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Phil's Newsletter

$30,000 Thursday – Making Big Money While the Market Crashes

We had our best day of the year yesterday!  

How did you do?  Hopefully very well if you are one of our Members or have been following us on Twitter, where I began warning people one week ago that this was about to happen.  And I don't mean in that ridiculously vauge Jim Cramer weather-vane way that's subject to interpretation.  Not at Philstockworld!  On Wednesday March 18th, at 7:52 am, I tweeted:

It doesn't get much more specific than that, does it?  That was our post BEFORE the Fed announcement on Wednesday and, in the morning post, we discussed the decaying macros – as I have been doing with our Members for most of this month.   That morning, we also called a bottom on oil at $44 and I put up the following trade idea for our Members in our Live Chat Room (which you can join by subscribing here):

We topped out at $110 in Jan but already we can sell the April $110s for $10.50 so let's sell 3 of those in the STP for $3,150.   We already sold 3 March $105s for $5.40 (now $4.50) and they are going to be cutting it close but, worst case, we'll just roll them to April $110s.  We also already sold March $120s for $13 on the spike to $110 and those look good at $2.50 with 3 days to go.  

Of course I also like the long on /CL off the $44 line – as I said earlier, I expect us to test $45 into the inventories but at least $44.50 should be hit.  

As you can see from the SCO chart, we caught the dead top on
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Why Worry Wednesday – We’re in CASH Suckers!

And we're OUT!  

That's right, we took advantage of yesterday's BS rally to cash out our Long-Term Portfolio at the exact high of 34.8%, up $173,815.03 in 16 months.  We keep several virtual portfolios for our Members (and you can join us here) and the generally bullish LTP is paired with our Short-Term Portfolio, which acts as a hedge to the LTP positions but also makes short-term bets when the opportunities arise. 

The STP has also performed much better than expected and is up 83.8% over the same time-frame at $183,820 off our $100,000 start for a combined gain of $257,635, which is 42% of our initial investment and that was our goaaaaaaaaaaaallllllllllllll for two years (see "How to Get Rich Slowly") and it's only March – of course we deserve a rest!  

Cashing out our largest portfolio, in addition to protecting our profits, also helps us re-focus on what positions we REALLY want to play for the rest of 2015.  We'll be making a new Buy List for our Members and we'll also be double-dipping on some of our winners (AAPL comes to mind) as soon as we see a good re-entry.  One of the trades we did keep will be featured tonight on my TV appearance on Business News Network's Money Talk and we found 11 other trades we liked enough to keep in play (mostly ones that were underperforming) through the upcoming correction.  

Also, it's not too late to participate in our "Secret Santa's Inflation Hedges for 2015" as inflation has not officially been recognized yet (so our picks are still cheap) but, as currencies race each other towards the event horizon, we have faith that our infation hedges will begin to pick up the slack.  In any case, the way we designed our hedges, we don't need a big move in the market to make big gains on our spreads.  

For example, ABX has gone nowhere since our December entry and, at the time, we called for the ABX 2016 $10/15 bull call spread at $1.60 to be paid for by selling the 2016 $8 puts for 0.70 which was net $900 at the…
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2,100 Tuesday – S&P Just 10 Points From New Highs

SPX WEEKLYForget valuation.

Forget earnings, forget logic and LOOK AT THAT CHART!  What a thing of beauty.  We don't just hold the bottom of the rising channel but we LEAP away from it and make new highs, over and over again.  This is, of course, what markets do all the time, which explains why everyone is a Trillionaire, right?

Oh, I'm sorry, I mean everyone's a Trillionaire AND there's no inflation.  Because THAT is how things work in the economy, right?   The market goes up 15% in a year but all other prices remain steady and, in fact, oil, gold, copper, iron ore – all drop precipitiously even though EVERYTHING IS AWESOME!  

If anything in that chain of logic bothers you then you need to consider which one of these things does not belong.  Since low inflation/deflation is very much in line with declining demand and prices for materials, the problem seems to be in the market somewhere.  And what is distorting the market, you may wonder?  

Well, the Central Banksters have poured aprroximately $15Tn of QE liquidity into the markets over the past 6 years.  That's 20% of the Global GDP or about 3.5% of the Global GDP added each year.

