Phil's Newsletter

Monday Market Movement – S&P 2,000 and Bust?

SPX WEEKLYWhat a month we've had!  

We're still only about halfway back to where we were in the summer but, WOW!, quite the effort has gone into rescuing this market from certain DOOM!!! at our 1,850 predicted floor.  I would have been a lot happier seeing some healthy consolidation down there before we raced back to check out the 22-week moving average, which just so happens to be sitting right on that 2,000 mark but the 200-day moving average is at 2,023 – so no excuse for getting rejected here, other than psychological.

If you expect your technicals to work (the 200 dma), then you don't want to see psychologicals having a great effect or it means your technicals are BS (they all are) and you have no idea what the market is going to do.  As you can see from our Big Chart, all of our indexes are well above their 50 dmas and looking to challenge their 200 dmas, let by the Dow and S&P, who only need to cover 1% to hit their goals.  

We're waiting on the ECB to announce a new stimulus package and this isn't one of those times where Draghi is likely to get away with his usual "all talk, no action" statements as, just this morning, German Factory Orders slipped another 0.1% (was -0.2% last month) and that's not going to get us back to the critical 10,000 line on the DAX (now 9,727) which is still 10% below the critical 11,000 line (Must Hold) which is still miles below the 12,500 high they hit just 12 months ago.  

So, to recap, the German Stock Exchange is still down 22% from it's highs last year and the Nikkei is still down 20% but the S&P is down 5% and we're expecting a rally if the rest of the World is still technically bearish?  Come on people – get realistic!  If you want to be an effective short-term trader, you have to learn to have realistic expectations of how much an index, and the stocks within the index, should move given different data inputs.  

Speaking of data, if you want to see something scary, check out Deutsche
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Non-Farm Friday – Is America Working? **Trade Review**

SPY  5  MINUTEWe're waiting on the Non-Farm Payroll Report

Yesterday, we got the happy talk we expected from Minneapolis Fed Governor Kaplan and, he did such a good job goosing the markets at 11:30 yesterday, that he's speaking again today at 10:45.  Of course he'll say the same thing but will the markets react the same way?  That depends on the jobs report and how FAKE this low-volume rally we've been having really is.  

As you can see from Dave Fry's SPY chart, volume yesterday was a pathetic 94.8M and the spikes of volume on the way down were most of the up day's trading.  On the whole, we opened the year on Jan 4th at 200.49 and dropped to a low of 181.09 (down 9.6%) intraday on Feb 11th and now, March 4th, we're back to 199.78 which is just over a 10% gain from the low (199.19).  

According to our 5% Rule™, after a 10% run we expect a 2% pullback as we retest the highs and a bit of consolidation.  Today's NFP report will either pop us over that top or, more likely, give us that 2% drop test we've been looking for.  We shorted the Russell yesterday at 1,065 and after a very small drop, that trade failed but then, in our Live Member Chat Room, we shorted it again at 1,070 an hour later (10:44) and the 2nd time was a charm as it dropped back to 1,066 and we took a $350 profit off the table at 1,066.50 an hour later.  

This morning, ahead of the NFP report, it's a bit too dangerous to bet the Futures so we're just waiting to see what happens for now.  We headed downhill after last month's NFP report but, as I mentioned the following Thursday (2/11), a lot of that has to do with scaring people into buying bonds each month – so people won't notice that no one actually wants to buy notes that pay 2% interest, let alone 0%!

Nonetheless, in our Live Trading Webinar that week, we called a long on Nikkei (/NKD) futures at 15,700 and this morning they hit 17,050 for a gain of 1,350
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Flatlining Thursday – Markets Continue to Ignore or Embrace Bad Data

3-2-2016 3-16-46 PMWe're short today.

We didn't like yesterday's Beige Book from the Fed, which we went over live at 2pm during our Weekly Webinar and we made a few buck shorting the Russell but it then reversed overnight and I sent out a note to our Members (and on Twitter) this morning saying:

Flatlining, more or less in Europe after Asia was up 1% and our futures are flatter than flat and even oil is flat at $34.73 and /NKD skimming along at 16,900 so we'll just have to see what happens today but I stand by my interpretation of the BBook (bad) so, if we slip below these levels, we can short the laggards (4th or 5th to cross below with tight stops if any go back over the line):

Dow (/YM) 16,850, S&P (/ES) 1,980, Nasdaq (/NQ) 4,325, Russell (/TF) 1,065 and Nikkei (/NKD) 16,900

All are just over the line so 3 going under signals bear and then either of the 2 that haven't fallen are fair game.  The same logic can be used to go bullish but I've seen nothing so far to make me lean that way – including the Dollar back to 98.15, down about 0.5% and not helping much.   Oil is still a short below $35 (now $34.70 on /CL) and /NG testing $1.65 again means I like /NGK6 long again at $1.78 (as long as $1.65 holds on /NG). 

