The Intersection of Markets, Trading, and Life

The Burden of Things

The Lund Loop - Your weekly update on markets, trading, and life.

One week after my mother died, my sister and I arrived at her house with a U-Haul and a mandate to wind down the remnants of her life.

It penciled out as an easy job, as my mom had moved twice in the last five years, each time prompting a garage sale or phone call to one of us inquiring, “do you want this?”

Anything of special significance or sentiment should have been long gone, so we adopted a well-known strategy to expedite the process – save, trash, or donate.

It was a simple algorithm.

“Save” meant my sister or I wanted it. Failing that, if someone else could use it, it went to “donate.” Anything that didn’t fall into the previous categories went into “trash” – literally.

But even with our ruthless efficiency, we ran into speed bumps - the first of which was a hoard of ephemera my mother had collected obsessively.

Old travel brochures and printed recipes mixed with bank statements, hand written check ledgers, and triplicate copies of utility bills - each annotated by highlighter and post-it note.

And file cabinets full of folders, stuffed with anything from 60-page prospectuses for mutual funds she never bought, to instruction manuals for exercise equipment she never used, and receipts for every repair, upgrade, and renovation ever done on her houses - going back to the first one that my parents bought in 1972.

Not wanting to accidentally throw out a cherished photo or stock certificate for 10,000 shares of IBM, we sifted through each piece one at a time.

But quantity wasn’t the only stumbling block. Emotional drag played its part as well, particularly when we got to her bedroom.

My mom lived alone in a three-bedroom house, but the sicker she got, the smaller the orbit of things around her became.

Hats to cover her naked head. Mints and candies to take the bitter taste of chemo from her mouth. A phone and flashlight for emergencies. Nightshades, an ice pack, and a hot water bottle so she could sleep better.

These things and more piled up on what started as a simple side table but evolved into a massage table full of items pulled close, all within arm’s reach of the bed.

I’ll admit to a tinge of guilt when clearing away the miscellany of her life, but I had to do it.

Every time I entered the house it felt like she was still there. Around the corner, in the kitchen making a sandwich, or upstairs folding clothes - always just out of view.

I had to start creating space between the memory of her alive and the fact that she was dead.

In these these situations you do odd things. Things that don't make sense.

Like when I bumped into her desk clock and the battery fell out. I quickly scrambled to replace it. To make sure it kept accurate time for someone who wasn't there - and never would be again.

But what really slowed us down was deciding what to do with things that carried a tacit obligation - the antique pair of glasses, inkwell, and church hymnal, for example, found in a small chest of drawers, nestled in the corner of a closet.

Inside the book’s cover was written “John Kelly.” I had a vague recollection of the name, and even less interest.  

A snippet of retained family folklore told me he was a great-great grandfather, or uncle, or cousin twice removed – someone from my father’s side who died 150 or more years ago.

I knew nothing else about him, but reflexively put his things in the “save” category.

Then wondered why.

My father was 30 years gone and had never mentioned him while alive.

My mother certainly had no connection, nor had she indicated any significance to his things.

In fact, the last time I saw them was 40 years ago, in a dirty old box under my father’s workbench.

Why was I saving them?

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[A Russian nesting doll with hand-painted scenes from Prokofiev’s “Peter and the Wolf.”]

I was in love.

I thought she might be my wife someday. And I wanted to get her something special.

She was hard to shop for, but I had paid particular attention when she cooed over her friend’s Russian nesting doll.

That’s what I would get your mom.

I went to every place I could think of to find one - tchotchke shops, doll museums, even the local Russian cultural center - but to no avail. And her birthday was tomorrow.

Disappointed and depressed, I went to the mall - a mall I’d been to a hundred times before, one which had no Russian nesting dolls – resigned to buy her a shirt, or something.

Walking through the concourse I passed kiosks selling random crap, like handmade jewelry, customized cell phone covers, peanut brittle, off brand plushies, steak knives, new age crystals, windchimes, bath salts, and Russian nesting dolls.

Wait, what?

Yes, right there before me sat Vaclav’s Doll Hut, brimming over with nesting dolls of every size and shape. I picked one I thought she’d like.

She did.

It’s the one you’re looking at now.

And the stroke of serendipity that led me to it convinced me that your mother and I were destined for each other.

P.S. One week later I was in the same mall and I thought I’d stop by Vaclav’s to tell him how happy the doll had made my girlfriend. But his kiosk was gone, and it never returned.

