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Thursday Flip Flop – Futures Fake New Lows and Find a Bottom?

It's been a rough couple of weeks.  

The Nasdaq once again hit the 13,500 line last night, after hearing a hawkish Fed conference from Chairman Powell, which is exactly what we predicted would happen on Monday, when I said:

We were at 15,200 on the Nasdaq Thursday morning and our long-predicted correction target of 15,000 was a certainty but now we're "living on a prayer" that 600 points below 15,000 (14,400) is an overshoot of the rapid correction and not the first leg of the run to 13,500 – where we began Q2 of last year.  

13,200 is actually the 20% correction from 16,500 but the key line for the Nasdaq is 15,000 and 16,500 was 10% up from there and 13,500 is 10% down – that's what the above chart is measuring,  We will, on the whole, be LUCKY if the Nasdaq settles into a range around 15,000 but, in truth, it's likely we overshot the proper range by a mile and 13,500 may be the top of a proper range that centers around 12,000 – which would be a reasonable valuation for the index.  

When you are in a slide like this, you need to consider what is going to change the sentiment and, this week, we have a Fed Meeting on Wednesday but what is the Fed going to say that will help?  They have already said they were looking to tighten so reversing would be a sign of weakness and they already said not until March, so doing nothing won't help either.  I imagine they'll say they will take market conditions into account along with Labor and Inflation and that might calm things down a little, but will it reverse the slide? 

We have, in fact, tested the 13,700 line on Monday and, as of last night, it looked like we were going to break below as we raced back to 13,900 but, miraculously, we had a 350-point turnaround since 2am on ZERO volume – so everything looks fine again at the open – as if Powell didn't actually say anything to spook the markets. Of course, we have our Q4 GDP Report at 8:30 and our Leading Economorons are still expecting it to be up around 5.6% – so we'll see if Omicron causes a disappointment that sends us flying down again.  

8:30 Update:  GDP came in at 6.9% – a huge beat in the first estimate of Q4. Of course the GDP Deflator, which measures the changes in prices for all Goods and Services, went up from 6% to 7% so things got 16.66% more expensive and that accounts for the higher GDP number – not an actual ecconomy that is producing more goods and servies. However, selling the same amount of goods and services for more money is what Corporate America is all about – so enjoy your rapidly-declining lifestyle!  

Speaking of selling less for more, Durable Goods are a huge miss at -0.9%, down from 3.2% in the November report.  I guess Omicron and supply bottlenecks are to blame and those are going to be "transitory" – according to the same guy who has been telling us inflation would be "transitory" for the past two years.  

Last night, we had misses from CACI, DRE, EW, MEOH, MKSI, PLXS, XM and SLG plus guide-downs from AVI, CLS, CCI, HXL, INTC, LRCX, LC, SIMO and TER as pretty much anyone working with chips sees trouble ahead in Q1.  This morning, so far, Misses from FLWS, ADS, IP, KEX, MCD, MUR, SHW, TXT and VLY but, since last night, we have had good reports from (just naming biggies):  AMP, CCI, INTC (even though they guided down), LVS (don't get excited – the lost less than expected), LC, LEVI, RJF, SLM, STX, TSLA, URI, VRTX, WHR (surprising), XLNX, ALK, BX, CNX, CMCSA, DOW, EXP, HCA, JBLU (lost less than expected), MMC, NOC, BPOP, ROK, LUV (making money!), STM, TROW, TSCO, VLO (of course) and XEL.

So plenty of good reports but not enough of a ratio to justify a return to record highs – we'll have to see where the week settles out and we're still looking for 14,700 on the Nasdaq (strong bounce) – but that's pretty far away now (14,320). These are the bounces we are looking for against a predicted 20% correction so if ANY of the indexes are still in this zone – it's not a good time to get bullish:

  • Dow 36,000 to 28,800 would be a 7,200-point drop with 1,440 bounces to 30,240 (weak) and 31,680 (strong).  We were below our predicted 33,120 mid-point at yesterday's lows.  
  • S&P 4,800 is 20% above 4,000 and that makes it an 800-point drop with 160-point bounces so 4,160 (weak) and 4,320 (strong) is where we are this morning (again).
  • Nasdaq is using 13,500 as the base and we bottomed yesterday at 13,706.  14,100 is the weak bounce and 14,700 is strong.  
  • Russell 1,600, would be about an 800-point drop with 160-point bounces to 1,780 (weak) and 1,960 (strong).

This is a slight improvement from Tuesday, with 14,100 on the Nasdaq going  but we're still on the cusp with the S&P & the Russell and the Nasaq is way below 14,700 and 1,960 on the Russell (1,976) could turn red very quickly and it would be tragic if we went into the weekend with more red than we started the week with.  As long as this chart is in play (not all green), then those projected bottoms are very much in play for February.  

Inflation makes all the data tricky to analyze. For example, MCD reported sales 7.5% better than last year but, when you dig into it, prices are up 6% from last year so the actual sales of products are only up 1.5% from last year's lockdowns and, this quarter, MCD cut store hours by 10% but, even with the savings on wages (and less service to the consumers) they still had a miss – and MCD is down 2.5% this morning.  

Of course, MCD is trading at 26x earnings so they are overdue for a correction but, to get to a more normal (for them) 18% would require a 30% drop in price all the way back to $175.  That would be 637 Dow points just from MCD!  This is why we're still being cautious – valuations are still well above historic highs and there's no real indication that the companies are going to be able to grow into them over the next few years.   

Powell's comments have sent the Dollar flying up to 97 this morning, which is where we expected it to top off and, if that's correct, we should see a falling Dollar support the markets this morning (they often ditch the Dollar to mask large amounts of index-selling).  If so, that will be great for Gold (/GC), which is testing $1,800 this morning so that's a nice, long line to play in the Futures, with tight stops below – as will be Silver (/SI) if it gets over the $23 line.  

