For the second week in a row, I am hard pressed to
find a balance between risk and reward. The TREND
looked like this:
Tuesday- a bull market trend without a confirmation.
Friday- a TREND reversal from bull to BEAR.
There were just two 52 week new HIGHS in my universe:
AMZN and APPL. This is the smallest number this year.
Both stocks closed significantly down from last weeks close.
I can’t believe how dry the season is for special situations.
I looked at Tesla (TSLA) as Elon Musk tried to figure out if
he was Edison or Snoop Dogg. Smoking dope is hardly the
way to build your brand. Premiums are outrageous for this
stock. For a company that goes through money faster than
a drunk hot pole dancer on a crack binge, Tesla’s valuation
is based on the shaky ground of Mr. Musk perceived genius.
Looked at Apple, no dice. Hong Kong down 9%, looked at Ali
Baba, Yinn and Yang. All sides of the trade were too expensive
for my blood. Looked at McDonald’s, nothing to write home about.
The only game I am showing is my current position in SPXU
Sept 21 35 CALLS at 75 cents. Could not even make a case for
the 35 PUTS. sleep well. kodiakpaul63
Next week looks so crazy. It’s all Trump and is he going to pull
the trigger on additional tariffs? Probably.
Sometimes the best move is no move and I seem to be stuck in
a market without any clear direction.
I am wishing everyone a happy, safe and sane Labor Day.
Time to rest and be thankful that we live at the
intersection of democracy and capitalism.
The TREND for August was 78% BULLISH with a 56%
confirmation rate. The BULL has endured for more than
10 years, the longest in US history. This is a problem for me.
I see devastating problems on the horizon which will be the
opportunity of a life time. BUT, I can’t manufacture a reasonable
risk-reward model at these valuations. ALL of the following
have hit all time highs: AMZN@2,022.35, AAPL@228.87,
DDM@48.52, MSFT@112.78, SPY @ 291.74, UPRO @ 57.56,
QQQ@ 187.52 and UWM@89.29.
I CANNOT buy puts or sell short on these high flyers. It is
what it is and you always get yourself in trouble when you try
to manufacture something that isn’t there. Sometimes the best
play is no play and maybe that is the best lesson I learned in the
last 44 years?
On the plus side, by selling into rallies, I have significantly increased
my WINS for the year. Maybe, that what patient-impatient thinking
is all about.
Enjoy your family. Sleep well. kodiakpaul63
This is a flash buy of an equal amount of September 21
SPXU CALLS at .40. Our new cost basis is .75 (1.10+.40/2).
This is a rescue mission. kodiakpaul63
This is a flash message to sell the August 31 120 CALLS at
.92. While a winner, I was looking for a lot more in the
way of profits. I saw $2.00 0n a 60 cent investment but just
managed to win 32 cents. kodiakpaul 63
The trading trend was extremely volatile last week.
We had a trend reversal (Bull to Bear), two days of
neutral signals and another trend reversal (Bear to Bull).
You MUST sell into any and all rallies.
Congratulations to Jim Cramer for his life long record about
being wrong about GLD. Cramer is stuck in a time warp of
1950’s thinking and it shows. Technical and fundamental
analysis died in 1981. Too bad Wall Street never got the message.
SELL SIGNAL: GDX @ 18.71. The gold miners finally caught up
with the downward slide of gold bullion. GDX is strictly a
short sale and puts rule the day, week, and month. What was
staggering was the one day total of 125,000,000 shares traded
in GDX. It was all machine behavior without much human influence.
My Report Card
DGLD + 4.20(W) GLD + 2.79
UGLD + 1.26
The 1.26 gain from the short sale is the biggest winner by far.
