Faithful Thursday - G20 Will Fix Everything, Right?

Wheeeeee, what fun!  

After being soundly rejected at the strong bounce line (1,950) and falling back to the weak bounce line (1,900) which it briefly failed in the morning, the S&P 500 blasted back to 1,940 where it's violently consolidating overnight.  That means our long call on the S&P Futures (/ES), which we gave you FOR FREE in yesterday's morning post, gained $1,500 PER CONTRACT if you stopped out at 1,930 on the pullback while our Russell Futures (/TF) longs popped 15 points for another $1,500 per contract profit and our Nikkei Futures (/NKD) are now at 16,100 - up 400 points for $2,000 per contract wins on that one.  You are very welcome!  

We had a Live Trading Webinar yesterday where I demonstrated futures trading techniques and, in less than 30 minutes, we made $320 in profits (replay available here) - don't you wish school was always like that?  This morning we're long on Natural Gas (/NG) at the $1.79 mark and don't forget the Natural Gas ETF (UNG) is our Trade of the Year and I just did a PowerPoint on that at the NY Trader's Expo on Monday, which was essentially similar to our Trade of the Year notes we went over on Money Talk on Feb 10th.  

If all goes well, our Trade of the Year will make $40,500 on a $9,500 investment with the worst case being you own 5,000 shares of UNG at $8.95 ($44,750), so it's a 90% return on risk (if you believe the Natural Gas ETF can go to zero).  UNG is currently $6.51, so the trade is still makeable (we have an aggressive upside target) but this may be the last time as the first US export shipment of natural gas left the port yesterday

On Tuesday (because we pay attention and we knew this would happen), we added Cheniere Energy (LNG) as a Top Trade Alert and yesterday it blasted 10% higher but it's only just getting started (and of course we leveraged it with options) and you can hear the CEO discuss their operations here.  

Keep in mind this is our 2016 Trade of the Year (UNG, not LNG) and our Institutional Clients and Premium Members are already long on this trade and usually you do not have a chance to get our prices by the time we're into February but, on UNG - it's actually LOWER than where we got in and that's a huge potential opportunity but, of course, consult your financial adviser to make sure it's a good fit for your portfolio.  

The other trade we had lined up was Ford (F) and that stock was $11.40 at the time and now $12.08 but just yesterday we reiterated that trade (slightly modified) as another Top Trade Alert and you can see the original trade idea on the same link as the UNG trade, even if you are too cheap to pay $2 a day for a Membership.  Our logic is you can put your $750 to work on this trade and, next year, you can afford a Premium Membership!  

We've been doing Trades of the Year (always live on TV) since 2011 and our average return on cash is over 400% and the UNG trade tops out at 429% as it was a tough year to call.  Our 2015 Trade was Apple (AAPL) once again and that trade is still in progress as it was:

  • Buy 20 AAPL Jan 2017 $90/120 bull call spreads for $13.50 ($27,000) 
  • Sell 20 AAPL Jan 2017 $85 puts for $9.50 ($19,000)

That one had a net outlay of just $8,000 in cash and, if successful (AAPL over $120 by Jan), it will return $60,000 for a $52,000 profit (650% on cash).  Currently the spread is down at $10.85 ($21,700) but the short puts are now $6.10 ($12,200) so it's net $9,500 and still up $1,500 (18%) even though AAPL has been a real disappointment this year.  It should be noted that we got out of this trade last year, when AAPL hit $130 far ahead of schedule but now that trade is getting interesting again (we already added a 2018 variation for our Members).  

As I noted yesterday, we're generally bullish in our long-term outlook because we believe the G20 will come up with some consensus for more stimulus (not officially but moves will be made in March) and we also believe inflation will begin to gather steam along with, finally, a resurgence in demand for materials.  This morning, as we predicted, the Durable Goods numbers were better than expected, up 1.8% ex-Transport and up 4.9% with it - about double what was expected by leading economorons.  

HOWEVER, we are cautious going into the weekend as the G20 is not likely to say anything profound to boost the markets and the Shanghai plunged 6.4% this morning as statements from Chinese officials gave traders there no reason to hope for more aid.  We'll be putting on some hedges into the weekend but, for today, we'll hopefully see the S&P get back over 1,940 and, even more hopefully - hold it.