Monday Market Madness – Trump Leaves G20 Early, Skips Asia Summit Entirely

Oh what a beautiful morning!  

We went long on Gasolione (/RB) into the weekend as we expected OPEC to do SOMETHING to prop up Oil (/CL) at the $60 mark and we thought /RB Futures would make a good play into Thanksgiving regardless.  We did, in fact, get noise over the weekend that our freinds the Saudis see the need to cut oil ouput by another 1Mb/d next year to maintain "price stability".   

I had predicted we'd get down to $62 when I was interviewed on Nov 1st at Investing.com, but our first attempt to go long on oil and gasoline failed but this time /RB made the big payout with an almost $5,000 gain on 6 long contracts as we stopped out our last contracts at $1.64 - a nice way to start our week…

The next long attempt can be made over $1.65 on /RB or back at the $1.625 line and, of course, we'd love to give $1.60 another try but you have to use tight stops on Gasoline as the contracs pay OR LOSE $420 per penny of movement on each contract.

When you get a strong move based on a quote – even from a very reliable source – you have to look to take quick profits because, as is the case with Gasoline – nothing has Fundamentally changed – just some Saudi Oil minister says (while oil is failing $60 and US inventories alone are climbing by 5Mb/week) that they "might" need to cut Global Production by 7Mb/week – a month from now – if the other OPEC members agree. 

So, for future reference (and we've done this before but it's like school, I have to repeat things many times before a light bulb appears above the students' heads):  OPEC (now called the new and improved OPEC+ in an effort to rebrand and include Russia, Mexico and Kazakhstan) generally acts to support oil at $60 ($70 for Brent) like it's an emergency so wherever Gasoline is at the time tends to benefit as well and especially when you have a major down move, you can play the 5% Rule™ for a bounce:


continue reading

Faltering Friday – Market Tries to Reconcile Election, Fed, White House Turmoil

Image result for china cyber crime cartoonAll kinds of stuff is happening.

At the moment (7:30) the futures are down a bit but not very much and we're still holding those huge gains from Wednesday – so all is well (ish).  There's new tensions with China as the NSA says Chinese Internet stocks are violating a 2015 Cybersecurity Agreement regarding intellectual property theft and that's a charge that should, techincally lead to even more sanctions against China.  Most likely, this is one of Trump's "negotiating tools" as he prepares for trade talks with Xi – another chip he has to bargain with.

Still, real or fake, these accusations are having very real effects on Chinese cyber-stocks, which are all heading lower pre-market, including AliBaba (BABA) who we would like to play bullish into their "Singles Day" on Sunday, but now we'll have to wait and see how the morning plays out.  Don't forget, Trump's unilateral sanctions are illegal unless he can cite "National Security Issues" and, if those don't exist – just make them up!  

 

IN PROGRESS

 

 

Fed Fired Thursday – Sessions Gone, Powell Speaks

Image result for trump nixon cartoonNow Trump has gone full Nixon.  

Trump finally fired his whipping boy, Jeff Sessions and, while we may forget it because he's become a National joke, thanks in large part to the way Trump has demeaned him for two years, he is/was the Attorney General of the United States of America and firing him is a big deal.  And Trump's reasons for firing him are very similar to Nixon's reason for firing AG Archibald Cox in the summer of '73 – to derail an investigation into the President's corrupt dealings

Like Nixon, Trump is placing a loyal stooge in Sessions' place (one who is not technically qualified to be the AG, in fact),  Acting AG, Mattthew Whitaker, was hand-picked by Trump and was once a US Attorney in Iowa but then joined the board of World Patent Marketing in 2014 saying:

“As a former US Attorney, I would only align myself with a first class organization. World Patent Marketing goes beyond making statements about doing business ‘ethically’ and translates them into action.”

The Federal Trade Commission last year accused World Patent Marketing Inc., of Miami Beach, Fla., of scamming would-be inventors by charging them thousands of dollars to patent and promote their inventions. The company “provided almost no service in return” and threatened people who complained, the regulator said.

The FTC alleged that the scheme, which it said was promoted through “bogus ‘success stories’ and testimonials,” began in early 2014. The agency found that consumers lost about $26 million; some allegedly ended up in debt or lost their life savings.

World Patent Marketing promotional videos and photos show Mr. Whitaker reviewing invention ideas with the company’s founder, and the FTC included in court exhibits an email from Mr. Whitaker acting on behalf of the company and threatening a customer who complained with potential “serious civil and criminal consequences.” The August 2015 email was reviewed by The Wall Street Journal.

Image result for trump sessions cartoonUsually something like that in an attorney's past would immediately derail any chance they had of becomming the Attorney General of the United States of America but this is the Trump Administration
continue reading

Which Way Wednesday – Trump Bloviates but Powell Will Have the Last Word

Is this guy delusional or what?

