From the top this time.
That’s right we tested the S&P 500’s 4,000 line from the bottom for most of January and finally we’re testing it from the top and, hopefully it holds as we’ve got a very critical test of the 50-Day Moving Average about to (hopefully) cross over the 200 dma at about 3,950.
As long as we are able to stay over 3,960 long enough for that to happen, we’ll have a bullish signal for the TA crowd. So, let’s do the math: The 50 dma is at 3,943 and 4,000 is 57 points over that so it’s rising at about 1 point per day! The 200 dma is at 3,956 and 4,000 is 44 points over so rising at 0.25 per day. So, the 50 dma is closing the gap at 0.75/day while we’re over 4,000, which means we need to stay up here for 17 more days to close the deal – not quite as easy as the chart makes it look, right?
So, it’s very much up to earnings and, of course, the Fed tomorrow. This morning we’re down 125 on the Dow at the moment (8am) and 10 point on the S&P 500 but that’s 4,027 – a relief after 4,007 when I started this article. Misses were once again about 50/50 last night, with three winners (CFLT, HLIT and WHR) dropping guidance but WHR (got ’em) had a huge beat and we’re still proud of them.
This morning, AQUA, CAT, CVLT, MAN, MDC, MPLX, OSK, PSX, PBI and SPOT have missed so far with guide-downs from UPS, PFE & GLW while AOS, ALGM, DOV, XOM, GM, HUBB, IMO, IP, KEX, LII, MCD, MCO, MSCI, NYCB, PNR, PHM & ST gave us clean beats. That’s 17 out of 30 for 56.66% winners – not a good sign….
Like the S&P 500, the Nasdaq 100 also has something to prove but, in this case, it needs to stop the 50-WEEK Moving Average at 12,306 from falling below the 200-Week Moving Average at 11,587. They are 719 points apart and are currently being drawn together so this math is like those 2 trains approaching each other problem but the answer is in the Fall so nothing to see here if we stay inside the range. What it really means is the S&P 500 will decide our technical fate, not the Nasdaq.
XOM made $55.7Bn last year, well over CVX’s $35Bn and that’s $90Bn between them and there’s 330M of us so that’s $272 each we contributed at pump, about $800 per family – and we didn’t even get a free mug! Now, XOM, in a typical good year prior to this, made about $20Bn so, when they say $55Bn is “EXCESS PROFITS”, now you know that their excess profits were the ENTIRE profits of CVX.
So we put 500 gallons of gas in our cars in a typical year and it’s not just XOM and CVX who make money, of course but the Excess Profits for those two companies alone last year came to about $1 per gallon (2 cars) and if you factor in the rest of the sector – well over $1 per gallon. It’s interesting then, how they can testify to Congress and tell us they have no control over these prices, when over 1/3 of what we pay at the pump tend to slip its way right into their pockets, OVER AND ABOVE WHAT IS CUSTOMARY, isn’t it?
They know they are doing it, these aren’t “accidental” profits! XOM made their usual $5.9Bn in Q1, before the war started and in Q2, they were suddenly making $20.7Bn and another $20Bn in Q2 before calming down to $10Bn in Q4. Sometime during Q1 or Q2 they might have said “Do you think we’re charging people a bit too much for gas?” – Nah!
And why is wholesale gas $2.50 but we’re still paying over $3.50 at the pump? When gas was $2 just two years ago were they marking it up $1? No, gas was, in fact, wholesaling at $1.50 and we paid $2 at the pump until it jumped to $2 in early 2021. Now XOM, CVX, etc can pretend all they want but 200M cars using 500M gallons of gas is 100Bn gallons of gas and x $0.50 is – HEY!!! – we just found out where the extra $50Bn came from!
Be sure to tell your Congressmen we figured it out – they seem to have been stumped…
In other news, the Futures have turned around and gone positive. The Employment Cost Index came down from 1.2% to 1% for Q4 but that doesn’t actually put a dent in the gain for the year of (1.4%+1.3%+1.2%+1% =) 4.9% but anything that seems like an excuse for the Fed to pause is good for a rally these days.
The IMF upgraded their expectations for Global Growth from 2.7% in October to 2.9% today – making it more likely we will avoid a recession. Several developments in the past few months contributed to the shift in the IMF’s views, its economists explained. Economic growth proved surprisingly resilient in the third quarter of last year, helped by tight labor markets, stronger-than-expected spending by households and businesses, and Europe’s swift adaptation to the energy crisis caused by the war in Ukraine.