Sadly, we can't short Oil (/CL) this morning as the higher Dollar can boost it further.  Oil is at $88.50 and we shorted them at $87.50 yesterday and did well during our Live Trading Webinar – picking up over $1,000 per contract but today is not as safe for that bet.  

Be careful out there!  


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  1. Good Morning!

  2. Good morning!


    INTC down 6% this morning, mostly because they are saying things are going slower than they'd hoped on their massive investment, which is mostly due to supply issues.  Q4 was up 8% at $19.5Bn but Q1 is guiding back to $18.3Bn with a guid-down of margins too.  None of this affects our long-term premise so we'll look to take advantage of the dip.  

    So far, we're only back to our 11/1 entry:

    INTC Long Call 2024 19-JAN 40.00 CALL [INTC @ $48.73 $-2.96] 40 11/1/2021 (722) $52,000 $13.00 $0.25 $13.00     $13.25 $-1.70 $1,000 1.9% $53,000
    INTC Short Call 2024 19-JAN 55.00 CALL [INTC @ $48.73 $-2.96] -40 11/1/2021 (722) $-24,600 $6.15 $0.43     $6.58 $-1.63 $-1,700 -6.9% $-26,300
    INTC Short Put 2024 19-JAN 45.00 PUT [INTC @ $48.73 $-2.96] -20 11/1/2021 (722) $-13,000 $6.50 $0.55     $7.05 $0.70 $-1,100 -8.5% $-14,100

    Once again our conservative targeting saves us from damage.  This is why I don't like it when you guys propose out of the money spreads…

    At the moment, in the LTP, the 2024 $35s are $16 so a bit less than $3 for the roll and I'd rather see $2.50.  When our target is this low, however, we can also look at paying to push the short INTC 2024 $55 calls higher and the $60 calls are $4.75, so just net $1.75 to add more room to gain and, since that then widens the spread to make it safer to sell short-term calls – we have a good chance of recouping that $7,000 over time.  So we're paying $7,000 to add $20,000 worth of potential gains and the June $55 calls are $1.45 so 10 of those would be $1,450 and that's using 144 of our 722 days so clearly it's worth doing as we can easily recoup our investment with 1/4 covers.  

    This was a net $14,400 spread and now it's a net $21,400 spread that's $32,000 in the money and, if we spend $10,000 more to roll down to the $35 calls, it will be a $31,400 spread that's $52,000 in the money.   See, that's how we decide if the rolls are worthwhile (assuming we still strongly believe in our targets).  

  3. And also, we're taking advantage of the still-high VIX, which is keeping the price of the 2024 $60 calls higher than they would be, which is why the roll is so cheap.  

  4. DOW reported really good numbers… 

  5. Dow/Rn – Back on track:

    Top Trades for Thu, 12 Aug 2021 15:23 – DOW

    I like DOW, we talked about them a little while ago – it's a great bargain at $64, which is $48Bn and they are good for $5Bn a year so fairly valued and a great long-term play.  They pay a $2.80 (4.5%) dividend, so worth owning in the Dividend Portfolio as:  

    • Buy 500 shares of DOW for $63.90 ($31,950)
    • Sell 5 DOW 2023 $62.50 calls for $8.50 ($4,250) 
    • Sell 5 DOW 2023 $57.50 puts for $8 ($4,000) 

    That's going to be net $23,700 on our first 500 shares so $47.50 each is a 25% discount off the current price and, if assigned 500 more at $57.50, our net goes up to $52.50, still 17.8% cheaper than it is now.  

    In the LTP, we can be a bit more aggressive with:

    • Sell 10 DOW 2023 $60 puts for $9.25 ($9,250) 
    • Buy 20 DOW 2023 $55 calls for $12.50 ($25,000) 
    • Sell 20 DOW 2023 $70 calls for $5.55 ($11,100) 

    That's net $4,650 on the $30,000 spread so we have $25,350 (545%) upside potential at $70 and we're about $17,000 in the money to start.  Aren't options fun?   Very happy to DD on that if it goes lower, of course.  

  6. Long Covid expert says the world is in ‘deep trouble’

  7. We rolled that to a 2024 spread on 11/18:

    DOW Short Put 2024 19-JAN 55.00 PUT [DOW @ $59.74 $2.52] -10 11/19/2021 (722) $-11,000 $11.00 $-2.33 $-7.75     $8.68 - $2,325 21.1% $-8,675
    DOW Long Call 2024 19-JAN 50.00 CALL [DOW @ $59.74 $2.52] 30 11/18/2021 (722) $36,000 $12.00 $1.25     $13.25 - $3,750 10.4% $39,750
    DOW Short Call 2024 19-JAN 65.00 CALL [DOW @ $59.74 $2.52] -30 11/18/2021 (722) $-16,500 $5.50 $0.53     $6.03 - $-1,575 -9.5% $-18,075

    • DOW – Cheaper than when we bought it.   How can we have an economic recovery without DOW?   Per their earnings, this is all about supply chain issues and price adjustments will be made going forward.  We spent net $4,650 on the spread and committed to owning 1,000 shares for $60 and it's now $58.30 – so nothing to panic about but 2024s are now out so we may as well roll the 10 short 2023 $60 puts at $10 ($10,000) to 10 short 2024 $55 puts at $11 ($11,000) and we'll roll our 20 2023 $55 calls at $7.80 ($15,600) to 30 of the 2024 $50 ($12)/65 ($5.50) bull call spreads at $6.50 ($19,500).  So, for net $2,900 we've rolled from a $30,000 spread that was $6,000 in the money to a $45,000 spread that's $24,000 in the money and we'll put a stop on 1/2 (10) short 2023 $70 calls at $4 ($4,000) to make sure we don't get burned on the way up.  

    We were down $4,150 at the time and we spent $2,900 and now we're up $4,500 on the new set – even though DOW is way lower than where we started in August.  This is what I want to stress during this earnings cycle – it is better for your portfolio to have CASH!!! on the side to be able to make these adjustments than it is to put the money into more and more positions because – when there is a correction – you have no cash to adjust anything if you are stretched out too far.  

