Passed 68-31!
That's the first thing these guys have agreed on in years. Don't get too excited – it's only the Budget they should have passed last June but anything passing in Congress is simply amazing these days. The basic bill provides $730 Billion in NonDefense funding, a $46 Billion increase over fiscal 2021, and $782 Billion in Defense funding, an increase of $42 Billion. What it does not have is funding for Covid, which had to be stripped out to make the GOP happy. That will now be a completely separate fight for vaccines, medicine and testing – despite the fact that 1,293 people died of Covid yesterday with 35,795 new infections.
As you can see from the map, the war is still raging on but the markets don't actually care about that and the indexes are up another 1.5% in pre-market action but still no 4,320 on the S&P 500 (see yesterday's PSW Report) and this week is a technical failure if we can't get back over that line and hold it.
The Volatility Index (VIX) is still at 29 so don't get complacent but Gold (/GC) has dropped back to $1,968 and Silver (/SI) is at $25.87 – both off their highs and Oil (/CL) is "only" $107 this morning and Gasoline (/RB) is down to $3.26/gal wholesale – what a bargain! Wheat is well off the highs at $1,063 – up from the usual $750 but Corn is persistently elevated at $750 – usually $600.
We picked the only commodity winner on Wednesday in our Live Member Chat Room and in our Live Trading Webinar (subscribe here so you don't miss the next one) and we're going to take the money and run at $4.75 with gains of $2,500 per contract in 2 days because it's just too much profit to risk over the weekend with all the other commodities selling off. Congratulations to all who played along at home!
Futures Trading is something every trader should know how to do but it should also be something you very rarely do. We try to only play very obvious tops or bottoms and $4.50 has been a great bottom for /NG but we've been unwilling to make a top call on Oil or Gasoline – even though these levels are clearly unsustainable. Keynes was right when he said "The market can remain irrational longer than you or I can remain solvent" – the Futures remind you of that on a regular basis if you don't maintain a strict trading discipline and learn to make non-greedy exits.
We are entering the weekend very well-hedged and we haven't traded much this week as we wait on the Fed next week. Putin is making some noises about peace this morning but he also said he was wirthdrawing troops the day before he attacked so why should we believe a word this man says?
Next week we will do our portfolio reviews and, if the S&P can get back over 4,320 and hold it – we may even make some bullish adjustments as we're close enough to the 20% sell-off we predicted since last year to be happy to start buying a few, select, long-term positions.
Have a great weekend,
– Phil
Biden just officially took away Russia's trading status.
Comment content omitted because it is too long.
They are still on drugs asking $25Bn for this company with $3Bn in sales at a $500M loss.
Another one you shouldn't be fooled by at $3.7Bn:
So last year, they lost their entire market cap – same as the year before. Wow, where do I sign up?
We used to play these guys:
And these guys:
And these guys (still do, actually):
WPM doesn't PRODUCE gold, they have contracts with miners to produce gold, which they then sell. So there will be 10% less gold at a 10% higher price and WPM makes their money off the spread so all good for them:
No big deal for our play:
Phil / BABA
Oops…I made a mistake in the question I asked yesterday.
I have 5 short Jan 2023 $200 puts and 10 Jan 2024 $120 – $140 call spread. Should I roll the short puts into short Jan 2024 $100 puts now or wait?
I love how they say "But BLK has more than $10Tn in assets under management." So what? They only make $6.5Bn managing those $10Tn and they just lost $17Bn. The question is, is that a loss to the company or to their asset holders – in which case it shouldn't impact earnings too much. Need clarity.
BABA/Jij – Well that makes more sense then. The Jan $200 puts are now $110 and the 2024 $130 puts are $51 and your obligation goes up from $100,000 to $130,000 but it's a worthwhile roll. You don't want to spend more money if you can avoid it. 2025s should be out in July, then maybe to the $100s.
Phil – This is for DOW. I have 15 BCS ($50-65), and 5 short $55 Puts (all 2024). Entered for a net of $3,800. Thinking of selling $65 monthly calls (maybe 5 every month) against this every month, as long as feasible, to reduce the net to 0. Does that seem reasonable?
