Phil's Newsletter

Philstockworld Top Trade Review

The hits just keep on coming.  

When we left off in June, our Top Trades had 70 winners out of 91 trade ideas but 5 of those trade ideas were for Lumber Liquidators (yes, I liked them that much) and they are all winners now so our winning percentage has jumped to 75 of 91 (82%) – not bad!  Of course, a few of the other losers have turned around too but LL was one I simply pounded the table on (which is why I picked them 5 times) so I will move those to the win column.  For the rest – wherever we are when we do our review (usually 2 or 3 months later) is where we mark it.  

Our June review took us to the end of April, for example, where we had 16 winners and only two losers but one of those losers was a Chevron (CVX) short, who subsequently took a nice dive and the other was SuperValue, which was a 2018 $3/5 bull call spread with short $5 puts and we bought 20 for $880 on March 3rd and, as of our June 5th review, they were $670, down $210 for our other loss of the period. 

Now SVU is back at $5.36 and the spread is $1.25 and the short puts are $1 so net $25 x 20 contracts is $500 – still a loser (worse, actually) but what a great trade as all SVU has to do is hold $5 through Jan 2018 and the trade returns $4,000 – that would be a $3,500 gain from here (700%), so still great as a new trade!  

That's why it pays to read our Portfolio Review section over at Philstockworld – many hidden gems there – especially in our "losing" trades – rare though they may be!  That's because we're FUNDAMENTAL investors and, while the charts may go against us for some period of time, if we get the fundamentals right we know that, at some point, the market usually catches on to what we're seeing.  

Top Trades is a fairly new section at PSW, we began it last August so this is our one-year anniversary and we've put out over 100 Alerts, so averaging better than 2
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Fed Up Friday – FOMC Meets with Protesters

I don’t want to be sacrificed in your war against an inflation enemy that isn’t here.”

11 Fed officials met with "Fed Up" protesters yesterday who told them: "You will be leaving us behind,” if the Fed rushes to raise rates, accusing the Fed of “pulling the ladder right up after you have climbed it.  Our communities are still in a great recession” and “Let our wages grow”.  

The protest, misguided though it is, exemplifies how uneven the US economy has become as 8 years of easy Fed policies have done nothing for the Bottom 80% – things have actually gotten worse just below the top of the economic ladder.  Sadly, the Fed doesn't work for the Bottom 80% and the Fed is not the Government, the Fed is a Banking Cartel and the kind of inflation they seek to contain is WAGE inflation – exactly what the Fed Up crowd wants them to "fix".  

Things are very fixed, as far as the Fed is concerned.  In fact, in the past 3 months, US banks made $43.6 BILLION in profits, beating the previous record of $43.01Bn in Q2 of 2015.  So the Fed is doing exactly the job they are supposed to be doing.  They don't want higher wages – they want "full employment" – in other words, they want a high supply of labor but that doesn't mean they have any interest in those employees making a living wage – that would be inflationary!  

As noted by discount store, Dollar General's (DG) CEO last night after announcing weak sales and earnings:

I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that's out there, that demographic, things have not gotten any better for her, and arguably, they're worse. And they're worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.

Making matters worse, he added that the company's core consumers


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$1,500 Thursday – Our Futures Shorts Pay off Big!

Aren't you glad we're back?  

What a great week to start doing free picks again as we started off with Monday's Toll Brothers (TOL) trade idea, which has already gone from a $300 credit to $1,250 for a $1,550 gain (516%) in 3 days, so you're welcome for that one and it's only "on track" to our full 1,433% expectation so, if you want, you could still play it for $1,550 and look to get the full $4,300 in Jan 2018, which is up another $2,750 (177%) from here – but those are just our table scraps at this point!  

