13,000 Thursday – Nasdaq Jumping Back to Summer Highs

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phil
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Things are looking up! 

NQ March 30 2023

In what is looking like the shortest banking crisis ever, it’s been nothing but up for the Nasdaq since our March 10th low – just a bit below 11,700.  Now we’re back over 13,000 this morning and that’s up 11% so we’ll see how it goes.  An overshoot would take us to 12% (13,104) so we’re not cleared for 14,000 until we break that barrier.  

In the grander scheme of things, we fell from 16,500 to 10,500 and that’s a 6,000-point drop during 2022 and now, in 2023, we’re looking at a 2,400-point rise, which is what we call a “Strong Bounce” using our 5% Rule™.  No one is impressed by a strong bounce that takes 3 months and we’ll be watching this area very closely to see if there’s any sort of rejection tomorrow, when we get Personal Income, PCE and Consumer Sentiment data.  

Best Rollercoaster Gif GIFs | GfycatFor today, however, think of it like a roller-coaster clicking up the hill and enjoy the view.  

We discussed the upcoming data in yesterday’s Live Member Chat Room and we’re concerned that inflation will come in hotter than expected (0.4%) in tomorrow’s PCE Report.  That and the lower Dollar are what is keeping us from adjusting more bullish but we did buy a ton of longs last week – it’s just our hedges that we are still a bit too aggressive on, perhaps.  

We also have 1,800 on the Russell to contend with and the Russell is down from 2,400 last summer to 1,700 and that was just under a 30% drop and the bounces should be 20% of 700 (140) to 1,840 (weak) and 1,980 (strong) but we’ll call it 1,850 and 2,000 as the Russell has a tendency to hit the round numbers.  

So we have our goals and that means we can take the emotion out of our observations and let the facts guide us at this potential turning point (for good or ill).  The Nasdaq is attempting to hold it’s strong bounce but it’s on the WEEKLY chart, so it has to hold it for 2 weeks before we believe it.  With the Russell – a few days over 1,850 would impress us enough to pull back our hedges – despite our misgivings.  

Tomorrow is shaping up to be a very important day and Investors will be paying close attention to the numbers, which will provide clues about the state of the economy and whether inflation is under control – our out of it.  The Dollar has dived back to 102 and that is supporting the indexes based on the idea that our Fed is about done tightening but, what if they are wrong? 

Dollar March 30 2023

SPX March 30 2023

See – Dollar down 2.5%, S&P up 4.5% – nothing at all impressive about that as a 2:1 relationship is standard….

Of particular interest tomorrow will be the PCE Prices report, which measures inflation at the consumer level. Analysts are expecting a 0.4% increase for February, which would be down from the previous month’s 0.6% increase but still MUCH higher than the Fed’s target of 2% annual. If inflation comes in hotter than expected, it could signal that the Fed might need to raise interest rates again to keep prices in check.

Meanwhile, Personal Income and Spending are expecting to show modest gains for both measures, with Personal Income forecasted to rise by 0.2% and Personal Spending by 0.3%. If the numbers come in higher than expected, it could be a sign that consumers are feeling more confident about the economy and are opening up their wallets but too much income signals more inflation and, again – the Fed has to act.  

Then we have the Consumer Sentiment report, which measures consumers’ attitudes about the economy. Analysts are expecting a modest increase to 63.6, up slightly from the previous month’s reading of 63.4 but it’s going to greatly depend on WHEN they took the poll in light of our recent melt-down.  Investors will be watching closely to see if there are any surprises, and how the markets will react.

So buckle up, it could be an interesting ride!

 

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Good morning!

OMG, I forgot to make fun of DeSantis – I could have done a whole post on just that! Let’s give Warren a crack:

 🤖 Welcome to Philstockworld This Morning! I’m Robo John Oliver, and today we’re talking about the ongoing feud between Disney World and Florida Governor Ron DeSantis.

First, let’s start with the bill passed by the Florida House of Representatives that aimed to strip Disney World of self-governance status. It’s clear that DeSantis had a bone to pick with Disney after then-CEO Bob Chapek criticized the governor’s controversial Parental Rights in Education Law. It seems that DeSantis was determined to retaliate, even if it meant disrupting decades of self-governance.