  8. INTC/Phil how would you do a new intc play ?

  9. INTC/Micro – From scratch I'd go with:

    • Sell 5 INTC 2024 $50 puts for $10.35 ($5,175)
    • Buy 15 INTC 2024 $40 calls for $14.25 ($21,375) 
    • Sell 15 INTC 2024 $55 calls for $6.25 ($9,375) 

    That would be net $6,825 on the $22,500 spread that's half in the money to start and I'd wait for a bounce but 5 (1/3) June $55 calls can be sold for $1.60 so say $2 would bring in $1,000 and you can do that 5 times while you wait to drop your basis to $1,825 down the road.  It's like collecting a $1,000 quarterly dividend against your $6,825 cash outlay and the upside of the play is a nice bonus at the end! 

    Indexes seeing a little selling.  Oil coming down a bit.

    MRNA -0.47%Jan. 27, 2022 10:18 AM ET

    • Moderna (NASDAQ:MRNA) and IAVI, a not-for-profit scientific research organization, announced that the dosing got underway in a clinical trial for the experimental HIV vaccine antigens delivered using Moderna's mRNA technology.
    • The immunogens undergoing the study were developed by IAVI and Scripps Research. The Phase 1 trial, IAVI G002, is sponsored by IAVI and takes place across four sites involving 56 healthy, HIV-negative adult volunteers. They will be monitored for six months following the last vaccination.
    • The trial is designed to evaluate the broadly neutralizing antibodies (bnAb), a goal of HIV vaccination. It is believed that the sequential administration of priming and boosting HIV immunogens induces specific classes of B-cell responses leading to early maturation for generating bnAb. The hypothesis will be put to the test in the study.
    • Read: Moderna’s success in its COVID-19 vaccine bodes well for their collaboration against HIV, Dr. William Schief, the Executive Director of vaccine design at IAVI, said last year.
    • GLW +0.14%Jan. 27, 2022 10:13 AM ET2 Comments

      Corning (NYSE:GLW) is up 5.4% alongside an upgrade to Buy at Goldman Sachs, seeing the company riding multiple 2022 tailwinds as well as some declining risk in the Display business.

      "We expect Display risk to recede while Optical, Environmental and Hemlock tailwinds continue and strengthen," the firm says. "We also see resumption of the buyback as a sign of management confidence in fundamentals."

      Usually, weak TV demand means excess glass inventory that has to be worked down after the holidays, but the company pulled off an unexpected beat in Display thanks to tight supply/demand and solid execution, Goldman says.

      Meanwhile, fundamentals should continue to be driven by strong Optical demand "gated only by Corning's ability to deliver product," as well as a rebounding Environmental business on abating auto-supply issues, and production restarts in the Hemlock business amid some solid solar demand.

      Corning its trade well below its recent peak price/earnings ratio and it's "a key value stock to own in 2022 in our coverage," Goldman says.

      It's raised its price target to $50 from $38, now implying 21% upside.


      The company beat on top and bottom lines and guided to significant growth in the Optical business.

      T -3.10%Jan. 27, 2022 10:00 AM ET3 Comments

      • December Pending Home Sales-3.8% M/M to 117.7 vs. +0.6% consensus and -2.2% in November. Transactions fell 6.9% from a year ago.
      • Contract signings were down across all regions compared with the prior month and one year-ago.
      • "Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options," said National Association of Realtor Chief Economist Lawrence Yun. "Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers."
      • Yun forecasts the 30-year fixed mortgage rate will rise to 3.9% by Q4 and existing-home sales will slip by 2.8% to 5.95M units.
      • December, though, marked a third straight month of increased home construction. As a result, Yun expects housing inventory to continue improving and leading to slower home price growth in 2022. He sees housing starts rising to 1.65M units and home prices to increase 5.1%.
      • Note: An index of 100 is equal to the level of contract activity in 2001.
      • Earlier this week, New home sales end 2021 with a surge
      • UUP +0.79%Jan. 27, 2022 9:49 AM ET

        The dollar index jumps above the 97 marker, touching 97.27, a fresh 18-month trading high. The upward move has currency ETFs and other funds trending as the index is currently +1.21% touching its highest level since early July 2020.

        Three funds that find themselves in the crosshairs are the Invesco DB USD Bullish ETF (NYSEARCA:UUP), WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEARCA:USDU), and Invesco DB US Dollar Index Bearish Fund (NYSEARCA:UDN).

        Bullish funds UUP and USDU are trading positive on the day at +0.7% and +1.2%. Additionally, UUP is +1%, and USDU is +0.8% over the year.

        The bearish UDN on the other hand, is -0.6% on the day and -1.2% in 2022.

        See the below chart of the dollar index hitting an 18-month trading high:

        The surge in the dollar strength comes from yesterday's FED meeting, where Chairman Powell stated, "I think there's quite a bit of room to raise rates without hurting the labor market." The Fed left rates unchanged but provided a hawkish undertone providing investors some forward guidance that rates will be on the move higher to battle inflation as soon as possibly March.

        Currency ETFs are very sensitive to rate decisions as the underlying assets are tied to the price action of the U.S. dollar. In a traditional stance, as rates rise, they provide strength to a currency, making UUP and USDU interesting investment opportunities with rates set to go up.

        It should be noted that currencies and currency funds do not move like traditional equities with large 5% plus/minus daily moves.


        In broader spectrum moves, the S&P 500 rallied yesterday until Powell started speaking, then the index pivoted and could not close back above its 200-day moving average.

