW


  17. Sorry it wasn't AG it was PZG that mines in the US. Paramount Gold Nevada Corp. It's up a whole 7 cents today. AG is First Majestic Silver Corp out of Canada which looks promising.


  18. Cobalt and manganese are going to moon on Lithium-ion battery needs. The fed EV fleet mandate alone makes these plays worth it. I doubt Li-ion will make much of a dent in energy storage, but if they try, that's be 100X the need.


  19. TSLA/BDC – So scary to bet against but nice bonus money in the STP at the moment:

    TSLA Long Put 2022 21-JAN 600.00 PUT [TSLA @ $790.76 $-44.67] 4 12/18/2020 (357) $56,000 $140.00 $-16.43 $120.25     $123.58 $15.33 $-6,570 -11.7% $49,430
    TSLA Short Call 2021 19-MAR 900.00 CALL [TSLA @ $790.76 $-44.67] -2 1/13/2021 (49) $-19,600 $98.00 $-49.28     $48.73 $-13.46 $9,855 50.3% $-9,745

    Nice snap back on the indexes.

    /RTY stopping out at 2,075 but that's a nice $1,250 per contract.  2nd time was the charm.

    Poor Melvin!

    Miners/Pirate – Good topic, please remind me to look into those this weekend.  Could be good Reddit-fodder.  


  20. Will do. Many of these are bargains so dabbling doesn't break the bank. I usually do a starter than add more depending. Of course we have had WPM many times before.


  21. Love WPM but not very cheap at the moment.  We picked them up in the teens when they were Stock of the Year.

    Have a great weekend folks, 

    - Phil






  22. Cobalt : I wouldn't bet on cobalt for the long haul.  Sure, it is necessary in specific types of Li-Ion batteries now (where kwh/kg is relevant--like card and wearables) but I expect that amount to plummet over time.  All of the battery manufacturers are looking to replace cobalt in their batteries due to cost and political instability in the DRC.  For stationary storage, LiFePo batteries are superior due to much better safety parameters and dramatically higher cycle counts.


  23. SLV might run. Calls right at the open and see if the wallstreetbet crowd runs it next Monday and through the week.


  24. NY has used 100 percent of its first-dose COVID-19 allocation



  25. Florida town conducting legal review of Trump’s residency at Mar-a-Lago