by phil - October 22nd, 2016 8:22 am
Who says we're not bullish?
While we are, certainly, cautious on the market and well-hedged (just in case), we certainly do seem to find a lot of bullish positions to take. That's because we're VALUE INVESTORS and there is almost always something of value to buy in any kind of market and our Top Trades are, of course, our top value picks – the ones we feel most confident in.
In our first year, our Top Trade Ideas had an astounding 81.1% winning percentage with 86 out of 106 trades making money within a few months. That's without even adjusting them. We do not have a portfolio for Top Trades, we just do these reviews but many of our Top Trade Ideas do end up in one of our 4 Member Portfolios.
Our August review took us through July 12th and July 12th was the last Top Trade Idea we had until August because I REALLY didn't trust the market in mid-July so this month, we'll just be reviewing our August trades as we like to give Sept time to cook before reviewing those. We had a surprising amount of trade ideas in August though. Our 15 May, June and July picks had 11 winners but, unfortunately, that actually bought down our percentage!
Of course, when you are reading our reviews, those losing tades are often still opportunities. CMG, CBI, PSO and SDS are all plays we still like from the last review – they are simply late bloomers! SDS, in fact, is a hedge – it's not supposed to win if the others are doing well but we still count it as a loss.
Top Trade Alerts come from our Live Member Chat Room at Philstockworld and represent a very small portion of our trade ideas but they are a fair representation of applying our "Be the House – NOT the Gambler" strategy and you can learn a lot by reviewing the performance of these trades through up and down markets over the course of a year. All PSW Basic and Premium Members have Top Trade Access (just make sure your smart phone number is in the box here if you want text alerts in addition to our EMail alerts).
by phil - October 21st, 2016 8:32 am
Don't you just love oil trading?
After making $4,000 in less than a day on our Live Trading Webinar Idea on Wednesday (replay available here) we took advantage of the last day's trading the November contracts over at the NYMEX to short Oil Futures (/CL) one final time. As I said to our readers in yesterday's morning post:
Today is rollover day to the December contracts so anything can happen though, of course, we'll short below $51 or $51.50 if we get there on a bounce, using those lines as stops and, of course, we still have our longer-term Oil ETF (USO) puts. We can only hope that, by making contract spoofing more expensive for the pumpers, we can do just a little to curb the practice at the NYMEX – God only knows the GOP Congress has done nothing to stop this madness, which robs Americans of Billions of Dollars at the pumps each year.
Remember, I can only tell you what is going to happen in the markets and how to make money by trading it – the rest is up to you!
Another trade we left up to you was our call to short the S&P (also from our Webinar) Futures (/ES) at 2,140 and those gives us a nice ride down to 2,130, which was also good for $500 per contract and that's nice money to take home into the weekend so we're not being greedy if it stops us out (over our weak bounce line at 2,134 – also see yesterday's post), though we will short oil again as it struggles to take back $51 this morning though, now we're early in the December contract cycle, so there's less downward pressure, so it's a much riskier bet (so very tight stops above).
Also, in favor of the oil bull, OPEC is having another meeting this weekend (as noted in our Webinar, they are now having streams of meetings to talk up the price of oil) and Now Russia's Oil Minister is saying that, with Russian output now over 11Mb/d (a post-Soviet record), they are still willing to discuss production cutbacks. As…
by phil - October 20th, 2016 8:15 am
That's what we like to say when we get a nice dip when we're shorting. It indicates both the excitement of the trade and it's also a reminder that Futures trading is a lot like playing Chutes and Ladders – things can quickly reverse on you, so you have to know when to take those profits off the table. Yesterday, we initiated our short oil position (/CL) during our Live Trading Webinar at 1pm (replay available here) and, before it was over, we had reduced the position to just 2 contracts, which we decided to leave overnight. Those two contracts made another $2,300 overnight and now we're up $4,110 on a trade in just 19 hours – not bad for a free webinar!
