Phil's Newsletter

Thin Air Thursday – Markets Begin to Gasp At New Highs

Image result for higher higherHigher, higher!  

Up and up the markets go but we see shorting opportunities this morning IF we cross back below Dow (/YM) 26,100, S&P (/ES) 2,800, Nasdaq (/NQ) 6,810 and Russell (/TF) 1,585.  The rule of thumb for shorting the futures is wait for 2 to cross below and then pick the next one that crosses and keep very tight stops back above the line and if ANY of the indexes go back above their line – kill the trade and wait for the next set-up.

We demonstrated the stopping out part in yesterday's Live Trading Webinar but I missed my chance to flip long as we got caught up in another discussion and missed the Beige Book Rally.  Still it was a nice day trading as we picked up $4,312 on our Coffee (/KC) trade and now we're waiting for a nice pullback to reloaid and do it again.  Speaking of releading, we're still short on Gasoline (/RB) at $1.86 and it's a $1.865 this morning so we're down $210 per contract at the moment – ahead of the EIA Inventory Report at 10:30.

The Futures are not only a fun way to pick up some extra cash while we wait for our positions to pay off but they also provide a quick hedge – even when the equity markets are closed.  As you can see from the chart, our call on the Dollar long at 90 in yesterday morning's PSW Report was also a nice winner, topping out at $750 per contract and now back at 90.40 but we think consolidating for a better move up – hopefully to 92.50, which would be $2,500 per contract gains.  

Remember, I can only tell you what is likely to happen and how to make money playing it – that is the extent of my powers – the rest is up to you!  

As we're moving into earnings season, this last leg of the market bubble is being driven by earnings revisions due, mostly, to Trump Tax Breaks but, as we warned about
continue reading





Which Way Wednesday – Will the Wild Ride Continue?

Related imageWheeee!   

Yesterday sure was fun.  The Dow Futures (/YM) blasted up to 26,050 at 10am and then, by 3pm, it was back at 25,700, down 350 points (1.34%) in 5 hours.  But don't worry, we recovered 100 into the close and now we just tested 26,000 again, which is a good shorting line with tight stops above since yesterday's 300-point drop was good for gains of $1,500 per contract for the shorts.

In our Live Member Chat Room, we stuck with the Russell Futures (/TF) shorts at 1,600 and those fell all the way to 1,575 for gains of $1,250 per contract and we added longs on the Dollar (/DX) at 90 and Coffee (/KC) at $120 while, of course, taking the $1,000 gain on /RB and runningthe same short at $1.85 we played all last week in our morning Reports (you're welcome!).  

We still like the Russell for a hedge into earnings and, in the Live Member Chat Room, we chose the following hedge at 11:25, just in time for the massive 100-point drop in the Russell but we're back to 1,585, so you can still make the hedge on the Ultra-Short ETF (TZA) as follows:

  • Sell 30 TZA 2020 $10 puts for $2.50 ($7,500) 
  • Buy 40 TZA July $10 calls for $1.80 ($7,200) 
  • Sell 40 TZA July $15 calls for 0.60 ($2,400) 

That gives you a net credit of $2,700 and a $20,000 upside on the July spread if TZA pops from $11.40 to $15 (31%) and, since it's a 3x short ETF, that would mean the Russell would have to drop about 10%, back to 1,425, which doesn't seem like much of a stretch after yesterday's quick plunge.  If the Russell doesn't fall, then we take the remaining $2,700 and invest it in rolling the long July calls to something lower in January and then cover with short Jan calls and then we have a full year of insurance in exchange for our promise to buy 3,000 shares of TZA for $10.  The idea, of course, is that our longs make much more money than our TZA shares would lose – hedges…
continue reading





Terrific Tuesday – Futures Blast Market to New Highs – Just Because

Dow 26,000?  Really???

That's right, the Dow blasted 1% higher this morning to hit 26,000 and the S&P 500 hit 2,800 and the Nasdaq 100 hit 6,800 and the Russell hit 1,600 all record highs ahead of the Government shut-down on Friday (not really, they will extend it again).  Meanwhile, this puts Donald Trump only 12% behind Obama for first-year market rallies and he only had to promise a $1.5Tn tax cut to get it.  George Bush I also beat Trump – and that guy wasn't even trying!  

