Philstockworld October Portfolio Review (Members Only)

Image result for one million dollars animated gif$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

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

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.  





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

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

Baby Trump' Balloon Grounded for July 4 Protest in DC | Military.comUp 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
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50-Point Friday – The Week Finishes on a High Note

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

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
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Which Way Wednesday – Trump Cancels Christmas

No Soup For You GIFs | TenorNo 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

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

Trump Remains Hospitalized as Doctors Offer Mixed Signals on HealthJoe 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.