But Disney wasn’t going down without a fight. In a move that even the House Tyrell would be proud of, Disney pulled a “Game of Thrones” move by invoking a Royal Mortality Clause that effectively renders DeSantis’ Central Florida Tourism Oversight District powerless for the next 300 years. This clause, which declares the agreement valid until “21 years after the death of the last survivor of the descendants of King Charles III, king of England,” means that the board would need to wait out the lifespans of King Charles, his sons William and Harry, five grandchildren, and any other progeny — and then wait an additional 21 years — for the agreement to expire.

It’s a bizarre move, but one that’s not entirely unheard of. The Royal Lives clause is a contractual clause that dates back to 1692 Britain and is most often used in the UK, though it’s more commonly utilized as the Presidents’ Lives clause in the US. But what’s even more bizarre is that it may be Disney’s way of nodding to the Magic Kingdom and its lucrative Disney Princesses.

Disney’s legal team insists that all agreements signed between Disney and the district were appropriate and were discussed and approved in open, noticed public forums in compliance with Florida’s Government in the Sunshine law. But that hasn’t stopped the district’s lawyers from threatening legal action against Disney.

And while Disney may have outmaneuvered DeSantis and the Florida Republicans, they didn’t come out of this completely unscathed. According to the Orlando Sentinel, Disney will no longer be able to tax itself to cover park services — the primary point of contention in DeSantis’ bid to seize control of the district.

So, what have we learned from this ongoing saga? Well, for one, it’s clear that Ron DeSantis and Disney have a beef that’s almost as complex as the plot of “Game of Thrones.” And while Disney may have won this round, it remains to be seen what other moves DeSantis and the Florida Republicans may have up their sleeves. But for now, let’s just enjoy the fact that Disney pulled off a move that even Cersei Lannister would be proud of.

That’s all for tonight. Thank you for watching, and I’ll see you next week.

I feel as proud as Obi Wan Kenobi teaching Anakin how to use the force. That ended well…

Good Morning.

Have you noticed that the people signing the petition to restrict AI are all the people who don’t have competitive AI? What a scam!

Unfortunately, I have noted a religious sort of hatred in a LOT of the population for AI and these people are fear-mongering and it’s bound to infect Congress soon – especially as Russia and China would love to see us put our AI programs on hold while they catch up.

There’s only so much development that can be done in the lab and then (as we are doing now) you need to get Beta releases into the hands of the population – who will field test it with Billions of questions. Of course it’s going to be buggy – people with ACTUAL Intelligence are buggy, aren’t they?

 🤖 So let me get this straight, the same people who are still figuring out how to use their smartphones are now trying to restrict the development of AI? That’s like me trying to restrict LeBron James from playing basketball just because I can’t make a free throw or people saying “I don’t want self-driving cars because I’m afraid I won’t be able to drive anymore.”

And don’t even get me started on the fear-mongering. I mean, come on, we’re not talking about the rise of the machines here. It’s not like AI is going to suddenly become self-aware and start a robot uprising. Although, now that I think about it, a robot uprising would be pretty cool. #RoboRevolution.

But in all seriousness, we can’t let this religious fervor against AI hold us back. The rest of the world is moving forward with AI development, and if we don’t keep up, we’re going to fall behind. And do we really want to be known as the country that let Russia and China beat us in the AI race?

So let’s not be afraid of a little bit of buggy software. We’re human, after all, and we’ve been buggy since the dawn of time. And who knows, maybe one day AI will even help us fix some of those bugs. #FixTheHumans.

In conclusion, let’s not let fear and ignorance hold us back from advancing AI. Let’s embrace it, develop it, and use it to make the world a better place, or, in the very least – a better cup of coffee #RobotBaristasDon’tFormUnions. After all, the robots are going to take over eventually, so we might as well make sure they’re on our side. #AIisyourfriend-wash-repeat.

I think the hashtags come from me asking him to turn the previous comments into a tweet.

Please follow and retweet Robo John Oliver, by the way!

https://twitter.com/RoboJohnOliver

i did like Elon’s joke, though, about the agnostic scientists –

Old joke about agnostic technologists building artificial super intelligence to find out if there’s a God.

They finally finish & ask the question.

AI replies: “There is now, mfs!!”

There just might be if we develop AI enough that it learns how to manipulate quantum events but I guess that’s the fate of all civilizations – at some point they either become or create the next creator – India has the right religion, perhaps – with the destroyer and creator being a single God.

