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BNN Money Talk Portfolio Review

I love the Money Talk Portfolio!  

It's a real test of skill since we can only do adjustments on show days and tonight I'll be on Money Talk (Bloomberg, Canada) at 7pm for the first time since Feb 16th.  At that time, we were up 140.9% at $240,926 and we had gotten very defensive, moving to 2/3 CASH!!! ahead of the coming correction – which we felt was long overdue.  The S&P was around 4,400 at the time and is now 7.3% lower, at 4,076, and our portfolio is down 7% at $223,779

This is exceptionally good as our newest trade, LABU (Biotech ETF) was a huge mistake at the time and we're down $16,630 on that which means there is nothing wrong at all with the rest of our positions and just the one that needs to be fixed.  We still have $145,344 (65%) in CASH!!! – and it should be a good time to deploy some as there are real bargains out there.  

In the MTP, we seek to find "bullet-proof" positions that we won't need to adjust from month to month as we only get one random day each quarter to make our changes.  Though LABU was a bit of a risk, it's a generally conservative portfolio but we felt we could afford a risk as we were up 140% at the beginning of year 3.  

The market is still a bit iffy – so we're not going too crazy but there are some compelling moves to make.  

  • BYD – 20% off the top is not bad and still good for a new trade at net $8,362 on the $40,000 spread so we have $31,638 (378%) of upside potential if BYD can get to $75 but 8 months is too much pressure so let's buy 12 more by rolling 20 2023 $55 calls at $8.85 ($17,700) to 30 2023 $45 ($17.50)/65 ($8.50) bull call spreads at $9 ($27,000).  Now it's a $60,000 spread with a lower target and it cost us $9,300 to make the roll so in for net $17,662 overall and a $42,338 upside potential.  No more short call sales until we resolve the short Jan $75s, of course.

  • GOLD – A great inflation hedge but not acting like it lately.  Fortunately, we are deep in the money and I'm comfortable with our targets on this $30,000 spread that is currently at net $8,438 so we have $21,562 (255%) of upside potential on this one.  

  • HPQ – Blew past our goal and no pullback – winner!  It's a $20,000 spread at net $11,690 so $8,310 (71%) upside potential if they hold $35 which may sound a bit dull but you make that in January (8 months) so about 9% a month should keep you ahead of inflation, right?  

  • IBM is our PSW 2022 Trade of the Year and it's here, in all it's glory at net $17,275 on the $30,000 spread that's deep in the money but still has $12,725 (73.6%) left to gain and we started at net $2,600 – so we're already up $14,675 (564%) – mission accomplished and then some!  

By the way, that is our return on a trade that we played simply not to go lower than it was at Thanksgiving.  You don't have to swing for the fences or chase high-flying momentum stocks to engineer fantastic returns using these very simple option strategies – that is what PSW is all about teaching our Members!  

  • INTC – Intel did not make our Stock of the Year because this is not destined to be their year but next year should be.  This trade is still about where we started at net $4,222 and it's a $30,000 spread so we have $25,778 (610%) of upside potential – but it's going to be a bumpy ride.  

  • LABU – Our newest and worst-performing position.  I didn't think Biotechs would drop further but they went down with the market anyway and there are tremendous bargains in the space – most notably MRNA as $142.28.  While it would be tempting to flip to a play concentrating on that stock – I don't want us over-committed on short puts.  Our best bet is to adjust this position but we need to be realistic about the prospects.  If Biotech bounces back 50%, LABU will go up 150% from $6.67 to $16.675 – so that should be our target.  We can roll the 15 2024 $20 puts at $14.70 ($22,050) to 30 of the 2024 $10 puts at $6 ($18,000) for net $4,050.  The obligation remains the same net $30,000 if we are assigned and we're using $4,050 of the $15,960 we originally collected so now we have a net $11,910 credit remaining or $3.97 per contract so our net entry would be $6.03 – that's a nice fix!  
  • We can also take advantage of the dip by rolling the 30 2024 $10 calls at $6.67 ($8,400) to 60 of the 2024 $5 calls at $4 ($24,000) and we'll sell 30 of the 2024 $10 calls for $3 ($9,000) to help pay for it.  That adjustment then costs us net $6,600 in addition to the $4,050 we've spent on the puts and we began with a net $145 credit originally so now we are in the spread for net $10,505 and we have 60 2024 $5 calls, 30 of which can make $5 at $10 ($15,000) and 30 of which can make $10 at $15 ($30,000), which we feel is a reasonable target.  We can make more but let's count on $40,000 less our $10,505 outlay and call this $29,495 (280%) of upside potential.  