The Republicans got trounced in the House but kept the Senate and Trump calls it a "Big Victory" though I do have no doubt that his friend Putin did congratulate him – so maybe that part is true.  So far, the markets seem very happy with a split Congress and we're back to the 7,100 line on the Nasdaq but that's only our weak bounce line (7,080) and we're still waiting for the Nasdaq and the Russell to confirm strong bounces and, of course, the others need to hold theirs for two consecutive days or we'll have to reset the clock on them as well.  Our bounce lines are:

  • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
  • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
  • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
  • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
  • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

 

IN PROGRESS

 

 

 

 

 

 

 

 

 

 

MidTerm Tuesday – Throwing the Bums Out (hopefully)

Related imageIt's election day.

Time to erase a huge mistake that was made in 2016 or time to push America further down the path to Facism – I wonder what my fellow countrymen will choose.  If we do nothing about Global Warming for another two years – I don't think it will matter much who's in charge during America's last century, will it?  So I guess we have that to look foward too – a slow, burning extinction that erases this whole mess of species from the annals of Galactic History, just another start-up civilization that wasn't smart enough to make it.

Unfortunately, we are not likely to have a resolution today as many of the elections are so close, it will take days and maybe weeks to determine the winners.  Also, if the diffference in the House or Senate is just one or two seats, look for any close election to be challlenged.  That's the craziness that's ahead of us, plus the Fed has a statement out Thursday at 2pm and 3 Fed speakers Friday morning so we're not going to know a damned thing until next week for sure…

Meanwhile, on a bullish note, China is now saying they do want to talk trade some more – that should help a bit.  

 

 

IN PROGRESS

 

 

 

 

 

 

Meaningless Monday Market Movement – Waiting on the Election

"Nothing really matters."

That's the tag line from Queen's Bohemian Rhapsody, which is this weekend's hit movie, about a band with an outspoken gay lead singer who was a teenage Indian refugee who was granted the political aslylum that Trump would deny to others.  To this day, a guy who died of Aids has Conservative Republicans stomping their feet and clapping their hands at sporting events around the nation singing "We Will Rock You" and "We are the Champions" to this day.   Life is strange…  

Nothing matters today as the election looms large tomorrow and nothing matters tomorrow as we have a Fed Rate Decision on Tuesday so today is completely pointless so let's just see what's been going on recently that might matter:

We have the Iran Sactions kicking in but there are so many exemptions to it that it's pretty toothless at this point.  Nothetheless, it's certainly pissing Iran off and now Trump's pal Kim Jung Un is also pissed off because the US has not honored their pledge to reduce sanctions on North Korea – who did scale back their nuclearl program ages ago – so why should Iran believe a word Trump says?  US Foreign Policy plans should go further than "kick over hornet's nests."

Will US voters repudiate Trump's policies tomorrow or embrace them?  Sadly, just a day before the election – we still don't know.  Aside from the election, there are many market-moving ballot initiatives around the country.   For example, Colorado voters will decide on increasing the buffer zones around oil and gas development and could eliminate new drilling in more than half the state. Energy producers have put about $40 million into defeating the initiative - more than is spent in many Congressional races.

Electric companies in Arizona and Nevada face potential new requirements to produce more energy from renewable resources such as wind and sola and a separate measure in Nevada will ask voters to approve opening a competitive retail energy market.  In Montana, a ballot measure would require state authorities to deny a permit for any new hardrock mines that would create “perpetual pollution,” while a Washington state initiative to impose the nation’s first fee on carbon dioxide has drawn high-profile support, including from the rock band Pearl Jam…
continue reading

Thank Trump it’s Friday – President Claims Deal with China is Coming

2,763! 

We are officially back to where we were on October 12th on the S&P 500 and still below where we were on the 19th, when I wrote: "TGIF – Closing out a Weak Week in the Markets," saying:

That's right, we opened on Monday at 2,763 and closed at 2,750 on the S&P (/ES) and this morning we're at 2,782 and climbing on a supportive note out of China, whose entral bank governor and banking and securities regulators said recent volatility in Chinese stocks didn’t reflect the nation’s economic fundamentals and “stable financial system.”

That flipped the Shanghai up 2.5% into the close, reversing a sharp downturn as China released weaker (6.5%) GDP data than expected (6.7%).  Chinese exports, by the way, held steady from last quarter as they are not, so far, being affected much by Trump's tarrifs, which is actually bad because that means that there's more potential trouble for their economy ahead.

So here we are again, two weeks later, a little worse for the wear yet people, including reporters who should certainly know better, are calling me on the phone and saying "can you believe this rally?"  Well no, I really can't believe it – it seems kind of unbelievable that we rally yet again on the same "progress" in China trade that both countries trot out to boost their markets when it suits them.  

