Faltering Thursday – Wrapping up the Best Month Since 1974

Image result for money printing animated gifThe BEST month!

That's right, speaking of cognative dissonance, while you were locked up (Trump did promise he'd do that) for the month, the Stock Market had it's best month in almost 50 years, now up 34% from our March 23rd lows.  We just reviewed our Member Portfolios in our Live Trading Webinar and they are up along the same path.  Fortunately, rather than just recovering with the market, we called the bottom right on the money and added to our positions, leveraging the 34% gains quite nicely – so now we're having a great year – in captivity.

The difference between being able to act when they market is down and not being able to act is night and day for your overall returns, that's why we always keep a healthy amount of CASH!!! on the sidelines – even in the best of markets and we always scale into (and out of) our positions. Which brings us to today's topic – should we take our money off the table?  

CH 20200429 SP500 looking for a bottomWe have some truly ridiculous gains in our portfolios thanks to this epic bounce and we're coming back to test the 200-day moving average on the S&P at the 3,000 line and we didn't think we'd get back over our Must Hold line at 2,850 but, on the other hand – as I said back on March 24th: "Turnaround Tuesday – Yes, $3Tn is a LOT of Money!"

That was my estimate of the stimulus at the time and that's why we called the bottom but, by Wednesday, we knew that the Fed's contribution made it more like $6Tn (now $6.5Tn with the second round of SBA loans) as I qupted on 3/26: "Federally Funded Thursday: “We are Not Going to Run Out of Ammunition” – Powell."  The Fed Chairman reiterated that comment yesterday but also warned that the Fed can't do this alone and needs fiscal support from the Government as well.  Do I hear $9Tn?  

JPow Jerome Powell GIF - JPow JeromePowell MoneyPrinting ...As investors, we don't really care, FREE MONEY is FREE MONEY
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Which Way Wednesday – Virtual Fed Meeting Edition

Comic: Addicted Markets Beg Powell For More Fed Rate Cuts As S&P ...Will Powell be wearing pants?

That is the burning question on everyone's mind as the Chairman of the Federal Reserve will be zooming in his address to the nation at 2:30 this afternoon.  Powell has already said (3 week ago) that the Fed will act "forcefully" to help the US recover and that the economy can be "robust" once the virus is contained.  Traders are assuming that means more of the same today but today it's Powell's job to assess whether or not the virus is contained – so that's a potential point of disappointment as well as the strong likelihood that Powell will have a "wait and see" approach as clearly they can't possibly have spent the $4Tn they have been allocated yet, so those expecting more from the Fed are likely to be disappointed.  

We are certainly waiting and seeing this morning and we have a list of 16 positions we are thinking about trimming from our Member Portfolios, about 20% of the total and we'll discuss two of them here in our Money Talk Portfolio Review, as I'll be on the show this evening (BNN at 7:30) and we only adjust the portfolio on show days. 

The last time I was on the show was March 11th, a bit before we hit bottom and I made a call for jumping into blue chips and I made a call for selling puts on stocks you want to buy, using Valero (VLO) and Ford (F) as examples.  We also added Tanger Factory Outlets (SKT) as a long-term dividend play.  Our Money Talk Portfolio was down 8.4% at the time and we made a series of aggressive moves I detailed in that morning's PSW Report – in order to take advantage of the market decline.  

We had the advantage of being mostly in CASH!!!  In fact, we had $99,235 of cash in the portfolio while the positions themselves were worth -$7,670 for net $91,565 out of our original $100,000 we began with back on 11/13/19.  We had stayed "Cashy and Cautious" – as we did with all of our Member Portfolios, as we felt fairly certain that SOMETHING was going to cause the market to sell off – we just didn't expect…
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Terrific Tuesday – Talk of Another $2 Trillion Stimulus, Re-Opening Boosts Market

Trump gives governors 3-phase plan to reopen economyCognative Dissonance.

That's the mental state experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.  On the one hand, the President and Fox News are pushing the idea of "Opening Up America Again" as if their lives depend on it and, politicaly, Trump's does because if he doesn't "beat" this virus, he won't be re-elected and, if Trump isn't re-elected, he is very likely to go on trial for all sorts of things he's currently being protected from.