[A Ragged, bearded doll, dressed in Bavarian clothes of green felt]

I was only six and it was the first time I’d flown by myself. I wasn’t scared, but the stewardess who sat next to me gave me ginger ale and a toy airplane just to make sure I was okay.

The flight was short, and Geneva and Roy were waiting for me at the bottom of the stairs when I deplaned.

I called them my aunt and uncle but technically they were “greats” – Geneva my grandmother’s sister and Roy her husband.

I was spending the weekend with them at their house in Kentfield, and knowing how they’d dote on me, I’d been excited about the trip ever since they called my parents to suggest it.

Now in their 60’s, they never had children, and I was their surrogate, just as my father had been before me.

They were wonderful people. Not particularly educated, but cultured, moving in all the right circles in the Bay Area. Roy even played violin in the San Francisco Symphony.  

They took me to Fisherman’s Wharf where I tried shrimp cocktail for the first time.

We ate chocolate sundaes in Ghirardelli Square, then rode the ferry to Alcatraz.

And on Sunday we had a picnic in Sausalito.

But what made the biggest impression on my six-year old brain were the tall tales Roy told while we sat around the dining table eating prime rib and Yorkshire pudding.

When he was still a young man, Roy had lived in a faraway land called Germany. It was there that he’d seen incredible things, like people paying for a loaf of bread with a wheelbarrow full of money – or so the story went.

He told me about men in boots who marched in the streets, shouting slogans to their leader – an evil man they called “The Father” – who eventually attacked his neighbors and tried to wipe out the people called “juice.”

Roy left Germany, but returned after a great war had passed and The Father was gone.

He looked far and wide for his friends, many of whom were juice, but they were no longer there.

I remember thinking that The Father had probably taken them away.

Before I went home, Geneva and Roy gave me a present – a Sandman – the one you’re looking at now.

In German he’s called Sandmännchen, based upon Ole Lukøje, a character by Hans Christian Anderson.

Sandmännchen is the gatekeeper of children’s dreams, and according to legend;

Under each arm he carries an umbrella; one of them, with pictures on the inside, he spreads over the good children, and then they dream the most beautiful stories the whole night.

But the other umbrella has no pictures, and this he holds over the naughty children so that they sleep heavily, and wake in the morning without having dreamed at all.

At the back of my Sandmännchen there’s a string, attached to an ivory ring. When pulled, it plays a Bavarian lullaby.

On nights when my sleep was disturbed by nightmares, I pulled that ring, and pulled the Sandman close, for protection from the unknown.

And I thought fondly of aunt Geneva and uncle Roy.

Lead Trader

The Lund Loop - Your weekly update on markets, trading, and life.

This week – to the thrill of most and dismay of few - I’m moving the self-indulgent personal essay crap a bit farther down The Lund Loop and putting the market front and center.

First, let’s start with this fantastic video which illustrates the essence of trading.

The meta here is, if you hesitate, you lose.

But the meta meta here is the action of one of the three bag holders who decides to cut his losses and takes a hard out.

Sure, he gets grazed in the process, but 30 minutes in the sun and he’ll be dry as a bone, ready to continue his day, while his playmates will spend the rest of their day in damp, wet clothes.

Moral of story, if you can’t be fast, at least be smart.

Now to the charts.

Please see disclaimers at the bottom of this newsletter.

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Apple Inc. - AAPL

When the market closed on Wednesday, everything looked like the bee’s knees. Like the berries. I mean it was jake, and any other 20’s slang you’d like to throw in.

Then Apple pre-announced, the stock tanked, and FinTwit lost it’s mind.

But wait a minute. There was one brave soul who didn’t follow the herd.

Brian Lund@bclundIt's not a fund blowing up, but I'll take it if we get a final flush. $AAPL

Bloomberg@business

Apple now sees Q1 revenue at about $84 billion https://t.co/ADPhhxARCP
Brian Lund@bclund$AAPL already down 37%, "pre-announce," and people are looking to sell/short?🤔🤔🤔
Brian Lund@bclundI feel pretty good buying the $NDX here. No bigger tech bomb is going to fall than the $AAPL news.

If you bought the NDX the next morning you’re up about 200 handles right now.

We talked about looking for clues in price action a couple of Loops ago and here are the ones I noticed;

Naz futures fell after hours on the AAPL news, but nowhere as much as you’d think they would have.