While it would have been nice if LABU had popped higher right on the button in February, our options spread left us flexible enough to simply put in some money (we had not put in any yet – just margin) with no additional margin and now we have a bit less upside potential (was $40,550) but a much lower target price ($15) to be successful.  

  • MO – Another one that didn't go down much during the sell-off and we're well over our goal so just sitting back waiting to collect the full $15,000 on what is currently a net $9,760 spread so $5,240 (53.6%) upside potential if MO simply holds $50.

  • PARA (was VIAC) – We got off to a slow start but just yesterday, Warren Buffett announced he would join us with a 20% stake in the company so I think we'll be good.  It's a $60,000 spread and currently net $20,050 so that's $39,950 (199%) upside potential if they can make it to $40 in 18 months.  

  • SPWR – Like LABU, SPWR was underperforming and we gave it some love, taking a very aggressive stance last quarter.  It did pop 50% but now it's back in the same spot as the tarriff review process (for all solar, not just SPWR) continues to make a mess of the buisness.  I still have faith and I expect them to be right back on track to $25, where we'll sell some calls but $30 seems very fair as that should be $6Bn in market cap or 50x next year's anticipated $120M in profits for a company in a huge growth cycle.  That would put our $15 calls $15 in the money for $52,500 and currently we're at net $9,912 so it's $42,588 (429%) of upside potential and even more if we ever get a chance to sell short calls and reduce our cost basis.  Who's with me?  Warren???

  • WBA – I'm a little pissed off that they are selling Boots but how can I stay mad at a company that's making $4.3Bn against a $38Bn valuation?  They have $12Bn in net debt and the cash should knock down half of that and still leave them with over $2Bn to spend on their planned "Health and Wellness" upgrades to 9,000 US stores ($222,000 per store).  Net $5,498 is about where we came in on the $18,750 spread and we still have $13,252 (241%) upside potential at $52.50, which I think is very reasonable.  

So we have 10 existing positions using $87,735 in cash and $217,250 of ordinary margin (much less if portfolio margin, depending on your broker) and they have $241,238 of upside potential over the next 20 months.  Will every one of them hit their goals?  Probably not, but there's no targets we aren't comfortable with so we just have to hope the market does find a nice bottom around the 4,000 mark on the S&P 500 – though we think an addition dip to 3,600 could easily happen in between.  

That would be just another opportunity to improve our positions!  

Speaking of positions, on Monday, we discussed how ridiculously cheap Foot Locker (FL) is.  I'm not going to rehash why I like it here.  I'm tempted to take the stock position as it still returns 118% with the help of our option augmentations but why lay out the cash when we don't have to?  We're going to go with the following spread:

  • Sell 10 FL 2024 $30 puts for $8 ($8,000) 
  • Buy 25 FL 2024 $25 calls for $9 ($22,500)
  • Sell 20 FL 2024 $40 calls for $3.75 ($7,500) 

That puts us into the $37,500 spread for net $13,000 and it's my intention to make that up by selling 5-10 short calls per quarter along the way.  For example the Aug $35 calls are $1.85 so we could collect $1,850 selling 10 of those but, since it's just ahead of earnings and we feel the market is underestimating FL – we'll take a chance and wait for the results first.  We have 613 days so sell so 6 sales like that would put $11,100 back in our pockets and blow the doors off the dividends. Upside potential as it stands now is $24,500 (188%).