Even if you don't subscribe to PhilStockWorld (PSW), where you get these articles EMailed to you pre-market every morning, you can follow us on Twitter or read us on Seeking Alpha, where they had Monday's post ready by 10am - not too bad of a delay for free picks, right?  On Tuesday our 8:38 article was ready on SA at 9:55, just a little behind the Huffington Post (9:36), where we picked up a short play on GameStop (GME) and I called for shorting the indexes:

Still, with the Dollar (/DX) down at 94.30, it should be bouncy here and there's no particular reason for the markets to go higher so I like shorting the Futures, with VERY tight stops, at the following levels:

Dow (/YM) 18,550, S&P (/ES) 2,185, Nasdaq (/NQ) 4,825 and Russell (/TF) 1,242.50.  We can't short the Nikkei (/NKD, now 16,550) because the Nikkei likes a strong Dollar, so it's too risky but a bounce in the Dollar back over 95 will drive Oil (/CL) and Gold (/YG) lower and knock down two big sectors of the S&P. 

This…
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Which Way Wednesday – The Oil Demand Scam

Yawn!  

Not a very exciting market while we wait for Friday's Fed Speak but we have been amusing ourselves picking up some cheap positions – in case the free money train is going to keep on rolling.  The nice thing about sideline cash is you get to deploy it, which is so much more fun that being full of positions you're stuck with and praying they don't drop.  In addition to all those free trade ideas we gave you yesterday (and TOL is up over 10% since Monday's featured pick!), we added 3 more long trade ideas in yesterday's Live Member Chat Room, including IMAX, which spiked higher as we sent out our Top Trade Alert for that stock.  

Our shorting lines remain the same as yesterday and you have to be nimble with those S&P (/ES) (SPY) contracts but the trading range allows for many opportunities to pick up $250-$500 pretty much every day though yesterday we firmed up on shorting the Russell (/TF) at 1,250, with tight stops above that line.  On the Russell, it's $100 per point per contract – so a little more aggressive.

 

We're doing a Live Trading Webinar today at 1pm, EST and we'll do a little Futures Training.  Oil should be in play today with inventories out at 10:30 but we already saw an API Report that indicates an unexpected (by economorons) 4Mb build and that should be good for those USO puts we told you about last week.  Keep in mind the reason for the build is mainly the 500Kb/d Exxon (XOM) refinery is off-line and 7 x 500,000 = 3.5M barrels that weren't refined – duh!  

Of more concern to the oil bulls is the ever-declining demand for gasoline, as evidenced by the EIA revising their gasoline consumption expectations from +4-5% in January to +1.5% in their July estimate and even that may be revised down as US consumption, according to our friends at CNBC, had missed 10Mb/d estimates by 200,000 (2%) all summer.  

Of course, those guys are full of crap and totally misleading you because US consumption is actually 8.1Mb/d so either CNBC and their analysts are incompetent…
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Technical Tuesday – 2,200 or Bust!

Well, we're making SOME progress.  

As you can see from JackDamn's SPY Chart, since gapping up in the 2nd week of August we've stayed tightly in this range between 2,170 and 2,190 on the S&P (and divide by 10 for SPY) which is up around 10% since the Brexit Panic, brief though that was at the time.  

Before then we were hovering around 2,010 so 2,020 is only up 5% and really, it shouldn't be THAT hard to manage, should it.  I hear again and again from the MSM and my fellow pundits how great everything is but, to me, "great" should have a much easier time of gaining 5% in a quarter – this is "good" at best…  

Of course, it's not quite so "good" when we consider that SPY, like the S&P, is priced in Dollars and those Dollars have become 2.5% weaker in the past 3 weeks and more than 5% weaker than they were at the start of the year, when the S&P was at 2,050, which is 6% lower than it is now.  So, in reality (I know, where is that), in constant Dollar terms, the market is only 1% higher since the start of the year since those Dollars you cash in your shares for have 5% less buying power than they did back then. 

If only we had all bought gold in January – or Natural Gas (which was our Trade of the Year), that trade is up 900%!  Speaking of trades, we were dead wrong on Best Buy (BBY) yesterday and they had a fantastic quarter and popped 15% to $38 pre-market this morning.  The way to adjust a short call is simply to roll it to a longer-term, higher strike and generally we roll the loss, not the whole amount.  I'll touch base in Member Chat in case anyone played them short.

Inside of BBY's numbers were poor game revenues and that might bode ill for GameStop (GME), whose earning are Thursday, so another potential shorting candidate at $31.50 and the Jan $35 calls can be sold for $1.40 while the $37 ($7.25)/32 ($3.75) bear
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Choppy Trading and Low Conviction Equals All-Time Highs?

