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Fabulous Friday Finish – Rocky Earnings do not Stop Indexes from Making New Highs

Nice move on /NG this morning.  

We hit our goal at $5.32 this morning – as we predicted in Wednesday's Live Trading Webinar (replay available here) giving us a $3,200 per contract profit in two days – congratulations to all who played along (we are done with this trade)!  Our original set (this was a bonus round) was played on Tuesday, when I said:  

So basically we want to lock in $1,000 – so that's the stop but over $5.10 and that becomes the stop but the retrace from $5 would be 0.02 and 0.04, which is where we'd end up stopping out.   What do we expect?  Well this had a very high potential for reward as we've slipped from $5.80 so it's an 0.80 drop (will consider below $5 while market was closed to be overshoot) so 0.16 bounces means $5.16 would be the weak bounce and the retrace from that would be 0.032 so $5.13 and $5.105 so, on the way up, we watch those carefully to see if they give us trouble.  More bullish if they don't. 

As I keep saying, the 5% Rule™ is not TA – it's just math.  That's why, unlike TA, it actually works. It doesn't work on it's own, however, you have to have the Fundamentals backing you up but the combination of solid support and strong Fundamentals is a winning one.  Oil (/CL) is back to $83.50 and the S&P (/ES) is back to 4,550 and both make nice shorts here.   As I've mentioned before – we think the GDP Report next Thursday will be a disappointement.

Despite some rocky earnings reports, most notably from Intel (INTC), the market is in a bit of a relief rally as China's Evergrande suddenly made a bond payment (as if one payment fixes everything).  Had they not made this particular $83.5M (out of over $300Bn in debt), they would have been in default, been audited and all their financial woes would have been exposed in short order – of course SOMEONE came up with that payment!  

SNAP is also getting crushed and other social medias are getting dragged down with it as changes to privacy settings on Apple Phones are affecting their advertising business.  SNAP (and those in AAPL's ad ecosystem) have been dependent for a decade on IDFA, Apple's unique device identifier for advertising. But changes in iOS 14 now require a double opt-in from users in order to get direct access, as Snap's Evan Spiegel is pointing out in today's conference call.

FaceBook (FB) is also likely to take a hit when they report on Monday and we'll see how other social media platforms are affected.  One social media stock that is doing well is Donald Trum's Digital World Acquisition (DWAC), which is a SPAC that has been set up to buy Trump's worthless media assets.  Thanks to the magic of his lemming-like followers, DWAC is up from $10 to $90 and is now trading at a $15Bn valuation, despite having no assets, no business plan and not even any full-time employees (I kid you not).  

So Trump is a Billionaire again and is building a multi-Billion Dollar Social Media war-chest ahead of the next election – this time, with a network he will control himself.  There will be no cutting him off next time…    

TMTG also expects to challenge AMZN, GOOGL, and Microsoft (MSFT) in the cloud, as well as Stripe in payment processing. What would make TMTG different?  It appears that the main draw of TMTG would be its social media platform, which will be called “TRUTH Social.” TMTG notes that one third of people that it surveyed would use a social media platform that was backed by former President Trump.  

No wonder there's a waiting list for flights off this planet!  

Have a great weekend, 

- Phil

 


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  1. Look out to buy some long IBM and INC calls and sell some puts. will follow up during the day.


  2. Phil / INTC – Good Morning

     

    INTC took it on the chin today after earnings….. I thought quarter earnings were solid….. the outlook / cost for the investments will now be felt into the for 2 years maybe 3 – with GM compression, and possibly lower FCF  …. if the are successful return to grown….. This look stock will take a hit. and maybe be flat for some time…..   What do you think of all this?


  3. Good Morning.


  4. INTC I offered to buy Jan24 40call @ 12.40 and sell the 50 put for 10 and see what gives.


  5. IBM is creeping up already looking for a Jan 24 110 call and sell the 100 put, looking for 23.50 and 10


  6. CM climbing over 120 again!


  7. DWAC on its 3rd circuit breaker this morning. Up to $175



  8. Phil / AVGO / NEWS – taking off I see no special news on this.   They are due for a Div hike they also have not acquired a company this year…. so these two things may be driving this,,,,  do you see any news on this?



  9. batman,

    Looks like AVGO is going against you, I bet on both (QCOM)





  10. I see VZ recovered from my 51.10 purchase as well





  11. Japan OKs plan to push clean energy, nuclear to cut carbon



  12. Great Britain’s retailers hit by longest spending slump since 1996



  13. Good morning!

    Worked my now 8 /ES shorts to an average of 4,528.8 but down $6,000 so far – we'll see how it goes.  Half out if they get even.

