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DAILY DIARY

Doug Kass

My Tweet of the Day

Position: None

Closing Tweet of the Day

Position: None

Oscillator Back to Overbought

The S&P Short Range Oscillator moved back to overbought tonight — at 0.75% (from -0.61%).

Position: Long SPY common (S); Short SPY calls (M)

After-Hours Movers

 As of 4:18 p.m.:

10-9-24-AHM-Screenshot 2024-10-09 at 4.18.22 PM
Position: None

Wednesday Closing Market Internals

Closing Breadth

10-9-24-CB-Screenshot 2024-10-09 at 4.06.58 PM

Percentage Movers

10-9-24-CM-Screenshot 2024-10-09 at 4.06.39 PM

Nasdaq 100 Heat Map

10-9-24-CH-Screenshot 2024-10-09 at 4.07.17 PM
Position: None

Things I Did Today

For the second day in a row (3:10 p.m.) the market rose "from flag pole to that's all." (That's an old horse racing term!)

There were no macro events that impacted the markets today.

With less than an hour to go, my analysis of overnight weakness (How I Think Tactically) impacting the regular trading session was wrong-footed.

Equities ignored another rise in rates. Since the 50 bps Fed rate cut the yields on the 2-year and 10-year Treasuries have risen by about 41 basis points.

No matter, nothing really matters!

Today's "things":

* I covered my China short rentals ( (PDD)  and  (BABAF)  down by about -$7 each) for nice gains at around 11:15 p.m. last night.

* In premarket I sold some  (SPY)  (long) at $572.96 and  (QQQ)  (long) at $488.95. (I have now moved from neutral to delta-adjusted short the Indices).

* Short trading rental in  (NVDA)  at $134.55 and more at $133.40.

* Added to  (TSLA)  short twice (at $245.50 and $246.90)

* WIth S&P cash +8 handles I shorted more Index calls. And, again +28 handles.

* Sold out  (DIS)  long at $93.24.

* I added to my  (AAPL)  short at $229.

* Added to individual cannabis names.

Position: Long SPY common (S), QQQ common (S), MSOS (VL), CURLF, GTBIF, TSNDF, VRNOF; Short SPY calls (M) and QQQ calls (M), AAPL (M), TSLA (S), NVDA (S), MSOS calls (S)

Bulls: Riddle Me This

According to FactSet consensus Q3 2024 S&P EPS is forecast to rise by +4%.

Over history, on average 73% of S&P 500 companies beat consensus estimates by an average of +6.8%.

That would place Q3 EPS up by about +7%.

But that figure is down from the +10% consensus growth forecast made about two quarters ago.

In other words, interest rates have begun to rise and consensus earnings forecasts are lower than expected  — yet the animal instincts have lifted the S&P Index to an all time high (with price/earnings multiples growing in a massive valuation reset).

I discussed this recently in Is The Bull Run Based On A Bunch of Bull? 

Doug Kass: Is the Bull Run Based on a Bunch of Bull? - TheStreet Pro

Position: Long SPY common (S); Short SPY calls (M)

Buying Cannabis Stocks — Across the Board

Buying and bidding for individual cannabis equities, across the board.

Position: Long MSOS (VL)

Boockvar on Bond Auction and Fed Minutes

From Peter Boockvar:

10 yr auction meh/Minutes should be seen as old news

The 10 yr note auction was mediocre on the surface but soft relative to pricing this morning. While the yield of 4.066% was only just above the when issued of 4.062%, the off the run 10 yr yield was trading between 4.03-.05% from 8am-12pm. The bid to cover of 2.48 was just a hair below the one year average of 2.51. Direct and indirect bidders took down 86% of the auction which is about the 12 month average of 85%.

Bottom line, yields across the curve are at the highs of the day with the 10 yr yield now at 4.07%, the highest since late July. While the Fed’s aggressive rate cut, the China stimulus news, and the better than expected jobs report are likely factors in the recent lift, maybe it’s not a coincidence that it comes a day after we heard the federal government announced a $1.8 trillion budget deficit which is about 6% of GDP in its fiscal year ended September 30th.

With respect to the Fed scrubbed minutes from that meeting 3 weeks ago to be seen at 2pm est, the payroll report (putting aside the debate over the internals and seasonals) makes it old news and we’ve already heard from both Powell and many of his colleagues since. I’ll only write about it if there is something new worth saying.

Intraday 10 yr yield move

10-9-24-BV-Screenshot 2024-10-09 at 1.45.41 PM
Position: None

My Chipotle/Starbucks Pairs Trade

My  (CMG)  long/ (SBUX)  short pairs trade continues to be profitable.

On both sides!