Also, as I tweeted, AAPL was already down 37% going into the announcement, and the market is a forward discounting mechanism.

Lastly, the VIX was way below its peak and the indexes were way above their lows, and this all added up to a “buy the news” moment IMHO.

AAPL itself had a nice bounce on Friday along with the broader market. It’s not out trouble yet but I’d have no problem selling some puts on it here. Just saying.

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There’s no two ways about it - the DJIA, NDX, and SPX all had a very good week, putting in a higher low and closing out above recent resistance levels.

This is particularly impressive given the AAPL news.

There’s still a ton of work that needs to be done to repair the charts, but given Friday’s jobs numbers, the Fed signalling a willingness to cut rates if needed, and a 90-day detente between China and the US on tariffs, and we’ve got a window here in which were could get a decent rally.

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CBOE Market Volatility Index - VIX

Die VIX, die.

Last week I wrote;

The VIX turned lower at resistance. Will feel better if/when it negates the bull flag breakout.

This week it negated that bull flag.

And I feel better.

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Amazon - AMZN

Last week I noted that AMZN was in (marginally) better shape than other tech stocks, as it wasn’t as extended from it’s short-term moving averages, and that followed through this week as it added 100 points without exhibiting any real weakness.

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Facebook - FB

From last week;

Looks like it has a double-bottom in. The case could be made that Facebook is farther along in the recovery process because it was so far ahead in the failure process.

Chart looks healthier than it’s been in a long time - which isn’t saying much.

This week that double bottom was never threatened, the stock had some constructive price action, and it continues to looked better.

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Tesla - TSLA

Once again, Tesla was in the news for missing something or other, but despite the drop, it held a double-bottom and is still in the upper half of a year and a half long range between $250 and $380.

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TripAdvisor Inc - TRIP

We talked about TRIP a few weeks back in the context of it having good relative strength.

As happens in every market, they eventually come for everybody, and TRIP was no exception.

But as the dust is settling, it’s put in a double-bottom and is still above a decent trendline.

Keep an eye on this stock.

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Aberdeen Palladium ETF - PALL

SPDR Gold Trust ETF -GLD

I don’t know anything about metals - precious or otherwise - but here’s some food for thought.

Palladium is an industrial use metal - end of story.

And in October of this year, analysts were chirping about how palladium approaching parity with gold was due to increased demand in China - indicating continued economic expansion - and how crazy and unsustainable the move was.

Fast forward to this week and palladium is at a new all-time high and just about to eclipse gold in price.

Is this telling us something about China and the outcome of tariff talks? [insert “Hmm” emoji here]

Tweet o’ The Week

Brian Lund@bclundIn 2018 I tried eliminating things to isolate the cause of my stomach issues, including; dairy, meat, gluten, carbs, alcohol, sugar, even GMO veggies. Turns out it was black tar heroin. 🤷‍♂️

2500 Words on Booze

Late June, 1980

Jenny Phillips was a punk rocker. 

More significantly, her boyfriend was a punk rocker, and like all good punks, he had a healthy disdain for the rules of civilized society. 

Which is probably why as he and Jenny walked out of the Phillips’ house he shouted to Eric Phillips – Jenny’s younger brother and my best friend – "I left a six-pack of Michelob Lite in the fridge. Help yourself to it."

Sid Vicious would be proud.

“Dude, you wanna drink some beer?” Eric said with forced enthusiasm. 

“Sure,” I replied, not really sure I meant it.

What did I know about drinking beer, or any type of alcohol for that matter? 

I was just thirteen years old and had preoccupied my summer practicing taking a shower in under five minutes, the amount of time I was led to believe through schoolyard gossip that I had to complete the task after 9th grade gym class.

But my self-satisfaction in achieving a personal best of four minutes and thirty-seven seconds evaporated with Eric’s question.

It never occurred to me that in high school I might be expected to drink - perhaps even get drunk – at parties, get togethers, and in random parking lots. 

However, it did occur to me that this was an opportune time to start, as we had product and Eric’s parents were out for the evening.

Eric seemed more experienced in this area - though to my knowledge he had never drank before - so I let him take the lead. 

“Let me find the opener,” he said as he rummaged through various drawers.

I sat at the kitchen table, intently staring at the six cold, perspiring bottles of beer in front of me. 

They looked mysterious and foreign, not at all like the cans of beer my father downed after mowing the lawn on a Saturday afternoon.

