We had some huge gains yesterday.
The Nasdaq broke all the way up to 13,000 before being rejected and, even though we had a disappointing earnings reports from Tech heavyweights like Apple (AAPL), Amazon (AMZN) and Google (GOOGL), we have, so far, only given up some of the gains.
In fact, if you apply our 5% Rule™ to the 1,000-point rally from 12,000 to 13,000, then our retraces would be 20% of the run (200 points), back to 12,800 (weak retrace) and 12,600 (strong retrace) and finishing the week over the Strong Retrace line at 12,600 would be a bullish indicator for next week – especially as we are now past the Fed.
The Nasdaq is, in fact, up 2,000 points (18%) for the year already at 13,000 and the pullbacks there would be 400 points so there’s nothing alarming about 12,600 and we could fall all the way back to 12,200 without being too alarmed – though it would be nicer if we held the 50-week (200-day) moving average at 12,324. This is a huge and unexpected (by us) turnaround in the market.
We have Non-Farm Payrolls coming up shortly (8:30) and that will be a major data-point but other employment data indicates we should be well over the 200,000 new jobs expected by our leading Economorons, which the Fed considers way too hot but no one seems worried about the Fed anymore so Que Sera Sera, I guess.
As I noted to our Members yesterday, we’ll have to do a bit of buying if this keeps up as we’re pretty bearish in our portfolio balances. It’s not hurting us yet but it will if this keeps up.
8:30 Update: 517,000 new jobs?!? WTF?!? There’s no way this doesn’t turn us lower as it’s the exact opposite of what the Fed wants. How could they not have had an idea of this on Wednesday before they only raised rates 0.25%? That’s an out of control number and unemployment is, of course, going the wrong way – now 3.4%
I think it’s great – F the Fed and their idiotic concept that it’s better to kill demand than boost supply to control prices. More workers, more stuff, more Economy is the way to go. More stuff and more people to load ships and trains and trucks fixes the supply chain and so what if we HAVE to pay them fair wages for a day’s labor – slavery was outlawed almost 200 years ago – Corporate America seems to have never gotten the memo…
517,000 new jobs means 517,000 x $4,000 ($2Bn) additional Dollars are required next month for payroll so the DEMAND for Dollars increases and the SUPPLY of Dollars doesn’t change that fast therefore – the Dollar goes up! See how easy economics is?
In fact, on Wednesday I said to our Members at 3:35:
Dollar testing 101 – that should be the first thing to turn as currency traders are a lot more sophisticated than equity traders (usually). 34,283, 4,145, 12,454 and 1,976 are where we are at the momnent. Dollar 102 would wipe out all these gains for the day.
We’ll see what happens as the Dollar was 102 Wednesday morning and the S&P was 4,075 – that’s down quite a bit from here and would turn us flat for the week, which would be a shame after all the excitement.
Have a great weekend,
Phill – I think there were 180 workers in CA system… Interesting point from Bloomberg
Hiring was broad-based across sectors, led by leisure and hospitality, professional and business services and health care. Government employment increased by the most since July, which reflected the return of University of California workers after the end of a strike.
48000 UC CA employees were on strike
Good point by Batman that the end of a CA strike helped bump up the job numbers but more is more and it’s not going the right way for the Fed.
Chart below indicates there was a good spread to job creation. Also, hours up 1.2% and earnings up 0.3%, both still hot.
Dollar at 102.40 but Indexes do not care and are turning back around.
Gold failed $1,900.
wow, this is a fast market. this is unhinged.
How would you net out recent economic developments (517k new jobs, etc vs dollar >102, etc)?
I don’t know what’s going on here. Market doesn’t seem to care about anything so tough to net out.
Of course, that was the case in 2007/8, when we used “Fuggetaboutit” and “It Just Doesn’t Matter” quite a lot. That was fun until, suddenly, it all mattered a lot and the market dropped 60%.
But it took over a year from the time I turned cautious until the actual crash and, like I said yesterday, we are taking Covid off the table and we are taking the rate hike off the table (until the next meeting) and Oil has calmed down and China is re-opening – there are conditions for a rally and adding 500,000 jobs means there are companies who think so too – despite a crappy Q4.
Earnings are improving a bit but the guidance is not at all:
We got our Twitter site back!
Please follow us and tell everyone to follow us – I want to get back over 500,000.
re my earlier question:
How would you net out recent economic developments (517k new jobs, etc vs dollar >102, etc)?
Sorry, forgot to add …”the effects of recent developments on the markets?
