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PHIL IN THE MEDIA

ABOUT PHIL

Testimonials

Phil: well, often you say, just for FUN, great comment, TXS, closed 2 SKF positions, one with 10 % , the other with 6 % gain.

RMM

Thanks to Phil (again) for the lessons on the art of the roll, selling premium and hanging tight under fire (particularly in the first hour of trading-MADNESS). Watching you manage the $25KP has really helped my trading in a big way.

Oknoman

Oknoman

I must add yet another paen to Phil’s “cash and short” call, as my TZA shorts are past paying for Similac and Pampers and have now covered all doctors and Mt. Sinai hospital bills for young Charlotte, as TZA took the portfolio up 10%.

Zeroxzero

That was a quick double on the DIA calls. trailing stop in place.

Kwan

Kwan

Hey Phil, Your HOV suggestion about 3 months ago basically paid for my Philstockworld subscription for years to come. My average cost is about $1.

Ether

Thanks again Phil and Successful Trading to all.

Verreaul

I love volatile days like this when you can make a bunch of money on these big swings. As long as you have Phil on your side calling the bottoms and the tops of course.

craigsa620

craigsa620

Phil, 26% on the week for the 20% I day.

trad

trad

Phil, 26% on the week for the 20% I day-trade, and since drinking the kool-aid last fall, the whole portfolio has doubled. Have a great weekend !!

JRW III

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some of our recent posts

What’s Next Wednesday – Powell Keeps it Easy but States are Raising Taxes

February 24, 2021

MORE FREE MONEY!!!

That was the message from Fed Chair Jerome Powell yesterday as he told the Senate the the Fed would hold interest rates near zero pretty much no matter what and the Fed would keep buying as many TBills as they want to print to allow Infinite Stimulus to keep going well into 2022. “The economy is a long way from our employment and inflation goals,” Mr. Powell said, just days after the PPI Report showed the highest inflation in 20 years. Powell will deliver the same message to the House this morning.

Consumer confidence in the U.S. rose in February for the second consecutive month as Americans grew more upbeat about current business and labor market conditions, the Conference Board reported Tuesday. Still, nearly a year after the crisis erupted in the U.S., the nation has about 10 million fewer payroll jobs than in February 2020. Of course, 1M of those jobs were cleaning offices – they're not coming back…

The Fed’s semiannual report delivered Tuesday said that business leverage “now stands near historical highs” and that insolvency risks at small and midsize firms remain considerable. Noting that asset bubbles triggered recessions in 2001 and 2007-09, Powell was asked if he sees a link between elevated asset prices and the Fed’s easy-money policies.

“There’s certainly a link,” Mr. Powell said. “I would say, though, that if you look at what markets are looking at, it’s a reopening economy with vaccination, it’s fiscal stimulus, it’s highly accommodative monetary policy, it’s savings accumulated on people’s balance sheets, it’s expectations of much higher corporate profits…. So there are many factors that are contributing.”

While the markets recovered on Powell's testimony, they didn't go any higher because, as I said yesterday – what more can this guy say? He's telling you that the Government can spend as much as they want for as long as they want and the Fed will back them up by buying every note they issue and the Fed will continue to lend money at 0% – even though no one in the private sector will do anything close. That's nothing more than perpetuating an artificial environment.…

Toppy Tuesday – What More Can Powell Say or Do at this Point?

February 23, 2021

Here we are again.

Indexes are still hovering around their all-time highs and Fed Chairman Powell is speaking to Congress. What is he going to say? What can he possibly say to make you believe that the stocks you are massively over-paying for now are going to be even more massively over-paid for by the next sucker down the road? How much money will they have to pour into the system to maintain this farce? Will there ever be consequences or were we just being silly for the past 245 years having a budget?

Money can just be printed when you need it. No matter what you want to spend, you just print more and buy whatever you need, right? That's our current fiscal policy and, as we noted yesterday, the Fed is responsible for most of it and yes, we need the stimulus and we need the liquidity BUT THERE IS A COST – and we haven't even been considering it.

Since the financial crisis, the Fed has kept the cost of borrowing money for banks at near-zero percent interest. That allowed those banks to borrow money to buy their own stock (as did many corporations) to inflate their value but not, of course, the value of their service to Main Street. When money is cheap because interest rates are low or near zero, the beneficiaries are those with the most direct access to it. That means, of course, that the biggest banks, members of the Fed since its inception, get the largest chunks of fabricated money and pay the least amount of interest for it.

Let’s recall that on September 15, 2008, Lehman Brothers crashed. That bank had been around for more than 150 years. Its collapse was a key catalyst in a spiral of disaster that nearly decimated the World financial system. It wasn’t the bankruptcy that did it, however, but the massive amount of money the surviving banks had already lent Lehman to buy the toxic assets they had created. In the wake of Lehman’s bankruptcy, $16 trillion in bailouts and other subsidies from the Federal Reserve and Congress were offered mostly to Wall Street’s biggest banks. That flow of money allowed them to return from the edge of financial disaster.

…

Monday Market Movement – The Weak Ahead

February 22, 2021

$4,000,000,000,000..

That's how much the M2 Money Supply has grown (26%) in the past 12 months (vs around 5% in a typical year) and it's going to grow another $4Tn this year as the Fed continues their easing policy. This is the biggest growth since 1943, when war-time Money Printing was all the rage. The looming danger for the economy isn’t only that the monetary printing presses have been in overdrive since the pandemic began, but also that they are already set for the same in 2021. A monetary surge for this year is locked in.

This is like giving kids an extra piece of candy the day after Halloween – it doesn't change anything, you're not going to get much of a reaction and the effort is probably wasted….

It’s worth tallying the list of policy measures that got us where we are. The first and largest source of M2 growth in 2020 was the Fed’s purchases of Treasurys and mortgage-backed securities. When the Fed buys such securities from nonbanks, which is its normal practice, it gives the seller a check or payment, credited to the seller’s bank deposit account. This increases M2. Since March 2020, the Fed’s holdings of Treasurys and mortgage-backed securities have increased by almost $3 trillion. M2 has increased by roughly the same amount.

The second largest source of M2 growth has been commercial bank purchases of short-term Treasurys and other debt securities, including mortgage-backed ones. These transactions create deposits in the same way as new loans do, with the deposit account of the seller or borrower being credited. Since the start of the pandemic last year, the increase in banks’ holdings of these assets has added almost $1 trillion to deposits and, therefore, to M2.

The U.S. money explosion isn’t over. Bank reserves, currently $3.2 trillion, will increase by about $1.4 trillion this year simply from Fed purchases of Treasurys and mortgage-backed securities at a promised $120 billion a month. In addition, the Treasury indicated in its February Refunding Statement that it will run down its Treasury General Account at the Fed by about $820 billion this year. This money will be spent through federal fiscal programs. These expenditures…

PhilStockWorld February Portfolio Review – Part 2

February 19, 2021

Does trading have to be exciting?

While the market remains at all-time highs, I remain skeptical and a lot of that is because I allowed myself to become complacent in 2007, after having missed the rally of 1999 because that, too, was ridiculous. In retrospect I was right – but not until March of 2000 and I could have had some fun betting on anything with a pulse in 1999 so, when 2007 came along – I finally went with the flow and, while we had pretty good timing in 2008 getting out on top – a lot of people didn't. So I guess, this time around, I just want to make sure nobody gets burned when this thing collapses.

We are all shaped by our past and we all run our own gauntlets to become the people we are today. I know I trade like an old man because I learned from my Grandfather, Max Davis, who was born in 1903 and, in 1973, 10 year-old me laid on the floor on Sundays with the stock section of the paper laid out on the floor (you only got stock reports on Sundays back then), circling companies that made new highs or new lows so we could later investigate why it was happening and then Grandpa would do his Fundamental Analysis of the companies (often including actually visiting the company) to decide if there were any hidden values there.

Having lived (in England) through World War 1, the Pandemic that followed, the Great Depression and World War II, Grandpa Max had seen a lot of shit – and he was very good at conveying his experiences to me from both a Social and Economic perspective. Though he never went to college, Grandpa Max was a voracious reader and a very sharp businessman. Learning from him always gave me a long-term and patient perspective on stocks and, since we only got stock news on Sundays anyway – you learn to be patient by default.

So of course, growing up, I gravitated to books by Jeremy Grantham (also British) and Warren Buffett and that's my "style" – value investing but my twist on it (as I'm 30 years younger) is to use options for hedging and leverage – rather than just trying to…

PhilStockWorld February Portfolio Review

February 18, 2021

$1,766,591!

Our paried Long & Short-Term Portfolios have gained $157,564 since our January Review and that is, of course, ridiculous and reflective of this ridiculous bubble rally. The LTP went up and the loss of the STP went down – even as we increased our hedging. That's because we sell a lot of premium and the premium decays regardless of the market direction. Time is our friend using this strategy.

Also, we have SUBSTANTIAL amounts of CASH!!! across all of our portfolios as we think this entire market is BS and will collapse at some point. At least 2 or 3 days each week I wake up wanting to just cash out and go on vacation – only I can't go on vacation and I'd be bored so we stay invested – but that's a really stupid reason to risk your assets if this is money that is critical to your future.

The S&P 500 is up almost 100% from it's March lows and yes, that was a 35% drop from the February highs but now we're 20% above those (3,393) and it's simply too far, too fast so we're being very careful with our positions and very aggressive with our hedges. In our last STP Review, we determined we had a good $300,000 worth of protection and we only have $551,828 worth of position in our LTP – that is well-covered!

We added new longs however in the LTP on BABA, GOLD, OIH, TOT, VLO, WPM and WU in the past 30 days as we've been enjoying earnings season and the bargains it brings. We still have $1,057,650 of CASH!!! sitting on the sidelines and we've sold very few naked puts so we also have tons of margin to play with. On the whole, we'd love a good crash – so we can go bargain-hunting. I will repeat what I said back on December 16th as the strategy still holds and, after making 10% for the month, perhaps more people will pay attention:

We have 33% less

…

Retail Wednesday – Is America Shopping?

February 17, 2021

Retail Sales.

They make up 60% of our GDP and December's Retail Sales were down 0.7% in December from the previous month, rather than up 3-4% as expected for the holidays. Anything positive this month would be an improvement but the trend has not been our friend recently. Excluding Autos, the trends are far worse as people still bought new cars last year, something the auto industry wisely locks in as 26% of all cars (50M) in the US are leased – so you HAVE to get a new car every 3 years or so.

14.6M cars were sold in 2020 and that's pretty much the amount of lease turnover for a year. Auto Sales overall were down 15.5% from 2019 and even leasing was down at 26% from 30%, so that dropped about 15% too. The key takeaway from the last Retail Sales Report is that it was clear that Consumer Spending decelerated at the end of the fourth quarter, partly because of expiring benefits, weakening confidence in the short-term outlook, and restrictions on certain activities due to worsening coronavirus trends.

Motor vehicle sales increased 1.9% m/m after declining 1.5% in November
Gasoline station sales were up 6.6% after declining 1.6% in November
Electronics and appliance store sales dropped 4.9% m/m following an 8.3% decline in November
Nonstore retailer sales fell 5.8% after declining 1.6% in November
Food services and drinking places sales declined 4.5% after declining 3.6% in November

We'll see what we get in the 8:30 Report but, to give you and idea of how insane the market is these days, this is what the Retail Sales ETF (XRT) looks like DESPITE these FACTS: …

Tricky Tuesday – Futures Jacked Up During US Holiday to Fool Who?

February 16, 2021

This is total BS!

The S&P 500 is up 40 points (1%) since Friday's close and the Dow is up 300 points, etc. on NO news and NO trading – just some last minute window-dressing into the bell and after hours – when no one is actually trading. This is what fund managers like Jim Cramer do when they need to sell their holdings – they create a false sense of excitement to lure the suckers into buying shares while the fund managers are dumping their overpriced holdings.

And, by the way: Since I pointed out how blatantly Jim Cramer used to manipulate the market in his confessional video back on January 29th, team Cramer has been busy redacting that video from the Internet. Very 1984! If you can't find the video – it never happened, right? A text description survives on Seekeng Alpha (for now) but who knows how long it will last.

Who controls the past, controls the future: who controls the present, controls the past… The mutability of the past is the central tenet of Ingsoc. Past events, it is argued, have no objective existence, but survive only in written records and in human memories. The past is whatever the records and the memories agree upon. And since the Party is in full control of all records, and in equally full control of the minds of its members, it follows that the past is whatever the Party chooses to make it. – Orwell

I find this disturbing and you should find it disturbing but, unfortunately, to our kids – reality is only what Google says it is. How many generations before, like 1984, there are no written records and the only past we can refer to can be erased at the whim of a censor – or simply because a "leader" like Donald Trump doesn't like what it says? We're having that discussion now in Congress and we're losing the battle – but you wouldn't know you're losing the battle because the 6 Billionaires that control the media aren't interested in telling you that, are they?

IN PROGRESS

Thousand-Dollar Friday – Our Futures Shorts Pay off Nicely!

February 12, 2021

Are we having fun yet?

In Wednedsday's Live Trading Webinar, we discussed using $58.50 as a shorting line for Oil (/CL) Futures and we had a couple of small dips but we finally caught the big one this morning. We don't need to be so quick to jump back on and re-short as we'll certainly get a strong bounce AND it's a holiday weekend – so "THEY" are as likely to drive us back to $58.50 as they are to panic out and sell.

That's why, last Friday, we went with the Ultra-Short Oil ETF (SCO), picking up the March $9 calls at 0.65 – to play for the post-holiday drop without having to worrry about the Futures over the weekend. Those calls dropped to 0.55 on Thursday, as oil topped out, but finished the day at 0.72 and we have 35 days left to play, looking to make 0.25 x 50 contracts at 0.90 is $1,500 on our $3,250 outlay (50 contracts in our Short-Term Portfolio).

Similarly, we played the Russell (/RTY) Futures short at 2,300 (as noted Tuesday in: "Tuesday Trouble at 2,300 on the Russell 2000") and, so far, that's been good for $1,250 per contract but were up $2,500 per contract on yesterday's dip and we should have taken that money and ran – but we didn't. Though I still like them for a nice, weekend hedge.

Keep in mind that it's only a hedge when you have long positions that will gain as much or more than your potential loss on the (in this case) short position if the market goes higher – otherwise it's a BET and BETTING on the Futures is a very dangerous thing to do.

As noted on Tuesday, according to our fabulous 5% Rule™, we've had a 10% run in 10 days on the Russell from 2,100 to 2,310 and that's 210 points so we expect a 20% (weak) retrace of that run or 42 points – back to 2,268 or a strong retrace back to 2,226. If the weak retrace holds (has so far), then we may be consolidating for a move higher but, if the strong retrace fails…

Faltering Thursday – Economy Shows Signs of Struggle

February 11, 2021

These are not the headlines for a record-high market.

Best Buy isn't cutting jobs because the 2nd quarter is going to be fantastic, are they? The Biden Administration isn't cutting school expectations because everything is going to be normal after the Summer break. The virus isn't resurgent in Germany because it's about to go away, Seadrill isn't going Bankrupt again because the oil industry is rebounding.

At what point do we plan on getting realistic? We don't have to because Uncle Sam keeps writing checks and everything is awesome until the money runs out (and maybe it never will). Meanwhile, we're being asked to pay record-high prices for stocks based on future expectations that everything will remain awesome for years so come and will, in fact, get much better because, currently, we're paying 30-40 times the earnings potential of these stocks. That means it will take 30-40 years for those companies to generate a return on our investment – AWSOME!

That means people are either buying stocks with irrational expectations or they are rationally using them solely as trading vehicles and have no intention of being long-term investors. To the extent that is true, market sentiment can turn on a dime and, if it does and if there are no fundamental investors to underpin the stock prices – what is going to happen when that sentiment changes?

The change in sentiment in February led to a 35% correction in the market and it could have been worse but the Government quickly stepped in with FREE MONEY and, since then, we've been promised MORE FREE MONEY over and over again and, though we are still waiting for it – it does seem very likely that it will be here in a few weeks. March's…

Which Way Wednesday – Powell and the 10-Year Note

February 10, 2021

Brother can you spare 410Bn dimes?

That's what we need to sell in today's 10-Year Note Auction and, if you have $41Bn to spare for 10-years, our Government will be happy to pay you almost (but not quite) 1% interest for holding your money. Needless to say, these auctions have been attracting less and less interest and, if it is perceived that the US has trouble borrowing money, that could put upward pressure on rates and we certainly can't afford that since we are $27Tn in debt – soon to be $30Tn in debt when Biden passes his $1.9Tn Stimulus Bill.

That's why Fed Chair, Jerome Powell is jumping in to make a speech at 2pm – we may need him to spin those auction results to calm the markets if the auction doesn't go well. We are only in the early stages of the debt crisis that began in 2008 and has essentially kept going since – the pandemic is only the latest excuse to prop up our economy by printing more money and it won't be the last as our debt burden is projected to grow another 100% over the next 20 years:

After World War II, our Government initiated higher, progressive taxes to pay down our debt. This Government doesn't have the stomach to ask the people to make sacrifices, so we force the sacrifices on our children and our grandchildren – who will one day have to deal with the mess we are making.

Here's the real kille, even at 1%, the interest on our debt is $400Bn a year yet, NORMALLY, the government pays around 4.5%, which would be $1.8Tn so, if rates ever do normalize, we would have to find $1.8Tn (1/2 the entire budget and double the entire discretionary budget) just to pay the interest on the debt we already have and, since we would have to borrow that too, we'll quickly be in a cycle of ever-escalting debt until we finally have to default.

So how…

Tuesday Trouble at 2,300 on the Russell 2000

February 9, 2021

Small Cap Stock.

The kind that should give us an indication of the health of the broad economy but, according to the Russell 2000 this past year – 2020 could not have been better as our small cap index rallied back from below 1,000 in March all the way to 2,300 early this morning – that's up 130% in 11 months! Let's say we started the year at 1,600, a 700-point gain is still a nice 43% gain on the year.

We should have a virus every year – is the only possible conclusion we can draw from this action. The Russell topped out at 1,740 in 2018 and was down 42.5% 18 months later – so it's kind of a finicky index but this is truly amazing though the Nasdaq is up from 9,000 to 13,700 and that's 4,700 points, or 52% but I guess with the Nasdaq we can argue that Tesla (TSLA) and GameStop (GME) deserved their 500% gains in the past year, right?

The secret, of couse, is to completely ignore the true value of stocks and just assume that, whatever price they are now, they can be higher later. Fortunately, what can't be higher later is the price/earnings ratio of the Russell, which is pinned at 35 and they cap the p/e measures at 35 so stocks that have p/e's of 1,000 don't throw off the scale but, of course, 35 was a number they picked because it was exreme and ridiculous and it was very unlikely ANY stock would exceed 35 for very long before the public became outraged and dumped it.

Of course, that's not happening at all now and, in fact, almost ALL of the Russell 2,000 stocks now have P/E Ratios higher than 35 so the P/E for the Russell is – 35. If 1,999 stocks had a P/E of 35 and ONE stock had a p/e of 10, the Russell 2,000's average P/E would be 34.9875 but it's not, NO Russell stock has a P/E of 10 and no 2 are under 15 and no 4 are under 20 and no 8 are under 25 and no 16 are under 30 and not even 32 stocks are even under the maximum P/E of 35 –…

Monday Market Momentum – Still Going Up

February 8, 2021

Inflation!

That's the new word driving the markets. Of course all this freshly-printed money was eventually going to spill out into the economy but, all of a sudden (after strategy meetings at Davos) all the prognosticators are now spinning inflation as the new reason the markets will go higher and higher. And it's a good reason, as you can see from this chart of the M1 Money Supply (physical money), which has jumped from 4Tn to 6.8Tn (70%) in 2020.

Keep in mind it took the United States of America 244 years to get to $4Tn and we just added $2.Tn in one year. As Admiral Farragut said: "Full speed ahead and damn the torpedoes" and that sums up the Fed's strategy quite nicely as they have FLOODED the World with Dollars in the past 12 months but those Dollars aren't moving – because we're all locked in our houses. They are moving to Amazon and Ebay and pretty much every streaming sevice on the planet and to ISPs and, of course to Apple and to Grub Hub and Door Dash and Cloud Servers – the stuff we are doing inside but imagine what will happen when we go outside and spend 70% more money than we had in 2019?

Of course there is going to be inflation and, depending on how you model it, there could be MASSIVE INFLATION ahead as 70% more money in circulation can lead to 70% more spending and a 70% boost to our GDP, from $20Tn to $34Tn and that could reduce our debt to GDP ration back below 100% (barely). We've done this before, of course.

After World War 1:

…

Non-Farm Friday – Is America Working?

February 5, 2021

This has not been a good trend.

Since the ill-conceived Summer Walk-Out, when everyone decided the virus was no longer a threat.. just because… we have been going the other way as the virus has re-asserted itself and last month we even had a net job loss of 140,000 jobs. That's not good because Donald Trump was the first President since Herbert Hoover (-6.4M) to preside over a net loss of jobs during any term, losing 3M net jobs in 4 years.

Keep in mind that we add about 2M people per year so we need at least 1M more jobs per year just to stay even (with 1/2 the population working) so losing 3M jobs puts us 7M jobs behind in 4 years so Biden will have to add 150,000 jobs a month to keep up with population growth AND another 150,000 a month to make up for the lost Trump jobs over the next 4 years – just to get us back to where we were before the Trump error began.

That's 14.4M jobs in 4 years but it is possible as Joe Biden was Vice-President when Obama added 10.4M jobs in his last term and Biden was a Senator when Bill Clinton added 12.3M and 11.3M jobs in two consecutive terms. Heck, Biden is so old that he was a Senator back when Jimmy Carter and Ronald Reagan added over 10M jobs each. So yes, we can make America great again and we started on that road yesterday as Vice President Harris cast the tie-breaking vote in the Senate to move forward with Biden's $1.9Tn Stimulus Package.

$1,900,000,000,000 is certainly a lot of money. In fact, it's $131,944 for each job we need to create over the next 4 years so of course the Republicans voted 100% against it as they don't want yet another instance of a Democrat turning around an economy that was wrecked by a Republican – how many Hoovers can there be before people begin to notice a pattern?

Republicans offered amendments on cutting federal funding to states that have an active investigation into underreported deaths in nursing homes and blocking aid for schools that don’t reopen after teachers have had the opportunity…

38 Thursday: S&P 3,800, 3,800 Deaths Yesterday and Bitcoin $38,000

February 4, 2021

A lot of 38s this morning.

I'm not one of those numbers people but I just noticed it in my scans and found it interesting. More so, I find it disturbing that 3,843 Americans died yesterday from Covid-19 and 118,991 people were infected (just under 1M per week) and you would think, listening to the news, that we have this situation well in hand. People – this is denial. Yes, we have a plan but you can't have 27,000 people a week dying and act like things are good. That's 108,000 people per month – Burbank, CA has 102,511 people in it. Green Bay, WI has 104,576, Boulder, CO has 105,673.

This is still an ongoing crisis but the market is pricing in two things that don't go together – that the virus is "fixed" but also that we will keep getting Trillions of Dollars in stimulus while the economy makes a fantastic recovery. This is what they call "pricing to perfection" but actually we're pricing perfection PLUS stimulus and have now moved well beyond perfection in our valuations.

Overall, we're still lurking about that 3,850 line, which is the 35% line (over 2,850) per our 5% Rule™. I'm not going to get into the whole valuation discussion again but we'll either break out of this channel (back to 3,700) or we'll fail it and failure has no support all the way back to 3,560. That makes the risk/reward play for shorting the S&P (/ES) Futures below the 3,850 line a very tempting play.

There WILL be stimulus – it's just a matter of how much but $1.9Tn is baked in and it certainly won't be more and earnings have been generally good so that's baked in and most of the big market movers have reported so there's no new catalyst and we're only vaccinating 1M people per day or 10% of the population in a month and Q1 ends in 60 days so can't improve much there and even if we get to 1.5M/day by the end of March, that's only 1/3 of the population vaccinated by the end of Q2 so marginal improvements then – not full improvements in the economy ahead. …

Webinar Wednesday – Guest-Starring Bill Olsen of NewsWare

February 3, 2021

Let's talk Fundamentals.

Our guest today in our 1pm (EST) Live Trading Webinar will be Bill Olsen of Newsware and he's going to show us lots of tricks to get the most out of his platform, which is better than a Bloomberg Terminal for bringing you the headlines before they become headlines. While I'm mostly a Fundamental, Long-Term Trader, who doesn't like to get a jump on a quick trade because you know something that's not generally known yet?

As Gordon Gekko said in "Wall Street": "I don't throw darts at a board, I bet on sure things." Information is power and we're living in the information age but, unfortunately, like everything else, you have to learn to read and filter the news and, while Bill has many pre-set filters you are going to love – you are still going to have to put your 10,000 hours in if you want to get your Gekko on.

Just this morning, for example, the following alert popped up at 6:14:

Ant Said to Reach Agreement with Regulators on Overhaul – Bloomberg
(Street Insider 02/03 06:14:06)

Perhaps that headline by itself isn't helpful but we know that Jack Ma has been out of favor with the Chinese Government and that AliBaba's (BABA) stock price has suffered because of it. We also know Amazon (AMZN) just knocked it out of the park on earnings so BABA should also do well and that means we BUYBUYBUYU on that news.

BABA is already up $10 pre-market at $264 but that's down from $319 in October and the best way to play it is to say we WOULD like to own it for $200, so we can sell 5 2023 $200 puts for $33 (perhaps $30 if we open higher, so call it a $15,000 credit) and then we can buy 15 of the 2023 $250 ($70)/300 ($50) bull call spreads for net $20 ($30,000) in our Long-Term Portfolio (LTP) and that's net $15,000 on the $75,000 spread so there's $60,000 (400%) of upside potential at $300 and, as our Members know, we can look forward to selling short calls like (but NOT YET) 5 March $290s

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Federally Fueled Tuesday – Stimulus Talks Advance and Fed Makes Nice Noises

February 2, 2021

Productive!

That's what they are saying about yesterday's negotiations between Joe Biden and the GOP Senators yesterday and that means $1,900,000,000,000.00 of MORE FREE MONEY is still on the table, so of course the markets like that. They also like that White House Press Secretary Jen Psaki said that, while Biden “is hopeful” that what he calls the American Rescue Plan “can pass with bipartisan support, a reconciliation package is a path to achieve that end.” That’s a reference to a procedure that would allow the legislation to pass the Senate with just 51 votes — potentially, all 50 Democrats plus the vote of Vice President Kamala Harris.

“I was the first person to speak about a specific issue," related Sen Bill Cassiday of Louisiana. "I said, ‘Mr. President, I don’t want to seem rude,”’ Cassidy recounted in an interview. “He said, ‘Listen, I’ve been in all these negotiations. We’re going to have a difference of viewpoints on some things. We’re going to agree on some things. And when we disagree, we’re not being rude.” Isn't that crazy, discussing issues with a President who listens? The World has surely gone mad!

Meanwhile, on the other side of DC, the Fed has been doing their best to pump things up with MN Fed President, Kashkari, saying “I’m not fazed by the fact that there’s speculation going on in the stock market,” Kashkari said he wouldn’t worry even if there was a stock market correction. The dot-com bubble popped in 2000 and let to a “minor recession,” Kashkari said.

Atlanta Fed Presient, Bostic, continued the message, saying not only is he not worried about the U.S. economy overheating, but he thinks growth could happen faster than many expect. He based that on his anticipation that the economy could recover from the Coivd-19 recession rapidly once vaccinations become more widespread and the stimulus being pumped begins to go to more people in need. “A lot of the recent developments have been positive,” he added. “We should be open to the possibility that things might happen more strongly than they would otherwise.”

"Don't worry about the Economy"
"The market is not in a bubble"
"More

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Market Week Ahead – High Ho Silver Trading

February 1, 2021

Now silver is flying thanks to Reddit.

Silver rose by as much as 11% to $30 an ounce, its highest value since 2013. The moves are the latest example of small-time traders buying stocks and other assets that large Wall Street funds bet against, resulting in large losses for major investors. Some users in the Reddit forums WallStreetBets and WallStreetSilver argued that silver is a heavily manipulated market, and a surge in the silver price could hurt large financial services companies. "If you don't care about the gains, think about the banks like JP Morgan you'd be destroying along the way," said Reddit user RocketBoomGo, in a widely circulated post.

Isn't it terrible the way these investors are manipulating the market. Meanwhile, the Dow is being manipulated 600 points above Friday's Futures close by PROFESSIONAL manipulators (see the difference?) who have jacked the index up 2% in very thin, pre-market trading NOT by getting a bunch of retail investors to buy but but getting a bunch of professional analysts to upgrade the prospects of key Dow components so they will be re-pricied at the open forcing PASSIVE INVESTORS to pay higher prices when the index fund purchases are triggered on the open market.

See? That is the way the markets are SUPPOSED to operate. Giving people an opinion in an open forum and leaving the action of the marketplace up to thousands of individual investors – now that is un-American!

Despite what some retail traders had hoped, some of the biggest profiteers from last week's market action were said to be Wall Street giants such as asset manager BlackRock and the private equity firm Silver Lake. However, other big investors have been hammered by the trading frenzy. Hedge fund Melvin Capital – which bet heavily that shares in Gamestop would fall – lost 53% of its value towards the end of January, according to media reports.

The firm has since received commitments for fresh cash from investors, leaving it with around $8bn in assets, but that is still down from $12.5bn at the beginning of 2021, according to Reuters. The firm had bet that GameStop's stock, which traded at less than $5 five months ago, would fall further, which would…

Flip Floppin’ Friday – Closing out a Wild Week

January 29, 2021

What a ride.

GameStop (GME) went from $75 to $483 to $112 and now $335 pre-market and it's like watching a ball bounce around a roulette wheel at the moment except, at least on a roulette wheel – the numbers fall within a particular range. This, on the other hand, IS CRAZY!

But it's also a great lesson in valuation as, clearly, the business of GameStop hasn't changed this week and even the perception of the value of GME hasn't changed this week ($100 is a stretch) but the SENTIMENT has been all over the place, hasn't it?

The GME debacle is nothing more than what goes on every day in the markets but this is a close-up look at what happens in high-speed mode with running commentary from 1,000 analysts trying to dissect every move (I'll be on Bloomberg at 11 am, in fact). What's fascinating about GameStop is that, rather than Wall Street Criminals manipulating the stock, ordinary traders are now doing it. If we allow ordinary traders to manipulate stock prices, how will Goldman Sachs make money? And if "Government Sachs" can't make money – Congress springs into action. When this guy does it, they just yawn:

Let's keep in mind that, for 20 years, Jim Cramer, a self-confessed market manipulator, has gotten on TV and told his army of followers to BUYBUYBUY or SELLSELLSELL stocks every day and, very clearly, they do exactly that at the open the next morning. Not one investigation has ever been launched yet the moment some ordinary traders do the same thing – CONGRESSIONAL INVESTIGATIONS!

That's because Jim Cramer works for the elites, sending the beautiful sheeple into the slaughterhouse for the benefit of his Wall Street buddies but the second the sheep object and try to take matters into their own hands, the Wolves of Wall Street cry FOUL! and beg the SEC to step in and stop the madness. Even our brokers turn against us because we retail invesors are nothing compared to…

Thrilling Thursday – GameStop $500 is no more Ridiculous than Tesla $900

January 28, 2021

WTF people?

GameStop (GME) is "only" up 830% in the past 12 months while Tesla (TSLA) is p 1,386%. The market cap of GameStop is $24Bn and that's completely ridiculous as Best Buy (BBY), who sells $43Bn worth of merchandise and MAKES $1.5Bn/yr has a market cap of $29Bn at $113. GME, by comparison, has $6.5Bn in revenue and LOST $673M in 2019 and $471M in 2020 and they PLAN on losing $141M in 2021.

Tesla, on the other hand, isn't just being valued as highly as ONE of their competitors – they are being valued higher than ALL OF THEIR COMPETITORS COMBINED. McDonald's is worth more than all fast food, Wal-Mart isn't worth more than all of retail, not even Amazon is worth more than the rest of the on-line competition but TSL50A has idiots paying $850Bn at $864 compared to $200Bn for Toyota (TM) at $145. Toyota has $275Bn in sales and MAKES $17Bn for a p/e of 12 while TSLA has $30Bn in sales (1/10th) and $2.5Bn in profit (1/7) yet TSLA is valued at 340x earnings, 28 TIMES the value Toyota commands.

When a game is ridiculous, irrational and the rules keep changing – it is best not to play.

IN PROGRESS

Weakening Wednesday – GameStop and Bust!

January 27, 2021

$4,000 per contract (you're welcome)!

That's the profit from yesterday's Russell (/RTY) Futures shorts at 2,180 as we're now falling back all the way to 2,100 and we'll stop out 1/2 here to lock in $4,000 per contract and put a stop on the other 2 at $3,500 per contract (2,110) so our worst case is an average exit of $3,750 but we can make another $2,000 per original (4) contract if we have another 80-point drop from here.

We don't try to make a massive killing on the Futures, they are just bonus protection until our hedges begin to kick in and they allow us to make quick profits when the market has a little dip. In yesterday morning's PSW Report (just $3/day to make sure you don't miss it!), we also played the Dow Futures (/YM) short at 31,000 and we're below 30,500 now (1/2 stop, rest at 3,600) for another $2,500 per contract win and the Nasdaq paid $20 per point from 13,500 (a GREAT shorting line) to 13,350 ($3,000 per contract) and we set the stop there at 13,375 on the other half and the S&P (/ES) Futures paid $50 per contract from 3,850 to 3,800 ($2,500/contract) and you KNOW 3,800 is going to be bouncy so we stop out there completely and simply re-play it if it fails but why play out the bounce?

