Thrilling Thursday – Back to Nasdaq 9,000

Almost there!

9,000 on the Nasdaq 100 (/NQ) is so close we can taste it.  Well, not so much taste it as short it as big levels like this are usually excellent spots for corrections.  At 8,500 we pulled back to 8,200 and our first attempt at 8,000 (only 2 months ago) was rejected for 200 points before getting back on the bull train so the odds of getting a pullback here, at 8,995 are certainly worth the risk of stopping out at 9,001 with a $120/per contrract loss while even just a 100-point drop back to 8,900 would be a gain of about $2,000 per contract.  

Finding very positive reward/risk scenarios is the key to good Futures trading – something we discusssed in yesterday's Live Trading Webinar.  Where we shorted the S&P (/ES) at 3,258 and the Dow (/YM) at 28,740 and both of those had quick stop outs at 3,260 (-$100) and 28,750 (-$50) but our long on Gasoline (/RB) was 2 contracts at $1.646 and we're already at $1.657 for a quick $462 so far (they are good to next week's webinar) and now we can add an /NQ short at 8,990 and another at 8,998 to average 8,994 with a stop at 9,001 for a $140 loss against the potential $4,000 gain at 8,900 – that's a fair way to play, right?

If we're still testing 9,000 at the open, that should be about $20.50 on the Nasdaq Ultra-Short ETF (SQQQ) and we can play for a quick pullback by simply taking the Jan $21 calls at 0.40 so let's say we risk the same $140 by taking 14 of those for $560 and stop out at 0.30 for a $140 loss but hopefully we make well over $1,000 on a nice plullback. 





Whipsaw Wednesday – Iran Attacks US – Peace Declared?

OK, now things are strange.

Iran fired missiles into Iraq last night and attacked US bases and the Dow fell 500 points and the S&P fell 60 points but they didn't kill anyone and, even stranger, Iran then indicated that that was their retaliation and they were satisfied and Trump seemed to feel that was fair as well and now the war seems to be over and the markets are right back to where we started yesterday morning.

Iran says it does not seek war after firing missiles at bases housing Americans.

Bodies lying near the site of the Ukrainian Boeing crash on the outskirts of Tehran.That's kind of crazy, but crazy is pretty normal these days so we'll just have to go with the flow and see what happens, I suppose.  In an unfortunate coincidence last night, a Boeing (BA) 737-800 (not Max) crashed shortly after taking off from Tehran, killing all 170 passengers.  Supposedly it was "technical problems" and that's got BA stock down 2% this morning – the day after it was announced that Warren Buffett was building a stake in the airline. 

Ukraine International Airlines, is partly owned through a network of offshore companies by Ihor Kolomoisky, an oligarch with close ties to President Volodymyr Zelensky, so of course there are rumors that this all ties back to Trump sending a warning to Zelensky to keep his mouth shut but hat would seem a bit much, even for Trump, though it is a crazy coincidence that outside inspectors won't be welcome due to the weekend war (that seems to be over) so "technical issues" it is and we'll all move on and accept it, right? 

All this peace breaking out has sent Oil (/RB) plunging back down to $62 from $65.65 yesterday morning and Gasoline (/RB) fell from $1.80 back to $1.70 as the President declares all is well and has, so far, failed to mention the plane crash – so it will be interesting to hear what he has to say this morning.

The markets don't need to wait, apparently, as it looks like we'll be up at
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Philstockworld December Portfolio Review (Members Only)

Image result for one million dollars animated gif$153,498!  

Not much action (up $1,445) since our last review on the Short-Term Portfolio and there is still no Long-Term Portfolio at the moment so the march to $1M is going very slowly at the moment.  Still after being up 53.5% in 3 months – our primary goal shifted towards preserving our gains over the holidays and now we're just waiting to see if the markets hold up into earings and we can start buying again.  

With the Iran situation and Trump's Impeachment and do we really have a China deal – it's hard to commit more cash into these overpriced stocks but we'll have to if they don't show any signs of slowing by the end of this month or we may miss the next ridiculous leg of this rally. 