Nonetheless, Global GDP still isn't even adding up to 3.5%, which means we're actually in a 6-year Depression with negative GDP that we've papered over with endless amounts of free money.  Now, I'm not saying this is a bad thing – an actual Depression would really suck (just ask your grandparents) and it's worth running up $15Tn in debt to avoid one, BUT (and it's a big but) there still needs to be a plan for dealing with the debt and the bublles it's caused. Just yesterday, the Fed's own Jim Bullard said:

The US risks inflating asset price bubbles with “devastating consequences” if it leaves interest rates at zero.  “When asset bubbles start, they keep going until they blow up out of control with devastating consequences.  Low inflation doesn’t rationalize policy rates of zero; it rationalises a policy rate below normal, but not zero.”

The real
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Monday Market Manipulation – Draghi and the Doves Talk us Up

Dove, dove, dove.

Dove, dove, dove – now that Fisher is gone, that's all we have at the Fed these days.  This week we hear from Mester, Williams, Bullard, Evans and Lockhart – all doves on the Fed and, of course Super Mario speaks at 10am (EST) to get our markets off to a good start for the week with his own special brand of doveishness

While our Fed, the ECB and the BOJ are doing all they can to talk the markets higher, China is warning its investors that the run that has pushed their market 75% in less than a year is unsustainable.  A spokesman for the China Securities Regulatory Commission said on Friday:

“Investors should be cautious about market risks.  We shouldn’t be thinking if we don’t buy now, we will miss it.”

A previous warning from the CSRC was ignored. The Shanghai Composite jumped 2.8% to surpass 3,000 on Dec 8th, the first trading day after the securities body on Dec 5th cautioned investors about growing market risks.  The valuations of some listed companies are “relatively high,” the CSRC spokesman said in Friday’s statement. “There are about 700 companies in the Shanghai and Shenzhen stock exchanges with a price-earnings ratio of above 100,” the spokesman said.

Stocks continue to rise in China on speculation that the Government will do whatever it takes to sustain a 7% growth rate, which means lots of FREE MONEY will have to be printed.  I think that's a fabulous idea – all Governments should print unlimited supplies of free money until all of our economies are growning at 7% and then everything will be AWESOME and nothing can possibly go wrong with that plan, can it?  

I certainly hope not, because that's the plan we're pursuing at the moment!  Meanwhile, Japan is starting to look like Zimbabwe and the 22% drop in the Euro in 2014 sent 124.4Bn Euros ($150Bn) out of the Union in the kind of negative cash-flows you expect to see in countries that are on…
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5,000-Point Friday – This Nasdaq Bubble Will NEVER Burst!

Up up and away!  

Not only is the Nasdaq popping back over 5,000 today but the Dow is back over 18,000 in the Futures and the Russell is already flying over 1,250 – well past the previous all-time high of 1,243 that was set on the first day of March

As we've noted earlier in the week, a rising market tide has NOT lifted all ships with 30% of the Dow and 1/4 of the Nasdaq at 52-week LOWS (mostly materials), which is why they had to stuff AAPL into the Dow – so it could at least keep pace with the Nasdaq going forward.  

Hey, who are we to complain?  This week's rally gave us a nice $4,300 gain on Wednesday's Top Trade Alert and a 5% comeback on our Long-Term Portfolio, which is closing back in on a 30% gain, albeit at the expense of our more bearish Short-Term Portfolio, which has fallen back to up just 77.6% but it's 1/5th the size of the LTP, so GO BULLS – I guess…

Despite our success, I'm not happy with this rally but I wasn't happy in 1999 or 2007 either and that made me miss out on some nice gains so we're keeping our LTP open (though, as you can see, over 50% in cash) so we don't "miss out" on the madness.  

And it is madness – there's no connection between valuations and earnings and, as you can see from this chart, the Macro Outlook is deteriorating rapidly, even in the US.  In fact – THE FED JUST SAID SO!!!  Unfortunately (for us "rational" investors) bad news is still good news to the markets as it only brings wave after wave of MORE FREE MONEY – so much free money that we are drowning in it.  

What does "drowning in money" mean?  Here's some jokes for you -

  • Money doesn't get no respect.  Why, there's so much money in the World these days that you've gotta pay the banks to hold it for you!  
  • There's so much money in

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$4,300 Thursday – Our Top Trades Pay off Nicely

Embedded image permalinkOver $4,300 in one day.

