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PhilStockWorld September Portfolio Review – Part 1

Image result for one million dollars animated gifImage result for one million dollars animated gif$2,167,659!  

That is up $15,088 on our paired portfolios since our last review and, I am very happy to say, $1,878,544 (86.6%) of it is now CASH!!!  We cut about half of our Long-Term Portfolio (LTP) positions but then we added 5 more in past month and we are very well-hedged in the Short-Term Portfolio (STP), with roughly $500,000 worth of downside protection against a 20% drop in the S&P 500 so, at the moment, we probably make more money on a drop than we would on a pop.

The S&P 500 is hovering right about where it was on August 17th, when I wrote: "Top of the Market Tuesday – Cashing Out While We Can" so I'm not going to rehash our reasons.  In fact, the Friday before that (13th), the S&P had finished the week at 4,450 and this morning we're at 4,466 and we'll see how that holds up into Quad Witching tomorrw.  

As I noted in yesterday morning's report, the S&P 500 has been week this month and 4,480 is the Strong Bounce line, according to our 5% Rule™, so we'll see how that goes into the weekend.  It doesn't affect our well-balanced portfolios and we have no intention of getting too bullish again ahead of earnings next month but we are finding bargains and some of the biggest bargains are sitting right in our portfolios!  

These are the positions that have survived the gauntlet of several purges and we have 40 positions that are using $368,250 in cash and $555,000 in margin that can easily make another $500,000 (54%) over the next 12 months.  At this point in the cycle (toppy and looking to correct), we shouldn't have any position that we wouldn't be THRILLED to double down on if it drops 40% – meaning we would ride out a 20% correction and see what happens.

Long-Term Portfolio Review (LTP):  

  • Short Puts – These are all stocks we REALLY would like to own at the net price.  We just sold 10 AAPL Sept 2023 $105 puts for $7 and that puts us in 1,000 shares at net $98 – yes PLEASE!!!  If that doesn't happen, we get to keep the $7,000 for promising to buy AAPL at a 34% discount to the current price.   This is free money, folks, why would you not take it?    Our 13 short puts have paid us $78,300 and now the 2024s are out so we'll be selling at least a couple a month until we get to 30 open positions (about $200,000),  at which point we'll begin cutting back again. 
  • W – This spread is $32,000 in the money and showing net $45,325 out of a potential $50,000 – so we're done with it.  Kill it.

  • CIM – Way over target and paid us a lovely $990 dividend on June 29th.
  • SKT – Over our target and just paid us $1,424 on July 29th.

Just two dividend stocks like those pay $9,656 per year in dividends.  That's another 2% per year added to our original $500,000 portfolio and, the two positions are only net $143,390 so $9,656 is 6.7% of that while we wait to get called away at $210,000 for another $66,610 (46%) in profit.  They seem boring but this is more than a 50% return in 16 months!  

  • APO – Fairly new and on track.
  • BABA – We were recovering but took another downturn. 

  • BYD – New trade, still good for a new one.
  • CAKE – Also great for a new trade as it's cheaper than our entry.  This is a net $8,300 credit on the $20,000 spread  so there's $28,300 of upside potential at $55.

  • CHL – Dead money at the moment.  

  • DOW – Another new one that's cheaper than our entry but we're already $10,000 in the money on the net $1,550 entry on the $20,000 spread so there's $18,450 (1,190%) upside potential here.  
  • FB – Miles in the money.  We have to roll the 3 short Sept $365 calls at $9.48 ($2,844) to 3 short Jan $400 calls at $13.50 ($4,050).  
  • GILD – Well in the money.
  • GOLD – We are aggressively long on this one.  

  • HAL – Brand new.  $20,000 spread at net $4,050 has $15,950 (393%) upside potential if HAL simply holds $20.  Aren't options fantastic?  
  • HBI – On track
  • HPQ – On track but also good for a new trade as they only need to get to $30 and it's a $17,500 spread at net $6,459 so it's $11,041 (170%) of upside potential from here.  

  • KHC – Brand new trade.  $18,750 potential at $40 and we're $9,300 in the money already yet you can still buy this spread for net $4,038 so there's $14,712 (364%) of upside potential.  Arent' optons fun?  
  • LMT – Brand new.  
  • MO – $30,000 spread that's $15,000 in the money at net $2,365 – FUN!  

  • PAA – Just paid us a $1,440 dividend on July 29th.  We'll get half called away and maybe we'll buy more again, but that's a January decision.
  • PHM – On track. 
  • QSR – I'm a little worried about the sector with the Delta virus but, long-term, they are a bargain.  
  • REYN – The price of aluminum is skyrocketing and putting pressure on margin but i't a great long-term play.  We are waiting for longer-term options to come out so we can roll the longs. 