No change so far so, if you are a Report Member or above and getting this daily pre-market Email (8:35)…
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Which Way Wednesday – Russell 1,050 or DOOM!!! Again

3-1-2016 2-48-11 PM REUTERS 1Here we are again.

Back on Jan 11th, we pegged 1,050 on the Russell as the most critical line in the markets and failing that turned us bearish and turning bearish made us a ton of money last month.  That was also a Beige Book week and we were concerned about upcoming reports for the week which were: "Retail Sales, PPI, Industrial Production, Empire State Manufacturing, Consumer Sentiment and Business Inventories."  Sound Familiar?  Yep, it's the same stuff that was lousy this week but it has less impact now because we already had our shock.  

RUT WEEKLYOn Thursday, Jan 14th, although we predicted DOOM!, we also predicted the Dow would bottom around 16,000 (off by 250) and that we'd bounce back to 16,700, which was pretty much the right price as we analyzed and evaluated each Dow component.  In that post, I laid out the game plan we would follow for the next 6 weeks, which led us to a $200,000+ gain (33%) in our two main tracking portfolios.

We flipped bullish right at the bottom and now we're back to being uncertain at Russell 1,050, S&P 1,978, Dow 16,865 and Nasdaq 4,335 vs 1,046, 1,922, 16,346 and 4,271 back on 1/11.  So clearly, all the other indexes have recovered much stronger than the Russell so either we see the Russell begin to catch up or, once again, it will become a drag that likely signals an overall pullback.

Today's big data point will be Oil Inventories at 10:30 but expectations are already low after the API showed a 9Mb build last night.  Any net under 5Mb will be bullish for oil (now $33.75) but $35 has been a good shorting line for us so far (/CL).  This afternoon we get a look at the Fed's Beige Book and it's hard to imagine that won't be depressing after our PMI and ISM numbers (auto sales were light too) and, this morning there was a 4.8% drop in Mortgage Applications – also a bad sign.

We will be doing a Live Trading Webinar for our Members at 1pm so we'll be live when the Beige Book is released at 2pm so get ready for some fun

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Super Tuesday Turnaround – China Props Us Up Again

700Bn Yuan!  

Relax, it's only $106Bn but still, a nice boost from the PBOC this morning as the dropped reserve requirements by another 0.5%, freeing up 700Bn Yuan of reserves.  China's economy is (supposedly) half the size of ours so that''s like dropping a $200Bn stimulus on our economy – similar to what Bush did back in the day - it was good for a couple of months and then – CRASH!!!  The stimulus shot covered up even weaker than usual PMI numbers (49, down from 49.4 and below 50 is contracting), the worst since Jan, 2009.  Crash indeed.  

The services gauge slipped to 52.7 in Feb, from 53.5 in Jan. Measures of new orders, selling prices, employment, backlogs and inventories were below the 50 dividing line between improving and worsening conditions.  On the official manufacturing measure, the new orders, employment and purchasing quantity components slipped.  A separate manufacturing reading from Caixin Media and Markit Economics fell to 48 in Feb, from 48.4 in Jan.

"Early signs suggest stimulus has yet to gain significant traction, pointing to the need for continued and expanded policy support," Bloomberg News economists Tom Orlik and Fielding Chen wrote in a note. "In the near term, that likely means the announcement of a larger fiscal deficit target at the National People’s Congress on Saturday, plus stealth moves to guide lending rates lower."

Before the stimulus was announced this morning, the Shanghai Composite was down 4.6% but the MORE FREE MONEY announcement got us back over the critical 2,700 mark to close positive at 2,733.  So yay, I guess – all is ??well?? in China once again and we can get back to worrying about the rest of the World, which is also popping on this "great" news out of China.  

Japan had their first successful sale of 10-year NEGATIVE 0.06% bonds this morning.  Investors paid 101.25 Yen in order to get 100 Yen back in two years and 2.2 TRILLION Yen were sold this morning ($19.5Bn) with 3.2 times more bids than there were bonds available.      

Of course, keep in mind that Japanese investors…
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Monday Market Movement – G20 Drops the Ball Once Again

Well, it's not like we didn't expect it.

Sadly, after a 3-day meeting of the World's top Financial Ministers in Shanghai, markets are opening weak after only vague commitments to spur growth came out of the meeting.  Chinese stocks, which desperately need a boost, fell below the critical 2,700 line on the Shanghai this morning but were pumped back to 2,687 into the close – still in a precarious position.  