You HAVE to have hedges in such a clearly broken market. We went over our main hedges in our Short-Term Portfolio Review two weeks ago and discussed it in that day's Live Trading Webinar, so I'm not going to get into it here but we had a good $293,000 worth of protection, not including A LOT of additional profit if TSLA and CMG ever come down to Earth.

Thank goodness we didn't bet against GameStop (GME), which left the Earth last week and is now passing Jupiter, not at $147, which was yesterday's close but at $225 now – and that's AFTER pulling back from $350 in yesterday's INSANE after-hours run-up that bought the market cap of GME to over $22 BILLION.

That's for a Retailer who makes $400M in a good year…

Testy Tuesday – S&P 3,850 Edition

January 26, 2021

S&P 3,850.

That's 1,000 points (35%) over our Must Hold Level though we have discussed how low tax rates are adding 10% and stimulus is adding 20% so that accounts for most of the growth over the past two years. It's still a very impressive chart and, if we can hold this level (I doubt it), the next stop will be 4,000, or 3,990 to be exact, at the 40% line.

Of course, Biden has been elected so the additional $1.9Tn in stimulus (10% of our GDP) is baked in for Q1 and Biden has said he will maintain the low Corporate Tax Rates set by Trump (for now) so we STILL have that 30% underlying support to the index – as long as no one changes their minds. The other 5% depends on earnings and so far, so good as most of the reporting companies have managed not to disappoint this quarter.

Overall, earnings for S&P 500 companies, DESPITE 20% of our GDP being direct Government stimus and another 20% of our GDP as Fed stimulus, are down 14.4% from last year but most companies are projecting some form of normalization in the second half and Wall Street wants us very much to look forward to a virus-free future and not back to a virus-ravaged past.

The US is, in fact, at Biden's goal now of vaccinating over 1M people per day (1.13M yesterday), but that needs to be improved upon as that's just 90M people or just over 25% of the population by the end of April – certainly not the "normalcy" Corporations are looking for. Even 50% by the end of July would make for a poor Q3 so we must do better but, thankfully, in countries where they are vaccinating heavily, infection rates are dropping rapidly.

Israel is leading the World so far, with almost half their population vaccinated already. UAE is at 25% and US is at 6.87% but it's only Biden's first week in office, so hopefully we can get things going and start acting like a First World Country again.

Israel is vaccinating 2 out of 100 citizens per day and they expect to be at 100% by March. …

The Market Week Ahead – Earnings Start to Matter

January 25, 2021

Now we're getting some action!

About 1/3 of the S&P 500 reports this week so there should be lots of opportunities for baragain hunting – unless, of course the earnings are not good and we finally begin to deflate this bubble market. This will be the first week in 4 years that there is likely to be more focus on the markets than the Government as the Government goes back to "normal" functions with a President who doesn't try to dominate the news cycle.

That shifts the focus back to earnings but one might wonder how earnings can possibly justify the sky-high valuations we have been giving most stocks in the past few years. According to Jill Mislinsky at DShort: "The peak in 2000 marked an unprecedented 129% overshooting of the trend – substantially above the overshoot in 1929. At the beginning of December 2020, it is 154% above trend. The major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be at the 1457 level."

154% above treand. That's a lot! While I don't see the S&P going all the way back to 1,457, I do see a 20% correction almost inevitable, back to about 3,000 and, while we may go higher, we'll still pull back at some point so 3,829 (this morning's open) is a very tough pill to swallow on the S&P 500.

We do have a Fed Meeting on Wednesday and the Chicago Fed National Activity Index was in-line this morning but again, 20% of our GDP is stimulus and we are celebrating very slight growth – this is a very dangerous thing to get used to!

Dallas Fed comes out at 10:30 and tomorrow we get Home Prices and Consumer Confidence, Wednesday it's Durable Goods, Investor Confidence, Business Uncertainty and the Fed and then Thursday we have GDP, Retail Inventories (very important after Christmas), New Home Sales, Leading Economic Indicators and the KC Fed. Friday we finish the week with Personal Income, PMI and Consumer Sentiment – a very busy data week with NO Fed speak – other than Powell's press conference on…

Friday Failure – Europe in a Recession Seems to Matter

January 22, 2021

Recession in Europe – again?

The eurozone economy has suffered a weak start to the year, with high coronavirus infection rates and government restrictions increasing the risk of a second recession since the pandemic first struck last year. Fresh Covid-19 outbreaks that authorities have struggled to contain are continuing to weigh on economic activity and have damped expectations for a strong global recovery in the first half, a reality that US Investors, so far, have refused to face.

In the early months of the year, a number of large economies face the threat of declining output as restaurants, cinemas and a wider range of businesses that involve close physical proximity are closed or have had their activities severely curtailed. Data firm IHS Markit said its Composite Purchasing Managers Index, which measures activity in the manufacturing and services sectors, for the eurozone fell to 47.5 in January from 49.1 in December. A reading below 50 points to a decline in activity.

A similar survey for Japan pointed to a bigger contraction in the services sector, while figures for the U.S. to be released later Friday are expected to point to a slowdown in the services recovery.

Seriously people – we're not shocked by this, are we? Most of the investing community is playing ostrich and have been keeping their heads firmly in the sand and pretending the vaccines will somehow "fix" everything but we've had flu vaccines for decades and, guess what, people still get the flu! We are simply refusing to have realistic discussions about our future because it's just too depressing to contemplate but to go the opposite way and invest as if things could not possibly be brighter for our near-term future is simply foolish.

We are still in the middle of a Global Catastrophe and it is NOT fixed. We haven't even seen the real repurcussions of the damage it's caused because we are filling all our economic holes with endless supplies of money and we're acting as if that has no long-term consequences. Now that Joe Biden is President, the GOP is worried about the debt again and is seeking to block his $1.9Tn spending program. Then where would we be?

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3,850 Thursday – S&P 500 Seems Comfortable 700 Points Over the Must Hold Line

January 21, 2021

3,150.

That's still the true value-line we have for the S&P 500 based on old-fashioned notions like actual earnings and actual prospects without the assumption of Trillions of Dollars being pumped into the economy. It's "only" a 20% drop from where we are now and we were down there as recently as October and below 2,850 in June. 2,850 was our old Must Hold Line but we capitulated by 10% on the assumption that Corporate Tax Cuts would not be going away completely – it's the MASSIVE stimulus that's been an upside surprise since then.

The Chart above is still using our 2,850 base and the 5% Rule is still working from 2,850 so it's still in play and that means 3,990 is the 40% line. We had good consolidation at 30% (3,705) during December so we can assume the lines in between that 285-point run will be 20% (57 points) each and that's going to be 3,762, 3,819, 3,876 (which we're testing now) and 3,933. Those are the lines to watch to see how the S&P behaves during earnings season.

Generally, companies have been beating low expectations and, so far, investors seem to be in a forgiving mood as, for example, United Airlines (UAL) lost $1.9Bn in Q4, which is 15% of their $13Bn market cap yet the stock is only down 2% pre-market. Why? FREE MONEY!!! There will be more free money and no one thinks Joe Biden will let the airlines go bankrupt – even though he is a train guy.

IN PROGRESS

Whipsaw Wednesday – America Heads in a New Direction

January 20, 2021

We're going to go back to the future!

After taking an evolutionary step backwards for four years, it's time to get America back on track and moving forward again in the 21st Century and, hopefully, we still have time to make this decade the Roaring 20s and not the prelude to the second Great Depression. As Warren Buffett says about investing in companies:.

“I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”

Well, America has not passed the idiot test but it's still too soon to get a grade as we have to see if Engineer Joe can get this train back on the tracks or if, at this point, he'll merely be able to bring us in for a soft landing. At 78 years old, even Joe Biden doesn't think he should be President for more than 4 years and is calling himself a "Transition President". Reagan was 78 when he left office, Trump is 74 but, as Reagan said of Walter Mondale:

“I want you to know that I will not make age an issue of this campaign,” Reagan said. “I am not going to exploit for political purposes my opponent’s youth and inexperience.”

Experience is certainly what Joe Biden is bringing to the table – he's been a Senator since 1973, then VP for 8 years in 2009 and then 4 years of relaxation as a Professor at the University of Pennsylvania while remaining at the forefront of the "Cancer Moonshot" program he started and is likely to bring to the White House officially as one of his first acts. If you want to know what Joe Biden is really about, watch his eulogy for John McCain.

Politics doesn't have to be ugly and our nation doesn't have to be bitterly divided. We, the people, are being offered a chance to go forward with the grace and…

Tuesday Already?

January 19, 2021

January 19th already, too.

This new year is flying by and maybe that's because 2020 seemed to take forever. Even though we are still locked down, there is, hopefully, light at the end of the tunnel but before we start to take off the masks and party like it's 2019 (remember the good old days), let's keep in mind that there's still a lot of work ahead of us and, according to the CEO of vaccine-maker, Moderna, this Covid virus is in it for the long haul.

On Friday, the World Health Organization urged more effort to detect new variants. The U.S. Centers for Disease Control and Prevention said a new version first identified in the United Kingdom may become dominant in the U.S. by March. Although it doesn’t cause more severe illness, it will lead to more hospitalizations and deaths just because it spreads much more easily, said the CDC, warning of “a new phase of exponential growth.”

Of course, that's good news for Biotech.

A couple of weeks ago, Moderna's CEO, Bancel said that the "nightmare scenario" where mRNA-1273 provided protection for only a few months was now "out of the window." He added that the slow decay of antibodies generated through the vaccine indicates that the duration of protection of mRNA-1273 could be up to two years. That news was certainly encouraging for people across the world and for investors. Two years of immunity would mean that Moderna could at least see substantial revenue from its vaccine every other year. But in an interview with CNBC last week, Bancel gave investors even more reason to be excited. He stated, "I think this will become a market like flu." The flu, of course, is seasonal, with vaccines administered on a yearly basis.

While it's a little goulish betting on the downfall of humanity – it's also realistic as, while we've been distracted, more than 60% of all US Covid-19 cases have been reported SINCE Election Day – just two months! 40% of the deaths have occurred in the last 60 days as well. The US now has over 24M cases, 14.5M of which came in the last…

Happy Martin Luther King Day

January 18, 2021

It's Martin Luther King day so the markets are closed.

It's a good day to read his "I Have a Dream" speech – really is amazing when you think of the great social change in this nation that was set in motion by one man with a vision. Here's a great video of the actual event.

It is a testament to the power and effectiveness of Dr. King's movement that, even to those of us who were alive at the time, it seems like it must have been another world where a man had to speak out against such injustice as if it wasn't obvious to the majority of people that segragation, whether by law or by practice, was an outrage.

Sadly, many of the lessons he taught us have already been forgotten, some great quotes:

Nonviolence is a powerful and just weapon. which cuts without wounding and ennobles the man who wields it. It is a sword that heals.
Nonviolence means avoiding not only external physical violence but also internal violence of spirit. You not only refuse to shoot a man, but you refuse to hate him.
It is not enough to say we must not wage war. It is necessary to love peace and sacrifice for it.
The hope of a secure and livable world lies with disciplined nonconformists who are dedicated to justice, peace and brotherhood.
Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.
Never forget that everything Hitler did in Germany was legal.
We will remember not the words of our enemies, but the silence of our friends.
The past is prophetic in that it asserts loudly that wars are poor chisels for carving out peaceful tomorrows.
A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.
A nation that

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Free Money Friday – Biden Pledges Another $1.9Tn for the Bonfire

January 15, 2021

New Administration, same policy.

Joe Biden pledged yesterday to give all of us another $1,400 in direct payments and, in a shocking change of policy from the previous administration, plededg real money to pay for vaccines and TESTING to start getting the virus under control. As crazy as that sounds – we need it very badly with 2M Global Deaths and 91M Global Cases and over 20% of each coming from America, which is already on fire.

As I'm sure Benjamin Franklin must have said so I'll make up the quote: "Money fixes everything and, if that doesn't work, print more money." Trump's Covid Incompetence has now killed more Americans than Hitler did on purpose in World War II (405,000) so we can't get that guy out the door soon enough but Biden is getting hit by a very big wave with more daily infections and more daily deaths than ever before and it's likely to get worse before it gets better.

Speaking of worse, December Retail Sales were down 0.7% from November and, shockingly, on-line sales were down more than 5% – this is BAD! So $1,400 per person is a good start and there's a $400 weekly unemployment supplement through September

“We have to act and we have to act now,” Mr. Biden said. Biden made both a moral and an economic pitch, arguing that it was essential to use the government’s borrowing power to support struggling families and arguing that the resulting consumer spending would spur growth. “Even our debt situation will be more stable, not less stable, if we seize this moment with vision and purpose,” he said.

In a poverty-fighting move long sought by many Democrats, the child tax credit would rise from $2,000 to $3,000 for this year under Mr. Biden’s plan, with an additional $600 for children under 6 years old and new rules that would let the poorest households get the full benefit. The plan also includes money

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Philstockworld January Portfolio Review

January 14, 2021

$1,609,027!

Our combined portfolios are up over $1M (166%) in just over a year and the best thing is our Long-Term Portfolio (LTP) is back to about 50% CASH!!! – and you know I love my CASH!!! In fact, we only made a couple of adjustments but let's please consider what happened to the 21 remaining positions since our Dec 16th review, where I said:

We have 33% less positions, so it's easier to adjust if we do have a correction and we have 33% less longs for our Short-Term Portfolio to protect – lowering our insurance costs as well. Those are the "consequences" we've suffered from "missing out" on a fantastic rally. Certainly it's been a lot more relaxing and I aim to keep it that way into the New Year – just in case.

So next time you feel compelled to trade due to a Fear of Missing Out (FOMO) – keep in mind – missing out on what? We already made FANTASTIC returns for the year – why risk it just to make a tiny bit more?

Did we miss out by cutting our positions? No! A month later the EXACT same positions are at $1,513,928 – gaining $113,643 (8.1%) in 27 days – and that's from a half CASH!!! position! People say why don't we do a lot of new trades and I keep saying what trades could possibly be better than the ones we already have? These are the remaining positions that ran the gauntlet of 2020 and were the best of the best of a portfolio that's now up 202.8% in 14 months. Making gains like this with conservative plays in a toppy market is as much as we could ever hope for at this stage of the rally.

And that's not including the $300,000 we took off the table when we closed down our old Short-Term Portfolio (STP) and our new STP is down 52.8% but, fortunately, that's "only" down $105,555 against the $1,013,928 gained in the LTP it is sworn to protect. We did our STP review yesterday and determined we have $293,000 of downside protection against a 20% market drop and we'll have to think carefully as we look over our LTP as to whether we feel that's adequate to ride out a potential dip in style?

IN PROGRESS

Which Way Wednesday – S&P 3,800 Edition

January 13, 2021

Monday's shorts are still going strong.

Of course we cashed most out already but even now (7:45), the Dow (/YM) Futures are still above the 31,000 line, which is our shorting line for /YM and the S&P Futures (/ES) only just crossed back below 3,800, which is our shorting line for /ES. As I noted in yesterday's Morning Report:

It's an interesting way to start the year and we'll see how things play out but we're still shorting those index lines at Dow (/YM) 31,00, S&P (/ES) 3,800, Nasdaq (/NQ) 13,000 and Russell (/RTY) 2,100 and we'd love to see Oil (/CL) closer to $55 so we can short that into tomorrow's inventory report as further OPEC cutbacks aren't going to make a dent in the surplus we have going on. For now, we can use the $52.50 line as our shorting zone with very tight stops above.

The hardest thing about trading the Futures is all the NOT trading the Futures you have to do in between. It's been a long time since we've played the indexes but we now have a nice alignment of good, solid resistance points to guide us and market conditions that are truly toppy so the risk/reward profile brings us back to Futures trading for the first time in quite a while.

Unfortunately, I can only tell you what is likely to happen and how to profit from it – the rest is up to you. On Monday, for example, I said:

According to our fabulous 5% Rule™, the Nasdaq topped out at 13,060 and 12,900 is the 7.5% line up from 12,000 and 13,200, of course would be the 10% line and a rejection of that 1,200-point run would be 240-points but we'll call it 250 and that make 12,950 the weak retrace line. If that holds, we should be worried but, if it fails, the next support is way down at 12,700 so that's the next shorting zone we can play.

If you missed Monday's call (and you would not if you subscribed HERE) I would not chase the Nasdaq this morning but play the S&P as it crosses…

Tuesday Turmoil – China Sells Off, Weather Gets Cold

January 12, 2021

The weather isn't the only thing turning cold.

Chinese stocks fell the most in three weeks, led by consumer shares and commodity producers, amid concern valuations for the most popular stocks were stretched and as metal prices slumped. The CSI 300 Index dropped as much 1.5% before paring losses to 1% at the close. Gauges tracking energy, consumer staples and materials producers slumped more than 2%.

Some 39 Chinese companies both domestically and offshore defaulted on nearly $30 billion of bonds in 2020, pushing the total value 14% above 2019’s. Defaults by Chinese companies are likely to top last year’s record as tighter monetary policy squeezes borrowers, according to China Merchants Securities Co.

“The central bank will implement more prudent monetary policies this year,” said Yuze Li, a credit analyst at China Merchants Securities. “More companies may face refinancing pressure. As the maturities jump, the default amounts will climb by an estimated 10%-30% from the previous year,” he said, referring to both onshore and offshore defaults.

In the dollar-bond market, the financial sector accounted for about 43% of total defaults, followed by technology and energy. ?Five state-linked companies defaulted for the first time in the onshore bond market, the most since 2016.

IN PROGRESS

Monday Market Movement – Down for a Change

January 11, 2021

Wheeee!

As I noted on Friday, it doesn't take much to mkes a lot of money on the Futures shorts and Friday's plays are all paying off in spades this morning and we only just crossed back under the 13,000 line on the Nasdaq (/NQ), which pays us $20 per point, per contract – on the way down from here. By keeping a tight stop (13,005) over the line, we limit the loss to $100 per contract but we have no such limit on a potential win and the Nasdaq is more than 1,000 points over-valued at 13,000 – so it doesn't take much of a push to get us lower.

Of course, we don't want to be greedy and we lock in gains of $500 or $1,000 per contract by putting tight stops on 1/2 and, if those trigger, then tight stops on the other half so we don't lose more than 25% of our total gains. Then we follow the 5% Rule™ to see if we have a weak or strong bounce and that tells us whether we should get out or double back down for the additional ride. That's how we played the Nasdaq, which dropped to 12,940 on Friday before giving us a ride back to 13,120 and sticking with that has put us in a fantastic position on that index as well.

According to our fabulous 5% Rule™, the Nasdaq topped out at 13,060 and 12,900 is the 7.5% line up from 12,000 and 13,200, of course would be the 10% line and a rejection of that 1,200-point run would be 240-points but we'll call it 250 and that make 12,950 the weak retrace line. If that holds, we should be worried but, if it fails, the next support is way down at 12,700 so that's the next shorting zone we can play.

Since we expect a bounce at 12,950 however, it's a good place to take 1/2 our profits off the table and, if we head higher, we set a stop on the rest at no less than 75% of our maximum gain, which will be $1,000 per contract. Then we calculate a…

Non-Farm Friday – 4,000 Dead People Don’t Need Jobs Anyway

January 8, 2021

If this were a stock chart, what would you predict?

The only thing outperforming BitCoin and Tesla in 2020 is the number of people dying from the virus every day in the US and, just like the stock market, we are setting new records almost every day. Over 4,000 Americans died yesterday but we're too distracted by the revolution to keep the asshole in power who got us into this mess to pay any attention to the actual mess.

Certainly Donald Trump isn't paying any attention to the virus or the inept roll-out of the vaccine or the complete failure to provide PPE equipment to protect our people. None of this has been on his agenda and President Thanos will do whatever it takes to stop Joe "Iron Man" Biden from doing something about it. 365,000 people have died in the US so far from Covid-19 (yes, it's been a full year as it's now 21) yet, if 4,000 of them died yesterday, that's a pace of 365,000 in 91 days. So, at this pace – which is accelerating rapidly – as many people will die in the next 3 months as have died in the last 9 months.

So far, we have vaccinated 5M people in the first month and that's a bit less than 2% of the population so only about 50 months and we'll get to everyone. Since the vaccine doesn't stop people from spreading the disease – it will have very little effect on slowing the spread until about 1/3 of us are vaccinated which, at the current pace, will be mid-2022. Hopefully Joe Biden will do better than Donald Trump and, thankfully, Mitch McConnell will no longer have the power to stop him.

The market, meanwhile, does not stop going higher – no matter what happens. This is fantastic for those of us who own stocks but not very good for the rest of humanity, who are seeing the largest wealth gap in modern history grow away from them day by day.

We're playing the S&P Futures (/ES) short at the 3,800 line – simply because it's…

Thursday Thrills – Democracy in Danger, Market at All-Time Highs

January 7, 2021

Who needs law and order?

Not the stock market. Despite all the turmoil, the market is still chugging along at the highs. Of course, the Democrats took control of the Senate yesterday and Mike Pence didn't violate the constitution and certified the election so it looks like our long, National Nightmare will finally come to a close a week from next Wednesday (Jan 20th) but, unfortunately, like many nightmares – the worst part comes just before you wake up.

Did Trump incite the riot that led to an assault on Congress and our Capitol? We report, you decide:

All of us here today do not want to see our election victory stolen by emboldened radical left Democrats, which is what they’re doing and stolen by the fake news media. That’s what they’ve done and what they’re doing. We will never give up. We will never concede, it doesn’t happen. You don’t concede when there’s theft involved.

Crowd: (07:11) Fight for Trump! Fight for Trump! Fight for Trump!

We want to go back, and we want to get this right because we’re going to have somebody in there that should not be in there and our country will be destroyed, and we’re not going to stand for that.

You know what the world says about us now? They said we don’t have free and fair elections and you know what else? We don’t have a free and fair press.

Our media is not free. It’s not fair. It suppresses thought. It suppresses speech, and it’s become the enemy of the people. It’s become the enemy of the people.

You’ll never take back our country with weakness. You have to show strength, and you

…

Wednesday Rebound – Russell Jumps 3% Pre-Market

January 6, 2021

Is this Democratic Rotation?

With the Democrats looking to take both Senate seats (and control of the Senate) away from the Republicans, the small-cap Russell 2000 Index has gone crazy this morning, jumping 3% pre-market on the assumption that the first thing Joe Biden will want to do is make America great again for small businesses and the middle class. The Nasdaq, on the other hand, has become a haven for Oligopolists and there may be some trust-busting coming their way as now Tech is becomming "too big to fail".

”The market is pulling in implications of what a Democrat win would mean for the economic recovery,” said Peter Rosenstreich, head of market strategy at Swissquote Bank. “Expected increase in fiscal stimulus and infrastructure spending would bode well for cyclical or growth stocks. Tech stocks may not benefit as much, and that may have something to do with their stretched valuations.”

As we know from our fabulous 5% Rule™, 3% is too much for an index to move in a session so we should expect at least a 0.5% retrace (10 points) back from the 2,040 line on /RTY (Russell Futures) back to 2,030 and, if that fails, another 10 points to 2,020 will be the proper test so see if we're going to hold the bullish uptrend.

Meanwhile, speaking of Oiligarchs, 53 people were arrested in Hong Kong this morning for the crime of "subverting state power" during the pro-democracy sessions last summer. In a blatant display of Fascist refusal to recognize the Democratic process, the majority party refused to allow a newly elected official to be sworn in – promting a walk-out by the minority party in protest.

Oh, wait a minute, that happened in Pennsylvania, not China. China hasn't gone that far off the rails yet…

Republican Sen. Jake Corman, the top-ranking senator, said Monday he wouldn’t permit Mr. Brewster to be sworn in because of Ms. Ziccarelli’s pending lawsuit in federal court. The suit alleges that

…

30,000 Tuesday – Is this the New Normal?

January 5, 2021

We'll be testing Dow 30,000 again today.

After yesterday's wild ride, dropping 900 points and then getting 300 of them back into the close – traders are somewhat jittery this morning and, as I mentioned yesterday, we're about to get early earnings reports on Thursday and it will not be good if they disappoint.

I have pointed out on serveral occasions that the earnings don't justify these valuations so we'll be watching the Dow components very closely to see if they can justify their 29.73x p/e ratio, which is up 39% from an uninfected 21.35x one year ago. That's nothing compared to the 39.45x the Nasdaq is trading at (27.55 last year) or the 40.40x the S&P is now at (25.53 last year).

Let's assume, for a moment, that the virus is a negative or, in the very least, not a positive event. Corporate Profits are lower than they were last year so what is the new valuation based on if not stimulus and the pace of stimulus last year was $3.3Tn direct from the Government and another $2.8Tn from the Fed – pretty much $500Bn a month to buy us that 40% increase in valuations.

Perhaps this will be the new normal and our Government will just keep pumping $500Bn/month into the economy but, even then, will earnings ever actually catch up or is it always going to be speculation that things will improve – one day? Corporate profits were $2.3Tn in Q4 of 2019 and Q2 of 2020 came in at $1.8Tn, which were down 21.7%. Q3, not on the chart, was worse, at $1.6Tn but estimates are we should "bounce back" in Q4. That's already baked in – what if the market disappoints?

And, of course, even bouncing back only gets us back to about $2Tn, still around 15% below last year yet we're left paying 40% more for the same companies. Will it never correct? That's a pretty rough premise to hang your investing hat on, isn't it?

China has a message for companies expecting another year of stimulus to keep the lights on – "Toughen up or Prepare to Fail". After letting inefficient firms survive for years, Beijing is now allowing them to fail. Bond defaults rose to a…

Marco Island Monday

January 4, 2021

Greetings from Marco Island.

I'm still on vacation with the family, heading home tomorrow afternoon but I'll do my best to keep up with the market as we start the new year. It's only the other side of the state from where I live so we get sunsets at the beach instead of sunrises but it's just nice to be anywhere else for a few days as we approach a full year in quarantine.

IN PROGRESS

Happy New Year from Philstockworld!

December 31, 2020

This was a LONG year.

I was in Thailand this time last year, working on a project with the Thai Government to bring medicinal cannabis to the country with Hemp Boca and New Age – two of our PSW Investments partners. As with most things in 2020, that project is now on hold but it seems like a different world where I went to an airport and got on a plane and walked around a crowded terminal without a mask on, etc.

I'm 57 years old and there's been no point in my lifetime where the world has changed so drastically. World War I was the "war to end all wars" and then there was the 1918 Pandemic and then the Great Depression and then World War II (since the "war to end all wars" didn't, they decided just to start numbering them) and then we had a nuclear arms race then a global recession in the 70s and then the financial system melted down and now this – it's always something, isn't it?

My Grandpa Max was born in 1903 and died in 1999 – having caught most of the action and it always gave me the perspective that "this too shall pass" though, while you are in the thick of things – it sure doesn't seem so, does it?

We started this year optimistically with "2020 Vision – Looking at the Year Ahead in the Markets" and we called for a long on Oil (/CL) at $61 and a long on Natural Gas (/NG) at $2.16 and Natural Gas topped out at $3.40 in November but Oil hit $65 in January but then collapsed to $10 in April and is only back to $48 now.

IN PROGRESS

Why Worry Wednesday?

December 30, 2020

Move along folks, nothing to see here.

The new, more contageous strain of corona is in the US and McConnel killed the additional stimulus but why should that bother the markets? The good news is, with most of the country back on lockdown, we "only" had 201,106 new cases yesterday and "only" 3,628 Americans died yesterday – which was 9% better than Monday so YAY!!!, I guess….

Here's a fun fact, there are only 924,107 "staffed" hospital beds in the US – ones where the patient can be monitored. Only 20% of them have the potential to have ventilators – even after US having 9 months to get ready. 124,686 Americans were hospitalized YESTERDAY – most of them cycle out within a day or two but every time one lingers on, it diminishes our total capacity to care for the rest.

The US ranks 32nd in hospital beds per capita, right behind Turkey but better than Columbia so YAY!!! again, I guess. Remember what China did when Covid started – they built two giant hospitals just for Covid cases on just a few weeks and that country only had 90,000 cases – TOTAL. The US will ring in the New Year with 20M cases and not one wing has been added to any hospital – no Government effort at all has been made to make sure we are prepared, leaving us no choice but to go back on lockdown.

It's one thing for the Government to say they don't want to have lockdowns because they hurt the economy but when the same Government does nothing to make it possible to NOT have lockdowns – what do they think is going to happen? You can't govern this ineptly by accident – it has to be the plan….

California, Ohio, North Carolina and Puerto Rico now have "stay at home" orders in place – no going out unless it's absolutely necessary as their hosptial systems can't take any more patients. PA, MA, DE, WS, KY and NM have all issued stay at home advisorys – trying to not make it an order if they don't have to.

What could possibly be better for the stock market, right? Maybe we'll get lucky…

Toppy Tuesday – More Free Money Helps Us Re-Test the Highs

December 29, 2020

Here we are again!

Dow 30,404, S&P 3,735, Nasdaq 12,840, NYSE 14,405 and Russell 1,996. Not only did the new $900,000,000,000 stimulus bill get signed but IMMEDIATELY after that, President Trump teamed up wiith the House Democrats to pass an additional $1,400 per citizen (of Georgia) handout to help us pay those Christmas Credit card bills and decide who to vote for in Thursday's Senate Run-Offs.

One of my big concerns is there would be selling ahead of the end of the year but clearly that hasn't happened, possibly because most people's gains are too short-term to have consequences for timing long-term capital gains, which may increase significantly next year under Biden (especially if the Democrats win the Senate). That hasn't happened so there's no significant pressure to sell and the volume of trading is virtually none so it takes very little to manipulate the market higher and give 2020 a fantastic close – no matter what's actually wrong with the economy:

Date	Open	High	Low	Close*	Adj Close**	Volume
Dec 28, 2020	371.74	372.59	371.07	372.17	372.17	38,851,900

…

Just Another Manic Monday – With More Free Money!

December 28, 2020

More stimulus!

Well, actually it's the exact same stimulus they've been talking about for months and it's actually half the stimulus they initially promised we'd get but that doesn't stop the market from going up and up and up and up, every single time the stimulus talks make a little progress. This morning, not only has Trump said he'd sign the current $900Bn Stimulus Bill but President-Elect, Joe Biden, says it's not enough and he will sign a bigger one ASAP.

“Overnight, we got the stimulus deal completely out of the blue. Economically speaking, it is a major support to bridge over this difficult winter period,” said Hani Redha, a multiasset portfolio manager at PineBridge Investments. “The market is going to still be in a constructive mood.”

Hani was surprised, so why shouldn't we all be?

While the markets look ahead to Nasdaq 13,000, the US passed 19,000,000 infections over the weekend and we'll be over 20M by New Year's Eve and adding another 5M in the 20 days it takes us to finally remove Donald Trump from office. 25M people infected, over 10M of them (1 out of 30 Americans) actively infected over the past 30 days and still potentially contageous is going to be quite a challenge to overcome for Biden.

Remember, this chart is the infection rate before the Christmas spread has had time to register and these states aren't just a little bit over 25/100,000, they are mostly double and California is almost 4 times that at 98/100,000 – PER DAY! And we still have New Year's Eve to look forward too – it's going to be a major super-spreader event.

I know investors refuse to deal with the reality ahead of us but we're not going to magically vaccinate our way out of this. There simply isn't enough vaccine. According to the CDC (what's left of it under Trump), it will be late May before we have adequate coverage for the entire country to be vaccinated and it will STILL take several months AFTER that to develop enough herd immunity to make mass gatherings safe.

IN PROGRESS

Merry Christmas!

December 24, 2020

Merry Christmas to all the survivors of 2020!

I would list them but, if you've ever seen the Vietnam Memorial Wall in Washington, DC – well, there's "only" 58,000 names on that walls for all the American soldiers who gave their lives in that 20-year war and we would need 6 sets of those walls just to try to rembember all the Americans who have died just this year under the reign of our mad tyrant, Trump.

20,874 people are dead in Florida, 23,651 in California, 26,405 dead in Texas… nowhere is untouched, nowhere is safe – we even had a case of Covid in the South Pole this week. But no country is suffering like America and no people are suffering like Americans with 18.5M of us now having been infected – half of them actively so as the infection rate has soared to 1.5M people per week and is very likely to hit as many as 2M people in our country per week (300,000 per day) after the holidays.

Our fellow countrymen need our help more than ever before and I was inspired by an old post on Barry’s site titled "Give and You Will Receive" listing 13 good ways we can all give every day.

’Tis the season of giving and goodwill to all man and all that and my children used to wrap up all their old toys when they were done with them to give to children who need them more than they do. Keep in mind that your old IPhones makes a great IPods for kids who can't afford such fancy things – even without the contract and those old kitchen appliances, tools, etc. could really help out people less forunate than ourselves.

It’s a little thing, but if you want your kids to learn the benefits of charity, actually parting with things they like or liked and physically giving them to kids who clearly appreciate it is much more gratifying than writing a check to some anonymous organization. The same goes for volunteering some time (and money!) at a local shelter and helping some people come in from the cold for a nice, warm meal – it makes you appreciate your…

Wednesday Worries – Trump Tweets Trouble for Stimulus Bill

December 23, 2020

I give up!

pic.twitter.com/v9Rdjz6DNu

— Donald J. Trump (@realDonaldTrump) December 23, 2020

Trump indicated yesterday that he will block the stimulus bill based mainly on the "fact" that it included other things besides Covid relief (it's also a $1.4Tn budget bill to keep the Government running) and the President says he wants to raise the direct payments from $600 to $2,000 per person, which would add another $400Bn to the bill, completely breaking the budget.

It took two months of fighting to get this bill on the desk and suddenly Trump sounds like a Democrat, demanding a much bigger spending bill than the compromise that was finally passed on Monday with a 92-6 vote in the Senate and a 359-53 vote in the house. If he vetoes it, lawmakers would need to either pass new legislation meeting his demand for larger stimulus checks or vote to override his veto—which requires a two-thirds threshold for passage in each chamber.

