Entries by Phil

Which Way Wednesday – 3,700 Fed Edition

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

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

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

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!!!

German magazine Stern doesn't hold back with their anti-Trump cover | Metro  NewsIt'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


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

Printing GIF | GfycatMORE 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."

History's deadliest pandemics: Plague, smallpox, flu, covid-19 - Washington  Post"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…
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Wonderful Wednesday – More Free Money Gives us S&P 3,700!

Turnaround Tuesday – More Stimulus Rumors as Powell Speaks$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
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Trade of the Year Tuesday – Who Will Survive the Fall?

Tesla nears $500 billion! Higher than combined m-cap of Ford, BMW, 7 other  automakersThis 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


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Monday Market Week Ahead

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

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.  

It's the Great Pumpkin, Charlie Brown is a Christmas special wearing a  Halloween costume - VoxPictures 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.

Food Insecurity Is A Serious Problem In America, And Has Long-Term Effects  On Our ChildrenTHAT 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
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3,000 Death Thursday – It’s Like 9/11 Every Day!

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.

100+ Ti ideas | disney art, disney drawings, disneyNew 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…
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