The amber glass curved ever so slightly inward from the base and rounded out halfway up the length of the bottle, tapering towards the top, and finishing with a small lip just below the capped mouth. 

A golden sheath covered the top third of the bottle, giving it a sophisticated and mature look.

It was a Michelob after all.

Studying its form, I felt like I’d stumbled into the boudoir of a beautiful older woman - catching her in a moment of slight repose - wearing the barest of coverings, which I knew were destined to end up on the floor in mere moments.

And as in my milfy fantasy, I wondered if I would be able to handle what was going to happen next?

Would I charge in like an over-anxious amateur, speeding through the process, and finishing too fast?

What was the etiquette? 

Was I supposed to sip it or chug it down? 

What did you do when you drank, I thought?

Was drinking in and of itself the act, or was it just an accessory to an act?

Cal and Claude

The Lund Loop - Your weekly update on markets, trading, and life.

In what now seems like another life, I was once a small business owner. I didn’t plan to be one – it just happened.

During high school I worked at an interior design showroom, mostly doing physical labor, like rearraigning furniture.

One Friday, the summer after graduation, a designer came in looking for some sofas. After finding two she liked, she asked if they could be delivered immediately, as she was having a party that night.

It was an unusual request and one we weren’t set up to fulfill.

The showroom served as a showcase for different manufacturers who provided floor samples from which clients almost always ordered custom pieces. These pieces took months to produce, and when ready, were shipped directly to the customer’s home.

Floor samples were rarely bought, and if they were, it was up to the customer to arrange delivery.

But this designer insisted that immediate delivery be a condition of sale and said if we could not commit to that, she’d go somewhere else.

Not wanting to lose out on a $20K sale, my boss promised her we’d get them delivered right away.

Sidebar: Yes, you read that correct. $10K for each sofa.

This was a very high-end designer showroom, designated as “To the trade only.”

I could write a book about the extravagance and excesses I saw during my years in this industry, the least of which is a $10K sofa.

After the transaction was finished, the designer left for her home in Newport Beach, about 20 minutes away from the showroom.

As soon as she walked out the door my boss said, “hey, can you and Grant throw these in your bus and deliver them? You can just go home after that.”

The “bus” was my 1972 VW Bus. Grant was my friend/roommate who also worked at the showroom.

I said “sure,” because it was Friday, and getting out of work early meant our weekend partying would start sooner.

“Oh, and she’ll give you 60 bucks for the delivery.”

It’s hard to explain the value of 60 dollars to a seventeen-year-old in 1985.

Sure, you can do the inflation calculation which shows it as $136.68 in today’s dollars, but that doesn’t tell the whole story.

Back in a time before free diversions like social media, the internet, and YouTube, you usually had to go somewhere to have fun. This meant the cost of fuel at least, and more likely an additional expense like parking, admission, and/or alcohol.

Which made every dollar that much more valuable.

Suffice to say, it was a no-brainer to do the delivery. I took $10 to fill up my car, Grant and I split the rest, and off we went.

Not long after the delivery, my boss started offering our services as incentive for people to buy items off the floor. And before we knew it, we had a decent side business.

$40 for a chair to Laguna.

$125 for a dining set to Coto de Caza.

$75 for a sideboard to San Clemente.

We even took a road trip to San Luis Obispo to deliver a glass coffee table for $500 – then partied all weekend with friends at Cal Poly SLO.

It wasn’t long before we figured out that this could be a real business.

And for 20 years it was, until I sold it in 2005 to trade full time.

During that time, I dealt with hundreds if not thousands of interior designers – two of whom were Cal Schmidt and Claude David.

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Interior designers are an interesting breed.

As a group they are an overwhelmingly creative, a trait that’s controlled by the right side of the brain. Also, the same side that controls – or better put, creates but doesn’t control – emotions.

Impatient, petulant, and dramatic, there isn’t a more entitled group – including everybody’s favorite punching bags, Millennials.

And as less left-brain centric – the analytical side – things like budgets, deadlines, and paying bills are, let’s say, deemphasized.

Bottom line, they can be very hard to work with.

Cal and Claude were different, and I liked them both right from the start.

But they couldn’t be more opposite.

Cal was born in Southern California and raised by socially progressive parents. Claude was the product of a devoutly religious couple and grew up in rural Tennessee.