Obama's rally peaked out on Jan 19th, 2010 at 1,150 on the S&P and then we fell for a month – back to 1,050 (10%) but then we rallied to 1,200 (April) but then we fell to 1,050 again (July) in a very exciting second year.  Of course, those consolidation waves set the base for the next 1,200 points and then Trump took over we're up another 600 but, of course, Trump is taking credit for the whole 3,222-day rally – even though he's only been President for 10% of it.

Notice the Clinton Rally lasted 4,494 days and was much, much bigger (582%) than our rally (301%) and yes, it was pure lunacy at the end of the dot.com boom but this is the no tax boom and crypto-idiocy boom and 2,000 lie boom – all rolled into one.  Sure, in a few years, we'll look back at this rally and say "What were those idiots thinking?" and we'll forget "those idiots" were us and yes, I'm including myself because, despite warning you to be cautious, we put 20% of our CASH!!! back to work this month in our brand new Member Portfolios.

chartFOMO (Fear of Missing Out) is what drives the markets and, if we are on the way to a Clintonesque 100% additional gain from here (Dow 50,000?), then we'd feel like real idiots missing out on that rally, even if there is "no inflation" – according to the Fed.  As you can see from the Relative Strength Indicator – since 1960, we have never been this "strong" in the market and forget the fact that all those peaks ended
continue reading





Fantastic Friday – Greetings from the Top to all you S-Hole Countries!

What a great start to the year!

The S&P 500 is up from 2,680 to 2,770 so 90 points is 3.3% and our Long-Term Portfolio is already up 4.4% or $21,755 in 8 days of trading.  As you can see, we still have all of our cash on the sidelines as the well-hedged positions we picked up have been cash-positive for us so far – we haven't been confident enough to take big risks yet.  Our $100,000 Options Opportunity Portfolio, which you can follow at Seeking Alpha, is only up 3.3% because we're down $900 on our TZA hedge while, in the $500,000 LTP, CASH!!! is still our primary hedge against a market collapse.  

Our goal is not to "beat" the market on the way up, our goal is to kick the market's ass on the way down or if the market is flat.  By capturing all the good stuff and avoiding all the bad stuff, we can consistently outperform the market year after year without suffering the portflio-killing pullbacks that plague more aggressive traders.  While it's fun to brag about making outsized returns during these market bubbles – it's more fun to "Get Rich Slowly" and retire with plenty of money, isn't it?  

The key to building wealthy over time is CONSISTENCY.  Warren Buffett's Berkshire Hathaway has "only" averaged 16% returns but he's been doing it for 50 years, allowing his initial investors to make 10,000 x returns on their invesments.  

But that's not the way it starts.  It starts in year one with a 16% return and $100,000 becomes $116,000 and then $116,000 becomes $134,000 which becomes $156,000 in year 3 and then $181,000 after 4 years and finally, in year 5, you get to say you've doubled up.  While it may seem like you'll never get to $1Bn in 50 years at that pace – the math doesn't lie – you just need to learn how to CONSISTENTLY make good returns.  

And, of course, anyone who says they have a better system is LYING to you because, after 50 years of measuring, no investor on this planet is richer than Warren Buffett so it's Warren Buffett's model we pursue, picking up good stocks at good prices and building
continue reading





Thrill-Ride Thursday – Markets Right Back on Top

What pullback?

We waited all year for the markets to pull back and all we got was a lousy 50-point correction?  This market is completely nuts and this morning the Futures already have us back at the 6,700 line on the Nasdaq (/NQ) along with 25,400 on the Dow (/YM), 2,756 on the S&P (/ES) and 1,565 on the Russell (/TF) while Oil (/CL) is testing $64 despite disappointing demand numbers in yesterday's inventory report.

Facts don't matter in this market – it's all about the momentum at this point and, tempting though it may be, we're not placing many bets against it though shorting /NQ Futures at 6,700 with tight stops above is a no-brainer – as it limits your losses but not your gains (see yesterday's Report).  We took a poke short in yesterday's Live Trading Webinar but then decided long was a better play after losing $105 but now we're done with those and flipping short at the same(ish) levels we shorted on Tuesday afternoon.  

We saw how quickly gains could evaportate yesterday but, if those weak retrace lines keep holding up, we may be consolidating for a breakout to new highs, rather than correcting from our New Year's rally.  Yesterday's strong 10-year note auction alleviated fears in the bond market but that may have been because we sold $20Bn in debt at 2.6%, the highest level since last March.  Today we sell $12Bn of 30-year notes at 1pm and we'll see how that goes.  