Short-Term Portfolio Review (STP):   $153,498 (53.5%) is flat to the last review as our hedges killed us and so did TSLA.  Still, I'd rather lock in a $50,000 gain over 3 months than risk giving it back so we got cautious after making ridiculous 2-month gains.  Next month, we can start an LTP by simply renaming this one and removing the short-term plays and the hedges and putting them in a new STP – see how easy that was – we already started our LTP – and it's our STP!  

  • Short puts – All on track with $8,710 of additional potential.  
  • SQQQ – The December spread was a bet, not a hedge and offset by the CSCO puts – though it's a long time before we get this loss back.  Just dead money here.  
  • BKNG – Very nice as we bought back the short calls and now we can sell them again.  Unfortunately, we shorted BKNG over China Trade issues affecting travel (it did) but that's over now and they really aren't that expensive at $2,000.  Also, I no longer feel strongly about the bear put spread so let's just cash this one in – it's been very good to us.

CMG – Meh

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Untroubled Tuesday – Google and AAPL at Record Highs Despite War Footing

What war?  

Since when does killing another country's General constitute an act of war?  While no one is shedding any tears for General Suleimani, he was a General in a foriegn nation and we did assassinate him and Iran has said they WILL retaliate – which could mean anything but you wouldn't know it from yesterday's markets – which made a quick recovery.

The S&P 500 is back at 3,245 and only about 15 points off the all-time high while Apple (AAPL) is testing the $300 line and Google (GOOG) is testing the $1,400 line – both at all-time highs as well.  Google is being investigated for Anti-Trust Violations but so what, Trump is being investigated for Treason and that doesn't seem to stop him.  Another unstoppable stock under investigation (Privacy Violations) is Facebook (FB) who are also just under their all-time high so of course the Nasdaq is doing well – closing in on the 9,600 mark that we said would be the top of the rally back in April, when we reviewed the top components, but 9,000 is going to be a real test for the Nadaq 100 as even the Nasdaq Composite has paused under 9,100 with the 200-day moving average now 10% below that mark.  

Notice the cute indicator that the Nasdaq divided by the S&P is now 2.79 and it never quite hits 2.80 and lat time we were this high was back on 2018, before an almost 2,000-point (20%) correction.  So we still like the Nasdaq Ultra-Short ETF (SQQQ) as a hege and SQQQ is way down at $21.45 – down from $80 a year ago.  It's a good way to hedge the war and to hedge earnings season.  

When we set up an index hedge, we like to offset the cost by selling puts against a stock we'd REALLY like to own if it's assigned to us and, back on Novemeber 15th, we put out a Top Trade Alert on China Telcom (CHL) at $39, thinking it would do better when the Trade War ended and it did but it's still only at $41.37 and you can still sell the June $42.50 puts for $2.70, which nets
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Monday Mayhem – War! What is it Good For? Defense Contractors?

Whee, what a ride!

A very profitable one too if you read our Thursday morning PSW Report and followed our note to short the S&P (/ES) at 3,250 as those Futures contracts pay $50 per point, per contract so a very nice $2,000 per contract gain on the 2nd leg down – after the first set hit our initial $500 goal at the open

Of course, that's nothing compared to our long on Oil (/CL) Futures at $61 as oil topped out this morning at $64.50, paying $3,500 per contract or, if you were more sensible, taking gains of $3,000 off the table into the weekend was PLENTY to make in 24 hours!










2020 Vision – Looking at the Year Ahead in the Markets

This is the weekend post.

We have successfully concluded our trip to Bangkok with a signing ceromony this afternoon (3am, your time) that has put Hemp Boca, New Age and PSW Investments to partner with Bienestar to bring CBD products to Thailand for the first time.  It's a massive opportunity and we're all very exhausted and my plane leaves very soon so I'm going to be brief here and we'll add to this post over the weekend but, for now, it will have to serve as Thursday and Friday's Report – as I will be spending the next 29 hours flying home from the other side of the World

As you can see from the chart above, the S&P 500 (/ES) has blasted back to 3,250 since Tuesday's close and I'd sure be shorting that as there's no news supporting it and the volume is ridiculously low so it's very simple to short that line with tight stops above and see if it gets a bit of a rejection – probably back to 3,240, at least, which would be good for a quick $500 profit to start your year off right.