The stock market doesn't seem to care (about anything) as it's flat this morning. I think there's a nice percentage play in shorting the S&P (/ES) Futures below the 3,685 line with tight stops above and we could try again, of course, if we get to 3,700. While Congress clearly has the votes to override the President – do Republicans have the will to do so?

Both chambers on Monday also passed a seven-day extension of government funding, which Trump signed early Tuesday morning. If the President doesn’t sign the aid package or have his veto overridden by next Monday, the government could shut down briefly. If Mr. Trump doesn’t sign or veto the bill within 10 days after it is passed, it would become law without his signature. Most lawmakers have already left Washington for the holidays following the bill’s passage, so any refusal to sign by Trump kicks the stimulus into 2021.

“I am also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation, and to send me a suitable bill, or else the next administration will have to deliver a Covid relief package,” he said. “And maybe that administration will be me,

…

0.9 Trillion Dollar Tuesday – Another 5% of our GDP is Stimulus

December 22, 2020

It's official.

$900,000,000,000 in additional stimulus has been approved by Congress with $325Bn for Small Businesses, which is good – as 25% of Small Businesses that were open in January have already failed and 1/3 of the remaining 75% don't believe they will last 3 more months so that would add up to half the small businesses in America failing – that would be kind of hard to recover from, don't you think?

In the final stimulus package is $600 per person of direct checks but they won't come until after Christmas – a huge mistake if the aim was to boost retail sales. The $300/weekly unemployment bonus is still in place through March 14th and all unemployment benefits will be almost doubled in time, from 26 weeks to 50 weeks but it's the states that pay much of the unemployment so this is really going to stick it to the state budgets.

The bill has $25Bn for tenants who are in arrears, which is really a bail-out for the landlords (who apply on behalf of the tenants) but, for the tenants, the eviction prohibition is extended until January 2021 so go rent a nice place and don't pay for it!

$82Bn has been approved for schools, finally. $22.4Bn is included for Covid testing so those testing companies should do well. That's only $74/person though, won't last long if we intend to do regular testing as the countries who successfully fight the virus are doing. Airlines are getting another $15Bn after getting $25Bn in June so that's $40Bn in bailouts for airlines this year. Delta (DAL) is 16.6% of the US market (1/6) and their total revenues are $44Bn in a normal year and, so far this year, just $13Bn and they lost $5Bn per Q in the last two Qs so drop in the bucket, really.

We expected a bailout and chose the Airline ETF (JETS) as our Top Trade on October, 8th and

IN PROGRESS

Monday Market Meltdown – Virus Mutation Trumps Stimulus

December 21, 2020

$900,000,000,000!

Still not enough to give us a good day in the market? The stimulus news is baked in but the news of a new, more infectios strain of Corona Virus has pushed the UK towards stricter lock-down measures, which the rest of Europe is now considering as well. Christmas is officially cancelled.

The new virus strain is spreading 70% faster than the old one, which has already infected 17.5M of us (5% of the population) in the US with 315,000 deaths and 403,359 new cases on Friday alone, which would be a rate of 17.5M more infections in the next 43 days – just in time for Joe Biden to be sworn in. Since we know Trump will continue to do nothing to slow things down and since this is the spread of the original virus strain in the US – we are well and truly screwed!

So Merry Christmas to one an all, only 4 shopping days left and Retail Sales were down 1.1% in November from October – and that included Black Friday! Usually, around Christmas we survey our Members for shopping reports from malls around the country but this year no one is going shopping so we can only imagine how empty the malls must be. Online shopping is up 29.2% but onlline is only 10% of all Retail so not enough to save the rest. Also, as we have noted before, the kind of retail that's up is masks and gloves and disinfectant – not the kinds of things that you usually go to the mall for.

How's that recovery looking?

IN PROGRESS

Financial Failure Friday – Dollar Dips Below 90 as BitCoin Tops $23,000

December 18, 2020

Holy cow!

I mentioned the Dollar weakness the other day but we thought the 90 line was going to hold and we did have a very brief bounce but now we're looking terminal as that line fails to hold as well thanks to Wednesday's Fed Statement and Powell's press conference where they said they won't be changing their policy – even if the US Economy does improve.

While FREE MONEY FOREVER may be great for the stock market, it's not very good for the value of the currency those stocks are priced in and that too is then good for the stock market – how convenient! Dollar weakness also reflected rising expectations that Washington lawmakers will finally agree on an economic rescue package that’s seen as necessary to shore up a sagging recovery.

The Fed, in its last policy meeting of 2020, on Wednesday reassured investors the central bank would maintain its easy monetary policy stance, including its bond-buying program, until the economy shows “substantial progress” toward recovering from the damage inflicted by the virus. Fed Chairman Jerome Powell, in his news conference, indicated the central bank wouldn’t be hasty in unwinding its monetary stimulus measures even though the central bank’s economic forecasts appeared a bit more upbeat than previous iterations.

“The FOMC’s dot-plot looked hawkish…Mr. Powell’s comments were anything but,” wrote Kit Juckes, global macro strategist at Société Générale, referring to the individual rate forecasts produced by members of the policy-setting Federal Open Market Committee.

On top of Powell's comments, Congress does seem to be moving towards another $900Bn stimulus bill so the printing presses continue to fun at full speed as $900Bn may not sound like a lot these days but it's still 5% of an $18Tn economy – as our smallest stimulus of the year.

Your household budget would seem fine too if, every few months, someone dropped an additional 5% of your income into the checking account, right? And what possible harm could that do? It's just…

PhilStockWorld December Portfolio Review

December 17, 2020

$1,535,280!

That is up a lovely $48,402 from our November Review for, which is very nice for a month we played very cautiously, We're up 155% for the year in our paired portfolios (LTP/STP) but the STP is, at the moment, down 42.5% as the market has been all uphill since we rebooted our hedging portfolio on October 28th.

We reviewed the Long-Term Portfolio in yesterday's Morning Report. Well, not a review as we didn't change anything but, at the moment, I'm not inclined to. The market keeps rising and our long positions are doing extemely well so now it's time to put some of that $48,402 in profits to work adjusting the protective hedges in our Short-Term Portfolio. This locks in the gains of the LTP and allows us to leave those positions in play – even though we are unsure the rally will keep going. We've been nervous since September – the hedges are what let us keep participating in the upside – they are the cost of insurance.

Short-Term Portfolio Review (STP): $114,960 is down $76,885 from our Nov 18th Review but the gains int he LTP more than made up for it.

IN PROGRESS

Which Way Wednesday – 3,700 Fed Edition

December 16, 2020

Shorting sure does seem pointles, doesn't it?

No matter what the news, the market seems to climb higher and no one seems to notice (or care) that the Dollar continues to get weaker, down almost 5% since September. That's a 5% Tax on you total net worth thanks to these inept economic policies so when you wonder where all this stimulus money is coming from – it's being extracted from every Dollar you've ever made in your life and every asset you own (if they are Dollar-based).

The Dollar is down 8% since July and down more than 10% since March while the S&P 500 has climber from 3,100 to 3,700, which is 20% and that makes sense because earnings are priced in Dollars so the weak Dollar gives you a 10% inflated view of earnings and stocks are priced in Dollars, so the weak Dollar gives you a 10% inflated view of the value of the stock. There's really nothing there – yet people get excited!

Let's say, for example, your mom takes your temperature and it's 98.6 and the temperature outside is 75 degrees. Later she takes your temperature and it's 37 degrees and the outside temperature is now 24 degrees. Clearly it's the freezing temperatures that have frozen your body, right? Or perhaps the first reading was in Fahrenheit and the second was in Celsius?

That's what we're doing when the Dollar, which is the "constant" we measure value by, drastically changes during the course of a year. It leads us to get false readings in all of our data and causes us to make false conclusions since the underlying assumption in the markets (and all trading algorithms) is that we have a consistent base of measurement. This is a huge flaw in the system!

Our last Long-Term Portfolio Review was on November 17th ("Tesla Tuesday – Musk Makes the S&P 500 and our Long-Term Portfolio Review") and, at the time, we were up a whopping 159%, at $1,295,033 for the year (because what hasn't worked this year in a bullish portfolio?) and we decided to cash out many positions. Fortunately, I have an unadjusted version so we can see how much…

Toppy Tuesday – More Free Money and Fed Hopes Keep Us on Top

December 15, 2020

Up we go again.

Index Futures are up 0.666% and the Dow (/YM) is testing 30,000 again, which is a really good shorting line. We had fun shorting the Nasdaq (/NQ) at 12,500 yesterday into the close and it's back over it again this morning so it will be a lagger to the Dow if it crosses back below and also playable with tight stops above.

Why short? Because 30,000 on the Dow and 12,500 on the Nasdaq are good lines of resistance and likely to be rejected without an actual catalyst and everyone is already expecting Stimulus and more Fed Action so it's easier for bullish traders to be disappointed than rewarded.

The S&P, for it's part, is having trouble at the 100-hour (2-week) moving average at 3,666 (so also a good short on /ES) and has no real support all the way back to the 400-hour (2 month) moving average at 3,525. As this is a 2-hourly chart, these moves can be very quick. Most of the gains came in the first week of November, when the S&P popped 200 points on relatively low volume to 3,640 and we're pretty much still there a month later – that's not real strength.

IN PROGRESS

Monday Market Movement – Up and Up into the Holidays

December 14, 2020

There's always a bright side.

In this case, for vaccine makers, $130Bn in unexpected revenues over the next 4 years and, as I noted back on Sept. 28th in "The Week Ahead – 3,350 is Critical for the S&P 500" and our corresponding Top Trade Alert, "Pfizer (PFE) made $16Bn last year and you can buy that whole company for $200Bn at $36 per share so just 12.5 times earnings… While Pfizer may not ultimately "win" the vaccine race, they are a solid blue-chip pharmacuetical company who are clearly able to keep up with the BioTechs WHILE making a healthy profit. Isn't that the kind of company we like to invest in?"

As you can see, PFE is going to generate $21Bn in additional revenues next year alone – a nice boost to their normal $50Bn in revenues and, while they may not make much profit selling their Covid vaccine next year (state of emergency regulations), they will make follow-on revenues for years to come. That's how PFE became our "value play" in the virus space.

The investing premise was simple, the others had gotten away already so we went long on PFE, which was lagging the rest of the sector – a horse no one believed would win the race but we made a place bet – simply betting our horse would finish the race and, even if it didn't, it was still a good horse and we'd run it in future races.

Johnson and Johnson (JNJ) was also sure to be in the running and is a good, reliable stock but, at $400Bn in market cap, it's twice the size of PFE and would then draw less net benefit from a new line of revenues. That's why PFE is up over 20% since late September and JNJ is only up 2.5%. You don't have to be psychic to predict the future of a stock – you just have to pay attention to trending condisions in the news and the markets and think about how that will impact their business down the road.

That's what our Top Trade Alerts are all about. Sound investing ideas that are not following the short-term trends – we're focused on the long-run and we generally make nice, sensible trades that aren't swinging fot the fences – but will still make very nice returns if they are successful.

IN PROGRESS

Faltering Friday – Failure at Dow 30,000

December 11, 2020

Anoher day another 3,000 deaths.

Meanwhile, Mitch McConnel and the Republican Bastards in Congress postponed the vote on a simple one-week stop-gap bill to keep the Government running past December 11th – which is today. If they don't get back to the table, Federal Agencies shut down and Federal workers get furloghed including agencies that are critical front-line defenses in fighting the pandemic. Tens of thousands of additional lives could be lost if the Repbulicans get their way today.

Mostly it's the Senate – only 67 hard-line Republican Representatives voted against the measure vs 343 reasonable people who voted for it but the Senate is a different animal altoghether – full of wealthy, entitled White Men whose families don't suffer the consequences of contracting Covid-19 because they go to the best hospitals and get the best treatment – so what do they care if they condemn tens of thousands of American Citizens to death? Like President Trump – they are immune.

The chart above, of the deadliest days in US history, is already out of date with 3,055 people dying on Wednesday and another 2,974 yesterday and the daily death rate is now tracking towards 4,000 per day over the next few weeks (merry Christmas!) and may get worse than that if people insist on migling on Christmas the way they did on Thanksgiving.

1,800 people a day die of heart disease in America on an average day and 1,640 die of cancer so Covid-19 is now the leading cause of death in America. Not in the world – just in America, where 4 times more people die per population than the even the next 9 worst nations in the World. That's the real tragedy, this is a preventable tragedy – every single day something could be done to reverse these numbers and every single day nothing is done by Trump and the GOP – NOTHING!!!

It's the lack of outrage that I find outrageous.

Adolf Hitler was the leading cause of death for Jews from 1939-1945 yet 6M divided by 365 divided by 6 years = "only" 2,739 deaths per day. Trump's negligence is killing

…

3,054 Thursday – US Hits Record-High Deaths, Europe Increases Stimulus

December 10, 2020

MORE FREE MONEY!

And even more for us as 3,000 less Americans get to share it with us every day. In 365 days, that would be over 1M people dead – assuming we stay at "just" 3,000 deaths per day, of course. That's not very likely though as Trump's own Coronavirus Response Coordinator, Dr Deborah Birx, is now warning us that the upcoming December surge in COVID-19 cases will be the "worst public health event" that the country will ever face. "This fall/winter surge is combining everything that we saw in the spring with everything we saw in the summer - plus the fall surge going into a winter surge," said Birx.

Experts who spoke to Salon also emphasized that the public health crisis is not some distant future event; it is already upon us.

"They [hospitals] are overwhelmed already," Dr. Alfred Sommer, dean emeritus and professor of epidemiology at Johns Hopkins Bloomberg School of Public Health, wrote to Salon. "Many are not just near the breaking point in physical capacity, but what is too often overlooked, their staff are exhausted, physically and emotionally, with no let-up in sight."

"Respiratory disease always get worse in the fall and winter," Benjamin wrote to Salon. "So this natural increase plus the lack of aggressive use of masks, social distancing and closures of large events will make this outbreak worse. Influenza during this time will also make it worse unless people get their flu shots. We just came off Thanksgiving when far too many people travelled and congregated, spreading this highly infectious disease; and Christmas is coming up, when even more people who are infectious will be congregating with family and friends and spreading it further."

Sommer also noted that winter is helpful to the virus' need to spread, as people are "getting closer together indoors," while dry air "helps to 'preserve' the virus in the air and surfaces longer." Sommer lamented that so many Americans shirk public health advice, such as mask-wearing and avoiding congregating in…

Wonderful Wednesday – More Free Money Gives us S&P 3,700!

December 9, 2020

$916,000,000,000.

That's the price of S&P 3,700 as the Trump Administration proposed just under $1Tn in additional stimulus including another $600 per person in direct checks. The new stimulus does not include $300/week unemployment compensation and that's still a big sticking point with the Democrats. Crafting a liability shield for businesses, schools and health-care providers facing coronavirus-related lawsuits has been a priority for Republicans throughout the negotiations, while Democrats have pushed to send more aid to state and local governments.

Along with state and local aid, the $908 billion bi-partisan framework at the center of the current negotiations would add $300 to weekly unemployment benefits, provide $82Bn for schools, $16Bn for the distribution of Covid-19 vaccines and $288Bn in relief for small businesses. Both the White House and some lawmakers are making a late push to include the new round of direct payments in the next bill. One of the most popular parts of stimulus legislation Congress passed in March, the last round of direct payments sent $1,200 per adult and $500 per child to many American households, at a cost of nearly $300Bn.

Clearly we need the stimulus. We are still 10M jobs down from where we were in February and job growth has ground to a halt and the virus is raging out of control with 215,000 new infections yesterday as we now top 15M cases in the US, adding more new cases every day than the country had TOTAL at the beginning of April. More cases every week (2M) than we had TOTAL at the beginning of June and more cases for the month of December (8M) than we had TOTAL through the middle of October.

That is how fast this problem is accelerating and Mitch McConnel and the GOP have been blocking additional virus relief for over a month now playing games to time it so they can look like the good guys just ahead of the Georgia Senate elections, where voting begins next week to decide if we're going to keep McConnel as the Senate Majority leader to plague Biden the way he has been a literal plague on this Nation.

Here's a chart of the 10 WORST countries on…

Trade of the Year Tuesday – Who Will Survive the Fall?

December 8, 2020

This is a solemn duty.

We have not had a miss in a decade of our Trade of the Year picks and I'd hate to break that streak. I am currently considering that my trade of the year should be NO TRADE as I really don't trust the markets and I'd rather short Tesla (TSLA), which is often a suicide run but TSLA never stops going up and $650 is $608Bn in market cap - more than EVERY other car company COMBINED – so that stock has left logic and reason behind long, long ago.

And yes, just one week ago, they made this chart and TSLA was 20% lower than it is now. Since then it's gained a Volkswagen in value and that's clearly ridiculous but, when things are clearly ridiculous, what is to stop them from getting more so?

So TSLA is too dangerous to short but, if I were, I would buy the Jan 2023 $800 puts for $350 and I would sell the Jan 2022 $800 puts for $295, which would put me in the calendar spread for net $55 and I would pay for 10 of those $55,000 by selling 3 Jan 2022 $750 calls for $152.50 ($45,750) so we'd be in the spread for net $9,250 and our hopes there are that the short calls expire worthless and the short puts either expire worthless or can be rolled lower and whatever value is left on the long puts greater than $9,250 is our profit. We'll see how that goes next year.

In last year's Trade of the Year Report, we ended up picking Barrick Gold (GOLD) at $16.50 with a net $750 spread that would pay $12,000 if all went well for a $11,250 (1,500%) profit if GOLD were over $17 in Jan, 2022 (one of our famous "Stupid Options Tricks" we teach our Members. GOLD rocketed up to $30 in the summer and we took an early exit and now it's back to $23.95 and I'm almost ready to jump back in:

I don't see the Dollar getting too much stronger so Gold and GOLD should continue to do well

…

Monday Market Week Ahead

December 7, 2020

Happy Pearl Harbor Day!

That's right it was Dec 7th, 1941 when the Japanese attacked Pearl Harblor, killing 2,403 Americans and the country was so outraged that we quickly mobilized the greatest military operation in history to counter-attack and rid the World of Fascism. President Roosevelt called Congress into an emergency session and legistlators raced back to Washington for a joint session of Congress at noon on Dececember 8th, less than 24 hours after the attack, Rooevelt addressed the nation, saying:

The facts of yesterday and today speak for themselves. The people of the United States have already formed their opinions and well understand the implications to the very life and safety of our Nation.

As Commander in Chief of the Army and Navy I have directed that all measures be taken for our defense.

But always will our whole Nation remember the character of the onslaught against us.

No matter how long it may take us to overcome this premeditated invasion, the American people in their righteous might will win through to absolute victory.

I believe that I interpret the will of the Congress and of the people when I assert that we will not only defend ourselves to the uttermost but will make it very certain that this form of treachery shall never again endanger us.

Yet here we are again, with virus deaths now heading towards 4,000 Americans per day, the real enemy is the Commander in Chief, whose gross deriction of duty has left this nation weak and defenseless and has, so far, led to the death of 288,962 deaths – and that is only from the first 8.8M people infected as we've only had 8.8M recoveries and 288,962 (3%) deaths. Another 6.3M people are currently infected so we can infer that about 200,000 of those people will die and the virus is still spreading at a rate of now over 200,000 infections per day – up from 100,000 people per day just 30 days ago – yay!

IN PROGRESS

30,000 Friday – Dow Holding the Line so Far

December 4, 2020

Dow 30,000 – amazing!

Well, maybe not that amazing as we were at 28,872 in January so, on the whole, we're up 1,200 points (4%) for the year but, considering what has happened to us since January – that's pretty remarkable. Of course we did drop to 19,000 (down 36.66%) in March but back up over 50% since then has more than made up for it – pretty exactly made up for it, in fact – as if someone were trying to paint a picture.

Pictures are subjective, of course – and so is belief. As Linus has taught us, if one person believes in the Great Pumpkin, no matter how convincing his story is, people tend to think he is crazy. But, if millions of people believe in Santa Clause – we have a national holiday!

At the moment, millions of people believe in the stock market and let's all hope that illusion isn't shattered too harshly. On the whole, we only have 4% more faith in 30,000 than we had in January and, unlike the Great Pumpkin, 30,000 did finally show up – though also unlike the Great Pumpking, 30,000 appeared because the market had A LOT of help – about $20Tn Globally, in fact.

For $20Tn, I'm pretty sure I could make Santa Clause real too! Let's see, there are about 2.2Bn children (under 18) so that's about $10,000 per child we've borrowed and spent bailing out the Global Economy so yes, I'm pretty sure we could have spent that money to put a bike or a doll under their trees instead – even including delivery charges (or we could use Prime and get it for free!) though having someone dress up in a red suit and devour cookies would make it a bit more expensive – but I think we'd still have a bit of change left from our $20Tn shopping spree.

THAT is how much money we've spent propping up the markets this year. In the US, in fact, we spent $6Tn and we have 74M…

3,000 Death Thursday – It’s Like 9/11 Every Day!

December 3, 2020

3,157 Americans were killed yesterday.

Not so much by a virus but by incompetence and lack of caring and deriliction of duty. We are THE WORST IN THE WOLRD in infections and death rate and no, America doesn't have some special brand of the virus – we just have a special brand of leadership that puts their own interests ahead of the country's because, as Trump says – he's immune.

Immune from suffering because he can afford the best doctors for himself and his family – he even has access to treatments that are not even legal for the rest of us. He's also immune from compassion – we've seen that and now he appears to be immune from prosecution as he's trading pardons for cash and other favors. All this while 1 American Citizen dies every additional minute he spends not doing something about the virus.

And this is nothing as 200,070 additional Americans were infected yesterday and 100,000 of us are in the hospitals with yes, 3% of those people dying daily. Higher case count leads to more hospitalizations which leads to more deaths – who would have imagined, right? Health experts project the number will continue to climb, as Thanksgiving gatherings are expected to have accelerated the rampant spread of the virus this fall. Another metric suggests deaths could surge by mid-December.

New Covid-19 hospitalizations follow new coronavirus cases, typically within a few weeks. Soaring cases nationally have accelerated beyond public-health agencies' ability to rein in contagion by tracking infections to head off further spread, said Jennifer Nuzzo, an epidemiologist who leads the Johns Hopkins University Covid-19 Testing Insights Initiative.

I hate to be that guy but this is a total catastrophe and, like some sort of cartoon villain President, Trump is STILL ignoring the virus and the Senate is STILL blocking stimulus – even as the Democrats have capituated and said they will accept less than HALF of the $2.4Tn they were looking for. Why won't the Senate pass the bill? Because it won't help Trump, it would only help Biden so they don't give a crap.

Funding for State and Local Governments to fight the…

Which Way Wednesday – Beige Book Edition

December 2, 2020

Trend-spotting.

That's our job as investors and even you traders out there try to spot trends with your little charts (so cute!). Investors tend to focus more on the data and yesterday, both Fed Chairman Powell and Treasury Secretary Mnuchin warned Congress that their continued failure to act and pass a stimulus bill is hurting an already weak economy. We can see that in the data trends this week:

Chicago PMI – 58.2, weaker than expected by leading Economorons
Pending Home Sales – Down 1.1% vs +1.5% expected
Auto Sales – Slowing
ISM Manufacturing – 57.5%, weaker than expected
Construction Spending – Up 1.3%, better than expected
Morgage Applications – Down 0.6%, much worse than expected

That's our data so far and we'll get the Fed's Beige Book this afternoon but of course it's going to be gloomy, you could hear the panic in Powell's voice talking to Congress, BEGGING them to DO SOMETHING as the Fed seems to be out of tricks at this point, with rates already at 0.25%. We need MORE FREE MONEY and we need it NOW!

As we expected, Black Friday was a bust but you wouldn't know it reading the front page of the Wall Street Journal though there is an article about it here. It's titled "Shoppers Spent Less Over Black Friday Weekend" but I'd say they are underselling it just a little as in-store shopping traffic was down 37% and the people who did shop spent 14% less than last year. I know math is frowned up by Conservatives but I'm one of those annoying liberals who believes in facts, so it seems to me that if a retailer sold $100,000 last year and 37% less people shopped this year, that would be $67,000 but then if they spent 14% less on top of that, that then becomes $57,000.

So the headline could have read "Black Friday Sales Down 43% from Last Year" or "OH MY GOD, This is Terrible" but the WSJ went way our of their way to make it sound not so bad, knowing…

Turnaround Tuesday – More Stimulus Rumors as Powell Speaks

December 1, 2020

MORE FREE MONEY!

That's what this economy is based on and that's what the people expect. The way we make money in America is by MAKING MONEY – literally printing it and giving it away like… money. I was going to say like candy but you can't create candy out of thin air so, if you tried to give away $6Tn in a year, you would go bankrupt and create sugar and labor shortages and even Bazooka Joe would run out of ideas for clever cartoons on the wrapper. But MONEY – that is created by simply flipping a switch at the Fed that adds another zero to the balance sheet.

Since 2008, our National Debt has climbed from a shocking $8Tn to what is a now a "Who gives a f*ck anymore?" $27Tn and, whether now or next quarter, the market is execting AT LEAST $2Tn of additional stimulus and at least $2Tn of additional debt in 2021 (there's no way to stop Trump's fiscal-year budget now) so we'll be over $30Tn in debt by the end of Q1 – more than 150% of our GDP. How long do you think this can go on?

IN PROGRESS

Monday Market Movement

November 30, 2020

Good morning!

There's some issue with our site certificate, which is supposed to be valid THROUGH 11/30 but I'm getting an error message this morning so I'm sorry if some of you are having trouble accessing (Edge lets you bypass the issue, Chrome does not). I hope everyone had a great Thanksgiving. We've already pulled back a lot of our trades for the holidays as we expect a dip between now and January and we've had a great year so why risk it? It is making it hard for met to find a good Trade of the Year, though – and I have the pressure of having to announce it next week on Money Talk (Weds, 7 pm).

As you can see from the image above and this one here, Black Friday was a bust for in-store Retailers but a boom for on-line though I very much doubt it's possible that on-line sales made up for retail as on-line has been only 10% of all sales so, of in-store was down 20%, on-line would have to be up 200% to make up for it and that's just not at all likely.

Today is, of course, Cyber Monday but that's kind of out the window too with everyone working at home all the time. Hope springs eternal in the Retail Sector but, as we predicted, Christmas is officially cancelled as Dr. Fauci said yesterday that "restrictions and travel advisories will be necessary for the Christmas holiday season."

IN PROGRESS

3636 Friday – S&P 500 Re-Tests Election Highs on Black Friday

November 27, 2020

Here we go again.

The S&P 500 is at 3,636 in the Futures (/ES) and, when we tested 3,640 earlier this month, we were harshly rejected with a 120-point (3.3%) drop but we quickly recovered – and then we quickly dropped again – but now we've quickly recovered, so let's all enjoy the pundits telling us how this rally is sustainable (this time).

Apple (AAPL) is down from $137 to $116 since early September and that's down 15% so it's actually very impressive that the Dow, S&P and Nasdaq have all held up well while their leader declined. It means people are putting money into relatively "bargain" stocks and that can put an underlying floor on the market we can build off.

Nonetheless, we went a lot deeper into CASH!!! in our Member Portfolios because it simply isn't worth the risk since we still don't know if Trump will willingly leave the White House and we don't know if there will be stimulus and we don't know if the virus will stop peaking (we are averaging almost 150,000 per day now) and we don't know if Black Friday will be a bust – too many unknowns to risk an overvalued market….

The US now has 90,000 people actively in the hospital with Covid-19 and 110,000 new cases were reported yesterday so there's no end in site as we approach the limits of our medical capacity to treat people. Thanksgiving itself could become a super-spreader event as 50M Americans (20% of the population) ignored the CDC and traveled for the holidays and 1,200 people are no longer thankful as the death toll climbs to 263,000 since March.

As you can see, we've had only 8M outcomes out of 12.5M infections in the US as more people are actively infected today than any other time in the outbreak – and they all just got together for Thanksgiving. This disease is 3% fatal folks! Typically, it takes 2-3 weeks to start seeing case counts rise after spreader events and by then we'll all be getting together for Christmas – have a merry one!

…

Which Way Wednesday – To Infinity and Beyond?

November 25, 2020

Record highs!

New vaccines, Biden beginning his transition, Trump losing in courts – yes, things are looking up compared to the way the World seemed about to end for the last 6 months but that doesn't fix our economy. Even the Dow gains of 50% in 4 years are coming off a very narrow-based rally in which just two stocks, Apple (AAPL) and Microsoft (MSFT) are responsible for the majority of the index's gains.

At the beggining of the year, the S&P 500 was priced at an already-high 18.4 times the earnings expected in 2020, and 15.5 times the earnings expected in 2022. Now, it is priced at 26.1 times the adjusted 2020 earnings forecast and no one is sure of 2022. 2021, let's say the 2nd half is "normal" and we have stimulus in the first half – figure 20-21x earnings in 2021 at this pace, still 25% above the historically normal 16x earning for the index.

And, don't forget, all that assumes NOTHING ELSE GOES WRONG.

One of the things that could go wrong is a US Recession/Depression but it looks like we're planning to stimulate our way out of that and that's what put us over the top this week – Janet Yellen is the new Secretary of the Treasury and she helped usher in the low-rater era for the Fed – it's not likely she'll want to oversee the end of it. However, 10-year rates are now at 0.9% anyway, up from 0.3% earlier in the year.

IN PROGRESS

Testy Tuesday – S&P 3,600 Yet Again

November 24, 2020

This is a strong-looking chart:

The S&P 500 is clearly consolidating ABOVE the 3,600 line at this point and, if we hold it into the end of the year, that will bode very well for next year. Nonetheless, we're still shorting the S&P (/ES) Futures if they dip back below the 3,600 line (now 3,602) with tight stops above simply because it's a very positive risk/reward play as we can stop out at, for example, 3,602.50 with a $125 loss but, just yesterday, /ES was down at 3,550, which would have been a $2,500 gain. When you can win $2,500 and risk $125, you only have to be right once in a while to do very well.

Yes there is going to be a vaccine, I would say by May, things should be getting back to normal but they aren't normal now and they won't be normal for Christmas so I really don't see how Q4 GDP will be any good and Q1 not so great either. So it's another sub-par year for the first half, at least and, even if there is not a coup, Biden will not be likely to run up $6Tn in debt – as Trump did this year. Biden is also very likely to raise taxes on the wealthy (over $400,000 in income) and wealthy Corporations – doesn't that impact their bottom-line earnings?

Biden is likely to move us towards a stronger Dollar and that too, is not great for stocks and Biden wants stronger wages – not good for the bottom line. That's why Chipotle (CMG) is one of my favorite shorts – higher wages hit them hard, as will reality if it ever rears its ugly head and notices that CMG is trading at over 150 TIMES their annual earnings.

$1,300 per share is a $36Bn valuation for a company whose best year was a profit of $475M – and that was back in 2015! Since then, $22M (when they poisoned their customers), $176M, $176M and $350M last year. Even if they get back to $500M ($164M in the first 3 quarters of 2020) – they'd still be at an insane 72x earnings for a restaurant that is near its saturation point. Labor…

Monday Market Movement – More Vaccines Boost Futures – Again

November 23, 2020

If it's Monday we must have a new vaccine.

Every Monday for the Month of November (other than before the election – hahahaha), we have had an announcement that there is a 90% effective Covid vaccine and today it's AstraZeneca/Oxford's turn. MRNA and PFE have already announced theirs and it looks like Pfizer is the loser in the vaccine race as theirs requires special, extreme-cold delievery while the other vaccines require only normal refrigeration.

AstraZeneca said it would seek emergency-use authorization from the World Health Organization to ~~experiment on~~ distribute the vaccine in Low-Income countries and prepare regulatory submissions to authorities in countries that have early-approval programs. Pending regulatory authorization, the shot could be available in limited volumes by year-end, with hundreds of millions more doses available each month after that

We sure need that vaccine as US Hospitalizations for Covid hit a record this weekend with 142,732 new cases yesterday, capping off another week of 1M infections in the US. Friday we were just 3,996 short of 200,000 new infections so by next weekend we should expect to be seeing populations the size of Salt Lake City or Vancouver getting infected in a single day. 83,870 people are hospitalized around the country with a new record being set daily.

New York Gov. Andrew Cuomo warned that cases are rising so quickly in parts of the New York City borough of Staten Island that nonessential businesses may be closed and mass gatherings banned there later this week. The bodies of hundreds of people who died in the city during spring surge are still in freezer trucks on the Brooklyn waterfront.

So happy Monday!

Of course we can't blame Trump – even in Japan, with a population of 126M people living in a country the size of California, they have had 132,300 cases of the virus TOTAL and the seven people who died this weekend bring their nation's death toll to 1,981, TOTAL. So don't blame President Trump – he's doing the best he can, right?

Other G20 leaders (Trump boycotted the announcents) have vowed to work together to combat the Corona Virus that has now infected over 12M people world-wide. The G20 Communiqe pledged "To spare…

Philstockworld November Portfolio Review

November 20, 2020

$1,486,878!

Although that's down a bit from our October Portfolio Review, that's only because we cashed out the old Short-Term Portfolio back on October 28th and we didn't carry the gains forward due to a discrepancy arising from the Tesla (TSLA) split so we reset the STP to $200,000 from $620,909 so really, we've made incredible gains in the last month as the LTP was only $974,283 on the day we re-set – as we got heavily bullish during that mini-crash.

As is has been all year, our timing was pretty perfect and the LTP has rocketed back from $974,283 to $1,295,033 as of Tuesday's review, which is up $320,750 (33%) in 33 days as the S&P flew back from 3,250 to 3,600 (up 10.7%). Of course that's ridiculous and of course we were lucky to time it perfectly so OF COURSE we took the money and ran on Tuesday, cashing in 40% of our LTP positions – enough is enough!