Not bad for sitting at a computer, right?  Yesterday morning, at 9:37, we sent out a Top Trade Alert to our Members (which comes via Text and Email as well as in our Live Member Chat Room) to take advantatage of the morning plunge in oil to $44 a barrel on the May contracts

We had, of course, been discussing oil trades all week but it's always special when we make something a Top Trade Idea and this was the moment we had been waiting to take advantage of, when the rollover of the April contracts caused a panic sell-off at the NYMEX ahead of an inventory report that was expected to be disappointing – a perfect storm!  

That caused us to send out this Top Trade Alert for SCO, where we sold 3 of the April $110 puts for $10.50 (chart above) as well as a long entry on /CL (oil Futures) at $44.  After the Fed announcement, we had oil at $47 for a $3,000 per contract gain and the 3 short SCO contracts that paid us $3,150 in the morning were available to buy back in the afternoon at just $1,800 (+42% on the day), for another $1,350 gain.

That's $4,350 of that single Alert in a single day – not bad!  Of course we have no reason to buy back the short SCO calls and we expect to make another $1,800 on the trade between now and April 15th (contract expiration) but we took the money and ran on the volatile Futures trade.   

Unfortunately, not everyone can trade the Futures so, at 10:14, we sent out a second Top Trade Alert to allow our Members to take advantage of the oil lows with the following trade ideas:

I like UCO July $5/9 bull call spread at $1.35, selling the Jan $5 puts for $1 for net 0.35 on the $4 spread.  

USO has less decay so safer to sell puts on though there is some decay over time.  Jan $13 puts can be sold for $1.25 to pay for the UCO play or you can establish a

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Which Way Wednesday – Waiting on the Fed

waiting animated GIF Not much to do this morning but wait patiently.  

Oil fell all the way to $42.05 in overnight trading but not the contract we were trading (thank goodness), it was the soon-to-expire April /CLJ5 contract that we knew was heading lower still (see yesterday's post).  We're back around yesterday's lows this morning and you can still take advantage of our long trade ideas on USO and UCO from yesterday's Live Trading Webinar as prices should still be good today.  

Oil inventories are at 10:30 and the API report has already indicated a huge 10Mb build is to be expected.  The wild-card is whether or not that takes into account Obama's purchase of 5Mb for the SPR last week.  Since the announcement came on Friday – it's very possible that it wasn't recorded in the current week's inventories, which are taken on Sunday.   This is why we went long on the MAY contracts (/CLK5) and not the Aprils…

I sent out a news alert earlier this morning and our Chart of the Day is cerrtainly this alarming picture of Greek 3-Year Bond Yields, which have jumped back over 20% again – something people really have to learn not to ignore!  

It was also pointed out this morning, in Bloomberg, that while Greece is scrambling to pay German Banksters 20% interest rates, there's no plan at all for paying the $1.59Bn in MONTHLY retirement benefits due to 5.5M Greeks. Greece’s economy has shrunk by a quarter under the conditions laid down by Germany and other euro-area nations in bailout terms. The jobless rate increased in the fourth quarter as the economy began shrinking again and a political standoff rekindled concern the country could leave the euro area. The percentage of adults living in households where no one works rose to 19.6 percent in 2013 to 1.1 million, from 7.5 percent in 2008.

[image]In the midst of this looming crisis, Greek PM Alexis Tsiparis is not heading to Franfurt but to Russia, as he's heard that Vladimir Putin is a kind and reasonable man – compared to the German Banksters he's been dealing with.  Meanwhile, in
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Tumbling Tuesday – Oil Falls to $42.50 as Fake Contracts Hit Inventory Wall

Oil is down 10% this week (so far).

This is being caused by FAKE!!! orders that have been placed at the NYMEX where traders pretended to demand hundreds of millions of barrels of oil in order to inflate prices during the summer.  Now they are suffering for their scam as the physical inventories have filled up and they are forced to roll (now 5% of the contract cost per month) or cancel their fake orders when there are no buyers present.  

In other words, this is EXACTLY what I told you would happen when oil was at $107 in June!  As I said at the time:

Forget peak oil, we're seeing PEAK DEMAND for oil pass us by!  Keep in mind that the non-OECD line on the chart above is just 1/4 of all demand and that is barely positive while OECD demand (66M out of 90Mbd demand) has been NEGATIVE since 2008 with the very brief exception of 2011 but, of course, that was only up 2% compated to 2010, which was flat to 2009s 5% decline.  