For contrast, the WSJ says US Consumers are starting to “Freak Out” as their bank accounts are drained and their credit cards are maxed and inflation is not falling, nor are salaries rising enough to fix this in a timely manner.
That is 30% folks, 30% of the people who make less than $50,000 (half the households in this country) are falling further and further behind on a monthly basis. We’ll get the Personal Income and Spending Report on Friday and we’ll see if it’s getting better or worse but almost 50% of the Earnings Reports coming in negative indicates it is, in fact, getting worse.
From the WSJ:
“Jazzlyn Millberry, 33, has been looking for big ways to make cuts. One day last fall, her banking app informed her that the cost of one month’s groceries and household goods for her family of four had risen to $900, from about $600 or $700.
“I find myself now going to three or four different grocery stores just to get the best deals on things to save on costs,” said Ms. Millberry, a health-insurance claims analyst in Pickerington, Ohio.
On one recent outing, she stopped at Kroger for eggs and meat, Aldi for produce, Sam’s Club for her children’s snacks, and Target for toilet paper.
Even as she has cut back on groceries, restaurants, hairstyling and facials, her credit-card balances have grown in the past several months. She said she started making only the minimum required payment on her credit cards.”
That’s what’s going on in Middle America, people are sacrificing and scrambling to hold on but it’s still not enough and raising minimum wages from $12 to $13 to one day $15 isn’t really going to help all that much, is it? We have done a great job brain-washing people into believing that falling behind economically is their own personal failure and not Society’s or the Government’s and by making people ashamed of their situation, they tend to complain less and protest less – BRILLIANT!
January 31, 2023 2:57 am
Phil I am not sure if you still looked at the Monday eddition but looking at YETI you set up the play for 2025 and than you talking about 2024 something not right there. Further I set up the play for 2025 35 strike @ 18 50 strike @ 10.95 and the 35 put @ 5.95 Prices obviously might differ from your original but the return at best is 50.6% not 500% !!!! Entry cost 8150.00 return at best 21850.00.
Yes, well 2024 is a typo and I meant 2025. Perhaps you don’t realize that was the original trade idea from November, no a new one. As I said below it, if you read it in context, the net was now (as of yesterday) $8,000 and I’m pretty sure that the upside to $30,000 is $22,000 which is not 500% but still 275%.
I got way off track when I was writing that, must have been on the phone.
Phil the spread is 15 not 30
ok see it x 20
Good morning! Phil, did you lose access to your twitter account? Last two tweets are NFT spam. https://twitter.com/philstockworld/status/1620409509058609158
You are right, something happened and now I’m in a nightmare hoping for Twitter support. I do not recognize the Email that is associated with the account now.
I just put in a request for Twitter to fix this. I don’t know what the email account is however.
Chicago PMI at 44.3% from 45.1% last time. Here’s a fun use of OpenAI:
It’s very good at distilling stuff.
Now it’s time for Consumer Confidence – Oops, down. 107.1 from 109.
No biggie but we’d rather see improvement that matches the MSM economic cheerleading.
That’s good. Decisions to restart blast furnaces are not taken lightly.
Phil TSLA were we to conservitive on the play 2025 100/125 delta now .87/.81
LOL, we weren’t sure they would recover so better safe than sorry. Anyway, Ford is lowering prices and they are in for a big margin squeeze this year – I wouldn’t bet them up from here. Very happy with the gains we got.
I have been waiting for the major players to start rolling out their EV offerings before I buy one. There is going to be a major price adjustment as they start to compete for market share. I can’t wait until I do not have to get oil changes and pay $1,000.00 every time something goes wrong with my vehicle.
That’s right, you only have to worry about spontaneous combustion…
Is there a way to lock in “the gains we got” on TSLA to take some cash off the table or do we just have to “let it ride?”
At the moment, it’s “Let it ride” for me.
I had to go change a few passwords – just in case.
Thank goodness I don’t actually use Twitter much anymore or this would be a crisis. I doubt they have many customer service people to handle these issues anymore.
Russell is winning our “Most Improved” contest today:
I did a quick search for online high yield savings account and now i am being bombarded with banks I’ve never heard of offering close to 4% on savings.
Anyone use online high yield savings accounts? I see synchrony offers 3.75% not too shabby. What’s everyone doing with idle cash? Im getting nothing from TD and want to move some money around that sits idle.
Appreciate the feedback.
we need to show this to TD
LOL. Hey, I’ve been with the bank since it was commerce bank. I ran the #s and Im missing out on thousands in interest. 😎
I assume you are having them sweep your cash to MM accounts at night? If not, ask them about it.