As the great stock trader, Kenny Rogers tells us:

You've got to know when to hold 'em

Know when to fold 'em

Know when to walk away

And know when to run

You never count your money

When you're sittin' at the table

There'll be time enough for countin'

When the dealin's done

S&P 3,600 is certainly enough and certainly too much to risk as we're up more than 50% in 4 years (thank you, Mr. Trump – now LEAVE!) and that's more than double the usual 8% you can expect to gain annually and maybe it will keep going and maybe it won't but we're very confident we can make more money if the bull cycle…

Fragile Thursday – Market Reminds Us How Quickly it can Fall

November 19, 2020

"Once I had a love and it was a gas

Soon turned out had a heart of glass

Seemed like the real thing, only to find

Mucho mistrust, love's gone behind" – Blondie

Wheeee, that was fun!

Especially if you took our advice and shorted the Nasdaq at 12,000 yesterday as we got a lovely 50-point drop twice, followed by a 100-point drop during the day and, eventually, we hit our target at 11,800 at 4am but we were happy to take 11,850 off the table before going to bed – still good for gains of $3,000 per contract – you're welcome!

I also said that, if the Nasdaq fails the 50-day moving average at 11,500, that we have no real support until the 200-day moving average at 10,250 – a 10% drop so let's hope I'm not on a hot streak for predictions coming true in a day. From 12,000 to 11,800 is a 200-point drop so we're looking for 40-point bounces to 11,840 (weak) and 11,880 (strong), which is where we are at 8am so we'll see if that can be beat at the open.

If not, the next lines to watch are the bounce lines off 11,500 and that's a 500-point drop so 100-point bounces to 11,600 (weak) and 11,700 (strong) and that is how we can plan out our Futures shorts – if 11,800 fails. Of course Congress is on vacation through Thanksgiving so there's no chance of a bailout this week or next and we're running out of Fed Speakers (see Monday's line-up) with Mester going right now (8:30) and Bowman at lunch and tomorrow it's Barkin, Bostic and Kaplan, all pre-market, but they've all already had at-bats this week and failed to deliver much encouragement.

https://www.reuters.com/article/us-usa-fed-barkin/feds-barkin-lets-see-how-it-goes-on-whether-more-qe-needed-idUSKBN27Y2TD?il=0
https://www.marketwatch.com/story/feds-bostic-says-softer-retail-sales-data-fits-the-picture-of-a-weaker-q4-11605623744
“Right now, the trends are in the wrong direction,” Kaplan told a virtual event for the Louisiana communities of Shreveport and Bossier City.

Kind of the opposite of helpful,…

Why Worry Wednesday? Short-Term Portfolio Review

November 18, 2020

Still at those highs.

Trump is determined to go out with a bang so he can blame any market crash on Biden and all the stops are being pulled out to keep things afloat. The Nasdaq was at 5,000 when Trump took office and now were up at 12,000 (up 140% in 4 years) but it's a great short this morning (/NQ) at the 12,000 line as Apple (AAPL) just announced they will be cutting App Store fees by 50% (to 15%) for most developers.

That's going to take a bite out of earnings potential as it shows that, like NFLX, AAPL can't just keep raising rates to generate more revenue – eventually you do get blowback. In Apple's case, they are in court with their clients as well as the Government over their billing practices.

If AAPL goes down from it's current $2Tn Market Cap – it will certainly take the Nasdaq with it so we're shorting the 12,000 line on /NQ this morning with tight stops over the line as it's a very attractive risk-reward play. 11,800 would be a reasonable pullback target – good for $2,000 per contract on /NQ – we'll see how that plays out into this afternoon's live trading Webinar.

Notice we've been pulling back less each time we test 12,000 – that's a very bullish pattern so we're just playing for this little pullback for the moment but, if that 50-day moving average fails (11,500) – it's a long way down (15%) to the next support at the 200-day moving average at 10,250 (by the time we get there).

I guess this is a good time to review our new Short-Term Portfolio (STP) which we just started on 10/28 as we cashed out the old one as we had a nice dip and took full advantage. The new STP started with $200,000 to protect what is now a $1.2M Long-Term Portfolio (see yesterday's LTP Review) though now mainly in CASH!!! as we got out of half our positions yesterday.

Our last STP Review was way back on last Friday and we've taken a 5% hit since then as our very aggressive TZA hedge got clobbered with…

Tesla Tuesday – Musk Makes the S&P 500 and our Long-Term Portfolio Review

November 17, 2020

Tesla (TSLA) got added to the S&P 500!

The stock is taking off like a Space X rocket in Futures trading, up about 15% and boy am I glad we stopped shorting them! Of course, now they are going to make a tempting short again as $500 is clearly ridiculous as that's about a $500Bn valuation for a car company with $25Bn in sales and about $2Bn in profits so call it 250x earnings back at the highs.

Being in the S&P doesn't make you more valuable but it does force index fund managers to buy your crappy stock and that will give all the hedge fund manipulators who have been playing games with TSLA for years a chance to head for the exits into the volume buying spree as the index fund managers (the guys using YOUR retirement funds) are forced to buy TSLA at ridiculous prices. See what a great scam that is?

That's one of the great ways the rich get to force the poor to give them money. Other fun ways are payday loans, Payroll Taxes, Unemployment Insurance, Social (in)Security, ETFs, Rental Properties, Leases, Church…. (see: "The Dooh Nibor Economy"). We've done extremely well for ourselves during this pandemic as the market has flown higher but, a week before Thanksgiving – I think the party is truly over for the year so I URGE YOU to CASH OUT any positions you don't want to see through a 20-40% correction – because that is a very likely thing in the next 3-6 months.

Our last Long-Term Portfolio (LTP) Review was back on October 16th and, at the time, we were at a very healthy $1,070,623 – up 114% for the year. We got very aggressive with SKT and I discussed SPWR, T and WBA as still being great new trades and those all went very well:

Other than that, we left the porftolio alone and that was a great decision as it, along with the market, has blasted higher and now we are at $1,295,033 – up 159% for the year…

Moderna Monday – Another Vaccine Lifts the Markets – Again

November 16, 2020

Dow 30,000!

I told you this was coming last week (see: "Record High Wednesday – Dow 30,000 in Sight") and we touched it this morning in the Futures (/YM) as Moderna (MRNA) announced that they have a 95% effective Covid vaccine that, unlike Pfizer's, requires only normal refrigeration. That's punching MRNA up 20% in pre-market action and sending the indexes flying higher as two vaccines are better than one so why not double down on our longs?

Well, as I mentioned last week, 30,000 on the Dow is 40 TIMES the earnings of its components and that does seem a tad high, doesn't it? Also this weekend, Biden's Covid Task Force said they don't think a Nationwide lockdown will be necessary while Trump's Covide Task Force said they haven't seen the President at a meeting in over 3 months.

We are hitting 11M cases in the US today and will have our 250,000th death this week as well. Gosh, it seems like only last week that we hit 10M cases, doesn't it? Well, actually, that was last Tuesday: "Ten Million Infections Tuesday – Just in Case You Forgot About the Pandemic…" While the markets are singing "Don't worry, be happy" Washington and Michigan are imposing stricter restrictions and ending indoor dining in those states as infection rates have doubled in the past 30 days

In addition to stopping indoor service at restaurants and bars, and restricting outdoor dining to tables of five people, indoor operations were halted at gyms, bowling alleys, museums, zoos, aquariums and movie theaters, while religious services are limited to 25% of indoor capacity or 200 people, whichever is less. Weddings and funerals can take place, but indoor receptions of any size are prohibited. Michigan stopped in-person classes for High Schools and Colleges but we're still sending our younger children off to infect each other for some reason.

I live in Florida, where we are partying like it's 1999 and, yesterday, we had dinner at Benny's on the Beach (love it!) so we could watch the Space X Dragon Rocket take off for the International Space Station and I've got to…

Flip Flopin’ Friday – Markets All Over the Place

November 13, 2020

153,000 new cases yesterday.

The virus is spreading at an alarming rate and the futures are up half a point this morning – go figure. Do you want to know why you can't see the US on this chart? Because 153,000 new cases for 330M people is 463 cases per Million people – the chart doesn't go that far!

Across the United States, daily caseloads surged. Illinois reported a record number of infections for the second day in a row. Ohio and Minnesota each topped 7,000 daily cases for the first time since the pandemic began, while Pennsylvania and Indiana reported more than 6,000 cases in a day, according to Johns Hopkins. Other states recording all-time highs included Colorado, Utah, New Mexico, South Dakota, North Dakota, Oregon, New Hampshire and Vermont.

The rising numbers of cases pushed hospitalizations higher. The number of people hospitalized due to Covid-19 rose to a record 67,096 for Thursday, according to the Covid Tracking Project. Intensive-care units continued to face pressure. As of Wednesday, there were 12,796 Covid-19 patients in ICUs, the highest number since May 2. The U.S. death toll, meanwhile, surpassed 242,000 as more than 900 new fatalities were reported, according to Johns Hopkins.

School districts nationwide are split on their closing plans as community infection rates vary and transmission in many locations has been relatively contained. Cities such as Detroit, Boston and Baltimore have shut down or scaled back in-person learning because of increases in coronavirus cases. Other large school systems including Chicago and Philadelphia that didn’t reopen schools during the fall term are deciding to keep students at home longer. Meanwhile, schools in Oregon, Texas and elsewhere are keeping schools open despite increases in infections.

Grocery stores are reinstating purchase limits on items like paper towels or soap for the first time since the spring, as consumers stock up on staples amid rising Covid-19 cases. With people staying at home more, retailers say there is renewed demand for paper products and frozen foods. Stores also are reporting new shortages in staple cooking ingredients like butter and spices.

The markets had a bad, but not terrible week as we're still hanging…

Fatal Thursday – Virus Deaths in the US Hit a New One-Day Record!

November 12, 2020

144,000 infections, 1,600 deaths – yesterday!

I hate to harp on the virus but, come on people, this is serious! The chart on the right just two weeks ago projected 1,100 deaths just 3 weeks ago but we're 50% above that already. A range of factors has contributed to the recent surge in infections, hospitalizations and deaths, say epidemiologists and public-health officials. Inconsistent messaging on masks and other preventive measures has hindered their effectiveness, they say, and pandemic fatigue has increased some people’s willingness to take risks.

We may not be able to survive another 2 months of Donald Trump at this rate as we could be well over 200,000 people being infected per day by January 20th – 1.4M people per week, 6M people per month and our hospitals are already overwhelmed with new cases and that can lead to many more deaths than the current projection of 103,500 Americans who will die on the altar of Donald Trump in the 69 days (hopefully) he has left in power.

At this rate of acceleration of death, if policy doesn't change, we are on a path to 3,000 people per day dropping dead by January 20th. At what point do you think the market might notice that? Hard to have growth projections for your business when 1M of your potential customers are going to die in the year ahead. Of course we assume President Biden will change policy right away but, as I noted in the Webinar yesterday, that too will have economic consequences. The economic consequences can't be escaped at this point - they are behind doors number 1, 2 AND 3.

With just two weeks until Thanksgiving (and Black Friday), that's another looming disaster we have to look forward to so I'd be VERY CAREFUL in the weeks ahead. The other major issue that's going to be slamming the markets is President Biden is very likely to raise taxes on the wealthy and that includes Capital Gains. With the market at record highs, the cost or NOT…

Record High Wednesday – Dow 30,000 in Sight

November 11, 2020

Dow 30,000.

Barron's predicted this back in 2017, assuming the Trump tax cuts would boost Corporate Earnings and all went well with China Trade and nothing bad happened – Barron's saw the possibility of the Dow hitting 30,000 by 2025. While that's all very nice, I will point out that it's only 2020 yet here we are already – the very definition of getting WAY ahead of ourselves.

What's even more interesting is that we're doing it with 10% unemployment and a virus ravaging our economy and GDP down about 10% for the year – this is some truly insane market action – we're not taking reality into account at all….

Historically, the average Price/Earnings Ratio for the Dow Jones is about 16 times earnings.

IN PROGRESS

Ten Million Infections Tuesday – Just in Case You Forgot About the Pandemic…

November 10, 2020

10,422,026.

244,470 people dead, 6,554,460 people recovered, like our President, leaving 3,623,096 actively infected people among us – 1 out of 100 citizens who, at this very moment, could be transmitting the virus to someone else. HOPEFULLY most of them are following protocols and wearing masks and maintining social distancing.

Housing Secretary Ben Carson and White House Chief of Staff Mark Meadows were not following protocols at last week's election night party, attended by 100 people at the White House, and they have both come down with the virus and, keep in mind, all 100 people were tested before entering the White House – so it could have been a lot worse. Literally the only person wearing a mask is Health and Human Services Secretary Alex Azar.

A person with the virus can be infections 48 hours before they test positive and the the CDC defines "close contact" as spending at least 15 minutes within 6 feet of an infected person beginning two days before they test positive or exhibit symptoms. CDC's Popescu called the party, in particular, "a ripe environment for transmission to occur," and said anyone in attendance should have been informed and asked to take precautions.

As with Trump's last party, which infected dozens – it will take a week for us to see who catches the virus from this completely irresponsible event. Of course, that's not the only irresponsible event going on, of course. 127,151 Americans were infected yesterday, 1/4 of the World's 504,752 new cases, despite having just 4% of the World's population. We are, indeed a nation of over-achievers. Even our 10M total is 20% of the World's 50,459,886 infections, we are getting infected at 5x the rate of the rest of the planet.

I know it seems very ordinary that 244,470 (the chart is from yesterday and today isn't over) people have died from the virus. "Only" about 1,000 people a day are dying at the moment and 3,000 people died on 9/11 so what's 1,000 people per day dying of a virus, right?

Try to keep in mind, however, that "only" 116,516 Americans died in two years of World War I and "only" 405,399 Americans died in WWII – and that took 6 years – this has…

Monday Market Mania – Trump Cures Covid, Gets Fired!

November 9, 2020

It's over!

In more ways than one. Everyone but Donald Trump decided Joe Biden will be our next President and you would have throught they killed the Wicked Witch of the West the way American cities were partying this weekend as swing state after swing state swung against President Trump.

Better late than never and just as I predicted back on September 28th, Pfizer (PFE) has come up with a 90% effective vaccine for Covid! That's about as good as it gets with a vaccine and it's more than enough to get things under control in the coming year so, if all goes well – this Christmas is still cancelled but, by next summer, things could be back to more or less normal and that is certainly worth celebrating.

The markets are celebrarting with a 5% jump in the Dow, up 1,400 points to 29,683 and the S&P has flown up to 3,635 – up 133 (4%) points from Friday's close. The already pumped up Nasdaq is red as people getting out of the house is not actually good for Amazon (AMZN), Alphabet (GOOGL), Netflix (NFLX) and all those other stocks that were benfitting from our long imprisonment.

The small-cap Russell index is so happy that it's blasted up 7% (and got halted) this morning, breaking an all-time high as it looks like the shoppers will return to Main Street to eat, drink and be merry once again. Ding-dong indeed! Airlines are up 20% this morning – that's crazy! Of course, I predicted that too, on October 8th, when we put the Airline ETF (JETS) in our Future is Now Portfolio, saying:

JETS is the US Global Jets ETF and it's got LUV, DAL, UAL, AAL, ALGT, CJT, AC, ALK, JBLU and ATSG as it's top holdings. As we discussed in the Webinar yesterday, we're about a year away from herd immunity, vaccine or no vaccine and the airline industry is vital to our national

…

Friday Failure – No Stimulus, No President, Have a Nice Weekend!

November 6, 2020

Not much to say about this mess other than – add some more hedges!

Ex-ish President Trump declared the elctions invalid last night in a rambling lie-fest. I don't think it would suprise anyone if he sends in the troops this weekend to "oversee" the recounts in the states he lost in. As noted by Stephen Colbert – this isn't very funny anymore – our Democracy is at stake. You know, the thing our Founding Fathers fought and died to protect and, when faced with a similar challenge our "Not-So-Great" Generation changes the channel or, at most, fires of an angry tweet or likes an anti-whatever post on Facebook. Way to revolt, my friends!

There is still no official President and there won't be one until Trump has exhausted the courts, apparently.

Officially it's Biden 264, Trump 214 but Biden is up 12,000 in Nevada with 150,000 mostly blue votes left to be counted. Biden is 1,0000 ahead in Georgia with 50,000 Atlanta votes left to count – where Biden has been leading 4:1. Biden is behind by just 20,000 in PA – from 600,000 last night with about 200,000 mostly Dem votes left to count and Trump is up 80,000 in North Carolina with 250,000 votes to count – not likely for Biden and, for some reason, Alaska hasn't been called yet – that's Trumps.

There's no way Trump wins at this point other than reversing the results and now we'll see how far the limits of Presidential power can be pushed to overturn our Democracy. Trump believes (for good reason) that he owns the Supreme Court. So much so that his legal team doesn't believe they need evidence to throw out voting results as they are making half-assed challenges all over the country and taking quick losses solely so they can appeal the matter to Trump's Supreme Court, where they expect to get favorable rulings that will invalidate our election.

The market doesn't seem that upset about it, with the Dow down just 250 points…

Federally Fueled Thursday – Fed Stimulus Hopes Lift Markets Higher

November 5, 2020

More free money!!!

That's what investors are hoping for this afternoon as the Fed winds up their 2-day meeting and we'll have their rate decision at 2pm. It's up to the Fed to save Christmas as we don't even have a President yet, with Joe Biden leading Donald Trump 253 Electoral Votes to 214. You need 270 to win and Biden seems to have Arizona (11) locked up but only an 8,000-vote lead in Nevada (6) and Biden is 18,000 votes benind in Georgia (16), 77,000 behind in North Carolina (15) and 164,000 behind in Pennsylvania (20). So Biden can win any two states to win and Trump is in big trouble, basically.

Especially as late voting, which is either mail-in voting or big city voting, strongly favors Joe Biden. This is why Trump supporters are protesting to "stop the count" around the country. Having every vote counted is something Democracies do – this is America!

We've had a spectacular 260-point (8%) move in the past 5 days on the S&P 500. A 10% run would have taken us to the 25% line at

IN PROGRESS

Which Way Wednesday – Election Uncertainty Remains

November 4, 2020

Four more years?

Whether Trump wins or loses America has spoken and at least half of us have seen Trump in action for the last 4 years and WE WANT MORE! Even if Biden squeaks out a victory at this point, the Democrats are unlikely to control the Senate – so nothing much will change. Ex-President Trump will tweet just as much as President Trump and, just 3 years from now, he can enter the 2024 race, looking to pull a Grover Cleveland and get elected to non-consecutive terms. No matter what happens, what we have told the World today is that we, as a country, do not reject Donald Trump, his words or his actions – pretty much half of us want 4 more years of it.

Biden will have no mandate to make sweeping changes and Trump, if he loses, will be calling the election a fraud for the next 4 years, rallying his base and inciting more fury and division than we already have. Trump already declared victory last night and threatened to go to his Supreme Court to halt the counting, knowing full well that the uncounted mail-in ballots are very much in Biden's favor. Chris Wallace, on Fox News, reacted to Trump’s speech by saying: “This is an extremely flammable situation and the president just threw a match into it. He hasn’t won these states.”

Republicans have filed lawsuits in PA to stop the counting before liberal Philadelphia's votes are counted with two cases to be heard tomorrow. MI, PA and WI are all likely to turn to Biden which currently look like Trump wins and AZ, NV and GA all have a lot of uncounted blue votes.

In Pennsylvania, for example, you can see that Trump's 600,000 vote advantage has Fox News declaring PA for the President but 25% of the votes (1.5M) remain uncounted and Biden has been winning the uncounted votes by 3:1 and 5:1 margins so far – this is why Trump is so desperate to stop the counting and declare late counting to be a fraud – despite the fact that all votes cast…

Terrific Tuesday – Futures Fly Higher as Trump Error Comes to a Close

November 3, 2020

Election Day!

The Futures certainly seem happy about it with the Dow (/YM) up 420 points and the S&P (/ES) up 40 points. Biden still has a commanding lead in the polls but there has been so much interference and disenfranchisement of voters already that there's no telling what will actually end up being counted so – anyone can win.

5.2M people, mostly people of color, have been deemed ineligible to vote by the courts, usually because they are unable to pay court ordered money sanctions (considered a felony), according to the Sentencing Project. In three states - Alabama, Mississippi, and Tennessee – more than eight percent of the adult population, one of every thirteen people, is disenfranchised and in Floriday, 900,000 people who have been in jail are never allowed to vote again despite the 2018 ballot referendum that was supposed to restore their voting rights in the country's largest swing state.

Speaking of swings, the S&P 500 is now back to 3,335 – a move I called "almost inevitable" last Wednesday and we bounced right off our predicted 3,277.50 line, where we wisely cashed in our hedges but now we'll see if the weak bounce line (3,335) holds up and, as I said at the time, it's not likely we make ti back over 3,392 as now you can see the "death cross" being taken by the 50-hour (two week) moving average crossing under the 200-hour (2 month) moving average. By the way, the weak bounce line on the chart is from our original drop from 3,600 to 3,200 in Aug/Sept – not this recent drop.

That death cross is going to turn 3,400 into serious upside resistance but we're 2.5% away from that so no worries this morning and it's not like we'll have a decision tomorrow in the election so I don't see a major catalyst unless the Fed steps up and does their own stimulus on Thursday.

IN PROGRESS

The Week Ahead – Elections, Data and Jobs

November 2, 2020

What a busy week!

It hasn't even started yet and the dow is up over 400 points. Why? Who know? Actually, it's because it's Monday and Monday's pre-market futures are very easy to manipulate. Trump is 10 points behind Biden in the WSJ/NBC poll so he has to at least push the markets up into the election so he can keep pretending he's got a great economy. It's hard for him to keep up with the other charade – that he's "beaten" the virus – when the infection rate is hitting new daily records in the US 50% higher than the previous peaks after the July 4th idiocy and now it's time for holiday idiocy, where you get to infect your entire family at Thanksgiving.

My Nephew, Neice and Sister-in-Law all got it last week and they all seem to be doing OK, thank goodness but that's how fast it spreads through a house – as soon as my Nephew showed symptoms it was too late for his mother and sister to avoid it. Testing might have helped but we don't test – so we'll never know.

Stanford did a study of 18 Trump rallies between June and September and found that 30,000 of his followers were infected with 700 of them dying for their leader. Trump knew about this early on and held the rallies anyway as he loves the idea that his followers are willing to die for him – what's a bigger power/ego trip than that? At a rate of 1,000 infections per day doubling every 3 months, we'll all be dying for Trump in the near future? How soon, you may ask?

Well, 100,000 per day between now and February is 9,000,000 but then 2,000/day through May is 18,000,000 by August and then 3,000/day into November will give us another 27M infected so, if we "stay the course" and re-elect Trump and he continues to do nothing, then we're looking at 54M new infections by this time next year. MAGA!

This is what is going on in the UK (our Government refuses to allow official research into the "fake" virus like this) and this is why the UK just announced a one-month lockdown this…

Flip Flopping Friday – Winding Down a Weak Week

October 30, 2020

That went pretty much as expected.

On the whole, it was just the one big drop on Wednesday morning that did us in and, if we just consider the drop from our 20% line at S&P 3,420 to our 15% line at 3,277.50, then it's just a 5% correction in a bull market and our weak bounce line is 20% of the 142.5 drop (we ignore the spikes), which is 28.50 but now we rond so call it 3,310 and 3,340 would be our strong bounce line – where we were rejected yesterday afternoon.

This morning we're back down to 3,280 as Apple (AAPL) earnngs disappointed along with, as we predicted – Starbucks (SBUX) but not too badly so, in yesterday's trade idea for our Earnings Portfolio, we're going to cash in our 10 Jan $70 puts for a small profit and the real money will be made on the expiration of the short calls below the $90 line -so those we can ride out for a bit. We never thought SBUX would hit $70 but the puts would have jumped nicely if SBUX took a big hit. It didn't so that part of the trade is over. Never forget why you got into a position.

Earnings reports and guidance from technology companies after the closing bell weighed heavily on markets overnight. Twitter (TWTR) plunged 15.3% in offhours trading after posting its slowest user growth in years and warning that uncertainty around the U.S. Election could compress ad spending. Apple (AAPL) shares dropped 4.2% ahead of the opening bell after quarterly iPhone sales fell from a year earlier. That, combined with a delay in the launch of the company’s new smartphone, led to iPhone revenue falling more than analysts had expected (but exactly as we had expected). Shares of Facebook (FB), Amazon (AMZN), Tesla (TSLA), Microsoft (MSFT) and Netflix (NFLX) are all down over 1% premarket – Google (GOOGL) is up $100 (7%) and is pretty much holding the market up by itself this morning.

“The big tech earnings were not that bad but markets did not respond positively, so that does suggest a deeper sense of negativity in the market,” said Seema Shah, chief strategist at Principal Global Investors. "While big tech has driven the U.S. stock market…

Faltering Thursday – Rally Runs Out of Steam without Stimulus

October 29, 2020

"You give it all but I want more
And I'm waiting for you

I can't live without you" – U2

It's GDP day and we're all expecting some fantastic numbers at 8:30 as the US economy bounces back from Q2's -31.4% drop but, as I have pointed out before, 100% less 31.4% is 68.6% but 68% + 31.4% is only 89.35% so we need more like a 45% gain in GDP just to get back to our Q1 level, which was already crap at -5% – before Trump even had the virus to use for an excuse on what a terrible job he was doing with the economy.

Q2 was the biggest downturn in GDP in US history – including the Great Depression, including 9/11 and, since then, the Trump Administration and the Federal Reserve have put over $4,000,000,000,000 to work proping up the market. $4Tn is, by the way, an entire Quarter of GDP so, rather than be excited that the GDP is coming back to "normal" we should be alarmed at how adding 100% to the Q3 GDP ONLY gets us back to normal.

Category

Q2

Q1

Q4

Q3

Q2

…

Wednesday Writedown – Virus Resurgence Spooks Markets

October 28, 2020

Wheeeeee!

Down we go again as US cases hang around their record highs and Europe is starting to catch up as another wave of the virus goes global. No country, of course, can match the US in number of cases or number of deaths because we are truly the most incompetent Government on the planet. Of 50 US states, only 2 (Mississippi and Mossouri) do not have rising numbers of viral cases – only 2.

The does not, of course, stop Donald Trump's White House from announcing that it has "successfully ended the COVID-19 pandemic" on the same day that 73,240 Americans came down with the disease.

“We have exploding case counts. Death rates will undoubtedly rise. They are living in a parallel universe that bears no relation to the reality that Americans are living,” said Dr. Tom Frieden, former director of the Centers for Disease Control in the Obama administration. “And this idea that we should let it spread and protect the vulnerable is a really dangerous mistake. The idea that it [containing the virus] can’t be done ignores reality.”

Do you see where it says "National Emergency Declared"? That was 7 months ago when the US had less than 2,000 cases and now, on October 27th, with 8,779,839 American infected (73,240 in a single day), the White House has declared the National Emergency is over, not because it's actually over, but because it's a week before the election and Donald Trump likes to claim he defeated the Coronavirus at his rallies and now he can say "it's official".

1,000 Americans per day are dying. 3,393 Americans have died from Terrorist attacks yet 1,000 people, EVERY DAY, are being killed by Trump's virus and he's declaring "Mission Accomplished". 20 years later, we still have to scan our bags and take off our shoes at the airport and even the incompetent George Bush II formed the entire Department of Homeland Security in response to 9/11 and the TSA was formed on November 19th, 2001, 5 weeks after the attack on the World Trade Center.

Why? To prevent more American deaths. To help Americans return to their normal lives…

Testy Tuesday – Dropping Below the Lines

October 27, 2020

Wheeeee – that was fun!

It only took a day to wipe out the rest of October's gains but we recovered a bit off the weak bounce line (of the 15% line) but that was sure to lend support so now we calculate the bounce lines off the bounce line and we fall from 3,562.50 (the 25% line) to 3,360 (the weak bounce line) and let's call that an even 200 points which makes the bounces 20% of that so 3,400 on the dot is the short-term weak bounce and 3,440 is the strong bounce but 3,410 is the 400-Hour (2 month) Moving Average on this short-term chart and that's about a month – so we'll have to respect that line followed by our 20% line at 3,420 – that's going to make it a tough slog to get back through that zone of resistance.

Keep in mind TA is totally BS, our 5% Rule™ is not TA – it's just math. Math that is derived from the same formulas that drive the electronic trading that is 90% of all trading these days – so it works very well. If you want to apply TA you shouldn't look at a chart's past but consider it's future. We're significantly below the 100-hour (2-week) moving average and, since it's a fast-moving average, it's going to get pulled down quickly and that's going to turn that blue support line into a downtrending line of resistance and, since we are as much below it as we were above it at the moment – then we can imagine the downslope will match the upslope but, for that to happen, we'd have to be having days below the 15% line again so – if we can't pop back over that red 400-hour moving average this week, which also "happens" to be our 20% line heading into the election, then DOOM!!!! is a ahead for the market.

Of course DOOM!!!! is a relative term as we're miles up from the bottom but not far off the 3,200 we started the year at. Earnings season has not been kind so far, as we've fallen almost 10% from our too highs since companies began reporting in earest and it hasn't been the data – as we haven't had too…

The Week Ahead – US Virus Infections Hit a New Record Ahead of Election

October 26, 2020

4 more years!

At this pace, in 4 more days anther 240,000 American citizens will hve the "China Virus" – named so by the President despite the fact that, to this day, less than 100,000 Chinese citizens have caught the virus – TOTAL! By election day, 480,000 more Americans will be infected, more than Germany's 8-month total and, at over 60,000 infections per day (more than Singapore or Ireland's totals), we are now pacing at a new record of infections heading into an election to decide between a candidate who belives the virus is a major threat and one who doesn't.

Keep in mind these infections are increasing and, with 8,637,000 Americans now infected (one in 38 people), if we don't DRASTICALLY change our ways (hint, hint for next Tuesday!), we are on a truly disastrous path that is not only a threat to your health – but a dire threat to our economy as well. This is the ticking time bomb Trump is leaving us, whether he stays in office or not. Like George Bush II's economic collapse before him, the Democrats will inherit a disaster in progress which the next Republican Candidate will try to blame on the Democrats – and not the man who truly caused it.

I would almost hope Trump does get re-elected – so that people will truly see him trapped in a bankruptcy he won't be able to walk away from but that bankruptcy – Moral, Ethical, Evironmental, Financial, Health and Reputational – is our bankruptcy and the bankruptcy of our children, which will take many, many years to recover from.

IN PROGRESS

Friday Market Folly – Up and Up Regardless of Events

October 23, 2020

Higher and higher we go.

994 Americans died from Covid-19 yesterday, 1 per minute during the debate where Trump denied it was a problem, leading Joe Biden to give him a WTF?!? look. As Trump falsely stated that we are "rounding the corner" on the virus (we are not) and that a vaccine was ready (it is not), Biden pointed out that projections indicate that over 300,000 people (50% more) will be dead by Christmas – though he didn't say it that harshly.

In reality (a place we're no longer familiar with) Pfizer and Moderna have both said they could apply for Emergency Use Authorization from the US Food and Drug Administration in the coming weeks, but only if they have positive results from their Phase 3 clinical trials. Neither company says they know whether the results will be positive. Pfizer has said they could apply for emergency use authorization after the third week in November. Moderna has said they could apply in early December.

"99.9% of young people recover," Trump said. "99% of people recover. We have to recover. We can't close up our nation," Trump said.

So far, about 2.6% of people in the US who tested positive for Covid-19 died from it, according to Johns Hopkins University. Recovering from Covid-19 depends on someone's underlying health conditions, and many survivors experience lingering symptoms. Health experts are unclear as to why some people experience lingering symptoms and other internal damage.

"If you look at the people who were sick, but didn't require hospitalization," Dr. Fauci said, "when you look at the percentage of them — that actually recover, and recover within two to three weeks — a substantial proportion of them don't feel right." According to a CDC survey, symptoms subsided in some people in as little as five days, while others, studies show, have experienced symptoms several months later. Only 65% of 292 people surveyed in the CDC study from April 15th to June 25th said they returned to their normal health as soon as five to 12 days after they tested positive for Covid-19 – as…

Distressing Thursday – CDC Concerned About US Virus Trends

October 22, 2020

"CDC says the U.S. is now seeing a ‘distressing trend’ in coronavirus outbreak."

I'm sorry, I don't want to keep talking about the virus that's impacting the Global Economy and life on Earth as we know it but it IS out there every day and it is the #1 Macro Concern on the planet – no matter how much you choose to ignore it. Today Jay Butler, the CDC’s deputy director for infectious diseases, said Covid-19 cases are growing “really in all parts of the country,” with particularly high transmission in the Midwest. “Unfortunately, we are seeing a distressing trend here in the United States. Smaller, more intimate gatherings of family, friends and neighbors may be driving transmission as well, especially as they move indoors.”

I can testify to that as I was at the Breakers Hotel in Florida this weekend and there was a wedding in the courtyard and there were about 500 people, none of whom were wearing masks and they were having a buffet AND they were all gathered in the half of the courtyard where the food was, rather than spreading out. And they were hugging and kissing and talking in small circles – MADNESS!!!

And these are wealthy people (the hotel is very expensive) so you'd think at least SOME of them have had educations and would be aware of the risks. I felt bad for the bride, who will aways remember her wedding as a super-spreader event that leads to the deaths of dozens of guests but I felt more bad for the hotel staff – who were the only people wearing masks and gloves which offered little protection from this germ-fest.

“I recognize that we are all getting tired of the impact Covid-19 has had on our lives,” Butler said. “We’re tired of wearing masks, but it continues to be as important as it has ever been and I would say even more important than ever as we move into the fall season.”

The U.S. still has the worst outbreak in the world, with more than 8.2 million cases and at least 221,122 deaths, according to Hopkins data. Health officials and infectious disease…

Which Way Wednesday – Stimulus Hopes Hold off Disaster (so far)

October 21, 2020

We're holding up so far.