In other words, the demand NEVER CAME BACK but that fact is being covered up by a cartel of Billionaires who own the supply of oil as well as the media that they control (see excellent History Channel report on the subject).  As I noted yesterday, the "demand" on the NYMEX for 172M barrels of oil that is scheduled to be delivered to the US in July is completely and utterly FAKE and those contracts will almost all be cancelled by next Friday – purposely shorting our country's oil just at the start of summer driving season.

Our play at the time was shorting the /CL oil futures at $107.  At $47, those shorts were already up $60,000 per contract and, for non-futures players, I
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Meaningless Monday Market Movement

What a crazy week that was!  

As you can see on our Big Chart, we were down sharply, then back up and then down to finish down just 20 points (1%) on the S&P after all that fuss.  Of course, our headline last Monday was "Watch Out for Violent Swings in the Market" so, if you are reading this – unlike the Media Morons – you were probably not surprised by the action

We've been having fun getting in and out of Futures plays on the indexes, taking advantage of the swings to pick up a few bucks while we wait to see how the Fed Meeting (and Yellen's speech) move the markets on Wednesday.    

Before any FACTS are out that might let investors make intelligent decisions, we have rumors and speculation and this morning it's China's turn to rain MORE FREE MONEY down on the markets with Premier Li saying that "the government has room to step in and has “more tools in our toolbox” should growth flag and affect employment."  Isn't it kind of scary when the Premier of China is reading off the same script as Janet Yellen?  

Unlike Yellen, this is Li's ONLY press conference of the year but look how much fun he's having – maybe he'll start doing them more often (by comparison NJ's Governor Christie has done 170 in 5 years).  

On the economy, Mr. Li said that the government is trying to strike a balance between keeping growth at a relatively high rate and pushing structural reforms. Growth, he said, faces downward pressure but if it begins to affect jobs and income, then the government would take more forceful measures.

The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth,” Mr. Li said during the two-hour-long televised news conference.  Keep in mind that when Li says “We still have more tools in our toolbox,” that a Chinese toolbox looks like this:

How can you bet against an economy where EVERY Government is doing whatever it takes to prop it up?  Well,

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PSW March Top Trade Review – Navigating Choppy Markets

What an exciting start to the year this has been.  

It's been a difficult trading environment, to say the least and this will be the first full year featuring our new Top Trade Alerts™ (Members Only) and I look forward to doing these educational review sessions at least each quarter (our last one was January) to review both our trade ideas and our use of options to make those trade ideas as profitable as possible.  

Top Trade Alerts are sent out once or twice a week via EMail and Text Message from our Basic and Premium Live Member's Chat Room.  These trades are just a very small portion of what we discuss during chat each day, but hopefully a good representative sample of the dozens of trade ideas we share with our Members each week in our Live Member Chat Room as well as our Weekly Live Webinars (replays can be seen here).  

Keep in mind these are just snapshots of trades as of today – it's up to you to take good trades off the table and cut the losses (or make adjustments) on ones that go bad.  We're always discussing adjustments in our Live Member Chat Room – join us there for follow-ups.   

Our first top trade idea for 2015 was UCO on Jan 5th and UCO did have a nice pop and we cashed them out of the $25,000 Portfolio with a nice profit on February's pop to $9.50+.

 UCO has since pulled back and the July $14s fell all the way to 0.15 but now the July $8s are just 0.95 and make a nice way to go long on oil or, you can be more conservative and buy the $6 calls for $1.85 and sell the $9s for 0.70 for net $1.15 on the $3 spread.  

On Jan 8th we took a poke at RIG when they fell to $16.15, selling the 2017 $8 puts for $1.70 for a net $6.30 entry, paired with the 2017 $10/15 bull call spread at $2.50 for net 0.80 on the $5 spread.  RIG has fallen off considerably since, to…
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Zero Hedge

China Hard Landing: Blame The Smog

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Earlier this week, we got further evidence of just how quickly China’s economy is slowing down (hard landing anyone?) when the March manufacturing PMI printed in contraction territory, the employment sub index dove to Lehman levels, and rail freight fell 9%. While disconcerting, this isn’t all that surprising given that if one looks at what really matters (i.e electricity usage, rail freight volume, and credit growth), it’s pretty clear that China’s economy isn’t expanding at anywhere near the targeted 7% and hasn’t been for quite some time: 


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Phil's Favorites

3 Things: No Money, Wall Street's Big Scam, Bottom 80%

Courtesy of Lance Roberts via STA Wealth Management

Much of the commentary from the more liberal leaning media has continued to tout that the rise in asset markets over the last few years are clear evidence of economic prosperity in this country. However, is that really the case?

