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Weakening Wednesday – 543,415 New Covid Cases Hard to Ignore

267,305.

That is our new 7-day average of infections, beating the old high of 250,512 set back on January 12th.  On Monday, there were 543,415 infections and 380,751 yesterday and the trend is not our friend as the rate of infection has been doubling every two weeks since we were at 70,000 per day in early November.   

For perspective, the entire World shut down in the Spring of 2020, when we peaked out at just over 30,000 cases per day in the US – that is 1/18th as many cases as we had on Monday alone.  Does it make sense to you that the "messaging" you are getting from the Government and the Corporate Media is now to just grin and bear is as the virus spreads completely out of control.  As we suspected would happen on Monday, already the Government is "solving" the problem by officially telling people they only need 5 days of isolation instead of 10 days – because they want everyone to get back to work.

And, of couse, in Washington, DC, home of the anti-vaxxers and their staffs, things are completely out of control with 7 TIMES more infections per day than they had at their peak last fall and the entire Northeastern US is running more than double the rate they were at last January.  

Can the markets keep ignoring this surge in cases?  Certainly not if we're talking 1M cases per day next week.  Even if Omicron were as mild as the flu – having 7M people per week get sick would be damaging to the economy.  At the moment, "THEY" keep pointing out that hospitalizations and deaths are not maching the record highs – but that's because those are LAGGING indicators that FOLLOW the infections.  Yes, that's very obvious but, unfortunately, you have to actually say these things out loud to cut through the BS that's pumped out by the Corporate Media.  

I think I'm going to get a bit more hedged into the weekend, while the shorts are cheap.  We just did our Short-Term Portfolio Review (STP) on Dec 14th and determined we had $580,000 worth of downside protection against a 20% drop but our Long-Term Portfolio has popped up to $2,197,044 – up over $100,000 in the past two weeks – so we should be taking about 1/3 of those ill-gotten gains to lock in the other 2/3 with some more hedges.  When you are up $100,000 on paper – isn't is smart to guarantee you'll be able to pull out $66,000 when you need to?  That's what hedging is all about.  

  • One investment we can make is to buy 100 more SQQQ 2023 $5 calls for $2.11, as that's $21,100 for calls that are $7,500 in the money and a 20% drop on the 3x ETF would send it up 60% to $9.20, and we'd be $4.20 in the money at $42,000, so we are buying $21,000 worth of protection and, eventually, we will sell covers to lower our cost but, for now, we're going to buy back the 100 short March $12 calls for 0.18 ($1,800) as they've already lost 83% of their value – we will do better selling new short calls on the next bounce.  
SQQQ Long Call 2023 20-JAN 5.00 CALL [SQQQ @ $5.75 $0.00] 200 8/2/2021 (387) $83,000 $4.15 $-2.05 $4.38     $2.11 $0.00 $-40,900 -49.3% $42,100
SQQQ Short Call 2023 20-JAN 15.00 CALL [SQQQ @ $5.75 $0.00] -100 7/30/2021 (387) $-21,000 $2.10 $-1.10     $1.00 $0.00 $11,000 52.4% $-10,000
SQQQ Short Call 2022 18-MAR 12.00 CALL [SQQQ @ $5.75 $0.00] -100 10/12/2021 (79) $-10,500 $1.05 $-0.87     $0.18 $0.00 $8,700 82.9% $-1,800
SQQQ Short Put 2023 20-JAN 10.00 PUT [SQQQ @ $5.75 $0.00] -40 10/12/2021 (387) $-17,200 $4.30 $1.28     $5.58 $0.00 $-5,100 -29.7% $-22,300

  • Another short that's exhausted itself is the 20 short TQQQ Jan $130 puts, now at $1.33 ($2,660).  We'll buy those back because TQQQ is another 3x ETF and $130 is only about 25% below the current price so an 8% drop in the Nasdaq would put us there.  Our 2023 $200/150 put spread is half in the money and this is an income play – we will sell more short puts when we get another dip.