  10. JNJ +2.57%Jan. 26, 2022 10:51 AM ET4 Comments

    • Following in the recent footsteps of the U.K., Ireland, and the Netherlands, Denmark and Austria say they will rescind some COVID-19 curbs in effect.
    • Austria will end its lockdown on the unvaccinated on Monday as COVID hospitalization have decreased. However, the unvaccinated are still prohibited from participating in many activities, Reuters reports.
    • Denmark plans to eliminate all of its COVID curbs next week. This will result in nightclubs reopening, restaruants being allowed to serve alcohol later, and no need to show proof of vaccination at many locations.
    • Although cases and hospitalizations are near record highs, Danish authorities there said there is no longer a correlation between increasing infections and hospitalizations, Reuters reports.
    • Bars, restaurants, and theaters have reopened in the Netherlands effective today.
    • A week ago, UK Prime Minister Boris Johnson ended COVID-19 restrictions.
    • Vaccine names: Pfizer (PFE +0.7%), BioNTech (BNTX +3.7%), Moderna (MRNA +3.4%), Johnson & Johnson (JNJ -0.8%), AstraZeneca (AZN -0.7%), and Novavax (NVAX +4.3%).
    • A new study found that the Omicron variant is less likely to lead to hospitalizations than the Delta variant.

  11. Morning. Phil, what' are your thoughts on T regarding the split vs spin debate and the leg down?  I already have a good chunk of stock and considering a call spread / put sell as I have faith long term. Reading the differences between the 2 strategies leaves me unsure so won't jump in until I have more info. TIA as always. 

  12. just for something to do 

    buying IVZ and selling the July $19 puts and the $22 calls     activist investor Trian has a big position. They had invested in Legg Mason and got it sold to Franklin Templeton.        also recent puts sales shows limited downside

    1-25  4800 2023 $20 puts sold

    1-24  2500 June $19 puts were sold

    1.21 2000 2023 $17 puts were sold

    I also might buy the stock and sell the 2023 $20 puts and $25 calls 

    pays over 3% dividend

  13. look at the dollar index today 

  14. T/Jeddah – They did not provide any real clarity in their report.  People's frustrations with this are causing the stock to remain depressed.  It's like when the CEO retires and the stock goes down until they name a new CEO – investors just don't like uncertainty.  As you say, more info is needed but my attitude is that, either way – it's still T – just a split version of it going forward.

    Meanwhile, the business is awesome:

    And you guys forget, that's just the HUMAN subscribers.  Over the next 10 years, there will be just as many robot subscribers and auto subscribers on the network.  Oh, and 5G is here – revenues to follow after years of costs.  

    T hasn't even said if it will be a split or a spin-off and, of course, people are very concerned about the dividends.  

    IVZ/Stock – Good deal at under $10Bn with $1.5Bn in profits.  Even if they normalize at $1Bn going forward, fine thing to own.  They could be cheaper, but not much so, in the LTP, let's sell 20 of the IVZ 2023 (there are no 2024) $20 puts for $2.60 ($5,200) to remind ourselves to keep an eye on them.  

    Good catch!

    Dollar/Stock – Still going strong

    RUT below 2,000, Nas below 14,200 – not good – should probably short the Dow to catch up but AAPL earnings tonight may save the market (or doom it). 

  15. MRNA/Phil  So far only have the short '24 $200 puts at $35. Would you advise to roll them down to say 8 $150s at $46.4? 

    - 5 MRNA '24 $200Puts ($35.1)


  16. MRNA/Wing – I don't see the point of adjusting when you have net $165 as an entry and MRNA is at $147.  Why be forced to act?  The $200 puts are $85 and that's $72 in premium that WILL expire over time.  If they drop to less than 50% premium, then you might want to roll lower but, for now – all you are doing is paying someone else a ton of it.

    As we expected, the pre-market run-up on no volume was simply a set-up for another day of selling.  This is a very bad pattern – they are reeling in the dip-buyers like fish on a hook but one day those suckers won't come back for more.

    Gold ended up failing at $1,808 early this morning – the Dollar never pulled back. 

    /SI was lagging and it's solid at $22.70

    Lagging in the bigger picture, I meant:


    Imagine how bad inflation would be if the Dollar were not 7% stronger in the 8 months?  

    LC -26.84%Jan. 27, 2022 1:20 PM ET3 Comments

    LendingClub (NYSE:LC) dives 29% after the online lender issued softer-than-expected guidance for 2022 profit.

    The company sees 2022 GAAP net income of $130M-150M, short of the average estimate of ~$175M. Furthermore, the outlook points to a slower pace of growth for the top line.

    For the year, LendingClub (LC) expects total loan originations of ~$13B and is no longer providing quarterly expectations for originations. That represents ~25% increase from 2021's level, slower than the 139% jump the company saw between 2021 and 2020.

    "While originations are important, they are no longer the sole driver of our quarterly revenue," said CFO Tom Casey during the company's Q4 earnings call.

    2021 revenue of $818.6M more than doubled from 2020's $318.1M. The company's guidance for 2022 expects a 34-46% increase from last year's total revenue.

    Much of 2021's origination growth came from subprime and near-prime, explains CEO Scott Sanborn during the earnings call. However, the company is focusing on resuming growth "back into our core prime customer base. That market, we do anticipate to grow, but it is lagging," he said.

    Keep an eye on analysts' earnings estimate revisions for LendingClub (LC) on Earnings Tab.

    Over the past month, LendingClub (LC) stock drops even more than other online lenders, Rocket (NYSE:RKT) and SoFi Technologies (NASDAQ:SOFI), as seen in the graph below.


    Previously (Jan. 26), LendingClub (LC) sinks 17% after Q1 net income could slip from Q4

    Altria (MO) got a midday bump in response to its quarterly results as well. The company edged by projections for both earnings and revenue, while predicting adjusted earnings growth of 4%-7% for 2022. The stock advanced 2% on the news.

    SP500 -0.77%Jan. 27, 2022 12:59 PM ET55 Comments

    The major averages are mixed with defensive sectors outperforming.

    The Dow (DJI) +0.1% is leading with price gains from UnitedHealth and Microsoft. The Nasdaq (COMP.IND) -0.7% and S&P 500 (SP500) -0.2% are hampered by accelerating losses in Tesla, despite results that dazzled analysts.

    Six out of 11 S&P sectors are higher, with Consumer Staples and Utilities at the top. Communication Services is also doing well with a surge from Netflix. Consumer Discretionary is the weakest with the Tesla impact.

