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Monday Market Momentum – Still Up into Quarter’s Close

171 points.  

That is the summary of March so far – we're up 171 (3.9%) S&P points from 4,373 where we closed on Feb 28th, despite the war – and everything else that's going on.  The S&P has closed higher in 7 of the past 9 sessions with one flat and only a single down day in the past two weeks – last Wednesday when the Fed announce a rate hike but then Powell spoke and saved us from the drop.  

As I have been saying, there's simply nothing better to do with your money but store it in US Equities.

  “The view is we should just rotate to sectors which are more favorable to the situation, because there’s really not much of an alternative to equities,” said Ilya Feygin, managing director and senior strategist at WallachBeth Capital.  

Yes, I just said that!  Large-cap stocks in the U.S. offer more safety and value than small and mid-cap shares since they tend to generate reliable income for investors, especially companies that can maintain dividend payouts. In addition, the U.S. equity market’s swoon to start the year may have largely priced in a spike in oil prices and softening of economic growth, meaning they aren’t as expensive anymore

“Stocks appear to have largely priced in near-term geopolitical and interest-rate risks,” Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, wrote in a note. “Earnings forecasts are climbing again, as analysts get more comfortable with supply-chain risks and revenue estimates keep improving.”

US companies authorise more than $870bn in stock buybacks | Financial TimesS&P 500 firms took their bailout money (YOUR tax Dollars) and bought back $882 billion of their own stock last year, up 9.3% from the prior record set in 2018, according to S&P Dow Jones Indices.  These massive buybacks reduce the overall share count which we divide the earnings by – making it look like Earnings Per Share is going up – even when earnings are flat because there are less shares to divide them by.  

Keep in mind the market cap of the ENTIRE S&P 500 is "just" $40Tn so $1Tn is 2.5% of that so, when you hear about Earnings for Q1 being up 5% from last year – 2.5% of that is simply because there are now less shares to divide the earnings among (letting the rich get even richer) and, of course, the other 10% is inflaion.  

That's how you can be in the middle of a Recession and not even know it.  

Not that Data matters but we do have Non-Farm Payrolls on Friday and those are going to be bad enough that the Fed has scheduled super-Dove, Charlie Evans to speak right after the report and before the market opens.  We also have PMI and ISM – both likely to also be disappointing.  Before that, we have the Dallas Fed today and Retail Inventories were up 1.1% already – but not very important.  Tomorrow we have Williams, Harker and Bostic to take the heat off declining Consumer Confidence, Wednesday Thomas Barkin will put the spin on GDP ahead of Investor Confidence and Thursday, Williams again is tasked with spinning Personal Income and the Chicago PMI – it's going to be a bumpy ride:

And still we have plenty of Earnings Reports rolling in:

Image

I'll be curious to hear what Micron (MU) has to say tomorrow as Goldman Sachs (GS) just slashed their estimates for Semis, citing "a more challenging macro backdrop over the next 12 months."  Last I heard, we use semis to make a lot of stuff so it's hard to imagine strong GDP growth with declining semis but, since when has logic had anything to do with this market?  

Things are only going to get crazier….

Oscar 2022:El puñetazo de Will Smith al cómico Chris Rock | El Correo

 


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  1. Saudi oil depot hit as kingdom thwarts drone strikes


  2. The World Is Splitting in Two



  3. Any thoughts/adjustments on HBI?   Just keeps slowly going down as the market goes up.


  4. Good morning!  

    Indexes very indecisive this morning.

    HBI/Jeff – I don't see any good reason for the selling.  I imagine rising cotton, labor and shipping are worrying people.  LEVI selling off as well – down 33% from last year and HBI about the same.  We already went aggressively long HBI at $15 on Jan 28th in the LTP and we're in the $10 calls so I don't see any reason to do more than that – other than learn a little PATIENCE.