Hi Phil,
Do you think all the chinese ADRs will get delisted soon either due to SEC audit requirements or Chinese restrictions? If so, is it good idea to buy puts on FXI/KWEB etc?
Another question. Do you think financial sector is exposed to CDS on Russian bonds which will be declared to be default soon?
Thoughts on taking profits on the miners/iron and steel producers? Their charts are usually cyclical and are all mostly at or past their recent highs.
I have an X 17/27 spread that is at $7 out $10 with X at $32 — but still 315 days away from expiration. I would love to wait for long term capital gains but I fear this could be back at 20 next year…
Only the Dow is still green at the moment – not a good way to finish the week. Speaking of which:
DOW/Rn – Sounds like our LTP play (1/2). I'd start by doing a 1/3 sale and see how it goes, no need to be greedy. If $60 doesn't hold, you can sell 5 $60s and put a tight stop on other 5, etc.
China/Harip – I think some will comply and others will not. Chinese companies play fast and loose with their books, so a lot of them can't comply to GAAP accounting, I'm not very interested in new Chinese plays at the moment due to the property crisis that is still unwinding over there.
Russian Bonds/Harip – Well BLK just took a $17Bn hit so sure, there's some exposure. As Buffett says, "you don't know who's swimming naked until the tide goes out" so I'd be careful, especially with CS, DB and others who like to swim in those waters.
As usual, TD is king:
Miners/Jeff – Sure we have a big pop not but we're only at the very beginning of a decade-long infrastructure cycle. The thing is, you have $7 and will make $3 (42%) if nothing goes wrong the rest of the year. Not waiting for long-term gains will cost you about 15% of them. You could sell 2024 $35 calls for $10, which is as much as you'll collect on the whole spread and that will certainly cover your downside but, if X goes higher, you'll have to cover those (the $30s are now $12), but, as long as you cover them for $13.50 or less, you still have a $5 spread at net $3.50 and the only reason you'd be doing that cover is because you were wrong and X is continuing safely higher.
For me though, I'd just leave it alone as I have faith in the long-term macro.
Tempting but too risky.
Phil / GILD – I have the '24 $60 puts ( 11.1) and looking at adding BCS o n this one….. I know they are having issues with approval ( more broad approval of their breast cancer drug) I'm wondering this is a good time to maybe at to this with a "24 BCS of 50 / 60 ? thoughts?
AAPL/Phil Have been slowly rolling my '24 $160 longs down to $150s .. looks good now for only about $1.50, but would it be better/safer to pay about $6.4 to roll further down to the $140s which doesn't seem like such a bargain but still good at $6.4 to gain $20?
150 AAPL '24 $150 calls ($36.74)
50 '24 $160 calls ($36 .71)
– 140 '24 $200 calls ($20.8)
Lost the Dow too, not a good week.
Although, on the whole, the S&P is only down 100 (2.5%).
This is more stock market physics – how long did it take to get from 4,800 to 4,600? About 9 sessions. Then 4,600 to 4,400? 4 more sessions. So that was an accelerating decline. Then we bounced and the next time from 4,400 to 4,200 was also 4 days – and then bounce and now 4,400 was toppy on 3/3 and in 2 days we were back to 4,200 and now bouncing. This is not a good trend, the drops are getting stronger, not weaker. Also, look how many red days vs green – very unhealthy. Plus the volume story you are well aware of.
GILD/Batman – While I think that's great in a vacuum, I just thing it's best to wait to see an actual support bottom before using cash – unless you are so well-hedged you need bullish positions?
AAPL/Wing – I think if AAPL does well, then $1.50 well spent and be happy and, if it does poorly, then the next roll should get a lot cheaper – so either way you win. If you have 200 longs and 140 short calls, then I don't see any reason not to sell 50 of the May $165 calls for $5.25 ($26,250) and see how things go. You can use that money to widen the spread if AAPL goes lower and, meanwhile, it's a good hedge while you impatiently wait.
Wow, last rat is leaving the sinking ship!
I love Jonathan Pie!
Phil / GILD – I was on the fence on this one…. I 'll. wait a bit….