Philstockworld September Portfolio Review

Image result for one million dollars animated gif$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
continue reading

Faltering Thursday – Reality Rears it’s Ugly Head

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.

Matt Wuerker's Editorial Cartoons - Roger Ailes Editorial Cartoons | The  Editorial CartoonsAnd 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.  …
continue reading

Which Way Wednesday – Fed Edition

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

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 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.

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…

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
continue reading

Philstockworld August Portfolio Review

Image result for one million dollars animated gif$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…
continue reading

Faltering Friday – Wrapping Up the Weak Weak

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?

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…
continue reading

Which Way Wednesday – More Stimulus Edition

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…
continue reading

Troubling Tuesday: Oil’s Not Well

$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.  

Plan the Trade, Trade the Plan”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
continue reading