  • RIO – This one is $9,000 in the moeny but you can buy it for net $1,275 on the $30,000 spread! 
  • SPWR – We're down about $10,000 but I love this one.  

  • T – Disappointing but making money.  Eventually, we'll roll to the 2024 $20 calls for hopefully $3.50 or less.  
  • TROX – New trade and blew past our target already.  We should roll our 25 Feb $15 calls at $9.90 ($24,750) to 50 of the 2024 $20 calls at $5.75 ($28,750) and then we can roll the short calls along over time.

  • VIAC – Could be our Stock of the Year for 2022 if we're still at $40 come Thanksgiving.  We're just waiting for the short calls to expire and then we'll sell some more on a pop.
  • WPM – On track.

Very few changes to make as we're very happy with our LTP positions.

Short-Term Portfolio Review (STP):  $94,705 is down $29,970 since our last review as CMG particularly killed us.  We stopped out of the short calls with a $90,000 loss and we'll hopefully make that back SLOWLY by selling some more short calls.  It's time to spend a little money to add more protection but not too much – just in case the market keeps rising.  The STP is supposed to lose money in an up market – but it's still annoying.  

  • SQQQ – Thise will expire worthless in January.  
  • TQQQ – We're down 50% on our January shorts but here's a magic trick:  We roll the 20 Jan $130 puts at $13.50 ($27,000) to 20 of the June $160 puts at $39.50 ($79,000) and we'll partially pay for that by selling 20 Jan $130 puts for $13.50 to another sucker ($27,000) so we're spending net $25,000 to roll our puts $32,000 in the money with 6 additional months of protection.  If TQQQ does goe lower, we roll the puts to a lower strike in June (the $100 puts are now $13.50).  If TQQQ is flat or higher in Jan – we sell another round of June puts anyway to finish paying for the roll.  

  • FXP – On track for the full $40,000 and only net $19,000 so far.  
  • TZA – 2023 $30s are $10.50 so $5.35 to roll them.  We'll hope for a pop before doing that but we'll get there eventually.  TZA is a 3x short so a 20% drop on the Russell will send the ETF up 60%, from $30 to $48 and that would put us $360,000 in the money.  The current net of the spread is a $48,500 credit but we knew we'd have to spend that money to roll the longs eventually.  

  • CMG – As noted above, we lost $90,000 on the previous short calls amd we don't try to make it up in one shot.  We can sell Jan $2,000 calls for $75 so let's sell 3 of those for $22,500 and hopefully we get the sell-off we're expecting by then.  
  • SCO – The short Jan calls will expire worthless unless oil completely collapses and we'll see how the next month goes before rolling the long calls.  

  • SQQQ – Let's buy back the short 2023 $25 calls at $1.40 ($7,000) and the rest of the spread is fine for now. 
  • W – Hit our goal but bouncing back a bit. Our put spread is $44,000 out of a potential $45,000 – so there's no point to that anymore – let's cash it out. 

You always have to be on alert for the net price of your spread (or parts of your spread) vs what you hope to gain.  Volatility can sometimes give you great exits – but only if you pay attention!  














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  1. Good Morning.

  2. Comment content omitted because it is too long.

  3. Good morning!  

    Yet again things turn ugly at the bell – we'll see if it sticks this time.


    Oil falling back down, gasoline really getting hit.



    More good data brings fear of the Fed back in focus:

    Sales at retailers and restaurants grew 0.7% last month, a sign of the economic recovery’s resilience despite the Delta variant. 2 min read



    • Retail sales jumped 15.1% in August compared to the mark a year ago when the pandemic limited activity. Retail sales were up 0.7% from the previous month to top expectations.
    • The strong month was led by momentum with clothing stores (+39% Y/Y) off the back-to-work and back-to-school trends. That could set up chains like Gap (NYSE:GPS), TJX Companies (NYSE:TJX), American Eagle Outfitters (NYSE:AEO), Designer Brands (NYSE:DBI) and Abercormbie & Fitch (NYSE:ANF) for a solid quarter. The restaurant category was also in recovery (+32% Y/Y) even with the labor shortage impacting companies like Dine Brands (NYSE:DIN), Brinker International (NYSE:EAT) and Cheesecake Factory (NASDAQ:CAKE). There was also surprising strength with general merchandise stores (+16%) in a development that bodes well for Walmart (NYSE:WMT), Target (NYSE:TGT) and Costco (NASDAQ:COST).
    • If there was a disppointment it may have been in the category that includes e-commerce retail (+5.3% M/M, +7.5% Y/Y) in what could be another indication of the tough pandemic comparables for companies like Wayfair (NYSE:W), Chewy (NYSE:CHWY), Etsy (NASDAQ:ETSY) and Shopify (NYSE:SHOP).
    • Read more about the retail sales report.
    • Compare the S&P Retail ETF vs. the Amplify Online Retail ETF.