Cal was a bon vivant, man about town, a patron of the arts, and a gourmand who thought nothing of hosting a party of 200 at his Laguna Beach home.

Claude was a homebody who rarely socialized.

Cal was openly, proudly gay, and was well-known and respected throughout that community.

Claude was closeted, with a wife and two teenage children, his secret protected only by the unwritten “don’t ask, don’t tell” rule so ingrained in society at the time.

Both were extremely talented, but Cal had a massive ethical blind spot when it came to dealing with his clients, whereas Claude did everything strictly by the book.

To illustrate this, I first need to explain the byzantine way that high-end interior design goods are priced.

The interior designer is the client of the manufacture, and the end user is the client of the interior designer. And the job of the manufacture is to protect their client by doing whatever they can to make sure the end user can’t independently ascertain the cost of goods.

Here’s how it works;

Richie Rich hires Debbie Designer for his new house. Debbie will spec all the furniture, art, wallcoverings, accessories, etc., pay for it, have it installed, then present Richie with a bill for monies paid and her design fee.

The catch is, none of the manufactures will deal with Richie direct. They will only deal with somebody who has a resale license and is a member of a professional interior design society. That’s their client.

They won’t even let an end user come into one of their design showrooms unless they are accompanied by a designer.

And that’s where things get dicey.

When a designer takes their client into a showroom to show them different options, the client will see a price on each piece. This the retail price.

But that’s not the price the designer pays.

The designer gets a 50/20 discount, meaning, 50% off the retail price, and then another 20% off that.

Some particularly good clients even get a 50/20/10 discount.

With that discount, a $10,000 armoire would cost the designer $3,600 – the net price.

Ethical designers (see: Claude) will show that price on their invoice and add their design fee on top of it, usually somewhere between 15%-25%.

Unethical designers (see: Cal) will show the retail cost on their invoice and then add their fee.

So that armoire that cost the designer $3,600 might be billed to the end user for as much as $12,500 – about a 250% markup.

An unethical designer can get away with this because manufactures won’t divulge the net price to the client, and besides, the Ritchie Riches of the world are super rich, and paying attention to the markup on their furniture is the least of their concerns.

But they can only get away with this for so long. Eventually, if they stick around long enough, do a job big enough, or run into an anal-retentive Ritchie Rich, they’ll get caught.

And once they do, their name will be mud not only among respectable designers, but among all the Ritchies of the world – whose network will disseminate the info rather quickly and efficiently.

So most designers billed their clients based on prices closer to the net than to the retail.

Claude only billed off net. But Cal billed off retail – and then some.

Cal and Claude didn’t cross paths too often, which was just as well as they hated each other.

Cal loathed Claude because he didn’t have the guts to “come out” – his words - and would endlessly needle him about it whenever the odd event brought them together.

And Claude despised Cal, resenting the largess and extravagance of his lifestyle, illicitly bankrolled off the backs of clients.

Claude consoled himself with the knowledge that it was only a matter of time before Cal’s devious ways caught up with him and blew up in his face, and was convinced that by treating his clientele fairly and honestly, his reputation would only grow, leading him to much greater success than Cal.

Which is exactly how things went.

Autopilot

The Lund Loop - Your weekly update on markets, trading, and life.

The little boy ran through the house, narrowly avoiding collisions with uncles, second cousins, and others from the four generations of family gathered for the holiday weekend.

His destination, the kitchen, where relatives were busy preparing a multi-course meal.

He arrived to see his mother in the corner, working on the main dish.

“Whatcha you doing mom?” he said.

“I’m making the roast,” she replied.

“How do you do it?”

“Well, come over here and see.”

With that, the little boy dragged a barstool to the counter, perched on the edge, and began watching intently.

First, she washed the vegetables – carrots, potatoes, and onions from the garden – then peeled and chopped them, before placing in a bowl and tossing with virgin olive oil.

She then put the roast on a cutting board, sliced off one-inch on each end, and lightly scored the top down the length in quarter inch intervals.

Next, she stripped the needles off a fresh sprig of rosemary, and once finely chopped, sprinkled them into a bowl of softened butter, mixing it by hand.

Taking care to fill the score marks, she spread herb butter all over the roast, placed it into a pan, added the vegetables, and seasoned everything with fine sea salt and Malabar pepper.

Finally, she poured a cup of homemade beef stock into the pan and placed it in the oven.

“So, what do you think?” she said, turning back towards her son.