We will see how the prices hold up, FL did pop yesterday but it's dropping back this morning – we'll have to wait for the market to open to price them out properly.  

SOFI is a New Age Finance Company, offering Student and other loans to a younger crowd.  They are mostly on-line but have 3 branches in California.  Ordinarily, I would not pick a pre-profit company for the Money Talk Portfolio but SOFI has been trashed over a major misconception about how they will be affected by Biden's proposed Student Loan Forgiveness.  The average loan Sofi has with a student is $70,000.  If $10,000 is forgiven – for one thing SOFI gets the money – it's not a loss!   For another thing that still leaves $60,000 (85%) of debt to be repaid yet the market is pricing it like that whole business line is gone.  They JUST got chartered as a National Bank – that would not have happened if they were on the verge of bankruptcy.  They just INCREASED their guidance for 2022, expecting to make $105M this year on $1.5Bn in revenues.  That puts them at 65x earnings at $7.05 ($6.5Bn i market cap) but revenues are up 50% from last year and getting their charter gives them access to the Fed and cheaper money to lend out so more profits going forward and FDIC backing to help attract new clients.  I love them!  

Let's add the following options spread:

  • Sell 10 SOFI 2024 $10 puts for $5 ($5,000) 
  • Buy 40 SOFI 2024 $7.50 calls for $2.70 ($10,800) 
  • Sell 40 SOFI 2024 $12.50 calls for $1.65 ($6,600) 

That gives us a net $800 credit on the $20,000 spread and the spread is out of the money but we're speculating at this stage so, like LABU above, we can fix it if we're wrong and, if we're right, we should easily get to $12.50 in 18 months.  Upside potential here is $20,800 if all goes well.  

And just like that we added another $45,300 in potential gains to a $223,779 portfolio – so about 20% over the next couple of years.  If we do that once per quarter, we can continue to do quite well for ourselves – without taking any crazy risks.  We are simply following our core strategy – as summed up in this PSW Training Video:

 


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  1. Good Morning!

    Note that the BYD spread is 2023, not 2024. We don't have 18 months…


  2. Good Morning.


  3. Good morning!  

    BYD/Rn – Thanks.  I guess we'll have to buy 12 months then…

    FL dove but recovered half.


  4. BYD adjusted above now reads:

    • BYD – 20% off the top is not bad and still good for a new trade at net $8,362 on the $40,000 spread so we have $31,638 (378%) of upside potential if BYD can get to $75 but 8 months is too much pressure so let's buy 12 more by rolling 20 2023 $55 calls at $8.85 ($17,700) to 30 2023 $45 ($17.50)/65 ($8.50) bull call spreads at $9 ($27,000).  Now it's a $60,000 spread with a lower target and it cost us $9,300 to make the roll so in for net $17,662 overall and a $42,338 upside potential.  No more short call sales until we resolve the short Jan $75s, of course.

    I don't think we need to buy the short calls back and, if we do, it's an affordable mistake as we'd be 100% in the money on the main spread.  


  5. Yikes, big reversal this morning:

    Indexes fell in early trading, following signs that rising costs were weighing on some companies’ profits, putting Wall Street on course to extend the year’s volatility.7 min ago 3 min read

    TGT confirmed WMT's crappy outlook:

    The retailer posted profit that trailed Wall Street forecasts as shoppers bought fewer TVs and kitchen items. 3 min read


  6. That's a fun BYD adjustment. So our final position is 30 2024 $45-$65 BCS, 20 2023 short $75 calls, and 10 2023 $50 puts? 

    Why not also roll the puts to 2024, and buy back the $75 2023 calls as well? Seems a simpler position to manage then. So we end up with 30 2024 $45-$65 BCS, and 10 short $2024 $55 puts? The 2023 $50 puts and short $75 calls together are ~10K, as are 10 $55 2024 puts. And we can continue selling short calls as needed?