 On the other hand, the Senate is about to look at a relief packgage aimed to shore up the states, including paying unemployment benefits (like they are supposed to) for 24M newly unemployed Americans and that "CARES 2" package is looking like ANOTHER $2.2Tn.  So are we ready to open up Amercia just 6 weeks after we locked it down or is this a lingering crisis that requires $4.4Tn of direct Government aid PLUS $4Tn from the FED?  That's cognative dissonance – they can't both be true – but we're acting as if they both are.

All this talk of throwing MORE FREE MONEY around is driving the Dollar down and boosting the market and our Futures are up another 1% as the Dollar drops another 0.5% – which is pretty much the usual relationship between the two.  

It's not much of a rally when the buying power of the currency your stocks are priced in keeps falling but it undoes a lot of technical damage as yesterday the S&P 500 pushed over our Must Hold line at 2,850 and we're also back above the 50-day moving average at 2,800 so, if we can hold that today without going under, next stop is testing the 200 dma at 3,000 and that's just 15% off the all-time high – what virus?

A "recovery" like this sows the seeds of its own destruction as we're going up on stimulus and ignoring the reality of businesses opening up at 25-50% of capacity and the very real possibility that we're re-opening America far too soon (as most medical experts are warning), which will ultimately prolong
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Monday Morning Math Notes – Looking Ahead in a Viral Market

Should we stay or should we go?  

THAT is the question I've been pondering this weekend as we've had an excellent run in the markets off the bottom and all of our Member Portfolios, except the Dividend Portfolio, are back in the black and we should be THRILLED, in this kind of market – just to get our money back.  Still, the thing is – if we go back to cash – then what?  This is where the Fear of Missing Out (FOMO) comes in because, while we are comfortable that we can take our cash and make money in any kind of market – we still don't want to miss out on deals of the century, do we?

So I have been reading and thinking all weekend and watching the virus counts and looking at what's happening around the World and considering the data and here's what I think:

21% of 1,300 people tested randomly in New York City and 14% of the people in New York State had antibodies for the Coronavirus.  That means 1 out of 6 people have been exposed enough to have had a reaction – it doesn't mean they are definitely immune but we're talking about 15%(ish) of 20M people (that's 3M for Fox viewers) and "only" 300,000 (so far) had symptoms that were noticable enough to get counted while the rest developed anti-bodies after apparently mild exposures.

In New York City, about 21 percent tested positive for coronavirus antibodies during the state survey. The rate was about 17 percent on Long Island, nearly 12 percent in Westchester and Rockland Counties and less than 4 percent in the rest of the state.  State researchers sampled blood from the approximately 3,000 people they had tested over two days, including about 1,300 in New York City, at grocery and big-box stores. The results were sent to the state’s Wadsworth facility in Albany, a respected public health lab.

In California, antibody testing in two studies found rates of exposure as hign as 4% in Santa Clara County and 5% in Los Angeles County.  Keep in mnd the sampling, at stores, may disproportionately include those who have either already had the illness, or those who naturally tend to go out more and so…
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26 Million Out of Work, 50,000 Deaths, 870,000 Infections – Are We Great Yet?

I WAS going to write an upbeat article.

Then Trump suggested injecting disinfectants into infected people's lungs AND NO ONE CONTRADICTED HIM!!!  That was yesterday's live press briefing at the White House where Trump suggested injecting poison and also using ultra-violet light inside the body – since it seems to hinder the growth of the virus in the environment.  

Trump said that just seconds after those items were mentioned (not in the same way) by DHS's Bill Bryan (yet another Trump unconfirmed appointment) and it was very clear that Trump himself is only getting the information for the first time at the briefing and then he makes ridiculous and dangerous inferences from what he misunderstands and, because this is all being done on camera – no one has the guts to contradict him – no matter how insane his comments are.  

“This notion of injecting or ingesting any type of cleansing product into the body is irresponsible and it’s dangerous," said Dr. Vin Gupta. "It’s a common method that people utilize when they want to kill themselves."

"As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route)," said a spokesperson for Reckitt Benckiser, the United Kingdom-based owner of Lysol, in a statement to NBC News.

Yes, this is what America has come to.  Lysol has to issue official statements telling people not to listen to the President and inject yourself with their product.  While I certainly don't think anyone reading this is going to start shooting up Lysol just because the President said it's a promising treatment – people have died from taking hydroxyclhloroquine after the President called that a miracle cure.  It turns out to be not at all effective against Covid-19 but, to be fair, we haven't tested injecting Lysol yet – BECAUSE IT'S BAT-SHIT CRAZY!!!