One thing everyone seems to be ignorning is a warning from Moody's that Trump's tax plan has put the United States on Negative Credit Watch as they see it as detrimental to our economy overall, with at least $1.5Tn in additional deficits over the next 10 years (in addition to the $8Tn deficit that was already modeled in).  According to Moody's:  

"Any boost to economic growth from the new US tax law will be modest and depend on how businesses and individuals


continue reading





Weakening Wednesday – Did China Find the Market’s Achilles Heel?

Wheeeee!  

Finally a nice little dip and we nailed it yesterday as I said to our Members at 3:08pm in our Live Chat Room:

  • /NKD down 125 today but the US indexes could care less.
  • /YM 25,400 is a fun short with tight stops above.
  • /ES 2,760 finally got a reject
  • /NQ 6,700 finally caused a pause – also a good shorting line
  • /TF 1,565 is good to play for the cross below
  • DAX 13,400 is a good check line too
  • Check out the 5-year charts.  There are 30 year-old traders with 5 years' experience who have no idea whatsoever that markets can go down.  ?

I put out an Alert to our Members at 6:06 am (and tweeted it too) calling for profit taking on the dip, saying:

I'm taking the money and running here, /NQ was my play and now testing S2 at 6,644 and my fresh horse is now /TF below 1,550 (but I doubt it) with /YM at 25,235 and /ES at 2,738.  If anything, I'd play long for the bounce here but huge winner ($11K) so I'm just happy to watch for now.

Seems like we're only selling off because the Dollar dove and took /NKD down 250 and our indexes followed it lower – otherwise I'd be more inclined to stick with it.

/RB is still a good short at $1.85, of course, with tight stops above. 


continue reading





2,750 Tuesday – S&P 500 Hits it’s Next Benchmark

2,750 already?

It was only September when we got over 2,500 so another 10% in 4 months is a 30% annualized pace for the senior index.  Back on 9/26, I asked "Is S&P 2,500 the Market’s Waterloo?"  and clearly it has not been, with barely a down day since, punctuated by this year's crazy kick-off that's taking us 75 points higher (3%) for the year, so far.

Of course that's nothing compared to what's going on with our GreenCoins (GRE), which blasted up another 100% this morning on heavy volume, despite the sell-off in some of the more popular crypto-currencies.   That's up 1,000% from our Dec 3rd call to buy the currency, where we guaranteed we'd accept them at 0.00044 as payment for 2018 Annual Memberships.  We even tweeted that one out the same day – so there was ample chance to get in on the fun.    

And why shouldn't we be able to make 1,000% in a month?  That's the new market paradigm these days when, as I predicted on November 29th, at this pace "We Will All Be Billionaires."  The next day (11/30) we analyzed the Dow in "24,000 Thursday – Dow Continues Its Insane March Higher" and now the Dow is at 25,300, up 5.4% in 6 weeks.  Of course, we didn't think it was sustainable and we cashed out our protfolio positions into the holiday and, since last Monday, we've been slowly building them back up – since this rally seems to be showing no signs of slowing down.

While I'd much rather see a good correction before we jump in and start buying again, we also don't want to get left behind in a good rally so we're picking up values where we can – though there aren't many value stocks left these days!   

Not only is the S&P testing the 2,750 line but the Nasdaq 100 (/NQ) Futures are just under 6,700 – and that's up 10% since October!  We're using the Nasdaq's ultra-short ETF (SQQQ) as our primary hedge at the moment as we really can't believe earnings are going to live up to the hype but it's not really about earnings – it's
continue reading





Monday Market Madness – Who’s Watching the Watch List?

It's been a busy weekend.

Last Wednesday, we put up our Watch List for 2018 and we had about a dozen trade ideas, right off the bat, that we were adding to our Long-Term Portfolio and Options Opportunity Portfolio.  Over the weekend, we've added 10 more actionable trade ideas for the OOP and LTP - so don't complain there's nothing to buy in this toppy market – we even had a nice hedging play for you on Friday.  While we're still expecting a correction – it's likely to be just another buying opportunity in a generally bullish market.  

Considering how sure I am that we're going to have a 10% correction this quarter, I was actually surprised at how many stocks there are trading for good prices.  Granted, I was looking at thousdands of stocks and found only dozens to buy – but I thought we'd find far fewer than that.  I suppose it's because the rally has been fairly narrow in scope – leaving many good stocks behind in favor of chasing the popular stocks to new highs.  