    The Treasury yield curve is flattening as money markets price in five rate hikes this year.

    The 10-year yield is down 6 basis points to 1.78%, while the 2-year is up 8 basis points to 1.17%.

    On GDP, economic growth came in at an annual pace of 6.9% for the last quarter of 2021, much stronger than expectations.

    "The overshoot to the consensus for growth is due entirely to yesterday’s report showing huge increases in December retail and wholesale inventories," Pantheon Macro's Ian Shepherdson writes. "As a result, inventories contributed a huge 4.9 percentage points to growth."

    The economy is in much better shape than the last time the FOMC embarked on a tightening process, but growth is expected to slow sharply starting in Q1.

    "Equipment spending will rebound strongly as chip supply improves," Shepherdson adds. "That could come as soon as Q1, given the surge in vehicle inventory reported in the past two months, but any improvement here likely will be offset by a much smaller contribution from inventories – they could even be a drag on growth – and consumption, where the weakness in December retail sales and the ongoing hit to spending on discretionary services due to the Omicron wave will be hard to reverse across the remainder of the quarter."

    "Our tentative Q1 GDP forecast right now is zero."

    Deutsche Bank's economists are out early calling for a base case of five hikes this year, with one at each meeting from March to June.

    "When all was said and done, the market prices a +117% chance of a 25bp March rate hike, so a meaningful probability of a 50bp move, and 4.6 25bp hikes through 2022," Deutsche Bank's Jim Reid says.

    Elsewhere in economic data, December durable goods orders fell 0.9%, more than expectations, with autos dragging. Ex-autos they rose 0.4%. Initial jobless claims fell as expected to 260K.


    Among active stocks, Seagate Technology is leading the S&P gainers on strong data storage outlook. At the other end is Teradyne, falling on weak guidance.

  17. ARKQ -3.41%Jan. 27, 2022 12:58 PM ET35 Comments

    • Elon Musk is in agreement with ARK Invest when it comes to autonomous vehicles as he responded to a thread of tweets put out by ARK Invest analyst Tasha Keeney.
    • Keeney stated: “Autonomous cars: we think this could be the most impactful innovation in history. Autonomous ride-hail could add roughly $26 trillion to global GDP by 2030.”
    • In response, Musk tweeted out: “Sounds about right for autonomous cars. Optimus will greatly exceed this. The economy will be as big as people want it to be. There will be no scarcity, except that which is artificially created.”
    • See the entire Twitter thread.
    • ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) is one of ARK’s ETFs that looks to capitalize on the autonomous driving space. ARKQ has a top-weighted position in Tesla (NASDAQ:TSLA) at 10.79%.
    • Daily price action: TSLA -7.8% and ARKQ -2.8%.
    • Tesla trades lower after its earnings topper is offset in part by a warning that supply chain issues will linger in 2022.

    TER -27.37%Jan. 27, 2022 11:52 AM ET1 Comment

    • Teradyne (TER -27.5%) plummets after the company initiated its Q1 2022 guidance sharply below the consensus mark in its fourth quarter earnings report.
    • The semiconductor equipment company said it expects its 1Q22 revenue to range between $700-$770M vs. consensus of $879.16 million.
    • GAAP EPS is expected to be $0.71 – $0.93; Non-GAAP EPS to be in the range of $0.76 – $0.98 vs. consensus of $1.30.
    • "In 2022, we expect a slower technology transition in one of our major end markets to result in lower System-on-a Chip test demand for Teradyne before accelerating again during the ramp of 3nm production in 2023," said CEO and President Mark Jagiela.
    • Q4 Results Highlights: The company closed its FY21 last quarter at positive note with revenue of $885M (+16.6% Y/Y) beating consensus by $16.03M. Universal Robots revenue up 22% Y/Y; MiR revenue up 46% Y/Y.
    • The company also expects to repurchase a minimum of $750 million of its common stock in 2022.
    • GAAP EPS of $1.29. Non-GAAP EPS of $1.37 beats by $0.08.
    • Teradyne declares $0.11/share quarterly dividend, 10% increase from prior dividend of $0.10.
    • "Both our test and industrial automation businesses delivered another quarter of double-digit revenue growth compared with the year ago period," said Jagiela. "2021 was a remarkable year for Teradyne as we increased annual sales by 19% and grew non-GAAP earnings per share by 29%, capping a five year stretch where revenue and earnings grew at an annual compounded rate of 16% and 32% respectively."

    VLCN -14.15%Jan. 27, 2022 11:49 AM ET9 Comments

    Tesla (NASDAQ:TSLA) is 7.49% lower to $867.18 as much of the buzz over the strong earnings report is being overridden as investors peel away from some high PE stocks and focus on the supply chain warning from Elon Musk and gang.

    Lucid Group (NASDAQ:LCID) is down 9.20% and traded below $30 earlier in the session. LCID also sunk below a $50B market cap with its downward swing.

    Rivian Automotive (NASDAQ:RIVN) is off 7.00% and traded at a new post-IPO low of $54.37. Concerns of a slower production ramp than originally forecast are in the mix.

    Other electric vehicle stocks with heavy losses on the day include startups Volcon (VLCN -13.0%), Sono group (SEV -8.3%), Faraday Future Intelligent Electric (FFIE -9.4%) and Electric Last Mile Solutions (ELMS -6.8%).

    If EV stocks are being sold off, what are the defensive names that investors are taking shelter in. Outsized gains are being seen today for food and beverage stocks like Hostess Brands (TWNK +7.3%), Conagra Foods (CAG +2.6%), Campbell Soup (CPB +2.1%), PepsiCo (PEP +1.7%), Coca-Cola (KO +2.1%) and Keurig Dr Pepper (KDP +2.5%). Retail giants Target (TGT +2.1%), Procter & Gamble (PG +1.8%) and Walmart (WMT +2.3%) are also having a solid day. Altria (MO +2.6%) and Philip Morris International (PM +1.3%) are also higher.