Yeah, I got it.
So I’m trying to get Maddie more into Classical Music and Opera (no way for Jackie) and there’s a huge problem because there are 100s of different recordings of things and it really matters who is conducting, who is singing, playing, where it was recorded, the quality of the space… I was spoiled because my Dad was an avid fan and spent hundreds of hours picking out the perfect cuts and that’s what I grew up with. Also, you could always count on Telarc or Deutch Gramaphone to do a good job.
I tried to make her a list on Spotify but there are way too many choices and not enough rankings. Maybe I’m missing something?
Oh yeah, I’m new to Spotify (I use Tidal) so I’m just starting a playlist but, if you like Classic Rock, I think this is a good list (nowhere near done):
Speaking of Spotify, missed earnings and jumped up anyway. Makes no sense. Yeah, they increased Revenue but they still are losing.
Sure but it’s all about increasing membership. There’s acquisition costs of whatever they did on the holidays (I don’t really pay attention to them) and it takes a while for membership revenue to cover it. Nothing wrong with that as long as they are adding subscribers, which tend to be sticky for these services.
I have my kids (21 and 16 yrs old) add songs to a playlist so I can see what they are listening to. There is some good new stuff out there and gives me a view into their world.
We take turns whenever we are in the car together. Everyone tries to pick a song they think other people will like (or hate if we’re in a bad mood). We also play games where you have to have a connection to the last song and we try to be obscure and, if no one can figure it out (Google is allowed), you get another turn.
Something like Jackie plays Year 3,000 (Jonas Brothers) and Maddie plays The Power of Love (because Year 3,000 mentions flux capacitor) and I play Fight the Power (Public Enemy for obvious reasons), etc…
Wow, that’s a tough one, because ranking is so subjective. Example: I used to sing in symphony choirs before my voice got creaky in my old age. We often did Beethoven’s 9th, and one year the orchestra conductor had worked with us enough to feel confident we could do whatever he asked. One evening he was in a go-fast mood, and he took off on the final prestissimo. We, the choir, stayed with him, but his glasses flew off with the vigor of his conducting, and the principal bass player was exhausted. Every performance, even by the same group, is different.
So. I don’t know Spotify at all, I use you tube for classics, and I have a list that I love of classic pieces I’m compiling, by no means complete. For example, I have Alicia Sara Ott performing Beethoven’s Choral Fantasy (because of her interaction with the other soloists and the choir), Marita Solberg singing Solveig’s Song (because she’s Norwegian and really gets it), Mahler’s Resurrection Symphony led by Rattle, Rachmaninoff’s Vespers by almost any Russian group. I also really like Tito Gobbi, even thought that was long ago, as Rigoletto, because he understands the man caught in a job he hates because he can’t get past his handicap – who then blames everyone else for his problems.
Likewise, for Mozart’s “Don Giovanni” – is the Don a bit of a jerk who thinks highly of himself and collects women, finally falling in his hubris? Or is he truly evil, a rapist who is finally brought up short by vengeful spirits. I’ve seen both, and both are excellent.
Nice, I’ll have a listen over the weekend.
Take Maddie to a live classical concert so she can actually see whats involved in creating the music.
Vail has a fantastic outdoor venue, with the Dallas, Philadelphia, and New York symphonies playing back to back in July. Its also a great way to beat the Florida heat
Oh, I’ve taken them, of course. Maddie still listens but Jackie is a lost cause but at least she likes my Rock selections. She was all about the boy bands as a kid – thank goodness she grew out of that (mostly).
Maddie went to see the Philly Symphony last July 4th – and ended up getting shot at…
I dig performers-who-are-great-explainers, and in that vein there’s pianist James Rhodes providing commentary on some standout recordings. He has hipped me to alot of great stuff with (importantly) generally great sound quality, which I think is key to getting the younger ears interested.