It's still too scary to short things, which is a shame – because there are so many things that are tempting to short like Tesla (TSLA) at $316 (always a good short), Amazon (AMZN) at $1,230 ($600Bn!), Netflix (NFLX) at $210 and whatever Uber is currently trading for!  We'll get AMZN's numbers at the end of the month but, last I heard, they should be about $60Bn in sales and $1Bn in profit for the quarter, which will put them up around $2Bn for the year or less than $5 per $1,230 share so it will only take AMZN 246 years to pay back investors at that pace.  

The investing premise on AMZN is, of course, that they will grow into their valuation but then their valuation jumps was faster than their growth – up 50% in 2017, in fact – yet people just keep snapping it up – with half of that growth coming since October.  

How will Amazon justify a $600Bn valuation?  It's earning $2Bn now and it's selling about $180Bn a year worth of stuff while WalMart (WMT) sells $500Bn so let's say AMZN gets as big as WMT
continue reading





Friday Follies – Trump Promises Dow 30,000

Dow Jones Industrial Average crosses 25000 for the first timeWell, we're past 25,000 the Dow and the President is promising 30,000 so we'd better buy more stocks, right?

As crazy as it all seems, the makets COULD go up another 20% and there are about 200 trading days for the Dow to gain 5,000 points so 25 points a day would seem calm compared to what the markets are adding this week.  Keep in mind how silly this is as it's a $100 TRILLION Global Stock Market and when we have these 1% gains across the board, we're adding $1Tn of "value" in a single day against an $85Tn Global GDP that's growing, at best, 4% for the year ($3.5Tn).  

Related imageThat, in a nutshell, is what's wrong with the World now – we value Coprorations more than we value Governments and Coporations and their Top 1% owners are slowly but surely taking control of our Governments, turning us into a Global Oligopoly in which people don't matter.

Oddly enough, the people love it, though.  Especially the Top 10% of the people, who buy stocks, as they seem content to let the Billionaire Class lead us into the land promised by Ayn Rand 60 years ago, one in which "rational self-interest" was promoted and became a magnet for wealthy baby-boomers who wanted to alleviate the guilt they felt in a nation that was, at the same time, fighting a war on poverty and promoting equality for all.

Rand called her philosophy "Objectivism", describing its essence as "the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute."  She supported philosophical realism, and opposed anything she regarded as mysticism or supernaturalism, including all forms of religion, referring to "the virtue of selfishness" in her book of that title, condemning ethical altruism as incompatible with the requirements of human life and happiness and she considered laissez-faire capitalism the only moral social system because in her view it was the only system based on the protection of the rights of the job-creating class.

Image result for trump ayn randDoes that sound like any
continue reading





Follow-Through Thursday – Dow 25,000 and Bust?

How long, can this keep going on?  

"Well, your friends with their fancy persuasion

Don't admit that it's part of a scheme

But I can't help but have my suspicion

'Cause I ain't quite as dumb as I seem



And you said you was never intending

To break up our scene in this way

But there ain't any use in pretending

It could happen to us any day" – Ace

So far, 2018 is looking like 2017, with the indexes climbing up and up and, as I noted to our Members this morning, there's some good economic notes backing up the positivity including 18 states that raised the minimum wage on January 1st, which puts a bit more disposable income into the hands of 4.5M affected workers while putting upward wage pressure on 50M more.  Those effects take time to roll in but rising wages is a trend we should be able to rely on.  

Clearly the markets are loving it as we made fresh record highs and this morning the Futures are making even fresher, higher records but, as noted above, how long can this keep going on?  What has actually changed to justify today's record high?  

You can't just keep rewarding the market for doing the same thing it always does otherwise, as I warned back on November 29th, we will all be Billionaires.  While I'm sure you want to be a Billionaire, what's the point of it if everyone is a Billionaire?  If that happens, you're going to be nothing if you aren't a Trillionaire – that's what happened in Zimbabwe, where they were printing $100,000,000,000 bank notes in 2009, right before their currency completely…
continue reading





 
 
 

Phil's Favorites

Amazon Unveils 20 City Finalists For HQ2, Expects To Create 50,000 Jobs In Winning City

 

Amazon Unveils 20 City Finalists For HQ2, Expects To Create 50,000 Jobs In Winning City

Courtesy of Zero Hedge 

On Thursday morning, Amazon announced that it had reviewed 238 proposals from across the U.S., Canada, and Mexico to host HQ2, the company’s second headquarters in North America, and has has chosen the following 20 metropolitan areas to move to the next phase of the process (in alphabetical order):

