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TGIF – Same Bat-Place, Same Bat Channel

Well, we made it through earnings. 

It's been a wild ride with the S&P up and down with each result but, in the end, we're back where we started from and that's pretty much the all-time high at 4,382 this morning.  4,420 was the actual all-time high and that was way back yesterday but we started the week at 4,400 – so none of this is impressive.  Still, neither AAPL or AMZN were any help to the markets and those two companies are 10% of the S&P 500 by themselves – that speaks well for the broader strength.

The Nasdaq started the week at 15,100 and is down 250 at 14,850 – still digesting AMZN's warning that it's not going to actually get better for the delivery giant, now that people can leave their homes again but there's still hope as the Delta Variant of Covid is shutting the World back down, so maybe AMZN does have another record quarter ahead of them?

Generally, earnings have been good and estimates for Q3 and Q4 are rising – ignorning the Delta Virus so far:

S&P 500 earnings

Q3 estimates

Today:  up 28.3%

July 1:  up 24.7%

Q4 estimates

Today:  up 20.3%

July 1:  up 17.3%

Source: Refinitiv

If those hold up, then 2022 estimates may also be too low but the undercurrent, so far, is that many companies have reported substantially higher commodity and, in some cases, labor costs, but most have been able to pass the higher costs on because consumers are flush with cash. S&P 500 margins have been hovering around 13% – record highs for the index and not likely to improve.  The first round of inflation is clearly being won by the corporations – who have excuses to raise prices – whether they need to or not.

Traders are also playing the market as if the Fed will never raise rates and that the FREE MONEY train from Washington will never end either.  Even with the optimistic outlook on 2022, we're still trading at 25x forward earnings – anything that goes wrong from here could be catastrophic.  

Economy’s Prospects Looked Bright, Until the Delta Variant Surged

China Tech Selloff Resumes

Procter & Gamble Warns of Higher Costs and Slower Sales

But, until then, party on!  

Have a great weekend, 

- Phil

 


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  1. Good Morning.


  2. The Bug – media and the CDC are going nuts with misinformation and panic again. I recommend the pinned weekly summary at this place: https://www.reddit.com/r/COVID19/


  3. Wayfair is dropping too much!  Definitely "on Target"


  4. WARNING!

    A federal moratorium on evictions imposed by the Centers for Disease Control and Prevention is set to expire on Saturday. The moratorium, which has been extended several times during the Covid-19 pandemic, is the subject of a lawsuit filed this week by the National Apartment Association in the U.S. Court of Federal Claims.

    The NAA, an Arlington, Virginia-based trade association representing the apartment industry, says rental owners and operators are shouldering $26.6 billion in debt not covered by federal rent assistance programs.


  5. Good morning! 

    Today is Maddie's 21st birthday.  I'm working until about 1pm and then heading out to meet the girls.  Back in the command center on Monday.

    Bug/Snow – I smell fear from businesspeople and policy makers, not sure if it's overblown.

    W/Randers – Can't say I'm surprised.  Earnings are on the 5th.

    Evictions/Stock – That's going to hit the fan hard and fast next week.


  6. Happy Birthday Maddie!

     

    It's ok for that to feel a little weird, Phil….. ;)


  7. Happy Birthday to Maddie!  Man, I know you all could probably tell me, but by boys turn 9 and 11 next week and it just goes by so fast.  Got to enjoy every minute of it.



  8. The Twins are 22 on October 1 and I at times, can only pinch myself to remind, it does not get any better than now….


  9. Overblown/Phil – yeah, it's overblown, but sort of like TA with death crosses and such – you have to pay attention because most traders believe it.


  10. SPWR earnings date is 8/3


  11. SPWR earnings date is 8/3


  12. OK, just to be safe before I go.  In the STP, let's do the following.

    • Close 200 SQQQ Jan (22) $10 calls at $1.21 ($24,200 – no less)
    • Close 100 SQQQ 2023 $30 calls at $1.30 ($13,000 – no more) 
    • Buy 300 SQQQ 2023 $5 calls for $4.10 ($123,000)
    • Sell 300 SQQQ 2023 $15 calls for $2.10 ($63,000) 

    We're spending $71,200 (of our $200,000 cash) to go $100,200 in the money and bringing the spread up to $300,000 potential.  More time is less decay on our longs and we are still covering various short calls as well.  

    Have a great weekend, 

    - Phil