    HBI Short Put 2023 20-JAN 17.00 PUT [HBI @ $14.86 $-0.37] -20 7/22/2021 (298) $-6,200 $3.10 $0.40 $-2.20     $3.50 $0.30 $-800 -12.9% $-7,000
    HBI Long Call 2024 19-JAN 10.00 CALL [HBI @ $14.86 $-0.37] 40 1/28/2022 (662) $23,000 $5.75 $-0.30     $5.45 - $-1,200 -5.2% $21,800


  5. Tronox is back to <20. Missed the fall to 16 in early March. I think the Apollo group buyout rumour is just that – a rumour. Bloomberg was saying a month or so ago that their M&A analyst surveys still indicated TROX as a likely M&A candidate. 

    Phil – should we reenter?


  6. All red:

       

    Bigger picture:

       

    Big Dollar move is hurting everything:

    The good news is a strong Dollar keeps inflation in check but that's only good news in the US – for the rest of the World – it's a disaster. 

    Commodities are priced in Dollars so, for them, commodity prices are just going nuts.

    Dow blew the weak bounce on our bullish Bounce Chart so back to the -20% chart if they can't get it back by Weds:

    • Dow  36,000 to 34,200 has bounce lines of 34,560 (weak) and 34,920 (strong) 
    • S&P 4,700 to 4,465 has bounce lines of 4,512 (weak) and 4,559 (strong) 
    • Nasdaq 16,500 to 15,675 has bounce lines of 15,840 (weak) and 16,005 (strong) 
    • Russell 2,400 to 2,080 has bounce lines of 2,144 (weak) and 2,208 (strong)

    /ES is on the cusp, so watch them closely.


  7. - 20% chart and, don't forget, the strong bounce on the Russell is already – 20% for them:

    • 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).
    • Nasdaq is using 13,500 as the base.  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).

    Hard to believe how red this chart was just a few weeks ago.  



  8. It's amazing that nothing that guy does seems to stick.

    Not just Presidentially, but his entire life – it's like he's got super powers…

    Speaking of Super Powers – Nas is up 100 now,  /ES almost green.

    Mar. 28, 2022 1:17 PM ET4 Comments

    • The U.S. 2-year note is rising nearly three basis points to 2.328% after a relatively large-sized Treasury auction took place Monday.
    • The U.S. Department of the Treasury sold $50B worth of 2-year notes at a high yield of 2.365%, with all tenders at lower yields accepted in full.
    • Bid-to-cover ratio, or the amount tendered ($123.14B) divided by the amount accepted ($50B), at 2.46.
    • Awarded 30.26% of bids at the high yield. Specifically, primary dealers took 19.43%, direct bidders grabbed 25.55% and indirect buyers (foreign entities) took in the most at 55.03%.
    • By comparison, demand for Monday's 5-year note auction was a bit stronger, with a bid-to-cover ratio of 2.53. The agency sold $51B worth of 5-year notes at a high yield of 2.543%, awarding 2.98% of bids at that yield. Indirect bidders took in the most among competitive buyers. The 5-year UST yield fell after the auction, slipping by over four basis points to 2.534%.
    • Earlier, the international trade in goods deficit narrowed to $106.6B in February.

    LOVE +3.46%Mar. 28, 2022 1:05 PM ET2 Comments

    Lovesac Company (NASDAQ:LOVE) is due to report earnings on March 29 with analysts expecting revenue of $174M and EPS of $0.58. Of note, shares of Lovesac soared after the retailer's last earnings report. Options trading on Lovesac (LOVE) suggests another big move up or down this time around as well.

    Wall Street bulls are confident on Lovesac (LOVE) ahead of the report.

    BTIG reiterated a Buy rating on Lovesac (LOVE) and price target of $113.

    Analyst Camilo Lyon: "We are positive on LOVE heading into its FQ4 earnings report on Tuesday, March 29 BMO. We are comfortable with our FQ4 revenue estimate of $175M / +35% (vs. consensus of $174M / +34%) and EPS estimate of $0.64 (vs. consensus of $0.54) as our checks indicate demand was strong for LoveSac despite a volatile macro backdrop. We also believe demand has remained solid through early FQ1 as the company leverages its in-stock competitive advantage."

