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Friday Flip Flop – Nasdaq Down and Up 1,000 Points in 2 Days – Stability?

Come on, this is silly:

Now the entire stock market is trading like BitCoin.  It's hard to call yourself an investor when the market can swing like this in a 24-hour period, isn't it?  At least in Vegas, you know why you won or lost – the little ball fell on a red number, not a black or whatever.  Try, on the other hand to explain why the Nasdaq fell 7% on Wednesday and then gained 7.6% on Thursday – there's no logic to it.  

That's because the market is now trading on emotions instead of reason and that's why we have our Bounce Chart and that's why our bounce chart needs to see two (2) trading days above or below a major support level before we can confirm tha status has changed.  The Bounce Chart is part of our 5% Rule™ and the 5% Rule™ is not TA – it's just math.  It gives us insight into the Algorythmic Trading that underlies the market and gives us a feeing for which way the programs are turning or, more accurately, what instrustions they are being fed by those emotional humans.

  • 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).   
  • 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 13,580.  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).

The only change since yesterday morning is the Russell 1,960 strong bounce line has gone from red to black (on the cusp) and the Dow did not fail it's strong bounce line yesterday though the S&P did test the weak bounce at 4,160.  The Russell bottomed out at 1,880 before shooting up like a rocket to re-test 2,000 (failing) but 1,960 is holding so far.  

   

So yesterday was, indeed, a whole lotta nothin' and we took advantage of the dip to cash in some of our hedges but any sign of weakness this morning and we're more likely to add a new hedge into the weekend as the strength doesn't reassure me more than the weakness scares the crap out of me.  The S&P ETF (SPY) was at about 450 this month, until the 10th so we can call that consolidation but then we fell to 411.02 as of yesterday morning and now back to 428 (halfway) with 6 out of 10 days red along the way and only 3 green (one was neutral).  

Date Open High Low Close* Adj Close** Volume
Feb 24, 2022 411.02 428.76 410.64 428.30 428.30 213,570,500
Feb 23, 2022 432.66 433.26 421.35 421.95 421.95 132,578,000
Feb 22, 2022 431.89 435.50 425.86 429.57 429.57 124,391,800
Feb 18, 2022 437.33 438.66 431.82 434.23 434.23 132,454,300
Feb 17, 2022 443.22 446.57 436.42 437.06 437.06 102,259,100
Feb 16, 2022 443.93 448.06 441.94 446.60 446.60 84,863,600
Feb 15, 2022 443.73 446.28 443.18 446.10 446.10 88,659,500
Feb 14, 2022 439.92 441.60 435.34 439.02 439.02 123,006,300
Feb 11, 2022 449.41 451.61 438.94 440.46 440.46 153,064,100
Feb 10, 2022 451.34 457.71 447.20 449.32 449.32 140,103,700
Feb 09, 2022 455.22 457.88 455.01 457.54 457.54 92,589,900

So, even counting yesterday as a green day (much of the volume was very red in the morning), the down volume was 785M and the recovery volume was 387M so, even if you say we replaced the bullish bricks to rebuild our market wall – the bricks may look the same but they weigh half as much and that will not do you a lot of good the next time the big, bad, wolf comes to blow your portfolio down! 

Until we are satisfied that there are an adequate number of sellers willing to buy our stocks when they get cheaper – we will continue to be "Cashy and Cautious".  The main thing that turned the markets around yesterday were statements by some Fed Governors that a 0.5% rate hike is now pretty much off the table for March.  Of course they said that when then Nasdaq was down 1,000 – then it regained 1,000 so maybe now they've changed their minds again?  

You'll never find out from watching CNBC, who have been running the headline "Nasdaq gainst 3.3% in Epic Rebound" all morning and you have to dig deeply to realize that's after it was down 3.5% in the morning and still only flat for the week and still down 1,000 (6.66%) since the 10th.

Our bounce rules teach us to be smarter than CNBC wants us to be while they push their suckers viewers to "Buy the F'ing Dip."  It's the same tactic they pulled in 2008, when they constantly told their suckers viewers that -20% was the opportuntiy of a lifetime – and then -40% was the opportunity of a lifetime – and then, oddly enough – at -60%, they threw in the towel and THAT was when it was time to buy!  Oddly enough, CNBC's sponsors, hedge funds and banks and fund managers, were doing the opposite of what CNBC was advising.