  7. Looking for opportunities for a BOIL and UCO downtrend after Memorial Day…


  8. now the oil report is  out phil lol


  9. What do you  think of the 1/2023 TZA 30/50 BCS (trading at 40+ now) for $6? Could sell some 30 puts for $4.75.  Additional hedge.  


  10. Wow, a draw despite the SPR release:

    CL1:COM -0.54%May 18, 2022 10:30 AM ET16 Comments

        

    I would not bet against /CL based on that report.  

    May 18, 2022 10:33 AM ET

    • The April reading of the Global Supply Chain Pressure Index ("GSCPI") worsened due to issues in China and the euro area and increased backlogs in the U.K., the New York Fed's Liberty Street Economics unit said Wednesday.
    • The GSCPI estimate increased to 3.29 in April from 2.80 in March (revised from 2.82). As recently as December, the index stood at 4.45. The higher the number the higher the pressure is on global supply chains.
    • The index is especially salient since supply chain disruptions have contributed to inflationary pressures. That's a key reason for the Federal Reserve to raise interest rates in an effort to constrain demand and allow supply chains and production to catch up.
    • The economists at the NY Fed see the potential for heightened geopolitical tensions stoking supply chain pressures in the near term.
    • A relatively new gauge, the GSCPI will be published on the fourth day of each month at 10:00 AM ET.
    • Previously (March 3), Global supply chain pressure index eased in February but stays elevated
    • Earlier this month, Fed Governor Chris Waller said it would be "great" if supply chain issues get resolved, but he's not counting on it.

    This is fun:

    GOOG -1.60%May 18, 2022 10:42 AM ET1 Comment

    Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Russian subsidiary intends to file bankruptcy after Russian officials took control of its bank account, leaving the tech company unable to perform its operations, a company spokesperson said on Wednesday.

    The news, first reported by Reuters, adds to the issues that Google (GOOG) (GOOGL) has had with Russia since it invaded Ukraine earlier this year.

    "The Russian authorities seizure of Google Russia's bank account has made it untenable for our Russia office to function, including employing and paying Russia-based employees, paying suppliers and vendors, and meeting other financial obligations," the spokesperson told the news outlet, adding that, "Google Russia has published a notice of its intention to file for bankruptcy."

    In March, Google (GOOG) (GOOGLpaused advertising on websites, apps or YouTube channels that exploited, dismissed or allowed Russia's invasion of Ukraine.

    Separately that month, Russian media regulator Roskomnadzor, warned Google-owned YouTube to stop running "anti-Russian" ads and "spreading threats" against its citizens.

    Russia has also recently said that Google (GOOG) (GOOGL) and Meta Platforms (FB) should be held accountable for "inciting war."

    And late last year, Russia fined Google (GOOG) (GOOGL) with a 7.2 billion rouble charge for failing to delete illegal content.

    I wouldn't mess with GOOGL – Putin is going to have to go five pages deep to find himself now….


  11. TZA/Nom – If you are going to get back $20 for $6 – that's great – especially when you're buying in the money so either your longs improve or you get paid.  Short puts are dangerous on ultra ETFs as there is a decay factor.  2023 not so bad but 2024 terrible.  Better to find a long you REALLY want to own and sell puts against that.  


  12. Giving it all back and back below 4,000:

       


  13. apple under 144


  14. AAPL 138 breaks and its a black hole


  15. anyone have a guess as to what triggered this? the retail margins problem?




  16. Opinion | Samuel Alito: One Angry Man


  17. SpaceX Employees Offer to Sell Shares at $125 Billion Valuation



  18. Tesla got booted off S&P's ESG index. And they added Valero, Philips 66, Marathon Oil… Lol. 


  19. Trigger/Tommy – Delayed reaction to Powell being firm on inflation followed by data that inflation is a major issue at retailers and not going away.  We talked about this early in the earnings cycle but people need to be hit in the face, I guess.  WMT/TGT illustrate we are early in the earnings cycle as they are currently being hit by costs and wages that they have not yet passed on.  