    Things generally seem to be heading higher.

    INTC with a nice 10% drop this morning, also not in the LTP anymore.

    INTC/Batman – They are a cyclical company that has to go back to an investing cycle.  They are also getting pressure from inflation on margins as they run a lot of large contracts and could not adjust prices to keep up with inflation.  They made $1.71/share this Q but would have been $1 without a few lucky breaks and next Q they forecast 0.90 so $4/yr for a $50 stock is nothing I would throw away.  

    Chart

    They are spending around $90Bn for a new factory and then they'll go back to dominating for the next decade since their competition can't afford to compete at that level – now that we're down into the single-nano levels.   Great long-term play, messy short-term play as they aren't doing any buybacks – that's for sure.

    CMG taking a nice hit, thank goodness! 

    CMG Long Put 2022 21-JAN 1,500.00 PUT [CMG @ $1,804.23 $-39.60] 5 4/19/2021 (91) $69,020 $138.04 $-130.54 $94.86     $7.50 $-1.70 $-65,270 -94.6% $3,750
    CMG Short Call 2023 20-JAN 1,800.00 CALL [CMG @ $1,804.23 $-39.60] -2 7/21/2021 (455) $-51,876 $259.38 $4.62     $264.00 - $-924 -1.8% $-52,800
    CMG Short Call 2022 21-JAN 2,000.00 CALL [CMG @ $1,804.23 $-39.60] -3 9/16/2021 (91) $-23,109 $77.03 $-54.33     $22.70 $-15.56 $16,299 70.5% $-6,810

    Still a long way to go to hit those puts but they are just leftovers. 

    DWAC/Dave – Amazing.

    NFTs/Randers – Yep, I don't get it:  My daughter, the artist, won't participate because "NFTs destroy the environment".

    No photo description available.

    No photo description available.

    AVGO/Batman – Not sure why.  

    Buy Broadcom Before The Dividend Raise In December


  14. Gold flew back.

        

     

    That's stagflation – precious metals up, demand metal down.


  15. phil your /es shorts must be looking abit better now.


  16. INTC/Phil – I don't see the support level here. I also wonder if AMD earnings coming up shortly will cause more downward pressure. Thinking that waiting a little longer may yield better prices for short puts. Thanks.


  17. /ES/Tommy – it is really nice when a return to normalcy make some money.   back to for short now and about even. I like playing with conviction at the all time highs but it can be very painful as well.  And rewarding…

    INTC/Seer – like IBM, there is no particular rush here.   


  18. Phil I am holding from MU Jan 23 12x 80 long cost 28.90 now 5.90 
    Short 100 call x 12 received 18.66 now 2.35 
    Sold Jan23 2x 60 put for 5.15 now 5.22 not to relevant,
    Question is it worth to roll the 80 Jan 23 long call to say Jan 24  to 60  for about a cost of 12.50 or wait? TIA


  19. How Trump Is Using a SPAC to Bankroll a New Social Media Company


  20. India’s Farmer Protesters Are Confronting Modi Head-On



  21. My IBM play was filled at a cost of 13.90 and the INTC at 3.95


  22. What crazy action today.

       

    Something for everyone, I guess…

    MU/Yodi – You let that go a bit long, didn't you?   Yes, I'd take advantage of the low 2024 prices.  I'd go with the 2024 $50/75 bull call spread at $12 so + $6 brings you to net $16ish on the $25 spread less the put money and you could sell 6 of the 2024 $55 puts for $7.50, which drops your net $3.75 per long.  If you don't like the put sale – why be long the stock?


  23. looks like they are going to end up at /bz  85.75 which is exactly 1,20 percent line from 70.


  24. Thanks Phil put can be sometimes very dangerous. I guess the present onces will go worthless.



  25. Oil/Tommy – Really pinning it. 

    MU/Yodi – i’m just saying if you don’t really want to own it, why play it? Better off going with Intel for the long term.  

    Have a great weekend, everyone!

    - Phil
     


  26. INTC- considering l/t position- either B/W stock @ 49.46; 2024 strangle 52.5 C/47.5 P @14.10; vs. BCS 2024 45/55 @ 4.13 plus 2024 40 putter @ 4.50 (2:1 ratio on the putters).

    Comment?