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Flip Flop Friday – Stocks Cheer Up for no Particular Reason

We hit all our downside goals – so now what?

As you can see from our S&P 500 chart, there's been a lot of damage done since the Death Cross last month but it's only within our predicted range – nothing to shake us out of our overall strategy.  We anticipate the 4,000 line (blue) to evenually settle down as the middle of the range between 3,680 and 4,320, where the S&P should consolidate into July earnings reports and then we'll see how they go.  

That means it's not likey we recover to more than 4,320 and, if I'm right, we'll see upside resistance at 4,000 and very strong resistance at 4,160 (weak bounce).  That will bring the 200-day moving average down to 4,320 around the end of June and the 50-day should then be down at 4,160 and we'll just have to get used to the lower trading range.

These ranges, by the way, are based on VALUATIONS – we just use the chart to illustrate our point.  We only seem like TA geniuses because our valuation models are so good…

To that end, next week we will be putting the rest of our plan into effect as we look to re-distribute about $1M in CASH!!! from our Short-Term Portfolio (which is where we hedge) to our other portfolios, where we will be analyzing and improving our positions.  That's the only reason we didn't cash out compeletly last month – we wanted to ride out the crash to demonstrate how our system holds up through a crash and recovery cycle though, sadly, we don 't forsee too much of a recovery.

For example, our Money Talk Portfolio hasn't been touched since we were on the show on Feb 16th and, at the time, the portfolio was at $240,926 – up 140.9% in two years from a $100,000 start.  We expected a rough quarter ahead so we left ourselves with $145,000 in CASH!!! to get us through the downturn.  Now we have our downturn and the portfolio's net balance is now $187,136 down $53,790 (22.3%) on about a 15% drop in the S&P.  Our options leverage cuts both ways, of course, and we suffer a bit more in a downturn.  Nonetheless, this is the OPPORTUNITY we had hoped for to add positions as well as improve our existing ones:

  • BYD – Good for a new trade.  Not likely we'll adjust this as we have posiitons more in need of fixing than this.

  • GOLD – A great inflation hedge and our position here is sound but we will take advantage of the dip to roll our long Jan $15s out to 2024.

  • HPQ – Still at the top of our range so nothing to adjust.  Net $8,530 on the $20,000 spread still makes a nice trade with about 120% upside potential if HPQ simply holds $35.

  • IBM – Way ove the top of our range but only about $13,000 out of $30,000 potential is good for a new trade, of course.  

  • INTC – Good for a new trade. 

  • LABU – This Biotech ETF has been a disaster and I think, on the whole, I'd rather put the money into MRNA than a basket of Biotechs – so probably that's what we'll do next week. 

  • MO – Still over our target.

  • PARA – Good for a new trade.  I can't believe this thing is still this cheap.  We'll be adding to this since it turns out our other positions don't need much fixing.

  • SPWR – Good for a new trade.  The Government is to blame with their tariff review that is holding everything up in Solar.  Our long calls have not taken much damage and owning 1,000 shares of SPWR at $25,000 is not something that worries us so we'll probably sell 10 more puts and otherwise wait.

  • WBA – Good for a new trade.  I don't like that they are selling off Boots so I'm not adding more but the position is fine.

So a portfolio we haven't touched in 3 months is down 22% but there's really nothing to adjust (other than LABU) – this is just a normal pullback so I guess we'll be adding positions next Wedanesday.  

Have a great weekend, 

- Phil

 


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  1. Good Morning.


  2. Good morning!  

    I fell asleep and just woke up – hard to keep these hours.

    Speaking of which, I'm only around for a bit this morning and then I have to head over to the conference, which is why I'm in Vegas in the first place.

       

    Looks like a nice. bouncy day – if 4,000 holds that's constructive and if we get to 4,160 – I'll be shocked.


  3. This is the conference that Phil is speaking at. Looks like there is a livestream.

    Fintwit Conference Hosted by Benzinga & Lupton Capital | May 13 – May 14, 222


  4. Cool!  I’m on tomorrow at 2pm, PST.  
     

    VIX finally under 30.    
     

    Money Talk Portfolio back over $200,000 already.   


  5. 4,030 is the 2.5% line on ‘ES for the day – that should be tough to cross.  



  6. Phil – How long you in Vegas?  I fly in Sunday evening.


  7. Thinking about adding another hedge.  What are your thoughts?


  8. What conference is it in Vegas?


  9. never mind, randers1 linked to it. COIN from 42 to 70! Shoulda done the weeklies!!


  10. What do you guys think, throw $100 at WLUNA?


  11. JXN – Man, buyers stepped in today.  Hope it lasts as the last few days feel like a shakeout of weak hands.  See how it goes.


  12. GOLD, would you roll Jan 23. 15 calls to Jan 24. 15 or $13s


  13. Ouch, big pullback. 

    Vegas/Prakash – Sunday is when I fly out   

    Hedge/Nom – certainly if you feel vulnerable, don’t take a risk.  You should be able to see where you are most exposed after the last few days.  

    COIN/BDC – Just happy to be down less at this point.   

    JXN/Jeddah – Hopefully just getting started. I really don’t get why they are so low.   
     

    GOLD/Millard – I think if you were getting that extra two dollars for less than one dollar then why not?


  14. Looks like BA cost the Dow 100 points. 


  15. CL hitting resistance at $110?


  16. SDOG don't care about no market downturn. IDOG is for those that think the dollar is done rising.


  17. The US Can’t Make Enough Fuel and There’s No Fix in Sight




  18. Boots Suitors Get More Time to Bid for £7 Billion Pharmacy Chain





  19. BA closed up


  20. Looks like there is nothing but bad news with BA for a while. 


  21. BA was so silly.   It was a people work issue and people dumped the stock like they were going bankrupt.   Seeing buyers jump right in is a good sign that people are looking for bargains again.  

     

    Have a great weekend everyone. I will do my best to be on time Monday, my flight arrives at 6 AM. Most likely I will be a wreck unless I miraculously sleep on the plane and have no delays.

    - Phil