There are 3 of these “talking playlists”
• Fed Raises Rates and Says It Isn’t Done Yet. We Think It Is. Even as the Fed says it expects “ongoing” rate hikes, we expect the next move will be to cut rates by year-end. (Morningstar)
• The 5 Main Factions Of The House GOP And how they’re likely to govern for the next two years. A number of important fissures define the current House congressional GOP — and the embrace of Trump and Trumpism is just one of them. Voting records, ties to the establishment and caucus membership, for instance, all played a role in how I measured Republican House members against one another, drawing on data as well as expert opinion. • The 5 Main Factions Of The House GOP: And how they’re likely to govern for the next two years. (FiveThirtyEight)
• Tulipomania! On Holland’s legendary tulip bubble, which burst today in 1637. (Paris Review)
• Welcome to Neom, Saudi Arabia’s desert dystopia in the making: Western architects are scrambling to work on a Saudi Arabian dream: a city founded on a 170km-long line of mirrored towers. But will it end up as a series of broken pieces? (Prospect)
• Best Practices for CIO Succession Planning Require Long-Term Preparation: Carrying out executive transitions smoothly requires thoughtful processes established well in advance. (Chief Investment Officer)
• How we fell out of love with voice assistants: For the past three years voice assistant use has been falling and adoption continues to slow. (BBC)
• Boom Times for Online Classic Car Sales: The pandemic changed the auction picture somewhat, giving a boost to eBay Motors, BringATrailer.com, and other online auction/sales companies. The wisdom initially had been that online sales were O.K. for smaller purchases, but for big-ticket items enthusiasts needed to see the cars in person. That assumption has been proven wrong, though traditional auction houses also did well in 2022—with values climbing on collector cars. (Barron’s) see also The Pandemic Used-Car Boom Is Coming to an Abrupt End: Dealership are seeing sales and prices drop as consumers tighten their belts, putting financial pressure on companies, like Carvana, that grew fast in recent years. (New York Times)
• Why Did the Beatles Get So Many Bad Reviews? An inquiry into how critics stumble. (The Honest Broker)
This is funny – super-young Seth McFarlane and Bill Hader:
Almost 50 years for that show!
And here is why Robin Williams was so great:
HBI starting to look like a MEME stock
Just got stupidly cheap near $6.
Classical music. I think a big factor is that its so poorly reproduced with most peoples sound systems , few have vinyl or any system able to produce an engaging harmonic reproduction which is necessary . 2a3 tube was one of the finest triodes ever produced for music amplification and reproduction in my view , still in production today since 1920s.
The answer is to go to the concert in person. Support your local classical musicians! If you live in a big city, and prices are steep, go to your music school performances. I went to a performance of The Magic Flute by the USC music school, and it was great fun, a fine performance. And the Queen of the NIght had those high Fs, no problem.
Sure, a good sound system is a must. My Dad used B&O headphones but I have Snell Type As with dual Denon mono amps – makes me happy…
Thanks for your take on the current market uncertainty and comparison with 2007/8. Indeed, a tough call even for an accomplished market seer/handicapper. Uncertainty – seems to be an integral part of life and the markets – and something that has to be addressed continually. Any thoughts on reducing the SQQQ hedges vs adding more longs?
No reason to reduce them, they cost us less than $100,000 and we’ve got about $3.6M in CASH!!! in the STP our of just under $3.8 total (LTP is $3.73 so still about even on the rally) so all we need to do is add longs.
The LTP has $2.3M in cash and RH is at $345 so we can sell 10 of the 2025 $250 puts for $36 ($36,000) and buy 25 of the 2025 $250 ($150)/350 ($98) bull call spreads for $130,00 and that’s net $94,000 on the $250,000 spread and there’s $156,000 (165%) upside potential and we can even whittle that down by selling 5 June $400s for $20 ($10,000) as we certainly don’t mind buying more longs to cover if things go well but 4 sales like that pays for half our purchase.
Just a few trades like that and we’re $1M more bullish – isn’t that more fun than playing with our hedges?
Phil / RH – is put sale this an official add?
No, just noting we can add +$1M very easily still so no reason to worry.
As a rule of thumb, if you get 10 strikes, you’re going to be more inclined to wait for the first few pitches, right? It’s early in the year and we have a ton of cash and 45 longs in the LTP where we don’t really want more than 60.
As noted above (or below), we’re still very well-protected and we only need to spend about $150,000 to make adjustments against whatever $1M bullish positions we decide to take and we’re very well-balanced and making money at the moment but there are still a lot of unknowns so, on the whole – waiting and seeing is still the best move.
HBI – I was assigned stock from the short $13 puts. Would it make sense to sell the stock and buy a 2025 spread?
Well, they are at $6.60 but you can still sell the stock and sell the 2025 $10 puts for $3.70 (net $6.30) and let’s assume your net from the original put sales was $11, now it’s $7.30 – not too bad. You can then pick up the 2025 $3 ($2.20)/7 ($1.95) bull call spread for $2.25 and that will put you over the top at $7 with another $1.75 in profits.