Position: Long CMG (S); Short SBUX (S)

Nothing Really Matters

* Despite a continued rise in interest rates... equities hit an all-time high.

Nothing really matters, anyone can see

Nothing really matters

Nothing really matters to me

- Queen, Bohemian Rhapsody

Classical and historical relationships are losing value in a momentum-based market advance: 

Here is a bond market update:

* The yield on the 1-year Treasury bill is +4 bps to 4.25%.

* The yield on the 5-year Treasury note is +4 bps to 3.90%.

* The yield on the 10-year Treasury note is +3 bps to 4.07%.

* The yield on the long bond is +2 bps to 4.34%.

Position: Short TLT

More Viewing at Benzinga and Now MRKT CALL

As mentioned yesterday I have been listening to the Benzinga Cannabis Conference since yesterday morning.

A lot more this afternoon from the conference.

But between 1 p.m. and 1:45 p.m. I will be on MRKT CALL with Dan, Guy and LY from SOFI.

Let's go to the videotape! What to Buy at Record Highs - YouTube

Position: None

Programming Note

I have a lunch meeting between 12:30 and 1:30 p.m.

Radio silence.

Position: None

Tweet of the Day (Part Deux)

Position: None

Out of Disney

I have eliminated my Disney  (DIS)  long for a small gain.

The move had nothing to do with the impending storm and the potential theme park damage.

Rather, it is in response to yet another theme park ticket price hike.

The ever-rising admission prices have been a headwind that I have worried about for several years.

The 6% price hike is not only tone deaf but is likely to raise demand elasticity issues.

Position: None

Red Amid the Green

In a sea of green, Nvidia  (NVDA)  and Tesla  (TSLA)  turn red.

In the "old days" this would be meaningful — not so much in a machine/algo-dominated investment landscape, though.

Position: Short NVDA (S), TSLA (S)

Wednesday Mid-Morning Market Internals

At 11 a.m.:

Breadth

10-9-24-Breadth-Screenshot 2024-10-09 at 10.57.03 AM

S&P 500 Sectors

10-9-24-Sectors-Screenshot 2024-10-09 at 10.57.29 AM

% Movers

10-9-24-Movers-Screenshot 2024-10-09 at 10.57.47 AM

Nasdaq 100 Heat Map

10-9-24-Heat-Screenshot 2024-10-09 at 10.57.18 AM
Position: None

Adding to NVDA, TSLA Shorts

I added to  (NVDA)  $133.40 and  (TSLA)  $246.90 shorts.

Position: Short NVDA S TSLA S

More Tesla Shorting

I just added to my small Tesla  (TSLA)  short at $245.50.

Position: Short TSLA S

Shorting More Index Calls

With S&P cash +8 handles I am shorting more index calls.

Position: Long SPY common (S) QQQ common (S); short SPY calls (M) QQQ calls (M)

From the Street of Dreams

Piper Sandler downgrades Blackstone to neutral with an unchanged price target of $149.

The brokerage decreased its 2024 and 2025 estimates by 9% and 7%, respectively, saying realizations have been slow to come back as shown by the company's Q3 update. Piper continues to believe there is pent up demand and the likelihood that activity will return meaningfully in 2025, but says much of that good news has been priced into the stock with Blackstone up 20% in the last three months and up 40% in the past year.

Position: Short BX (S)

Marijuana Moment

The Miami Herald has endorsed Amendment 3 on Adult Use of Cannabis:

Miami Herald Endorses Florida Cannabis Legalization, Highlights Failed Drug War, Revenue Potential - Trulieve Cannabis (OTC:TCNNF) - Benzinga

Position: None.

Another Email From Tesla

We are excited to offer 0%APR when financing the Model 3 and Model Y with the purchase of Full Self-Driving (Supervised).

Please let me if you would like to explore this incredible offer, I can get you a trade-in estimate, finance estimate and address any other questions you may have.
Feel free to call me at 631-XXX-XXXX ext.XXXXXXX
Best, Nick from Tesla of Smithtown

Position: Short TSLA (S)

My Comment of the Day

STAFF

1 hour ago

Premarket

Long Time First Time

Took a trading short rental in NVDA $134.55.

Not recommended!


Position: Short NVDA (VS)

Boockvar on Why Pepsi's Taking Economy With a Grain of Salty Snacks

From Peter Boockvar:

Just a few things of note

Let's start with the business of Pepsi and its view on the US consumer:

"the cumulative impacts of inflationary pressures and higher borrowing costs over the last few years have continued to impact consumer budgets and spending patterns. After outperforming packaged food categories in previous years, salty and savory snacks have underperformed year-to-date."

With their outlook and guidance, "We expect consumers to remain choiceful and value conscious as the cumulative effects of inflationary pressures continue to impact budgets and spending patterns. Pockets of elevated geopolitical tension and macroeconomic pressure are also expected to persist in certain international markets."

