The GW tokens are working now

A quick note on the status of the Giga-Watt tokens that I was talking about two months ago. Without repeating the details of the GW token rental business that you can find here, the issuance of the token has been successfully completed by now as scheduled. As discussed, the tokens can be used either for renting the mining services directly from the company or for being rented out to those who need additional tokens for the mining services. I'm not an IT guy and has no interest to do mining myself. So my only option is to rent my GW tokens out. I just got the following guidance for the steps how to do the rental business. Well, I just did it today and within a few hours, 16% of my tokens have been rented out. It's amazingly efficient and easy! Keep in mind though, this is a totally new type of rental business that I have no prior experience at all. Similar to housing rental, it got to be dependent on the supply and demand balance and it may take time to rent all the tokens out. I have no idea how long it will take. Also, there are 4 levels of rents that you can choose from for your tokens. I'm trying the highest one for now to test my luck and it works now for part of my tokens. I assume it should logically be much faster if a lower rent level is chosen. If you have any questions, you may contact them for support at  support@cryptonomos.com. They are very fast in responding per my experience so far.

For those of you who have followed my lead to also explore this new opportunity, thank you for your trust. I'm really excited about this new adventure and also a big relief now that I know it is working. While I trust my source for sure, it is after all a totally new exploration that I have no way to know for sure whether it will work. But now I can confidently announce it is indeed working and very well. Let's wish all the good luck for us all together in this new venture tour!

Guide how to transfer WTT from Cryptonomos to Giga Watt & rent them out:

1) make account on giga-watt.com (top right corner)

2) click on + sign next to WTT, and choose Cryptonomos

3) Copy UUID

4) In Cryptonomos cabinet, click send in main interface

5) Then in Giga Watt, when received the tokens, click "..." sign next to + and - signs, choose rental fee and rent out.

other aspects:

1) if you want to rent out WTT, you can only rent out all available tokens

2) don't worry if after renting it still says 0 rented out - dashboard updates once each hour

3) if you need to rent tokens from other tokenholders it is done automatically, you do not need to do anything

4) if button "send" is not working, means your tokens have not been issued yet

Google or Facebook out of business?

Anyone thought about the possibility of Google or Facebook going out of business within 10 years? More precisely, Google/FB’s ad business dies of competition. I may sound having lost of my mind, but just think about what happens to IBM in front of MSFT or Blockbuster in front of Netflix or Kodak in front of the digital photos! I know no one has ever talked about it, so let me be the first one on record to say this. If Google and FB keep their current business model for ads, it may soon be replaced by someone with much creative and innovative ways of doing business. A new revolutionary technology has emerged, which can be compared to the birth of the Internet 20 years ago. It is called blockchain (BC) technology. If you haven’t heard about the term BC, you must have heard about bitcoin, right? That’s the most famous and first ever crypocurrency based on the BC technology.

I’m not an IT guy that I can tell you exactly what the BC is about. But roughly, it is a booking system for records of electronic transactions. Each transaction is called a block and is added up to the previous verified blocks to become a chain like computer codes, hence the name comes. Up until now, all the booking records are stored centralized in one location and therefore are very vulnerable to cybercrime like hacking. BC has revolutionized to allow the booking records to be stored not in one or two computer systems but across the whole Internet via thousands of computer nods. That’s why it is so safe that there is zero chance the BC itself can be hacked. Don’t be confused about the stories about hacking of the bitcoin exchanges. The exchanges (like banks) can be hacked but not the BC itself.  It is estimated that a hacker will need 1$ billion worth of the computing power to hack the BC across the Internet and it has to be done within 10 minutes. In theory it is possible but in reality zero chance. This decentralized model can virtually eliminate cybercrime. That’s why you will start to hear more and more businesses will heavily invest in this technology. The financial business is on top of the list as they are burdened by all the transaction records that are being hacked every day. That’s why JPMorgan has recently announced that it will invest $9 billion in the blockchain technology. Microsoft is also moving into it now. Very soon this will become the new norm for doing business, just as what the Internet has become to date.

