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33,000 Tuesday – Dow Reaches for the Stars

32,953.

That's where the Dow closed last night after rallying from 32,500 at lunch.  Why?  We don't know – does it really matter anymore?  33,000 seems impressive but we were at 32,000 on Feb 25th (see "32,000 Thursday – Dow Touches Another Record") and, since then another 1,000 points is only a 2-day move in a month.  It came, however, in a spectacular fashion as we first fell to 30,500, THEN we climbed 2,500 points (almost) in the past two weeks.

Of course the free money is about to flow into our economy and everyone is very excited and all the pundits are expecting 7-8% GDP Growth like we are China or something and that has people pricing the market lke we're going to grow like this forever more but even China can't sustain that kind of growth and the growth causes it's own problems (like inflation) – none of which are priced into the market.  

Oil was irrationally exuberant and yesterday (as well as Thursday) we discussed shorting it below the $65 line and, so far, it's been good for gains of $750 per contract (our goal is to make $1,000 per contract at $64), so we raise our stop to $500 per contract to lock those gains in and we'll play it again if it comes back around at $65 or $65.50 too – now that we've seen it look toppy there. It's essential to keep tight stops above your lines to limit your losses – money management is the key to success in futures trading.

We don't have any good lines to short the indexes at the moment.  I'm seeing 32,865 on the Dow (/YM), 3,966 on the S&P 500 (/ES), 13,168 on the Nasdaq (/NQ) and 2,350 on the Russell (/RTY), which is the best shorting line of the bunch so I guess I'd go with that for a short and keep super-tight stops above.

Remember, we have the Fed meeting tomorrow and that's where we think the disappointment begins for the week.  Market volume has slowed back down and light trading allows for heavy manipulation, so we'll have to be patient this week.

$4,000,000,000,000 is the amount of infrastructure spending being kicked around in Congress.  That would probably keep the markets going for the rest of the year but, seriously, how do we ever plan to pay for this?  This is very much like taking the family on a huge vacation to Disney by maxing out all the credit cards to soften the blow that, when it's time to go home – you will have moved into a much smaller house in a much worse neighborhood and this was the last hurrah before bankruptcy – but wasn't Space Mountain great?  

We are currently running a $3.2Tn Deficit for the year that ends in June so passing $30Tn in debt will be a snap this year (as I predicted a year ago!).  Corporate Taxes are $213Bn, which is nice of them since we gave them a few Trillion Dollars and their owners (the top 666) got one Trillion Dollars richer last year so giving back 5% of it is a nice gesture, don't you think?  

That $2Tn of Local Debt is nasty, as is another $1Tn in State Debts and that doesn't even count the unfunded pension plans all those ex policemen, firemen and teachers are counting on to survive the next 20-30 years on.  Notice that Interest on Debt has creeped up to $395Bn – almost double what it was last year and all it would take is a 1% rise in borrowng rates and Interest on Debt would surpass Defense Spending as our largest budget item (after the entitlements).  How exactly are we ever going to pay for this?  

We currently collect just under $3Tn from workers as Income Tax and Payroll Tax and our beloved Corporate Masters kick in another $200Bn, making up almost 6% of the Government revenues – blessed be their names – so balancing our $3.2Tn deficit would mean EVERYONE paying 100% more taxes – just to avoid going deeper in debt.  Who's excfited about that?   

Updated Budget Projections Show Fiscal Toll of COVID-19 Pandemic |  Committee for a Responsible Federal BudgetIn THEORY, we can double the GDP and tax revenues would double on their own but you'd have to do that and not increase spending (meaning not increasing Social Security or Medicaid while the economy doubles – so a ridiculous, impossible wish) and, even at China's 7% annual growth rate, that's 10 years to double and another $10Tn or so in debt – at least and, again, if interest rates go back to 3%, then Interest on Debt becomes a $1Tn line item by itself and that adds another $6Tn to our debt in 10 years so now it's $16Tn in debt – even if we cut our deficit 66% to $1Tn while doubling our GDP and still keeping rates near historic lows.  Yeah, that's what is going to happen….

This chart was from June of last year – $3Tn more has been spent since then than is projected in the worst case and $4Tn more is planned ON TOP of the $3Tn deficit we are already running – how insane is that?  

So enjoy the ride while you can – try not to get sick as it's going to be very bumpy.  At least we are not alone:

debt-to-gdp rise around the world

And it's not just our Government that's in debt.  Non-Financial Corporations have $11Tn in debt – almost double from the $6Tn that tanked the economy in 2008 – so we have that to look forward to as well.