Not proving something doesn't
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Faltering Thursday – Rally Grinds to a Halt as We Wait for More Stimulus

Oil is back over $15.

As you can see from the chart, the number of people piling into the Oil ETF (USO) is skyrocketing as the price becomes an apparent bargain, now $2.50 but the ETF is broken and now it's a chicken and egg thing as the bargain-hunters buy USO and that forces USO to buy oil contracts which has NOTHING To do with the fundamentals of oil but drives up the price of oil briefly but USO MUST dump the contracts (as they don't take delivery) by the end of the month at any price and that dump has rules and those rules can then be taken advantage of by traders who profit off the rollover.  Given the situation – I think we'll have to dump out of USO for the duration – long before the month ends.  

Stock price graphsThe ETF is reverse-splitting 1 for 8 as of April 29th, so we'll have to be out by then as it's more likely than not that oil will plunge into negative numbers again at the May, taking USO down with it, no matter what price they reset it too.  So far, Trump has offered to buy 75M barrels of oil for the SPR and Trump has attempted to raise hostilities with Iran in attempts to boost the price of oil and it's working somewhat, with oil back to $15 but we just had a 25M barrel build in inventores yesterday so even if they fill the Strategic Petroleum Reserve to the brim – we still can't handle 4 more weeks of build like that!

Keep in mind the chart above represents all the storage in the US and we're only 20M barrels below the all-time high.  They may find SOME additional storage but it's doubtful they find 50M (10%) more barrels worth to take us up to 600M – there's a limit to how many broom closets refineries can fill up.  Even more immedite is the storage situation at the US's main hub in Cushing, OK, which has a very well-defined capacity of 80M barrels.  

Figure 2. Cushing, Oklahoma commercial crude oil inventories

At least, that's what it says on the
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Wednesday Weakcovery – Does $500Bn Even Help Anymore?

dc gifs Page 2 | WiffleGifAnother $500Bn is being thrown on the fire.

Not that we don't need it, our economy is on fire and our people are in peril but here we are, after being locked into our homes and out of our jobs for over a month and WHERE are the stimulus checks?  Very few people have gotten their promised $1,200 so far and almost no small businesses have gotten their Paycheck loans, which were meant to allow them to pay their employees -that's what Congress is supposed to be doubling down on this morning but what is preventing 75%-80% of this money from being misdirected to big businesses as well?

PPP vs SBARepublicans had initially wanted only to replenish the small-business fund (which they looted), while Democrats wanted to also boost money for hospitals, testing, food stamps and state and local governments. Although under pressure last week from some centrist Democrats uncomfortable with delaying the small-business aid, Democratic leaders saw several of their requests met in the emerging deal.

It took two weeks for the money allocated in March to reach the banks and then it took only 3 days before the banks ran out of money and the Republicans act like that's shocking but the money is supposed to cover 2 months of salaries and rents and utilities and small businesses employ 50% of the people in this country and those people earn $6Tn a year so $500Bn a month so salaries alone for 2 months are $1,000Bn so STOP BEING SHOCKED THAT $350Bn WASN'T ENOUGH MONEY!

F'ing MATH people – look into it….

Meanwhile a lot of businesses, in good faith, hung onto their staff and kept paying their bills because the President assured them those bills would be covered and then the first round of loans was completely inadequate and now the 2nd round of loans is still inadequate and I doubt many small businesses can afford to keep paying their staff for 2 months based on empty promises – so look for lots more layoffs.

“People are feeling like they’ve lost everything,” CNBC quotes Allie Fleder, chief

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Tumblin’ Tuesday – They Will PAY You to Take Their Oil

$38.50 per barrel.  

That's how much you get PAID at the NYMEX for agreeing to take a 1,000-barrel contract off their hands.  The problem is (and the reason it's so cheap) what are you going to do with 1,000 barrels of oil and $38,500?  The barrrels are 42-gallon drums and weigh 300 pounds each and you have to pick them up in Cushing, OK no later than the end of the next month and picking up means from a pipeline – you have to bring your own barrrels.

You can buy the barrels for about $20 each but they are 3 foot tall by 2 foot in diameter (12 cubic feet) and a standard semi truck has about 2,400 cubic feet of spaces so, if you were to fill up 1,000 barrels you'd need 5 semi trucks to take them to your storage facility and you'd have to pay 5 teams to load them and unload them and then pay for storage until you find a seller.