We are flirting with disaster at the 3,420 line but, so far, it's holding up on endless promises of endless stimulus – currently over 10% of our GDP ($2Tn) is on the table to be pumped into our economy in the last 2 months of the year – just like we did in Q2 and that gave us a 20% pop in the S&P, from 3,000 in late June to 3,600 at the end of August. The question now is, can $2,000,000,000,000 give the markets another 20% boost or is it only enough to fill the hole that's been blown in this economy by the Covid Crisis?

Nancy Pelosi said she hoped that fresh stimulus spending would be retroactive, although Republican Senate Majority Leader, Mitch McConnell has warned the White House against a bigger Democrat-led deal before the election. The administration said its offer is now up to $1.88Tn, below the $2.2Tn Pelosi has pushed for. “The rise in yields suggests that the market thinks a stimulus deal will be forthcoming and that the Democrats are set to take both the presidency and the Senate at the Nov. 3 election,” said John Hardy, chief foreign-exchange strategist at Saxo Bank.

IN PROGRESS

Tipping Point Tuesday – Schrodinger’s Stimulus Moves the Market

October 20, 2020

Rumors are everywhere.

The President held another super-spreader event in Arizona yesterday and he has threatened to hold one every day up to the elecion until every last Republican is infected with the corona virus. It is possible that Trump, a long-time Democrat until he decided to run for President, may have always had the goal of destroying ther GOP, who now fact humiliating defeat under his "leadership", a complete loss of power and now, even a loss of population as Covid-19 is spreading through the red states like a California fire.

Speaking to supporters at the Prescott Regional Airport, Trump bashed CNN for its coverage of the pandemic, saying it’s all the network covers. “People aren’t buying it, CNN, you dumb bastards,” he said to loud applause. Trump also referenced his own recent case of COVID-19, the disease caused by the new coronavirus. “If you have it, you have it, you get better,” Trump said (after over $100,000 worth of treatments). Over 220,000 Americans have died of COVID-19, with 5,830 deaths in Arizona alone – but at least they don't have to listen to any more of Trump's bullshit…

"Mr. President, you’re right about one thing: the American people are tired. They’re tired of your lies about this virus," Biden said in a written statement. "They’re tired of watching more Americans die and more people lose their jobs because you refuse to take this pandemic seriously. Now, more than ever, we need a leader to bring us together, put a plan in place, and beat this virus — but you have proven yourself yet again to be incapable of doing that."

Still, he might win – his followers are certainly loyal:

Meanwhile, it's all about the latest stimulus rumor for the market but nothing seems to be actually happening so, like yesterday – get ready to be disappointed. The news isn't so good either so I find it very hard to be enthusaistic about the markets today:

The Week Ahead – Election Looms Large

October 19, 2020

Two weeks to go.

Two weeks ago the S&P was down at 3,350, down about 4% from where we are now so don't get complacent – especially into the elections and ESPECIALLY when Global Covid Cases topped 40M this weekend with 8.15M in the US and growing at 0.05M per day along with 220,000 deaths.

You KNOW Trump is lying about the virus, you KNOW Trump has been lying about it since day one. You KNOW Trump is essentially doing nothing to stop it and I REALLY hate to be that guy every week but how can you let yourself be deluded by all this other nonsense when we are STILL right in the middle of a Global Crisis?

Come on people, let's not rely on the lie to make us feel good. This is the chart of how many people per 100,000 in the US are infected by the Corona Virus. In May, I said I was very concerned because passing 1/250 (400 per 100,000) means that any time I went outside and walked down the street and walked into a store – I probably either passed an infected person or touched something they had touched and we now know the virus lasts a lot longer than we thought on surfaces.

That was back in May. Now it's October and 1/2,500 people are infected as we brilliantly ended our lockdown on Memorial Day Weekend to "save" Trump's economy and now 1/40 people are infected. That means, if you go to a restaurant – even one that's 1/2 empty – you are likely there with an infected person and your children are in class with infected people and now you can't walk down the block without coming in contact with infected people and Trump is doing what to control it before it gets to 1/4 people? What? Name SOMETHING???

Our lives are at stake people – our actual lives! 220,000 Americans are dead an "only" 8M out of 330M have contracted the virus so far. That means 40x more to go and 40x 2,200 is 8,800,000 dead – that's the entire population…

Philstockworld October Portfolio Review (Members Only)

October 16, 2020

$1,561,147!

That's up $361,550 for our paired portfolios since our September 18th review and we only made one change in our Long-Term Portfolio – selling 5 calls against our Berkshire Hathaway position. The LTP went from $1,039,240 to $1,065,198 but the big move was the Tesla (TSLA) postion in the STP, that went from -$881,087 to -673,065 (including our 50% cash-out), accounting for over $200,000 of the gains. Because of the cash-out, TSLA is now less volatile for us as we wanted to be sure our hedges were true hedges into the Elections, Earnings and the Holidays – all hitting us bang, bang, bang for the next and last 77 days of 2020.

We just did our STP review on Tuesday and we got much more aggressively short in order to cover our now $1M gain for the year. It should be noted there was an error in the price of the SQQQ June $30 calls, which were sold for $8.50, not $11.70 (the put price) but, fortunately, our other positions acquited themselves and made up for the downward adjustment. We're also half CASH!!! in the STP and that means we're flexible and ready to take advantag of earnings season and we will be looking for bullish bargains because we have PLENTY of downside protection at the moment.

UPRO is our new hedge and the short $50 puts are rollable so, in a catastrophe that brings us down to $30, we expect to be able to roll the short puts and end up with $400,000 from the long puts from our net $179,500 entry. If that does not happen, then the short puts will pay us $20,500 in January (already in the net) and another $80,000 over the next 4 quarters so the net cost of our $400,000 insurance policy should be about $100,000 when all is said and done.

CMG – has earnings next week (21st)

SQQQ – cost us net $58,000 and it's at least a $300,000 potential spread (rollable as well) and, of course, we will sell more short calls to pay down that

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Fallback Thursday – Reality Hits the Markets

October 15, 2020

Wheeee, down we go!

In yesterday's Live Trading Webinar we discussed the merits of shorting Oil (/CL) Futures at the $41 mark. We had already made a quick $500 shorting oil in our Live Member Chat Room early yesterday morning (and it was in our Top Trade Alert) but we're not sy about betting on the same horse twice and at 4:26 I said to our Members:

/CL back at $41 is back to being a short again below the line now that it's calmed down as I can't see EIA being exciting enough to justify – last week certainly didn't and Columbus Day is not much of a driving/travel holiday, is it?

As you can see, we're back to test $39.50 this morning and we'll take the money and run there as it's the 2nd green S2 support level so it's bound to be bouncy in the very least – should be a $3,000 gain for all our hard work!

Remember: I can only tell you what is likely to happen in the market and how to profit from it – the rest is up to you!

I noted another way to play for our Members as well:

Another reason I like shorting oil here is we're not far away from the rollover on the November contracts and December is very crowded with fake orders that NO ONE is going to want delivered so we could be heading for a nasty crash like we had in March, when there were way too many May contracts to roll into.

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Wednesday Worries – 25% of Small Businesses are Closed

October 14, 2020

This is concerning.

In this excellent but disturbing graphic by Visual Capitalist, major cities are averaging 30% drops in small business activity with San Francisco HALF closed and New Oreleans not far behind. When you break it down to liesure and hospitality businesses, it's a devastating 65% and 72% in those cities and even Washington, DC has 55% of their L&H sector closed among 37% of all small businesses still shut down.

Yet out Congresspeople can't see the need for more stimulus? Do we need any better reason to throw the bums out? And it's not like we're having some fantastic recovery. Overall Small Business Activity in the US is down 21% – no better than it was in June and that's AFTER the first $4Tn in stimulus has been spent.

There's been some spillover from Main Street to Wall Street as Bank of America's (BAC) profits are down 16% in today's report and Wells Fargo's (WFC) are down 56% but Goldman Sachs' profits almost doubled expectation at $9.68 per $215 share in a single quarter – very impressive.

IN PROGRESS

Toppy Tuesday – $2Tn Stimulus Talks Buys Us a Trip back to the Highs

October 13, 2020

Here we are again!

After incredible gains yesterday, we're back to the highs on the Dow, Nasdaq and S&P 500 and we're waiting for the Russell to come back to 1,700 (now 1,636) but even the NYSE has joined the party at 13,324 and things could not be greater in America, could they?

Well, the economy may be on life support but what a lot of life support we're getting with Trump now bidding $2Tn and Biden saying that's nowhere near enough so, whoever gets elected – there's going to be lots of money flowing into the economy – just don't ask where it came from…

Apple (AAPL) led the markets higher yesterday, jumping 6.35% in a single day ahead of today's iPhone 12 event. While Apple may be introducing a 5G phone, the US is certainly not ready (the rest of the World is) as Trump's ban of Huawei set us back quite a bit and he either saved us from Chinese spying or put America about a year behind the rest of the World in technology - which one do you think Putin was hoping for?

Despite the run-up in the Nasdaq, our Short-Term Portfolio is holding up well at $484,069 – up a very healthy 384% for the year and that's strange for a hedging portfolio in an up year but that's because we caught a couple of nice down moves perfectly AND we made some very profitable short-term plays. We're down about $30,000 since last Wednesday but our Long-Term Portfolio has jumped from $1,005,650 to $1,065,450 (up 113%) so we're going to take the +$30,000 we made in the LTP and spend it on more hedges in the STP to lock in those gains – just in case.

Short-Term Portfolio (STP) Review:

CANE – We figured sugar would do well with people being shut inside and nothing to do but bake. We can exit at $1.20.

INTC – Just a short put to raise cash. Very confident.

WBA – My favorite bargain stock. In contention for Stock of the Year 2021.

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The Week Ahead – S&P 3,500 and Nasdaq 12,000 in Play

October 12, 2020

Up and up we go.

3 weeks and one day from now we will have an election and the markets could not be happier. That's not good news for the soon to be ex-President as Joe Biden has the biggest lead three weeks before an election than any candidate since 1936, with a 55% to 43% margin among likely voters – even the Fox News poll has Biden leading by more than 10 points.

Even if every undecided or current third party voter went to Trump now, he'd still be down about 5 to 6 points nationally. That's never been the case since 1936 at this point, when Franklin Roosevelt took 60% of the popular vote from Republican Alf Landon with Roosevelt winning the electoral college 523 to 8 (Maine and Vermont).

A look under the hood reveals why Biden is in such a strong position. Since the coronavirus pandemic began, Covid-19 has either been, or been within the margin of error of being the nation's most important problem in Gallup polling. Biden has a huge advantage over Trump when it comes to the pandemic. The clear majority (59%) of likely voters in the last CNN poll said Biden would better be able to handle the outbreak. Just 38% said Trump would do a better job than Biden.

I know, it's a tough choice isn't it? Who do we want leading our country? What kind of World do we want our children to grow up in? I was reminded of what kind of President I'd like to have watching this video this weekend:

That guy! Get that guy back!!!

Regardless, Biden is better than Trump – according to the polls, according to the markets, according to rational-thinking people around what's left of the planet that isn't on fire. But that brings us back to the markets. Will Biden actually be good for the market? Probably not. Trump has put the…

50-Point Friday – The Week Finishes on a High Note

October 9, 2020

Not a bad week.

Especially if we ignore Trump's "No stimulus" hiccup on Tuesday night but the market qickly reversed itself again and got back on the pre-programmed path of onwards and upwards we default to whenever there's not enough news to cause any volume of selling.

Market volumes have indeed been anemic this week and all it took were 90M S&P ETF (SPY) transactions on Tuesday to knock us down 80 points in two hours. That was more trading than we had in any two other days this week as we haven't had any serious market volume since early Sepember, when the S&P 500 fell 15% and, before that, early June, when the S&P fell 10%. This is a very low-volume rally and that's a very dangerous kind to invest in at they can easily pop – like a bubble!

Date	Open	High	Low	Close*	Adj Close**	Volume
Oct 08, 2020	342.85	343.85	341.86	343.78	343.78	44,892,400

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Fabulous Thursday – Testing our Strong Bounce Lines – Again

October 8, 2020

Here we are again.

I don't even have to write anything new today, I'll just copy and paste what I said on September 15th, in: "Terrific Tuesday – S&P 3,420 Yet Again":

As we discussed last week (when we failed at 3,420), 3,420 is our Strong Bounce Line and the 20% Line so we knew we were likely to re-test it – the question is whether or not the S&P passes the test and we may find that out this morning as the Futures are pointing up yet another 1% – just like yesterday when we made most of our gains in the thinly-traded pre-market session.

Our 5% Rule™ told us 3,420 would be our Strong Bounce line on the way back up but it was much easier to call a short the first time we tested the line, as we did on the 9th in our Live Member Chat Room, because we had not consolidated for a move higher at the time. Now the markets have had time to digest the bounces and we're above on all the indexes but the S&P 500 as back on the 9th it was:

Another chance to short at 3,420 on /ES with tight stops above. Lined up with 28,200, 11,475 and 1,540.

That is NOT the case this morning with Dow 28,320, Nasdaq 11,532 and Russell way up at 1,617. ONLY the S&P 500 hasn't confirmed the move over the strong bounce line so it's no longer wise to bet against that happening. You have to take these moves in context – looking at a single chart doesn't tell you enough. And we're making this move WITHOUT stimulus and WITH Donald Trump likely to be out of office in January – so this is a strong move so far.

The Russell's 1,600 line only just turned green yesterday and the NYSE is at 13,100 this morning but, if it goes green too on the Must Hold line, the other indexes are going to have a much easier time making another run back to the top of the range – a range…

Which Way Wednesday – Trump Cancels Christmas

October 7, 2020

No stimulus for you!

President Trump returned from the hospital yesterday and decided to cancel the stimulus negotiations despite the constant cries from the Fed that the Government NEEDS to do something to get the economy back on track. Trump doesn't want to add to his deficit total, which will be about $4,000,000,000,000 this year, and his score is, of course, far more important than helping the people who elected him, right?

Trump did say he wants the Fed to cut rates a full point (to -0.75%?) and double down on QE as those are off the books measures that would work out very well for a Real Estate Tycoon who's about to be kicked back into the private sector.

After getting blowback all night on stopping the stimulus talks, Trump tweeted at 10pm that he would sign a bill for stimulus checks and another tweet that Congress should approve $25Bn for Airlines and $135Bn for a Paycheck Protection program so, of course, after cancelling the negotiations to provide stimulus he can now claim he is trying to get more stimulus. When do we get to vote him out? Twitter responded:

He's clearly spooked about Tuesday's stock market crash and sees that the Dow futures look ugly too, so naturally he's doing an about face and panic tweeting late into the night.

WHAT???? Bail out BIG BUSINESSES while AMERICANS ARE LOSING THEIR HOMES AND STANDING IN FOOD LINES!!!! BTW, that bs before, that you claimed was for small business was absolute bs! Larger businesses got it!!!

Airline payroll? Why not the 30 plus unemployed Americans who have been waiting on a real bill to pass since July? WTF Donald! Why Airlines first? Oh never

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Tempting Tuesday – A Sinking Dollar Lifts All Ships

October 6, 2020

This is how the Fed "fixes" the market.

Yesterday, the Chicago Fed's Charlie Evans said he would be "quite pleased" with 2.5% core inflation, a 25% increase in the Fed's Inflation Target. That was at 10:30 and the Dollar took a nose-dive all day, lifting the market over key techincal lines to give us the impression of market strength but, what we really got was Dollar weakness.

Equities are priced in Dollars so, if the Dollar is weak, you need to trade more of them for the same share of stock – the stock didn't get more valuable, your Dollar got less valuable but the chart doesn't know that, does it? Here's an interesting way to look at the market: This is the S&P 500 priced in Gold:

That's interesting, isn't it. Priced in Gold, this market peaked out back in 2018 at 2.450 and fell almost 50% to 1.325 (SPX/Ounce of Gold) and is now back to 1.78, still 27% off the highs. Of course gold isn't an absolute measure of the market but there's a reason GOLD (Barrick Gold) was our Stock of the Year for 2020 – inflation was always going to happen given our current monetary policies – the question was only "how much" and the Fed is now saying "a lot".

Speaking of our Stock of the Year, I'm going to be taping a segment for Money Talk this evening for airing tomorrow and we'll be talking about our Money Talk Portfolio, which features our Stock of the Year and plenty of other good picks so let's see who we want to add. Remember, the rules of the Money Talk Portflio are we only make our trades once per quarter, on the show, so we weren't able to take full advantage of the sell-off but we are still chugging along with a very nice 26.6% gain for the year so far:

F – If we were assigned this position our net entry would be $3.65 so I'm not worried about this one. $1,130 (42%) left to gain.

TM – This one is too expensive if it goes wrong so we should cash it

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October Market View – Looking Ahead to the Elections

October 5, 2020

Joe Biden is leading by 14 points.

No wonder Trump got sick – the old "Dog ate my leadership" doesn't work as well with voters as the sympathy vote. The President needs something to turn his campaign around and it's a mix of opinions as to whether the President is faking Covid to gain sympathy or whether he is so psychotic that he imeriled the lives of his driver and secret service agents just to do a propaganda wave outside the hospital, not to mention the staff who had to move Patient Zero out of isolation – completely against hospital policy.

IN PROGRESS

Schadenfreude Friday – Trump Catches Corona

October 2, 2020

Talk about an October surprise!

It seems the President has contracted the coronavirus as the Global hoax spreads to the White House. Of course, it's very possible that Trump, who is constantly tested and is surrounded by people who are constantly tested is FAKING the virus to elicit sympathy, give himself an excuse to not be humilated by Biden again in another debate and to make an "amazing" recovery, proving to his gullible followers how strong he his, probably claiming that he can be their salvation too.

Would that really shock you if it happend? Trump passed 20,000 false statements to the American people way back in July, should we believe this one? After the debate, Trump's numbers have been plunging and the GOP has resorted to using Russian "Deep Fake" videos and images to make Joe Biden look bad – and that's not working either.

If cheating doesn't work ahead of a test, why not fake sickness? It's what a gaint child would do…

So, if the President is really sick, I wish him well – no human should ever have to suffer what 7.3M of our fellow countrymen are suffering under the Trump Administration – not even Donald Trump. But, if he's faking it, then he is the biggest peice of s**t on the planet which is suffering 34.3M infections with over 1M people now dead from the disease the President actively DENIED – not ignored.

IN PROGRESS

28,000 Thursday – Dow Back Within 5% of it’s All-Time High

October 1, 2020

We're back baby!

The Dow Jones Industrial Average topped out at 29,500 in February as we ignored the virus in China and then it plunged 11,000 (37%) points, to 18,500 in late March and now it's back up 9,500 (51%) since then and we're only 1,500 points (5%) from a full recovery. Recovery, of course, is a funny word when over 7M Americans now have a disease that has terrible, long-lasting effects on the body but who cares – it's rally time!

The revised Q2 GDP came in yesterday at -31.4%, which was better than the previous estimate of -31.7% but that's not why we rallied, we rallied because it was the last day of the quarter and the hedge funds all like to "dress the window" and make things look good in the brochures they use to lure in fresh month during the following quarter.

This will be a nice time to go over our hedges and make sure we're prepared – just in case the indexes are rejected at their all-time highs again – given the 200,000 dead and 7M infected and 31.4% decrease in economic activity and all. Oh, and the nation's slide into Fascism…. So, in our Short-Term Portfolio, which we reviewed back on Sept 18th, we've made no changes but we've made a lot of money as Tesla Calmoed down a little – though that may change at any moment again:

While the TSLA position has the potential to give us a huge pay-off, it's very volatile and we need to focus on our hedges, which we KNOW will pay us if the market falls for sure. At the moment, our primary hedges are SDS and SQQQ so let's make sure they are adequate to protect what is now a $1M Long-Term Portfolio (up 100% for the year).

SDS – This is now a simple bull call spread and the spread is $12 wide with SDS at $16 so it needs to gain $6 to be 100% in the money for $240,000. $6 is 37.5% of $16 and SDS is a

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Weakening Wednesday – Presidential Debate Spooks the Market

September 30, 2020

Well that went as expected.

Yesterday we titled our Morning Report: "Testy Tuesday – Shorting the S&P 500 at 3,350" and we made a lovely $1,250 per contract on our shorts and got another chance to get in at 3,350 in last night's futures and we have another dip as the markets started selling off for exactly the reason I predicted yesterday:

President Ponzi will debate Sleepy Joe Biden this evening and that's going to be depressing. Much as we need to get rid of Trump, Biden is simply not an exciting alternative.

Debates are a time when we talk about what's wrong with the country and, unfortunately, there's a lot wrong with the country and neither candidate seems like the guy who's really going to fix it although at least getting rid of the guy who is breaking it couldn't hurt. It's like when you hire an incompetent plumber and your house is filled with backed-up sewage – you don't tend to say "let's give this guy 4 more years." Sometimes ANY alternative is worth a try and that's what the Democrats have given us this year – "Biden 2020, he's not Donald Trump".

“Markets seem to be getting more concerned, with VIX futures peaking around the election,” said Edward Park, deputy chief investment officer at Brooks Macdonald. “But whoever takes over, and however long it takes to take over, the person will be facing a battle against coronavirus.”

Delays to fiscal stimulus on both sides of the Atlantic are also a worry for investors, who fear economies will need fresh support in the absence of a clear timeline for a coronavirus vaccine. While U.S. lawmakers are trying to find common ground on a deal ahead of the election, a German government spokesperson late Tuesday warned of possible delays to the approval process for the EU recovery fund.

“For financial markets, there’s a growing understanding that it was a V-shaped rebound, but that doesn’t mean it will be a V-shaped economic recovery,” said Carsten Brzeski, an economist with ING Bank in Frankfurt. “Any delays in fiscal stimulus will add to that

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Testy Tuesday – Shorting the S&P 500 at 3,350

September 29, 2020

All going as planned so far.

As you can see from our chart, we're consolidating right in that zone between the 200-hour and 50-hour moving average and 3,350 is also the 50-day moving average, so it's a lot harsher resistance than you would think. We gapped into that zone last week so we didn't "earn" it and we probably have very little support below the 50-hour moving average so, if we can't get back over 3,350 this week – that short bet on the S&P Futures (/ES) we discussed making yesterday could make a vey nice pay-off.

It would be one thing if we were moving up on good news but there's really not any good news to report – it's kind of depressing actually, as noted by John Oliver this weekend:

Here's the front page of the Wall Street Journal this morning:

Not exactly rally fuel is it? 205,000 (20%) of those 1M Global Deaths are in the USA, which has 4% of the Global population so Trump is killing his citizens at a rate which is 5x greater than other World leaders – GREATNESS!!! President Ponzi will debate Sleepy Joe Biden this evening and that's going to be depressing. Much as we need to get rid of Trump, Biden is simply not an exciting alternative. He's "safe", not exciting. Jimmy Carter was safe – at least he won.

Of course if Trump only loses by 2%, like Ford did, do you think he's going to go quietly? He lost by 3M votes (5%) last election and he STILL became President. This is the most important election of our lives, of America's life and we're all trapped in our homes while the votes are being suppressed. My daughter is in college and

IN PROGRESS

The Week Ahead – 3,350 is Critical for the S&P 500

September 28, 2020

A death cross!

A death cross is, according to Investopedia:

The death cross is a technical chart pattern indicating the potential for a major selloff. The death cross appears on a chart when a stock’s short-term moving average crosses below its long-term moving average.

And it looks like THIS! That blue line is the 50-hour (1 week) moving average moving below the 200-hour (1 month) moving average and now we're going to test that range from below and, if 3,333 (the 50-hour) acts as strong resistance, it's a very bearish signal moving forward. The 200-hour moving average (3,350) will certainly be rejected at first (great shorting opportunity on /ES with tight stops over that line) and then we'll see if we get a strong or weak retracement from there but – if we don't even make it back to 3,350 – well that's also the 50-day moving average on the S&P 500 and failing that means, as we discussed last week, that we're very likely heading back to 3,100 – a 2.5% drop from here and the 200-day moving average.

The Futures have us up to 3,330 this morning and I will want to short that 3,333 line but with very tight stops but I don't see any really good reason for the Futures to be up 350 points on the Dow (1.3%) and 35 on the S&P (1%) other than it's another BS, manipulated, low-volume rally to start the week off so the Big Boys can sell to all the suckers as they liquidate ahead of the reckoning.

The US reported 36,919 new cases of corona virus yesterday but "only" 1,000 people a day are dying so why not open everything back up? Florida's idiot Governor DeSantis took his lips off Donald Trump's ass long enough to issue an order lifting ALL restrictions on businesses so come on down to Florida and get a lap dance folks!

"Every business has the right to operate," DeSantis said. "Some of the locals can do reasonable regulations. But you can't

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TGIF – Ending the Week With a Whimper

September 25, 2020

Everything is proceeding as I have foreseen.

In Monday's "The Week Ahead – 200,000 Deaths Weigh Heavily on the Market," we knew the 200,000th American death would put Covid back in the news cycle and there wasn't much chance of Powell making us feel any better as the Fed is pretty much out of firepower and Congress is MIA as far as stimulus goes and NO ONE is actually doing anything about the virus except for claiming what a great job they've done fighting the China virus – but we won't name names as that would just embarrass a normal human being who had either empathy for their fellow man or the intelligence to realize their incompetence has killed twice as many peeople as the Vietnam war – and this one is still going on – and we've all been drafted!

As we noted in Monday's Report:

“We have a very serious situation unfolding,” said Hans Kluge, the World Health Organization’s regional director for Europe. For the first time, he wore a mask at the press conference on Thursday. “The September case numbers should serve as a wakeup call for all of us.”

I'm sorry, I know this is depressing and not what we want to talk about in a stock market newsletter but this is REALITY and, as an investor, you can't afford to put your head in the sand and hide from unpleasantness because denying the reality of the situation can lead to even more unpleasantness in your portfolio when ignoring a problem doesn't make it go away.

As noted above, the global markets are only down 2% since Wuhan was first locked down on January 23rd yet the Global Economy has taken a 20% hit in Q2 and

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Transfer of Power Thursday – “A Continuation”

September 24, 2020

"There won't be a transfer, frankly, there will be a continuation."

Asked whether he would “commit here today for a peaceful transferral of power after the November election,” Emperor Trump declared: "We’re going to have to see what happens. You know that I’ve been complaining very strongly about the ballots, and the ballots are a disaster. Get rid of the ballots and you’ll have a very peaceful — there won’t be a transfer, frankly. There will be a continuation,” the President said.

And so, Democracy dies. Not with a bang, but with a whimper as the lack of outrage is itself outrageous. If any other World leader said such a thing, they would call the UN in to supervise the election but here we are, in America, where voting is supposed to be a sacred right that empowers our Democracy and we're just letting a guy who lost the popular vote by 6% when he ran – DICTATE the outcome of the next election. Like a….. Dictator.

Trump’s refusal to endorse perhaps the most fundamental tenet of American democracy, as any President in memory surely would have, was the latest instance in which he has cast grave uncertainty around the November election and its aftermath. Democrats are growing increasingly alarmed as Mr. Trump repeatedly questions the integrity of the vote and suggests that he might not accept the results if he loses. Hours after Mr. Trump’s assertions, Senator Mitt Romney, Republican of Utah, expressed alarm over the comments on Twitter:

“Fundamental to democracy is the peaceful transition of power; without that, there is Belarus,” Mr. Romney wrote. “Any suggestion that a president might not respect this Constitutional guarantee is both unthinkable and unacceptable.”

I'm sorry if this is "political" but are we seriously going to let this happen?

Weak Bounce Wednesday

September 23, 2020

Not much is happening.

Powell and Mnuchin's testimony to Congress did not help or hurt the markets, which are still bouncing from September's 10% drop (what, you forgot that happened already?). Economic data has been blah and even politics has been blah this week so the market is just drifting back to test the weak bounce line – which it still hasn't reached yet and probably won't because, as we pre-noted on Monday, the 100-hour (weekly) moving average is about to death cross under the 400-hour (monthly) moving average and that's going to form significant upside restistance at the weak bounce line.

Failing to get back over the weak bounce line in the time it took you to fall below it (call it two weeks) means you are consolidating for a move below it – not recovering. This is a market that is only propped up by external (stimulus) forces, swimming in a pool of very low reality that operates in a Nation that is dumb enough to still possibly be re-electing Donald Trump AFTER seeing the evidence of the damage he's done in just 3.5 years in office.

I really can't believe there's even a discussion about Trump being re-elected, let alone it being close but it does seem close – or at least that's what the media say – and we can't trust them to tell us the truth anymore, can we? See! You don't know if we can – that's TERRIBLE!

The same people that are actually considering inflicting humanity with 4 more years of Trump are trading the markets and, if they don't see that the last 3.5 years have been a stain on the history of our Nation – they sure can't see that Tesla (TSLA) is on over-valued piece of crap or that paying close to 30 times earnings for the average S&P 500 compay is clearly an historical abberation that is certainly going to correct itself as soon as "THEY" stop pumping it up like a carnival baloon.

IN PROGRESS

Terrible Tuesday – Powell Says US Faces Slow, Uncertain Recovery

September 22, 2020

Powell testifies before Congress today.

We already know what he's going to say though, as his testimony is pre-released. Not that that will stop the market from acting shocked when they hear it later (because who reads?). That means we can short the Nasdaq Futures (/NQ) again below the 11,000 line (or the 11,100 line if we hit that first) with tight stops above as it's a high-percentage play as you have a clear line to take a small loss while even a small dip should take us down 50 points for a $1,000 per contract gain. So, if we stop out with a $50 loss but could have a $1,000 gain – that's what we mean by a high-percentage play.

“Many economic indicators show marked improvement,” Powell said Monday in the text of testimony he’s scheduled to deliver before the House Financial Services Committee on Tuesday. “Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain,” he says.

Powell will appear alongside Treasury Secretary Steven Mnuchin, a quarterly exercise mandated by the Cares Act passed by Congress in March and which appropriated about $2Tn to help speed the U.S. recovery. The pair are likely to face questions about their use of Cares Act funds and about what else should still be done.

“The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government.”

Well, good luck with that!

IN PROGRESS

The Week Ahead – 200,000 Deaths Weigh Heavily on the Market

September 21, 2020

"At least one more cycle."

That's what former FDA Commissioner Scott Gottlieb said he expects for the US as the virus moves into the fall and winter when, presumably, it's more active. U.K. Health Secretary Matt Hancock said the country is at a “tipping point” and more measures will be taken unless people comply with rules to contain the resurgent coronavirus. He didn’t rule out national action.

There were 36,765 new cases in the United States YESTERDAY – the most new cases on the planet Earth and almost half as many people that have been affected in China, TOTAL, in a single day – yet Trump still calls this the "Chinese Virus" despite America being the epicenter of the World since March.

If, as top scientists fear, we are heading into a second cycle of viral infections, we are now starting off a base of 31,089,558 cases in September vs 100,000 in March that expanded over 300 times in 6 months. Despite the cautions we have in place, 36,765 people in the US caught the virus yesterday – that's 1% of all the cases in the World, that's 30M cases in 100 days kind of pace. We are FAILING to contain the virus bigly:

IN PROGRESS

Philstockworld September Portfolio Review

September 18, 2020

$1,204,322!

That is DOWN $190,405 but still up over 100% for the year. We have a very large, very volatile bet on Tesla (TSLA) that we're riding out and that let both to last month's huge gain and this month's huge loss but last month showed us the massive potential the position has as it's currently net -$881,087 so, if TSLA ends up between $300 and $380 in January (now $450), we stand to almost double our entire portfolio on that one position.

I was going to say I don't like the super-volatile positions but that's not true – I do like them as we're selling TONS of premium to people who think stocks go up or down forever and have no rules but I DON'T like them in margin-limited portfolio or in portfolios that aren't miles ahead and can afford to take chances. Not only can we afford to take a chance this year but we're also locking in our 100% gains using TSLA as it pays us almost as much to the downside ($881,087) as our entire Long-Term Portfolio (LTP) is worth ($1,043,965)!

But, spoilers, let's just take a look at where we stand and move on from there. As we expected, the Fed and Congress have fired their stimulus guns this week and the reaction from the market has been a big shrug as evidenced by the shouldering down move in the S&P 500 this week:

While that's going on, Donald Trump's victim count is hitting 200,000 but that's nothing compared to what we're about to see as our kids finish their second week at school as two weeks is just about the time when it's already too late and local Governments realize what a huge mistake re-opening too early has been. While we know Trump doesn't care about California and New York having 100,000 combined deaths this year, he'll be losing 60,000 voters in Florida and Texas as well.

Early indications are that sending the kids back to school is already becoming a "super-spreader" event for the whole country and 50,000 more Americans will be dead by…

Faltering Thursday – Reality Rears it’s Ugly Head

September 17, 2020

The truth.

We don't get a lot of that in America these days. Remember when we used to pity the poor Russians, who were being fed misinformation by their Government from the state-run media? While it certainly can't make Fox news any more of a GOP propoganda network than it already is, now they featuring Trump weekly, violating the Equal-Time Rule that says "U.S. radio and television broadcast stations must provide an equivalent opportunity to any opposing political candidates". This means, for example, that if a station gives a given amount of time to a candidate in prime time, it must do the same for another candidate who requests it, at the same price if applicable.

We know this is going on with our Political News but you also need to be aware this goes on with our Financial News as well. Fox News (Murdoch) is sponsored by GOP supporters, Climate Deniers, Covid Deniers and, of course, the keep America White crowd while CNBC, Fox Financial (Murdoch) and the Wall Street Journal (Murdoch) are so embedded with the Government that Larry Kudlow, of CNBC's Kudlow and Cramer is the White House Economic Adviser. While that, of course, makes sense when you have a Reality TV President – it doesn't make a lot of sense if you were, for example, trying to run a $20Tn economy. As noted by American Progress:

One would think that news organizations ostensibly devoted to understanding and explaining Wall Street would know better. Either way, the dishonest propaganda push undertaken by CNBC and the Wall Street Journal is politically disconcerting from the standpoint of a functioning, well-informed democracy. From the standpoint of moral and intellectual honesty, it is downright criminal.

