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Why Worry Wednesday – Back Near the Highs as Big Tech Reports

1,557 people died of Covid yesterday in the US.

That's not really news, that's how many people die every day in the pandemic.  It's improving, in fact, as we were losing 2,000 people a day during the summer so, as long as things don't pick up too much during cold and flu season – we'll only lose another 150,000 shoppers before Christmas – happy holidays to all the survivors!   

There might have been a time when we would have considered 150,000 deaths shocking, not to mention the 8M new cases (2.6 out of each 100 Americans) who will be infected in the next 100 days – but that was the old America.  Now it's "as long as it isn't me – I don't want to do anything about it at all," right?  I mean, honestly, what have you done about it?  Have you been outraged?  Have you demanded action? Oh, you wore a mask while the pandemic raged on – what an action movie that will make…

Getting vaccinated is really helping – it prevents you and those around you from getting infected (as you tend to carry a lower viral load for spreading when you are infected and it goes away faster) and now many places are requiring you either show that you are vaccinated or have a clean test before entering but guess what I just learned – those clean tests cost $100 and guess who pays for them?  We do! 

Anti-vaccine protesters hold placards as they take part in a protest against Covid-19 vaccinations in Britain earlier this month. Photo: Reuters

That's right, the people who refuse to take the $35 vaccine are choosing instead to take dozens of $100 tests at the taxpayer's expense.  These "Vaccine Queens" are costing us a lot more than Reagan's "Welfare Queens" ever did – abusing the system so they can carry on their unvaccinated lifestyles.

Florida Governor, Ron DeSantis has long been anti-vax but it's interesting to note that previous Governor, Rick Scott, made a lot of money owning part of the labs that drug-tested people when he required people on welfare and unemployment to be drug-tersted.  I wonder if DeSantis and other GOP Governors now own part of the labs that test for Covid – a very profitable activity in anti-vax states as the Government pays for the testing.  

For those Governors and their families and donors who have an interest in selling tests – of course they don't want mandatory vaccinations.  In Florida, where 20% of the population is unvaccinated, a 50,000 seat concert or football game can require 10,000 $100 tests per event for $1M in sales – paid for with our tax dollars.   That's happening every single day – all over the counrty – BILLIONS of Dollars every month, testing the unvaccinated so they can have "normal" lives despite being unwilling to take basic health precautions

We just let this sort of thing happen, don't we?  

Also happening is a huge bounce in the S&P 500 and other indexes BUT it's happening at ridiculously low volumes – especially compared to the sell-offs.  Only 46M shares were traded on SPY yesterday – less than a typical holiday and 100M share's haven't been traded in two weeks, when we bottomed out on October 6th.  

As we pointed out recently, there's enough inflows from IRAs and 401Ks as well as the Fed's $120Bn monthly QE that any lightly-traded day is bound to be positive.  However, there are nowhere near enough buyers to support a heavily-traded day so, when volume does return, you can be certain the market will turn down as well.  So far, the 4,550 line on the S&P has triggered the selling bots – we're pretty close to that line this morning at 4,512.  

The question is, what will the catalyst be?   We have the Beige Book this afternoon, but no one really cares so it's more likely to be GDP next week, though we also have Consumer Confidence, New Home Sales, Durable Goods, PCE and Personal Income & Spending to mull over – as well as about 150 S&P 500 earnings reports. 

This week is more of a "watch and wait" situation.

As noted by the most recent GDPNow from the Atlanta Fed – even the leading Economorons are beginning to realize Q3 GDP is nowhere near where it was projected to be – but they are still 3 points higher than the official Fed Estimate – so plenty of room for the masses to be shocked by our GDP number:

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storm warning

 


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

    https://attendee.gotowebinar.com/register/8995446993443234830


  2. Good Morning.


  3. Good morning!

    Same bet on /NG this morning as we cross back over the $5 mark (tight stops below).