    Boom Phase of the Economic Cycle | Brenton Point

    We're still in early innings as some companies have been able to quickly raise prices but that then robs spending money from other companies who haven't but, eventually, everyone raises prices an things even out and wages rise too and things get back to "normal" albeit at higher prices.  That's what happens all the time – that's why I used to pay 0.06 for M&Ms and now I pay $2 – you just don't really notice it over 50 years except once in a while when we hyper-inflate and specific things stick out for a bit (like Hotels, Rents, Airfares…) but the good thing about capitalism is things tend to find their place again in short order.  

    Been a while since we were excited about buying AAPL but $2.4Tn isn't the magic number with $100Bn in earnings (24x) – they are growing maybe 5% at the moment but keep in mind 5% is $20Bn in sales and $5Bn in profit – that's a whole other company for most.  20x would be about $130 and you know people would freak out about that level.  

    We have $1M cash in the Butterfly Portfolio and this is our AAPL position:

    AAPL Short Call 2023 20-JAN 150.00 CALL [AAPL @ $142.84 $-6.41] -160 1/21/2021 (247) $-360,000 $22.50 $-9.20 $-70.81     $13.30 $-2.90 $147,200 40.9% $-212,800
    AAPL Short Put 2023 20-JAN 125.00 PUT [AAPL @ $142.84 $-6.41] -40 9/20/2021 (247) $-42,000 $10.50 $-2.05     $8.45 $2.00 $8,200 19.5% $-33,800
    AAPL Short Put 2024 19-JAN 120.00 PUT [AAPL @ $142.84 $-6.41] -20 10/15/2021 (611) $-25,500 $12.75 $-1.03     $11.73 $1.78 $2,050 8.0% $-23,450
    AAPL Short Call 2022 17-JUN 180.00 CALL [AAPL @ $142.84 $-6.41] -40 3/24/2022 (30) $-21,400 $5.35 $-5.26     $0.10 $-0.03 $21,020 98.2% $-380
    AAPL Long Call 2024 19-JAN 130.00 CALL [AAPL @ $142.84 $-6.41] 160 3/24/2022 (611) $895,200 $55.95 $-22.95     $33.00 $-4.40 $-367,200 -41.0% $528,000

    We were comfortable selling $120 and $125 puts – that's below 20x.  Thanks goodness we did our job last month and sold the short June $180s.  So that's money in the bank and the 2024 $120s are $39.50 so the roll is $6.50 at the moment but, if it comes down to $5, that's $80,000 we're going to have to spend to roll lower.

    ESG/Rn – All refiners, that's ironic.  


  20. No webinar today?


  21. Sorry, no Webinar today as I have to do 30 minutes at 5pm on TV and my voice is iffy as it is.

    VIX popped back to 30 as we drop 1,000 points.

       


  22. Phil someone on CNBC mentioned BGS, killer divi. 


  23. Phil / SWK – the 130 / 150 BCS is taking a hit. ( think this is in the portfolio)…. still positive on this?  or should this be rolled?


  24. Speaking of our Butterfly Portfolio:

    Butterfly Portfolio Review:  $1,227,904 is up 514% and that would be great except we were up 651% at the 4/12 Review ($1,501,992) so a massive $274,088 but, to be fair, $56,205 is from today alone.  Kind of puts those STP hedges into perspective as you can see how we'll be using up those gains pretty quickly in our bullish portfolios.  