Reality Check:  

  • February Industrial Production-2.2% M/M vs. +0.5% consensus and +0.9% prior.
  • Capacity Utilization 73.8% vs. 75.7% consensus and 75.6% prior.
  • Manufacturing Output: -3.1% M/M vs. +0.6% consensus and +1.0% prior.
  • February Retail Sales-3.0% M/M vs. -0.9% consensus and +7.6% prior (revised).
  • Core Retail Sales: -2.7% M/M vs. -0.1% consensus and +8.3% prior (revised).

Party on markets!  

 


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  1. Good morning

    Yesterday Swamp was surprised his 300 days out short call was assigned. In one of my comments I tried to explain the reason of this. No questions asked. I just wonder if this was any help to some or did I just wasted my bites. 


  2. Good Morning.


  3. Good morning!

    So Oil (/CL) is, of course going to bounce off $64 after falling from $65 and a weak bounce is 0.20 and a strong is 0.40 so we can try another short at the strong line with a stop at $64.50 – after which we have to wait for $65 to come around again.  

    Overall, I still expect to see $60 by April.

    That's what an inversion looks like!  

    Inversions are bad…


  4. Yodi – I thought it was helpful. I'd never thought about the dividend > premium as a reason for getting called. 

    GME – more crazieness this morning. Maybe it will hit my $150 put before the end of the day (if i don't sell before!)


  5. Yodi – it made sense that it may have been the dividend.  Did Swamp verify if in fact the dividend hypothesis was in play? There’s another reason it may have been assigned. Sometimes new traders do dumb things and who gets exercised is randomly assigned and Swamp may have been that random trader.


  6. I appreciate your comments Yodi, please keep them coming. 


  7. stevez no we did not hear from Swamp


  8. Yoda – Really appreciate your contribution here.. Keep it up and please continue share your trades !!!  I am learning all the time from everyone in the forums and even Phil lol


  9. i missed your last comment Yodi but after analyzing it further you are current. Dividend was more than likely the reason it was called. Good learning lesson for me. Thank you for the feedbacn


  10. Yodi – I do read your comments. Thanks. I entered the REYN trade yesterday – let's see how that plays out.


  11. yes please keep commenting. I was told since I hold the WBA trade that PHil has that I would have to pay the dividend by TD. I looked through my statement and did not see the deduction however. PLease  keep up your comments. They are always a learning experience and gaining more expertise is mandatory when trying to keep up. 


  12. Phil and others Since the beginning of Feb. I am sending emails to TD Ameritrade without proper response. They are making Tax withholding deductions in respect to options with out identifying the actual option the deduction is made for. I am just about ready to report this matter to the security and exchange commission. Try to phone them I wait for more than 3/4 of an hour and still do not get a life person on the line. Have they reduced their staff to a one man show or what gives?


  13. The only thing good still of this company is the actual TOS platform. It is always hard to learn the tricks of a new platform


  14. YODI something weird is going on with TD. I had a FIT trade 23X 7C (18) of them. I sold 10 short. Since they were going eventually be bought by GOOG I supposed it might be a lucrative trade. It stayed under 7 but I haD SOME PROFIT.  Guess what they raised the call to 7 and froze the trade. No action could be taken. Got a notice that I would receive 375. dollars and 100 shares, a little flag on the account. I thought fine with that get my money back and make some. They changed the expiration from 23X to Feb. 19, 2021. I had never seen that happen before. Then on the expiration date they exercised 1800 shares @7.00. I was amazed then charged me again for the 10 shorts, BUT left the shorts on my screen shot for 18 instead of 10 with an expiration of 23X! Anyways I copied everything then found out I did not have 1800 shares of FIT at all. They WERE NOT available! The gainskeeper said there was something wrong with the trade. Yes that sure was correct. Anyways I have copies of everything for a paper trail for SEC which I know is useless. They let MADOFF get away for over 18 years and 80 billion dollars so I am not so sure if anything TD does is of interest to anyone.


  15. Hi phil,  is the green and red must hold box gone forever i liked it.


  16. Anyone hear any updates on CHL – China Mobile..  It has been almost 2 months since it was delisted and I still have the 27.5/35 BCS..  No updates from TD or ToS on this issue..    CHL issued a restatement request to NYSE on Jan 21 and I understand it needs to be reviewed by the NYSE board within 5 weeks after it is submitted..  I would definitely like this resolved so I can get my money back to use for other trades..  Thoughts ?


  17. How Amazon Crushes Unions



  18. TD/Yodi, Pirate - I think they are being decommissioned by Schwab.  I think they are purposely pissing people off and trying to get them to switch platforms.

    Must hold/Tommy – StJ did that and he hasn't been around lately.  We'll take volunteers to keep up the daily chart but it's beyond my technical expertise.