Warrent Buffett and I agree that the US economy is on the mend, held down by the doom and gloom speeches on the economy – mainly coming from the GOP but also from Bernie, who brings to mind Neil Young's lyrics about being a Top 1%'er with an actual conscience:

 There's a warnin' sign on the road ahead
There's a lot of people sayin' we'd be better off dead
Don't feel like Satan, but I am to them
So I try to forget it, any way I can.

Speaking of rockin' in the free world, Chinese property developer, Ren Zhiqiang woke up this morning to find all of his social media accounts closed (he had 37M followers) after criticizing President Xi's campaign to tighten state control of the media.  "Internet users had reported that Ren Zhiqiang’s account was continuously publishing illegal information, and the impact was vile," said Jiang Jun, the regulator’s spokesman. "All online platforms should refuse to provide channels for illegal speech."  

Donald Trump is calling for changing the constitution to reign in the press in our country and, as Lincoln said: "America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves."  The Beastie Boys warned us we had to fight for our right to party back in 1986 and we didn't listen and now you have to be 21 just to have a drink and you can't even get a contact high at a concert anymore - how far are we willing to let freedom of the press slip because we're not willing to fight for it?

Sadly, the majority of Americans, rather than being outraged by
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Berkshire Hathaway’s Q4 Earnings Show Buffett Still Has It

Wow, Buffett knocked it out of the park:

Berkshire Hathaway 4th-quarter profit up 32 percent

Berkshire Profit Gains 32% to $5.48 Billion, Capping Record Year

Berkshire’s Earnings: A Surprise Boost From Kraft Heinz, But an Off Year at Geico

Warren Buffett Attacks Wall Street Over ‘Phony’ Earnings


Buffett says it’s possible that the offending analysts “don’t know better.” But more likely, Buffett says, the analysts go along with the phony numbers because they fear losing access to management, which is key to a Wall Street analyst’s job these days. Buffett also says analysts may be swept up by a herd mentality and go along with these inflated financials because everyone else is doing it. None of these reasons lets them off the hook, Buffett says.

“Whatever their reasoning, these analysts are guilty of propagating misleading numbers that can deceive investors,” Buffett writes.

Based on pro-forma earnings, profits for the S&P 500 rose an average of 0.4% in 2015. But if you stick with figures that conform to official accounting rules, profits actually plunged nearly 13%.

Clearly Buffett reads PSW!  wink

Oddly, Buffett’s denouncement of executives who doctor their earnings comes during a section of the his annual letter in which he does a bit of his own selective accounting. Buffett says that Berkshire shareholders would do better ignoring a portion of the company’s amortization costs. Buffett acknowledges the slight contradiction by saying that he gives that advice with “some trepidation.” But he says amortization, unlike

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GDPhriday – Will a Downward Revision Take Down the Market?

SPX DAILYWheeeeee – what fun!  

The markets have flown higher on fairly light volume but who cares as we are making HUGE amounts of money on our bullish bets.  We are exactly on the path we expected for the week with just a few more data points to go but I did already tell you on Wednesday:

Hopefully tomorrow, improving sales of Durable Goods, which were down 1% (ex Aircraft) in the last reading.  We'll get an update on Personal Income and Spending on Friday, which should be improving (rising wages) but also a revised Q4 GDP report, which will likely be a bit lower in light of recent data.  

We're hoping the indexes hold up at S&P (/ES) 1,900 and Russell (/TF) 1,000, where we're playing the Futures long for a bounce with tight stops below.  DAX 9,200 needs to hold up in Germany and we're already surprised that 15,700 isn't bouncing on the Nikkei (/NKD) as people have panicked into the Dollar, driving it back to test 98 this morning.  The Nikkei loves a weak Yen.

The S&P hit 1,960 this morning (up $3,000 per contract), the Russell hit 1,040 (up $4,000 per contract) and the Nikkei hit 16,300 (up $3,000 per contract) so you are very welcome.  We even had a live Futures Trading Demonstration on Wednesday in our webinar where similar picks made $320 in the 30 minutes we were going through the trading examples (replay available here), in case you are wondering if you are capable of learning how to make money trading the Futures too.  

We took the money and ran, of course, as we're expecting a disappointing GDP number and then we'll play it by ear.  For those of you who are futures-challenged, we still have our ultra-long Russell (TNA) trade idea from last Thursday's post (again, you…
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Faithful Thursday – G20 Will Fix Everything, Right?