And that moral and intellectual dishonesty is affecting your health, your safety and your portfolio. As much as you KNOW that these networks are lying when they are denying climate change, promoting miracle vaccines or propping up despicable bastards for public office – you have to realize they are ALSO lying to you when they tell you how great the economy is and what to invest in. …

Which Way Wednesday – Fed Edition

September 16, 2020

And once again the Futures are up.

As you can see from the S&P chart, we have had some massive gaps up in the thinly traded open and then drifted down during real trading at the end of the day. This is like someone who works for the auction house shouting "100 Million Dollars" on the first bid for a painting to make sure the other suckers in the audience start bidding higher.

In the case of the markets, the Banksters buy up the Futures on thin trading (so it's very cheap to do) and cause the Retail Suckers to pour in and chase the momentum so the Banksters can dump their stocks all day long during real volume trading. This is how rich people exit the market – they create a buying atmosphere and they take their profits while poor people follow their advice – which doesn't actually apply to their own actions. You see the big brokerage houses doing that all the time, exiting positions while their analysts are pumping the ~~Tesla~~ stock.

We had a good day yesterday shorting the Dow (/YM) Futures from our trade idea in the Morning Report and congratulations to all who played along. Our morning call for our Members was:

So we're sticking with our strategy of shorting the indexes (which didn't work yesterday) as we're likely to be rejected here (Dow (/YM) 28,100, S&P (/ES) 3,405, Nasdaq (/NQ) 11,475 and Russell (/RTY) 1,550) and, as usual, we can just short the laggards, which would be /ES crossing below 3,400 and /YM confirming below 28,000 – we should catch a quick ride down but the Fed goes tomorrow and that should give the marketsupport until they are disappointed by that so tight stops above!

As you can see, this wasn't rocket science, the pivot points on the Dow were 28,014 and 27,795 and we simply allowed for the pre-market BS pump job and took a stab at shorting early but once we confirmed the move below 28,000, it was a no-brained to jump in for the 200-point drop on the Dow (at $5 per point, per contract!). This morning we're back to 28,000 again but we have a Fed Meeting at 2pm so it's not a good day to play the futures – too volatile.

Speaking of volatile,

IN PROGRESS

Terrific Tuesday – S&P 3,420 Yet Again

September 15, 2020

Up and up we go.

As we discussed last week (when we failed at 3,420), 3,420 is our Strong Bounce Line and the 20% Line so we knew we were likely to re-test it – the question is whether or not the S&P passes the test and we may find that out this morning as the Futures are pointing up yet another 1% – just like yesterday when we made most of our gains in the thinly-traded pre-market session.

We do have some actual good news this mornng as China's Retail Sales picked up nicely in August, which is good for the Chinese Economy but that has nothing to do with whether Western economies are picking up – we get our own Retail Sale Report on Wednesday. If that matches, then it's good but it's still not record-high good, is it?

China’s Economy Picks Up Speed as Shoppers, Moviegoers Return

China’s economic recovery accelerated in August, with retail sales, the last noncooperative component, returning to pre-coronavirus levels by showing their first month of growth this year.

Heard on the Street: The Chinese Are Spending Again

Now, with no local cases reported in weeks, shopping malls, restaurants and gyms across the country are packed with consumers again. Movie theaters—the last major holdout among public venues—reopened in late July. During the last 10 days of August, official data showed box-office revenue returning to 90% of year-earlier levels.

“The retail sales data indicate that pent-up consumer demand was released in August when social-distancing rules were further relaxed,” said Larry Hu, an economist with Macquarie Group.

IN PROGRESS

The Week Ahead – If At First You Don’t Succeed…

September 14, 2020

Try and try again.

More stimulus, more "exciting" vaccine news, more money being tossed around. This time it's M&A news with Oracle buying TikTok and NVidea (NVDA) buying ARM Holdings from Soft Bank (SFTBY) for $40Bn, giving both companies a nice boost. Oil (/CL) is up again on hurricane news but still pathetic under $37.50 but Natural Gas (/NG) is popping back to $2.40, ending the bear move that took it back to $2.25 from $2.70, which was a 16.66% correction.

It's Quad Witching Week in the markets, when tock index futures, stock index options, stock options, and single stock futures expire simultaneously. So we can expect the unexpected this week – especially with a Fed Meeting on Wednesday along with Powell's speech at 2:30 that day. We also have Retail Sales on Wednesdy morning but, other than that, it's a pretty dull data week and I don't see what the Fed can do to help so I don't see this mornng's exuberance lasting, which means the Dow Futures (/YM) should be a good short at 27,750 when they cross below that line.

It's amazing to think that it's now September 15th and we are now beginning our 6th month in captivity since we finally began worrying about Covid on March 15th. There were about 80,000 cases, mostly in China at the time and now there are 29,030,058 this mornng with 6,520,606 in the US alone and, this week, we will pass 200,000 American deaths from Corona. 29M is 362 TIMES 80,000 and it's been 180 days so we've added 2 China's per day of victims since March and we are still growing at that pace and the complacency of the markets is stunning sine any of those 362 80,000 units of infected people are, very obviously, capable of infecting 29M more more people.

How much is 362 x 29M? 10.5Bn – that's more people than there are on the planet potentially affected in the next 6 months. Of course we are, theoretically, doing a better job of containing the spread but by "we", I certainly don't mean America, which is very likely to leap forward in cases…

Philstockworld August Portfolio Review

September 13, 2020

$1,394,727!

That's up $260,972 (23%) since June (up 132% for the year) as of Augst 18th and yes, I've had a very busy summer and haven't kept up on the review summaries – sorry. Honestly, if it wasn't for the virus, I'd be on a cruise this summer – we decided the market was too high on Memorial Day and now it's after Labor Day and we're even higher so yes, we made good money staying home but, on the whole, I would have much rather have spent the summer with my family enjoying Europe, wouldn't you?

That was our plan, we were supposed to go to Scandanavia on a 14-day cruise and I was really looking forward to it but, like most plans this year, they've been cancelled and, like most things this year, the markets have completely ignored it. We've been ignoring the market for the past month and our main LTP/STP combination is pretty rock-steady at $1.4M and we cut about 20% of our positions in August, raising more cash and making our downside hedges more effective (as they are the same but we have less to protect).

We had one nice dip but nothing too exciting and it's back to school I've been worried about as I think it's been a huge mistake but it's only week one – so not too many results are in yet. This week is also the big "Quad Witching" quartely expirations for options and Futures contracts so things could get crazy and we'll be doing our portfolio adjustments this week – probably aiming for even more CASH!!! (have I mentioned how much I like CASH!!! lately?).

Not only that but the Fed makes their announcement on Wednesday and Powell speaks at 2:30 that day AND we have the Retail Sales Report at 8:30 Wednesday as well. Have I mentioned how much I like CASH!!! lately?

So here's what we were thinking 30 days ago and stay tuned this week for our Live Portfolio Adjustments (Member Only):

Short-Term Portfolio Review (STP): No point in riding out the dip if we don't have to so we're going to raise more CASH!!! and there are plenty of great stocks to buy, like WBA, INTC, BA and…

Faltering Friday – Wrapping Up the Weak Weak

September 11, 2020

Well, that went about as expected.

Remember, I can only tell you what is likely to happen in the markets and how to profit from it – the rest is up to you. Of course, sometimes our "profits" are simply not losing money because we choose not to play a game that's hard to win. That's a very hard concept for investors to grasp – the art of standing still at the sidelines but if you have 100% of your money and the market drops 80%, then you can buy 125% of the stock you could have afforded when the market was at 100%. Yep, do the math!

So, not only does PATIENCE allow us to buy our favorite stocks at a discount but it allows us to buy more of them than we could have bought when they were at full price so if, for example, I wanted to buy AAPL at $140 last week and I had $14,000 to allocate towards but instead I decided to wait for a pullback of at least 20% and then it hit $112 and I pulled the trigger and bought 125 shares for the same $14,000. Not only that but now, if AAPL rebounds and hits my target of +20% down the road at $168, now I have $21,000 for a 50% profit on my $14,000 whereas, had we bought 100 share for $14,000, we would now have $16,800 for a 20% profit.

Our profit is 150% HIGHER when we are PATIENT!

That's without usuing options tricks or even having perfect timing, that is simply the difference between learning to be patient and not. That doesn't just go for stock, of course, that goes for every options contract we sell or write – the difference between jumping in an chasing entries or patiently waiting for the right entry can DRASTICALLY affect your portfolio's performance. Try it!

IN PROGRESS

Thursday Failure at 3,420 – Are We Heading for a Real Correction?

September 10, 2020

See how those lines work?

As we very accurately predicted yesterday, before the market opened, stimulus talk was enough to get us to our 3,420 line on the S&P 500 – but no higher. In fact, right before the close and after our Live Trading Webinar, I said to our Members in our Chat Room:

Another chance to short at 3,420 on /ES with tight stops above. Lined up with 28,200, 11,475 and 1,540.

This morning we're down to 3,380 on /ES and those Futures Contracts pay $50 per point when you get them right and, so far, we're right for 40 points so that's a gain of $2,000 per contract on our little hedge. We're not greedy, we take 1/2 off the table and put stops on the other half at $1,500 to lock in gains of $1,750 per contract and, this morning, the breakdown lines we're watching are 27,800 on the Dow (/YM), 3,375 on the S&P (/ES), 11,250 on the Nasdaq (/NQ) and 1,515 on the Russell (/RTY).

If 2 of the 4 indexes fail their line you can short either the 3rd using the 4th for confirmation or just wait for the 4th to cross and short with confidence and simply stop out if ANY of the indexes get back over the line again. What that does is limit your losses to a good line of resistance without limiting your gains and that means, if you are wrong, you shouldn't lose more than a couple of hundred Dollars but, if you are right, you could gain thousands – that's a good game to play!

It doesn't work every time though, we can go months without playing the Futures at all but, when conditions are right, we love to play them every day. Conditions now are a toppy market and worsening economic conditions, poor policy decisions and the driving force to the rally (stimulus) has met the point of diminishing returns – seems like a good short to me….

Congress remains deadlocked over a fresh stimulus package. On Wednesday, Senate Republicans said they would support a scaled-back $300 billion version of their earlier $1 trillion…

Which Way Wednesday – More Stimulus Edition

September 9, 2020

Well, that was predictable.

How predictable? So predictable that I wrote on Sunday:

Remember, the 5% Rule™ is not TA, TA is nonsense, the 5% Rule™ is MATH! Math is how we describe the universe – including the market universe. The math of the 5% Rule™ tells us that 25% (3,562) is just the 20% line (3,420) with an overshoot but now the key is how much of a pullback do we get? If the 20% line holds, then this could be bullish consolidation for a move up but, if it fails, then we can expect at least a 20% retrace of the 20% move up (-4%) and that would be 3,420-2,850 = 570 x 0.2 = 114. So 3,420 – 114 = 3,306 – that's the pullback line we need to keep an eye on.

As usual, the bounce is more predictable than the recovery but the bottom line is both parties are, once again, talking about stimulus because they know as well as I do that failing to hold 3,306 would take us down to the strong retrace line at 3,135 and that would be more than a 10% correction off the 3,588 high (3,229), which would set off all kinds of panicky indicators so GAME ON for more stimulus talks – even if it is the same BS they were arguing over in June and July with no resolution (they took August off to watch the country burn).

So of course we're going to bounce off the line we predicted we'd bounce off. The question is – how much? Here's where the 5% Rule™ gets a little tricky because there's two zones we're looking at. One is easy, that's simply the total drop from 3,600 (we give them the extra 12 points) to 3,300 and that's 300 points so we expect 60-point bounces to 3,360 (weak) and 3,420 (strong) and, since 3,420 is our 20% line – that's going to be a very serious win/lose line for the S&P 500.

The other calculation we can do is going to be more accurate and that's using our 5% lines from 2,850, which is the Must Hold line on the S&P 500 (the line below which we are no longer in…

Troubling Tuesday: Oil’s Not Well

September 8, 2020

$6,000 per contract!

That's how much our Members have made (so far) shorting oil off our August 26th "Hurricane Edition." when I said to our Members in the Morning Report:

Hurricane Laura is coming.

It's a good excuse to get Oil (/CL) back to $43.50 but it makes a nice short there as nothing else is going on in the energy market to prop it up. We do have a holiday weekend approaching (next Friday) but driving is mostly off the table this year and, for oil, I'm a lot more concerned with the Dollar bouncing back from it's -10% position and kicking oil's ass after Powell's speech tomorrow at the Jackson Hole conference.

While I prefer to short the Oil (/CL) Futures at $43.50 with very tight stops over that line, we can also make the simple bet that oil won't be over $50 in April by picking up the following bearish spread on USO:

Buy 20 USO April $35 puts for $6 ($12,000)

Sell 20 USO April $30 puts for $3.15 ($6,300)

Sell 10 USO Sept $30 puts for 0.52 ($520)

If USO goes below $30, we need to take a loss on the short Sept $30 puts but, if not, we can sell those puts for 0.50 each month and collect $2,000 more through January. As it stands, the net of the spread is $5,180 and it's $8,000 in the money at $31 to start. If we drop our basis by $2,000 more, we should be in very good shape.

USO, as you can see, remains on track and the April $35 puts are now $7.80 ($15,600) and the $30 puts are $4.40 ($8,800) and the short Sept $30 puts died last week (Wednesday morning) at 0.75 ($750) so the spread is up about $1,000 (20%) at $6,050 so far. Setting those stops is key as the short puts are now $1.75 – exactly enough to wipe out our…

The Weak Ahead in the Markets

September 7, 2020

No, it's not a typo – I meant weak!

Last week we knew the Nasdaq was too toppy to hold 12,000 and, as hedges in our generally empty portfolio (since it's only two weeks old) we have been playing the Nasdaq Ultra-Long (TQQQ) short and you can see how quickly that spiked down from $175 all the way to $125 on what was actually a fairly minor correction (so far) for the indexes.

As we discussed back on Aug 21st, the TQQQ spread makes money two ways: We make money in the position in that our 10 March $125 puts get more valuable as TQQQ goes lower and they are now $31.50 ($31,500), up $6,500 from $26,000 at the time. We also make money on the premium decay as the 10 March $95 puts lose their value faster than the $125s and those are now $19 ($19,000) and we sold them for $15,000 so down $4,000 on those is net $2,500 (22.7%) gained on the $11,000 spread so far but the spread has the potential to return $30,000 below $95 – so it's still an excellent hedge.

Another hedge we placed was Tesla and our trade idea for them was:

Buy 1 TSLA March $2,000 puts for $413 ($41,300)

Sell 1 TSLA October $2,000 put for $227 ($22,700)

Tesla had a 5:1 stock split so now we have 5 March $400 puts at $97 ($48,500) and 5 short October $400 puts at $56 ($28,000) and that's already net $20,800 from our $18,000 investment for a $2,200 (12.2%) gain so far but time is really on our side on this one so it will be fun to track along the way.

…

TGIF – The Holidays Can’t Come too Soon

September 4, 2020

Wow, what a day!

I know some of us forgot that markets don't always go up. As I have been warning you for quite some time, they can go down very violently after these low-volume rallies. I think the worst thing about yesterday's sell-off is that there wasn't any particular bad news and, in fact, we're being promised vaccines by Election Day (what a coincidence) and whether they work or not is certainly not the point from the same people who gave us hydroxychloroquine and suggested we drink bleach and inject sunlight into our bodies.

Remember from last week that 3,420 is our support line on the S&P and that's 20% above our must hold line at 2,850 (see "Toppy Tuesday – As Usual"). We're not there yet, with the S&P bouncing off 3,420 yesterday but, if that breaks – there isn't any real support on /ES (S&P 500 Futures) until we hit the 50-day moving average at 3,300. That makes shorting /ES below the 3,400 line a high-probability play where we can keep tight stops above it and hopefully catch a ride down to 3,300, which would pay $50 per point, per contract or $5,000 per contract.

What we have, so far, is just a minor correction and, if we hold that 20% line, we're still in a very bullish market. What matters now is how much of a bounce we get from yesterday's drop, which began at 3,590 on Wednesday (see "Record High Wednesday – Up, Up and More Up"), which is 5% over the 20% line which is what we call a "normal overshoot" in our 5% Rule™, which also tells us that we can expect at least a 20% bounce (of the drop) off 3,420 so it's a 170-point drop so a 34-point bounce (weak) takes us to 3,455 and another 34 points (strong) would be 3,479 so those are the lines we'll be watching this morning.

A failure of the weak bounce on the first day after a drop is a very bearish sign and, by day two, which is all the way to Tuesday now with the Holiday Weekend, would also be a bearish sign while clearing the strong bounce…

Thrilling Thursday – Market Rampaging into the Holiday Weekend

September 3, 2020

Chinese banks are under increasing stress.

Profits are plunging at the fastest pace in at least a decade, bad debt has hit a record and capital buffers are eroding. Bank executives and analysts predict the damage is likely to continue in the second half of this year. It’s also of global importance, with behemoths such as Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, and China Construction Bank Corp. on the global “too-big-to-fail” list.

And, keep in mind that China's GDP is approximately 1/2 of the US or Europe's GDP so those numbers are, relatively, twice as bad as they look in proportion to their economy. “The government needs to strike a balance between sacrificing the banking sector for the economic recovery and maintaining financial stability,” said May Yan of UBS. “The call for national service from the largest banks can’t go on forever. A weak financial system is very dangerous to the nation.”

Non-performing loans in China in June (last published month) were $395Bn and that has exausted the "Bad Loan Coverage Ratio" which was 3% in 2012 and is now sitting at 0.5% (as of June) and falling fast. As part of the pandemic response, China has allowed many borrowers to delay interest and principal payments to March next year, which is hiding the true sense of the bad debt bulge.

Profit at China’s biggest banks declined by at least 10% in the first half from a year earlier, the biggest drop on record as bad loans ballooned. In a worst-case scenario of government pressure, China’s lenders could be guided to lower profits by 20% to 25% in 2020, according to Jefferies analyst Shujin Chen. That will erode capital even further and be a risk to financial stability, she said.

It's not just China that is becoming unstable, of course. Our own Congressional Budget Office reports that the Federal Budget Deficit will hit $3.3 TRILLION this year, more than is collected in income taxes – so they can double your taxes and we'd STILL be running a deficit! How do you think that's going to work out?

Debt

…

Record High Wednesday – Up, Up and More Up

September 2, 2020

WOW!!!

What else can you say when the S&P 500 is up almost 20% in two months? That's a pace of 120% annual gains, if we make that for 10 years we can turn $100,000 in to $265,599,227.91 so go market, right? Obviously, if it becomes that easy to make money – even for just a few people, then money will very soon become meaningless so we need to have a genuine Fear Of Missing Out if this is going to be a sustained rally that takes us to 4,200 by November (another 20%) and S&P 5,000+ to close the year.

The funny thing is that the S&P 500 companies themselves – EVEN when you include the earnings powerhouses of AAPL, FB, GOOGL, AMZN and MSFT, have made 32.9% less in Q2 than they made in Q2 of 2019, which was only a 0.8% improvement from Q2 of 2018 and the S&P 500's earnings are projected to be down 23.2% in Q3 and down 14.3% in Q4, giving us a not-so-grand total of -20.4% earnings for the year.

Overall earnings per "share" of the S&P 500 are in the $120-130 range for the year, though that assumes a very nice rebound in Qs 3 &4 that are not entirely certain. Let's say the EPS is $125, though and we divide that by 3,550, the current share price of the S&P 500 and that gives us a p/e ratio of 28.4 – about double the historic average.

As we discussed in our "Stock Market Physics" notes yesterday (and see the original SMP article here), the higher you pump up the S&P, the more inflows you need to sustain it so it gets harder and harder to sustain it as it goes higher. We have money flowing into the markets via Government Stimulus and Fed Stimulus and that's great while it lasts but Steve Mnuchin (of Goldman Sachs and the Treasury) just told Congress they need more stimulus NOW or "bad things will happen."

Well, since we clearly know that Steve Mnuchin doesn't give a crap about people, he must mean bad things will happen to his…

Toppy Tuesday – Trouble at 12,222?

September 1, 2020

How high is too high?

You pot smokers out there know what I mean! High can be fun, too high can be scary. On August 11th it was: "20 Million Tuesday, 28,000 Tuesday – Record Infections, Record Highs" and, speaking of infections, happy 6M America! We had 5M on August 10th… Anyway, August 3rd was "Monday Market Movement – Nasdaq 11,000 and Bust, Again?" and, 10% later, I was certainly wrong about that one.

AAPL was $425 on month ago, now it's split 4:1 and it's $129 so 4x that is $516, that's up 21.5% in 30 days for the World's biggest company so of course the AAPLDaq is up 10% but AAPL had help. GOOGL has gone from $1,450 to $1,650 (13.7%), AMZN from $3,100 to $3,450 (11.2%), FB from $250 to $295 (18%) and, of course, TSLA has gone from a split-adjusted $300 to $500 (66%) over the past 30 days.

This is NOT reality, this is a game. When you are playing a game and the rules are not clear and they keep changing – your chance of winning becomes random or, if someone else is making the rules, then your chance of winning is pretty much zero and you might want to play a board game under those conditions but should you really be playing with your retirement account?

Please just THINK about what you are doing. As I noted last week, there's very few stocks pulling up the whole market and, while some of these sky-high valuations may be justified, the weight of the thousands of others that are not begins to put a drag on the indexes at some point. Think of each index Dollar added to the underperforming stocks as a weight the high-flyers need to carry with them to get to the next level. At the rate the Government is spending and the Fed is printing – we do have a lot of lift – but it's not infinite and every day the markets move higher adds more weight that needs to be lifted to the next level.

Evenually, gravity will take its toll.

You don't have…

Annuities vs Income Fund – Round One

September 1, 2020

With the Fed keeping rates artificially low, my Mother and her friends began to have problems with their retirement accounts.

Annuity accounts there were paying them 5-6% a year and covering things like mortgage payments and utilities began paying 3%, 2%, even 1% and forcing them to pull money out of their retirement accounts to pay their bills. Once you begin to go down that path – it's very hard to get back on track – especially for people whose earning days are long past.

Doug Rapoport is the Fund Manager for Capital Trading Ideas, PSW Investment's hedge fund and he and I sat down and designed a new hedge fund that is based on our "Be the House, NOT the Gambler" that has been successfully practiced in our Butterfly Portfolio for over a decade now. Working together, we came up with an Income Fund strategy that combines a predictable quarterly withdrawal without sacrificing the potential for growth and, though it's only been two months since we launced – I thought it would be a good time to report on our progress – especially as people interested in participating in quarter 2 MUST have their documents ready and money transferred by September 30th.

Here is Doug's Report:

Back in March 2001, I was an Executive Vice President at Gruntal & Co. acting as a financial advisor while also handling insurance needs and estate planning. I was recently lured to their Fort Lee, NJ office after working on Wall Street and midtown New York for the previous 8 years including a year in the World Trade Center. At the time, I lived in Edgewater, NJ which was the next town over so the 5 minute commute and the large bonus checks that were common at that time made the decision very easy for me.

We had just come out of the massive dotcom bubble burst where many tech companies fell as much as 90% if they stayed in business at all. And many other non tech companies were dragged along with it. There comes a time in your life when some experience, gut feeling, and homework are amplified with a large amount of luck. Before the dot.com…

Monday Market Movement

August 31, 2020

Yet another chance to short oil at $43.50!

What a great way to start the week and we had 3,500 on the S&P (/ES) and 12,000 on the Nasdaq (/NQ), 28,750 on the Dow (/YM) and 1,585 on the Russell (/RTY) this morning and the best way to short the indexes is to short the laggard. In other words, wait for at least 2 of the indexes to cross below those major lines and then, as soon as the 3rd one crosses below, short that and STOP OUT IF ANY of the indexes goes back above their line. If the 4th one confirms by crossing under – you are probably in great shape. That limits your losses but not your gains – it's a money-management style of playing that can be very effective in the long run as a single win can cancel out many losses.

Tesla (TSLA) split 5:1 and Apple (AAPL) split 4:1 today so Tesla shares went from $2,213 to $442.60 and AAPL went from $499.23 to $124.80 and both are up slightly on that action but they've been bid up so much the past few weeks in anticipation of the split that I don't think there's much gas left in the tank but I did say that at $1,250 on TSLA and again at $1,950 (now $390) and so far, so wrong on that one.

No matter how you split it, TSLA is a one-stock bubble and $450 is a market cap of $415Bn – more than the ENTIRE rest of the auto industry combined and they sell 100M cars per year and TSLA sells 400,000 or 1/250th as many. So, unless those cars cost $10M each with a 15% profit margin – their valuation makes no sense at all. You can't "grow into" that sort of valuation. Even if TSLA were going to be the ONLY car company in the World with the best margins in the World (car companies generally make 10% or less) – how long would that take? They are being priced like that now!

Yet people are paying it. There's a sucker born every minute but now that they've done a stock…

Federally Fueled Friday – Powell Gives Us a Big Finish

August 28, 2020

Down and down the Dollar goes.

Powell pulled out all the stops yesterday, saying the Fed was no longer worried about inflation and would spend 5 years boosting the economy if they have to. While Republicans love to pretend they don't tax you, devaluing all the money you've ever made in your live and most of your assets by 10% by reducing the value of the currency is kind of a tax, isn't it?

The wealthy have all these great ways to keep up with inflation but, if you are a regular person getting a regular paycheck which comes in the form of Dollars – you got a 10% pay cut. Not only that but not only does the deficit swell due to that same lower tax rate (for the rich) that causes the Dollar to collapse, but the thing the Government needs to buy with those tax Dollars begin to inflate, causing an even bigger deficit as Government Spending can't keep up with inflaiton.

4 more years of this and we'll need a shopping cart just to carry the money we'll need to buy groceries! Of course, hyperinflation is a great way to pay off your debts as the economy can grow along with inflation (it's just your wages that don't keep up) while the long-term interest rates are fixed, so the money the Government pays back becomes worth less (worthless?) and PRESTO!, debt problem solved!

Many 3rd World countries go down this path to pay off their debts but it is just as much a confiscation of wealth from the people as any tax ever was but, fortunately, those of us in the Top 1% can simply manage our investments to stay ahead of the game – lucky us! Our Trade of the Year was GOLD, because we expected some inflation due to Trump's market-boosting policies but we're now operating at a whole new level – he has certainly kicked it up a notch and now Powell is on the bandwagon too.

Speaking of America becoming a 3rd World country under Trump, his…

GPDThursday – Can Powell Reassure the Markets?

August 27, 2020

GDP is coming at 8:30 and it's going to suck.

-32.5% is expected and it's the 2nd revision to Q2's GDP, so there's not likely to be anything very surprising. As we noted yesterday, what really matters is how much Q3 improves but we're a long way from finding that out so people will speculate off Q2 and that's why Powell is scheduled to speak at the market open – in case we start selling off as people realize a -32.5% GDP doesn't quite square with record-high equities.

Covid cases are over 24M this morning around the world and India is seeing a record spike and South Korea, Italy and France reporting the most new daily infections in months. The US has gotten their infections under control by no longer testing people. The U.S. Centers for Disease Control and Prevention’s shift in guidance on Covid-19 testing away from asymptomatic individuals this week alarmed many public-health experts who say it’s a wrong turn that could restrict how many tests are performed.

CNN reported on Wednesday that the CDC guidance change was due to pressure from Trump administration officials, citing an unidentified official. New York Governor Andrew Cuomo called the move “political propaganda” and an effort by President Donald Trump to bring down the number of cases with less testing.

Public health experts said the new guidance, released as part of an unpublicized update to the CDC’s website, could in fact cut down on testing. “This makes no sense,” wrote Leana Wen, a physician who formerly led Planned Parenthood and currently serves as visiting professor of health policy and management at George Washington University, in a tweet late Tuesday. “We need more testing, not less.” Howard Forman, director of the Yale School of Public Health’s health-care management program, called the shift “insane and counter to all the best evidence that we have about how testing is supposed to work and appears to work.”

IN PROGRESS

Which Way Wednesday – Hurricane Edition

August 26, 2020

Hurricane Laura is coming.

It's a good excuse to get Oil (/CL) back to $43.50 but it makes a nice short there as nothing else is going on in the energy market to prop it up. We do have a holiday weekend approaching (next Friday) but driving is mostly off the table this year and, for oil, I'm a lot more concerned with the Dollar bouncing back from it's -10% position and kicking oil's ass after Powell's speech tomorrow at the Jackson Hole conference.

While the Dollar deserves to be weak, it's weak relative to what? All the other countries are printing money too – maybe not as fast as we are but the US Dollar is 60% of all the World's currency so, if we are debasing it, we'd have to debase it twice as hard as the Euro (30%) to fall as fast.

Europe has indeed spent about half of what we've spent on stimulus but they've spent it much more effictively and seem to be getting their virus under control. Japan has spent the most, by far and the Yen is another major currency the Dollar is measured against so why should the Yen be higher against the Dollar? It makes no sense, so the Dollar is probably too weak now and a move back up in the Dollar to 96 will likely knock commodities and stocks down about 5%.

IN PROGRESS

Toppy Tuesday – As Usual

August 25, 2020

Back to our highs, again.

And what do we do when we hit the 20% line at 3,420 from below? NOTHING!!! What do we do when we cross under it from above shortly after that? We short it! That's right, the 5% Rule™ is not very complicated. In fact, this chart is saved in my StockCharts profile as "S&P 500 Large Cap Index ($SPX) Feb 6 2020" which means we've been using the SAME chart since before the crisis and we're STILL right where we expected to be over 6 months ago.

Remember, the 5% Rule™ is not TA – it's just math! Math is real, TA is not…

Math told us we'd bottom out at 2,280 and we went long at 2,280 and did very well and math told us we'll top out at 3,420 and we got much more bearish last week and now we'll see how that plays out. Hopefully, for the sake of the investors that are irrationally exuberant, we won't go down as sharply as we did in March. In fact, we can go down 20% and still be on a bullish track – as long as our "Must Hold" levels do continue to hold.

Unfortunately, the Must Hold levels are NOT holding on the NYSE and the Russell 2000 – our two broadest market indicators. That's because, as I noted in yesterday's Report, this is a very narrowly focused rally led by the Tech Titans

IN PROGRESS

Just Another Manic Monday

August 24, 2020

Virus cases are down.

President Trump was right – as soon as we stopped the CDC from counting cases, less cases have been reported and the official number of US virus cases has dropped off considerably. That's SCIENCE! As you can see from this New York Times chart, however, there's a very suspicious amount of states that are way over the US Average, which indicates the US average is simply not reporting all the cases. SCIENCE!

Also, as pointed out, even our best states are having more cases than the 10 WORST countries in the world (besides ours, of course). Meanwhile, we have a new miracle cure – exactly the kind of cure rich people think up – we take the plasma from people who have recovered from covid and inject it into people who've been exposed. It's called "convalescent plasma" and it's based on the same sciency-sounding principle that has old, rich people getting transfusions from young, healthy people to "keep their blood fresh".

Trump has had the FDA grant this "treatment" and emergency-use authorization which is like the FDA saying "This could be total BS but we don't have any better ideas, so what the Hell?" Trump also had the FDA grant the same authorization to hydroxychloroquine back in April and it was revoked in June once a few studies were done that showed the "treatment" to do far more harm than good.

NONETHELESS, Global markets are rallying this morning on news of a "cure" with the Dow back above the 28,000 line but we're still shy of the February high of 29,500. The S&P 500 is over 3,400, where it topped out before and the Nasdaq was 9,750 before the crash but now blown past it at 11,680 – 20% over the pre-crash highs and 50% over the lows of March.

Of course, the reason the Nasdaq 100 is doing so well is that it is the most concentracted index on FAAMG: Facebook (FB), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT) and Google (GOOGL) – our Trillionaire Corporate Citizens. Those stocks are up 35% for the year, adding $3Tn in market cap in 8 months so, if you're wondering where all that stimuluss money went, look no further than into the stock valuations of our 5 Tech Titans.

IN PROGRESS

Faltering Friday – Investors Begin to Factor Risk Back In

August 21, 2020

How good is the economy, really?

Barry Ritholtz summed it up nicely yesterday with these key economic points:

• Unemployment Rate: U-3 unemployment was only 3.5% in February 2020, and it skyrocketed to peak at 14.9% in April — and that likely undercounted full unemployment. It is 10.2% as of July 2020, a big improvement, but far above the recent lows. Not only that, as a reminder, the worst the Unemployment Rate ever got during the Great Financial Crisis was 10% in October 2009.

• GDP: Real GDP bottomed in Q4 2008 at -2.16% (annualized); today its -9.49% (annualized); if you prefer to use nominal GDP, that bottomed in Q4 2008 at -1.86% annualized, today it is -10% (-9.986%).

• Non-Farm payroll workers: There were 152.463 million people employed in February 2020; That fell to a low 130.303 million in April; it has since recovered to 139.582 million. There are 12.88 million people who have lost their jobs since the pandemic spread and have still not found new ones since the recession began.

Look back at the GFC: Peak to trough, the total job loss in 2007-10 was 8.7 million. There are 48% more people unemployed right now than at the peak of the GFC.

• Existing Home Sales: The Existing Home Sales (Seasonally Adjusted Annual Rate) were at 5.76 million in January 2020; they bottomed in May 2020 at a (SAAR) of 3.91 million, have since recovered to 4.72 million in June 2020. The

…

Falling Thursday – Fed Fails to Firm Up Markets

August 20, 2020

We got the Fed's mintues yesterday, they were not helpful.

