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Tuesday, August 16, 2022

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Free Money Friday – $1,500,000,000,000 for US, $13,600,000,000 for Ukraine

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

 

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Deutsche Bank faces questions over plan to stay in Russia

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?

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…

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)

Phil / GILD –  I was on the fence on this one….  I 'll. wait a bit….  

Could Putin actually fall?

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