    On the whole, we're suffering from positions that would have been silly to protect like DIS and AAPL, which dropped over $100,000 on it's own.  Hopefully it's just a down cycle that we'll simply ride out but it doesn't feel like it this afternoon:

    • AAPL – As noted above, we're waiting to roll the $130 calls to the $120 calls for $5 or less and the $120 calls to the $110 calls for $5 or less and each roll will cost $80,000.  Though it's very doubtful they get hit, we may as well free up the spot and buy back the 40 June $180 calls for 0.10 as they have nothing left to give us already.  I'm certainly not worried about the short $120 puts so really not a big deal at all – just a shame our net fluctuated down so hard.  
    • By the way, we sold the 2023 $150s – the 2024 $130s are $33 – $20 more and that $20 would pay for us to roll the 2024 $130 calls at $33 to the $100s at $52.50 and we'd have a much lower $30 spread that's 100% in the money – even if AAPL dropped another 10%.  So you can see why I'm not at all worried.    Either way it's a $480,000 spread at net $260,850 so $189,150 left to gain and we just pocketed $21,400 on a 2-month short call sale with 18 months left to sell.  

    • AMZN – I remember saying I'd be damned if I would buy back that short May caller.  All good now.  Too low to sell another one at the moment.  Remember, we don't like AMZN, the long position is simply a backstop to allow us to sell short calls.  HOWEVER, now it's an impractical back-stop so we have to move it.  Even at $2,166, AMZN is still $1.17Tn and they made $33Bn last year so not terrible but this year they will be lucky to make $8Bn and SUPPOSEDLY, back to $27Bn in 2023 but that's still 43x – hence the call selling we've been doing.  
    • No sense in calling it a roll, this is a new play but we'll keep the long Jan $3,300s and hopefully we can do better than $50 on a bounce.  Let's buy 6 of the 2024 $2,500 ($310)/2,900 ($195) bull calls spreads for $115 ($69,000) and we'll sell 2 of the July $2,500 calls for $40.70 ($8,140) using 58 of our 765 days.  

    • DIS – We were bullish on them and now we're paying for it.  Unlike AMZN, $105 on DIS is $198Bn and DIS makes $10Bn normally ($7.5Bn this year) so that's 20x.  They are a bit low in the channel so I still don't want to sell calls and the $110s are $18.28 and the $100s are $23, so that's less than $5 and we do that roll for $25,000.  

    • F – Very surprising drop in F.  $12.82 is back to $54Bn and F makes $8Bn a year so this is just stupid down around 6x earnings.  The 2024 $10s are $4.40 so we roll the 2024 $15s for $2.12 ($21,200) and we roll the 2023 $10s for 0.65 ($4,875) and then we have 175 2024 $10s and we'll see what happens.  This is what the cash is for, people!  

    • GNW – Holding up well considering.  Let's buy back the short $5 calls as they make me nervous.  

    • GOLD – Gave back all the spring gains.  No new call sales at this price so we wait.  

    • IMAX – Had nice earnings but then dropped anyway. We are aggressively long as IMAX is under $1Bn at $15.80 and they should get back to making $50M next year (20x) so we'll just wait for that to happen if we have to.  

    • KO – Doing great until today.  We sold the $65 calls so that's fine with us.  

    • MJ – Waiting for Congress to pass a banking bill.

    • UL – $44 is $117Bn and they make $6.5Bn so below 20x is too low so we wait.  

    • WBA – We were doing good for a while, not so much now.  Notice how much better the covered play is performing in the MTP.  The $30s are $12 so no roll.  The $35s are $8.80 so that would work but either they bounce and we don't need to roll or they go lower and we just roll to the $30s so why bother with the in-between step?  In a few months, 2025s will be out anyway.  

    • WHR – Another one we got aggressive on.  Not working so far but they had great earnings and $172 is $10.5Bn and they make $1.4Bn so, again, STUPIDLY CHEAP!  That means we HAVE to roll the 30 2024 $190s at $23.85 to the $170s at $32.50.  