“Members agreed that the ongoing public health crisis would weigh heavily on economic activity, employment and inflation in the near term and was posing considerable risks to the economic outlook over the medium term.” – FOMC

Federal Reserve officials left interest rates unchanged near zero at their July session and continued to buy Treasury and mortgage-backed bonds at a pace of about $120Bn a month. At a press conference following the meeting, Fed Chair Jerome Powell said the path forward for the economy was “extraordinarily uncertain” and would depend on containing the virus. Results on that front have been mixed, with infections rising in several U.S. states, potentially weakening the recovery.

Officials had a long list of worries about the outlook, ranging from new waves of virus outbreak disrupting growth and crimping credit conditions, to waning fiscal support, as well as disruptions to foreign growth from the pandemic. Importantly, “several” said the long-run impact of the pandemic could result in business restructurings that may “slow the growth of the economy’s productive capacity for some time. Uncertainty is quite high. And I think uncertainty matters a lot for players in the economy and consequently for the economy itself,” said Thomas Barkin, president of the Federal Reserve Bank of Richmond.

He also said "The Fed is doing a lot to support the economy right now and we’re committed to continuing that support." I'm sure there are some (the people you can fool ALL of the time) who will take that as a positiive sign but, as I said in yesterday's Live Trading Webinar, there's simply too many negatives to just focus on the positive in this market. We're heading into a period of great uncertainty and the best thing we can do right now is get to CASH!!!

We went over our Long-Term Portfolio Positions and decided which ones will stay and which ones will go and we'll be taking a knife to our other portfolios as well. We…

Record-High Wednesday, Again

August 19, 2020

Up and up we go.

The S&P 500 is up 12% since the end of June and that's nothing compared to the Nasdaq but the Nasdaq is just silly now and so are the other indexes. Sure money is pouring into the economy and the Dollar is collapsing but will making the rich SO MUCH RICHER really stop the virus that is ravaging our economy? Of course not.

In last week's Live Trading Webinar, we shorted the Dow Futures (/YM) at 28,000 (avg) and we're still in that trade a week later as the Dow hasn't done much in the past week – and Apple (AAPL) is in the Dow! We could be consolidating for a move up or a move down but, as noted in our earnings anlaysis of the Dow components on July 23rd, there's no justification for a move higher – not from an actual earnings perspective anyway.

IN PROGRESS

22M Tuesday – Global Infections March On

August 18, 2020

21,913,816.

It's hard to believe we are living through the 2nd worst pandemic since the Black Plague (so far) and the stock market is at an all-time high. 774,682 people are dead (so far) and we're adding 300,000 cases per day around the World and 500 people PER DAY are dying in America from this virus. Remember when 4,000 people died on September 11th, 2001? Sure you do.

We're about to mark the 19th anniversary of that tragedy in 3 weeks and over 10,000 Americans WILL DIE between now and then. The whole nation took action when 9/11 happened to prevent additional deaths, now we seem to have simply lost all sense of proportion in this tragedy and we've certainly lost the will to act. We're even sending our children back to school without having taken any sort of reasonable action to keep them safe.

Of course this is a crisis of leadership, the Democrats did a good job of laying that out at their convention yet there's about 40% of this country that will never be convinced. We've developed herd immunity to idiocy and now it washes over us like the tide – there's little we can do to stop it anymore, so we just learn to live with it.

No one is outraged, no one is doing anything about it, we just accept this incompletent Government and the deaths of our friends and neighbors as if that's just "one of those things" – even though 95% of the countries in this World have made huge progress getting their infections under control, the US, Brazil, India, Russia, South Africa, Peru, Mexico and Columbia are all now in the 500,000 case club – though none are close to America's 5.44M infections, despite India having 5 times our population.

China STILL has under 90,000 cases. They had over 80,000 back in March, when we had only 5 and, since then, they've only had 10% more cases while the US has had 100,088,000,000% more. China was already showing the World how to contain the virus and most of the World paid attention and listened. We essentially did the opposite and now 170,559 American's are dead and that's on this President…

Just Another Manic Monday

August 17, 2020

OVER 1/2 of US housholds have lost some income since March.

OVER 1/3 expect to lose more in the next 30 days.

Jobs have been furloughed, businesses closed, hours reduced and salaries cut. While the health emergency and lockdown were the biggest direct cause of unemployment, there were secondary effects, too. Pandemic-induced layoffs were responsible for 11.6 million job losses. A further 6.9 million are due to the unavailability of child care, which is why Trump wants to force children back to school and risk their lives and the lives of their families – it's making him look bad when they stay safe at home.

The survey recorded how a public health crisis turned into a food crisis, as the responses showed that millions sometimes or often didn’t have enough to eat. That number rose to 23.8M for the week ending July 24, an increase of almost six million since the first week of May. At the same time, after a near-total shutdown of restaurants early in the crisis, Americans – especially those with higher incomes – have gradually been getting back into the habit of dining out. Still, spending remains far below pre-pandemic levels.

The Centers for Disease Control and Prevention, in a study conducted in May and June, found that more than 10% of adults seriously considered suicide — a figure that rose to more than one-quarter among 18-24 year-olds. It also found a jump in substance abuse, and said mental health outcomes were worse among racial minorities, essential workers, and unpaid caregivers.

The Census Bureau’s survey, in addition to high levels of anxiety and depression, reported on problems with physical health, as well. It found that more than 70.9M adults did not get medical care that they needed, for a condition unrelated to Covid-19, between mid-June and mid-July.

While none of this seems to affect the stock market, you KNOW the market is wrong. Just walking down the street tells you the economy is in trouble as so many stores and restaurants you walk past are temporarily or permanently closed. And this is WITH the economy running on MASSIVE stimulus – MASSIVE is nowhere near a big enough word to describe the stimulus, actually, as it's been about one third of our GDP already in the first 8 months of this year with more on the way. Even so, market returns have been mixed.

IN PROGRESS

1933 Friday – Best 100 Days Since the Great Depression – Markets Love Mayhem!

August 14, 2020

Here we go again?

The last time the S&P gained 50% in 100 days was on the bounce off the first leg of the great Depression. In the 90 years since, we've never repeated that trick – until now, when the S&P has popped 50% in 100 days. You'll notice we flattened out after that in 1933 and that is despite MASSIVE STIMULUS at the time. In fact, we didn't really get the economy going again until World War II broke out and, between the military service and the war manufacturing, the US went to full employment – so much so that they even let the women work!

The Depression was persistent because it's all about jobs and jobs are all about Consumer Spending and we'll be getting our Retail Sales Report at 8:30 this morning, followed by Consumer Sentiment at 10 am. Just like the Trump Depression, the Great Depression began when there was very low unemployment – just 2.2% in 1929. Then the market crashed, like it did in March, and then we had a bit of a recovery but then we completely collapsed as job losses mounted and businesses could not get back on track.

I know it's hip to be complacent and pretend everything is awesome, etc. because who wants to face the reality of our situation and, believe me, I take no pleasure in being Cassandra for the group but the sky IS falling and ignoring it won't make it go away. These are not abstract things, this is stuff that's right in front of our faces that people are simply brushing off – mostly because we have a Government that encourages you to brush it off.

While we are off our (mostly) April highs, we still have MASSIVE unemployment and we don't know what the effect of Lockdown II is going to be but, since this report was filed, there have been 11 major Retail Bankruptcies in two months, after 12 in March, April and May:

Tailored Brands (Aug. 2), Lord & Taylor (Aug. 2), Ascena (July 23), The Paper Store (July 14),

…

3,350 Thursday

August 13, 2020

The S&P 500 topped out yesterday at 3,387.

That was just shy of the 3,393 high we hit in February, the day before we plunged 1,200 points (35%) over the next four weeks. HOPEFULLY we won't repeat that disaster but, just in case we do, we're beginning to cash in our positions and, today, we're going to once again roll up our hedges to help lock in our gains.

The market is up not 35% (that's what we dropped from) but 50% abover 2,200 and that's a pretty good run. According to our 5% Rule™, we should be expecting a 20% pullback (of the 1,100 gain) from 3,300 back to 3,080 as a weak retracement and a stronger pullback would give back 40% of the gains, to our Must Hold Line at 2,860. That would NOT be bearish if the Must Hold line does, in fact, hold – it will just feel that way.

Still, no point in riding out the dip if we don't have to so we're going to raise more CASH!!! and there are plenty of great stocks to buy, like WBA, INTC, BA and VIAC (see Tuesday's Report and yesterday's Live Trading Webinar) so we'll have somewhere to put that cash if the market doesn't crash but I'll feel a lot better heading into the Back to School Disaster with more CASH!!! in our portfolios.

Our Long-Term Portfolio Positions are up over 100% for the year and they are protected by our Short-Term Portfolio, which is up 315% for the year at $415,152. That's actually down about 100% as TSLA has once again spiked up on us but we think we can outlast the Tesla bulls – even as the stock hits $1,600 again today. It's time, once again, to make some adjustments as the Nasdaq tests 11,150 as well this morning:

CANE – Just a simple bet on Sugar. I don't see any reason not to ride it out as it's breaking up nicely.

AAPL – On track and we don't need the margin but we may as well buy it back and clear the slot.

…

Which Way Wednesday – Market Swings Getting Wilder

August 12, 2020

Wheeee, this is fun!

On the whole, the Nasdaq has only fallen 150 points since Monday's open but it's had drops of 50 points, 200 points and 300 points in 3 days so I guess we're working up to the 600-point (5%) one-day drop ahead of us. Meanwhile, rumors of stimulus is still keeping us afloat. Yesterday, according to Treasury Secretary Mnuchin (why is it always a Goldman Sachs guy?), the Trump administration is open to resuming coronavirus aid talks with Democratic leaders and would offer more aid money to try to reach a compromise.

“The president is determined to spend what we need to spend. … We’re prepared to put more money on the table,” he told CNBC’s “Squawk on the Street.”

Well, that's what he said after the markets plunged into the close. Mnuchin promised they could get a deal done by the end of the week but they haven't actually re-started talks yet so that's a little hard to believe. Remember how many times we had a trade deal with China "any minute"? Meanwhile, Trump did not continue the moratorium on evictions because it's hard for homeless people to vote against him and so many of his friends are landlords.

Schumer and Pelosi also criticized the measures in a joint statement Saturday. They said the policies would provide “little real help to families” and would not address Covid-19 testing, efforts to reopen schools and food assistance. Dems call for $3Tn, the GOP wants to spend $1Tn. The White House has already rejected an offer by the Democrats to meet in the middle with roughly $2 trillion legislation.

On Monday, New York’s Democratic Gov. Andrew Cuomo said the unemployment benefits spelled out in Trump’s executive order would cost his state an estimated $4 billion by December. It would add to a budget shortfall that Cuomo said was already $30 billion. “That’s handing a drowning man an anchor,” the Governor said.

Overall state budgets were almost $200Bn in debt in the first half of this year and no better so far in the second half of the year and they simply can't afford to prepare the schools…

20 Million Tuesday, 28,000 Tuesday – Record Infections, Record Highs

August 11, 2020

Why didn't we think of this before?

A deadly virus sweeping the planet is GREAT for the stock market! There we were trying to keep stores open and going to work and making things – what a waste of time that all was, right? All we had to do was stay home and have the Government print money – we are all "welfare queens" now, aren't we? That's especially true of our Corporate Citizens, who are getting hit after hit of Government cash and paying record-low rates for record-high debt – what could possibly go wrong?

The stock market is up 5% in the past week and 15% since July 1st and 54% since March 23rd's 2,200 low – that's a pretty good rally. We caught that rally and now I think it's time to CASH OUT of our crisis trades so let's do a quick review of the trades we made while the rest of the World was panicking and yes, I'm now telling you to GET OUT!!! while the rest of the World is buying – imagine that….

That's right, it was now 5 months ago when we first plunged below our 2,850 "Must Hold" line on the S&P 500 and, as I said back on March 12th, "When the going gets tough, the tough go shopping" and it's not just the lower stock prices we take advantage of when our fellow investors are panicking out of positions but the higher levels of volatility raise the Volatility Index (VIX) and allow us to "Be the House" and sell options for fantastic premiums.

Initially, we sell puts to establish good entries in positions when we think there may be more downside. We'll see how those are doing and decide whether we want to expand on our plays. The first round was taken on March 12th, and these were the original trade ideas followed by the current price and profit in caps. If I don't mind holding the position – we'll call it a KEEPER:

Boeing (

…

Monday Morning Markets – Moving Past 5 Million Virus Cases

August 10, 2020

5,045,564.

That's how many cases the US officially has (not that we are counting). 162,938 Americans are dead, that's much harder to cover up. Globally we are about to cross 20M cases at 19,877,261 with 731,570 deaths so the US has more than 25% of the global cases and 22% of the deaths – despite having just 3.7% of the population so Trump is right – America is leading the world by a factor of 6 – no one transmits the virus or dies from the virus like we do! MAGA!!!

The markets don't seem to mind and we're still up around record highs as the worst things are for the American people, the better things are for American Corporations, apparently, as the stimulus fairy comes and pays them visit after visit. President Trump played the fairy this weekend, waving his executive action wand and unconstitutionally wishing for various bribes to the voters:

$400/week supplement to unemployment checks (states need to pay for it and Federal supplement comes from Disaster Fund that's meant for hurricanes, etc).
Suspend payments on Student Loans through 12/31 (but not the interest).
Extend eviction protection through 12/31 (the courts can't handle the backlog anyway)
Defer Payroll Taxes through 12/31 (a disaster for the Social Security and Medicare System and also puts a huge tax burden on the employees at the end of the year they are unlikely to manage for, which will be blamed on Biden as a tax increase, of course)

In other words, Trump's Executive Orders are a whole lot of nothing but Congress and the White House have still failed to reconcile Democrats' $3.4Tn coronavirus-relief plan and Senate Republicans' far smaller $1.1Tn proposal. The Paycheck Protection Program expired Saturday. The future of the small business rescue plan is in limbo. “Meet us halfway and work together to deliver immediate relief to the American people,” Pelosi and Schumer said in a joint statement. “Lives are being lost, and time is of the essence.”

Joe Biden, noting that Trump signed the “half-baked” orders at his golf club in New Jersey, said they short-change the unemployed and trigger a “new, reckless war on Social Security." “These orders are not real solutions,” soon to be President Biden said. “They

…

Friday Federal Failure – Congress Takes a 3-Day Weekend Without Fixing Anything!

August 7, 2020

WTF?

The unemployment benefit boost ran out last Friday and, all week, we were told Congress was making progress towards a new stimulus bill and President Trump, who has never steered us wrong, said that if Congress couldn't agree to extend benefits he would sign and executive order but, last night, the whole thing blew up and we got – NOTHING!!!

Democrats have introduced the HEROES Act which would provide $3 trillion of economic relief. The Republican plan, the HEALS Act, would only allocate $1 trillion dollars. Both sides have attempted to reach compromises in order to pass a cohesive bill, but that has yet to occur.

After a meeting between Democratic House Speaker Nancy Pelosi, House Minority Leader Chuck Schumer, White House Chief of Staff Mark Meadows and Treasury Secretary Steven Mnuchin, Pelosi said no progress had been made. "We're very far apart," Pelosi said. "It's very unfortunate." Pelosi said Republicans "didn't take the virus seriously in the beginning, they're not taking the consequences of the virus seriously at this time. And that's why it's hard to come to terms."

As noted by Paul Krugman, employment has plunged, and real G.D.P. fell by around 10 percent. Almost all of that, however, reflected the direct effects of the pandemic, which forced much of the economy into lockdown. What didn’t happen was a major second round of job losses driven by plunging consumer demand. Millions of workers lost their regular incomes; without federal aid, they would have been forced to slash spending, causing millions more to lose their jobs. Luckily Congress stepped up to the plate with special aid to the unemployed, which sustained consumer spending and kept the nonquarantined parts of the economy afloat.

The Democrats put up the HEROES act in JUNE and now it's AUGUST and we're still waiting on the Republican plan – even though they are well aware of the consequences of not moving forward. Unlike affluent Americans, the mostly low-wage workers whose benefits have just been terminated can’t blunt the impact by drawing on savings or borrowing against assets. So their spending will fall by a lot – pretty much immediately.

8:30 Update: 1.8M jobs were added in July,…

Faltering Thursday – Jobs Disappear and Take Market Highs With Them

August 6, 2020

695,000.

That was the most people ever laid off in a single week in the US, way back in 1982. In March, layoffs peaked out at 6.9M in a single week and, for the month of July, they've been around 1.3M – each week – double our worst week in history 4 weeks in a row. And this is what President Trump calls a recovery?

As you can see from the Unemployment Chart, we still have about 17M jobless Americans (officially) and it's getting worse again. Temporarilly laid off workers went back to work but the jobs thate are being lost now are the permanent kind, due to store closing, restaurant closings, etc. – jobs that aren't going to bounce back quickly and can't be "fixed" with a small stimulus loan.

And, don't forget, the Government supplemented businesses NOT to lay off workers through July but now that those supplements have run out, a lot of companies have to make hard choices to either pay the rent or pay the workers and many are just giving up and doing neither and, when the landlords can't pay the bank – that's when the Fed leaps into action! A good example of reality from the Wall Street Journal this morning:

Shana O’Mara has been receiving unemployment benefits since early July, after the expiration of a government loan that was sustaining her Tempe, Ariz., travel agency. She stopped drawing a salary from her business to keep it alive, but has continued to work without pay helping customers rebook and cancel trips.

She said her most recent weekly unemployment benefit payment fell to $214 after taxes, from $748 the preceding week, reflecting the July 31 expiration of an additional $600 in pretax federal benefits. “I don’t think anyone can live on $800 a month,” she said. Her family has stopped ordering takeout, and she called her auto lender and

…

Will We Hold It Wednesday – Dow 27,000 Again?

August 5, 2020

MORE FREE MONEY!!!

We'd better give some to Disney (DIS), who lost $5Bn in Q2 and has given up on releasing Mulan (live version) in theaters and will go straight to video in September. The Covid-19 pandemic has closed Disney’s theme parks, virtually eliminated movie distribution and curtailed live sports, a key programming source for Disney TV networks. However, the world’s shut-in nature has helped the company’s Disney DIS 0.81% + streaming service secure more than 60 million users in nearly nine months, a mark that Netflix took about eight years to achieve.

In other playground stocks, WYNN also lost $5Bn this morning in their Q2 report and the company has $3.8Bn in cash left and already has $12.8Bn in debt. The company is trading at about 50% of it's all-time high despite revenues being off 94.8% for the quarter and despite the fact that WYNN has only made about $2Bn in the past 5 years so a $5Bn loss is wiping out 10 years+ of profits.

Of course the nice thing about WYNN going forward is it will be 10 years until they have to pay taxes again but it could be 100 years if they lose another 5Bn in Q3 and go bust – all this optimism assumes things will be back to normal next year but, between now and then, how much debt damage will be done.

Unfortunately, we simply don't have enough information to take a stab at WYNN for $8Bn when they are losing $5Bn a quarter. What rational investor would pay $8 to lose $5 per quarter? These losses are real, they have to either borrow more money next Q (you already owe $13 as a proud shareholder) or find more investors, which will dilute your position. As fun as it would be to own the stock going forward, even if they make $500M/year, there's this debt to pay and $8Bn is still 16x FUTURE earnings – that's not a good deal by any stretch.

Most stocks are like that at the moment and so is the entire market. We're irrationally ignoring the the potential downside to a second wave of viral infections and we're still in the middle…

Toppy Tuesday – Waiting for the Shoes to Drop

August 4, 2020

We're still at 11,000 on the Nasdaq.

We punched over it a bit yesterday and we're into our second round of shorts on the Nasdaq (/NQ) Futures now and you can still catch them crossing the 11,000 line with tight stops above, which is a more conservative way to play. We scaled back in overnight, taking advantage of the spike up to end up with 3 short at 11,048 average so 11,000 is now our stop line to lock in the net $1,000 per contract gains (there were some losses that are offset).

The Russell (/RTY) is below 1,500 so, as long as that stays below, it's still good to short /NQ and the Dow (/YM) failed 26,600 and the S&P (/ES) failed 3,300 again and we're probably on the way back to 3,150, which is the Must Hold Line on our Big Chart and also now the 50 dma(ish). Our tracking chart for the S&P is more conservative as we don't think this bull run will last so the Must Hold line on the SPX is still 2,850 and thats' a solid 15% drop from where we are now:

Our hedges in the Short-Term Portfolio are holding up well and the portfolio itself is up 373% for the year as the STP loves volatility – and we've had plenty of that. Although it's early in the month, not much is happening today so it's a good time to go over our hedges and see if there's anything we should adjust (there wasn't last time). We haven't touched the positions since July 14th (3 weeks) other than adding the short INTC puts but, since then, the Long-Term Portfolio (LTP) has gained $75,000 AND the Short-Term Portfolio (STP) is up $70,000 too – not bad for leaving things alone!

CANE – I thought sugar consumption may go up during a pandemic and so far, so good and we're well over our very conservative target. Keep in mind that we sold the Oct $5 puts for 0.75 so our net entry is $4.25 and we make 0.75 (17.6% against risk) if CANE is

…

Monday Market Movement – Nasdaq 11,000 and Bust, Again?

August 3, 2020

Apple $425, Nasdaq 11,000 – Yipee!!!

As you can see on the chart, AAPL is up almost 40% for the year and AAPL is 15% of the Nasdaq so it's responsible for 6% of the Nasdaq's rise from 9,000 to 11,000 (22%) for the year so 27% of the Nasdaq's rise is due to one stock and then you have to consider the suppliers Apple boosts along with their own stock.

Apple is having a break-out moment as $425 per share is a $1.8Tn market cap so we're just 10% away from $2Tn in valuation at $470 – get your party hats ready. $2Tn is the GDP of Italy (#9 in the World) or Brazil (#8) with France, India and the UK, with population of 65M in France, 1.4Bn in India and 67M in the UK doing a piss-poor job comared to Apple's 137,000 employees. Is the average Apple employee 10,000 times more productive than the average Indian? If so, it's hard to explain the valuation of Infosys (INFY).

Speaking of companies that are worth $1.5 Trillion (yes, there's more than one now), Microsoft (MSFT) is trying to buy TikTok's North American operations so they can have something cool in their portfolio (now that's they've given up on Bing). President Trump has been helping Microsoft by threatening to ban TikTok in the US, devaluing their platform and scaring the company enough for MSFT to swoop in and make an offer – good old-fashioned strong arm tactics from your favorite Oiligopolists:

“Microsoft appreciates the U.S. Government’s and President Trump’s personal involvement as it continues to develop strong security protections for the country,” the company said in its statement.

The deal would land Microsoft the breakout social-media player of this decade. It would give Washington a win over Beijing by bringing a Chinese technology crown jewel under U.S. ownership. For TikTok parent ByteDance it would resolve the national-security concerns that threatened to thwart its U.S. operations. The proposed transaction gained the blessing of senior Trump officials, including Treasury Secretary Steven Mnuchin, who saw value in an American company getting access to sophisticated TikTok algorithms that decide what videos users are…

Thank Tech it’s Friday – Apple and Company Boost the Markets

July 31, 2020

$60 Billion!

Apple (AAPL) had $59.69Bn in revenues last quarter and that's up 10.9% while the rest of the economy was down 33% and the market logic is that one company making money trumps an entire economy losing money. Of course it's ridiculous but what can you do?

The chart on the right illustrates just how bad our Q2 GDP was compared to… well, history! This one-quarter drop in GDP was worse than ENTIRE RECESSIONS COMBINED yet the market is trading like we are going to just dust ourselves off and get right back into the race. Of course Apple did well – they sell exactly the kind of crap that people forced to sit on their couch for 3 months are going to buy. Amazon and other tech companies did well too because they cater to the shut-in crowds – you can't judge the economy or the market by what was bound to be the strongest sector.

Apple was our Stock of the Year 3 times this decade and, just two weeks ago, on July 17th, we did our Portfolio Reviews and we made aggressive adjustments to our AAPL position in the Butterfly Portfolio:

AAPL – We got more conservative but AAPL did not. The Aug $330s are $60 and they can be rolled to the Oct $350s at $50 so we're paying $10,000 for $20,000 more strike. Since our $200/260 spread is now net $144,000 out of a potential $180,000, it has $36,000 more to gain to cover the short calls. Still, we can do much better than that in two years so we'll cash that spread ($144,000) and move to 40 of the June 2022 $300 ($117)/400 ($65) bull call spreads at $52 ($208,000) so we're spending $64,000 to move from a spred with $36,000 potential to one with $192,000 potential – easily covering the short calls but also well-covered by them.

AAPL Short Call

2020 18-SEP 350.00 CALL [AAPL @ $384.76

…

GDPhursday – Fed Boost Doesn’t Last 24 Hours

July 30, 2020

Wheeee, that was easy money!

In yesterday's Live Trading Webinar, we were watching the Fed report live and we didn't see what people were being so bullish about so I made a call to short the Russell (/RTY) and the S&P 500 (/ES) Futures, which I reiterated in our Live Member Chat Room:

"In the Webinar we decided to short /ES at 3,250 and /RTY at 1,500. GDP tomorrow is likely to be ugly."

As you can see, we've already gained over $1,000 per contract and we haven't even had the GDP Report yet (8:30) and that is expected to show a horrific 30+% drop in US economic activity for the 2nd Quarter. It's POSSIBLE we have an upside surprise – thanks to $5Tn of stimulus spending during Q2 but, either way, we're in the middle of an economic disaster with not end in near sight.

Germany's GDP was down 10.1% this morning and that is twice as bad as it was in 2009, the second-worst on record (only records since 1970) but Germany, unlike the US, had a plan to fight the virus and has things more or less under control with 208,892 – about as many cases total as the US has deaths (150,716 so far). Germany has just 9,137 deaths to date, both about 5% of the US's totals although they have 25% as many people (84M).

Merkel's Germany did everything the Trump Administration did not and the differences are astounding. Rather than spend Trillions of Dollars propping up the economy, they actually protected their people from getting the virus in the first place and are already on the road to recovery while the US virus count and death count are spinning out of control.

8:30 Update: Officially we're down 33% DESPITE the $5,000,000,000,000 boost by the Fed and Congress (see yesterday's Report for breakdowns) so I'm very glad we put on those extra hedges as things could get pretty ugly although it's really right in-line…

Which Way Wednesday – Fed Edition

July 29, 2020

Will the Fed save us (again?).

Looking at the chart on the right, clearly we are in need of saving. Those numbers are pretty up-to-date and we're starting to re-close in certain places and several airlines and auto makers have announce massive job cuts that are not going to make things better. At least this chart will LOOK better as people will no longer be getting the benefits, which run out soon – so they will no longer be counted on this chart – having moved over to the "homeless" chart or the "impoverished" chart.

30M unemployed is 1/10 of our fellow Americans and you know how many more businesses are struggling in your neighborhood. Is it another 1/10th? Will 20% of our people be out of work soon? What happens to the economy if 20% less people are getting paychecks? Clearly the Government, even if the Liberals take charge, will need 20% more money to prop it up and we've already spent $6.7Tn in the past 4 months just to get to this mess!

Obviously the money was mainly misdirected and wasted but is that going to change when we give Jared another $500Bn of untraceable funds to play with? What happened to the first $500Bn? Oh yeah, untraceable… Well there was another $500Bn that the Treasury had and that fund was traceable but, at last count, no one was getting that money either.

Notice how the Federal Reserve Actions are not being counted as part of our debt and that's a good thing as we've added $2.5Tn in new debt already this year and Congress is voting on another $1-3Tn to get us through Q3 but even $6Tn is barely 1/3 of our GDP and we've certainly taken a 30% hit to the economy this year – we'll find out more in tomorrow's GDP report.

IN PROGRESS

Trillion Dollar Tuesday – New Stimulus Package Not Enough to Keep the Market Afloat

July 28, 2020

$1,000,000,000,000.

That's enough money to give all 1,000 Billionaire in the World another Billion Dollars. Oh wait, we did that already. Well it's enough money to give one Million Millionaires another Million Dollars. What? We did that already too. Well it's enough money to buy 3,000 masks for every man, woman and child in the country so we wouldn't need to spend Trillions of Dollar propping up the economy or it's enough money to continue giving $600 unemployment bonuses to 30M people for an entire year.

ROFL!!! Who are we kidding, this is America, we're going to give it to the rich people again!

The funny thing is the rich people are pissed that they are ONLY getting $1Tn this quarter (they got $6.7Tn last quarter) so the Futures are tanking and we're losing all of Meaningless Monday's gains. The biggest stimulus issue will hit us on Friday, it's the end of the $600 weekly unemployment bonus and the Democrats in the House wanted to extend it through Christmas while the Scrooges in the Senate said not only do they want it dropped to $200 now but they want all unemployment capped at 70% of wages AFTER it's combined with any State Benefits people are receiving.

The Republicans also want to cut dependent checks down to $500 while the Democrats want to increase them to $1,200 for up to 3 children, so people with more than 7 children come out ahead on the Republican plan! Democrats also want to spend $430Bn to make our schools safe enough to attend and providing $50Bn for child-care facilities to keep our toddlers safe while the Republicans think $70Bn is plenty and the kids can take their chances with the rest of us.

Democrats have also propose $1Tn in aid to local Governments while the GOP just says no to that and again, they want the cities and states to fight the virus with the same budgets they had when there was…

Monday Morning Markets – More Stimulus as We Wait for the Fed

July 27, 2020

More free money!!!

The Senate Republicans are expected to vote on the CARES Act 2 (it's a 5-act play) and this will be the beginning of two weeks of negotiations with the House, who already voted on a much more extensive measure to prop up the economy. The $600 weekly unemployment benefit will expire on Friday and most economists predict a complete disaster if that's not extended to 30M unemployed Americans. "We're not going to pay people more money to stay at home than work," US Treasury Secretary Steven Mnuchin said Thursday on CNBC using the poor grammer of a person who's never worked a day in his life and has sold his soul to Satan.

Mnuchin (who's father was a general partner at Goldman Sachs and spit out the silver spoon he was born with - demanding a platinum spoon on his way to Yale and a job with, you guessed it, Goldman Sach after which he took part in the total destruction of Sears, where they looted the pension and cost millions of workers their jobs while getting rich of the real estate they sold out from under the investors' noses) says 70% of minimum wage should be the cap for those lazy bastards who aren't risking their lives to go back to their closed businesses.

Really people, just tell Daddy you need another job and stop bothering the Government, who you've paid unemployment insurance to for your entire life, to actually pay you when you are unemployed! What do you think this is – Europe? At least we're all getting a second $1,200 stimulus check so the rents will probably be paid in August. It remains to be seen if the moratorium on evictions is extended. If not, expect total chaos in the housing markets and the courts since 1/3 of Americans have not paid their rents in the past few months.

While the House plan included $1Tn in aid to state and local Governments, the Senate plan has none. With so many areas shut down, tax revenues have gone down sharply and this funding was meant to help deal with that shortfall so expect this to…

TGIF – Stop the Week, We Want to Get Off!

July 24, 2020

Wheeeee, what fun!

The Dow fell 353 points yesterday and that's not a big deal but it was a great deal for our PSW Report Members who were alerted, pre-market, to the idea of shorting the Dow Futures (/YM) at the 27,000 line. The Dow ended up falling all the way to 26,450, a 550-point drop that paid $2,750 per contract but we took the money and ran at about $1,200 per contract early and as the Futures shorts are just extra protection while we wait for our primary hedges to kick in.

And what are our primary hedges? Well those are the positions in our Short-Term Portfolio, which we reviewed last Tuesday at $405,464 and, as of yesterday's close, the STP stood at $460,074, up $54,610 on the dip and the portfolio itself is up 360% for the year – despite the generally bullish market. That's because of clever (though sometimes painful) trades like our Tesla (TSLA) short, which is only just beginning to pay off.

At the same time, our Long-Term Portfolio (LTP), which we reviewed last Wednesday at $901,428, is now at $966,958 so that's up $65,350 for the week so it does turn out we are correctly bearishly balanced – and now you can see why we didn't make any portfolio changes last week (other than mechanical changes on expiring positions). We knew the "rally" was a house of cards so we were very happy to be neutral on the way up, knowing that we'd make a very nice gain on the way back down.

3,135 is the top of our range on the S&P 500 and we are still way over that but it's just a blip on the weekly calendar so don't get excited, especially when the unemployment bonuses and other stimulus measures are running out and Congress does not seem able to step up to the plate with additional funding.

As we are all painfully aware, the virus is still raging out of control and the US is up there with other 3rd World countries in the number…

4 Million Infection Thursday – Virus Rages on at Dow 27,000

July 23, 2020

This is a good shorting spot.

27,000 is a good line on the Dow (/YM), which was around 18,000 from November 2014 through November 2016 so we can call that a good consolidation point. So we're 50% above 18,000 and that means, via our fabulous 5% Rule™, that we can expect a 20% (weak) retrace of that 9,000-point run, back to 25,200 or a 40% (strong) retrace back to 23,400 and, guess what? That happened already!

In fact, we fell yet another 1,800 point to 21,600 just recently but it was an overshoot and we quickly took back the strong retrace and the weak retrace and now we're back at 27,000 but the real question is – where should we be?

Let's consider that 18,000 was a realistic base. The economy was going well under Obama, America was at full employment and a respected World leader and the deficit was getting under control – all good things that help a market stay strong. The Dollar was strong too, it was at 102 in 2017 and Americans enjoyed great buying power and my kids loved going to the Dollar store to get knick knacks.

Trump took office in January of 2017 and he cut taxes drastically for Corporations and people in the Top 1% and the Dollar dove all the way to 0.88 a year later, a 14% collapse that we've only recovered half of 2.5 years later. Losing 7% of the buying power on every penny you've saved your entire life is a devastating shock to the average American, who was not able to offset the loss of buying power through their stock market gains.