    Everyone is getting rid of their currency while they still can, I guess:

     

     

    • Crypto-related stocks are most trading in the green on Wednesday as bitcoin (BTC-USD) takes out April highs and makes a new all-time high, now standing at just over $66K.
    • Bitcoin (BTC-USD +5.7%) is grinding higher so far intra-day, and returns nearly 50% on just a M/M basis, as well as +436% Y/Y, as per the chart below. 
    • Note that it wasn't long ago when bitcoin (BTC-USD) was trading at $30K in mid-July.
    • Of course, the fresh milestone for BTC comes shortly after the ProShares Bitcoin Strategy ETF (NYSEARCA:BITO) started trading on Tuesday with massive volume.
    • On the other hand, ethereum (ETH-USD), the second largest crypto by market cap, is also trading well in the green on Wednesday, though it has not yet made new ATHs as it tests the $4K level for the third time.
    • The proxy-like benchmark for the price of ethereum (ETH-USD), Grayscale Ethereum Trust (OTCQX:ETHE), outpaces ether in the past five days, but the digital token's total return nearly doubles that of ETHE Y/Y.
    • Some crypto-related stocks that are moving out of the gates as BTC marks new territory includes: Marathon Digital (MARA +3.1%), Riot Blockchain (RIOT +3.5%), Bit Digital (BTBT +4.8%), Coinbase (COIN +1.9%), MicroStrategy (MSTR +4.6%), ISW Holdings (OTCPK:ISWH -4.9%), Silvergate (SI +6.7%), Digihost Technology (OTCQB:HSSHF +1.1%), Sphere 3D (ANY +4.8%), Cipher Mining (CIFR +5.1%) and Canaan (CAN +6.8%).
    • Earlier, bitcoin rose to $64.6K, the highest level since April.
    • Billionaire hedge fund manager Paul Tudor Jones offered what he characterized as a "very bleak picture" of inflation on Wednesday, saying that the fast pace of price increases represented the biggest threat to both the financial markets and society in general.
    • To protect portfolios against higher prices, Jones told CNBC that investors should buy commodities, inflation-indexed bonds and cryptocurrencies, like Bitcoin (BTC-USD).
    • "Bitcoin will be a great hedge. Crypto will be a great inflation hedge," he said.
    • Jones reported that he has crypto in "single digits" in his portfolio, partly because he believes "we are moving into an increasingly digitized world."
    • "Clearly, there's a place for crypto. And clearly, it's winning the race against gold at the moment," he contended.
    • Jones also lashed out at the Federal Reserve, saying the central bank "is an inflation creator rather than an inflation fighter."
    • "I think we have maybe the most inappropriate monetary policy that we've seen maybe in my lifetime," he said.
    • Jones argued that policymakers are taking inflation "lightly" because the U.S. hasn't seen this level of inflation for decades.
      • "What they're telling you by their actions is that they are going to be slow and late to fight inflation," he said.
      • "Somewhere down the road, somebody will have to come in … and put the hammer down," he added.
    • The famed investor expressed a lack of confidence in Fed Chair Jerome Powell, saying he's not the person to fight inflation given the dovish policies he has advocated so far.
    • However, Jones predicted that Powell would be re-nominated as head of the U.S. central bank.
    • Jones has been an outspoken critic of Fed policy for a while now. See why he called policymakers "bat s- crazy" back in June.

    • BTIG lowers its rating on Western Union Company (NYSE:WU) to Neutral from a prior stance of Buy on concerns the money transfer platform could face pressure from crypto alternatives and the new Facebook app.
    • Analyst Mark Palmer: "Our newly cautious stance on WU reflects our view that the company's money transfer platform is likely to face increasing pressure from free alternatives, such as the new digital remittance app that Facebook yesterday announced as the subject of a pilot program in the U.S. and Guatemala."
    • Palmer and team dig into the potential negative impact on Western Union from the advent of blockchain-based remittance options, such as the service that Zap Solutions' Strike launched earlier this year in El Salvador that offers free, instant money transfers.
    • Shares of Western Union are down 1.69% premarket and trade below their 50-day, 100-day and 200-day moving averages.