OPTIONS: SPECIAL SITUATIONS
I was very disappointed that I couldn’t find the right risk vs
reward model for: BRYRY(Monsanto), Tesla or SOXL. I did
however find the following options very interesting:
CVX August 31 120CALLS@.61 117.80 close
SPXU Sept 21 35 CALLS @ 1.10 34.64 close
GDX Aug 31 18.50 PUTS@.35 18.71 close
I am sure that is must cross the mind of investors about why
we should give a crap about what happens in Turkey? The
risk is world wide CONTAGION as banks face the loss of BILLIONS
of dollars. They lent money to someone without the ability to
repay. It was like lending a million bucks to a guy who owns
and sells lemon aide from his front lawn. The loans have
are SUPER leveraged and the downward spiral of the Turkish
Lira spells big trouble for the world. The same thing happened
in the mid 1990s when Thailand created the world wide crash
known as the Asian Flu. It is a thousand times worse now because
the evolution in computers and the over leverage of debt.
In closing, I am thinking about a long series about options.
By far, they are the most misunderstood, misused and abused
class of investments. Next week, Grinders and the Great Gold
Swindle. Maybe. Sleep very well and dream big. kodiakpaul63.
PS to owners of GE: ha,ha,ha,ha. Suckers.
The mystery of Monsanto (MON) is solved. It doesn’t
exists any more. Two years ago, Bayer (BAYRY) bought
MON in an all cash deal. Three years ago, Bayer also bought
Merck (MRK). Currently, BAYRY is trading down, -2.91 @
23.78 a share and making new 52 week lows (D). NO OPTION
DATA AVAILABLE. I sense an opportunity here.
As for JNJ, they are the ONLY part of PILL that is NOT a BUY.
they are under legal pressure as well concerning talcum powder.
Look forward to what happens next? kodiakpaul63
This is the 1,620 consecutive week that I have harvested
data about a universe of stocks. WHY??? Three reasons
immediately pop into my head. First, the more you know,
the more you grow. Second, the more data and the longer
you collect it, the more valid my conclusions. It is great
science. Finally, no two weeks were the same. I am never
bored. For example, this weeks surprise was Monsanto (MON).
After a devastating legal loss, I thought there might be a cool
options hedge. To my surprise, here is what I found: MON,
0.00 -127.95. Never, ever saw that before. No MON stock,
no options. I wonder what is next for MON?????
5%, 10 year T Bonds? Jamie D., the big cheese at Citibank (C)
thinks so. If true, this is the kiss of death for the ten year BULL
market. You want more pee in your pants data? Choke on this:
a current CPI of +2.9%, income gain of +.01%, and a deficit financed
GDP of 4.1%. Bad for the BULLS, great for the BEARS. A winning
opportunity of a lifetime for inverse ETF thinkers.
There was a BUY signal for Disney (DIS) at 112.68. After pushing to
a new high of 117.90 (U), DIS faltered and fell -5.22. I looked at a
hedge of August 31 CALLS and PUTS, but for whatever reason
backed off. Check it out if you are interested?
FB; GAME, SET AND MATCH
BUY DATE PRICE SELL DATE
FB8/31 160 PUT 7/28 1.35 3.00 W 7/30
FB 8/31 190CALL 7/28 1.68 2.15 W 8/06
3.03 5.15 +2.12 W or +70%
This was a GOOD but not GREAT trade. FAST MONEY (my
favorite kind). 100% RIGHT on both sides of the hedge.
Left some money on the table for the 190 CALLS. OK with
me. Most humans can’t do this.
A NEW IDEA: BIG PHARMA
I couldn’t help to note in my universe the re-ignition of Pfizer
(PFE). It got me thinking about how the system of big pharma
was trading. Mostly, great. I was stunned not the find an inverse
sphere of influence. I have always liked drug makers because they
let you play offense and defense at the same time.
PILL (3X) Bull at 34.79 with a 52 week high of 35.51(U). Next I
checked the components (parts) under “holdings.”
Components Symbol Price 52 Week High(U)
Gilead Science GILD 76.78 89.54
Amgen AMGN 169.50 172.50
Lilly LLY 102 103.19
Merck MRK 66.07 66.99
Pfizer PFE 40.87 41.92
Johnson/Johnson JNJ 130.15 148.32*
Abbott Labs ABT 64.03 65.90
Endo International ENDO 15.65 17.35
CONCLUSION: Since all the parts are interconnected, I always
look for the cheapest part: ENDO. Big pharma is kind of
spendy so I like call options for all the parts. Sell calls for
income. Sell calls for income. Sleep well and dream big.