    Meanwhile, Quo Vadis said it remained buyers of Lovesac (LOVE) ahead of the report.

    Analyst John Zolidis: "LOVE has compiled an enviable track record of seven consecutive quarters of impressive upside to consensus estimates. But the past doesn't matter as investors have sent the shares to 52-week lows and contracted the valuation to the lowest level since LOVE went public. We attribute the weakness in the stock to four factors. Investors believe LOVE was a pandemic demand pull-forward beneficiary and that growth will slow as this is digested. Second, the company is seen as a housing derivative and the market anticipates housing to roll-over with higher interest rates. Third, LOVE is getting hit with higher container costs and this could persist longer than what was factored into guidance. Lastly, we hear that credit card data has been weak. Unlike many retailers, LOVE has already provided a 2022 outlook… Longer-term, we believe the company will continue to innovate and grow and see structural upside to margins."

    Seeking Alpha Marketplace Gary Alexander pitched the bull case on Lovesac early in the month.

    I kike these guys.  $46 is $670M and they made $15M last year but it was their first profitable year, despite the pandemic.  Still facing supply issues but great growth so, for the Earnings Portfolio – Let's sell 10 of the LOVE Dec (as far as they go) $45 puts for $11.50 ($11,500), which is net $33.50 and see how it goes.   


  9. TSLA up crazy on the stock split news:

    Oil going the other way but not /NG:

        

    Morgan Stanley’s equity research team put out an early market note that stated: "The Fed is committed to getting inflation under control even if it comes at the expense of growth. The questions for equity investors at this point is whether they believe the Fed will actually tighten this much and/or whether the economy can handle it? Near inversion of the yield curve suggests the bond market is taking the Fed at its word but it will be a challenge to orchestrate a soft landing."

    It further added: “We are downgrading Financials to Neutral on the back of our analysts downgrading banks to In-Line. Given our more late cycle view and forecast for a full inversion of the yield curve in 2Q, Financials will have a hard time outperforming.”

    Beyond Meat (BYND) also showed midday weakness, falling 4% on a downgrade from Piper Sandler. The firm cut its rating on the maker of plant-based meat substitutes to Underweight from Neutral.

    In taking a bearish stance on the stock, Piper Sandler pointed to increasing competition and worry that a highly publicized deal with McDonald's might have limited upside. "Given its lack of Beyond branding, there is also the risk MCD takes production in-house at the end of its 3-year contract with Beyond," the firm said.

    So 3 years from now, they are pre-worrying about the contract BYND just signed with MCD?  Just can't please some people….

    BTC-USD +6.40%Mar. 28, 2022 12:27 PM ET4 Comments

    Bitcoin (BTC-USD) exchange traded funds and related blockchain ETFs popped on Monday, bolstered by a rally in the underlying crypto asset, which showed a performance of +6% in intraday action.

     

    • March 15th, 2022 at 1:21 pm | (Unlocked) | Permalink
    •  
    • COIN – They are crashing out and we're pretty aggressive too.  We rolled down last time so not good.  I think they are way oversold here.  $153 is $33.5Bn but they made $3.6Bn last year, so the potential is there and it's a growing sector.  Q4 was great but they are guiding a possible loss for 2022 as sanctions and declines in crypto have dropped their trading volume significantly in Q1.  This is coming at the same time as they are doing a major spend to build an NFT marketplace.  This is very early stage on a future exchange.
    COIN Short Put 2024 19-JAN 200.00 PUT [COIN @ $201.13 $14.42] -5 10/15/2021 (662) $-22,000 $44.00 $15.95 $3.60     $59.95 $-2.15 $-7,975 -36.3% $-29,975
    COIN Long Call 2024 19-JAN 180.00 CALL [COIN @ $201.13 $14.42] 10 2/18/2022 (662) $66,180 $66.18 $9.87     $76.05 $9.78 $9,870 14.9% $76,050

    That is an over $40,000 turnaround in the Future is Now Portfolio since our last review!  Hope it sticks.  