In order for rising asset prices to be reflective of overall economic prosperity, the "wealth" generated by those rising asset prices should impact a broad swath of the American populous. Let's take a look to see if that is the case.

"Mo Money" Or No Money


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Watch Phil on Money Talk on BNN Now!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show last night. As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. (And get this, Obama - the President - is following Phil on Twitter.) ~ Ilene


The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here. Part 2 is here. Part 3 is here.   ...

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All About Trends

Mid-Day Update

Reminder: David 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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Insider Scoop

Stifel, Bank Of America Are Talking About Apollo Education

Courtesy of Benzinga.

Related APOL Stocks Hitting 52-Week Lows Morning Market Losers Apollo falls on sales, outlook (Investor's Business Daily)

On Thursday, Stifel issued a report on Apollo Education Group Inc (NASDAQ: APOL) as the stock's volume has not recovered. Stifel lowered its target price from $35 to $25, but still rates Apollo Education as a Buy.

"Our Buy thesis which ... more from Insider

Chart School

S&P 500 Snapshot: Four-Day Selloff

Courtesy of Doug Short.

The S&P 500 dropped at the open, despite a good jobless claims report, and hit its -0.75% intraday low. A slow rally took the index to its 0.30% intraday high in the early afternoon. But subsequent selling pushed the index back into the red. It closed with a modest 0.24% decline, the forth consecutive daily loss.

The yield on the 10-year Note rose 8 bps to 2.01%.

Here is a 15-minute chart of the past five sessions.

Here is a daily chart of the index, where trading volume was right at its 50-day moving average.

A Perspective on Drawdowns

Here's a snapshot of selloffs since the 2009 trough.


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Sector Detector: Bulls retake the wheel, with a little help from their friends at the Fed

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

Courtesy of Scott Martindale at Sabrient Systems

Well, it didn’t take long for the bulls to jump on their buying opportunity, with a little help from the bulls’ friend in the Fed. In fact, despite huge daily swings in the market averages driven by daily news regarding timing of interest rate hikes, the strength in the dollar, and oil prices, trading actually has been quite rational, honoring technical formations and support levels and dutifully selling overbought conditions and buying when oversold. Yes, the tried and true investing clichés continue to work -- “Don’t fight the Fed,” and “The trend is your friend.”

In this weekly update, I give my view of the cur...

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Swing trading portfolio - week of March, 23rd, 2015

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

Bitcoin vs. Uber: Bitcoin Lovers Respond to Mish

Courtesy of Mish.

I recently commented that it would not surprise me if bitcoin plunged to $1.00. That was not a prediction, it was a comment.

Still, I still feel a collapse in bitcoin is likely.

For discussion, please see Cash Dinosaur: France Limits Cash Transactions to €1,000, Puts Restrictions on Gold; Bitcoin End Coming?

In response, reader Creighton writes ...

Hello Mish

While I'm not going to argue the point about the possibility that Bitcoin drops to $1, or less, (that could happen yet, but not for the reasons you propose) I felt it necessary to point out something you seem to have overlooked.

While it's likely that the US government watching Bitco...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.


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Option Review

Cypress Semi Draws Bullish Option Plays

Bullish trades abound in Cypress Semiconductor options today, most notably a massive bull call spread initiated in the July expiry contracts. One strategist appears to have purchased 30,000 of the Jul 16.0 strike calls at a premium of $0.89 each and sold the same number of Jul 19.0 strike calls at a premium of $0.22 apiece. Net premium paid to put on the spread amounts to $0.67 per contract, thus establishing a breakeven share price of $16.67 on the trade. Cypress shares reached a 52-week high of $16.25 back on Friday, March 13th, and would need to rally 4.6% over the current level to exceed the breakeven point of $16.25. The spread generates maximum potential profits of $2.33 per contract in the event that CY shares surge more than 20% in the next four months to reach $19.00 by July expiration. Shar...

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2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...

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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 



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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 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.

Thank you for you time!

FeedTheBull - Top Stock market and Finance Sites

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...

Learn more About Phil >>

As Seen On:

About Ilene:

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.

Market Shadows >>