Question pertains to bank savings account. TDbank hasnt budged on their savings rates.
Oh yeah, terrible. If you have a good sized account just tell them they need to address the issue or you’re walking.
I’ve had Ally Savings account for a long time. Currently paying 3.3%.
I’ve looked at them, thats not bad. Thanks.
Schwab money market funds pay about 4.25% Or if you want maximum safety, their government / treasury money market funds pay 4% !!!
They are also offering 3 month treasuries for 4.6% and 6 month for 4.81%
Thank you for the info.
Canada GDP seen expanding by 0.4% in Q4
Jan. 31, 2023 8:43 AM ET
6 stocks to watch on Tuesday: General Motors, Pfizer, Whirlpool and more
Jan. 31, 2023 8:53 AM ET
The futures showed uncertain trading in Tuesday’s premarket period, as investors continued to look ahead to the Federal Reserve’s interest rate decision on Wednesday. This followed a sharp decline the previous day, with the Nasdaq dropping 2%. Here are some stocks to watch on Tuesday:
AARGH, don’t get me started on this topic. This is how financial institutions make lots of $$$. You can see it on financials as Clients’ uninvested cash sweep account balances held in deposit. They may pay .45% or less on it. There are too many people who do not want to actively manage their funds. You need to put in an order to take it out of cash and put it into a Money Market or something that actually pays.
You can invest in the Schwab Prime Money Market Fund SWVXX (or any other MM fund) in a TD Ameritrade or Think or Swim account. That pays 4.27% until the Fed raises rates. I live with people that will not put funds into another savings vehicle because they will need them in 2 months. Then I go into an explanation of simple interest say $ 12,000 X .0427 = $512 in a year or $ 1.42 a day or they are missing out on $85 interest in those 2 months. These are the same people that think you need to pay bills before they are due (maybe it goes back to mailing checks era). Time value of money, float principles are beyond their comprehension.
This is why money managers have jobs.
Can you just buy SWVXX like a regular stock or ETF in Tos? I tried to enter an buy order like I would an ETF but there is no bid/ask (which I understand). If so – when do they pay out the interest?
It’s a mutual fund, that settles at the price after market close (usually $1). Here’s a list of all the Schwab ones available from TD: https://invest.ameritrade.com/grid/p/site#r=jPage/https://research.ameritrade.com/grid/wwws/research/mutualfunds/families?c_name=invest_VENDOR
Talking with TDA, you can purchase up to the amount of your options purchase power and the MM becomes marginable after 30 days.
Good info on getting margin back! Bought the MM last Friday, so saved me a call.
Phil- I am trying to decide whether to roll a couple of 2024 positions I have out to 2025 or let them play out. One is a Levi 15/20 BCS (net1.90)that has recovered nicely since their earnings report and is up a bit. The other is a F 10/17 BCS (net 2.45) that is about even. The targets are not too aggressive but I can actually lower my net by rolling out to 2025 on Levi.
I’m sneaking two questions in but generally trying to learn when to adjust and when to let it ride.
Hoping you can shed some light.
Value your opinion as always.
LEVI (I have to remember to repeat the symbols otherwise they don’t get indexed in the comments for later look-up) – Well the first thing is where do you think they will be in 12 months or 24 months?
Clearly on-track for $20 so you’ve got net $2.55 now and $2.45 coming if you leave it alone and wait for your 100% upside at $20+.
The problem with now rolling is you are now buying LEVI at $18.35, not $15ish, when we went in. While I felt $15/20 was highly likely, I’m not as sure about $20/25 so do I really want to turn a 100% gain in 24 months I’m 90% sure will work out for something longer-term I’m not so shure of or should I just be happy the trade is working and find another stock that hasn’t gained 20% yet?
F – That’s a good one, they haven’t gone anywhere yet. $13.47 and you have the $10/17 spread that is still about $2.50 your 2024 $10s are $4 and the 2025 $10s are $4.40 and I’d say it’s worth 0.40 to buy a year and the 2025 $5s are $8.40 and it’s not worth $4 to roll down $5 so there you are.
I’d roll the long calls and not the short ones and, when the short ones expire, you get to sell another set for more money (and maybe a higher strike) or, if F does very well, you can just roll them to higher 2025s.
My job seems safe for another few weeks… 😎
Agreed The Industry can make it hard so that people require a “Financial Professional”. I love teaching financial literacy in classrooms and business camps. The Stock Market Game
It really gets the kids interested to gamify the market. I will ask them if they think the market will go up or down during the presentation and enter a Paper Money trade. Its fun for them to see the values update. Most of the time the teachers come up to me afterwards to ask about their 403b plans with questions like “should I invest enough to get my max employer match?”. YES!
