Record-High Wednesday – Here Come Those Tears Again


The market has been running like a rocket. Like one of those reusable Space X rockets as it keeps going up every time it falls. The Nasdaq is retesting 7,200 on the 100 Index (/NQ)and we shorted that line this morning only because the last time we tested it (mid-March) we plunged 10%, back to 6,322, which was the 200 dma back in April. This time, the 200-day moving average is back at 6,500, so still a 10% gap down if we fail to punch over. That means our RISK is stopping out at 7,205 with a $100 loss while the potential REWARD could be $14,000 on a 700-point drop – that's the kind of bet we like to make!  

In our Options Opportunity Portfolio and our Short-Term Portfolio, we are using the Nasdaq Ultra-Short, SQQQ as a primary hedge because the index is full of overpriced stocks. It's not a bet though, it's a hedge as it's crazy to BET that the Apple-driven index will go lower while AAPL is still under $1Tn in market cap (now "just" $950Bn). $1Tn is more than the GDP of Turkey ($849Bn) so, if Apple were a country, it would rank 17th in the World. Above them is Indonesia and Mexico – both at about $1.1Tn, which would be about $225/share for AAPL.  

Image result for 38th parallel

I suppose if we're going to learn to accept valuations in the Trillions, we should start thinking about Corporations more like countries or maybe we should just start trading countries – it's a work in progress – anyone want to go long on North Korea at $17.4Bn? With 25M people, that's just $696 per person – seems like a bargain compared to South Korea, which is "valued" at $1.7Tn for just 50M people so $34,000 per person's share. Life is good below the 38th Parallel!  

How does a country with just $17.4Bn develop nuclear missiles? That means Carl Icahn can develop nukes – he has $17Bn and Icahn is "only" ranked 73rd on the Forbes 500 list. Jeff Bezos can buy a dozen nukes with his $112Bn and he's already got rockets, as does Elon Musk with $20Bn and he already looks like a James Bond villain! We worry about tin-pot dictators abroad but do we really know what the Kochs and Waltons are keeping in their bunkers?  

As we know with Billionaires – once one gets a cool toy, they all want it and Trump is leading the Billionaire Class into the nuclear age with his finger firmly on the button. That's why Trump is worried about Kim Jung Un, not because he threatens our nation's security but because he threatens Trump's bragging rights that he has nukes and no one else at the club has any. I know it sounds silly but maybe you've never heard a guy talking about the helicopter pad on his yacht for 2 hours…

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Disclosure: Our teaching theme at Phil's Stock World is "Be the House, NOT the Gambler." Please see " more

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