  10. On oil, I'm regretting my overnight Stop-Loss at a $0.40 loss on /CL.  Got stopped out at 111 after opening at 110.60.

     

    Oh well, getting out for a small loss could be a lot worse but missing out on the downside today has a bit of sting too it!


  11. Oil/JPH – They do that a lot – flush the stops before a big move – very crooked contracts.


  12. So it's worth taking a look at the Future is Once Again Now Portfolio as we had a huge set-back but, rather than panic, we just made our minor adjustments and kept the faith and now we're back to $245,767 from $159,982 on March 15th – a very nice $85,785 (53.6%) gain in two weeks!  I know it's hard to grin and bear it but we went over each position and decided there wasn't anything wrong with them but we spent about 15% of our CASH!!! to make small adjustments and now we are in great shape again.

    Here's 3/15's Review:

    The Future Is Not Yet Portfolio Review:  $159,982 is up just under 60% but so disappointing as we were up over 100% and then everyone turned against speculative stocks.  We only lost about $3,000 since the last review (2/17) so stabilizing a bit and we still have $110,800 in CASH!!!, which is 2/3 of the portfolio's value, so I'm not terribly worried.  I want to stick with these to see if we're right about the trends over time but, if this is money you can't afford to lose – I think the risk is too great in the current conditions.  Remember, this portfolio was a $100,000 gamble pot out of $1.2M in portfolios – it was always our riskiest set.

    • NAK – $200 better than last month.  
    • RWLK – Earnings did not help but, when you are this small, just a couple orders shipped one day and not another can throw you off.  The lose 0.06 per share vs 0.04 expected – not a catastrophe and revenues are growing.  I'd like to buy more but $1 would take us down to $1.45 avg and cost us $20,000 so let's instead sell 200 of the Oct $1 puts for 0.45 so, if we're assigned, it's adding 20,000 more for net 0.55 ($11,000) and, if we're not assigned, we still knock our $1.89 basis down to $1.44.

    • BIIB – Just added these.

    • COIN – They are crashing out and we're pretty aggressive too.  We rolled down last time so not good.  I think they are way oversold here.  $153 is $33.5Bn but they made $3.6Bn last year, so the potential is there and it's a growing sector.  Q4 was great but they are guiding a possible loss for 2022 as sanctions and declines in crypto have dropped their trading volume significantly in Q1.  This is coming at the same time as they are doing a major spend to build an NFT marketplace.  This is very early stage on a future exchange.

    • COWN – This is old-school financial and also not doing well but just down with everything else.  I don't think they'll come back by June but it's dead so I don't want to put more in – we'll just roll the short puts.

    • CRSP – How can this not be the future?  Gene editing!    If the above stocks weren't so likely to need money, I'd add some here.

    DAL – We keep getting notes that the airlines are doing well but it's not reflected here yet.   It's net $1,475 on the $30,000 spread – I say we double down.

    • ERJ – We got into them because they are building flying taxis but they are also a defense contractor so bonus!  Still good for a new trade.   They had a nice beat in Q4 but guidance was flat so people sold them off last week but those people are silly.   Let's roll the 2024 $15 calls to the 2024 $10 calls for $2.50 and buy back the short 2024 $20 calls.  

    • F – We are still in the money despite the 40% pullback.  

    • FF – Last month, we added FF to the Dividend Portfolio and they popped 20% since so nice start there and we love them long-term.  

    GPRO - Let's buy back the short 2024 $12 calls and double down on the 2024 $7 calls.  At $7.50 we're down to $1Bn, which is below 1x Sales and only 5x earnings – ridiculous!  