“Pretty cool,” he said. “But I’ve got a question.”

“Okay.”

“Why did you cut off the roast on each end?”

Chuckling, she replied, “because that’s how your grandfather taught me to do it.”

The boy smiled, kissed his mom, and took off outside towards the porch, where he found his grandfather.

“Grandpa?” he said. “I watched mom make the roast for dinner. She said you taught her to cut a part off each end?”

“That’s right,” his grandpa replied.

“How come?” said the boy.

“Because that’s how my mother did it.”

The boy hugged his grandpa and ran back into the house, through the foyer, past the staircase, and into the grand room, where sitting by the fireplace, wrapped in a throw, sat his great grandmother.

“Great grandma?” he said. “when mom made the roast tonight, she cut off a little bit on each end. She said her daddy taught her to do that. And he said he did it because you did it.”

“That’s right,” she said.

“But grandma, why did you do it?”

“Well sweetie, I did it because I didn’t have a pan big enough to fit the roast.

----

Autopilot.

It’s great for airplanes, Teslas, and conversations with mind-numbingly boring co-workers at the office Christmas party. But it’s not so good for progress, personal growth, or leaving the past behind.

For much of my life I’ve been on autopilot.

In the way I think, act, and react.

But I’ve challenged myself to change.

The Lund Loop is part of that process. You are part of that process.

The current market feels bad. It is bad.

And it’s tempting to go into autopilot mode and stress out.

But as was said about disco at the height of its craze, “this too shall pass.”

Instead, I’m focusing on where I am now, opposed to where I was one year ago.

And it’s a much better place on almost every metric.

I’m writing (fairly) regularly.

My health is good - I’ve gone to back to yoga.

I’ve rediscovered my long-lost love of books, literature, and poetry.

My kids are older (boo), but healthy and happy (yay).

And I’ve had a chance to meet a ton of new people this year via the Lund Loop, social media, and in person.

So take that, stupid autopilot.

And for those of you who are stressing out about the market, this is a good, short bit of wisdom that might make you feel better.

Jim O'Shaughnessy@jposhaughnessy1/Right now: Take a deep breath, sit down, and write about how you feel about what is happening in the market. Be freeform, and be honest. If you feel a pit in your stomach, write about it. If you feel jittery, write about it. If you think this is the next financial crisis,
Jim O'Shaughnessy@jposhaughnessy2/write about it. If you feel like selling out and going to cash, note that too. Write about every worry, frustration and uncertainty you are currently experiencing. Then date it, and put it away. Chances are very good that when you read it again 12-18 months from now, you'll
Jim O'Shaughnessy@jposhaughnessy3/be shocked you felt this way. Your brain will do somersaults to try to convince you that you *really* didn't feel everything you wrote, because things will have calmed down. Corrections and bear markets are a feature, not a bug of the stock market. Without them, there would
Jim O'Shaughnessy@jposhaughnessy4/be no equity risk premium. Look back at EVERY OTHER market decline and remember, people were feeling like that was the end too. It wasn't then, it isn't now. This is actually a healthy, if painful in the short-term, action. Most important, remember, this too shall pass.

I hope you and your loved ones have a Merry Christmas (or belated Happy Hanukkah) and a Happy New Year.

See you in 2019.

Tweet o’ The Week

🎄Brian Lund🎄@bclundMillennial Trader Claims "Didn't Know Market Could Go Down." Demands Refund.

Level Change

Please see disclaimers at the bottom of this newsletter.

There’s not really not much to say about the market this week.

It’s a friggin bloodbath. Everybody knows it. And nobody knows where it’s going from here.

What I will say is that I have never seen so many support levels get sliced through like they’re not there.

This week I’m just going to put up some charts that show previous support levels - which are now resistance levels (red) - and the next set of potential support levels (green).

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S&P 500 Index - SPX

When I first showed the top chart a number of Lund Loops ago, some people took me to task for putting in the red support line, saying the index would never drop that much.

And to be honest, I didn’t think it would either.

The bottom chart shows where we are today, and you can see the original support level right above the “Level To Watch” note.

Week: -7.05% YTD: -9.6% From ATH: -17.5%

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NASDAQ-100 Index - NDX

Same deal - before and after.

NDX officially entered into bear territory this week, down 21.4% from it’s all-time high waaaaaaayyyyy back in October.