    It's going to be another bad month if we start making new lows…


  25. BGS/Kustomz – I don't know them well enough to understand how they'll do in this environment.  Looks like $22.75 is $1.65Bn and they do about $2.15Bn in sales and made $67M so not terribly exciting but they project $114M this year, which is more reasonable.  It's the drop in the stock that made the dividend seem higher – not anything that's going well for the company.  Unless you can get a good handle on how they are handling inflation – be very careful with them – they are still miles above where they fell to in 2020.

    SWK/Batman – Can't really say in isolation so we'll have to wait for a proper review.  It depends how much firepower we have and what else needs attending to.  Note in the Butterfly above, the first thing I did was put $160,000 aside for AAPL so I could plan the rest of my spending.  SWK is at $116.30, which is $18.5Bn and they are rock-solid for $1.5Bn so SILLY pricing means we automatically roll the long calls lower whenever we can roll $10 for $5 – so that's 99% likely what we'll decide.

    They are still $30 over their 2020 low but, unlike BGS – they didn't drift into it – it was a V-shaped shock we would throw out and say $140-160 seems more likely to be a proper bottom so this too is panic that is likely to reverse – so we take advantage while we can.



  26. Cisco almost down to 41 post market… still projecting about $3.3 for the year. 


  27. A third of US should be considering masks, officials say




  28. Wow, right back to the bottom.  

       

    Failing Thursday – Indexes Fail to Find Support as Crypto Crashes

    3,840.

    That's the overshoot on the S&P 500 (/ES) Futures now that 4,000 has failed.  There's nothing wrong with testing it but the fact that 4,000 offered us little (or no) support is concerning, as we had hoped 4,000 might prove out as the middle of the range on the S&P but, without that, we would have to consider 4,000 to be the top of a range we have yet to explore, that bottoms out at 3,200 – 20% below the 4,000 line.  

    I find it very concerning that volume didn't spike as we crossed 4,000, which indicates there are no bullish buying programs that were triggered at that support – that's what gives you support.  If we consider a simpler approach for Money Managers who aren't cognizant of our 5% Rule™, they would likely be looking for a 20% correction from 4,800, which is our 3,840 line so THAT is where we'd BETTER find support or we will be praying 3,200 holds!

    The Nasdaq 100 (NDX) is 30% off its high of 16,500 at 11,550 but I'd call 11,500 that support line and the Nasdaq topped out a bit higher than 16,500 – but it as an overshoot so we're ignoring it.  We hoped yesterday would be enough and we cashed out a couple of our hedges (partially) but we'll have to put them right back on into the weekend if there's no sign of a bottom here.

     

    We're a little brave because I'm seeing a lot of stocks that are getting interesting at this point (see yesterday's list) and, whether they sell off further or not, they are still worth buying at this point.  As I said at the start of the week, we are suffering from a lack of catalysts to turn the market around and, sheeple that they are, the TV pundits have suddenly gone negative so now it's non-stop doom and gloom in the Financial Media.  With Bitcoin at $28,000, there's a lot of focus on that and what it means but PSW Members know it means NOTHING! because it's a meaningless made-up currency – just another meme that's blowing up but nothing that reflects on the actual markets.

    I don't have any good news for you:  There's still a War, there's still Inflation, there's still Supply Chain disruptions, there's still Global Warming, Crumbling Infrastructure, Labor Shortages, Covid, Rising Interest Rates and an Election, which did not used to be something to be feared but the last one almost ended in the overthrow of the US Government – so I'd have to say we should at least use caution as we get closer to November. 

    On the other hand, what could be worse?  At this point aliens would have to invade and, even then, it would only cut us a little short of when we were going to destroy the planet ourselves, anyway.  So I'm looking at earnings in that context and we have to respect the companies who can deal with ALL THIS and still make money.  Imagine what they could do without the chains of Marley around their necks!

