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And It’s Still Not Enough

We have a spending problem, not a taxing problem…

The lede:    The federal government collected record total tax revenues of $443,715,000,000 in the first two months of fiscal 2018 (Oct. 1, 2017 through the end of November), according to the Monthly Treasury Statement.  Despite these record tax revenues, the federal government still ran a deficit of $201,761,000,000 for those same two months.

That is because the government spent $645,476,000,000 in October and November.

The $443,715,000,000 that the federal government collected in taxes in the first two months of this fiscal year was $12,873,120,000 more in constant 2018 dollars than it collected in the first two months of fiscal 2017 and $11,352,180,000 more than it collected in the first two months of fiscal 2016.


Read the whole thing:

Retail Sales Surge

The lede from CNBC:
  • U.S. retail sales increased more than expected in November.
  • The holiday shopping season got off to a brisk start, pointing to sustained strength in the economy.
  • The Commerce Department said on Thursday that retail sales rose 0.8 percent last month.
Initial jobless claims down 11K to 225,000, retail sales up 0.8%

Initial jobless claims down 11K to 225,000, retail sales up 0.8%   1 Hour Ago | 01:42

U.S. retail sales increased more than expected in November as the holiday shopping season got off to a brisk start, pointing to sustained strength in the economy.

The Commerce Department said on Thursday that retail sales rose 0.8 percent last month. Data for October was revised to show sales gaining 0.5 percent instead of the previously reported 0.2 percent rise.

Economists polled by Reuters had forecast retail sales increasing 0.3 percent in November.

No Surprise

“As expected, the Fed opted to raise rates amid a recent slew of more positive data suggesting a continued ‘solid’ pace of growth,” said Lindsey Piegza, chief economist with Stifel Economics. “Going forward, however, with inflation still low, additional rate hikes in 2018 may prove fewer than expected.”

More color from MT Newswire:

The main US markets were mostly stronger, with a fifth day of gains sending the Dow Jones Industrial Average to another record high even as the Standard & Poor’s 500 turned negative late in the session.

Stocks spent most of the day in the green after the Federal Reserve raised rates as expected and affirmed the view for three more hikes in 2018. Optimism was also fueled by reports that Republican lawmakers had come to a consensus over tax reform, which would see the corporate rate lowered to 21%.

Still, an extension of the day’s losses in financials weighed on the S&P 500, with the sector falling 1.3% amid skepticism about whether the Fed’s views on rate increases will come to pass next year. That’s after core consumer price inflation, which strips out food and energy, rose by just 0.1% in November, below expectations for a gain of 0.2% and less the 0.2% gain seen in October, data showed on Wednesday.

The Most Hated Rally?


Not really. 

Hat tip Dana Lyons. 

We Expect More Upside For AT&T


Following AT&T’s powerful rally off the November lows, which lifted shares over 15%, a pullback from heavy resistance is expected.  The stock is bumping up against the $38.00 area, a supply zone that includes a declining 200 day moving average as well as an extremely damaging breakdown gap.  We have sold some of our T position this morning near this area($38.04)and will be re purchasing on weakness.  In the long run we remain quite bullish on AT&T. 

Here’s an update on the recent option activity in the stock:  Open interest increased in the January 38 line increased by over 80,000 contracts and the Jan 40 line by a similar amount, confirming my original thesis that an upside call spread was executed, rather than a pure roll up from one strike to another. Bullish in either case.

Beware of The Secondary

Bob offers some great insight:

One trend that I am sniffing around on is what is known as “drive by” secondary stock offerings……basically quickly announced and priced deals to take advantage of sudden stock priced jumps and acquisitions….examples today include BlueBirdBio at $185 (traded at $220 2 days ago), Helios and Matheson at $6.25 (closed at $10.08), Oasis Petroleum at $8.5 (closed at $10.06 2 days ago). These are all marginal or momentum type stocks, but even “brand names” are getting into the game…..TD Ameritrade 27M shares at $51.50 (closed $52.70), and Iron Mountain 14.5M shares at $37 (closed $40.15 2 days ago).  Might be a developing trend worth watching!

How’d You Like To Be This Smart?

The S&P 500 Index made its 60th all-time high for the year on Tuesday.  Only 1995(77)and 1964(65)have made more. 

Steady.  Higher.  Relentless.

Exit question, #1:  Has multi-billionaire genius Mark Cuban taken off his shorts yet? 

                         #2:  Does Nobel Prize winning economist Paul Krugman still believe the market will  never recover?

Hat tip Ryan Detrick.



Rates Rising

Ahead of tomorrow’s Federal Reserve rate hike(expected), 1-Year Treasury yields(1.69%)are at their highest levels in nine years:


The 90-Day Treasury yield is also at a 9 year high.  Incredibly, it is now 1% above the German Bund’s 10-year yield:


Hat tip Charlie Bilello


Huge Day For AT&T

AT&T was the top gainer in the S&P 100 today with the help of a 3.3% surge.   The option activity in the stock was quite active as well.  Here’s the inside scoop from Bob:   AT&T January 38-40 call vertical bought for $.68 with stock right around $38 (up $1.15 on the day), 25,000 contracts in size in one sweep. Volume very very heavy in those two strikes today with over 90,000 contracts trading on each line. Might simply be a roll up in strike price given the recent move higher in T, as open interest in the 38 line is over 80,000 contracts. Hard to know for sure, but certainly expresses positive near term sentiment in the name.


This powerful move extends the stock’s rally off the early November low to over 15%.  Back in late October we highlighted the major support zone T was beginning to test following a steep breakdown earlier in the month.  We added to longs near $33.00 as this major support zone held under extreme pressure.   Today the stock is once again testing its 200 day moving average.  A clear take out of this heavy resistance zone could carry shares much higher. 

At time of publication we are long T in most managed accounts.

12 For 12

The S&P 500 Index has never finished a year with all twelve months ending with a gain(total return basis).  It’s well on its way to a record setting 12-month run as December nears the half way mark:


Three other times the S&P 500 Index has recorded eleven straight monthly gains in a year but just couldn’t stretch it to twelve.  Interesting, the next year, following a year of 11 straight monthly gains, the index finished higher all three times(average gain=11%).

Hat tip Ryan Detrick.

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