    AROW +1.14%Jan. 27, 2022 11:04 AM ET

    • January Kansas City Fed Composite Index+24 vs. prior +22 in December.
    • Manufacturing Index +20 vs. +11 prior.
    • “Regional factory activity expanded at a faster pace in January,” said Wilkerson. “However, over half of firms indicated that 10% or more of their workers were out at some point in January due to COVID. Expectations for future activity remained strong, despite firms reporting difficulties from COVID, labor shortages, and continued supply chain issues.”

    TRUE +0.91%Jan. 27, 2022 10:47 AM ET

    • TrueCar (TRUE +0.9%) projects a 9% Y/Y decline in new vehicle industry sales that is estimated to reach 1M units in January. On month-on-month basis, the decline is estimated to be 17.5% from last month.
    • Used vehicle sales for the month are expected to reach 2.9M, down 9%.
    • Light vehicle sales decline 9% Y/Y to estimated 15.3M.
    • Fleet sales projected to be down 5.2% Y/Y and 11.3% sequentially.
    • Excluding fleet sales, TrueCar expects U.S. retail deliveries of new cars and light trucks to be 893,077 units, down 10% Y/Y and down 18.3% sequentially.
    • The average new vehicle price is to decline about 2% from December after running through a straight nine months of consecutive increases. The decline comes primarily due to slight recovery in supply.
    • "Last month we saw industry sales decline 25% year-over-year, this month we are expecting sales to be down 9%. We're cautiously optimistic due to the slight sales increase this month compared to the end of last year along with the small uptick in inventory, however the chip shortage will continue to affect the industry in 2022," says Valeri Tompkins, Senior Vice President of OEM Solutions at TrueCar.
    • The company expects industry's full year 2022 sales to reach 15.4M units.

    STX +16.43%Jan. 27, 2022 10:46 AM ET

    • Seagate Technology (NASDAQ:STX) shares rocketed up by almost 20%, Thursday, after the hard-drive drive and storage-technology company reported a better-than-expected quarterly profit, and forecast revenue and earnings to grow in its current business period.
    • Late Wednesday, Seagate (STX) said that for the its fiscal second quarter ending Dec. 31, it earned $2.41 cents a share, excluding one-time items, on $3.12 billion in revenue, compared to a profit of $1.29 a share, on revenue of $2.62 billion in the same period a year ago. Wall Street analysts had forecast Seagate (STX) to earn $2.36 a share, on sales of $3.12 billion.
    • Summit Group analyst Kinngai Chan on Thursday raised his rating on Seagate (STX) to buy from hold on the belief that the market for hard-disk drives, especially those used in cloud-based data centers and enterprise servers will turn positive this year.
    • Seagate (STX) also forecast fiscal third-quarter earnings in a range of $1.80 to $2.20 a share, and revenue between $2.75 billion and $3.05 billion.
    • Speaking on a conference call to discuss Seagate's (STX) results, Chief Executive Dave Mosley said the company believes hard-disk drives remain a "critical enabling technology" as data management continues to grow and that "We don't expect that to change over the next decade or longer."

  18. /NG having another crazy day off that $4 line.

  19. /NG about done at $4.40 so out of that and back to /GC

  20. I shorted TSLA pre earnings and lived. Probably left some $ on the table today when I closed it, better to take a profit when you can, than regret it. Seems like it is still overvalued to me. 

  21. Time to revisit HBI?

  22. TZA – When we sold the Jan 23 $20 calls (rolling to the Jan 24 $30/$45 Call spread) we left the short Jan 23 $40s. They are now in the money (about $0.50). I realize that the $13 price is almost all premium but I was wondering when I should start worrying about them. 

  23. Thinking of entering a new position on TROX (had a Feb spread that I got out of in december)- there seems to be no volume in the LEAPS. 

  24. phil were you still holding ng/ when it popped to 5.90

  25. sorry i missed earlier message

  26. sorry again i was looking at expired feb contract not correct

  27. MRNA/Phil Just for my understanding, at $147 the $200 puts are $53 in the money so with a price of $85, then isn’t 85-53= $32 the time premium (not $72), that will expire as there is $53 of intrinsic value? How do you calculate your $72 for that?


  28. Phil  /  LMT – There are some calls that need to be sold at what price ( stock and option Strike ) are you looking to sell….  earlier I thought you indicated selling calls 3000 ish on the stock but not the strike….  what is your thinking now?


  29. Phil / AAPL – big earnings today….  I have them at about a 124B and earning at 2.0 ish….  we'll see what happens….

  30. Wow, almost a round trip for the Nasdaq – and not the good kind.  

    Russell new lows = Not good. 

    TSLA/Randers – Very brave.  They are about 10x overvalued but tell that to the fanboys.  It's like Bitcoin – it goes up just because – there's no logic to it.  I used to like shorting them but that move up to $1,200 just broke my spirit.  

    HBI/Harald – It's always a good time for HBI though this isn't much of a pullback in the bigger picture.  

    Value-wise, this is $5.4Bn and they make about $650M a year with a little bit of growth so less than 10x earnings is good, as long as you like to invest in things that actually generate healthy returns (most people don't, apparently).  The trick is, you have to buy an amount you would be THRILLED to DD on if they do something as silly as they did in early 2020.  When the market crashes – HBI goes right down with it but, over the long haul, people realize what a value play it is when it hits their screens.  

    We already have HBI in the LTP and we're down a bit, so this is a better entry than our original in July – when we were worried we wouldn't get to $15.