So back to the topic today. Why Google or Facebook may lose competition with the current ad business model? Well, they are making money by acting as a middle man basically by connecting the companies with the customers via their ads and as the result, they get the commission. They are really doing great as of now but this business model may become obsolete pretty soon just like what happened to the newspaper industry for the paper-based ads. Some very smart people have started to develop a system based on the BC technology that can virtually eliminate the middle man but directly connect business to customer. You may have never heard about Basic Attention Token (BAT) which is probably the first digital advertising business based on the BC technology. It has the aim to grow to compete with the dominating ad companies like Google or Facebook by using a totally new and innovative business model. Let me just be clear, the whole BC technology is just at its infancy, even the early stage of the infancy. I don’t mean that this BAT company will necessarily succeed as it wishes. But the point is about the overall trend for the BC technology. I’m pretty sure, if not BAT, there will be some other BC based advertising companies emerge and grow and eventually take over and replace the current business model applied by Google and Facebook. It is just a matter of time. Mark my words, either Google/Facebook change their business model to employ the BC technology or they will be lost just like IBM or Kodak within 10 years!

I'm doing it again

NVDA, the Street darling, has treated me very well lately. Over 2 months ago, I talked about its bearish technical setup and argued that it was a good short candidate. Sure enough, it did start to fall almost immediately. After I took the profit from its initial drop, I got another opportunity to short it but using a different strategy, a stepwise approach to set up a bearish put spread taking advantage of its dead cat bounce. You may see the details here and it was another profitable speculation to short it. We are now getting another perfect setup to short it again. And I'm using the same stepwise approach as well. You see, although it reported a great earning on Aug 11, it got crashed due to the euphoric expectation that could not be met. But the initial reaction was often overdone. I used the opportunity to sell naked puts for NVDA, expecting it to rebound soon. That's exactly what has happened and it has recovered most of the loss in the following 2 weeks. While my naked puts position has shown a great paper gain (over 70%), I don't think NVDA has been out of the woods yet. Actually my intention is to short it again. Technically it looks even more bearish to me than 2 months ago since its weekly chart starts to show a negative divergence. This often means its downside risk is not a short lived thing, but rather it may last for a few months. The nice bounce back in the past two weeks actually creates a bearish Head & Shoulder formation on the daily chart. And we are moving more into the bearish season as we speak. I think a big plummet for NVDA is in the card, probably in the range of 10-15% in the weeks ahead. So, instead of simply closing my naked puts for a nice profit, I leave it open but add another leg with long puts to create a bearish put spread. Given I'm already heavily profitable with the naked puts, this combo position will allow me to short NVDA with zero risk. Actually in the worst case if I'm wrong and NVDA just goes up from here, I can still walk away with some gain. However, I really aim for a much bigger gain from it. If I'm right and NVDA indeed plunges 10% or more, I may harvest 10 times more of a gain against the worst case scenario.


Don't get me wrong. NVDA is a great company with a great potential. I have no doubt it will go much higher in the years ahead but for now, it is simply too much ahead of itself. Whenever there is euphoria developed, the risk can increase exponentially. I think NVDA is probably facing such a dire short-term situation. At least it is not a good time to buy NVDA now. If you have already got great long term gain from it, taking some chips off the table is a good idea. Or add some protection to your long position at least!

When people dare to buy at the last minute....

I was expecting a stronger rebound due to last plunge about 10 days ago but the market could not wait and plunged again last Thu. It went down to test the previous low and even went a bit lower to close and VIX jumped high again, causing a lot of panic. I got a question about the direction of the VIX. Here is how I responded last Friday before opening: VIX jumped again nearly 40% yesterday and it's very overbought as of now. Can it go further up? Sure it can. But the risk is much higher to the downside than upside at this level. It can deflate very quickly when the market calms down for a while. If you hold VXX for hedging purpose, it's fine to keep a bit of it for a worst case. If for trading purposes, I'll look into selling it to take the profits. In any case, it's not a good idea to buy VXX now. The immediate upside is very limited to me unless something really terrible and scary arises.