Because we know the NYMEX trading is FAKE, we knew the movement yesterday was also FAKE so we stuck with our short positions despite the "strong" oil inventory report, where the headline 5.2Mb draw in oil was also FAKE because, in fact, we imported 6.9Mb less oil last week than the week before. So not only was the draw NOT due to an uptick in demand but, without the hurricane disrupting shipping, we would have had a 1.7Mb BUILD last week. Meanwhile, those FAKE November contract orders are almost all gone – as we predicted:
That's right, there are now 500,000 (96%) FAKE orders for December crude oil and, as of yesterday's close, when we were shorting it (2:35 pm), it was $51.82. Now it's testing $51 and 0.82 on a futures contract is $820 per contract. That means those 519,754 contracts lost $426M this morning – ouch! Fortunately, we were able to lock up $4,000 of that gift money for ourselves – congratulations to all our Members!
We're done with oil shorts for the moment. Today is rollover day to the December contracts so anything can happen though, of course, we'll short below $51 or $51.50 if we get there on a bounce, using those lines as stops and, of course, we still have our longer-term Oil ETF (USO) puts. We can only hope that, by making contract spoofing more expensive for the pumpers, we can do just a little to curb the practice…
by phil - October 19th, 2016 7:41 am
Oh come on media!
Seriously we're all going to pretend that China once again hitting all of their targets dead center for another quarter (and claiming 6.7% growth) isn't complete and utter BS? First of all, 6.7% is A LOT. If your kid was 50 inches and grew 6.7% they'd be 53.5 inches – that's not the kind of thing you don't notice, right? Well, real economies don't grow on paper, they grow on the streets and by the sea and in the air – a country the size of China ($11Tn GDP – also BS) growing at 6.7% ($737Bn) is adding more than Saudi Arabia ($637Bn) or Turkey ($735Bn) every year. Hell Mexico is "only" $1Tn!
As noted by Delboy in our Live Member Chat Room this morning: "Within 0.1% every single figure was identical to the ones we were presented with for the last quarter. So they’re telling us that the trajectory is absolutely linear? The last time we all fell for that kind of consistency was when Bernie Madoff sent out the performance numbers on his funds. Can any economy, China’s included, really perform like that?" to which I replied:
Their GDP is a total joke. What companies in China are reflecting this growth? What's really crazy is that no one in the MSM ever takes a serious look at this stuff.
Think about what 7% growth looks like – you could see growth like that on a satellite – cities would be spreading like viruses around the country, truck, rail and shipping traffic would get bigger and bigger, ports would be bursting with cargo and people to load and offload day and night and they too would have to expand to meet demand.
Energy consumption would rise despite all attempts at conservation and an ever-rising flow of materials into their warehouses would not be enough to maintain inventories. In other words – they are obviously completely full of crap!
by phil - October 18th, 2016 8:20 am
See, this is why Monday's are pointless.
Everything that happened in yesterday's ultra low-volume sell-off has been reversed already and NOW the week can finally begin. Still, it didn't stop us from making a very quick $1,000 per contract on the oil trade we talked about in yesterday's morning post – you are very welcome!
Remember, I can only tell you what the market is going to do and how to make money trading it – the rest is up to you…
The default contracts rolled over this morning and now we're watching /CLZ6, the December contracts, which are 0.50 higher and have less pressure on them so we're not as enthusiastic with our shorts today but $51, if we hit it, will still be worth a toss on the short side.
Another thing we knew yesterday was that Fed Vice-Chairman Fisher was the only hawk speaking this week and he had his swing at bat and was actually very gentle and now we have no Fed Speakers today but we do have the Consumer Price Index at 8:30 and, other than employment figures, that's the #1 indicator that influences the Fed.
This is September CPI and August was 0.2% but 0.3% at the core, which excludes food and energy. Oil got more expensive in September as did many foods including coffee, which we nailed the bottom on in earlier in the year and which we just discussed on Money Talk last week as a finalist for our 2017 Trade of the Year – though it won't make the finals if it takes off too quickly for our Thanksgiving official pick!
Of course, that didn't stop us from adding it to our Long-Term Portfolio for our Members earlier in the year though currently we've cashed those out and added the Coffee ETF (JO) to our Options Opportunity Portfolio in the following trade:
by phil - October 17th, 2016 8:14 am
$3 Trillion Dollars!
