Weekly Update Ended Dec 1, 2017
Hard to believe but we are 26 days and hours away from 2018. This year has flown by faster than any year before and we are now into the final push for 2017. Fake news stories are all over the place and none more so than those in the financial media space. Given the facts that markets are at all-time highs the world over, even a hint of anything negative has investors scurrying for cover.
Has anyone noticed the fact that the scurrying is mostly done by investors that trade on our exchanges and then maybe, the effect is felt in other markets? So, what does that mean? Two things, either we have the world's most naive and gullible investors who fall for every shite story the fake news artists put out more than likely in cahoots of the darkside which by now is more than likely besides itself with frustration. The other is the fact that our markets are led around and at the mercy of the algos which see the negative headlines and then just react. There is no rational thought process, just the focus on the negative event/headline/story.
Call me a conspiracy theorist if you will but I am increasingly convinced that most of the fake news artists/journalists/websites have hidden agendas and/or have been paid off by the darksiders to get the markets lower. Unfortunately for investors (LT or ST or any other kind in between), the beatdowns are so fierce albeit senseless, the damage done in one negative session can take several weeks to recover from. However, that is the playing field we have earmarked for ourselves to making a living in, so its part and parcel of what we do every single day.
One has two choices, maintain rolling weekly hedges and hope for a payoff when the fake news artists float a whopper out there or maintain high levels of cash. None are optimal strategies given the fact that using the former likely means 90% of the time those hedges will expire worthless (assuming puts) and maintaining high levels of cash has an opportunity cost (cash sitting idle) that has to be overcome. Almost like being asked to pick one's poison.
Cest la vie, mes amis.
Last week, the indices finished at yet another all-time high and so did our main account while the mini-account is also up nicely in the two months or so since I funded it.
For the week, the FAANG names took a beatdown and the indices closed at ATHs except for the Nazz which was down a bit:
NASDAQ down 0.6%.
DOW up 2.9% (fins rallied like scalded apes last week)
S&P up 1.5%
Zuck down 4%
AAPL down 2%
Bezos down 2%
NFLX down 5%
GOOGL down 3%
Among the BATS names:
Baidu was up 6%
Jack was down 8%
TCEHY gave back 9%
and SINA was hammered down by 12%
As one can imagine, the jaysomaney.com (main) account was hit hard given the double whammy of being an all-options trading vehicle and then tech-only and is now up "just" 209% year-to-date versus 261% from a week ago and 244% two weeks ago. The liquidation value as of this past Friday is now at $815,240 (plus the $4,662 in the mini-account) which gives us $819,902 in net liquidation with $639,705 of that in cash (includes cash in the mini-account), down from the prior week as I took advantage of the fake news specials.
The mini account is once again down 7% in the two months or so since I funded it with an initial starting amount of $5,000 (taken from the main account) and of the $4,662 in liquidation value in that account, $4,040 of that is in cash. Plenty of cash in both accounts to end the year with a bang provided the markets trade on fundamentals and not on fake news. Unfortunately, Chuckles has been staggering like a drunken sailor on the fake news which is now an almost daily phenomenon and on days when the fake news specialists/artists are taking a breather, Chuckles seems to barely make any upwards progress.
This next part is getting repetitive, I know, but it helps answer those email queries which is why I leave it in.
Cash in the accounts is admittedly high and I am still looking for optimal deployment of that cash. Given the fact that not only are our indices at all-time highs but so are global indices at all-time highs, a bit of caution might not be a bad thing at all. However, having said that, there are still a few stocks that are still cheap despite their absolute performance.
The moment I find an opportunity that I like, I shall do so. If not, then not, I guess. I understand that my cash levels are very high and the account would be worth a lot more (2x, 3x, who knows) if I would be all in. However, I am comfortable with the amount of cash we have right now in the account. At some point, I will find a home for that money. In case I don't, it's not a big deal to me.
The markets backed off all-time highs last week and I expect that they will continue to stutter step higher going forward. My goal is to finish the year with a sharp move higher as well as far as our portfolio is concerned.
For those of you that would prefer to spend the money on hedges, I have my usual suggestion below and you should feel free to buy that protection on the downside if you feel the need.
Ultimately the choice is always yours, long, short or straddling the fence.
Please note that in the fund I maintain hedges and spend about 1% per week on those hedges. I am far more aggressive in the fund and the returns there are able to bear the costs of the hedges that I maintain. Incidentally, 90% of those hedges expire worthless.
As always, please check your inboxes for a list or trades that I made last week.
Here we go, as always, with the usual:
Please keep your positions in size with your account size (value). Most importantly please remember that I am running a marathon here and not a sprint. I am in no hurry whatsoever for any position and thus will not enter a position unless I feel the risk/reward is stacked in my favor. Yes, I will occasionally have positions work against me despite the risk/reward prior to the trade but if I was batting a thousand, none of us would be in our little room. We would all be on our own private islands. Even more important for all of us to remember that trades and opportunities will come no matter what the markets are doing.
Please, please don't roll the dice and don't bet on anyone single position without keeping the size relative to your overall account. I promise you even 1 or 2 call options at a time add up to spectacular returns over time.
There is nothing worse than seeing someone (new or experienced) blow up his/her own account by going "all in", long or short. Please avoid those sort of "investments" As my dad used to tell me all the time, "Rome wasn't built in a day".
Remember together we will all get there, wherever that may be for each of us individually.