    From Michelin tires to Pampers diapers, transportation expenses are working their way through global supply chains.

    • Economic indicators are topping expectations, but the stock market looks unsure about how to digest the numbers.
    • The Dow (DJI) +0.2% is higher, the S&P 500 (SP500) flat and the Nasdaq Composite (COMP.IND) -0.1% lower.
    • Better-than-expected measures of retail sales and manufacturing may give the Fed more food for thought about tapering at its meeting next week.
    • Retail sales posted a a surprise jump in August that was balanced somewhat was downward revisions for July.
    • Online retailers, furniture and department stores saw the biggest gains for the month, while autos and parts and electronics were the biggest decliners. Food and drinking spending was flat.
    • "Consumers are consolidating their trips, so when they're going to the store they're buying a lot more and they're also buying full price because there's no inventory out there and there's nothing on sale," Stacey Widlitz of SW Retail Advisers said on Bloomberg before the report arrived.
    • "The worst of the effects of both the Delta variant and Hurricane Ida are expected to hit in September," Grant Thornton's Diane Swonk tweets. "Consumer spending could eke out a small positive after adjusting for inflation on the third quarter but risks are to the downside. Supplements to UI insurance also expired in Sep."
    • Also this morning, the September Philly Fed manufacturing index came in at 30.7 compared with expectations for 18.8, while the prices paid component was down.
    • The 10-year Treasury yield is up 4 basis point to 1.34%.
    • The retail sales figures "along with continued indications of supply chain disruptions and wage pressures … will re-energize taper talk," Mohamed El-Erian tweets.
    • Crude oil is lower with commodities in focus. Natural gas prices continue to rise, especially in Europe, and uranium hit a nine-year high.
    • Gold and silver are also selling off.
    • S&P sectors
    • The megacaps are starting the day lower, with Tesla declining the most.
    • See the individual stocks making the biggest moves this morning.
    • J.P. Morgan's fall "playbook" for oil and gas exploration and production companies zooms in on seven key narratives set for impact to the sector in the second half of 2021 (and early 2022 as well).
    • And most important among those, analyst Arun Jayaram and team say, is the potential return of "significant" levels of free cash flow to equity holders – rather than used for reducing debt, as the sums have done this year.
    • Since the end of 2020, companies in the firm's coverage group have cut net debt by $9.65 billion through balance sheets of June 30 – and a key theme from Q2 earnings has been a planned shift of cash returns toward equity, which would narrow the discount of the stock prices to intrinsic value.
    • But which companies have announced cash return strategies beyond normal dividends? Continental Resources (NYSE:CLR), CNX Resources (NYSE:CNX), Cabot Oil & Gas/Cimarex (COGXEC), Devon Energy (NYSE:DVN), Diamondback Energy (NASDAQ:FANG), Magnolia Oil & Gas (NYSE:MGY), Marathon Oil (NYSE:MRO), Ovintiv (NYSE:OVV), PDC Energy (NASDAQ:PDCE), and Pioneer Natural Resources (NYSE:PXD).
    • And setting up its long discussion of other themes in the sector, it says "In an environment where sector weightings for energy remain lackluster, getting the investing narrative correct is especially important in terms of E&P stock selection."
    • That includes that there's an attractive macro setup as the companies are "almost unanimously" holding firm to 2021 capital budget plans even in the fact of strengthening commodity prices. WTI and gas strips have moved 40% and 55% year-to-date respectively, but producer budgets have remained sticky.
    • "We think that the current price environment remains a 'sweet spot,' with demand gradually recovering from COVID-19 and the OPEC/shale market share war remaining fairly subdued largely driven by public company shale discipline," it says, and its top picks for this theme are Antero Resources (NYSE:AR), Diamondback (FANG), Marathon (MRO), Ovintiv (OVV), and PDC Energy (PDCE).