Week: -8.32% YTD: -5.5% From ATH: -21.4%

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Dow Jones Industrial Average - DJIA

Sliced through levels just like the other indexes.

Week: -6.87% YTD: -9.2% From ATH: -16.3%

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CBOE Market Volatility Index - VIX

The VIX broke out of a flag formation with conviction this week.

Ugh x 1000.

Week: 39.02%% YTD: 175%%

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Apple Inc. - AAPL

Week: -8.91% YTD: -10.93% From ATH: -35.3%

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Amazon - AMZN

Week: -13.47% YTD: -17.78% From ATH: -32.4%

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Facebook - FB

Week: -13.27% YTD: -29.19% From ATH: -42.4%

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Netflix - NFLX

Week: -7.66%% YTD: 28.35% From ATH: -41.2%

It’s Good, It’s Good

Is there any lower form of human being than the package thief?

Watch a few of these scum of the earth get what they deserve, courtesy of a highly engineered glitter bomb.

Package Thief vs. Glitter Bomb Trap

— —

This week, my son - who has never once mentioned the word “football” - suddenly asked me if I knew what a “Hail Mary pass” was.

I said I did, but better than explain what it was, I would show him.

And for guys my age, only one name comes to mind when I think of the Hail Mary - Doug Flutie.

This video gives some great context and background on the famous play, as well as a reminder of how unlikely it was that Flutie was even in the position to make the play in the first place.

Then, thanks to YouTube algos, I was served up another video that reminded me that Flutie actually had a couple good years in the NFL.

Doug Flutie’s Hail Mary

Doug Flutie gets call from the Bills

— —

This week marked the 21st anniversary of Chris Farley’s death.

Insight Information

The Lund Loop - Your weekly update on markets, trading, and life.*

*Please see disclaimers at the bottom of this newsletter.

In the 1984 movie The Big Chill, a group of student activists, 20 years removed from college, come together for the weekend after their friend commits suicide.

Most have long since abandoned their youthful idealism and now occupy the “straight” world they once protested, no more so than their host Harold, who along with his wife and fellow alumnus Sarah, has spent his post-college years raising a family and building a successful business.

At the other end of the spectrum is Nick, a wounded Vietnam vet who has isolated himself from friends and become a drug dealer, treating his PTSD with a rotating concoction of pills from his inventory.

Early one morning while out jogging, Harold informs Nick that his company is going to be bought out and anyone who owns stock will 3x their money. He suggests that this could be a chance for Nick to “get into a different line of business.”

This of course is inside information, which, as Harold dutifully notes, is illegal to share or act upon. It’s also the stuff people secretly dream about.

The idea of having exclusive knowledge guaranteed to affect a stock’s price is exciting, exhilarating, even sexy. It’s a staple of lazy afternoon fantasies, motion picture sub-plots, and the subject of a recurring dream I had back in the late 90s.

After pausing at a four-way stop, the car in front of me starts out into the intersection, when “BANG!” – it’s T-boned by a semi-truck.

I get out of my car and rush to the twisted wreckage where I find the driver laying on the pavement, bloodied and broken. As I roll him over, I realize it’s Bill Gates – and he’s barely clinging to life.

Knowing that every second is critical, I make a mad dash to the phone booth on the corner, where, after instructing my broker to short every share of Microsoft he can find, I immediately call for an ambulance.

Technically, this doesn’t qualify as insider trading as it’s pubic information, albeit temporarily known only by those who witnessed the accident.

But there have been numerous times in the past – times from which the statue of limitations has long passed – where someone I know very well, that definitely isn’t me, was approached with information about a company that, if true, would reside in let’s just say, “a gray area.”

And every single time it was wrong.

That’s because most of us will never be close enough to the locus of power in a publicly traded company to receive any real inside information. And we don’t need it anyway. We get in enough trouble without it by using our insight information.


in·sight

/ˈinˌsīt/

Noun

The capacity to gain an accurate and deep intuitive understanding of a person or thing.

"this paper is alive with sympathetic insight into Shakespeare"

synonyms:

intuition, discernment, perception, awareness, understanding, comprehension,  acumen, judgement, acuity, vision, wisdom, prescience, savvy


It was the height of the dot com boom and the domain flipping craze was in full swing.

Business.com had just sold for $7.5 million and speculators were rushing to register any words or phrases they thought might have value.

Mind you, these were not active internet businesses being sold, just domain names.

