All-time highs!
Last time all our indexes hit all-time highs together was back in good old 1999 and that party was never going to stop either – unitl it did, of course. The pullback in 2000 wasn't even that bad, if you don't count the silly run to 5,000 on the Nasdaq that made no sense, then the pullback from 4,000 to 3,000 was very normal – it was only the crazies that bought stocks up at Nasdaq 5,000 that got really burned….
Of course, that Nasdq wasn't the same Nasdaq we have today. There is no more Pets.com (Amazon delivers our pet food), there is no more WebVan or Kozmo (Amazon delivers our groceries) and, of course, there is no more Books-a-Million (yep, Amazon).
Aside from Amazon, who lead the overpriced team in the new dot.com bubble with market cap that is 179 TIMES their projected (forward) earnings, other survivors of the crash of 2000/2001 are AAPL, HPE, IBM, MSFT, GOOGL, INTC, CSCO, ORCL and IM, who are especially notable as they actually compete with Amazon yet they still survive.
So clearly it is better to be a company that actually makes stuff – especially stuff that other apsiring tech companies buy from you. For AAPL, it's tech employees who buy there stuff and for GOOGL – they advertise all the stuff people are trying to sell you. Yet AMZN has a $373Bn market cap – bigger than all the dot.com stocks put together back in 2000!
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Amazon was coming back to reality before the election but now it's off to the races again and, while we're not worried about our Jan $900 short calls we sold for $8.10 the last time AMZN popped (now $1.98 so we're up 75%), it is getting interesting again as a short for those brave enough to point and say "Emperor Bezos has no profits!"
Well, they do have profits but they are all in their cloud storage division – the rest of the business is actually running at a loss this year. Anyway, it's an interesting stock to short. I favor the April $850 ($90)/780 ($50) bear puts spread at net $40 on the $70 spread, so that returns $70 for a $30 (75%) profit in 5 months if AMZN is simply not higher than it is now ($785).
If AMZN moves up, then you can sell the $960 calls, whch are 20% up from here and they are now $7.20 but, if AMZN goes up $40 (5%) the calls should be about $12.50 and then you can use that $12.50 to widen the spread by rolling the $850 calls up to the $880 calls, which are now $111 but the roll should be right about $12.50 if AMZN pops up near $8.50.
Meanwhile, this morning we have strong Durable Goods numbers (+4.8%, but it's all aircraft) in the US at the same time as the UK has downgraded their GDP projections by more 1/3 (2.2% to 1.4%) so the Dollar is flying up against the Pound and the Euro, who have their own problems as the ECB already owns 25% of all outstanding Government Paper, pushing German 2-year notes down to -0.74%.
We're still using the same shorting lines as yesterday on the Futures and we're going into the weekend "Cashy and Cautious" – but wondering when this rally will finally end.
US markets are closed tomorrow and Friday will be a half-day so volume will be a joke and whatever happens will be meaningless so have some fun and enjoy the day – I'm taking tomorrow off and suggest you do the same – even if your are in another country and don't slaughter Turkeys to honor a holiday we had 350 years ago with the Native Americans, who we subeqently slaughtered.
President Trump called President Obama this morning and said "Why are you pardoning those turkeys – they're LOSERS! They are only going to go on welfare – kill them now and we can feast on their bones!" At least, I hope he was talking about the turkeys…
Have a Happy Thanksgiving,
– Phil