Still the weak Dollar is also good for our Corporate Citizens (thanks Citizens United!) as well as for the Top 1%, whose stock prices were jacked up by the weak dollar which, of course, makes our exports cheaper too. This is how we make America Great, by devaluing our currency, running up the deficit and putting profits over people time and time again. Surely that's worth a 20% boost in the Dow, isn't it?

But now we should consider that 50% is MORE than 20% (math done as a courtesy for Fox viewers) so how exactly are we getting that extra 30%. …

Wear a Mask Wednesday – President Trump Finally Sees the Light

July 22, 2020

“"We are asking everybody, when you are not able to socially distance, wear a mask," Trump said. “Whether you like the mask or not, they have an impact."

The US has learned "a great deal" about "the China virus", and unfortunately, things will probably "get worse before they get better" Trump said.

“Some areas of our country are doing very well, others are doing less well,” the President said. “It will probably, unfortunately, get worse before it gets better. Something I don’t like saying about things, but that’s the way it is.”

Yes, that's the way it is.

It's also the way it was in February, March, April, May and June but better late than never, on July 21st, in taking the most simple precaution against the rampant spread of a virus that has now killed 142,073 Americans (twice as many as died in the 20-year Vietnam war) and infected, by tomorrow, 4M others. Last night was the first "daily" briefing on the virus since April, when Trump decided Dr. Fauci was upstaging him and, even worse, contradicting him. At the time, the US had less than 1M cases.

You're a stock trader – how does that chart of US infections look to you? Almost as good as Tesla but, unlike TSLA, this chart won't suddenly turn around an uninfect people. In fact, it looks like it's about to have a massive breakout and that's why, finally, the President is scared enough to change his tune – he is presiding over one of the biggest catastrophes in human history and his name, his family name and his "brand' will forever be associated with this disaster.

And it is a disaster and, even if the stock market refuses to recognize it – you'd better because, like not wearing face masks, ignoring the virus will not protect your portfolio and you PROBABLY won't die – but you might. You KNOW you might. So you MIGHT make more money and that would be fun but your portfolio also MIGHT die and, with the virus, we are attempting to avoid dying by staying inside and not having fun for…

Testy Tuesday – 11,000 and Bust on the Nasdaq?

July 21, 2020

Happy 11,000!

That's right, only 4 months ago the Nasdaq was at 6,771 and now we're over 11,000 this morning, up 62.5% in 4 months. OK, so we fell from 9,000 in January so we're "only" up 22% for the year and that's normal in such a booming economy with people out frolicking and shopping and fully employed with bonuses and rasises for everyone, right?

No, this is so wrong, actually. Last year, without the virus and with the tax cuts and with the Fed and with the China Trade Deal – the Nasdaq was at 8,000 but, since last October, we've one crazy and popped 37.5% overall and we gave it all up in a flash crash in March and now, despite the fact that the virus (remember the virus) is much, much worse than it was then, we're up much more than that now.

Will the virus be cured? Yes, probably by March we'll have a vaccine and certainly we'll have treatments that lower the damage done by the virus – hopefully it will be more like pneumonia or bronchitis – something people get and get treated for routinely. Still, that's not the case yet and ignoring the economic risks that lie ahead is insane. To a large extent, this is simply a reaction to all the money that's being thrown at the problem but that money can't all stay in the market because the problem is long-term and expensive – and it will suck that money right back out.

Speaking to CNBC’s “Managing Asia” anchor Christine Tan, Piyush Gupta said government stimulus in many countries is helping businesses tide through the current difficult period. But when those measures come to an end, many companies may not survive, he explained.

“Do you keep putting money … using public finances to support companies or do you let creative destruction happen a la Schumpeter? This is going to be a real challenge particularly in the SME space around the world, I suspect this will be a big, big challenge next year,” he added.

…

Monday Market Movement – More Stimulus, of Course

July 20, 2020

Yes, we still have the virus.

2.2% more cases per day now, up from 1.9% the week before. That's the very opposite of having things under control with 14.5M Global cases, 606,206 Global deaths and 3.8M in the US (26% of the World's total) and 140,534 Americans are dead – that's like 35 9/11s in the 120 days since Trump told us the virus was nothing to worry about.

Of course he's still saying that and our case count is skyrocketing. The chart above is not a chart of Covid cases but a chart of Hospital Capacity and we are at or over the limit in 7 states, including my own Florida which hit 127% of capacity this weekend. NOW people are going to start dying, big time. That's why the President stopped hospitals from reporting to the CDC last week – these numbers are going to get shocking and the Trump Administration has no intention of doing anything to stop it.

Why? Re-election, of course. Trump's only chance now is to keep you locked in so you won't go out and vote in November. The entire Republican party needs the lowest possible voter turnout in November and they are doing everything in their power to ensure that happens – even if it leads to another 140,000 voter deaths.

I think everyone saw Trump unleash the storm troopers in Portland this weekend and, of course, the situation got worse, not better. Rioting has become the new American passtime in Trumpland and just wait until they try to force the colleges to re-open and put 14,500,000 student lives at risk by jamming them into lecture halls and dormitories. It's very much like being drafted to risk your life for Capitalism in the 60s and we can expect a similar response as students are forced to leave the relative safety of their homes for the first time in months.

Of course, that's nothing compared to Trump and DeVos' anti-science experiment on our 56.5 Million young children (and their teachers) who are being forced to go back to school where they will, of course, be way too close to each other every day and then, every day,…

Philstockworld July Portfolio Review – Members Only

July 17, 2020

Rather than writing about news the market is ignoring, I thought I'd get started on our Portfolio Review.

I tried this last month and never finished it (finished in chat) but, seriously, I am trying not to be doom and gloomy so I'm going to ignore the news and focus on our nice Member Portfolios and this should be quick because we did the Long-Term Portfolio (LTP) Review on Wednesday morning (only 2 changes) and the Short-Term Portfolio (STP) Review on Tuesday (no changes) and the reason there is nothing to change is because we are super well-balanced, as we should be in a time of uncerainty.

How well-balanced. Well the STP was at $405,464 on Tuesday and the LTP was $901,428 on Wednesday for a combined $1,307,074 in our primary paired portfolios and, as of yesterday's close, we're at $928,128 and $381,501 for a combined $1,309,629 – that's pretty well-balanced!

There are two ways to play uncerainty and one is to go to CASH!!! and we topped out at right about $1.4M (up 133% for the year) in the LTP/STP and I said at the time that we should put a stop at $1.2M to preserve a double but then we had some craziness with TSLA so we rode that out and hopefully it will calm down and start making some money. In any case, we didn't cash out, we decided to hold our positions and being well-hedged is like cashing out as we're not likely to make a lot but, if we're quick, we have a better chance of catching a nice move than if we were just sitting on sidelined cash.

If we were not locked in our homes with nothing to do – I would have cashed out and been on a nice 3-week cruise at the moment – that is the more sensible thing to do. The advantage of either CASH!!! or balance in an uncertain market is that, if the market goes lower and you hold your value – then you have a lot of money to buy stocks when they are actually cheap – just like we did in March – which is why we are up so much now. We'd hate to miss another…

Mask On Thursday – Surging Virus Numbers Push Many States to Lock Back Down

July 16, 2020

Remember the virus?

The stock market sure doesn't but the US, on the whole, just reported it's second-highest jump in infections and governors and mayors were scrambling to issue new mask orders and limit the size of gatherings. Several large school districts also said they would open the academic year with online classes, bucking pressure from President Trump and his administration to get students back into classrooms as quickly as possible.

The new restrictions reflect a painful reality that America’s outbreak, which has increased in 41 states over the past two weeks, may worsen in the coming weeks and months. Wednesday’s tally of more than 67,300 new infections was about 1,000 cases shy of the record set late last week, according to a New York Times database, as the country’s total number of cases passed 3.5 Million. Meanwhile, 963 more of Trump's "Virus Soldiers" died yesterday in their brave struggle to keep the economy open for the President's Re-Election – no matter how many lives it costs.

As you can see from the S&P Chart, we were rebounding just fine in May, while we were still locked down as life was ajdusting to the "new normal" – as it did in the rest of the World. 2 months ago, on May 16th, we had less than 1.5M viral infections in the US and we had drastically slowed the spread – even with many states not following the lockdown protocols. BUT, then we had this rush to "re-open" into the Holiday Weekend and, in just two months since then, we have added 2M more cases and the chart is RAPIDLY accellerating as we hit two new records in the past 5 days.

DESPITE pouring $2.7Tn of direct stimulus into the economy and another $4Tn of aid from the Fed – we are STILL not back at our February highs – excpet the Nasdaq, which is way off in fantasy land at 10,550, after testing 11,000 on Monday. The Nasdaq was at 9,500 in February so it's up 11% during the pandemic while the S&P is less than 200 (5.8%) points off it's high.

…

Wonderful Wednesday – More Stimulus and a Vaccine?

July 15, 2020

Goldman Sachs made money!

Yes, I know, that's not really a surprise but the markets are acting like it is this morning and the Dow is up almost 500 points, pre-market with Goldman Sachs (GS) contributing 50 points with their $9 (4%) jump on better than expected earnings. Mainly we're up because last night Moderna's Covid Vaccine showed positive immunity responses in all 45 people tested and now they are heading into a much bigger phase two study (30,000 subjects) at the end of the month.

The new “Cove” study, scheduled to start July 27, will aim to enroll about 30,000 adults at nearly 90 different U.S. locations. Many of the study sites will be in states where the virus is surging, such as Texas, Florida, California and Arizona, according to information posted Tuesday on a federal database of medical studies.

Among the people researchers plan to enroll are those at appreciable risk of infection because of where they live. Testing the vaccine in coronavirus hot spots could help generate answers about the vaccine’s efficacy sooner, because people there are more likely to be exposed to the virus in everyday living compared with people in places where new cases have declined.

Researchers, however, still don’t know what level of a neutralizing immune response would be needed to guard against either infection or severe disease, and for how long a vaccine could provide such protection.

More than half of the study participants had side effects including fatigue, chills, headache and injection-site pain. Three participants who received the highest dose level tested had one or more severe adverse events, the researchers said. That highest dose level isn’t being tested in the large phase 3 study.

We're still a good 6 months away from a proper vaccine roll-out, even if everything goes perfectly and the Global Economy is still severely damaged so of course this is a massive over-reaction but it's better than no vaccine, right?

This should give everything a nice boost but hopefully not Tesla (TSLA), which is killing our Short-Term Portfolio (see yesterday's review) but, fortunately, great for the Long-Term Portfolio,…

Testy Tuesday – S&P 500 at 3,135 (10% line), As Usual

July 14, 2020

Wheee, what fun!

Although the Dow fell 500 points into the close yesterday we still finished the day in the green as we had quite the low-volume rally in the morning (before the market opened). That brought in what they call the "bag holders" to buy the "rally" before they got whipsawed in the selling frenzy that over took the market in the afternoon as California announced it was going back to lockdown as the virus rages out of control (again).

WHO Says Pandemic to Linger; Cases Pass 13 Million: Virus Update.

See, that's what I'm talking about! What a coincidence that news item popped up there… That's right, not all the news is GREAT and we're still very concerned about what's going on in the World and, without new stimulus officially being announced, the market is looking just a little bit tired of rallying on rumors of virus cures, etc. and now we are getting REAL earnings reports that are not, on the whole, very pretty.

I'm sure everything will be "FINE" eventually but, for now, I'd say a little caution would be recommended – just in case it isn't. We keep our hedges in the Short-Term Portfolio (STP) but those are getting killed recently because of Tesla's (TSLA) wild ride though we did take advantage of yesterday's spike up to sell more short calls, we're still way behind on that position though it is an excellent hedge against a market crash as I very much doubt TSLA will be immune:

There's not much we're looking…

Portfolio Protection Workshop Part 7 – 20 Crisis Trades Revisited

July 13, 2020

Has it been four months?

That's right, it was four months ago when we first plunged below our 2,850 "Must Hold" line on the S&P 500 and, as I said back on March 12th, "When the going gets tough, the tough go shopping" and it's not just the lower stock prices we take advantage of when our fellow investors are panicking out of positions but the higher levels of volatility raise the Volatility Index (VIX) and allow us to "Be the House" and sell options for fantastic premiums.

Initially, we sell puts to establish good entries in positions when we think there may be more downside. We'll see how those are doing and decide whether we want to expand on our plays. The first round was taken on March 12th, and these were the trade ideas followed by the current price and profit in caps:

Boeing (BA) – It's hard to call a bottom on BA but they will be close to $160 this morning and that means we can sell 5 of the 2022 $110 puts for $27.50 ($13,750) in the LTP for just $3,707 in margin. This one could be a rough ride. NOW $20.00 ($10,000) UP $3,750 (27.3%)

…

Friday Follies – Marching Headlong into Earnings Season

July 10, 2020

Buckle up, it's going to be a bumpy ride!

We're 10 days into the third quarter and look how well things are going with almost every state having the virus under control except for a few idiot red states that think they are immune but, either way, the daily briefings and general public awareness have certainly turned the tide and…. what? That's the chart from May? Oh gosh, I'm sorry – let's take a look at the same chart as it is today thanks to our completely inept leadership:

Oh my God – get me out of this country!!! What? We aren't allowed to leave because we're too likely to be infected? Inept is not the right word for our leadership then, is it? "Contrary to the continued existence of American life" is a more accurate description for these morons, really. You would think this is all some kind of plot to destroy America that was set into motion by a foreign Government, setting up a puppet leader who would send America spiraling down a path of division and destruction. Nah….

The only good news here is the same good news I predicted back when Trump was first elected – this may be the end of the Republican Party – just like Herbert Hoover in 1929-1933 led to over 20 years of Democratic rule. When Hoover was elected, the Senate had 56 Republicans and just 39 Democrats and the House had a 267-163 Republican majority and, just like they did 100 years later, they raped and looted the land and destroyed the economy and, just 4 years later, there were 59 Democratic Senators and just 36 Republicans and, in the House, there were 313 Democrats and just 117 Republicans and, by 1937, Republicans almost qualified for endangered species protection with only 17 remaining GOP Senators and just 89 House Members.

While it's still too early for the Democrats to throw Putin a thank you party for installing the Puppet of Doom for the GOP in the White Hosue, it's certainly looking like more of a Blue Tsunami than a "Blue Wave" is shaping up for the upcoming elections…

59,000 Thursday – Another Record High for Viral Infections

July 9, 2020

Winning!

As Trump predicted in 2016 we are so tired of winning at this point, aren't we? The US is clearly winning the virus race with a record 59,400 infections on Wednesday – our 5th National Record in the past 9 days – WINNING! On Tuesday we celebrated our 3,000,000 infection in the US and we're officially at 1% of the total population infected so that's 1/100 people carrying the virus (that we know of without adequate testing - which the President says causes more cases) and it remains airborne so see how well you do today avoiding coming in contact with 100 people or things that have been touched by 100 people….

There is a certain logic to "getting it over with" – they probably can't stop it from spreading, there is no miracle cure and we're all going to get it eventually so why prolong the agony? Well, one reason is that hospitals are out of room for new patients and also out of supplies which means the virus can spread out of control when we try to treat infected people and more infected people means less room and less supplies and that will cause more people to die and not just from the virus but hospital staff is pulled away from other duties as well – endangering non-Covid patients.

That is why we need to "flatten the curve". The US already has one of the worst-performing Health Care systems in the World and this is a stress test we are clearly failing. “It’s been chaos for us,” said Randy Bury, President of the Good Samaritan Society, which has struggled to keep its 200 nursing homes supplied with hand sanitizer, masks and gowns. “The supply chain in the United States is not healthy, and we’ve learned we cannot depend on the Government.”

Trump has resisted using federal powers to address the problem, saying in March that individual governors should find their own gear because “We’re not a shipping clerk.” With the National Strategic Stockpile depleted, states have been left to fend for themselves, though the Federal Emergency Management Agency has been distributing modest shipments of gear to nursing…

Which Way Wednesday – What Happened to Top Trade Alerts?

July 8, 2020

It's been a while since we had a Top Trade Alert.

Top Trade Alerts are the trade ideas we like the most in any given week, the ones we feel as very likely to do well and usually we are running with around an 80% success rate, which is amazing. I often tell our Members that the reason we are so successful with our trade ideas and futures plays is not because we are so good at picking winners but because we are so good at NOT picking losers.

When you decide to be a trader, professionally or as a hobby, you tend to sit down at your desk looking for things to trade but, like a good baseball hitter, the thing you have to learn is PATIENCE – if you don't wait for a good pitch, you are going to swing and miss a lot. In baseball, it's just a strike but in trading, it's a loss!

Home run hitters tend to strike out a lot because they swing for the fences and, while it's spectacular when they connect, many great home run hitters are terrible batters because that's all they do well while almost any player with an 0.300 batting average is going into the Hall of Fame. An 0.300 trading average is not great, but, if you learn how to manage your money correctly, it can work but traders who can bat 0.500 (50%) and manages their losses will always get into the hall of fame.

The highest batting average in baseball history was Ty Cobb, who battet 0.367 but, because he didn't swing at pitches he didn't like, he also walked a lot and his "On Base Percentage" (times he got to first base) was an amazing 0.433 – almost half the time he got up, he got on base! Being selective in your trades will also get you to first base (profits!) much more often but that, unfortunately, means there are certain times – or UNcertain times like these – when you are better off not swinging at all.

While we were happy to buy stocks when they were cheap earlier in the year, there simply aren't too many bargains left and, so, not a lot…

Testy Tuesday – S&P 3,135 Tested from Above for a Change

July 7, 2020

If it's Tuesday we must be testing the 10% line.

Mostly we've been coming at it from the bottom but, this week, we're trying something different and diving back to it from the top. We did this back on June 11th (Thursday, actually) when the S&P fell from 3,123 all the way back to 2,965 on Thursday and that Tuesday (9th) was when we began the fall from 3,222, down 8% from the top in two days. It's only 3 weeks later and no one even seems to remember it happened.

Certainly not Tesla (TSLA) investors, who have driven that stock up to about $1,400 per share as of this morning, giving the company an implied market cap of $254Bn.

IN PROGRESS

Monday Market Movement – Up and Up and UP!

July 6, 2020

Another day another 1.5% gain.

This is why we can't cash out our long portfolios, as much as we'd like to. The problem is we are going to have a very hard time protecting our ill-gotten gains from the correction – if and when it ever does come but, so far, the flow of money from the Fed and the endless stimulus by the Government is the rising tide that is floating all boats – no matter how rough the waters.

Investors are "exhberant" but is it really irrational when so much money is being thrown at the stock market? This is historically unprecedented. Here we are at the start of Q3 and we already heard on Friday that Q2 was a disaster for the Auto Industry and Earnings Reports kick off next week with PEP, C, JPM, WFC, UAL, BK, GS, PNC, PGR, USB and UNH reporting by Wednesday. This week we have just a few but nothing terribly exciting so we'll have to wait until next week to see if the markets can skip over Q2's almost certain disaster:

The Atlanta Fed has increased their GDP Now Forecast to -35% from -54% for Q2 so I guess that's great news. I'm not sure if -35% deserves new record highs in the stock market but it is certainly better than -54% thanks to that very clever re-opening thing we've been doing for the past month under the guidance of Supreme Leader Donald Trump.

According to our President, a few people "caught the sniffles" this weekend – a record amount, in fact – but it's nothing to worry about and no reason to chicken out and go back to our cowardly lockdowns that were damaging his economy. I know I'm inspired.

"Experts say the president appears to have seized only on a death rate estimate of 1 percent or less that does not capture the entire impact of the disease, and excludes

…

50,000 New Infection Thursday – Happy Holiday!

July 2, 2020

50,000 new infections!

That's right, that's the 5th time in the past 7 days the US has hit new all-time single-day highs in infections. Over in Japan, six weeks after Tokyo lifted it's State of Emergency, they are back to their May highs in daily infections. At this point, I don't think there is much to do about it. Clearly humanity has no taste for the obvious way to control the disease and very clearly Americans don't. Maybe the "herd immunity" crowd was right – cows don't go into lockdown when a disease strikes – some die, some don't and the rest of the herd moves on…

I don't suppose a cow puts much thought into it's vulnerability or what will become of it's children and loved ones or how it's business will survive or how it's carelessness might affect his fellow cows - AND NEITHER DO AMERICANS APPARENTLY! Maybe we just eat to many cows and we are starting to think (or not think) like them? Texas eats a lot of meat and they had 8,000 new infections yesterday but Arizona, which has 1/4 of Texa's population, had 4,700 new cases – more than half, so about 5 times the infection rate of Texas.

From Japan and other countries that have had re-infections, it's very clear that bars are a major cause of the spread of the infection yet the bars are open in most states for what is usually a big drinking weekend as we bow to pressure from the Liquor Lobby to keep things flowing while completely ignoring the Rational For God's Sake Will Humanity at Least Try to Save Itself Lobby – as usual. As noted by David Leonhardt:

Government policy and economic forces have combined to make corporations and the wealthy more powerful, and most workers and their families less powerful. These workers receive a smaller share of society’s resources than they once did and often have less control over their lives. Those lives are generally shorter and more likely to

…

What Next Wednesday – Fauci Fears 100,000 New Cases a Day, Market Soars

July 1, 2020

The US "is not in total control".

That's quite the understatement from Dr. Anthony Fauci, who warned the Senate yesterday that daily new virus cases in the US were trending towards 100,000 per day. That would knock out the entire population of Wyoming in 15 days! The country is now reporting nearly 40,000 new coronavirus cases every day - almost double from about 22,800 in mid-May - driven largely by outbreaks in a number of states across the South and West. “I can’t make an accurate prediction but it’s going to be very disturbing,” Fauci told the Senators.

“Well I think the numbers speak for themselves. I’m very concerned and I’m not satisfied with what’s going on because we’re going in the wrong direction if you look at the curves of the new cases, so we really have got to do something about that and we need to do it quickly.”

Outbreaks in states like Florida and Texas also threaten to disrupt the progress states like New York and New Jersey have so far made in driving down the outbreak in the Northeast, Fauci said. New York, New Jersey and Connecticut last week announced they would mandate 14-day quarantines for any travelers coming from a states with rapidly expanding outbreaks. Nonetheless, Fauci said increased infection anywhere in the country threatens to spread everywhere.

Keep in mind that 100,000 people a day is 3M people per month which means 1% of our population will be infected each month and that means that in two months, 1 in 50 people will have the virus and how likely is it that we can stop the spread at that point? 1-2 months later, 1 in 25 and 1-2 months after that 1 in 12. Hey I know – let's keep doing almost nothing, right?

The S&P 500 has pretty much done nothing since the end of April. Well, it's gone up and down but, on the whole, not much higher than that peak which is still much lower than the pre-virus peak…

Testy Tuesday – Are we Hedged Well Enough?

June 30, 2020

Nice move up yesterday, this is a good time to take a look at the Short-Term Portfolio (STP).

As you know, I'm a bit skeptical of the rally because over 10.4M people (yes, up 400,000 since Sunday) on the planet now have or had Covid-19 and less than 1/2 of them are "recovered" or "dead" so at a rate of 200,000 infections per day, we'll be at 20M by the end of August and most of those people will be newly infected so going from 5M actively infected to 10M (at least) actively infected means there will be twice as many people spreading the virus in 50 days or less so twice as contagious and growing twice as fast (400,000 per day) and we're already over-running hopsitals in several US states.

The economy is still very much shut-down and yesterday the markets were excited about some production growth in Asia but, when you were down 30%, growing 2% back is not really a reason to put on party hats – certainly not a 500-point rally. But that brings us to the TREMENDOUS amounts of stimulus in the economy.

I think the Government/Fed spent the right amount ($6.7Tn) to get us through 6 months but this isn't going to be 6 months and those unemployment bonuses run out at the end of July so either they put another $3Tn to work or Q3 will be a bigger disaster than Q2 and I'm sure we have diminishing returns (and mounting debt) – that pretty much sums up my "concerns" for the Economy at the moment.

So, the question is, are we hedged enough or CAN WE BE HEDGED ENOUGH to protect our long positions? Our Long-Term Portfolio is up 70% at the monet at about $850,000 and our Short-Term Portfolio is up 445% at $545,000 so combined $1.395M is more than a double off our $600,000 combined start so all is well but that's because we got lucky and were bearish into the crash (because we feared the virus early on) and…

Manic Monday – S&P 3,000 Holds as We Pass 10M Infections, 500,000 Deaths

June 29, 2020

I guess people ignore stuff all the time.

There were 165,534 NEW cases of Covid-19 YESTERDAY – that's double China's TOTAL number of cases yet President Trump still calls it the China virus while China calls it the President's total failure to contain the virus like they did more than 2 months ago.

ALL Donald Trump had to do was do what the Chinese did and what most of Asia did to contain the virus and this never would have happened. Instead the President ignored the experts, denied the virus was a thread, did not react fast enough or appropriately when he finally did act and TO THIS DAY, he still isn't doing what needs to be done to contain this Global threat and 38,845 people were infected in the US alone yesterday - HALF of China's TOTAL infections from the "Kung Flu" as the President likes to call it.

Florida, where I live, had a 6.4% rise in infections on SUNDAY – that's pretty much a doubling rate of 10 days! We are back to a state of emergency a month after opening but everyone knows it's too late – there's really no going back now. On Thursday, Trump’s administration asked the Supreme Court to throw out the Affordable Care Act, including its protections for people with pre-existing health conditions, in its entirety — despite the president’s frequent insistence that he will always protect such patients. He has never offered a plan to replace the law known as Obamacare.

On Saturday, Trump said on Twitter that he’d win re-election, once again proclaiming that a “silent majority” supports him. He boasted about high television ratings for his recent campaign events and said “these are the real polls, the Silent Majority, not FAKE POLLS!” Trump has repeatedly said, falsely, that the U.S. has more cases of Covid-19 because it’s conducting more testing for the disease. He’s also expressed skepticism that some of the reported cases are real. “You’re going to have a kid with the sniffles, and they’ll say it’s coronavirus,” he said Thursday.

DURING a White House coronavirus task force briefing Friday — its first in two months, held at Health and Human Services headquarters and without Trump — the president tweeted a wanted poster for 15 people who allegedly…

Friday Failure – 33 States (out of 50) Are Spiking With Infections

June 26, 2020

Holy cow!

As you can see from the chart, over 20% of the people who are tested in Arizona do, in fact, have the Covid Virus. Not much better in Florida and anywhere were 1 out of 10 people have the virus it's pretty much game over for containing it. We did have it contained – but Trump was so eager to call that a victory that he opend up the cages and now we are all Christians that have been thrown to the viral lions by our modern-day Commodus. Maybe in the future, we'll call the toilet a Trump, instead of a commode in his "honor"…

That's right, Commodus was the son of the popular Marcus Aurelius but, as Gladiator fans surely know, his reign was one of rot and corruption as he surrounded himself with incompetent toadies and managed to intiate the complete anhilation of the Roman Empire after 12 years of incompetent rule (he was assassinated):

During his solo reign, intrigues and conspiracies abounded, leading Commodus to an increasingly dictatorial style of leadership that culminated in a god-like personality cult. His assassination in 192 marked the end of the Nerva–Antonine dynasty.

Commodus had upset the peaceful balance that Rome had enjoyed for almost eighty years. Currency was devalued and the economy collapsed, leading the country into a civil war that lasted four years. His rule was the beginning of the end for that most famous empire..

Yikes, sounds a lot like the movie we are all currently starring in, doesn't it? I think we're just about in the middle of act two:

In context, the Latin panem et circenses (bread and circuses) identifies the only remaining interest of a Roman populace which no longer cares for its historical birthright of political involvement. Here Juvenal displays his contempt for the declining heroism of contemporary Romans, using a range of different themes including lust for power and desire for old age to illustrate his argument.^[6] Roman politicians passed laws in 140 BC to keep the votes of poorer citizens, by introducing a grain dole: giving out cheap food and entertainment, "bread and circuses", became the most effective way to rise to power.

…

3,000 Thursday – Holding the Line on the S&P 500 While Infections Rise and Rise

June 25, 2020

This is getting interesting.

We shorted the S&P 500, as noted in yesterday's Live Trading Webinar, right at our 3,135 line on the last cross and this morning we got stopped out after almost testing the 3,000 line and we've been over and under our line since and the next time we test it, we're going to short it again.

Our hedges are doing their job as the Long-Term Portfolio fell from $883,615 on Friday to $836,750 yesterday (down $46,865) while the Short-Term Portfolio rose from $521,687 to $540,485 (up $19,098). That's exactly what your hedges should be doing – MITIGATING half your damage on the way down. If your hedges are completely reversing the damage – you are probably over-hedged.

Why is that? Because if you have $100,000 and you put $85,000 in longs and $15,000 in hedges (our standard ratio), then if the market drops 20% your longs drop $17,000 but the hedges, which we play with 3x ETF and options, gain about $7,000 ideally. Because we also hedge our hedges, you don't see the full effect right away but mitigating 50% of the damage is close enough.

So now the market has dropped 20% and what do you have? You have $92,000 – that's only down 8%. That in itself isn't very exciting but that's where Part 2 of our strategy comes in because, since we are not very damaged by a 20% drop, we are in a great position to go bargain hunting for stocks that over-reacted to the downside (and that is what our Watch List is for) and now we can buy our stocks for a 20% or greater discount and, using our other options strategies and taking advantage of the higher VIX – we can buy stocks closer to a 40% discount with our $92,000 in buying power.

See how simple that plan is?

Wobbly Wednesday – Virus Surge Worries Markets

June 24, 2020

2,347,102 infected Americans.

Will we even make it to November so we can choose 4 more years of this nightmare? 121,225 Americans are dead out of 477,807 worldwide – only Brazil is close to us with 52,645 dead in their country – clearly not as "great" as ours has been made. Trump has been calling the virus "Kung Flu", which both attaches it to China (in a racist fashion) and diminishes the toll it is taking on the people of this country who are suffering and dying under his watch. Well played sir!

While the Chinese (84,653 infections, 4,640 deaths) are able to travel to Europe and the US, Americans may soon not be able to travel to China or to Europe as both Governments are considering banning US travelers from entering their countries and will at least require 2-week quarantines for those that do wish to escape our disease-ridden nation. That's as of July 1st folks, so you'd better take that summer vacation quickly.

In 3.5 years, America has become isolated and unloved, with soaring debts and monstrous unemployment. We have far less trade, riots in the streets and our life expectancy is crashing as fast as the stock market is rising. Putin could not possibly be prouder, could he?

President Trump, as well as his Russian and Brazilian counterparts have followed what critics call a comparable path in their pandemic response that leaves all three countries in a similarly bad spot: they were dismissive at the outset of the crisis, slow to respond to scientific advice and saw a boom of domestic cases as other parts of the world, notably in Europe and Asia, were slowly managing to get their outbreaks under control.

This morning, the stock market kind of cares about the virus and we're down a bit in the Futures

IN PROGRESS

Testy Tuesday – S&P 3,135 Yet Again

June 23, 2020

"Baby here we stand again

Where we've been so many times before

Even though you looked so sure

As I was watching you walking out my door

But you always walk back in like you did today

Acting like you never even went away

Well I don't know if I can

Open up and let you in baby

Here come those tears

Here come those tears again" – Jackson Browne

That's right it's Tuesday so the S&P must be testing the 10% line and last Tuesday we failed but the Tuesday before that we popped over so it's a real coin flip this morning.

Things are looking good so far because those 30M unemployed people are still getting their $600 WEEKLY bonus checks ($18Bn/week, $72Bn/month) and those will last until July 31st and that has kept the economy from totally collapsing and has kept Consumer Spending at reasonable levels at the Bottom 25% of wage earners are now outspending the Top 25% relative to where they were before the crisis.

Pumping an annualized $864Bn into bonus checks for the Unemployed is 5% of the GDP we're adding and that's making all those economic numbers look much better than they are, not to mention the base $15Bn a week of regular unemployment benerfits that are being handed out – that's another annualized $780Bn (4% of GDP).

Then we add in the $1,200 stimulus checks for 170M tax filers ($204Bn) and $500 for 50M dependents ($25Bn) and that's another $229Bn in Q2 is an annualized $916Bn (5% of GDP) so this economic bounce is here because we spent…

Monday Market Movement – Futures Can’t Hold Gains

June 22, 2020

First you go low on high volume, then you go high on low volume.

That's one of the tricks "THEY" do when "THEY" want to reel in retail suckers to take stocks off their hands at high prices. Keep the headliners like Apple (AAPL) rolling up the market while doing massive selling like we saw into Friday's close – a 100-point drop in the S&P 500 (3.2%) during the trading session but then a 60-point "recovery" when the markets closed and there was no volume – a time when it's MUCH easier to manipulate the markets, as well as the news.

Yes, we used to only have to worry about fake Financial News, the kind Jim Cramer boasts about routinely placing in this video. As Cramer says, if you are running a hedge fund and you are not manipulating the markets – you're just not doing your job. If you think that's not true today – just look at that action on the S&P and read the headlines of SOME papers and you tell me if we're still being manipulated or not.

Does what you hear about the markets and the economy make sense when you walk on empty streets and eat in empty restaurants? Will it makes sense when we get those quarterly reports for Q2? Does it make sense when you look at the Atlanta Fed's GDP Now forecast, that shows Q2 (the one we just finishing next week) GDP is projected to be DOWN 45.5%.

I know not all of you are Economists but I'll save you 2 years of graduate school by saying down 45.5% is BAD! What's also bad is that the average range of pundits is more like -35% so the public is in for a big disappointment if the Atlanta Fed is right and the random idiot on TV is wrong.

We get the final GDP Report for Q1 on Thursday (8:30) and that will be down 5% with Consumer Spending down 6.8% and that only reflects the last two weeks of March when we were locked up (hey, Trump did it, he locked us up like he promised!). If we were down about 50% for two weeks and the other 10 weeks of the quarter we…