This is a great chart from Morgan Stanley (click for bigger view):

We've sat out the summer rally, for the most part, waiting for a correction that never came and now we enter the last full week of August and we have to consider whether to move some of our cash off the sidelines or to wait into next earnings before making commitments.  Surely there are still bargains to be had and we'll be picking up stocks that are still in the bargain basement but I'm still not willing to chase the ones that are pressing the tops of their ranges – simply too rich for my blood.

We don't need to be "bullish" to make money.  Our Options Opportunity Portfolio (OOP) has gained $5,000 since our last review on 8/5, which is 5% in two weeks (now up 86% for the year) – it has a very healthy mix of bullish and bearish positions and, of course, the bullish positions are our big winners AND we have a very healthy amount (50%) in CASH!!!

Our strategy has been to pick up bargain stocks over the course of the year like Micron (MU) last Sept, Natural Gas (UNG) in Oct, IBM in Oct, Gold (GLD) in Nov, Marvell (MRVL) in Dec, Disney (DIS) in Dec, Biotech Ultra-Long (LABU) in Feb, Oil (USO) in March, Apple (AAPL) in April, Twitter (TWTR) in April, GoGo (GOGO) in May, SunPower (SPWR) in June and Kate Spade (KATE) in Aug – so it's not like we haven't bought anything over the summer – just not much.  

Image result for dividend monopoly cardIt's a very similar strategy to the one we use in our Long-Term Portfolio, over at PSW but with protective elements from our Short-Term Portfolio added in to make a single, well-hedged portfolio that began with just $100,000 last August.  Our most conservative portfolio is our Butterfly Portfolio and that went into expirations up 180% in it's 3rd year – that one is also self-hedging and market-neutral. 

We don't…
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TGIF – Stop the Rally, We Want to Cash Out!

What insanity! 

The chart on the right says it all – this is what $10Tn of stimulus in the past 7 years has bought our Central Banksters – a stock market that says things have never been better to a population who's impression of their own financial health has rarely been worse.

Why The Average American Is Angry (In 6 Simple Charts)

Hopefully the drop in productivity is merely a correction off the fantastic run we've had for the past 5 years, with a 50% increase since 2011 now paired back to a 33% increase but still very good.  Unfortunately, wages have not kept up at all and that's been hurting Consumer Sentiment and making it very hard for the economy to gain any real traction – no matter how much money the Central Banksters thow at their friends.

Of course, if you are a business owner, you are loving this and there is, of course, no better way to make sure your workers keep their grubby little hands off your proifts than to vote Republican as the GOP has been more than 5 TIMES better at keeping a lid on wages than the Democrats and, if you take out the well-deserved 900% increase in CEO and management wages over the same period – you'll find that the Republican party has TAKEN money from the workers and distributed to those of us who created those jobs, on our own, without any help from anyone, ever…

This has, unfortunately, left us with a lot of whiny poor people but plans are being drawn up at GOP headquarters to deal with that as we speak.  Those of us in the Top 10% only collect 48.2% of the income each year and that means there is room for us to get 51.8% more of the money in this country so don't be complacent – get out there and SQUEEZE the bottom 90% until more money comes out!  

Of course, the best way to get the bottom 90% to give up more of their wages is to force them to give them up.  We can do that by raising the price of
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Federally Fueled Thursday – Fed’s Vague Minutes Move Markets

Thank you Mr. Wilson!

That's right, we can blame Woody for this mess that has devalued our fine currency by 5% (so far) this year.  Yesterday, we got a peek behind the curtain at the Fed through the minutes of their July meeting which, frankly, were barely distinguishable from their Jan, March, April or June Meetings and will not likely vary much in Sept, Nov or December either but that doesn't stop the Financial Media from treating these monthly meetings and the minutes of the monthly meetings (16 times a year!) like they are some kind of Earth-shaking revelations – EVERY SINGLE TIME!