That's how much QE stimulus has been added by the World's Central Banksters in the last year and the headlines say it's "only" a 10% increase (in 2016, not 12 months) but it's 10% of a MUCH BIGGER NUMBER than when we had a 20% increase in 2012 ($2.4Tn from $12Tn) or a 47% increase in 2009 ($2.4 Tn from $9.5Tn). This is in fact, the most stimulus EVER pushed into the markets and the S&P is at 2,132, after starting the year at 2,050 so up 82 points is 4% for $3Tn.
So it costs about $1Tn to buy 1% of S&P growth these days – that's not much bang for the buck. From Jan 2012 (1,250) to Dec (1,425) $2.5Tn bought us 175 points, which was 14% so now we're spending 30% more to get 70% less now. How long will this madness continue? Will we spend $4Tn to buy another 1% growth or will the Central Banskters finally admit their policies are a dismal failure and, at this point, doing far more harm than good?
In China (and it always comes back to China), Beijing has quietly launched the biggest fiscal stimulus in history, one that is even bigger than 2009-10, following the global meltdown. According to Evercore ISI, the size of the stimulus is a whopping 4.5 %- 5.0% of GDP in 2016 or, to put it simply, 2/3 of China's GDP growth is nothing more than fiscal stimulus!
This terrifying chart shows you just how far off the rails the Chinese Government has driven the stimulus train, driving the Government's fiscal balance from +400Bn in 2008 to – 3,000Bn in 2016 adding 429Bn more debt in August alone!
THAT is how China avoided our predicted August melt-down and all the demand numbers you are seeing from China that are being treated as good news are completely stimulus-driven and are simply not a sustainable reality. For example, the dramatic surge in car purchases is not due to organic demand, but is the result of a tax cut (by half) on small engine cars implemented by the government in September, 2015. Since the cut, China’s auto sales have increased…
by phil - October 14th, 2016 8:00 am
Wow, what a market!
The Futures are up 10 points on the S&P, bringing us back to 2,142 at 7:30 (2,136 on the /ES futures) driven by nothing in particular other then Europe's relief that we rallied into the close so now they are rallying and our futures are rallying because Europe is rallying and if that sounds idiotic to you – welcome to trading! It kind of sucks if you are one of those stock-holding traders waiting for your equities to appreciate but it's unbelievably fun when you play inside the channels.
We started out the day short (and our Live Webinar's short on the Dow ended up making $1,000 per contract) but by 11:30 we were done with that trade as I said to our Members in the Live Chat Room:
Truth or dare time with the EU closing in 10 mins. They've recovered a bit into the close (down 1.25%) so no reason we should go lower now, especially with the Dollar at 97.63 but watch for the bounce off 97.50 as that could add more downward pressure.
As you can see from the chart, we nailed the turn perfectly and, of course, we did a little bottom-fishing but not much as we really don't trust this low-volume rally (and pre-market is very low volume too) and we already took a stab at shorting the Nasdaq this morning that failed (-$50 per contract) and we also are, of course, back in to short oil at $51, which is the gift that keeps on giving this week. Yesterday we hit $49.50 (up $1,000 per contract) before it turned back up!
We're anxiously waiting for Fed Governor Rosengren to speak at 8:30 and the title of the conference is "The Elusive 'Great' Recovery: Causes and Implications for Future Business Cycle Dynamics" and, as if that isn't enough insure an empty room – I hear the bagels are also terrible. Rosengren's boss is speaking at the same conference at 1:30 so it's unlikely he will make too strong a hawkish case ahead of Yellen's comments.…
by phil - October 13th, 2016 8:27 am
Sometimes things just go your way!
We had our usual Live Trading Webinar yesterday at 1pm and, when the replay is available, you can see our live analysis of the Fed Minutes as they were released which led us to conclude that the people rallying the Dow were idiots and that we should short the Dow Futures (/YM) at 18,100. As you can see on the chart, we blew tight though our primary target of 18,000 and almost hit 17,900 (a $1,000 gain) before bouncing back to 17,950 where we stopped out for a $750 per contract gain. Not bad for an overnight trade, right?