We still saw some nervousness this morning at opening and S&P went further down and VIX went further up a bit (not much though). Here is the thing. When the market is quite oversold and VIX is very overbought, any further to the extreme ought to be very limited and a turnaround usually will follow soon. Well, it appears we got the turnaround later today and it is especially important to note that traders came in to buy at the last half an hour before closing. It is a strong indicator that traders are not so much fear any more at least for the near future and they can even put in money for the overnight uncertainty. The VIX came down 8% today and its price action is now sending a broad market buy signal and we should see another few days wonder-rally in the coming week or so. Again, this is still a dead cat bounce and S&P may not go beyond 2460 with this bounce.

When people run away from it, what will be the next?

I have talked about junk bonds before, which are risky debts that companies with low rating issue to raise fund for their business. As we often hear, high risk, high return. Given the less security involved for junk bonds, the interest rate is much higher that the more secure bonds. So people hungry for income are very interested in the junk bonds, especially in the current almost zero interest environment. But here is the thing, those junk bond investors are very sensitive to the risk and they are almost always the first ones to run when they start to feel unsafe. That’s why junk bonds tend to lead the stock market by a few weeks to signal the next potential direction. In other words, when junk bonds start to fall, you should be worried what will come for the stock market.

For most of the passed months this year, the market has been extremely calm without any fear as I talked about before. So the junk bonds (HYG) has been in a very strong uptrend and moved up 9% for the year to date. This is quite a big move for bonds you need to understand. But if you decipher it a bit based on its weekly chart, you should notice that for most part of this period, roughly starting from March, a strong negative divergence has emerged in both of its relative strength (RSI) or the momentum indicator (MACD). This is an early warning sign that the current uptrend is going to end. Now for the first time in the past 8 months, we start to see a crack as well in its price actions. It has broken down from its uptrend. This is especially significant when shown up in the weekly chart as it suggests a long term trend developing for the junk bonds. While I don’t mean it will happen immediately, I have a strong feeling that the junk bonds will fall fast in the weeks ago and at least down towards its 50 day MA about 4% from here. If this indeed materializes, it means traders are running away from the risky assets. So what will be the next? A big storm for the stock market may come soon after that!  Following some big drops, the market would try to bounce back for a while. Don’t be fooled by the dead cat bounce for the stock market, friends! The bounce could be quite strong to fool many people into a euphoric mood again and then it may fall apart suddenly, only more severely. Just remember what the stock market is good at: make as many people as painful as possible. Try not to be one of them!

The next target of M&A?

Guessing for a M&A target is obviously very speculative with no certainty whatsoever but if it is a good value stock that you don’t mind holding for long term, it could be a great plus if it is also a potential target for a merger, sort of win-win situation. I think Bristol Myers Squibb (BMY) is probably in such a sweat spot.

For anyone who knows the pharmaceutical oncology R&D, immune-oncology (IO) is THE hottest area at the moment. BMY is by all means the pioneer that has opened a totally new era in the cancer therapy history. It successfully developed and commercialized the very first IO treatment, ipiliumab (Yeryoy), a CTLA-4 inhibitor for melanoma, and then the PD-1 drug, Opdivo for lung cancer. BMY used to be an unbeatable frontrunner for IO until about a year ago when it announced a surprisingly failed result for Opdivo as the first line treatment in a study for the small cell lung cancer. $20 billion was instantly wiped out from the BMY market cap and it has plunged over 30% since then from all time high about $75 to below $50. With such a spectacular correction, BMY has returned to its more normal valuation and since then, it has stabilized and I think its bottom is in for now. In the past few years, BMY has substantially streamlined its business by selling non-core assets and is currently largely focused on the IO business. It has a wide range clinical trial ongoing with different combo strategies for various cancer indications. For sure it won’t be a smooth way but it has a great IO asset not many competitors can compete with. It has very matured good selling products that generate tons of cash flow for BMY and it is paying a great dividend (nearly 3%). A good sign of its bottoming came from another surprising failed clinical trial from AstraZeneca, showing that its PD-L1/CTLA4 combo of Imfinzi and tremelimumab did not show a clinical benefit over Imfinzi alone or chemo at increasing progression-free survival among first-line lung-cancer patients. BMY has a similar combo study   for Opdivo-Yervoy pairing in that setting. Naturally people worried a similar result for BMY and its share price got hair cut by 5% following the news. But very quickly BMY has recovered from the shock. This is a typical bottoming signal, folks, that bad news could not move the stock much but any less bad news could trigger a spectacular run. Holding BMY for long term to enjoy its nice dividends is a great idea but I think there is a good chance BMY could be bought out soon. For companies that are eager to get into the IO business, there is nothing more comprehensive than BMY’s IO portfolio as well as its leading knowledge and experiences in this area. Of course, with BMY’s size, not many can afford to buy it. Still there are a few. For example, Pfizer has a lot of cash but has been constantly struggling with new product lines. It is no shy of actively looking for big size MA. BMY could be a great supplement to its portfolio. GSK has recently announced to re-enter the oncology R&D. Buying BMY could be a jump start. If a M&A occurs, a 30-50% instant appreciation for BMY is highly likely. Even if not, BMY itself will move up substantially in the years ahead along with its further advancing in the IO business. Either way, you can make money with BMY!