  • Atlanta, GA
  • Austin, TX
  • Boston, MA
  • Chica...


more from Ilene

Zero Hedge

Amazon Unveils 20 City Finalists For HQ2, Expects To Create 50,000 Jobs In Winning City

 

Amazon Unveils 20 City Finalists For HQ2, Expects To Create 50,000 Jobs In Winning City

Courtesy of Zero Hedge 

On Thursday morning, Amazon announced that it had reviewed 238 proposals from across the U.S., Canada, and Mexico to host HQ2, the company’s second headquarters in North America, and has has chosen the following 20 metropolitan areas to move to the next phase of the process (in alphabetical order):

  • Atlanta, GA
  • Austin, TX
  • Boston, MA
  • Chica...


more from Tyler

ValueWalk

How Motivation Works

By joniferdingcong. Originally published at ValueWalk.

In this complimentary webinar, learn about the power of motivation in the workplace from Columbia University Professor of Psychology and Business Tory Higgins, an expert on motivation and decision-making.

]]> Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

You’ll learn:

- Why “carrots” and “sticks” incentives are not enough to motivate people to do better work
- How promotion-focused and prevention-focused people pursue goals differentl...



more from ValueWalk

Digital Currencies

How a Criminal Defense Attorney Thinks About Crypto Currency

 

How a Criminal Defense Attorney Thinks About Crypto Currency

Courtesy of 

You are all in for a very special treat today. On the heels of last week’s guest post, in which the Unassuming Banker looked at crypto from a traditional IB’s view, I’ve got a new guest post from a friend of mine who is about to give you a perspective on the nascent asset class you’ve not read before. 

...



more from Bitcoin

Insider Scoop

5 Biggest Price Target Changes For Wednesday

Courtesy of Benzinga.

  • Goldman Sachs raised Groupon Inc (NASDAQ: GRPN) price target from $4.70 to $5.40. Groupon shares closed at $5.03 on Tuesday.
  • Barclays boosted the price target for Pure Storage Inc (NYSE: PSTG) from $19 to $22. Pure Storage shares closed at $16.16 on Tuesday.
  • Stifel increased the price target for Deere & Company (NYSE: DE) from $161 to $184. Deere shares closed at $167.54 on Tuesday.
  • Mizuho raised the price target on QUALCOMM, Inc. (NASDAQ: ...


http://www.insidercow.com/ more from Insider

Chart School

Weekly Market Recap Jan 14, 2017

Courtesy of Blain.

After 3 days of mild “rest” – and the first down day of the year (!!) for the S&P 500, bulls came back with bells on Thursday and Friday, driving indexes to record highs yet again.  This is starting to get “parabolic”… some shades of the type of things we saw in 1999.  (See the S&P 500 and NASDAQ charts below)  The S&P 500 gained 1.6% and the NASDAQ 1.7% for the week.

“This reminds me of January 2000,” said Kent Engelke, chief economic strategist, at Capitol Securities Management, which manages $4 billion in assets, referring to the nearly unceasing climb to records for stocks and the unease it can inspire.  “It’s scary, the unrelenting advance,” he added.

“The move isn’t about fundamentals...



more from Chart School

Biotech

How Alzheimer's disease spreads throughout the brain - new study

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

 

How Alzheimer's disease spreads throughout the brain – new study

Courtesy of Thomas E CopeUniversity of Cambridge

Harmful tau protein spreads through networks. Author provided

Alzheimer’s disease is a devastating brain illness that affects an estimated 47m people worldwide. It is the most common cause of dementia in the Western world. Despite this, there are currently no treatments that are effective in curing Alzheimer’s disease or preventing its relentless progressio...



more from Biotech

Mapping The Market

Trump Admin Bans CDC From Using Words Like 'Science-Based,' 'Diversity'

By Jean-Luc

These are the policies of a theocracy, not a modern democracy:

Trump Admin Bans CDC From Using Words Like ‘Science-Based,’ ‘Diversity’

The Trump administration has prohibited the Centers for Disease Control and Prevention (CDC) from using words like “science-based,” “diversity,” and “transgender” in their official documents for next year’s budget, according to the Washington Post.

Senior CDC budget leader Alison Kelly met with the agency’s policy analysts on Thursday to announce ...



more from M.T.M.

Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



more from Our Members

OpTrader

Swing trading portfolio - week of September 11th, 2017

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 ...



more from OpTrader

Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



more from Promotions

Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



more from Kimble C.S.

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...

more from David



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 >>