Of course, we already expected the Dow to fall hard and fast, which is why we featured the Ultra-Short Dow ETF (DXD) as a hedge in yesterday's morning post. We don't need to the Fed Minutes to tell us what the market is going to do but it was nice to have the confirmation so we could add some bonus money with our Futures trade. Now, the nice thing about the Futures is we can flip long on /YM at 17,500 (with tight stops below) and lock in the gains we made on DXD until the market opens. On the whole, however, we're expecting more downside than this but it will take a while for the dip buyers to realize they are tilting at windmills.
Speaking of Quixotic trades, those wacky oil bulls are at it again, driving oil back to $50.20 despite a build in the API report. They are all excited because we bombed Yemen this morning but all we did was knock out 3 rebel radar sites with a few dozen tomahawk missiles and the only person who'll make money on that is Lockheed Martin (LMT) who charges $2M for each one of those bad boys (long LMT!).
Still the very mention of anything even vaguely Arab-sounding and missiles is always good for a pop in oil and we're popping up to $50.40 per market on oil Futures (/CL), where we're happy to take the bulls' money and short them again with a stop at $50.55 ($150 per contract loss) and we'll do it again at $50.90 if…
by phil - October 12th, 2016 8:30 am
"When I get to the bottom I go back to the top of the slide
Where I stop and I turn and I go for a ride
Till I get to the bottom and I see you again" - Beatles
No, it's not a song about killing people (Manson), it's a song about a carnival slide in England.
As it says at the entrance: "Don't forget your mat" – just as we always remind our Members not to forget their hedges because, when we get to the top of the slide, we often go for a ride to the bottom, where we see bargains again and it's a damned shame if we're not ready to buy them, right?
Just as the path of the Helter Skelter is predictable, so is the eventual unwinding of a market rally and, no matter how much QE you pump into it, things do come down eventually. Only when you build on the base are you able to raise the bottom of the slide. Otherwise, no matter how high you climb – you will see that bottom again.
We had a little scare yesterday but not too much damage done, so far and, hopefully, you are well-hedged, like our Member Craigs, who said last night:
Phil I must say that it was really nice to have a portfolio that was looking very stable in the face of a rough day for the markets. I ended the day up 0.3% which includes another successful day of futures trading. So with a portfolio of mostly cash, a few of our faves like Apple and LL, JO, TOL, DIS, etc., along with a couple of hedges that paid off nicely today, and my futures trades, I never had to break a sweat during that madhouse today. Yes, by George (or Phil), I may be learning this system.
by phil - October 11th, 2016 8:20 am
I may have mentioned AAPL a couple of times, after all, it was our 2013, 2014 and 2015 Stock of the Year but not this year, as we were at $120 last Thanksgiving, when I make my picks for the following year, and we saw a rough year ahead so our Trade of the Year for 2016 was the Natural Gas ETF (UNG), which is right on track. Anyway, I laid out my logic for the AAPL trade on TV (as I always do with our trades of the year) and this graphic they used lays out the idea we had to take advantage of AAPL.
The target price was $120 and the target time was Jan of 2017 and we've been in and out of AAPL along the way, buying whenever it's below $100 and selling when it went over $120 because, as I noted yesterday, we are FUNDAMENTAL investors and we KNOW what our stocks are worth so we buy them when they are cheap and we sell them when they are expensive. I know that's a strange concept to most investors but trust me – it's a profitable one!
Notice we don't NEED a stock to go up for our Trade of the Year to make money – that's not how we play the market. At Philstockworld, we use the simple options strategies we teach our Members to construct plays that give us tremendous upside leverage. Using the above bull call spread and put combination, we netted into the AAPL trade for just $8,000 in cash and, if AAPL manages to hold $120 into January, the bull call spread will be worth $60,000 for a $52,000 profit (650%). This is good money for two years' "work", right?
Every year, in an attempt not to be boring, I struggle to find a Top Trade Idea that's better than Apple but that doesn't mean we aren't afraid to go back to the well, over and over and over again – when the opportunity presents itself. As recently as August, when Apple dipped back to $108.36, we made AAPL our Top Trade Idea for the Week on 8/22 and I…