    • Its third narrative: Outsized exposure to liquids still makes sense with the growing prospects of a propane supply squeeze. Propane's trading at 75% of WTI, significantly above the more typical low 50s percentage for this time of year, and J.P. Morgan is staying "constructive" on LPG prices. The best ways to play there are Antero (AR) and Range Resources (NYSE:RRC), it says.
    • The fourth narrative covers optionality to strengthening gas fundamentals. The firm tweaked demand and export assumptions and adjusted for supply disruptions (Hurricane Ida) and now says the five-year average may not be the best comp given lower expectations for production growth and increased exports.
    • Its fifth narrative: "Be wary of companies with significant hedging losses." That strip pricing surge means almost all hedges are underwater. Devon (DVN) has the most underwater hedges ($384 million), followed by Ovintiv (OVV, $381 million) assuming $65/bbl WTI and $3.50/Mcf Nymex. Among gas names, the most significant hedging losses are at EQT ($1.98 billion) and Southwestern Energy (SWN; $1.24 billion), while Cabot Oil & Gas (NYSE:COG) is totally unhedged for next year.
    • With Narrative 6, the firm says it favors "combo" producers for playing higher gas/NGL prices. Those with significant leverage to higher gas prices are Continental Resources (CLR), Matador Resources (NYSE:MTDR), Magnolia Oil & Gas (MGY), PDC Energy (PDCE), and SM Energy (NYSE:SM); and Ovintiv (OVV), PDC (PDCE), APA, and Marathon (MRO) have leverage to NGL prices.
    • And its seventh narrative for E&Ps advises caution when it comes to stocks with "significant" private-equity overhangs – after a large number of deals where private companies selling to public peers have seemingly been driven by P-E looking for a liquid currency to exit. For examples, it points to Pioneer (PXD) after the DPE transaction; Diamondback (FANG) after the Guidon filing; and EQT after the Alta close.
    • From here, the P-E seller overhang could be a risk for Southwestern (SWN; after the Indigo lockup expiration) and Callon Petroleum (CPE; after the Primexx close) along with an ongoing risk for EQTPXDFANGDVN, and Laredo Petroleum (NYSE:LPI).
    • As for ratings moves coming out of the playbook's publication, it's upgrading Gulfport Energy (NYSE:GPOR) and RRC to Neutral from Underweight, and downgrading SWN to Underweight from Neutral, based on its forced ranker methodology.
    • It's also upgrading SM to Overweight from Neutral (thanks to robust FCF metrics, valuation and optionality to the Austin Chalk play) and upgrading MTDR to Overweight from Neutral in part due to continued operational outperformance.
    • Turning to broader oil names, J.P. Morgan today also downgraded Chevron to Neutral (noting valuation and guidance for higher energy transition spending), and reiterated Occidental Petroleum at Underweight while staying Overweight on Exxon Mobil, Canadian Natural Resources and Cenovus Energy.
    • Redfin (NASDAQ:RDFN) reported that the median home-sale price in August rose 16.2% Y/Y to $380,271, but the lowest growth rate since February.
    • Seasonally-adjusted home sales in August were down 6% Y/Y to 594,200, the first annual decline in 15 months. The M/M decline was -1.4%.
    • Compared to August 2020, home sales fell in 44 of the 85 largest metro areas Redfin tracks.
    • The biggest sales declines were seen in New Orleans, LA (-23%), Salt Lake City, UT (-16%) and Warren, MI (-14%).
    • The largest gains were in seen in places where sales were somewhat depressed in August 2020, including New York (+65%), Honolulu, HI (+47%) and Nassau County, NY (+32%).
    • Seasonally adjusted active listings fell 19% Y/Y. Only four of the 85 largest metros tracked by Redfin posted a Y/Y increase in the number of seasonally adjusted active listings of homes for sale.
    • In August, 52% of homes sold above list price, rising 20 percentage points Y/Y.
    • "When it comes to home prices in this market, what goes up stays up," said Redfin Chief Economist Daryl Fairweather.
    • Fairweather further added ""That's especially true in the Sun Belt; home prices are up more than 20% from last year in Austin and Phoenix. Even with these steep increases, homes in these areas are still relatively affordable, so these and other hot migration destinations are going to continue to attract homebuyers from the coasts. As workers change jobs en masse and enhanced unemployment benefits come to an end, we could see even more households relocate for affordability in the coming months."