By the way, if you know how to download and save a video – save this one as it is being scrubbed, site by site, from the Internet.  Soon it will be like it never happened.  

Now, I'm not saying we're going to have another 2008-style meltdown – we don't have a gigantic real estate bubble that has essentially generated fake profits in the Trillions but we do have many, many, ridiculously over-valued companies that need to come down to Earth and DO NOT expect them to retake their highs – which were based on unrealistic expectations.  So we're not jumping all over this dip because it's more of a CORRECTION, where stocks come down to their CORRECT level – that's not the same thing as a dip – when things will bounce back.

At the moment, the Banksters are pumping up the markets on low volume and selling as much as they can to all the suckers that the Financial Media can push into the market.  Inflation will keep the market moving higher – any chance we had of getting that under control went out the window as soon as Russian boots touched Ukraine soil.  

Belarus is not in NATO, nor is Moldova – what is our plan for them when Putin comes knocking?  This is not a good time to be complacent about the markets so we'll be reviewing our hedges today in our Short-Term Portfolio and making sure we feel comfortable into the weekend.  It's those hedges that allowed us to sit back and relax while the Nadaq went up and down 1,000 points and it's those hedges that allowed us to carry our bullish positions into this uncertainty.  

Have a great weekend, 

- Phil

 


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  1. Good Morning!


  2. Good morning!

    Just going to see what sticks today.  

    Next week we have Non-Farm Payrolls on Friday as well as PMI and Retail Inventories on Monday, ISM and Construction Spending Tuesday, Productivity, ISM Services and Factory Orders on Thursday.  Nothing that's likely to spark a rally.

    I think the really scary thing about that interview on Fox with Trump is that he can even believe we'd be sending amphibious troops to Odessa – it's militarily and politically impossible for us to have done that at this point and Trump, who ran the armed services for 4 years – not only believes that but he believes Laura Ingram is breaking the top-secret news.  The man is clueless and dangerous and he has a good chance of being President again in 2 years….






  3. Trump Praises Putin, Leaving Republicans in a Bind


  4. Kyiv – 48 hours later, the work is done…It's Miller Time!  

    https://www.youtube.com/watch?v=m-FZH30L1Y4



  5. Market action- perhaps algos are now programmed to meet a very old (WW1 era)  Wall Street adage about markets/war- Buy with the drums; sell with the trumpets. 


  6. Putin’s No Madman


  7. Comment content omitted because it is too long.


    • The CDC will loosen restrictions on COVIDF-19 mask mandates, and it could come as soon as Friday, The Washington Post reports.
    • Just nine days ago, CDC Director Rochelle Walensky indicated that the agency was reviewing the guidance.
    • The guidance will be changed so it is based on hospitalizations and hospital capacity, rather than just case numbers, the newspaper says.
    • By making hospitalizations and hospital capacity part of the equation, the CDC is emphasizing severity of COVID in its guidance.
    • Mask manufacturers: Alpha Pro Tech (NYSE:APT), Allied Healthcare Products (NASDAQ:AHPI), 3M (NYSE:MMM), and Ulta Beauty (NASDAQ:ULTA).
    • Last month, the CDC said that respirator masks, such as N95s, offer the best protection.

    Feb. 25, 2022 10:04 AM ET

    • February University of Michigan consumer sentiment62.8 vs. 61.7 expected and 67.2 prior.
    • Despite the slight increase from the first half of February, U.S. consumer sentiment still remains at its lowest level in the past decade, "and the loss was still entirely due to a 12.9% decline among households with incomes of $100,000 or more," said Surveys of Consumers Chief Economist Richard Curtin.
    • Expectations: 59.4 (lowest since Nov. 2011) vs. 57.4 expected and 64.1 prior.
    • Current conditions: 68.2 (lowest since Aug. 2009) vs. 68.5 expected and 72.0 prior.
    • Inflation expectations: 4.9% vs. 5.0% expected and 4.9% prior.
    • Earlier, core consumer inflation rose 5.2% in January.

    Feb. 25, 2022 10:00 AM ET2 Comments

    January Pending Home Sales: -5.7% M/M to 109.5 vs. +0.8% consensus and -3.8% in December.

    Contract signings were down across all regions, except for the West, compared with the prior month.

