No More Internet Freebies. The Tax Man Won!
It was bound to happen, you just never knew when. On Thursday the Supreme court ruled for the state rights to tax sales that are made on the internet and the revenue will accrue in the states treasury. By a 5-4 vote the court closed a loophole that has stood in the way of the tax man for more than 50 years. The change in the law is that a buyer no longer needs to be in the physical presence of the seller.
The opinion was written by Justice Anthony Kennedy and was split against party lines. Some staunch conservatives joined liberals in the vote. The argument has been going on for decades whether or not the sales tax was against the constitution, The main argument has always been the “Physical presence issue” but that has been voted as unconstitutional. The rule change will bring the world of commerce in line with the updated digital age.
The new rule will be a boom to states that are missing out on an estimated $33 Billion of taxes each year. Because of the ruling, which still frees out of state sellers the duty of collecting the tax, it will be the buyer’s responsibility to pay the tax. Although a form of the rule has been on the books for 50 years, it should come as no surprise that roughly 96% of all transactions have not paid the tax.
Congress could have acted at any time to alter the states rules but chose not to. As usual they were too spineless to take a position that they feared could have a negative result when it came time to go to the polls. Most observers don’t believe that the ruling will have any significant effect on business. After the rules were announced, stock prices of large companies such as Amazon were unchanged. The rule is in now place so we will see how many companies will have the courage to have it enforced.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions here with a short paragraph.
Question: Why are my credit spreads always marked against me during the week?
Answer: When you create a spread, either a credit or debit it creates a liability for the broker and they want to protect their equity. The easiest way for them to do this is to mark the option that you are long on the bid side of the market and the option you are short on the ask side of the market. This will create the worst possible result on the overnight trade. Although the marking of the options by the broker during the week is irritating and causes confusion to inexperienced traders it has no effect on the profit or loss at expiration.
For example, if you are short the TSLA 385-390 call spread for a credit of $2.25 and TSLA’s stock settles at $384.80, you will receive a credit in your account of $2.25 minus transaction fees. The marking that took place during the week is not in play. So, remember the brokers marking’s during the week are meant to give them a degree of protection but that have nothing to do with the P& L when the market closes on Friday. You will always get a full credit if it is a winner and receive a debit if it is a loser.
The Wise Guy Report: The View From The Electronic Floor
Each week I talk about how the Wise Guys (floor traders) find the soft spots in the market and take advantage of price dislocation in three major commodity markets: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). On the equity side, I cover the MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis. This week let’s take a look at last’s week price action in crude oil and gold.
Crude Oil Rallies – Gold Heading Toward A 52-Week Low
Crude oil continued to try to find its way back to the top last week as the support level held at around $65 a barrel. It rallied late in the week, about 4% and appears that the double bottom is going to hold. U.S. rig count went down slightly for the week, breaking a 12-week winning streak. This market continues to bear watching as it appears that the $64 level can now become major support. You shouldn’t sell here but can take a chance from the long side of the market. .
Gold continues to head south as it lost and additional 1.5% this week. From its high back in April major support appears to be in the $1285 level. It is too early to tell if we are going to break out to the downside, so if you want to enter the market at this level, I would wait to see if these recent lows prove to be the bottom.
Get Your FREE Two-Week Trial Subscription
I offer a FREE Two-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. Simply click on the appropriate tab at the top on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- The Bullish – Bearish Credit Spread Strategy: The nuts and bolts of trading weekly credit spreads.
- The 21st Century Covered Calls Strategy: A modern day alternative to the old fashioned covered call strategy.
- The Low Cost Put Hedge Strategy: Sleep at night knowing your portfolio is protected for little or no cost.
- The Earnings Trade: Get in on potential big movers with little or no downside risk.
- The One Day Wonder Trade: Get ready for some real action. A one day trade with great results.
- The Blow Off Top – Bottom Trade: A lot of of action and big moves too.
Each Monday morning by 11:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site. The prices in the reports are Monday morning’s opening prices. In addition, I have a webinar on Thursday afternoon where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $19.95 each per month on a month to month basis with no contract or strings attached. If you subscribe to three, it is only $49.95 per month while you can subscribe to all six for only $79.95 per month which is a 33% discount. I think you will agree that this is a super offer so give it a try. Click on www.optionomicsgroup.com to access the Optionomics Group web site and get started today doing what the pros do – “Don’t Buy Them – Sell Them”.
Mr. Seifert