Of course, the Fed would never say "we're going to raise rates 0.25% in September" even though it is August 18th and you would think they would know by now but where's the fun in telling people your plans?  It's so much more fun to watch them run around in circles trying to interpret all the hints you drop along the way.  That's why, in addtion to 16 meetings and minutes, we have had over 200 Fed speeches this year – AND STILL WE KNOW NOTHING!

Louise Yamada's chart of 222 years of interest ratesWhen you think about it, though, what difference will it make in your life if the rate is 0.25% or 0.5% next month?  What difference would it make to IBM or AAPL or WMT?  What difference would it make to the UK or China or Japan or Canada or Switzerland?  While 0.5% may bed twice as much as 0.25%, it's only 1/10th of the "normal" rate of 5.18% that has been the average for our nation's history.

There's certainly nothing "normal" about 0.25% interest rates, let alone negative interest rates.  A negative 1% interest rate means that, if you work hard and save $100,000 by the time you are 25, by the time you are 75 you'll get $50,000 back.  Clearly this is not a good plan yet that's what the Fed would have you believe is "appropriate" for the health of the economy – certainly they don't mean your personal economy.

Similarly, if you have $2M saved up for retirement
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Which Way Wednesday – Coming off the Record Highs

Insider Sell Buy Ratio August 12, 2016Insider selling is on the rise.

The rate of net insider selling reached the highest level since June 2015. That surge preceded a previous market high when the Dow was pushing over 18,000 for the first time ever, according to Richard Cuneo, senior vice president of operations at Argus Research.  InsiderTrade reports that, in the week ending Aug 12th, $1.9Bn worth of insider shares were sold compared to just $100M of buys – a 19:1 ratio! 

That kind of stuff should at least bother you a little if you are on the side of the 1 that is buying while 19 are selling, right?  This is just one of dozens of things that don't smell right as the market keeps testing those new highs on record-low volumes.  

Evolution of Atlanta Fed GDPNow real GDP forecastThis morning we noted that Hotel Room Rates fell 2.7% in July (the worst in 8 years) and Air Fares fell 6.6% while the Atlanta Fed's GDP Now Forecasts 3.6% growth in Q3.  Wherever that growth is coming from – it's certainly not from businesss travel…

Actually it's housing that's driving the forecast with Residential Investment growth projected to be up 2.4% from 0.4% in the previous reading.  So we'll be keeping an eye on reports from home builders to see if there's more signs of a turn-around there but Retail Continues to be weak with TGT's guidance well below expectations and costing that stock 4% today.  WMT reports tomorrow.  

They keep throwing red flags and we keep racing around the track at 200 miles an hour – something's gotta give at some point and we can only hope it's just a fender-bender and not a nasty multi-car crash.

Staples (SPLS) was disappointing, LOW and HD were disppointing, CSCO is laying off 14,000 workers – what could there possibly be to be concerned about?  Surely I do not know because I listen to the MSM and they don't even mention these things – it's all about "record highs" and "can we set a new record" and "when will the
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Tempting Tuesday – Declining Dollar Masks Market Decline

Do you have cash?

If so and if that cash is in Dollars, your cash lost 1.5% of it's value since Friday – unless, of course, you used those Dollars to buy stocks, which only gained 1/10th of 1% since Friday's open, so you can still trade your declining Dollars for US stocks at the same prices they were Friday.  The question is which one, if any, will hold their value better going forward.

Hammering the Dollar today is an unusual call for radical policy action from the San Fran Fed's John Williams (who also composed the theme for Star Wars) who is warning that our Empire is being threatened by factors beyond the Fed's control like an aging population and sluggish productivity gains which are braking growth. 

That, in turn, is keeping interest rates from rising as far or as fast as in the past; Williams on Monday estimated U.S. short-term rates would likely rise only to 3% or 3.5%, even after the economy regains full health, and perhaps not even that.

Williams floated two monetary policy changes to cope with lower rates: raising the Fed's current 2% inflation goal, or replacing its current inflation-targeting regime with some form of nominal GDP targeting. Both approaches, he said, would give the Fed more scope to lower interest rates in response to downturns. 

In other words, policy changes that will keep us in this QE cycle for A LOT longer than is currently expected.  