    "With inventory at an all-time low, buyers are still having a difficult time finding a home," said Lawrence Yun, National Association of Realtors' chief economist. Rising home prices and mortgage rates are also adding the challenges for house hunters, he added. Rates jumped by almost a percentage point in January from December, making mortgages less affordable.

    NAR expects volatile economic conditions in coming months. The Federal Reserve's conclusion of its asset purchase program positions interest rates to increase. And Russia's invasion of Ukraine is likely to affect global oil supply, exerting upward pressure on inflation, which in turn is likely to lead to more aggressive rate hikes by the Fed, the NAR said.

    However, "There's also the possibility that investors may flee toward safer U.S. Treasury bonds, which may result in temporary short-term relief to interest rates," Yun said.

    Previously (Feb. 24), New home sales fall more than expected in January


  8. DELL -10.17%Feb. 25, 2022 10:00 AM ET

    Dell Technologies (NYSE:DELL) shares fell sharply on Friday after the IT provider posted fourth-quarter results that missed expectations, prompting some defense from Wall Street.

    Morgan Stanley analyst Erik Woodring, who cut the firm's price target to $66 from $68, noted that the company offered a "solid" outlook for its products, but the supply chain hurt the fourth quarter.

    "Component and logistics headwinds intensified towards the end of the Jan Q, which coupled with higher taxes, resulted in an F4Q operating profit and EPS miss," Woodring wrote in the note. "While the demand backdrop remains solid, supply chain issues bring about additional challenges in FY23."

    In addition, Woodring added noted that the supply chain is still "challenging," as the PC backlog is expected to increase sequentially from the fourth-quarter to the first-quarter and the Infrastructure Solutions Group backlog should remain "elevated" through the first-half of 2023.

    On Thursday, the Michael Dell-led company said it earned $1.72 per share on $28 billion in revenue during the period. A consensus of Wall Street analysts were expecting Dell to earn $1.95 per share on $27.52 billion in revenue.

    Of the company's two units, Client Solutions Group generated $17.3 billion in revenue, up 26% year-over-year. Operating income for the unit was $1.2 billion. Dell's Infrastructure Solutions Group delivered $9.2 billion in revenue for the fourth quarter, up 3% year-over-year. Operating income was $1.1 billion.

    Dell shares fell slightly more than 10% to $49.80 in early trading on Friday.

    Separately on Thursday, Dell said it would starting paying a quarterly dividend of 33 cents per share, which Woodring said added to a capital return program that is "in-line with expectations."

    Bernstein analyst Toni Sacconaghi called the fourth-quarter results "disappointing," but profit was hurt by roughly $300 million due to expedited costs, largely due to airfreight to get components and finished goods to where they needed to be, an increase of six times over the past year.

    The analyst added that 2023 should be "solid" as the firm increased its revenues for next year modestly and said investors should add to their positions on any pullback in the stock.

    Earlier this week, research firm Canalys showed that Dell owned 16.8% of the PC market in 2021, good for second-place, behind only HP.

    Feb. 25, 2022 9:59 AM ET1 Comment

    • In a video statement Friday, Ukrainian President Zelensky called on Russia's Putin to meet for talks.
    • Kremlin spokesman Dmitry Peskov told reporters the Kremlin would meet with Ukraine; the talks are to be held in Minsk.
    • The Russian delegation will include officials from the defense, foreign ministries and President's office.
    • The news comes after ~2 days of fighting throughout central and eastern Ukraine, and a day after Western leaders announced targeted Russian sanctions.

    Kyiv/1020 – When did we all vote to start spelling it differently?  Is Chicken Kyiv now one of my favorite foods?  

    Drums & Trumpets/Pstas – Yes but wars used to take more then 48 hours, I think.  I guess everything is faster these days…

    Oil has certainly calmed down.

        

     

       

     

    This is why we throw out spikes in the 5% Rule – just a lot of noise.


  9. KyivNotKiev is an online campaign started by the Ukrainian Ministry of Foreign Affairs (MFA) together with the 15 member centre for strategical communications "StratCom Ukraine" on 2 October 2018. Its goal is to persuade English-language media and organisations to exclusively use Kyiv (derived from the Ukrainian language name) instead of Kiev (derived from the Russian language name) as the one true name of the Ukrainian capital.[1][2] It is a part of the wider campaign "CorrectUA".