     

    • Strong Q3 results from big banks and rising rates couldn't prompt BofA clients to be net buyers of financial stocks last week.
    • Strong equity trading numbers drove better-than-expected earnings at Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), while J.P. Morgan Chase (NYSE:JPM) and Citi (NYSE:C) also topped forecasts.
    • And the 10-year Treasury yield (NYSEARCA:TBT) (NASDAQ:TLT) rose above 1.6%.
    • Financials (NYSEARCA:XLF) gained 1.2% on the week while the S&P Bank ETF (NYSEARCA:KBE) was up slightly.
    • But despite "upward revisions to Financials estimates amid Banks results last week, clients sold Financials for the third consecutive week (though corp. buybacks in the sector accelerated; Financials buybacks are once again outpacing Tech buybacks)," BofA strategists Jill Carey Hall and Savita Subramanian write in a note.
    • Clients sold in nine of the 11 sectors, with Info Tech (NYSEARCA:XLK) seeing the biggest outflows. Tech, Consumer Discretionary (NYSEARCA:XLY) and Health Care (NYSEARCA:XLV) all saw selling near record levels.
    • Overall, BofA clients were net sellers of U.S. equities, with the biggest outflow since June at -$2.3B, seemingly shrugging off the best S&P (NYSEARCA:SPY) weekly performance in three months.
    • Institutional clients sold for the third straight week, with the largest outflows since March, while hedge funds also sold.
    • "Selling by institutional clients in recent weeks aligns with historical trends: institutional clients’ sales have typically peaked in Oct., suggestive of potential tax loss selling ahead of the Oct. 31 deadline for mutual funds to realize capital gains," Hall and Subramanian write. "Private client selling has typically peaked in Dec., ahead of the Dec. 31 cutoff for individual investors. Flows have typically reversed in subsequent months."
    • But overall, clients were net buyers of small-caps (NYSEARCA:IWM) while net sellers of large-caps.
    • Hedge funds are now increasing net positions in small-caps, according to the latest analysis from SocGen. See what else they are betting on.
    • Abbott (NYSE:ABT) shares are ~3% higher in premarket trading as the company boosted its full-year EPS forecast following strong growth compared to 2020.
    • Q3 2021 sales were buoyed by strong sales of COVID-19 testing products. The $10.9B in sales for the quarter represented a 23.4% reported increase compared to the prior-year-period. But excluding COVID-19 testing, sales grew 11.7%.
    • Overall diagnostics sales for the quarter was $3.9B, a 48.2% increase.
    • The rapid diagnostics segment, which accounted for ~$2.1B in sales, increased 161.4% YoY. The only part of the diagnostic business that saw a decline was molecular, with a 24.6% drop.
    • Medical device sales saw a 14.6% YoY sales increase to ~$3.6B, led by diabetes care sales of ~$1.1B. That was 33% higher than Q3 2020.
    • Abbott currently has an average bullish sentiment among Street analysts. Out of 25 analyst ratings, 13 are very bullish and 6 are bullish.





  4. POLITICO Playbook: Breaking down Biden’s latest Build Back Better plan



  5. phil

    ng play wow.


  6. Americans are silver medal winners in games of the unwilling… :(

    https://www.youtube.com/watch?v=UA7HzEdWAe8


  7. Phil / AVGO – As we discussed last week I view AVGO as a strong company with excellent management and strong IP.  Willl play a big role in 5G, IOT, Server Storage. They will be raising the dividend this year, and have a tone of Free cash flow ( since they were not able to acquire a big fish this year they are also building a sizable cash pile) my target price is 555 / sh for 2023 fy .  I've got the following position and am looking take something off the table.   I was looking at the the Jan '24 500 (77)  / 560 ( 57)  BCS with no putters for now scale in with selling callers first then some buying…. thoughts?  Or should I just sit tight on this….  I've been selling my short putters on the way up,   I like the dividend and think whey will increase this by about 1.5 to 2.5 dollars this year.  Thanks for your input.

    600 Shares ( 430)  been selling short callers on this and adjusted cost basis is 390)

    Short 3X Jan'22 510 Call ( 22) ( per our discussion last week)

    Long 20 AVGO Jan  '23 $350 Call? (101)

    Short 20 AVGO Jan  '23 $450 Call? (51)

     

    Long 15 AVGO Jan  '23 $400 Call? (93)

    Buy 15 AVGO Jan  '23 $450 Call (76)

    Short 8X Jan  '23 $410 Put (52)


  8. /NG/Tommy – Not that hard really, playing a bounce off a floor is more physics than trading, isn't it?