    • IGT – You can't tell me gaming/sports betting is a bad idea?  Terrible chart but I love this trade.  They are buying their own shares for the first time ever.

    • RKT – The strikes changed as they just paid a special $1.01 dividend – almost 10%.  That's why the stock dropped.  We're already aggressive and again, if the rest of the portfolio were doing better – I'd press this one.

    • SPWR – My baby!  Recovering from a bad start today is a good sign after a week of gains.    We're very aggressive here.

    • THO – Disappointing so far but we just looked at them and there's nothing here we don't like.

    • WTRH – Well, I guess we'll buy back the 100 short 2024 $3 calls at 0.08 – in case we want to sell calls in the future.  Also the Jan $4 calls and there's nothing to be done about the short puts until 2025s come out.  

    And here's how we stand today:

    Here's what I said the month before:

     

     

    Future is Not Yet Portfolio Update:  It used to be called the Future is Now Portfolio but we're down to $162,982 and that's close to $100,000 off our highs as these stocks, more than any others, have suffered from the market pullback.  We were at $202,419 on Jan 20th so down $39,437 for the month and while up 63% is pretty good for 2 years (12/12/19) – it's just not worth it if you can't even beat the Dividend Portfolio.  

    Most of the loss is coming from COIN.  In fact, all of the month's losses are from COIN  and I still like COIN so tricky.  THO has been a big disappointment too and I still like them so I guess we'll ride it out but very, very disappointed that we didn't take 150% and run when we had the chance.  Greed kills.   Actually, not sticking with value stocks is what killed us here so lesson learned – stick with what I believe in!  

    We cashed out CIEN to raise money and rolled COIN from 10 2024 $250 calls to 10 2024 $180 calls for net $21.65 ($21,650).  

    That's all it is.  As long as nothing has actually changed the VALUE of the stock – then take advantage of the PRICE changes when they happen.


  13. Oh, the short RWLK puts never filled. 


  14. VIX is so not worried about War, Covid, Recession, Inflation, Climate Change, Rate Increases or Will Smith:

    A Somebody Else's Problem Field is something we can't see, or don't see, or our brain doesn't let us see, because we think that it's somebody else's problem. That’s what SEP means. Somebody Else’s Problem. The brain just edits it out, it's like a blind spot. – Douglas Adams 


  15. Small table bang for RWLK – which I think is a very exciting little company:

    ReWalk Robotics is an Israeli microcap med-tech company whose products are used to give certain patients who have suffered spinal cord injury the opportunity to walk, with the robotic assistance of an exoskeleton. In 2014 the ReWalk system became the first FDA approved exoskeleton for personal use at home (as opposed to within a healthcare delivery context). The company also offers robotic technology providing enhanced rehabilitation solutions for use in clinical settings, its own devices that is a soft fabric exosuit known as the ReStore, as well as third-party products for which it has the distribution rights. The overall industry is a small niche sector, and ReWalk competes primarily with Ekso Bionics (EKSO) in the rehab space, and a small division within industrial conglomerate Parker Hannifin (PH) that designed the Indego exoskeleton, which like ReWalk is also approved for home use.

    To date, the technologies have been unable to gain wide-spread traction among health insurers as superior alternatives to wheelchairs, at least in the United States, however ReWalk has been approved for qualified coverage of American veterans, and has gained considerable ground in more recent years in becoming a covered cost for patients in Germany. Heading deeper into 2022, however, there are multiple good opportunities that are independent of each other, and the impact of any one of them of going in ReWalk's favor should have a material positive impact on the company's equity, so it is far from necessary for all of them to happen to make a compelling possibility.

    You can still sell the Oct $1 puts for -.30, which is net 0.70 so, if you are willing to put in $7,000 for 10,000 shares, you can sell 100 of the Oct $1 puts for $3,000 and wait and see if you get assigned or you just get to keep the $3,000.


  16. something is not right with $VIX at  19.84    

    Come on people, wake up