On Tuessay, I said I liked Oil (/CL) long at $61 with the unrest in Iraq and Iran and gosh, that was a very quick $750 (at $61.75) on two runs up and now again we have a chance to go long at that line.  We also had a USO options spread for those of you who are Futures-challenged but we didn't get the fill we wanted (as the dip didn't last long enough) – so no trade there though you could just pick up the long USO Jan $12.50 calls for 0.40 and wait to sell the Jan $13s for 0.20 and accomplish a very similar spread.  

Natural Gas (/NG) is also a fun long now at $2.16 because, though it isn't cold in the US – it's very cold in other parts of the World and traders have not yet taken into account the globalization of the Natural Gas supplies. 

Oops, that's the opening bell so I'd better head to the airport…

Have a great weekend, 

- Phil


Terminal Tuesday – Ending the Decade With a Bang

Protesters and militia fighters gather outside the U.S. Embassy in Baghdad.Happy New Year!

Unfortunately, we may be at war again as President Trump blamed Iran after supporters of an Iran-backed militia tried to storm the U.S. Embassy in the Iraqi capital Tuesday, in an intensifying backlash against the U.S. after it conducted deadly strikes on the group.  Video and photos from the scene showed the blast walls surrounding the compound were on fire and one man took a hammer to the window of a booth used by embassy guards. Another booth was torched. The protesters chanted “America out, out! Baghdad remains free!

The U.S. conducted strikes on Kataib Hezbollah near the Iraq-Syria border on Sunday, killing 27 people, according to the group and security officials.  Supporters of the group gathered to mourn and denounce the deaths on Tuesday and later marched toward one of the bridges leading to the so-called Green Zone, the heavily fortified area where the U.S. Embassy is located.

The attack, the most forceful move yet by the U.S. to target Iran-backed militias, represents a fresh escalation of tensions between the U.S. and Iran and undermines relations between Washington and Baghdad.  It drew condemnation from across the political spectrum including Iraq’s most influential Shiite cleric Ayatollah Ali al-Sistani, and revived calls for the departure of American forces, which returned to Iraq in 2014 to help fight Islamic State.

Meanwhile, the Iraqi government said Monday the U.S. strikes would force Baghdad to review its relationship with the U.S.-led coalition, including cooperation on security.  Kataib Hezbollah, a Shiite paramilitary group, on Monday threatened retaliation for the “aggression of evil American ravens.” Iran denied involvement.

It has long been speculated that Trump would start a war ahead of the election and this one has the dual purpose of also rescuing oil prices, which had been struggling to hold $60 and damaging the profits of Trump's Saudi backers as well as, of course, Vladimir Putin.  WTIC (/CL) is at $61 at the moment and makes a fun, speculative long play or we could play the Oil ETF (USO) at $12.75 to pop up on trade tensions as follows:

  • Buy 50 USO Jan $12 calls for 0.55 ($2,750) 

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Monday Market Musings – Winding Down 2019

Yes, I'm still in Thailand.

In fact, this is going to be a very short post as our 8am meeting went until 2pm and now we go back at 5pm, which is 5am for you guys so I'll be out (most likely) at the open.  It's all very exciting stuff but we're working on an entire country so many, many, many meetings every day – even as the holiday approaches.   

Anyway, I hope your holidays are going well.  It doesn't seem like there's too mch market movement as we head into the open and, even if there were, the volume is a total joke and shouldn't be taken seriously, regardless.  The problem with Christmas/New Years is that even the regular reporters are on vacation so, even if something were happening – would we know about it?

Not very much seems to be happening in the rest of the world as most people have better things to do than rock the proverbial boat this time of year.  Even in Seeking Alpha's News Feed – there are less than a dozen items since Friday's market close as of the first (and only at 4am, EST) item of this morning.  That means it has been a good week to be away (so far) and tomorrow is a short session and Wednesday the markets are closed.  