Our other major hedge is TZA and we have the following spread in the STP:

TZA Long Call 2023 20-JAN 20.00 CALL [TZA @ $26.95 $0.00] 200 11/16/2021 (387) $160,000 $8.00 $2.40 $14.29     $10.40 $0.00 $48,000 30.0% $208,000
TZA Short Call 2023 20-JAN 50.00 CALL [TZA @ $26.95 $0.00] -100 5/7/2021 (387) $-77,000 $7.70 $-2.43     $5.28 $0.00 $24,250 31.5% $-52,750
TZA Short Call 2024 19-JAN 40.00 CALL [TZA @ $26.95 $0.00] -100 11/16/2021 (751) $-84,000 $8.40 $1.38     $9.78 $0.00 $-13,750 -16.4% $-97,750
TZA Short Call 2023 20-JAN 50.00 CALL [TZA @ $26.95 $0.00] -100 12/3/2021 (387) $-90,000 $9.00 $-3.73     $5.28 $0.00 $37,250 41.4% $-52,750
  • Another 3x ETF at $27 so, if the Russell falls 20%, this ETF gains 60% to $43.  The spread is currently net $4,750 and would pay $400,000 at $40, so it's the bulk of our protection but, over $40 and we run into the short 2024 calls, so that's our limit and then we'd be worried about the short calls so, even though we don't think we'll hit $50 in the near-term, let's just buy back 50 of the 2023 $50 calls at $5.28 ($26,400), just to tilt the position slightly more bearish.  

We don't have to do anything drastic since we already had $580,000 of downside protection and now I think we're up around $650,000.  That locks in the gains we made in the LTP quite nicely and we'll see how that holds up into next week.

As I mentioned above, I'm going to use 4,780 as the shorting line for the S&P Futures (/ES) and I think 2 to start there and 1 more at 4,790 and 1 more at 4,800 if it goes any higher and that would make a nice hold over the weekend with an average of 4,787.5 on 4 shorts.  Again, BECAUSE we have gained $100,000 in two weeks on our LTP longs, we can afford to gamble on the short side since we know that, if we lose these bets – we'll very likely make up the losses in the LTP anyway.  

Please be careful out there!  

 


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  1. I see this everywhere, If the Government shuts down, there are many people screaming for money, so waiting and see is less damaging for the industry. So what, just a few more dead, only Phil is counting!


  2. How is your daughter Jackie doing Phil?  Sure hope she's Ok!


  3. Good morning!  

    Dead/Yodi – Omicron does seem milder and, even better, it seems to give survivors a resistance to the Delta strain – so that's a good thing as essentially all the unvaccinated people are probably going to get Omicron over the next 3 months (100M).  So, one way or another, they will build antibodies.  Hopefully that's the case and it could be a blessing in disguise but only in the same way that your living room is on fire and you say "I never liked that rug anyway".

    Jackie/Wilsons – Thankfully she feels better already (started Christmas Eve) but it as an all-day mission on Tuesday finding a place to get tested and now she needs to find something again on Friday to see if she's out of the woods.  Either way, she'll be watching New Year's on TV, which sucks when you are 19.


  4. The Bug/Phil – In LA County, we have a dedicated covid team on the LA Times who, like the Atlantic reporters, have really learned their craft over the past year. They're reporting a 25% rise in hospitalizations already.


  5. Phil/testing – Jackie is having issues finding testing spots in Hoboken? There's a pharmacy on 10th and Washington that has daily slots available regularly (Betterlife) – have used it for last minute testing with no difficulties. 


  6. Good Morning.


  7. Phil- glad Jackie is feeling better. She has the rest of her life to enjoy New years eve and the old saw is "if you survive it, it makes you stronger." I certainly do hope you are correct that this will peak without more millions dead. I saw that judges are not letting noncustodial parents who refuse to get vaccinated and not allow their children to be vaccinated are being denied their visitation rights. Thankfully there are still some who are doing the right thing. We are covered with snow up here in No country, but everyone is masked and careful. I'm still loathe to get on a plane though still wanting some sun. Not the time to travel me thinks.


  8. I take it no webinar today?







  9. America runs on bad jobs




  10. Phil / Jackie – Not sure if Jackie has looked at her school for testing….  Schools ( especially those requiring tests to return ) usually have access to tests….  My son could not find a test anywhere and when he did it was 1 week out and $40… But went on line and through the school got test ( free as part of tuition) and got it in the mail 2 days later….  He went to a state site but entered the school code and the timing went from a 10 days to 2 and from $35 to 0…


  11. Hospitalizations/Snow – Yes, people play with the statistics but the bottom line is a full hospital is a full hospital.  If 4x more people get sick but 75% less people need to be in the hospital, that's still 4x times 25%, which is the same 100% number of hospitalizations but the Government Media focuses only on the 75% less people per case figure – because that one makes people feel safer. 