"We also continue to expect inflationary pressures to moderate versus the prior year, but certain commodity costs may remain elevated."

On why they reduced their expectations for sales growth, "it's a combination of the recovery of the consumer in the US, frankly, has been slower than we had anticipated, and then to a lesser degree, the geopolitics have impacted international."

So, more bifurcation in the state of the US consumer. Too many paint the US economy with a broad brush, it's either strong or not, soft landing or not. It's much more nuanced as some areas are fine, others are not.

After starting its rate cutting process by 25 bps in August, the Reserve Bank of New Zealand stepped up the cadence to 50 bps overnight to 4.75% but that was expected. They said "The Committee agreed that the economic environment provided scope to further ease the level of monetary policy restrictiveness." As they still believe that the current level of 4.75% is restrictive, they've left themselves positioned to cut again and the Kiwi is weaker in response.

This is a tiny country with a small economy so what the RBNZ doesn't matter for the global economy but it's always interesting to hear about the approach of other developed country central banks.

The one thing of note in Europe was the August German export figure that surprisingly rose by 1.3% m/o/m instead of falling by 1% as estimated. Exports to the US led the way, up by 5.5% m/o/m. They were up to their other important trading partner, China, by 1.9%. Nothing market moving here but good to see an upside surprise in a Germany economic data point after a run of softness.

With respect to getting more details from China on its fiscal spend priorities, the Finance Minister on Saturday morning local time will be hosting a briefing. The A shares in China gave up their Tuesday rally while the Hang Seng fell an additional 1.4%. The Hang Seng and the S&P 500 are now up by about identical amounts of 21% ytd.

Position: None.

Tweet of the Day

Position: None.

Upside, Downside Moves Before the Open

Upside:

-ALTM +31% (confirms to be acquired by Rio Tinto at $5.85/shr in ~$6.7B all-cash deal)

-CLSD +22% (ODYSSEY Phase 2b Trial of Suprachoroidal CLS-AX in Wet AMD Achieves All Primary and Secondary Outcomes)

-KZR +21% (Holder Concentra Biosciences sent non-binding acquisition proposal at $1.10/shr)

-ALAB +14% (introduces new portfolio of fabric switches purpose-built for AI infrastructure at Cloud-scale)

-HELE +12% (earnings, guidance)

-WINT +11% (announces publication of positive Istaroxime Phase 2b Study Trial Design)

-SAR +8.0% (earnings)

-GTLB +6.0% (Morgan Stanley Initiates GTLB with Overweight, price target: $70)

-ZETA +4.3% (to acquire people-based marketing company LiveIntent for $250M in cash and stock; affirms Q3 guidance)

-EVAX +3.9% (notes it now has evidence from three different clinical trials validating the vaccine target predictions of its AI platform)

-NCLH +3.8% (CitiGroup Raised NCLH to Buy from Neutral, price target: $30)

-AFRM +3.2% (Morgan Stanley Raised AFRM to Overweight from Equal Weight, price target: $37)

-VXRT +3.2% (initiates Sentinel Cohort for Phase 2b Study evaluating COVID-19 Oral Pill Vaccine Candidate)

-RDDT +2.8% (Jefferies Initiates RDDT with Buy, price target: $90)

Downside:

-SPGC -45% (prices $732K underwritten public offering of shares of common stock through Aegis Capital)

-DKL -9.6% (prices 3.85M shares at $39/unit)

-PPSI -2.2% (files 10-Q, reports Q2)

-BA -1.7% (offer to Union has been withdrawn and Boeing says further talks do not make sense at this point)

Position: None.

ETF Action in the Premarket

Charts from 8:14 a.m. ET:

109chartetf1
109chartetf2
Position: None.

Charting the Movers Before the Bell

Chart from 8:30 a.m. ET:

109chart830
Position: None.

Themes and Sectors

This is a valuable table for momentum-based short-term traders:

10-9-24-Themes-1728475502338blob
Position: None

Fed Speak Today

8:00AM: Fed Bank of Atlanta President Bostic (Voter) gives welcome remarks before the Greater Atlanta Home Builders Association monthly meeting, Atlanta, GA (No livestream. No Q&A. No embargoed text); 

 9:15AM: Fed Bank of Dallas President Logan (Non-Voter) speaks on the current state of theeconomy before the Future of Global Energy Conference presented by Shell USA, Inc. and co-hosted by the Greater Houston Partnership, Houston, TX (No livestream. Text available. No Q&A); 

 10:30AM: Fed Bank of Chicago President Goolsbee (Non-Voter) gives opening remarks before hybrid Chicago Payments Symposium, Chicago, IL (Livestream available. No embargoed text); 