  4. Hi Phil, Still holding on the /CL shorts? Approx target in mind? Thx

  5. Phil-


    You did not post the second half of the LTP positions-  it ends with MO



  6. Oil/RS – I got burned for my greed but was letting them ride as I think there's nothing for demand to get excited about between now and Thanksgiving and the refineries and supplies will come back on line and more people will go back to Covid restrictions – I just don't see the upside from here.  Check out the 2018 fall drop and 2019 Sept-Oct – I'd hate to miss one of those! 

    Gold got whacked this morning:


    LTP/Jeff – Refresh the page. 

  7. Hmmm


    Still not seeing the 2nd half - 

    I'm talking about the spreadsheet portion it ends at MO — not the writeups – I see all those.  The next spreadsheet portion for me is the STP.

  8. Oh, I get it! 

  9. Phil/AAPL Meanwhile, we're waiting for 2024 options to come out so we can sell more premium, which gives us better hedges.  Apple (AAPL) has Sept 2023s out so we're almost there.  With AAPL at $151.83, you can sell the Sept 2023 $105 puts for $7, which puts you into the stock at net $95, more than 33% below the current price. 

    Would you still sell the Sept '23 puts or would you now prefer say the '24 $110s for about $9.70?


  10. Another sell-off being erased on lower volume.  Very interesting market.  

    Oil popping too.

    • Signet Jewelers (SIG +5.4%) trades up as Wells Fargo upgrades the stock to Overweight from Even-weight citing "renewed optimism."
    • The jewelry company has a healthier capital structure, uses a leaner/healthier store base, and has made meaningful productivity improvements, writes analyst Ike Boruchow. He believes that the store has potential to hit around 10% margins (vs 5.2% pre-COVID) given the management changes and rapidly growing e-commerce site.
    • FY22 EPS is lowered slightly to $9.00 from $9.35 given supply chain issues, but FY23 EPS is raised to $8.54 from $7.80.
    • Wall Street analysts are mixed on the stock with an average price target of $86, while Seeking Alpha's Quant Rating gives the company a very high grade.
    • Overall, credit card delinquency rates ticked up in August from July, and most issuers in the table below also saw net-charge-off rates increase, signs that credit metrics may be heading to more normal patterns.
    • During the pandemic, consumers mostly kept current on credit card payments with the help of the government's stimulus checks and enhanced unemployment benefits,  keeping credit metrics unusually strong for the past 17 months.
    • But during that time, individuals have been borrowing less. So banks' profits from their consumer lending businesses have suffered. That's starting to reverse, too.
    • Loan balances increased M/M for four straight months across Capital One (COF +1.0%), Discover Financial (DFS +1.2%) and Synchrony Financial (SYF +1.6%), the three credit card companies that Wolfe Research analyst Bill Carcache follows.
    • The credit quality normalization is expected to occur gradually. The delinquency trends suggest that net charge-offs are unlikely to rise meaningfully until mid-2022, he said.
    • "Credit losses likely rise from here, but should still remain below cycle averages for the time being," writes Morgan Stanley's Betsy Graseck in a note.
    • Jefferies analyst John Hecht points out that credit forbearance pacts are largely in the rear-view mirror. "The vast majority of loans have exited deferral/forbearance, yet credit remains benign overall, likely due to strong household balance sheets and ongoing child tax credits," he writes.
    • "For now, robust consumer spending combined with efforts by lenders to drive new account growth and open up credit lines are driving the bus on card loan growth," Graseck said. She expects average card loan growth to be a "solid +4% Q/Q and +2% Y/Y" in Q3.

      Company Ticker Type August July June 3-month average
      Capital One COF delinquency 1.79% 1.71% 1.68% 1.73%
          charge-off 1.54% 1.45% 2.12% 1.70%
      American Express AXP delinquency 0.60% 0.60% 0.60% 0.60%
          charge-off 0.60% 0.70% 0.70% 0.67%
      JPMorgan JPM delinquency 0.62% 0.64% 0.67% 0.64%
          charge-off 1.25% 1.14% 1.30% 1.23%
      Discover DFS delinquency 1.42% 1.42% 1.43% 1.42%
          charge-offs 1.73% 1.72% 2.18% 1.88%
      Synchrony SYF core delinquency 2.30% 2.10% 2.10% 2.17%
          adjusted charge-off 2.40% 2.20% 3.30% 2.63%
      Alliance Data Systems ADS delinquency 3.60% 3.40% 3.30% 3.43%
          charge-off 4.00% 4.20% 4.80% 4.33%
      Citigroup C delinquency 0.80% 0.87% 0.90% 0.86%
          charge-off 1.62% 1.52% 1.82% 1.65%
      Bank of America BAC delinquency 0.90% 0.92% 0.97% 0.93%
          charge-off 1.45% 1.61% 1.78% 1.61%
          Avg. delinquency 1.50% 1.46% 1.29% 1.42%
          Avg. charge-off 1.82% 1.82% 2.00% 1.88%
    • SA contributor Motek Moyen sees American Express as significantly undervalued, pointing to its tailwind from the $79.3B digital payments industry.

  11. AAPL/Wing – Sure, I'd sell the 2024 $110s, it's still net $100.30 – a very good price and you are collecting $2.70 more.

    Still no strong bounce for /ES.