  10. Spelling/phil – one of my many pet peeves. It's not written in Roman alphabet, so it'll be spelled wrong by definition. Look at Bombay/Mumbai, Burma/Myanmar, Corea/Korea, the city of Pusan/Busan. All are equally wrong. And "Korea", especially "South Korea" in not even the name of the country. Pet peeves are fun!


  11. Yeah, not so much spelling like an error but, all of a sudden, everyone is saying Kyiv – I'm just pissed I didn't get the memo.  


  12. Well that video reminded me of Gene Wilder in Young Frankenstein 

    https://www.youtube.com/watch?v=ab7NyKw0VYQ


  13. Always on the prowl for yield w/o too much risk:

    ETD- 4.5%; integrated furniture maker/designer/retailer. Higher end market target. Should be steady demand. Did some covered calls for now.

    FL- Also 4.5% yield after stock getting wacked today on earnings/outlook. Less inclined to go with FL as still very concentrated Nike supplier who is going consumer/online direct. 


  14. Phil – I hold some BIG spreads, the long call is 2024 $40. Thinking of rolling it down to the $30s for <=$5. Or should I not be throwing more money into BIG? The supply chain has to ease up someday… 


  15. I am a democrat.

    Yesterday was terrifying.   Watching Biden struggle through his questions, unable to hear, unable to recall vocabulary. He was lost and befuddled. Then pretty much in perfect sync, each of the major late night show played the same CNN clip of air-raid sirens cutting to a Applebees commercial. Then they all shit talked Trump.  

    We NEED another John Stewart.  He chewed Obama out as it was necessary. The news media used to be more than just blind confirmation bias, it used to keep those in power, in check. Regardless of party. 

    CNN, BBC, NPR, all my prior go-to's are now sensational nonsense.  We truly have entered an era of propaganda and noise. The markets are trading like toddlers. 

    When will it all end.   


  16. MonkMan,

    If you want actual news, you read AP and Reuters.  The rest are entertainment.

    We also need to get past pretending politicians need to be showmen.  A person can absolutely be a capable leader without presenting well.  I am not commenting on Biden here specifically.  I'm stating how well presented somebody is REALLY shouldn't matter.


  17. Monk – careful with those sentiments as it could get you "cancelled". But this a big part of the problem. Welcome to my side of the street. My politics runs conservative and we have been dealing with media bias for decades. Now, mostly all corporate media (right and left) is partisan forsaking journalism for an agenda. Years ago, I was a regular NPR listener during the day and a fan of McNeil Lerher on TV. Sure , they leaned left but it was intelligent and thoughtful real journalism, not the histrionics of today. I don't know about Stewart but how the hell did we come to the point of reliance on political analysis done by late night tv comedians? Just my two cents but I think/hope there will be an anti-woke backlash which may serve to balance the scales again. 


  18. the face of our nation doesn't need to be a sexy celebrity or a charm bomb.. but Biden sounds like my confused uncle. Thats how Trump will get re-elected. 


  19. Comment moderation again- living life governed by algos. Go figure. 


  20. H-I-L-L-A-R-Y

    Biden will not run against a woman scorned…. ;)


  21. Don't laugh, She's pissed and that's what the Dems need…. 


  22. Wow, thie is just crazy, Dow is flying higher, big gains all around:

       

    That gives us:

    • 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).   
    • 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 13,580.  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).

    So we gained green boxes on the Russell and S&P and the Nasdaq went from red to black on the weak bounce line.  If 14,100 doesn't go green on the Nasdaq, we are still in danger but no need to add more hedges – we'll just see if there's anything opportunistic we can do in the STP.

    Classic, Stock.

    ETD/Pstas – Yes, the Covid trend that sent people into the arms of W should be coming to an end (sure looks like it from W's sales!) and ETD is very attractive as a solid name-brand at just $636M at $25.67.  Even during Covid they had $590M and $685M in sales and made $9M and $60M the last two years and, moving forward, they expect $800M/80M and we have no reason to doubt them.   There is a case to be made that they will cut their dividend, which is a cash-flow move I'd approve of but would send them lower so don't get into a position you wouldn't be THRILLED to double down on.  Those dividend statistics are, of course, based on Covid and Q1 was a nice beat with 0.95 EPS, which beat by 0.20 and $208M in revenues, which beat by 20M so they are super-steady dropping 10% to the bottom line and management knows what they are doing – big pluses.  If they had longer-term options I'd love them but they only go out to Aug but the Aug $25 puts are $2.20/3.20 and I'd say, if you can get $2.70 or more for them, I'd sell 10 in the Dividend Portfolio for $2,700 to see how things go.   