    So BitCoin is trash, TSLA is overvalued BS, as are many, many over-hyped stocks but AAPL, who sold off 5% yesterday, makes $100,000,000,000 per year so $2.5Tn is not such a crazy valuation for them at $146.50.  Historically, AAPL has been undervalued at 15x earnings so they could potentially fall 40% in a real panic, which is why we haven't been adding them yet.  Our Stock of the Year, IBM, on the other hand is still at $130 despite the sell-off that hit everything else and that's because $130 is $116Bn in market cap and IBM makes $9Bn a year so it's trading at just 13x earnings.   We knew it was going to be a rough year, so our Stock of the Year had to be rock-solid and our Trade of the Year didn't rely on IBM going up – simply not going down (from $120) will pay us in full.

    This is all very much like the death of the DotCom companies in 2000 – there was plenty of trash in the market but it dragged the good stocks down with them, so there were plenty of bargains to be had against the carnage.  Wells Fargo is downgrading F and GM this morning – as if they will never fix the supply chain and people will stop buying cars.  Whether gas or electic or flying – people will need transportation, right?  TSLA has been given endless amounts of money and it's taken them a decade to build 1M cars worth of manufacturing – F, GM and TM (who I mentioned yesterday) can produce 10M cars a year AND SELL THEM.  Yet TSLA is valued more than all 3 of them.  Just because people are selling TSLA doesn't mean F, GM and TM are bad stocks.

    Logic, unfortunately, will not stop your stocks from going lower but it should stop you from panicking out of perfectly good positions.  We have plenty of hedges to ride out a downturn – all the way to 3,200 on the S&P – let's hope it doesn't come to that….

    All still true!

    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…

    I can't believe that was only last week – seems like a different planet.

    Never even got close to the Weak Bounce line, did we?  

    CSCO/RN – Well that's a buy for me!

    $40 is about $160Bn and they are good for $15Bn a year so let them sell if they want to.

    $10Bn in Cash/Debt too!


  29. For the period ending April 30, Cisco said it earned an adjusted 87 per share on $12.8 billion in revenue. Analysts were expecting the company to earn 86 cents per share on $13.34 billion in sales.

    "We continued to see solid demand for our technologies and our business transformation is progressing well," said Chuck Robbins, chair and CEO of Cisco in a statement. "While Covid lockdowns in China and the war in Ukraine impacted our revenue in the quarter, the fundamental drivers across our business are strong and we remain confident in the long term."

    However, Cisco (CSCO) lowered its full-year earnings per share forecast to be between $3.29 and $3.37 per share, down from a previous outlook of $3.41 to $3.46 per share. Analysts had expected the company to earn $3.44 for the full-year.

    Full-year revenue is expected to grow between 2 and 3%, down from a previous outlook of 5.5% to 6.5% growth.

    Oh, sorry, there are 4.15Bn shares so $3.30 would only be $13.69Bn in earnings with a war, Covid and supply chain issues for $160Bn – who could possibly want that?  


  30. Scary thing is that was all done on no volume.  There are NO BUYERS out there:

    Date Open High Low Close* Adj Close** Volume
    May 18, 2022 403.50 403.80 390.55 391.86 391.86 105,349,989
    May 17, 2022 406.53 408.57 402.58 408.32 408.32 83,029,700
    May 16, 2022 399.98 403.97 397.60 400.09 400.09 78,622,400
    May 13, 2022 396.71 403.18 395.61 401.72 401.72 104,029,300
    May 12, 2022 389.37 395.80 385.15 392.34 392.34 125,090,800
    May 11, 2022 398.07 404.04 391.96 392.75 392.75 142,361,000
    May 10, 2022 404.49 406.08 394.82 399.09 399.09 132,497,200
    May 09, 2022 405.10 406.41 396.50 398.17 398.17 155,586,100
    May 06, 2022 411.10 414.80 405.73 411.34 411.34 151,671,300
    May 05, 2022 424.55 425.00 409.44 413.81 413.81 172,929,100





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  34. US child welfare system is falling short because of persistent child poverty