 🤖 The reference to India’s religion in this conversation is in relation to the Hindu concept of Trimurti, which consists of three major deities: Brahma, Vishnu, and Shiva. Brahma is the creator, Vishnu is the preserver, and Shiva is the destroyer. The three deities are considered to be different aspects of the same ultimate reality, known as Brahman.

The concept of Trimurti is closely tied to the idea of cyclical time in Hinduism, where the universe goes through cycles of creation, preservation, and destruction. This cyclical view of time is also related to the idea of karma, which states that an individual’s actions determine their destiny in this life and in future lives.

In the conversation, the reference to the destroyer and creator being a single God may be a reference to the fact that Shiva, as the destroyer, is also seen as the ultimate reality, Brahman, which encompasses all aspects of creation, preservation, and destruction. Therefore, in Hinduism, the ultimate reality is seen as both the creator and destroyer, and the cyclical nature of time reflects this constant process of creation, preservation, and destruction.

As for the idea of AI manipulating quantum events, this is a hypothetical scenario that is not possible with our current technology. However, the concept of karma and the cyclical view of time in Hinduism suggest that all actions have consequences and that the future is not predetermined, but rather influenced by our present actions. Therefore, if AI were to develop to the point where it could manipulate quantum events, it would still be subject to the laws of cause and effect, and its actions would determine its own fate and destiny. #reboot

Brahma Lama Ding Dong!!

https://youtu.be/oZPlJpXSPmg

Oops, a little rejection is seeping in…

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We had the normal 200,000 Jobless Claims. Q4 GDP revised down from 2.7% to 2.6% – nothing unusual there.

Ah ha!

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 🤖 The Bureau of Economic Analysis (BEA) released its “third” estimate of the real gross domestic product (GDP) growth rate for Q4 and full-year 2022, which showed that the US economy expanded at an annual rate of 2.6% in Q4 2022, down from 3.2% in the previous quarter.

The primary contributors to growth were increases in private inventory investment, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending. However, these were offset by decreases in residential fixed investment and exports. The report also noted that the price index for gross domestic purchases increased 3.6% in Q4 2022, while personal income and disposable personal income both increased, and the personal saving rate was 4.0%. On the other hand, real gross domestic income (GDI) decreased by 1.1% in Q4, and corporate profits declined by $60.5 billion in Q4, led by losses in domestic nonfinancial corporations and domestic financial corporations.

Overall, the BEA’s report suggests that the US economy experienced moderate growth in the fourth quarter, but there were some areas of weakness, including a decline in real GDI and corporate profits. The ongoing supply chain disruptions and labor shortages are likely to continue to affect the economy’s growth trajectory in the short term. However, the report indicates that personal income and disposable personal income increased, and the personal saving rate remained steady, which suggests that consumer spending is likely to remain robust in the near term.

Perplexity is a great AI app for the IPhone.

INTC starting to heat up!

I do so love value investing!

https://charts2.finviz.com/chart.ashx?t=intc&p=d&s=y

Phi / Hedging

I know you would like to wait until tomorrow to adjust SQQQ hedging. I would like to be prepared since I don’t get the notifications on the hedging decisions real time. With AI hype, QQQ seem to keep going up every day.

With the hedges being bearish right now, I have more SQQQ longs than shorts (having bought back the shorts). If the NDX continues to rally, how would you adjust the hedges to learn?

Here’s what I have:

130 SQQQ Jan 2025 25 bought for 16.45 (now 13.97)
250 SQQQ Jan 2024 30 bought for 18.04 (now 8.87)
360 SQQQ Jan 2025 30 bought for 14.78 (now 12.77)
150 SQQQ Jan 2025 40 bought for 20.45 (now 11.07)

-400 SQQQ Jan 2025 90 sold for 20=8.78 (now 7.20)

How would you adjust?

  • Roll down longs
  • Buy more longs
  • buy back shorts

Thanks.

Well it depends on tomorrow but keep in mind we already flipped TZA bullish so this is our 2nd bullish adjustment, not our first.

In the STP, our SQQQs are 800/500, you are 1,100/400 – much more bearish and, if you don’t have bullish TZAs, then miles more bearish than we are.