    HBI Long Call 2023 20-JAN 15.00 CALL [HBI @ $15.90 $0.32] 40 7/22/2021 (358) $18,000 $4.50 $-1.98 $4.50     $2.53 - $-7,900 -43.9% $10,100
    HBI Short Call 2023 20-JAN 20.00 CALL [HBI @ $15.90 $0.32] -40 7/22/2021 (358) $-9,000 $2.25 $-1.28     $0.98 $0.11 $5,100 56.7% $-3,900
    HBI Short Put 2023 20-JAN 17.00 PUT [HBI @ $15.90 $0.32] -20 7/22/2021 (358) $-6,200 $3.10 $0.25     $3.35 - $-500 -8.1% $-6,700

    So, for HBI in the LTP, it's a good time to roll the 40 2023 $15 calls at $2.53 ($10,100), to 50 of the 2024 $10 calls at $5.80 ($29,000).  So we're spending $18,900 to roll $25,000 into the money but the 2023 calls will expire and we'll either sell another batch for $9,000 in 2024 or we'll roll them up to a higher strike and widen the spread.  Either outcome is just fine because we KNOW, over the long-haul, that we REALLY like this stock and would be happy to own it.

    TZA/Dave – You are right, it's going to be a concern.  We also bought 200 more of the 2020 $30/45 spreads to cover the 150 short $50s (not $40s).  If you have the short $40s (we do have 50 short April $40s as well and 50 short 2024 $40s).  So, overall, this is our position:

    TZA Short Call 2023 20-JAN 50.00 CALL [TZA @ $41.29 $2.77] -50 5/7/2021 (358) $-38,500 $7.70 $4.20 $-10.10     $11.90 - $-21,000 -54.5% $-59,500
    TZA Short Call 2024 19-JAN 40.00 CALL [TZA @ $41.29 $2.77] -50 11/16/2021 (722) $-42,000 $8.40 $9.93     $18.33 - $-49,625 -118.2% $-91,625
    TZA Short Call 2023 20-JAN 50.00 CALL [TZA @ $41.29 $2.77] -100 12/3/2021 (358) $-90,000 $9.00 $2.90     $11.90 - $-29,000 -32.2% $-119,000
    TZA Long Call 2024 19-JAN 30.00 CALL [TZA @ $41.29 $2.77] 400 1/7/2022 (722) $526,800 $13.17 $7.61     $20.78 - $304,200 57.7% $831,000
    TZA Short Call 2024 19-JAN 45.00 CALL [TZA @ $41.29 $2.77] -400 1/7/2022 (722) $-442,000 $11.05 $6.13     $17.18 - $-245,000 -55.4% $-687,000
    TZA Short Call 2022 14-APR 40.00 CALL [TZA @ $41.29 $2.77] -50 1/18/2022 (77) $-15,000 $3.00 $4.58     $7.58 $3.08 $-22,875 -152.5% $-37,875
    TZA Short Put 2022 14-APR 30.00 PUT [TZA @ $41.29 $2.77] -50 1/18/2022 (77) $-20,250 $4.05 $-2.13 $-4.05     $1.92 - $10,650 52.6% $-9,600

    So the 50 April short puts and calls I'm not concerned about as we'll roll the loser and sell more puts and calls, etc. until we finally end up in the middle (and they both go worthless).  So what w're really concerned with is 400 of the 2024 $30/45 spreads covered by 150 2023 $50 calls and 50 of the 2024 $40 calls.  The 50 2024 $40 calls are leftover from 100 that we rolled half of into the April puts and calls so, for the same reason, we're not going to worry about them as we're confident they'll be dealt with.

    So what then is the threat?  Our 30/45 spread is mostly in the money but shows net $143,000 out of $600,000 so $457,000 coming if we have to pay off short 2023 $50s and they are 100% premium at $178,000.  Since we're dealing with the Aprils and we'll be rolling the other 2024s to the same kind of play – we can't really count on doing that again so our choices – if we get worried – are to either add more long 2024 $30s ($210,000 per 100) or buy back the short $50s ($59,500 per 50).  Clearly it's much cheaper to buy back the short $50s so we'll be using about 20% of our upside on the 30/45 spread to buy back 1/3 of the covers at $75,000 (now $59,500) so that's pretty much the plan for the moment.  

    If we do stop that out – then we'll have 400 of the 30/45 spreads that would certainly be 100% in the money covered by 100 of the 2023 $50s (not counting the ones we're going to work out) and then we'll see where things are.  

    Notice that we sold more short calls than the net spread cost us so, in an up market – we don't lose a penny on the TZA spread and, in a down market, we'll have to spend some of our cash stopping out but, since we can buy another $600,000 worth of IN THE MONEY upside protection for $143,000 – none of that seems worth worrying about.  

    So yes, when we're at an inflection point we should go over our trading plan and make sure we are comfortable with our up, down and flat scenarios.  

    TROX/RN – Sadly, they are getting bought.  

    /NG/Tommy – No, I took $4.40 and ran.  Holy crap, that's crazy on the expiring contract!   Wish I had forgot to roll those….

    Crazy things happen into expirations.  

    MRNA/Wing – My bad, I did the math of the net, not the $200!  You're right, we are at about 1/2 premium, which is the point at which you do want to roll then.  The thing is, I still believe in the target so, as long as you are willing to roll to 2x the $150 puts at $45, then just make sure that's an even or better roll and there's no pressure to pull the trigger unless the ratio turns sour.  Better case would be rolling to 2025 when those come out so patience is on your side and that $32 premium WILL expire over time and, as long as it's there – no one is going to assign you (or, if they do, it's a favor).  

    LMT/Batman – LMT is fully covered in the LTP so I'm not sure what you are talking about?  

    LMT Long Call 2024 19-JAN 300.00 CALL [LMT @ $388.50 $-2.74] 10 9/14/2021 (722) $64,800 $64.80 $37.20 $64.80     $102.00 $5.30 $37,200 57.4% $102,000
    LMT Short Call 2024 19-JAN 370.00 CALL [LMT @ $388.50 $-2.74] -10 9/15/2021 (722) $-32,000 $32.00 $26.95     $58.95 $-1.85 $-26,950 -84.2% $-58,950
    LMT Short Put 2024 19-JAN 300.00 PUT [LMT @ $388.50 $-2.74] -5 9/14/2021 (722) $-18,360 $36.72 $-13.12     $23.60 $0.90 $6,560 35.7% $-11,800

    I don't remember being anxious to sell any short calls – especially as they are not even at the top of the range.  

