Terrific Tuesday – Monday’s Oil Shorts Make Money!

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Monks Roller Coaster Large2 - Trent MundayWheeee!  

That was fun yesterday, where, in the Morning Report, I said: 

Russian Crude currently trades at $50 and Putin has threatened to unilaterally cut production if the caps are enforced but first Brent Crude, now $87.50, would have to be back over $100 and that’s not very likely so it’s all a lot of hot air and is no reason for WTIC (/CL) to be at $82.50 this morning.  Still, it’s a dangerous short (last week was obvious) and I’d be very careful playing it – with very tight stops above $82.50.”   

CL Dec 6 2022

As you can see, that worked out very well, paying $5,500 at yesterday’s close and another $1,000 this morning as oil prices collapsed under the weight of their own BS.  We are officially done with the shorts now – as that was a huge drop and we are not greedy (You’re welcome!). 

Futures are nothing to be feared and they make a great tool in our investing toolbelt – IF we know how to use them properly – and that is: Only once in a while and with great care – like a chainsaw…

We wait, PATIENTLY, for opportunities when there is significant resistance AND clear Fundamental evidence showing us a reversal is in order – like Natural Gas this morning, which is too low under $5.50 – so /NG is a good long the way /CL was a good short yesterday.  

Oil (/CL) is probably oversold too and can be played for a bounce but the issue there is I wouldn’t have conviction playing oil long and I’d be very quick to stop out if it fails $76 again but /NG I believe is way underpriced at $5.50 for the long haul.  In fact, if you want to play it with options instead of stocks, our UNG play in the Short-Term Portfolio is back to where it started at net $2 for the Jan $15/20 bull call spread.  If all goes well and /NG is back over $7 in January, the spread will return $5 for a 150% gain in a month.  

UNG Dec 6 2022

We’re seeing stock plays too but we’re generally being cautious into the Holidays.  Yesterday, in our Live Member Chat Room, we found a Top Trade-worthy play for META but we just did a Top Trade Alert on them on October 27th – so no need to be redundant but still a good trade idea, nonetheless.  

We also reviewed our hedges yesterday as I’m not seeing a lot of data to convince me that we’re not heading into a Global Recession next year.  As I said on Bloomberg last week, I think it will be mild for the US and Canada but we’re Global Citizens too and we’re not going to get through this unscathed – hence our heavy CASH!!! positions and abundance of hedging.  

SPX Dec 6 2022

The S&P did pretty much what we expected – testing and failing the 200-day moving average and it’s a big concern how easily we fell back below 4,000 – even with the much-weaker Dollar (now 105).  The Dollar was at 107.50 into Thanksgiving so we have a 2.3% currency advantage now and we still can’t close the deal – that’s bad! 

In our slower-moving Nasdaq weekly chart, we failed 12,000 exactly as expected and, sadly, that’s the 200 WEEK moving average that has to get over 12,000 and it’s taken over 3 months to get halfway from 11,000 – so it’s not going to save us now.  The 50-week moving average, however, is 850 points away from failing 12,000 and that would be very bearish.  We’re at 11,700 and it’s at 12,868 so 1,168 points and we have fallen that much since 13,000 in August (4 months) – so things are really going to be hitting the fan at the end of Q1!  

NDX Dec 6 2022

Have I mentioned how much I’m loving our hedges lately?  

 

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Good Morning.

Hi Phil
A couple of questions:
– Vix is actually low around 20. During this year Vix showed a tendency to bounce back up any time it was around this value.
What do you think about a short position buying some vix call? What spread would you suggest?
– AMZN is around covid low, even do it is not one of your favorites may be actual prices offer an opportunity for a good trade.
Something like:
BC 2025 80 AT 30.5
SC 2025 110 AT 16.5
SP 2025 80 AT 11.5
SP 2024 JUN 80 AT 6
SC 2024 JUN AT 5
If this is not a compelling valuation for Amazon (even do i remember we had a position in Amazon in the Batterfly portfolio) what valuation are you looking for to start a position?

 thanks

loving the answer
thanks a lot
No bull rides for me
thanks

Starting vision therapy today, hopefully I can follow posts and comments here without headaches then.

Phil – I am thinking of finally entering META using yesterday’s suggestion, but hold off on selling the March 130 calls? Or should I roll all the strikes down by $10

Man PSW members are sure doing their darndest to keep the (broken) healthcare system afloat.

We are an aging bunch… 😅 

Speaking of annoying health stuff. Traveled to meet my Son in Vermont over Thanksgiving. Caught my first cold in 3 years. Tested Positive for Influenza at Urgent Care , put on Combo of inhalers and Guaifen/Codeine Cough medicine. Only the family members that flew got sick. Decent retail activity in the quant towns of Vermont- Woodstock and Quechee. Always amazed at how rural things are there. I love the 24 hour pay be honor system cash, check Venmo Farm Store near my Son’s place! Kissthecowfarm.com/farm-store.html

SIG/Phil: what are your thoughts on SIG, we’ve played them in the past. Big pop today, but valuation looks reasonable, and no debt.

/NG think we’ll touch $5.00?