A revenge bouncing

What a revenge today!
As I said a few days ago, I thought the market was extremely oversold and could rebound strongly very soon, probably early this week. We got just that today, the first day of the week. Anyone chasing the market down with aggressive shorting late last week is getting slaughtered today. On the contrary, those who dared to buy (me included) in front of the end of the world sentiment are richly rewarded. I have been especially aggressive in shorting VIX actually when it jumped almost 50% within one day. Although seemingly quite risky to short VIX, the reward is really great at good timing. After all, VIX rarely stays very high for long and it always comes down pretty fast after panic hits hard and then subsides. You just need to know when and also how to manage the risk with manageable position size, if VIX continues to go high in the short term. VIX plunged almost over 20% today and UVXY got haircut by 26% as well.


The question is, are we done with the dead cat bouncing? Given how oversold the market was last week and the strength of today's bounce, I think we may see more upside in the short term. S&P may go towards 2490 before the rebound is completed. VIX may likely go below 10 again in the course and UVXY will likely move down towards mid or low 30s in the weeks ahead. Of course, this is all in the context of no new serious geopolitical crisis arising. If that happens, we will see another nosedive much sooner than I can predict.

A dual protection trade

Under the Trump’s administration, almost all the sectors are under pressure in terms of budget, except one that is the largest beneficiary: Defense. It is not an expectation but reality that Trump has significantly increased the defense spending for the years to come. The companies that will greatly benefit from it are no question the defense contractors. Lockheed Martin (LMT) is the top gun among them. It has got billions of dollars contracts from the government which will only increase under the Trump’s watch. In other words, buying LMT has the effect of protection from the national perspective. Of course, don’t argue with me if you don’t agree with what Trump is doing but this is a simple reality. Then comes with the second protection, a micro one for your own portfolio. As I have said consistently, this market is facing some serious risk of correction, probably in the scale of 5-10% that can happen any time. But there seems no fear out there as people just want to chase the markets to new highs almost every day. Believe me, it will stop for a pause at some point and it may not be too far away. It will be great idea to have some protection in place. One way to do so is to buy something that will likely go up during panic. I think LMT may be one of them. Although I don’t know exactly what will trigger the next panic, I suspect it may likely be related to some sort of geopolitical crisis. The North Korea nuclear crisis is on top of the list for now and Trump seems to have increasingly lose his patience with NK. Of course don’t get me wrong that I’m advocating a war with NK. Not at all. I’m wholeheartedly wish this crisis can be resolved diplomatically but we cannot ignore the risk of some sort of military conflicts that may be triggered, if NK continues to take the provocative actions. I haven’t seen any light at the end of the tunnel so far as the little Kin seems very determined to go with his own way to challenge the US. If unfortunately some crisis arise in the Korea Peninsula or anywhere in the world (as the world is really full of potential crises at the moment), panic will hit the market very quickly and hard. I think LMT will be flying in such kind of crisis and therefore could be one type of protection for your portfolio.