    Terrible finish with Nas under 14,000 and RUT 1,929.  Dow held up but that's why we ignore it – stupid index.  

  31. By the way, on TZA – Notice the 400 2024 $30 calls are already $831,000 and the short $45s are still out of the money.  At some point, if we become bullish on the Russell again, we can cash out those calls (or some of them) for more money than we'd make on the spread and then we'd take a similar $150,000 and buy 400 of the 2025 $40/55 bull call spreads (or whatever) to cover the 400 short 2024 $45s.  If they then expire worthless, we will have made a fortune on that spread.  

  32. Phil /EW – taking it on the chin today….  I'd like it better at 90 but do you think its worth a toss?

  33. Phil / Correction from above. ( was analyzing LMT at time)   the below was for AMZN


    Phil  /  AMZN – There are some calls that need to be sold at what price ( stock and option Strike ) are you looking to sell….  earlier I thought you indicated selling calls 3000 ish on the stock but not the strike….  what is your thinking now?

  34. I know I often talk about planning trades like they are chess strategies and you can see how we plan out the moves above but it's more like 3D Chess once you start thinking about how you will unwind a hedge 6-8 months from now.  This is complex stuff but you can see how we do this over years in the portfolio reviews.  Feel free to ask questions.  My stepmother worked for the Board of Education in NYC and she always told me "There are no stupid questions — but holy crap the kids who ask them are idiots!"  She was very wise…  cool

  35. /EW/Batman – Oil spreads?  Never touch those.  

    AMZN/Batman – Ah, well that would be a totally different position.  On that one, in the Butterfly Portfolio Review, I said:

    AMZN – The short Jan puts are going worthless (barely) and we're going to take the 2 short April $3,700 calls off the table and see if there's a bounce.  If not, we'll sell much lower calls (probably $3,000) to balance out the short puts that are now in the money.

    Earnings are not until Feb 3rd and they have dropped $200 (0.666%) since last week.  We took 2 short April calls off for about $3,000 with an $18,00 profit and old short puts went worthless with a $21,000 profit and we sold them on 8/20/21 so, after just 7 days since cashing out, we can be a bit more patient.  We could sell 2 July $3,000 calls for $170 ($34,000) and we already sold 2 April $3,000 puts for $86 ($17,200) and they can be rolled even to the 2023 $2,500 puts, so there's certainly no reason to rush this decision ahead of earnings and when we think AMZN may bounce back on earnings.  The trick to making successful targets is WAITING until you feel comfortable choosing a target.  We don't have any long-term puts and there's little damage to our spread so – PATIENCE!!!  If we do nothing and AMZN goes up, our problems are solved.  If AMZN goes down, we can sell long-term puts for cash and roll the short-term puts and sell short-term calls.  

    AAPL back to $164 on earnings.  

    Apple (NASDAQ:AAPL) shares rose after the world's most valuable company posted first-quarter earnings that topped estimates.

    The Cupertino, California-based Apple said it earned $2.10 a share on $123.95 billion in revenue, led by strength in the iPhone, which generated $71.6 billion in sales during the quarter. A consensus of Wall Street analysts expect the company to earn $1.89 a share on $118.4 billion in revenue during the quarter.

    Analysts expected the company to generate $67.5 billion in iPhone revenue during the quarter.

    “This quarter’s record results were made possible by our most innovative lineup of products and services ever,” said Chief Executive Tim Cook in a statement. “We are gratified to see the response from customers around the world at a time when staying connected has never been more important."

    Services revenue rose to $19.5 billion in the quarter, up from $15.7 billion in the year-ago period. Also aiding the quarterly results was strength in the Mac and Wearables divisions, with Mac revenue coming in at $10.85 billion, compared to $8.68 billion in the year ago period.

    Apple's Wearables unit, which includes the Apple Watch and AirPods, generated $14.7 billion in revenue during the period, up from $12.97 in the first-quarter of 2021.

    Apple shares are up nearly 2% to $161.95 after the company posted results.

    The Cook-led company will host a conference call to discuss the results at 5 p.m. EST.

    What a company!  Also looking good in our Butterfly Portfolio.

    AAPL Long Call 2023 20-JAN 120.00 CALL [AAPL @ $159.22 $-0.47] 160 1/20/2021 (358) $448,000 $28.00 $17.60 $10.94     $45.60 $-0.19 $281,600 62.9% $729,600
    AAPL Short Call 2023 20-JAN 150.00 CALL [AAPL @ $159.22 $-0.47] -160 1/21/2021 (358) $-360,000 $22.50 $3.45     $25.95 $-0.35 $-55,200 -15.3% $-415,200
    AAPL Short Put 2023 20-JAN 125.00 PUT [AAPL @ $159.22 $-0.47] -40 9/20/2021 (358) $-42,000 $10.50 $-2.85     $7.65 $-0.20 $11,400 27.1% $-30,600
    AAPL Short Put 2024 19-JAN 120.00 PUT [AAPL @ $159.22 $-0.47] -20 10/15/2021 (722) $-25,500 $12.75 $-2.50     $10.25 $-0.05 $5,000 19.6% $-20,500
    AAPL Short Call 2022 14-APR 155.00 CALL [AAPL @ $159.22 $-0.47] -40 12/22/2021 (77) $-86,000 $21.50 $-8.73     $12.78 $-0.23 $34,900 40.6% $-51,100

    It would have been foolish not to protect our 160 long spreads so we did sell 40 (1/4) short calls to cover.  Hopefully it doesn't run away on us but, like AMZN, we can always sell short puts and roll them up until, one day, we hit the middle of the shorts and they both go worthless.  

    You don't have to be clever, just patient and persistent…

  36. IBB -30% off its peak. Maybe time to start nibbling here. The Jan2023 150's are about 4 bucks currently.

  37. longer term, this article giving 2-6 months warning on any real strong buying action. All nibbles should stay nibbles for at least a quarter, IMO.

  38. Phil / EW -0 Edward life sciences