    FL/Pstas – That's one we've played before and holy crap are they being punished after BEATING earnings by 14% ($1.67) on in-line revenue, announcing a $1.2Bn buyback and RAISING the dividend to 0.40.  Unfortunately, they guided 2022 to -5% in Sales with comp sales off 8-10% and EPS of $4.25-4.60 vs $6.44 expected (and on track as of Q4).

    The main reason seems to be NKE's move towards more on-line sales so less NKE sold at FL.  NKE was 65% of sales last year and they project 55% this year and they don't seem to project making it up with other brands.  What if Adidas is next and Reebok?  I also worry about this slide, which indicates they have generally short-term leases in a rising rent environment:

    People tend to have clothing budgets and it's tough to grow retail clothing in an inflationary market – people just make due with less as necessities get all the love first.  I think dropping from $65 to $27 is a bit of an over-reaction as it's $4.3Bn for a company that should still drop $700M to the bottom line but that's going down, not up.  They are likely buying back the stock (25%) ahead of a go-private deal as I think they'll be happy to get their market cap in a takeover at this point.  

    Still, if they are willing to buy it back, no reason not to sell the FL 2024 $25 puts for $6.40 – let's sell 10 of those in the LTP for $6,400.

    /SI is back at $24 for those who wish to go long again (tight stops under).  Last time we were more sure as /GC was popping back to $1,900 but I think that's too much selling for 2 days on /SI and we should at least get an 0.25 bounce.  

     

  23. BIG/Rn – At $34.89 you can buy the whole company for $1.13Bn and they MADE $626M last year but it was due to a sale and leaseback transaction that paid down debt using undeployed assets but left them with $1.6Bn of capital lease obligations and still has a pretty high debt to equity ratio.  That means they are on dividend watch as most of their balance-sheet assets are in inventory and, if they have any issues moving it, they are in trouble.  The good news is that their inventory against shipping delays for others means they actually have a sales advantage of the moment and, presumably, they will have a beneficial inventory pare-down.  

    They project a soft Q1 though and should still make $150M going forward, which is fine for $1.13Bn so yes, I like buying the whole company and it's a position we will be putting more into and, as to the $40s – absolutely we want to roll down as the target of $50 is likely unrealistic so sitting there with it with your fingers crossed is not the smart way to play.

    Democrat/Monk – Very sad these days.  I have to say that Viacom has ruined the daily show.  It used to be not as good as it was under Stewart, but what could be?, but now it's just lame.  Trevor Noah is more like Rich Little (showing my age) than John Oliver and that's the real crime – there's no show like the old Daily Show other than Seth Meyers' openings and, of course, Last Week Tonight – which is very hard to find a time when John Oliver isn't on vacation and also he works on "issues" more so than current events like TDS used to.

    Here, see if Trever Noah can make it through any segment without doing an impression (and this is edited):

    Actual news/JPH, Monk – I always go back to the NYTimes to find out what really happened after I read a story somewhere else.  

    McNeil/Pstas – I miss that and McLaughlin.  I cannot imagine what you said that caused the bot to moderate you.  Maybe just the big paragraph?  


  24. Bot/moderation- well then let's try again:

    Monk – careful with those sentiments as it could get you "cancelled". But this a big part of the problem. Welcome to my side of the street. My politics runs conservative and we have been dealing with media bias for decades. Now, mostly all corporate media (right and left) is partisan forsaking journalism for an agenda. Years ago, I was a regular NPR listener during the day and a fan of McNeil Lerher on TV. Sure , they leaned left but it was intelligent and thoughtful real journalism, not the histrionics of today. I don't know about Stewart but how the hell did we come to the point of reliance on political analysis done by late night tv comedians? Just my two cents but I think/hope there will be an anti-woke backlash which may serve to balance the scales again. 


