Entries by Phil

Which Way Wednesday – To Infinity and Beyond?

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

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…
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Monday Market Movement – More Vaccines Boost Futures – Again

TOMMY EXPLAINED!!! | michaelckeysIf 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!  

A Tokyo Metropolitan Government official calls for self-restraintOf 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…
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Philstockworld November Portfolio Review

Image result for one million dollars animated gif$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…
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Fragile Thursday – Market Reminds Us How Quickly it can Fall

"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,…
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Why Worry Wednesday? Short-Term Portfolio Review

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

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…
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Moderna Monday – Another Vaccine Lifts the Markets – Again

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 

Is COVID-19 testing the key to a safe Thanksgiving? | MIT MedicalIn 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
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Flip Flopin’ Friday – Markets All Over the Place

Coronavirus (COVID-19) Testing - Statistics and Research - Our World in Data153,000 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…
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Fatal Thursday – Virus Deaths in the US Hit a New One-Day Record!

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.

Steve Bell on Trump's approach to coronavirus and the economy - cartoon |  Opinion | The GuardianWe 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.

The Tax Impact Of The Long-Term Capital Gains Bump ZoneWith 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
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