by phil - January 28th, 2015 8:37 am
Apple knocked it out of the park!
Last night, AAPL reported the most profitable quarter of any company in history – EVER!!! – making $18.04Bn in the last 3 months of 2014. That's $8.3M per hour in PROFIT with almost $1Bn/day in revenues ($74.6Bn for the quarter). The company made $3.06 for each $109 share and that was already up 10% since last Q.
I'm sure NOW it is obvious why AAPL was our Trade of the Year in 2012 ($52 when we made that pick) as well as 2013 ($72) and again this December, even though it was alread hitting $110 after the split. Of course, we didn't just play the stock at PSW, we played the options and our Top Trade Idea for Dec 17th was:
Our 2013 Trade of the Year is pictured on the left and made the full 614% expected and our 2014 Trade of the Year parlayed that money into the following:
That trade is already 100% in the money and will make the full $126,000 (525%) if AAPL holds $85.72 (post split), which is why we were able to be be nice and aggressive with our 2015 Trade of the Year, going for another 650% if…
by phil - January 27th, 2015 8:14 am
CAT's earnings are a grave concern as they are generally a good indicator of the Global Economy and the low demand for oil and other commodities led the mega-corp to miss by 20% with a 25% drop in Q4 profits. MSFT and PG were also disappointing but you can watch the MSM for that analysis, so I won't bore you.
What I will tell you is how you can make HUGE amounts of money off this information and that was easy as we simply shorted they /YM Futures this morning in our Live Member Chat Room at 17,550 and already the Dow is down another 150 points at 17,400 for a very nice $750 per contract winner. This is one of the best uses of the Futures, getting a huge jump on people who have to wait for 9:30 to trade the market – HOURS after the news comes out.
Of course we got the MSFT news last night and MSFT is a Dow component and, of course, 17,600 is the Must Hold line on our Big Chart, so it was a natural shorting line, per our 5% Rule™. Now that we've had our morning fun, we'll have to see what sticks but we already shorting the Russell (/TF Futures) at 1,200 as well as we don't think much of the data we're seeing so far:
Even as I write this (8:07), /TF is crossing below 1,190 (now our stop), which is up $1,000 per contract since our live call to short it in chat at 6:49 this morning (sent out to our Members as an Alert). What can be more obvious than shorting the Dow when 3 Dow components miss on earnings? This is what we teach our Members to do at Philstockworld – obvious stuff that makes money!
Other obvious plays were going long on /NG (Natural Gas Futures) when it was going to snow (up $750 per contract yesterday) and long on oil when GS pushes it back down to $45 with more scary announcements that it will go to $30 (this time with charts!), which is exactly…
by phil - January 26th, 2015 8:31 am
The Anti-Austerity Party won in Greece yesterday.
What it means for the markets is hard to say on day one of the new Government but it's not looking good for the people who Greece still owe over 300Bn Euros to. As you can see from this chart, that's 170% of their GDP and, frankly, its unpayable and it's ridiculous to pretend otherwise. Yet, for the past 6 years, instead of helping Greece out by forgiving or refinancing the debt at low rates, the EU has lent them more money in exchange for ramming harsh austerity measures down their throats.
What a shocker that 6 years of bottowing another $130Bn without using any of it to boost the economy (cutting back all stimulus spending, in fact) did not, in fact, lead to an economic recovery in which the debt was paid off. In fact, the debt is 70% worse and that doesn't go away and the now the lender (the ECB and their Bankster Buddies) want MORE austerity to make sure they get paid first.
Well BS to that says any rational person and BS said Greece this weekend as they voted in Alexis Tsipras and his Syriza Party, who are now just 2 seats shy of a full majority in Parliament. Already though, Tsipras has calmed the markets by calling for gradual negotiations with the EU, not an outright revolt:
“There will neither be a catastrophic clash nor will continued kowtowing be accepted,” Tsipras, 40, told crowds of cheering supporters in central Athens late Sunday. “We are fully aware that the Greek people haven’t given us carte blanche but a mandate for national revival.”
Of course, he hasn't actually been sworn in yet. The Syriza party is a Socialist, almost Marxist party – they believe in taxing the rich and raising minimum wages – and not in the wimpy way the US Democrats believe in it – it's going to be a very interesting couple of weeks. Make that months, actually as the real tipping point comes in August, when Greece needs Billions in new financing to repay/rollover bonds held by the ECB. IMF loans…
by phil - January 23rd, 2015 8:31 am
It sounds like a lot of money but, already today, it's worth $40Bn less than it was on Tuesday. Since Draghi's QE program doesn't begin until mid-March, at this pace (-$20Bn a day) by March 20th the whole Trillion will be gone – how's that for a magic trick?