This is a flash message to SELL the FB August 31 190 CALLS
@$2.15 a contract. Game, set and match. The FB opportunity
is closed. kodiakpaul63
GOLD, PART TWO
In my last blog, we looked at gold bullion backed, matched
ETFs. Today, we look at the gold miner’s. The relationship
between physical gold prices and the value of gold miners
is LESS than perfect. The correlation is usually around 80%.
While they don’t trade on a dollar for dollar, they do travel
in the SAME DIRECTION. Here are the prices for a small
sampling of gold miners:
The GDX, NUGT and DUST ETFs are NOT in play yet.
There are ZERO BUYS in the gold miner universe.
My picks are the short sale of the following: IAU, ABX,
ASA, and UGLD. UGLD, a short sell recommendation,
is up +7.5% in just 11 trading days. SHORTING is very
easy with just the click of a mouse.
GOLD AS INSURANCE
In fact, it is true that gold IS a hedge against an uncertain
future. God forbid a crisis in the Straights of Hormuz, a
political assassination, or a major terrorists attack. In a
volatile world, the only real insurance is gold. My vote is
to own PHYSICAL gold, bought over a long period of time.
Now, the price is LOW and a excellent time to BUY physical
gold. I favor gold coins and gold bars. Avoid collectible coins
like the clap. Two common sense rules: FIGHT for the LOWEST
sales charge (commission) and NEVER store your physical gold
under the mattress. The smaller the sales charge, the better the
bargain. You don’t want some junkie thief trading your $3,000
worth of gold for a hundred bucks of crack. Sleep well. kodiakpaul63
The TREND- the TREND continues to be VERY BULLISH.
You should be SELLING and a very selective BUYER.
SPECIAL SITUATIONS: BUY SIGNAL. DGLD is a buy at
$54.75. You should be long in a margin account and buy
SPECIAL SITUATIONS: SELL SIGNALS. There were two SELL
signals: GLD@ 114.92 and Ford (F) @ 10.04. F is the first
corporate victim of Trump’s Tariff War. They won’t be
the last. Both F and GLD are short sale positions and PUTS
are the order of the day.
THE MODERN GOLD TRADING SYSTEM
Last week, Cramer was on record as a BUYER of GLD based
on his charts. Going long on anything making new 52 week
lows is nothing short of financial suicide. In his entire
life time, Cramer has NEVER been right about GLD. And
history will keep that record intact. Time will show exactly
how FUBAR Cramer is when it comes to GLD!
The modern gold trading system is a massive electronic
network of INTERCONNECTED parts. There are two electronic
spheres in matched ETFs: LONG and SHORT(INVERSE). A
change in any ONE part of the system will change the value of
all the other parts in both sides of the system. IF GOLD FUTURES
GO UP, THE LONG SIDE PARTS GO UP AND THE SHORT SIDE
PARTS GO DOWN. IF THE GOLD FUTURES GO DOWN, THE LONG
SIDE GOES DOWN AND THE SHORT (INVERSE) SIDE GOES UP.
THE MOVEMENT FOR BOTH SPHERES BECOMES 100% PREDICTABLE.
GOLD PRICES: 2018 -92.10 (LOSS) OR -7/1%
GLD (D) @ 114.42
IAU (D) @ 11.59
UGL @ 33.93D GLL @ 81.55U
DGP @ 20.96D *DZZ @ 6.93U
UGLD@ 8.32D DGLD@ 55.44
I always believe in BANG for the BUCK AKA price leverage.
You can BUY 12.8 shares of DZZ for every ONE share of GLL.
OR, you can BUY 8.8 shares of DZZ for every ONE share of DGLD.
DZZ is in my opinion “thinly traded” so a word to the wise
is don’t bite off more than you can chew. DZZ makes absolute sense
in a MARGIN ACCOUNT. Next week, which parts of the LONG side
to SHORT and how to buy GOLD INSURANCE against the unthinkable.
Sleep well. kodiakpaul63
THIS IS A FLASH MESSAGE TO CLOSE THE OPTION POSITION
FOR THE XOP AUGUST 3 42 CALLS AT $1.30 A CONTRACT