I was contacted in a random call from a “Missing Money finder” about my brother-in-law. I researched the state’s unclaimed money site, and he could have over $ 180,000 from his deceased Mother’s funds. I let him know about it and it seemed like he could not be bothered to fill out the online form. SMH!
Those seem kind of scammy to me. The next thing they do is ask you for all your info. Having just had my Twitter account hacked – I can relate to the caution.
Phil / UBS earnings today…. What are your thoughts on this…. I have a sell target of 22 on this. Results were way down but hit CE for the most part… They are outlooking buying about 5B of their shares. What are your thoughts on earnings?
I have the following position and am looking to add more short term callers…. had lots of short puts that a closed out profitably…..
7500 Sh ( 15.9)
Short 35X Feb 17.5 Calls (1.8)
Short 20x Aug 22Calls (1.1) This is a partial roll for the above….
no puts as of now…
UBS Revenue was down 8% from last year so “Better than Expected” should be taken with a grain of salt. Buying back $5Bn (7%), though that kind of stuff really pisses me off – it should still provide some support. Despite trading high in their range, they are still relatively cheap but I don’t see the point in owning the stock for the 0.50 dividend (2.5%).
I’d sell the 7,500 shares ($160,650) and risk being assigned back by selling 50 Aug $20 puts for $1 ($5,000) and buy 50 of the Aug $17.50 calls for $4.40 ($22,000) and I assume you sold the Aug $22.50s for $1.10, so that’s fine and the short Feb $17.50 calls at $4 ($14,000) can be rolled to 35 Aug $20 calls at $2.50 ($8,750).
That’s net $138,400 off the table and you are left with 50 of the Aug $17.50s covered by 35 of the Aug $20s ($8,750 if it pays off) and 20 of the $22.50s ($10,000 if they pay off).
So that’s net $157,150 if all goes well, which is almost what you’d get if you could cash out cleanly now. Below $20 you will be back in 5,000 shares and you can start selling again and over $20 you may owe a bit on 500 shares but the key is you can invest in something more sensible with longer-term options like C at $52.22:
Also, in a trade like this, you can set a stop on the puts below the $50 line so you have little downside risk. The puts have a Delta of 0.46 so a $2.20 drop should cost you about $1 ($2,000), not $100,000 – so it’s not all that risky under normal circumstances.
You have to always look at your positions and consider whether or not they are trapping money for no reason.
Thanks Phil – With the 5B of buybacks ( which they sort of do annually ) they look closer value to 23.5 – 24 / SH nd less than 10 PE…. for a 5.5 growth…. It make sense to sell this but on a cash basis here closer to 3.5% so that’s reasonable…. last year I pulled out about 6K on covered puts / calls…. This year not sure with that Feb caller that may hurt….
I’m clearing out 50% of shares and selling the 25 putters and then buying enough of the 17.5 calls to cover some of the … This will free up some cash…. I need to study ‘C’ they do seem undervalued …. I owned them years ago but have not looked at them lately…. IF I can get my head around that one…. maybe will close everything out….
What is your C analysis look like. ?
Phil – you are expecting a 50bp hike tomorrow as well? Or 25bp and hawkish commentry, and another 25bp next time?
I think they’ve backed themselves into a corner at 0.25, they certainly haven’t done anything to change that narrative so they know it would be a bad shock to go higher. But it hasn’t stopped them before so I’ll have do go with – I don’t know…
Understood. I would not use the finder. But the State’s Unclaimed Property site is legit. I have found some treasures for my extended family & friends, $ from old phone bills etc. You should check out the NJ or FL site, you never know.
I like rolling options that way- like the Ford. You get more decay from the shorts that way too.
Oh wow. I just found an entry from an address I lived in 15 years ago in NJ.
I just found a few thousand dollars in some old bank accounts – that was worth looking!
Does sound like a fun thing to do on a rainy afternoon.
You can put in an order in TOS, just remember to change from Quantity to $ (they should be the same amount).
Interest is paid middle month ( except December- end of year)
2023 Payable Dates
1/17/23 2/15/23 3/15/23 4/17/23 5/15/23 6/15/23 7/17/23 8/15/23 9/15/23 10/16/23 11/15/23 12/29/23
If you do that with nice, liquid options then you can cash out any time you decide you have another use for the funds – better than a CD!
This is interesting, site that presents news with AI-Generated tags that rate the bias of the site: https://www.biasly.com/