Of course we don't think the Euro will keep falling to zero over the next 50 days but losing 2% per day of your entire net worth, even for just a couple of days, is bound to have some investors jumpy about their Euro-denomiated assets. That's why the Euro continues to slip towards parity today ($1 per Euro), hitting $1.11 this morning, after opening yesterday at $1.165.
Our mighty Dollar flew up to 95.77 this morning as investors flocked to safer harbors. It's really the US or nothing now as Abe has desroyed they Yen and China's Bad-Loan Ratio jumped 10% in Q4, now making up 1.29% of outstanding debt and forecast to climb to 1.6% by the year's end.
The 0.13 percentage-point increase in the bad-loan ratio was the biggest since the regulator began compiling quarterly data in 2004 and another 0.31% by the end of 2015 will, of course, make this the worst year on record.
Nonetheless, we are back on a bullish run in the Global Markets as everyone loves free money. Well, everyone who's rich, anyway – and anyone else doesn't matter, so party on people!
As I mentioned in yesterday's post, we were long in the morning, then flipped short after Draghi's announcement gave us an initial pop and then we flipped long again at 10:28 in our Live Member Chat Room and you can see how well those calls went for the day.
Those of you who read us regularly know that our long line for Natural Gas Futures (/TF) is $2.825 and we got anoter entry there yesterday as well with a very nice $750 per contract run back to $2.90 yet again (and up over $1,000 this morning at $2.925).
by phil - January 22nd, 2015 8:23 am
I've got Draghi fever, she's got Draghi fever
We've got Draghi fever, we're in debt
She's gone Dollar crazy, I've gone Euro hazy
Ain't no thinking maybe, we're in Debt
The ECB kept rates on hold this morning but that doesn't matter.
What matters is the unveiling of Mr. Draghi's mad plan to boost the EU Economy (such as it is) through a bond-buying program of AT LEAST $55Bn per month. Anything less than that will be VERY DISAPPOINTING as the markets have already baked in some massive QE from Draghi and the ECB.
Realistically, there's almost nothing Draghi can do to "fix" Europe today or to meet the inflated expectations of the market.
Sure we may get a pop on a nice program but it's not likely to last and we still have the Greek elections on Sunday, which can throw the whole Union back into turmoil next week.
As you can see from the chart above, Draghi is expected to annound a stimulus program that already puts the ECB's balance sheet back to where it was at the height of the Greek crisis (the 2nd one) and that's without (officially) a new Greek crisis – so it's a Hell of a lot of firepower spent just to fight the deflationary bogey-man.
As noted by Bloomberg, Draghi still has to negotiate the tricky issue of buying government bonds at the negative yields currently prevailing across much of the euro zone. Paying for the privilege of storing money in, say, a three-year French bond effectively locks in a capital loss if you get back less than you paid.
A lawyer could argue that that constitutes "monetary financing" of governments, which is forbidden by the monetary union treaty. Draghi has already seen off one legal challenge to his power to buy bonds; that fight may be rekindled in the near future.
by phil - January 21st, 2015 8:15 am
The state of the union is STRONG!
That was the word from our President last night as he set the agenda for his last two years in office. The GOP response was a very predictable no way and Uncle Rupert's Journal didn't waste a second publishing a front-page editorial blasting the President for his ridiculous idea of having the rich pay their fair share of taxes in order to improve the lot of the middle class.
In the 1944 film “Gaslight,” a con artist manipulates his new wife psychologically to make her doubt her own sanity in a scheme to steal her inheritance. That’s increasingly the way to understand President Obama ’s behavior toward Congress and especially the tax increase he floated in Tuesday’s State of the Union. The only plausible rationale is that he thinks he can gain politically by driving Republicans nuts.
It goes downhill from there… The true State of the Union is going to be two years of gridlock and bickering with nothing much being done – not too different from the last 6 years or the rest of the century, which has seen average household income drop 10% while the top 1% tripled their wealth.
Can we really afford 2 more years of the same? Romney and Bush III want to make it 10 if they can. Joni Ernst (I know, who?) delivered the GOP response, which centered on a promise to repeal the Affordable Care Act, "which has hurt so many American Families," though she couldn't actually name one, when asked later. Instead, in her speech she said:
by phil - January 20th, 2015 8:17 am
2,027 is our goal today for the S&P.
After that, we'll turn our attention to 2,040 tomorrow (the 10% line on our Big Chart) and we need 22 Nasdaq points to make that strong bounce line and then we'll look for 4,700 to come back on MORE FREE MONEY from the ECB on Thusday.