  25. Time to boot the bot :(


  26. Hivemind/ investigation help…….anyone here no about an outfit called K3? It seems to be a protean LLC, privately held, goes by K3 Holdings LLC, K3 Investments LLC. They seem to have a lot of bases but as they're privately held it's difficult to see what their main office is, who's involved. They're behind a lot of problems in the southern California housing market, and elsewhere I suspect.


  27. sorry "know", not "no"


  28. Snow- never heard of K3 here in Orange Cty. What sort of problems?


  29. Pstas – slum lord behavior, jacking up prices, not maintaining property, booting out tenants, buying up a lot of properties that used to be well-managed.


  30. Short-Term Portfolio (STP) Review:  $428,708 is up just $43,890 from the 15th but that's because we just bounced way back.  We got the cash up to $306,093 though – that's more important because, if we have a portfolio that's in trouble – there's the cash to make adjustments.  Of course, with the bounce – we don't have anything in particular trouble.

    • Short Puts – W is in trouble but we're in at net $125(ish) and it's at $130 so paper loss we can ignore.  We COULD roll them out to 2024 $130 puts about even or 2x the 2024 $90 puts at $20 but I don't want to carry them that long – it's just a leftover from the bear bet we closed so if we get out even I'll be happy.

    • TZA – We raised $109,000 selling 50 of the 2023 $20 calls and now we're balanced on the spread but yesterday and last week the Jan $40s were $14 and now $8.83 so let's offer to buy back 30 Jan $40s for $8 and see if it works.  There's no harm if we can't fill it but, if we can – it's a nice way to get a bit more bearish for $24,000.  

    TQQQ - WE took $56,000 off the table yesterday:

    • February 24th, 2022 at 11:56 am | (Unlocked) | Permalink
    • Also, for $56, it's silly not to take a profit on 10 more of the TQQQ Jan $100 puts in the STP as that's $56,000 and the worst case is we get assigned long TZAs at $75 and they are $45 now so $30 of our $26 gone but it's a $25 spread so it's miles before we get behind.   The short $75 puts are $33.83 at the moment and the 2024 $65 puts are $30 and the $45 puts are $17, so a 2x roll to there if we have to.?
    • That's why we have a saying that goes "ALWAYS sell into the initial excitement" – options prices go up and down very quickly and often over-react so it doesn't pay to "wait and see" if you can do better when you have the chance to get a nice cash out of buy back.  That being said, the $75 puts were $45 yesterday and now down 50% at $28 so, for $28,000, let's buy back 10 of the 2023 $75 puts to bring us more in balance.   It was not our intention to turn this into a bullish spread – we simply took advantage of the extreme money we were being paid yesterday ($56) and now buying back for $28 means we collected net $28 on the $100/75 spread – that's $3 more than we would have by waiting a year – mission accomplished!  

    And, as I say that, the Nasdaq hits 14,100 (weak bounce).

    • DIA – We'll be happy if the short March puts expire worthless – had a scare yesterday.  Not that it matters, we either roll them along or they expire worthless and we sell another $4,000 next month and, if we collect $4,000/month for 6 months – that's half the cost of the $150,000 hedge paid for.  

    • SQQQ – The $200,000 spread is net $36,750 so miles to gain if the Nas dies and look how close to target we were yesterday!  So the short calls don't scare me and I'd rather collect the $13,265 than bail so the risk of having to pay back $30,000 and "only" gaining $135,000 on the spread is worth it to offset a good portion of the cost of the spread if we don't make $45, which is where we start losing money on the short calls but we're $50,000 in the money on the longs.  Meanwhile, the Jan $40s are $13.43 and the Jan $30s are $17.35 for $4 to roll is too much but $3.50 ($35,000) will buy us another $100,000 in protection that's in the money and we can make it up by selling more calls so let's do that when we can.

    • TZA – This is why we're not scared of uncovering our other TZA spread.  This $600,000 spread is $160,000 in the money but net $104,000 means we have MASSIVE protection here.  We collected $42,000 on the short 2024 calls and our goal is to roll them to something shorter-term once the April $40s play out.  No reason to change anything at the moment but let's put a stop on 1/2 (25) of the April $40s at $4 so we don't get damaged if it pops again.