    CHL/Hicket – TD is useless for info but so is everyone else regarding this matter.  I'm encouraged that Xiaomi is winning points in court against their de-listing and I think most people are waiting and seeing.  The stock is over $35 in China, where it still trades so I'm not inclined to dump it for $27.50.  You can convert your ADR shares to regular shares and then find a broker who will sell your foreign stock if you want to cash out.   

    /RTY going well.  

    2,335 is the stop at the moment.


  19. Hicket CHL also fishy they assigned in Feb the Mar 30 call and paid me out at 30 even that the stock stands at 27.51. I hold still quite some shares, interesting to see what happens. I expect the stock will be soon trading again.

    In respect of SEC I was once with a broker who mangled with the clients funds. All account where frozen over a year! So as a broker I would not mess with them.


  20. Phil switch platforms which one are you talking about?


  21. Yodi-I don't usually have time to comment, but am always reading and appreciate your comments.

    Phil-seems like TOS is crapping out.  Who else can we use?  Who is not likely to be an acquisition target in the sector?

    Thanks.


  22. Yodi – Schwab bought TOS and they have a platform as well….


  23. Platforms/Yodi – I think Schwab is dumping TOS and they are either going to sell it or just kill it.  Their platform sucks and they can't make that better so they are making TOS worse and offering to move people to Schwab for free. 

    Who/Seer – No on is immune from being acquired.  TDA bought TOS and we thought that was the end 10 years ago, so this has been a bonus decade.  I guess TradeStation is decent but I haven't tried IAB or whatever is new out there as I've been very happy with TOS the past 10 years. 


  24. phil / TOS

    I use Tastyworks. Excellent UI. As a newbie, it helped me to implement your strategies and Yodi's Poor Man Trade etc. 

    Some one mentioned to me it's not as liquid. Not having used other platforms in any meaningful way, I can't comment. 

    SK


  25. Phil TOS OK but where to go if you say they kill it.


  26. I've used Etrade, Fidelity, and Interactive Brokers. Fidelity is my main platform. IAB is great tho. 


  27. I use tastyworks.  I don't have any complaints.


  28. I use TOS and tastytrade. Before all of the brokers went with zero commissions I performed a test where I tried the same trade on both platforms. tastytrade was typically about $0.05 worse for a spread.

    Now that free commissions are the norm I no longer see any difference between the two. I seem to have to adjust much further from the mid to get filled these days.


  29. Sorry, I meant tastyworks in my previous post


  30. Platforms – let's please continue this conversation. My sense is we are going to need a sort of group "consumer guide" on where to switch to, while considering differing tastes and needs. I started with Dean Witter Reynolds in the early 80s and have sort of just rolled along with the takeovers since. It sounds like it may be time to move on.


  31. I still feel TOS is the best overall. Tastyworks allows you to manipulate the legs of a spread more easily though. Tastyworks also just added the Chains feature that tracks a position across rolls. It definitely makes it easier to track the P/L of a position over time. But, the charting and screeners on TOS are really great.


  32. Using both TOS and Tastyworks here too. Much better charts in TOS. Tastyworks is much better for managing options positions. Rolling expirations and strikes is a pleasure on TW and cumbersome on TOS.


  33. What about options trading platforms if you are Canadian ?   I'm only used ToS and not aware of other options..  


  34. TastyWorks/Sk – That makes sense, designed by the TOS guys.

    Canada/Hicket – No idea. TD controls Canada.

    Nas rolling over (under).


  35. Yodi:  You said that you are having trouble getting through to Ameritrade.   Call the Private Client Services (PCS) number: 
    1 800 587-2226.  Given how actively you trade, you should qualify for PCS.  If you have trouble calling an 800 number from your location, I can give you direct numbers to some of the individual team members.    The PCS team is incredibly responsive and I almost never have to wait to get through to someone.  


  36. JohnC1 Thanks I generally call over skype and have no problem calling any number. I will try


  37. Phil / NQ short – What would be a good stop for a short position entered at 13,168?


  38. JohnC1 thanks I phoned that number and I had some one life on the line. PCS I was told are only for clients who do more than 100 trades and up, with other words big accounts. I do have a good amounts of trades but possible do not even qualify. In general I do not call. The fellow was this time even helpful with a PMT trader!!!! and after holding on for an other 40 minutes got a life person in the tax dept. Hope they solve the problem. 

    They seem to have problems in this company.


  39. Interesting market action. Really just treading water here near the top…. kind of directionless, just waiting for Fed news tomorrow. A little bit of weakness under the surface with declining volume ~3x advancing volume. Megacaps pulling up the indices. Didn't do much of any trading today; adding a couple more hedges/shorts. 


  40. Yodi,  I am happy that the PCS guy was able to help get you through to the right department.  I'm glad I was able be of some help.