A little late to the game, but not wanting to miss out on the action and sure I had the insight to find a valuable domain the public had overlooked, I began my search.

My idea was to start with obvious, well-known themes, then go downstream.

For example, Disney, Disneyland, and Disneyworld dot com would surely be taken. But what about character names? Maybe nobody had yet thought of Mickey, Pluto, or DonaldDuck dotcom?

They had.

But I continued, going from idea to idea, brand to brand, concept to concept, trying to find a hidden gem out in cyberspace.

At one point I theorized that the names of classic TV shows might still be under the radar and racked my brain to come up with the most iconic – those whose value would only increase over time.

And then it hit me. Star Trek.

The original series came out before I was born, and though it was constantly rerun after ending, I never paid much attention to the show. In fact, I only remembered two episodes – “Spectre of the Gun” and “What Are Little Girls Made Of?”

The first because of it’s surreal, Twilight Zone like depiction of the historic gunfight at OK Corral, and the second because of Sherry Jackson (Google it/her).

But despite my ambivalence, I knew the series, movies, and characters were beloved by millions. And if my hunch was right, there was a chance I could snag a related domain and make some big bucks.

StarTrek.com was taken of course. Enterprise.com too. So I went down the list of characters, starting with the lesser known ones first…

MisterChekov.com

MisterSulu.com

Scotty.com

DrMcCoy.com

Bones.com

LtUhura.com

But they were all taken.

And as it was no surprise that MrSpock.com was gone as well, I almost skipped CaptainKirk.com – so imagine my shock when I found out it was unclaimed.

Instantly, I locked it up.

I knew it, I thought to myself.

I knew if I thought hard enough and approached the process from a unique perspective, I could find something everyone else missed - and capitalize on it.

I sat back in my chair, self-satisfied, intoxicated by my fantastic insight and ability to see what others couldn’t, all the while counting guaranteed profits in my head.

A few days later I called my best friend, a serious Trekkie, informed him about my coup and rambled on about the greatness that was I.

“CaptainKirk.com?” he asked. “You got CaptainKirk.com?”

“Yep,” I answered.

“Are you sure about that?” he continued.

“You sound surprised,” I said.

“It’s just hard for me to believe that a domain like that wouldn’t already be taken.”

“Yeah, well it obviously was missed. Not everyone can think like I do.”

“Uh huh? So, you’ve got CaptainKirk.com?”

“Yep.”

“C-A-P-T-A-I-N-K-I-R-K dot com,” he said

“Yes!” I shouted, irritated at the repeated questioning.

And looking down at my domain receipt, repeated back to him….

“C-A-P-T-I-A-N….”

“Oh? Wait?”


Very few of us will have unique insights that guarantee how a stock will act. Yet everyday I talk to people who’ve convinced themselves that they do.

For illustrative purposes, let’s take a stock that I’ve mentioned here many times before, Immunomedics (IMMU).

Immunomedics is small biotech company, with no significant revenues, and a very promising cancer drug which has performed well in testing and is waiting on approval from the FDA – scheduled to happen sometime in January.

The stock closed at an all-time high in early September of $26.70. It’s currently trading at $17.57 and the chart looks like hot death.

Yet the IMMU Kool-Aid drinkers are convinced that as soon as the approval is announced the stock will rocket back up to those all-time highs – or beyond.

I think IMMU has a good chance of getting approval. And if they do, I think they have a bright future. And in the spirit of full disclosure: I’m long IMMU.

However, as they say in Japanese, oshiri ga ookii – here’s the big but(t).

This would mean that in the next 4-6 weeks, IMMU is guaranteed to jump 54% at a minimum.

Does that make sense to you?

I know that the IMMU bulls have listened to every conference call, followed all the clinical trials, studied the efficacy of the drug, and done the post-approval revenue extrapolations.

But so has everybody else. Including brokers, hedge funds, institutional buyers, family offices, money managers, quant funds, bio-tech specialists, and a myriad of professionals whose only job is to find a home for capital seeking return.

And they know everything the IMMU bulls know. Hell, a newborn dingo in a cave in Western Australia knows what the IMMU bulls know. But the pros know even more.

And they ain’t buying it. At least not yet.

Or, what if they’ve bought it and approval is already factored into the price?

My pal Brian Shannon says, “only price pays.” But meaningful insights only come from price as well.

Okay, what does this mean? How does it relate to real-world investing/trading?

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