12:15PM; Fed Bank of Richmond President Barkin (Voter) speaks before hybrid Chicago Payments Symposium, Chicago, IL (Livestream available. Other details TBA);

12:30PM: Fed Vice Chair Philip Jefferson speaks on "The Discount Window, 1990-Present" before a Charlotte Economics Club Lunch, Charlotte, NC (Text available. Q&A from moderator. No Webcast); 

5:00PM: Fed Bank of Boston President Collins (Non-Voter) speaks before the Worcester Regional Research Bureau 39th Annual Meeting, Worcester, MA (Text and livestream available. Audience Q&A expected. No mediaQ&A); 

6:00PM: Fed Bank of San Francisco President Daly (Voter) participates in moderated conversation on monetary policy and the economic outlook at BoiseState University, Boise, ID 9 No prepared remarks expected. Audience Q&A ex

Position: None

From The Street of Dreams

From JPMorgan:

US: Futs are lower. MegaCap Tech are mixed: NVDA +1.4%, while GOOG/L -1.4% amid DOJ headlines. Yields remain largely unchanged. Oil prices rebounded given the nervousness around Israel response and anticipation on China stimulus. BA is placed on negative watch by S&P; stock -1.5% after close. Outside US, China finance ministry unveiled a press conference plan on Saturday; New Zealand Central Bank surprisingly cut 50bp.

and...

EQUITY AND MACRO NARRATIVE: Yesterday, equities showed a healthy rally amid lower oil prices and lower rates vol as 25bp has been priced in as the base case for the November FOMC. NVDA added +4.1% on positive comments on AI demand; the rest of Mag 7 also outperformed and added 2.0% today. Overall, investors are waiting for response from Israel and detailed stimulus package from China as the country’s finance ministry announced a press conference on Saturday.

Position: None

Economic Calendar for the Balance of the Week

10-9-24-Kass-1728475334984blob
Position: None

Charting the Technicals

"There are no happy endings in history, only crisis points that pass."

- Isaac Asimov

Bonus — Here are some great links:

Election-Year Octoberphobia Weighs on Markets

October Isn't Just Volatile in the U.S.

Market Breadth Alert

Position: None

How I Think Tactically (Very Short Term)

* Of course the market is more complex, but nonetheless...

In the wee early morning hours S&P futures fell by over -20 handles and Nasdaq futures were down by over -100 handles.

As I write, those losses have been wiped out — with S&P futures -1 and Nasdaq -15.

My guess is that we could possibly revisit those levels today or tomorrow — despite the S&P Short Range Oscillator moving back to slightly oversold (-0.61%) from neutral.

As I often write, overnight futures trading sometimes tells a story. It's a chapter in a twenty-four hour book/story.

So, in my trading I will be biased tactically towards shorting today — especially with my ursine market outlook combined with the narrowing of leadership yesterday:

* The equal weighted S&P Index  (RSP)  dramatically underperformed the senior averages, up by only +0.24%

* Compared to  (SPY)  +0.94% and  (QQQ)  +1.4%.

* And Tom Lee's beloved  (IWM)  was only +0.05% on the day (an Index which is flat/down from July when he forecast a greater than +40% rally!)

Position: Long SPY common (M), QQQ common (M); Short SPY calls (M), QQQ calls (M)

Premarket Trading

This post modifies the next column: 

* Sold  (SPY)  (long) at $572.96.

* Sold  (QQQ)  (long) at $488.95.

I have now moved from neutral to delta-adjusted short the Indices.

Position: Long SPY common (S), QQQ common (S); Short SPY calls (M) and QQQ calls (M)

Last Night's Trading

* Out of China short trading rentals for a profit...

From the Comments Section:

Dougie Kass

STAFF

7 hours ago

Money Never Sleeps...

At 1115 PM - with more pressure on Chinese stocks I am taking my profit in PDD and BABA shorts now.

Covered PDD $137.80 (-$7) and BABA $103.50 (-$6.20).

and from X/Twitter:

Position: None

On Deck

Sorry a bit late this morning!

Playoff baseball until almost midnight!

Right back....

Position: None
Doug Kass - Watchlist (Longs)
ContributorSymbolInitial DateReturn
Doug KassVKTX4/2/24-31.72%
Doug KassOXY12/6/23-14.53%
Doug KassCVX12/6/23+10.81%
Doug KassXOM12/6/23+13.02%
Doug KassMSOS11/1/23-22.80%
Doug KassJOE9/19/23-14.64%
Doug KassOXY9/19/23-25.97%
Doug KassELAN3/22/23+37.02%
Doug KassVTV10/20/20+64.63%
Doug KassVBR10/20/20+77.10%