Just be aware that this is by no means a value trade, although I really like LMT as a long term dividend stock only if it can be much cheaper than it is now. On the contrary, LMT is quite expensive at the moment but it doesn’t appear to want to go down any time soon in the current environment.

Have you felt the pain?

A 50% jump overnight! As I said last week when the panic strikes, it can cause the volatility to jump 50% in no time. We just got that! VIX shot high by almost 50% on the passing Thursday, which has caused a lot of people into a depressing mood. Did you already have some insurance in place before that? If not, you must be very painful to experience this. So are we out of the woods yet? No, definitely not! You see, while it feels like very severe of a plunge, the decline is even not yet 2% below the SP all time high. I think we are likely seeing a more severe correction in the range of 5-10% in the next couple of months. So if you are itching to do bottom fishing for long term, think twice. Quite possible you will get a much better chance in the weeks ahead.


Having said that, nothing goes a straight line, either up or down. Actually the sudden plunge of the market has caught most of the people off guard, given how complacent most traders were before the hit. This is feel-like bloodbath has caused a rather significant oversold at the moment and the VIX has been extremely overbought. The CNBC talking heads all sound very worrisome and depressing about the market. In such a depressing sentiment environment, the next big move is often going up, not down. Barring any black swan flying out from North Korea over the weekend, I bet we will see somewhat strong bouncing back very soon, probably starting early next week. I want to buy, not sell right now, but only for a short period of time!

A clock-wise trade

What a short 6 weeks period can do to traders mood! Here is what I said 6 weeks ago here: Currently the herd mood is very depressing for oil and I have seen a lot of talks that oil will go down further from here. Considering oil is drastically oversold with depressing sentiment at the moment, a rebound is much likely than an immediate big leg down. But any meaningful bounce should be short lived. Don’t be fooled by the dead cat bounce! It was a spot-on perfect timing of the call as oil almost immediately started to rebound. You would think that people should at least have some memory how depressing their mood was just a few weeks ago and they should think twice if they wanted to change their mood so quickly. Nope! Just like a schizophrenic patient, their mood has 180 degree shifted without hesitation, from extremely depressing to extremely euphoric now within 6 weeks. Such an extreme move will trigger another shift soon, if not immediately!


If you bet for a short oil rebound as I did, then now is the perfect time to take your profit. Any further rise for oil, if any, should be very limited. I think next big move will be downwards. I don't know if this time will push it down to below $40 but I won't be surprised to see low 40s again soon. Aggressive traders can think about SCO to bet for a down draft of crude oil. It is just like a clock pendulum moving from one extreme to another every few weeks. Take advantage of this predictable trading opportunity.

A Russian Alipay?

You may look like a man from Mars if you don’t know Alipay in China. Alipay has increasingly become dominating in the mobile payment system widely used in China that is so convenient that is poised to kill all the cash transactions. This is one of the top secretes Jack Ma has created for Alibaba that may has a far-reaching impact in the global scale. The Alipay success in China makes me think about another dominating payment system widely used in Russia, since I’m taking about buying Russia stocks in general. It is a company called QiWi.

No, by no means I think QiWi has the functionality as Alipay and I’m not aware of anything even near to that in Russia. But QiWi is the one to provide many financial services in Russia, Kazakhstan, Moldova, Belarus, and even the United Arab Emirates. These are still the areas that  are so financially underdeveloped and lagging far behind in the Western standards. QiWi is helping to bridge some gap and may likely become the next Alipay over there if the trend continues. You see, QiWi has partnered with eBay and is planning to integrate QIWI's next-generation payment system, Visa QiWi Wallet, as a payment option on eBay in Russia. This is a strategic move for QiWi to develop high-tech solutions for online electronic payments. I’m even thinking that Jack Ma is probably also targeting Russia to establish his next footstep as part of ambition to globalize Alipay. If this is indeed the plan, I won’t be surprised to hear an announcement that BaBa is teamed up with QiWi to develop an Alipay like cashless payment system for Russia. I like the prospects for QiWi, especially in the context of likely good surprises from Russia as a whole with further economic improvement and the catchup in the mobile business.