TGIF – Ending the Week With a Whimper

Everything is proceeding as I have foreseen.

In Monday's "The Week Ahead – 200,000 Deaths Weigh Heavily on the Market," we knew the 200,000th American death would put Covid back in the news cycle and there wasn't much chance of Powell making us feel any better as the Fed is pretty much out of firepower and Congress is MIA as far as stimulus goes and NO ONE is actually doing anything about the virus except for claiming what a great job they've done fighting the China virus – but we won't name names as that would just embarrass a normal human being who had either empathy for their fellow man or the intelligence to realize their incompetence has killed twice as many peeople as the Vietnam war – and this one is still going on – and we've all been drafted!  

As we noted in Monday's Report:

“We have a very serious situation unfolding,” said Hans Kluge, the World Health Organization’s regional director for Europe. For the first time, he wore a mask at the press conference on Thursday. “The September case numbers should serve as a wakeup call for all of us.”

Relax Chicken Little, The Interoperability Sky is NOT Falling! - Great  Lakes Health ConnectI'm sorry, I know this is depressing and not what we want to talk about in a stock market newsletter but this is REALITY and, as an investor, you can't afford to put your head in the sand and hide from unpleasantness because denying the reality of the situation can lead to even more unpleasantness in your portfolio when ignoring a problem doesn't make it go away.  

As noted above, the global markets are only down 2% since Wuhan was first locked down on January 23rd yet the Global Economy has taken a 20% hit in Q2 and


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Transfer of Power Thursday – “A Continuation”

"There won't be a transfer, frankly, there will be a continuation."  

Asked whether he would “commit here today for a peaceful transferral of power after the November election,” Emperor Trump declared: "We’re going to have to see what happens.  You know that I’ve been complaining very strongly about the ballots, and the ballots are a disaster.  Get rid of the ballots and you’ll have a very peaceful — there won’t be a transfer, frankly. There will be a continuation,” the President said. 

And so, Democracy dies.  Not with a bang, but with a whimper as the lack of outrage is itself outrageous.  If any other World leader said such a thing, they would call the UN in to supervise the election but here we are, in America, where voting is supposed to be a sacred right that empowers our Democracy and we're just letting a guy who lost the popular vote by 6% when he ran – DICTATE the outcome of the next election.  Like a….. Dictator.

Trump’s refusal to endorse perhaps the most fundamental tenet of American democracy, as any President in memory surely would have, was the latest instance in which he has cast grave uncertainty around the November election and its aftermath. Democrats are growing increasingly alarmed as Mr. Trump repeatedly questions the integrity of the vote and suggests that he might not accept the results if he loses.  Hours after Mr. Trump’s assertions, Senator Mitt Romney, Republican of Utah, expressed alarm over the comments on Twitter

“Fundamental to democracy is the peaceful transition of power; without that, there is Belarus,” Mr. Romney wrote. “Any suggestion that a president might not respect this Constitutional guarantee is both unthinkable and unacceptable.”

I'm sorry if this is "political" but are we seriously going to let this happen?  

 

 

 

 

Weak Bounce Wednesday

Not much is happening.

Powell and Mnuchin's testimony to Congress did not help or hurt the markets, which are still bouncing from September's 10% drop (what, you forgot that happened already?).  Economic data has been blah and even politics has been blah this week so the market is just drifting back to test the weak bounce line – which it still hasn't reached yet and probably won't because, as we pre-noted on Monday, the 100-hour (weekly) moving average is about to death cross under the 400-hour (monthly) moving average and that's going to form significant upside restistance at the weak bounce line.

Failing to get back over the weak bounce line in the time it took you to fall below it (call it two weeks) means you are consolidating for a move below it – not recovering.  This is a market that is only propped up by external (stimulus) forces, swimming in a pool of very low reality that operates in a Nation that is dumb enough to still possibly be re-electing Donald Trump AFTER seeing the evidence of the damage he's done in just 3.5 years in office.  

Pin by Ideen Solhtalab on LOL | Funny quotes, Stupid people, Funny jokesI really can't believe there's even a discussion about Trump being re-elected, let alone it being close but it does seem close – or at least that's what the media say – and we can't trust them to tell us the truth anymore, can we?  See!  You don't know if we can – that's TERRIBLE!   

The same people that are actually considering inflicting humanity with 4 more years of Trump are trading the markets and, if they don't see that the last 3.5 years have been a stain on the history of our Nation – they sure can't see that Tesla (TSLA) is on over-valued piece of crap or that paying close to 30 times earnings for the average S&P 500 compay is clearly an historical abberation that is certainly going to correct itself as soon as "THEY" stop pumping it up like a carnival baloon.

 

IN PROGRESS

 

 

Terrible Tuesday – Powell Says US Faces Slow, Uncertain Recovery

Powell testifies before Congress today.

We already know what he's going to say though, as his testimony is pre-released.  Not that that will stop the market from acting shocked when they hear it later (because who reads?).   That means we can short the Nasdaq Futures (/NQ) again below the 11,000 line (or the 11,100 line if we hit that first) with tight stops above as it's a high-percentage play as you have a clear line to take a small loss while even a small dip should take us down 50 points for a $1,000 per contract gain.  So, if we stop out with a $50 loss but could have a $1,000 gain – that's what we mean by a high-percentage play.

Many economic indicators show marked improvement,” Powell said Monday in the text of testimony he’s scheduled to deliver before the House Financial Services Committee on Tuesday.  “Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain,” he says.  

Powell will appear alongside Treasury Secretary Steven Mnuchin, a quarterly exercise mandated by the Cares Act passed by Congress in March and which appropriated about $2Tn to help speed the U.S. recovery. The pair are likely to face questions about their use of Cares Act funds and about what else should still be done.

“The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government.”

Well, good luck with that! 

 

IN PROGRESS

 

 

The Week Ahead – 200,000 Deaths Weigh Heavily on the Market

"At least one more cycle."

That's what former FDA Commissioner Scott Gottlieb said he expects for the US as the virus moves into the fall and winter when, presumably, it's more active.  U.K. Health Secretary Matt Hancock said the country is at a “tipping point” and more measures will be taken unless people comply with rules to contain the resurgent coronavirus. He didn’t rule out national action.

There were 36,765 new cases in the United States YESTERDAY – the most new cases on the planet Earth and almost half as many people that have been affected in China, TOTAL, in a single day – yet Trump still calls this the "Chinese Virus" despite America being the epicenter of the World since March.

If, as top scientists fear, we are heading into a second cycle of viral infections, we are now starting off a base of 31,089,558 cases in September vs 100,000 in March that expanded over 300 times in 6 months.  Despite the cautions we have in place, 36,765 people in the US caught the virus yesterday – that's 1% of all the cases in the World, that's 30M cases in 100 days kind of pace.  We are FAILING to contain the virus bigly:

 

 

IN PROGRESS

 

 

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
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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.  …
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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.

 

 

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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
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