    Well, all seems well here.  As you can see from the TZAs being $104,000 out of $600,000, the only issue is we don't immediately realize our gains when the market drops – we have to wait for the premiums to wind down.  So this is useful protection if the market goes down and stays down but it won't make us look too "balanced" during a short-term correction.  This kind of protection is fine when you have plenty of cash in your long portfolios but, if you don't, you need hedges that will give you a more immediate pay-off.  Fortunately, we plan well ahead and CASH!!! is as much of a hedge as our STP is for our long portfolios.  

    If you are 50% in cash on a $200,000 portfolio and the market drops 20% then you have $100,000 in cash and $80,000 in positions but, if you want to DD on your positions – it only costs you $80,000 and then, if the market recovers, you would have $20,000 in cash and $200,000 in positions – even though all you did was get back to where you were.  We use a combination of that strategy and the hedges, which pay us well if, over the long run, the market doesn't bounce back like we hoped it would.  

    Remember – Hope is not a valid investing strategy!  


  31. Bots/Pstas – If you had to read all the crap they caught, you'd love them too.  People sign up for memberships and post ads and then cancel – really obnoxious.  

    K3/Snow – These guys?   There's lots of players like that in housing.  We're back on the road to serfdom as the Feudal Overlords are buying back all the land they sold us.  It's exactly what you say, they buy up assets and spend the least possible to improve cash-flow and, if the tenants leave, they are happy to raise prices for the next sucker who moves in.  Unlike a small landlord, they don't have cash-flow issues that motivate them to keep steady tenants.  


  32. Phil/Snow/Housing – Came across the same thing looking at properties in NH. Apparently there's 2-3 companies that bought up the apartments in the state and have that same management style. Quasi monopolies and their tactics have sprung up everywhere since M&A has gone unchecked. 


  33. Watch this rising floor on SQQQ – if that keeps up next week – it's not a good sign for the market:

    There are no likely upside data catalysts next week and earnings are winding down and then it's Fed time.  So we have that and the war and still Covid and Inflation and we forgot all about Global Warming at this point, didn't we?  

    Tackling climate change necessitated a faster response, despite the world’s current preoccupation with Russia and Ukraine, US climate envoy John Kerry said on Monday.

    “This (climate change) is an issue beyond politics, beyond ideology, this is an issue that affects the whole world at large,” Mr Kerry said during a speech at the American University in Cairo to start Egypt’s preparations for hosting the next edition of the UN Climate Change Conference.

    He underscored the importance of getting countries to implement the environmental pledges that came out of Cop26, highlighting the need to ensure a steady flow of capital from developed countries to help less developed countries in their efforts to combat climate change.

    Housing/Seer- Yep, they are applying big data to make sure everyone in America pays as much rent as can possibly be squeezed out of them.  


  34. K3/Phil – yup, that's them. I'm wondering if it's some hidden huge company owned by someone like the Kochs or Musk.


  35. K3 – Cute. The K3 address at the link you gave me, Phil, is a UPS store in a strip mall in South Pasadena.


  36. UPS/Snow – Ha, that's funny.  Clearly they don't want visitors.

    Well it looks like we're closing at the highs. Just keep the big picture in mind before we get all excited:

       

    Have a great weekend everyone, 

    - Phil

    And, if anyone asks you how things got so crazy:





  37. Who is Ketanji Brown Jackson?





  38. Russia-Ukraine latest news: Explosions rock Kyiv as Vitali Klitschko warns of ‘difficult night ahead’



  39. Miller time 1983 = white people


  40. Bloody Germans as the Brits used to say. Maybe still do. Now sending some arms. I am no military strategist but seems the time for money, guns and lawyers is before the bullets fly, not when the barbarians are breaching the gate. The Germans should hang their heads in shame and appropriately ridiculed. 

    "Don't mention the war"


  41. Bloody Germans/Pstas – when I was in school, I was very surprised to learn the name of the country with not “Bloody Germany“ as that was all my English grandfather ever said.  

    That sketch is certainly one of my all-time favorite things.  
     


  42. Russia’s War With Ukraine Is Already Costing Russian Economy



  43. A Guide to Cannabis in the U.S.









  44. BDC – I do believe those who are terrorizing Ukraine have the same skin tone, unfortunately….


  45. Phil, up in the middle of the night again.   


  46. Up/Stock – yes, hopefully I can get back on schedule, been a crazy weekend.