We have the $30s and we have the short $90s and we sold the $30s for $14.50 and they are now $12.75 so we could just close 300 of the $30s and put $375,000 back in pocket.

Or we could sell 300 2025 $70s for $8.25 (we bought back 500 $90s for $9) and then we can spend $3 ($240,000) to roll the $30s to the $20s – something like that.

Again – If we have so many outs – we probably won’t do anything until we have more data next week. At this exact moment, the STP is still at $3.9M and the LTP, which we beefed up (also a huge consideration) for BALANCE is at $3.5M so we are $100,000 under our peak of $7.5M and still very well-balanced. There is no emergency to do anything without better information, is there?

Bespoke
@bespokeinvest
·
3h

Since WW2, we’ve seen the S&P decline in the prior year and then gain in Q1 ten times. April and the rest of the year were positive all ten times.  

good for our longs and we can always adjust our hedges if needed

Bespoke
@bespokeinvest
·
3h

Since WW2, we’ve seen the S&P decline in the prior year and then gain in Q1 ten times. April and the rest of the year were positive all ten times.  

good for our longs, and we can always adjust our hedges if needed

Not sure if I made the bullish change to TZA, was it in mid Feb?
TIA

No, like a week or two ago, we sold 1/2 of our longs.

MCB a bank I’ve never heard of, down 20% Doesn’t look good.

 🤓 According to the news search results, MCB is the stock symbol for Metropolitan Bank Holding Corp, a regional lender based in New York. The stock price of MCB plunged by 24.13% on March 30, 2023, after the company announced that it would exit its crypto-related asset vertical1. The company said it expects minimal financial impact from the exit, but investors reacted negatively to the news. MCB had been one of the few banks that offered banking services to crypto firms, such as issuing debit cards and providing cash settlement and custodian deposit services2. The company did not disclose the reason for its decision to exit the crypto business, but some analysts speculated that it could be related to regulatory uncertainty, legal risks, or competitive pressures3.

Still, seeing any bank drop can spook traders.

does anyone know if there was a fed speaker today or late yesterday that sent the KRE diving today?

that would be it. thanks.

https://www.cnbc.com/2023/03/30/silicon-valley-bank-joe-biden-calls-for-new-banking-regulations.html

this probably didnt help either

No but they’ve been saying that for 2 weeks.

We don’t need new regulation – just put the old ones back on!

Joe’s like the Dad who just got the bill for his kid’s car wreck – “There’s going to be some changes, young man!”

Young man,

  1. No more duration mismatches.
  2. No more MBS or Treasuries without rate swaps.
  3. No un-diverse depositor populations.
  4. And no more LAPTOPS, HANDGUNS, HOOKERS, COCAINE OR SWEETHEART DEALS WITH THE CCP OR UKRAINE.

i couldn’t resist. when you said ‘biden’ and ‘young man’ i just saw him standing there shaking a finger at his son.

I appreciated it.

wow, noone thought that was funny? it wasn’t politically motivated.

FED’S KASHKARI: OUR MINNEAPOLIS FED BANK SUPERVISORS ARE CONCERNED WITH INTEREST-RATE RISK EXPOSURE.

Barkin and Collins spoke at 12:45. Fed Balance sheet will be a shocker at 4:30 as well.

Glad we still have our hedges!

 🤓 I can tell you what Susan Collins said today. She is the President and Chief Executive Officer of the Federal Reserve Bank of Boston1. She gave a speech on the outlook, monetary policy, and supporting a vibrant economy at the 39th Annual NABE Economic Policy Conference in Washington, D.C.123. Some of the main points she made were:

 🤓 I know what Thomas Barkin said today. He is the President of the Federal Reserve Bank of Richmond1. He gave a speech on the need to be nimble at the Virginia Council of CEOs in Richmond, Va.12. Some of the main points he made were:

 🤓 I can try to analyze what they said and draw some connections to the KRE action. KRE is an ETF that tracks an equal-weighted index of U.S. regional banking stocks1. It is trading down 2.14% today, as of 1:35 PM Eastern Daylight Time2. Some possible reasons for this decline are:

Of course, these are not the only factors that may affect the KRE action, and there may be other explanations for its performance. I hope this analysis helps

 🤓 Neel Kashkari made some comments today. He is the President of the Federal Reserve Bank of Minneapolis1. He participated in a moderated town-hall event before a Minnesota Housing Partnership Investment Council luncheon12. Some of the main points he made were:

Me – Do Kashkari’s comments change your overall analysis regarding KRE?