The Dollar remains weak and that has been market supportive but 96.50 should be bouncy back to 97 and that's going to put some downside pressure on things today and tomorrow – so be careful watching that.  Otherwise – very, very boring and hopefully it will stay that way through the week.  

You would think there is not much data in a holiday week like this but there is:   We have Retail Inventories, Home Sales and the Dallas Fed this morning, Case-Shiller, Housing Prices, Chicago PMI and Consumer Confidence tomorrow, PMI and Fed Minutes on Thursday and then Motor Vehicle Sales, ISM and Construction Spending on Friday.  Even with nothing on Wednesday – that's a full week of data. 

There are no major earnings scheduled this week but we get back into the swing of things next week and here's a nice look at the
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The Post-Christmas Post

Image result for thailand you are here mapGreetings from Thailand! 

I'm on the other side of the World working to finalize a deal for PSW Investments and two of our Investment Projects:  Hemp Boca (a CBD company) and New Age (manufacturer of Jade House Genetics THC products) to help create a Hemp and Cannabis Farming Industry in Thailand.  It's a huge project and I just got here this morning, which was last night for most of you and now it's 8am, EST and 8pm in Thailand and I already over-napped from trying to be up at 7.

Also, I have to be up at 3am to catch a 5am flight north from Bangkok up to farm country and that's only 7 hours from now and then I have 2 very full days of meetings so I'm going to be realistic and say that this is the post that is going to cover both Thursday and Friday's markets and I will try to catch up in the Live Member Chat Room but, for the next week – your "live" and my "live" are happening at very different times of day – so bear with me…

Not much has happened since Christmas Eve and the time between Christmas and New Year's is notoriously the slowest market week of the year.  Only 20M shares traded on the S&P Index (SPY) on Tuesday, the lowest level of the year, so we can't draw any conclusions from the trading action, which has generally been flat since Dec 20th at 3,230 on the SPX (/ES Futures).

Before that we were flat since the 16th and, before that, flat since the 9th so it's been 3 flat weeks in a row on the S&P 500 yet we've gained 100 points (3%) thanks to one big surge on the 12th and another one on the 20th.  Other than that – flat!  That's an entire month's "rally" that actually has very little support should the markets decide to pull back once the volume returns in a couple of weeks. 

So we're still approaching the market with a bit of caution and Asia was pretty flat today, waiting for the US to open and
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Secret Santa’s Inflation Hedges for 2020

Merry Christmas!

I hope you get everything you want this holiday season and, most importantly, I hope you have time to spend with your family.  I love waiting for my kids to wake up on Christmas morning to come out of their rooms so I can videotape (gosh I’m old, there’s no tape anymore) them in those first moments of Christmas morning – how can I not be of good cheer anticipating that?

I have something I can give you for the holidays as well.  Not peace on Earth but perhaps peace of mind heading into the New Year – a way to help insure some future prosperity with a few inflation-fighting stock picks that can brighten up your portfolio, which also can be used to help balance your home's budget against unexpected cost increases.  

We haven't had much inflation recently but the Fed is probably done easing and, if the economy is doing anything to justify the stock market's enthusiasm, then pricing pressure may be right around the corner as well.  If not, we can still pick solid stocks with sensible option spreads that will give us both leverage and protection that can perform well – even if the underlying position isn't boosted by inflation.

This isn’t an options seminar or one about risk or leverage – these are just a few practical ideas you can use to hedge against inflation as it may affect your everyday life using basic industry ETFs and some simple hedging strategies to give you an opportunity to stay ahead of the markets if they keep going higher. 

As you can see from the chart above, we haven't actually had much inflation in the last few years, which is why we haven't felt the need for Secret Santa Hedges since 2017 but, because we practice our strategy of "Being the House – NOT the Gambler", we don't ASSUME that next year will be like the last so, going forward, I like the following hedges:

Idea #1 – General Inflation Hedging with Gold

The Dollar
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