    Hoboken/Rn – Well, she's back in Woodland Park now but everything for miles is booked solid with huge lines of standby.  I know that pharmacy from when I used to live down there – it's right where Jackie lives now at school.

    Travel/Pirate – I'm dreading New Year's, going to stay inside.  Now my niece in Orlando came down with it.  This is happening very fast and it's only through sheer luck that this strain is mild.  Just a coin flip on the other side and we'd be dealing with a global disaster – even though we had 2 years to prevent it.  

    Webinar/Pirate – Yes webinar.

    School/Batman – Yes, good plan but she left the school to go home and that's when she got sick.  I do think the school was doing a good job of keeping the kids safe.  I'll tell her to check via the school though to see if anything helps. 


  12. That /ES is paying off already as we had that nice run to 4,790 and now back below 4,780 already.  

    Oil dropped hard and fast on inventory:

        

    It was a good draw but a holiday weekend and not enough to justify $77.50 or $80 on /BZ.  That's why those are good shorting lines.  


  13. Good morning and Happy Holidays! Here is the link to today's webinar

    https://attendee.gotowebinar.com/register/7120910511516631823


  14. Dollar dive is holding things up at the moment:

     

  15. Phil / Jackie – Me son received the test in the Mail…. 


  16. Test/Batman – She got tested Tuesday at WBA (positive) and she's got a mail kit and there's no point in re-testing daily but Friday she'll take the test and should find out if she's clear by Sunday though she'll first look for another testing center to get instant result on Friday if possible.  I told her to book an international flight – then they test you at the airport….

    US airline launches first COVID-19 testing program of its kind - ABC News


  17. Great example of coordinated stock manipulation.  

    paying Ichabod's Cranium and others to place positive stories about the company on various websites, including Huffington Post, Seeking Alpha, and TheStreet.com. With Murstein's knowledge, Myers and others created fake identities so their opinion pieces would appear credible to potential investors, the SEC said.

    "Murstein allegedly paid for more than 50 articles and hundreds of positive comments, which were really paid advertisements placed across the web in an effort to deceive investors about the value of Medallion’s stock

    When the company's existing valuation firm refused to bow to Murstein's pressure to increase the bank's valuation, Murstein fired the firm and hired a new firm to provide a higher valuation of the bank

    Not to worry, it's already bouncing back.  Traders don't mind a little crime – it means the company cares about them…


  18. Comment content omitted because it is too long.





  19. Phil/DIDI – Short Jan 2024 Puts 7.5. Haven't been put to me yet. I'm ok with holding the shares in HK. What does this news mean? I thought not issuing more equity would be a negative for them given the expected growth. Thanks.


  20. I am In Costa Rica.  Was on way home and tested positive.  Wish I had bought Covid insurance!  Costa Rica is swamped with young international travelers.  Santa Theresa (surfing town .. 5 hours drive from San Jose) kids are being told that no test is available unless they drive 5 hours .. so kids not bothering to test.  hotels and airbnbs are 100% full.  Cars 100% booked.  


  21. nomigp – Amazing how real estate has been impacted by movement due to remote working. Totally skewed all the local resources including healthcare both domesticlly and internationally. Looked at some no income tax states including FL, TN, and NH and they seem to have gone nuts post covid (and feeling the pain). Hopefully this will help defeat gerrymandering, but I'm sure they're working on excluding votes of newcomers too. 


  22. DIDI/Seer – They are delisting in the US and most people want out, so shares are being dumped.  It's just the kind of thing you have to ride out if you going to be a long-term holder.  

    DiDi Global Delisting: Both Options Present Upside

    Santa Teresa/Nom – I heard it's great down there, never been.  Probably a hot spot as it's all about the bars and clubs, right? 


  23. Santa Teresa is great. I spent a week unsuccessfully learning to surf there. Great food. Getting there was driving on the craters of the moon. 


  24. A little rejection at the close but another strong day overall.

       

    Vix is on the run:


  25. Here is the link to the replay of today's webinar

    https://youtu.be/UoiWBq4Ut9g