Our Bounce Lines from last were were (and still are):
China made their own weak bounce overnight and that's already enough to get our Futures back on track but, as you can see from the chart on the left – this morning's bounce to 3,173 erases only 50 points out of a 275-point drop, which just happens to be the very definition of a weak bounce per our 5% Rule™.
by phil - January 19th, 2015 5:21 am
It's Martin Luther King day so the markets are closed.
It's a good day to read his "I Have a Dream" speech – really is amazing when you think of the great social change in this nation that was set in motion by one man with a vision. Here's a great video of the actual event.
It is a testament to the power and effectiveness of Dr. King's movement that, even to those of us who were alive at the time, it seems like it must have been another world where a man had to speak out against such injustice as if it wasn't obvious to the majority of people that segragation, whether by law or by practice, was an outrage.
Sadly, many of the lessons he taught us have already been forgotten, some great quotes:
- Nonviolence is a powerful and just weapon. which cuts without wounding and ennobles the man who wields it. It is a sword that heals.
- Nonviolence means avoiding not only external physical violence but also internal violence of spirit. You not only refuse to shoot a man, but you refuse to hate him.
- It is not enough to say we must not wage war. It is necessary to love peace and sacrifice for it.
- The hope of a secure and livable world lies with disciplined nonconformists who are dedicated to justice, peace and brotherhood.
- Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.
- Never forget that everything Hitler did in Germany was legal.
- We will remember not the words of our enemies, but the silence of our friends.
- The past is prophetic in that it asserts loudly that wars are poor chisels for carving out peaceful tomorrows.
- A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.
- A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.
- One of the greatest casualties of
by phil - January 16th, 2015 8:14 am
It's been this kind of week:
The hits just keep on coming as bad news is suddenly bad news for the markets and even the promise of Draghi waving his money wand next week isn't enough to keep investors in equities. $4.1Bn flowed out of US-based stock funds according to Lipper while $4.3Bn went into bond funds – driving TLT all the way to $135, where we decided to initiate a short position in our Short-Term Portfolio.
Our STP finished the day yesterday up 92.5% and we're still very much on the bear side, up 16.6% for the week ($16,600) while the S&P fell 3.3% – AND THAT IS HOW YOU HEDGE! Yes, our bigger and bullish Long-Term Portfolio lost 1.8%, but that was "only" $8,600 so our net for the week is up $8,000 as our BE THE HOUSE – Not the Gambler strategy continues to pay off for the first two weeks of 2015.
Of course $8,000 a week is $400,000 a year (+66% to our $600K start), so it's not likely that we will be as much on the right side of trades all year as we were this week, but it's a fantastic example of how well our balanced portfolio approach works under extreme market conditions. We made only a couple of minor adjustments (like adding the TLT shorts) but, for the most part – we don't have to do anything to get that performance when we call the direction right.
Monday is a holiday in the US, so we're certainly not inclined to flip bullish today – or even neutral, for that matter. All of our weak bounce lines were broken, which is what we feared would happen on Tuesday, when we set them. Fortunately, our 5% Rule™ prevented us from capitulating during the run-up last week and now we are reaping the rewards on the way down!
Last Friday, for example, we mentioned that our Members had added $13,000 of TZA longs to our Short-Term Portfolio and TZA has rocketed up from $12.33 (a trade idea we published for free for…
by phil - January 15th, 2015 7:15 am
Oil hit $50 just after midnight, /NG topped out at $3.37, gasoline at $1.385 and the markets spiked up almost 1%. India cut their reserve rates 0.25% – a total surprise. Also, positive notes from China and /NKD is up from 16,600 yesterday to 17,200 just now (and I like /NKD short on that line with tight stops above).
Just two hours later, ALL HELL BROKE LOOSE and the Nikkei dropped 300 points (now more) and those /NKD shorts gained $1,500 in just two hours. That one was more luck than skill as the Swiss National Bank made a VERY SURPRISING announcement that they were removing their 3+-year currency peg to the Euro and that sent the EUR/CHF pair from the usual 1.20 all the way down to 0.85 before stabilizing at about 1.02, down 20% in minutes!
Needless to say, hedge funds who made the very usual, very normal short bet on the Swiss Frank are F'd this morning. As the Euro had been very weak recently, there were a large amount of short bets on the Franc (CHF) in expectations of the SNB stepping up their Euro-buying program to get back to their usual 1.20 goal.
But nooooooooooooooooooooo! They went the other way by 20% and, as I reminded our Members this morning, those wrong way currency contracts (and there are 1M of them on this chart) lose $1,100 PER PENNY move. That's $22,000 on a 0.20 move in CHF x 1M = $22Bn in losses this morning for currency traders. Someone is gonna have some 'splainin' to do!
I already sent out a detailed tweet on the subject earlier this morning, so you can delve further into the subject at your leisure. For now we should contemplate the…