Not a sprint but a marathon. (This is the most important takeaway for all of us) Will always hold true as far as I am concerned no matter what anyone else thinks on the outside.
THIS NEXT SECTION IS FOR THOSE OF YOU WHO WISH TO HEDGE YOUR PORTFOLIO-- I WILL MORE THAN LIKELY ALSO LEAVE THIS SECTION IN PERMANENTLY.
Use the same hedges as last week as these hedges should provide you the most bang for your money all things being equal. Buy any one or buy them all depending on the size of your account and the extent you wish to hedge your account(s).
Go Long SQQQ or buy SQQQ Calls (SQQQ is proshares ultrashort QQQ-leveraged 3x)proshares ultrashort QQQ-leveraged 3x)
Buy QQQ Puts
Buy Puts on any of the FANG names (most volatile) or short the names individually if you prefer
Go long SDS or buy SDS Calls (SDS are the proshares ultrashort S&P500--leveraged 3xproshares ultrashort S&P500--leveraged 3x
PLEASE NOTE THESE HEDGES ARE JUST MY SUGGESTIONS. AS SUBSCRIBERS VERY WELL KNOW, FOR ME, CASH IS (and has always been) THE BEST HEDGE. IF NOT CASH, IT'S EQUITY SINCE THAT CAN BE CONVERTED TO CASH IN SECONDS.
Remember, it is you who hits the buy button or sell button each and every trade and there are no exceptions there at all.
Thankfully on the Fed head front, we don't have any confirmed speeches but I am sure the various heads will find a way to make headlines even when not required.
Economic Data (*all times ET)
Factory Orders (10:00): -0.4% expected
Durable Goods Orders (10:00)
Durables Ex Transportation (10:00)
Cap Goods Orders Nondef Ex Air (10:00)
Cap Goods Ship Nondef Ex Air (10:00)
Trade Balance (8:30) -$45.4b expected
Markit US Services PMI (9:45): 55.3 expected
Markit US Composite PMI (9:45)
ISM Non-Manf. Composite (10:00):59.0 expected
MBA Mortgage Applications (7:00)
ADP Employment Change (8:15): 190k expected
Initial Jobless Claims (8:30)
Continuing Claims (8:30)
Bloomberg Consumer Comfort (9:45)
Change in Nonfarm Payrolls (8:30): 210k expected
Change in Manufact. Payrolls (8:30): 15k expected
Unemployment Rate (8:30): 4.1% expected
Wholesale Inventories MoM (10:00)
U. of Mich. Sentiment (10:00): 98.7 expected
UK Markit/CIPS UK Construction PMI (4:30)
Japan Nikkei Japan PMI Services (19:30)
Japan Nikkei Japan PMI Composite (19:30)
China Caixin China PMI Composite (20:45)
China Caixin China PMI Services (20:45)
Germany Markit Germany Services PMI (3:55)
Germany Markit/BME Germany Composite PMI (3:55)
Eurozone Agg Markit Eurozone Services PMI (4:00)
Eurozone Agg Markit Eurozone Composite PMI (4:00)
UK Markit/CIPS UK Services PMI (4:30)
UK Markit/CIPS UK Composite PMI (4:30)
Eurozone Agg GDP SA QoQ (5:00)
Eurozone Agg GDP SA YoY (5:00)
Germany Factory Orders MoM (2:00)
Germany Factory Orders WDA YoY (2:00)
Germany Industrial Production SA MoM (2:00)
Germany Industrial Production WDA YoY (2:00)
UK Halifax House Prices MoM (3:30)
UK Halifax House Price 3Mths/Year (3:30)
Japan GDP SA QoQ (18:50)
Japan GDP Annualized SA QoQ (18:50)
Japan GDP Deflator YoY (18:50)
UK Industrial Production MoM (4:30)
UK Industrial Production YoY (4:30)
UK Manufacturing Production MoM (4:30)
UK Visible Trade Balance GBP/Mn (4:30)
UK Trade Balance Non EU GBP/Mn (4:30)
UK Trade Balance (4:30)
China CPI YoY (20:30): 1.8% expected
China PPI YoY (20:30): 5.8% expected
Earnings season is almost over but we still have a few interesting techland names reporting this week.
- Mon 12/4
- Open: GW Pharma (GWPH)
- Close: Ascena Retail Group (ASNA), Coupa Software (COUP)
- Tues 12/5
- Open: Bank of Montreal (BMO), AutoZone (AZO), Toll Brothers (TOL), HD Supply Holdings (HDS), Lands End (LE), J. Jill (Jill)
- Close: Restoration Hardware (RH), Dave & Busters (PLAY), Oxford Industries (OXM), Veeva Systems (VEEV)
- Wed 12/6
- Open: American Eagle (AEO), Brown-Forman (BF), Fred;s (FRED), H & R Block (HRB)
- Close: Broadcom (AVGO), Grief (GEF), Keysight (KEYS), lululemon athletica (LULU)
- Thurs 12/7
- Open: Dollar General (DG), JinkoSolar Holding (JKS) Ciena (CIEN) GMS (GMS)
- Close: United Natural Foods (UNFI), Science Applications (SAIC), Cooper (COO), Finisar (FNSR), American Outdoor Brands (AOBC), Cloudera (CLDR)
- Fri 12/8
COUP, VEEV, AVGO, JKS, CIEN, CLDR
Until next week, may the trading Goddesses and Gods smile on all our trades, investments and dice rolls.