That's why yesterday, on the day we set an all-time high on the S&P 500, the volume was the lowest level of the year, coming in at just 48.6M on the ETF (SPY), 20% below the previous day and barely more than 1/10th of the volume we dropped on in late June.  That's right, the entirety of yesterday's SPY volume wouldn't even cover a single hour of selling on a down day – house of cards, indeed! 

During this whole rally, the volume has been heading lower and lower, even as the index has headed higher and higher and the last time volume was this low was last Christmas, right before the S&P fell from 2,075 back to 1,850,…
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Phil's Favorites

Renzi's Great Gamble

 

Renzi’s Great Gamble

Courtesy of John Mauldin of Mauldin Economics' Outside the Box

There is an extremely important election coming up, and I am not talking about the US presidential election. The upcoming referendum in either October or November in Italy may have as much or even more macroeconomic impact on the world as the US election, but hardly anyone outside of Italy is paying much attention to it – yet.

I have been saying for some time in interviews around the country that I think the referendum in Italy has even more potential impact than the Brexit vote did in the United Kingdom. And just like the Brexit vote, it is rife with emotion and political turmoil, making the outcome too close to call.

If you are a voter in Italy, your frustr...



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Zero Hedge

Brazil's Banana Scoundrels Will Now Win Their Olympics

Courtesy of ZeroHedge. View original post here.

Authored by Pepe Escobar via Stratgic-Culture.org,

The Rio Olympics are gone – Bolt, Phelps, Neymar, the green pool, the Ugly American Lochte and all – but a global audience may have been spared a shameful last act.

Mediocre incompetent opportunist, corrupt coward traitor, and certified political usurper, interim President Michel Temer, refused to go to the closing ceremony, afraid of being booed out of a packed Maracana stadium...



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Chart School

A Wild Day: Profit Takers Take To The Streets

Courtesy of Declan.

 

Yellen's speech pushed markets both up and down, but probably left more minds stuck in indecision than offered a clear path forward. Markets don't like indecision, which gives bears and weak longs an opportunity to sell. There are still key support levels to break, but recent weeks of tight action could lead to an unraveling.

The S&P finished as registered distribution with new 'sell' triggers in On-Balance-Volume and Directional Indicator. The index has been stuck in a relative downward turn since July (against Small Caps). This index is offering the clearest 'sell' signal.
 

...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Japan Pension Giant’s Losses Imply a $53 Billion Stock Splurge (Bloomberg)

The world’s biggest pension fund has room for a Japan stock shopping spree after the value of its investments tumbled last quarter.

U.K.’s May Orders Brexit Plans Ahead of G-20, Newspapers Report (Bloomberg)

U.K. Prime Minister Theresa May asked her cabinet ministers to come up with a blueprint for how their departments may be able to benefit from Britain’s exit from the European Union ahead of the Group of...



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ValueWalk

Meb Faber: The Trinity Portfolio

By Guest Post. Originally published at ValueWalk.

The Trinity Portfolio by Meb Faber

Guest: Episode 15 is just Meb.

Date: 8/10/16

Run-Time: 42:53

Topics: Meb tries something new in Episode 15. In “audio book” style, he walks listeners through his latest research piece: The Trinity Portfolio. “Trinity” reflects the three pillars of this investing approach: globally-diversified assets, weightings toward value and momentum investments, and active trend-following. On one hand, Trinity is broad and sturdy, rooted in respected, wealth-building investment principles. On the other hand, it’s strategic and int...



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Kimble Charting Solutions

Basic Materials attempting breakout says Joe Friday

Courtesy of Chris Kimble.

Basic Materials stocks can often times give a decent snap shot of how an economy is doing from a growth or lack of perspective. Below looks at Basic Materials ETF (IYM) over the past decade.

CLICK ON CHART TO ENLARGE

IYM remains inside of an upward sloping mult-year rising channel (1), since 2009. It hit the bottom of this channel earlier this year and has bounce off support. Currently IYM is testing f...



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Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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OpTrader

Swing trading portfolio - week of August 22nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust

 

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust 

By  at Bloomberg

Excerpt:

Stefan Thomas, who introduced millions of people to bitcoin, has had a change of heart.

Blockchain, the ledger software that makes the digital currency possible...



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Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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