    Silver/1020 – Russia's population density is 9 per square mile, we're at 36.  So 4x more crowded and half as dumb is still a disaster.  Russia has 33,000 infections per day vs 150,000 in US and they have half as many people.

    AVGO/Batman – Didn't we just short them?  Well, the good news for you is it isn't working.  Dividend is about 3% but I wouldn't own the stock at $512, so there's $307,200 you don't need on the table.  If you love them so much, sell the 2024 $450 puts for $67.50, which is more than twice what you'd collect in dividends and worst case is you are assigned back in at net $382.50 – well below your original entry but you can do something more productive with your $307,200 while you wait.

    I'm guessing short 3x is short 18 of the Jan $510 calls and you have 20 long 2023 spreads that are in the money and 15 of the $400/450 spreads too?  I'd trade those in ($160,000 + $60,000 = $220,000) for 40 of the 2024 $400 ($137.50)/550 ($60) bull call spreads at $77.50 ($310,000) and you already sold $39,600 Jan $510s against those so 8 more sales like that and you have almost a free $600,000 spread with $220,000(ish) off the table.


  9. Phil, 

    You are correct- On 10/15;

    10/15/2021

    Here's a fun play for Batman we can put in the STP for fun:

    Sell 5 QCOM 2024 $100 puts for $10 ($5,000) 

    Buy 5 QCOM 2024 $130 calls for $22 ($11,000) 

    Sell 2 AVGO Jan $500 calls for $25.30 ($5,600) 

    Buy 5 AVGO March $300 puts for $2 ($1,000)

    That's net $1,400 and we're betting AVGO goes down and QCOM goes up.  Won't take much to make us a winner.  


    • Nestlé (OTCPK:NSRGY +3.0%) is able to pass on rising input costs with price hikes to beat expectations and raise its full-year guidance. Organic sales at the company rose 6.5% in the third quarter, driven by 2.1% higher prices and 4.4% volume growth.
    • The maker of Cheerios and KitKat bars will also increase prices in the fourth quarter and in 2022, expecting inflation to rise further than the 4% jump during 2021.
    • Nestlé, which is struggle with supply chain issues like most of its peers, said that the price hikes should keep the company's margin at 17.5% followed by a slight improvement in the mid-term.
    • "The company knocked it out of the park for the third quarter," commented Kepler Cheuvreux analyst Jon Cox. "Most companies with strong brands will be able to pass on prices and I think the market still does not get that."
    • Raises FY 2021 Outlook: Nestlé expects organic revenue growth between 6% and 7% from previous expectations of 5%-6%.
    • Competitor Procter & Gamble also warned of inflation during its FQ1 earnings call.

    Yay!

    Oil heading back up off this report:

        


  10. Is anyone on the Webinar?  No one is responding.


  11. crickets  no sound


  12. We will post a new link in 2 minutes


  13. the first time it said error connecting to webinar

    the second time just no sound


  14. Sorry, there was an issue and we're going to try again shortly with a new link.



  15. The webinar is back on using the ORIGINAL link. Sorry for the confusion.


  16. Wholesale used car prices hit new highs – The Daily Shot





  17. A little pullback into the close but nothing severe.

    More watching, more waiting…

    I've got the 4 short /ES at 4,512 avg but I'm betting GDP disappoints so rising it overnight but back to 2 short if I get even.

    1 long /NG left after a nice day of trading and I'll stop that below $5.10 but hopefully we take off again.

    $83.50 is still a good shorting line on /CL 


  18. Phil / AVGO – Thanks the 400 / 550 looks like a good position…..   Selling the short  calls now and the buys Long ones in the next day….  Also, exiting the '23 position….   no put sales yet…. 


  19. Good evening, everyone. Here is the link to the replay of this week's webinar.

    https://youtu.be/i2FFHl_aiY8