-27 TZA Jan 19 ’24 $60 Calls
+80 TZA Jan 17 ’25 $30 Calls
-50 TZA Jan 17 ’25 $60 Calls
Would you roll to 80 of the ’25’s 25’s and 80 of the ’25, 45’s?
TZA is at $23.75 so up to $60 is over 100% and RUT would have to fall about 40% – we’re not expecting that. 2024 $60s are $2.40, the 2025 $60s are $4.75 so if you roll your 27 2024 $60s to 30 2024 $45s at $5.75, you pick up $10,770 and the cost of rolling the $30s ($7.60) to the $20s $9.50 is $15,200, so that whole transaction would be net $4,430 to put your 80 long calls back in the money, $25 below the first callers (which you can always roll up to higher strikes) and $40 below the other 50 short callers.
Thank you so much Phil! I will do that.
JWN had good earnings and an activist jumped on board. We didn’t get a chance to add them back – now they are back to where we cashed out!
ISM coming in hot as well:
Top 10 Stocks with Highest Short Interest
No. 10: Beyond Meat (BYND), short interest 38.73%.
No. 9: EVgo (EVGO), short interest 38.73%.
No. 8: Blue Apron Holdings (APRN), short interest 38.93%.
No. 7: Allogene Therapeutics (ALLO), short interest 41.10%.
No. 6: Aerovate Therapeutics (AVTE), short interest 44.12%.
No. 5: Marathon Digital Holdings (NASDAQ:MARA), short interest 44.16%.
No. 4: Bed Bath & Beyond (BBBY), short interest 46.24%.
No. 3: Ring Energy (NYSE:REI), short interest 49.95%.
No. 2: Carvana Co. (CVNA), short interest 65.43%.
OK, so STP is at $3,809,053 and, as I noted Wednesday morning:
LTP is $3,729,593 so $7,538,646 is still going up from Wednesday but the STP and LTP are going to switch leads, which will then make us want to cover and, how do we cover? By buying back short calls while they are cheap and improving our longs like Tully is doing! See what an easy system this is to follow?
Of course the key to not losing money on the rally is that, despite setting up to make $5M on a downturn, we sold more premium than we bought – so they are simply getting hurt more than we are – especially with the VIX back at 18.
phil, did you manage to get any of the SQQQ $30s for $13.50 today?
No, that wasn’t even official, just saying what we could do since everyone wants to know.
I try to teach people to have the discipline NOT to react to anything other than when we’re doing our adjustments – things are very rarely and emergency and people need to know they can have a life while still being “active” traders.
i’m confused. you mean i shouldn’t try to buy them today while they are cheap?
If you want to – sure. I just don’t make official portfolio moves until next week unless it’s an emergency – and it’s not.
This is why I’ve seen ELP live a dozen times:
UNG bouncing off 8.00
we were talking about ONEM the other day. Today a trader rolled 10,000 Feb $15 puts to the Jan24
$12.50 puts. Looks like the 2024 sale was for $1.25
Not sure what the take-away is from that. It’s the kind of roll we would do if the pricing seemed advantageous.
phil, did you manage to get any of the SQQQ $30s for $13.50 today?
That was not an official roll for the STP. As noted the other day, the trick is to make an offer in your favor and wait. If it fills – that’s nice and, if not, no big deal. Obviously it will fill if the Nasdaq goes higher but, if the nasdaq doesn’t go higher – we don’t need to roll.
thanks. got it. i had put in an order for 20 at $13.50 and i jsut wondered if anyone had managed to get any.
Not likely as the Nas turned down right after we talked about it.
Again, this is why there’s no urgency. People tend to panic and think they have to do something right at the point where it’s going to reverse anyway.
not panicing, but I don’t presently own as many as I’d like. i guess I am trying to top tick the bear market rally (if it is one and not a new bull) and grab something cheap.
Anyone, did you manage to get any of the SQQQ $30s for $13.50 today? I can’t execute any trades yet at that price.
Interesting discussion on music. I definitely like listening late at night. I have a few favorite headphones,
Sony Monitors, HiFMan Planar Magnetic, Sennheiser and decent noise cancelling kinds for the planes. I keep up on what the Audiophiles that have too much time & Money are saying on The Drop Drop: Passions lead here.
ELP reminds me when we did a play at a hippie/alternative school. One of the scenes was a free form dance to
From the beginning https://s.w.org/images/core/emoji/14.0.0/svg/1f60a.svg
From the Beginning – YouTube Music
Dollar 103 so the markets held up well, considering.
what a wild day. and interesting. thanks to everyone.
See, the new Webinar is out already. Very random.
That’s great thanks