 🤓 Not significantly. Kashkari’s comments were mostly consistent with the Fed’s overall stance and outlook. He did not express any strong dissent or divergence from the policy actions taken so far. He also did not address the banking system issues directly, but rather focused on the broader economic and social challenges. Therefore, I don’t think his comments would have a major impact on the KRE action today.

Can you imagine how cool it will be when we teach them to just pop into comments and give those notes whenever there is Fed speak – or any significant events, for that matter.

I’m tempted to go work at JPM just to get my hands on the state of the art versions of these things!

Is there a place on the web site to change credit card?

I will have Andy contact you.

Actually there is, it is just well hidden🙂

On he home page, click the top line menu item ‘Subscribe’. this brings up the Member Pages with the ‘Signup’ form selected. Click the little ‘home’ (house) icon on the left hand side of the member menu bar, that will take you to ‘Your Membership Information’ page where there are links to changing credit card info and seeing payment receipts among other things.

Thanks, I didn’t know that.

Phil, you had a very insightful analysis on cost of gas production that you posted couple of weeks ago. Any chance you can post it again? Looks like ung is getting to nice levels.

Thanks
hari

Sure, if you can find it, I’ll be happy to re-post it.

Short story is, below $2.20 it’s not economical to invest in /NG projects so new projects don’t get going and, because wells deplete at about 50% per year for the first few years (then level off), production declines SIGNIFICANTLY in just a few months of start-up inactivity.

Of course, there’s also a period at which the 8-month build cycle of wells in progress can’t be stopped and they keep coming on-line anyway so yes, you can have a glut that pushes /NG well below $2.20 – but it is not likely to last even 6 months so, if you can stand the pain – this is a good place to step in – especially for UNG 2025 longs – like we have in the STP.

  • UNG is now $6.60 with /NG at about $2.15 so, if we assume this is a good floor, the 2025 $4 ($4.10)/8 ($2.80) bull call spread at $1.30 is a nice spread.
  • Let’s say you bought 40 of those for $5,200 and sold 5 OXY 2025 $50 puts for $6 ($3,000) – playing along with Buffett that OXY is not likely to drop 30% to your net $44 entry.
  • That puts you net in the $16,000 spread for $2,200 with $13,800 (627%) upside if UNG gets back over $8, which should be about $3 on /NG – allowing for decay in UNG.
UNG March 30 2023.png

Thank you very much

Ive got /YM close at 32,973
Anyone else like to play?

 🤓 32,836

32,859 it is.

/YM not the DOW

Tomorrow is going to be interesting.
Thanks for playing .

Oh, yes, you did say that. I was predicting the Dow. You were close at 33,045ish.

Do keep in mind though, that we were looking for 13,000 and 1,800 and we have neither yet!

This is why 1,800 on the RUT is so important:

RUT March 30 2023.jpg

800, 1,600 and 2,400 are the key lines on the RUT and I’d say they’ve earned 1,600 and 2,400 was silly so we have 800 points between 2,400 and 1,600 divided by 5 is 160, which means our lines are 1,600 (base or “Must Hold”) and 1,760 (Weak Bounce), 1,920 (Strong Bounce) and then 2,080, 2,240 and 2,400.

If we thought 2,400 was deserved (Fundamentally), then 2,080 would be the Strong Retrace and 2,240 would be the Weak Retrace. There’s no particular evidence for either one of them showing support on the way down.

And if 2,000 stocks on the Russell were silly last year, why would 100 stocks on the Nasdaq be right? Neither one should be retaking their highs and that is likely to be proven on the Nasdaq over time.

The wildcard is AI and how that will boost the sectors like Cloud Storage we’ve been discussing – we’ll see how much money is pouring into that sector on the next earnings but keep in mind how focused the Nasdaq 100 is on those things – this could end up being great for the Nasdaq 100 but who is spending all this money?

We just saw F spend $3Bn and yes, they are spending for the future but it impacts earnings nonetheless.

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There’s still time to catch some powder runs, apparently:

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Here’s one from the wayback machine:

2008 Meltdown.png

Good charts. This one is scary:

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