No fuel price reduction yet, despite 20% price drop in crude oil ...Still if you are doing the math, you might be able to make all that work for under $38,500 but then you still need to find someone who will buy the oil from you for less than zero and, while -$38.50 did not last long – oil is still trading at -$4 this morning.  Those are the contracts that expire today for May delivery as there is simply nowhere left to put the oil.  

Not only are the storage facilities full but the pipelines are full so you can't even transport the stuff and the oil tankers are being used for storage and good luck finding a tanker truck or tanker car on a train.  Go to your local gas station and he'll tell you he's full too – those tanks hold 12,000-24,000 gallons and that's just 250-500 barrels at a gas station but that is, of course, refined gasoline – you would be buying unrefined crude so your only potential buyer is a refinery and, guess what – they're FULL!!!

So the oil market is, currently, broken and will not magically get unbroken as long as no one is driving their…
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Monday Market Mania – Oil Drops to $12, Trump Fans Protest Local Government

South Florida caravan protesters demand Florida 're-opens' - South ...This actually happened this weekend:

My town was invaded by a parade of protestors.  They had no permits, of course, you aren't even supposed to be out on the street without a face mask but apparently, waving a Trump 2020 banner in Florida is a "get out of jail free" card and men, women and their innocent children risked their lives, and the lives of others to demand that Florida be re-opened.  

Many of the people in the caravans had “Trump” quotes and flags on their cars. There were also some people wearing clothes or bearing signs supportive of the fringe conspiracy theory group, “Q-Anon,” and far-right group the Proud Boys.  You know, the usual right wing-nuts, egged on by the President, who tweeted out "LIBERATE VIRGINIA" and other states – as if they were oppressive regimes to be overthrown.  Apparently, someone had told Trump that "Liberate Virginia" meant "Free Vagina" in French and he laughed about it all weekend – and no one in the White House dared to correct the President.

Trump tweets 'LIBERATE MICHIGAN,' echoing Lansing protesters ...

Despite Trump's 59 lies about the Coronavirus Pandemic in just the last 30 days, only 15 states (that's out of 50 – in case you are a Fox News viewer) have contained the spread of the virus (green) while 35 states (again, math done as a courtesy to Fox viewers) still have the virus spreading led by North Dakota, where each infected person is infecting 1.7 other people leading to a 170% spread of the virus every two weeks.  

“We’ve avoided the cataclysmic outcomes we’ve seen in other countries and other locations,” North Dakota Gov. Doug Burgum boasted in a press conference last week, noting that hospitalizations in the state are only in the teens and deaths remain in single digits.

Sounds like Trump when we "only" had 15 cases in the US.  Now North Dakota has 585 cases and 10 deaths while the US as a whole now has 759,786
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PhilStockWorld April Portfolio Review – Putting Our Strategies to the Test

Image result for one million dollars animated gif$1,102,871!

That's the combined value of our paired Long-Term and Short-Term Portfolios as of yesterday's close!  We began the STP with $100,000 back on October 1st and the STP was up to $153,498 in our January 7th Portfolio Review but the positions were turning into longer-term positions (because we kept the losers we had been working on) so we added $350,000 to the STP and renamed it the LTP and then we created a brand new STP with $100,000 on Jan 17th with the primary objective of hedging our LTP positions

This all came on the heels of cashing out our last round of Member Portfolios back in October, when the LTP/STP combo hit $2,606,756 after two very bullish years and we decided the markets were just too toppy to risk that much money so we cut back, deployed just $100,000 in the STP (also some other virtual portfolios were created) and, when that started going well, we got brave enough to deploy some LTP money – but only a fraction of what we had cashed out because the markets WERE STILL TOO TOPPY!

Keep in mind that the title of our October 2nd Review was: "PhilStockWorld September Portfolio Review – Cashing out of this Crazy Market!" in which I said:

Hedging a $1.7M LTP would be very expensive and what if next time we didn't time the turn in the STP and instead blew the turn and lost money there as well as the LTP.  Then we'd be back to $2M and needing to make 30% to get back to $2.6M and what if it's hard to make money next year or what if we have another crash and the market is down 40% – it's just too much to risk vs. putting $2.6M safely on the sidelines and simply looking for new opportunities.

Political Cartoon on Twitter: "Kal on Donald Trump loathing for ...Did I know that a viral pandemic would be the catalyst that would take down the global markets?  Of course not, but I did KNOW FOR A FACT that valuations were stretched and we had made a ridiculous amount of money in our Long-Term Portfolio (based on…
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