Oct 19th was options expiration day and we  opened at 2,775.66, ran up to 2,797.77 and closed at 2,767.78 so we could have another interesting day ahead of us – especially with the Non-Farm Payroll Report coming out at 8:30 to povide us with real data that might move the market.  Our last Non-Farm Payroll Report was on October 5th, when the S&P opened at 2,902.54, up a little from the previous days close  despite a big miss in payrolls but we finished that day down 7 at 2,885.57 and we WISH we were less than 120 points (5%) away from that this morning.

Even China's beleagured
continue reading

Thursday Thoughts – Holding Nasdaq 7,000 is up to Apple (AAPL)

Well, we got our weak bounces – now what?

October ended with a bang with the indexes rushing up to the weak bounce levels which, for the sake of an update from yesterday's (and last week and the week before's) predictions are:

  • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
  • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
  • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
  • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
  • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

So the only change from yesterday, despite the "massive" rally, is that we have now turned the S&P and NYSE weak bounce lines green with /ES at 2,723 (still the low end of the bounce range) and the NYSE right in the middle this morning at 12,250.  Until the Nasdaq and the Russell confirm their lines – it would be crazy to buy into this bounce and anything less than strong bounce lines is still a very dangerous market to go long into.

This is the worst part of my job because I have to be like the parents telling the kids not too eat too much
continue reading

Window-Dressing Wednesday – Painting a Prettier Picture to End the Month

And we're back!  (for now) 

Keep in mind, of course that 2,710 is only the WEAK bounce line on the S&P and we need to clear AND HOLD all the bounce lines before the market is back in a truly bullish mode.  While the 5% Rule™ protects us from jumping in and chasing false bottoms – after such a huge fall it's frustrating to sit on the sidelines while stocks recover.  

Our predicted bounce lines are:

  • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
  • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
  • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
  • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
  • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

After yesterday's strong rally, we're already back above all our -10% lines except the Russell, which actually fell from 1,750 to 1,450, which was 20% so bounces from a 300-point drop are 60 points so 1,510 (where we are now) is weak and 1,570 is strong so really, on the Russell, that 1,575 line – is the more important number to clear which means, logically, if you are going to back a bullish horse, /RTY may be the way to go.

Meanwhile, before we go reaching for the stars, we should at least see if the S&P can get over it's weak bounce line at 2,710 and the NYSE 12,150 (they are bopth around there this morning) and whether they turn black or red this morning will likely determine the direction of the market.  As noted in the title, however, it's the last day of the month and all the stops will be pulled out by the powers that be (the Banksters, not the Government) to engineer a not-so-terrible finish to the month.  

As I noted yesterday, China, Europe and the US have all taken measures to boost the markets so of course we're hitting our weak bounce lines and the strong bounce lines won't be surprising but will we hold those?  Sadly, that's a question we'll have to answer in November but, for today, expect more of the same from yesterday and a HUGE disappointment if we don't.

 

IN PROGRESS

 

 

10% Tuesday Correction – Have We Fallen Far Enough?

Wheeeee!  

There's nothing like a nice sell-off when you're ready for it.  Yesterday's dip blasted our Short-Term Portfolio over the 200% line, up $207,272 for the year and up $23,088 (23%) since our 10/18 review as we briefly flipped more bullish for the bounce but then, since the bounce didn't make it over our Strong Bounce Levels, we doubled back down on our SQQQ hedges last week and turned ourselves back to bearish – just in time for this week's catastrophe.  

The primary purpose of the Short-Term Portfolio, which started with $100,000 on Jan 2nd of this year, is to protect the Long-Term Portfolio so we're always looking for bearish hedges – no matter how well the market is doing – but we also hedge our hedges with short-term long positions, to help lower the cost of our insurance.  For example, we sent out a Top Trade Alert to our Members on Sept 6th with the followin hedging idea (we very rarely add hedges to Top Trades, so it was a big deal):

  • Sell 10 MU 2021 $42 puts for $6.40 ($6,400) 
  • Buy 100 SDS March $34 calls for $2.60 ($26,000) 
  • Sell 100 SDS March $40 calls for $1.50 ($15,000) 

That was net $4,600 on the $60,000 spread and, unfortunately, we used Micron (MU), which turned around and fell 20% since then but, fortunately, we only promised to buy it for net $35.60 and it's now $34.60 so not a panic but those put contracts are now $12 ($12,000) so a bit of a drag but the S&P Ultra-Short (SDS) March $34s are now $7.50 ($75,000) and the $40s are now $4 ($40,000) so net $35,000 on the spread less $12,000 if we buy back the puts is $23,000 which is up $18,400 (400%), which is why the Short-Term Portfolio puts up such crazy gains in a pullback.

Now I do still like MU but, as I said at the time – any stock you REALLY want to buy at the net put price will do.  Meanwhile, all SDS has to do is stay over $40 and the premium on the short calls will expire and the net of the spread will rise to $60,000 – so
continue reading