Wheeeeee, what fun!  

After being soundly rejected at the strong bounce line (1,950) and falling back to the weak bounce line (1,900) which it briefly failed in the morning, the S&P 500 blasted back to 1,940 where it's violently consolidating overnight.  That means our long call on the S&P Futures (/ES), which we gave you FOR FREE in yesterday's morning post, gained $1,500 PER CONTRACT if you stopped out at 1,930 on the pullback while our Russell Futures (/TF) longs popped 15 points for another $1,500 per contract profit and our Nikkei Futures (/NKD) are now at 16,100 – up 400 points for $2,000 per contract wins on that one.  You are very welcome!  

We had a Live Trading Webinar yesterday where I demonstrated futures trading techniques and, in less than 30 minutes, we made $320 in profits (replay available here) - don't you wish school was always like that?  This morning we're long on Natural Gas (/NG) at the $1.79 mark and don't forget the Natural Gas ETF (UNG) is our Trade of the Year and I just did a PowerPoint on that at the NY Trader's Expo on Monday, which was essentially similar to our Trade of the Year notes we went over on Money Talk on Feb 10th.  

If all goes well, our Trade of the Year will make $40,500 on a $9,500 investment with the worst case being you own 5,000 shares of UNG at $8.95 ($44,750), so it's a 90% return on risk (if you believe the Natural Gas ETF can go to zero).  UNG is currently $6.51, so the trade is still makeable (we have an aggressive upside target) but this may be the last time as the first US export shipment of natural gas left the port yesterday

On Tuesday (because we pay attention and we knew this would happen), we added Cheniere Energy (LNG) as a Top Trade Alert and yesterday it blasted 10% higher but it's only just getting started (and of course we leveraged it with options) and you can hear the CEO discuss their operations
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Will We Hold It Wednesday – S&P 1,900 Edition

Oil prices set by AllahOil can! 

That's right, once again tumbling oil prices are taking down the global markets as yesterday's little meeting between OPEC and the American Oil Cartel (the one they pretend doesn't exist) in Houston broke up without an agreement to even cap production, let alone cut it back.  Aside from telling CNBC only Allah sets oil prices, Ali Al-Naimi said to his North American counterparts:

“If other producers want to limit or agree to a freeze in terms of additional production, that may have an impact on the market, but Saudi Arabia is not prepared to cut production."

Venezuela was hoping for a lifeline and got none and that country may end up cutting a huge amount of oil production as its economy collapses, giving Al-Naimi exactly what he wants – involuntary cutbacks by bankrupt oil companies.  Brazil is also in a lot of trouble as are many individual producers in Canada, the US and Mexico and now so are many hedge funds and foolishly bullish oil traders, who ramped up the price of oil from $29 to $34 (17%) into this meeting, only to see their hopes and dreams smashed into ashes at yesterday's meeting.

It's sad because, just last Wednesday, I told Canada that oil prices (and the industry) were NOT going to make a strong comeback and that they needed to move on and put their money to better use in other industries (see my Business News Network interview here).  I further detailed my veiws on Oil, Gasoline and Natural Gas in yesterday's Live Member Chat Room.  

I also said that what were seeing in the markets is an overall rotation out of the Energy Sector (and the Financial who foolishly lent them money) and that continues to be what we're seeing dragging the markets down all year:

Conglomerates are down there too but that's a funny category that includes "diversified" business that often include Financial and Material components (like GE, SI, DD).  The problem these sectors have is that the…
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Mark Morey: Social Revolution

By PeakProsperity. Originally published at ValueWalk.

Largely out of the headlines, the ongoing protest on Standing Rock is shining a bright light on how the big-moneyed interests with political clout steamroll the disadvantaged in order to get what they need.

Photo by tomwieden (Pixabay)

But in a rare David-vs-Goliath standoff, the Sioux tribespeople of Standing Rock Reservation are learning that they are not powerless. Their refusal to roll over and allow an oil pipleline to be built on their lands is growing into one of the largest resistance movements in recent years, drawing supporters from all over the country, and forcing the discussion of “Where do we draw t...

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Zero Hedge

Something Odd Emerges When Fact Checking The "Fact Checkers"

Courtesy of ZeroHedge. View original post here.

The American electorate has never been more divided with people having wide ranging opinions on which party/candidate would be best for the future of the country.  Certainly economic and other facts help guide those opinions but, in the end, the decision is also based on the subjective views of each voter.  

But, for Politifact, apparently even the facts are subjective and based on party affiliation.  Take the following example:

On July 6, 2015, Bernie Sanders made the follow...

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Phil's Favorites

If You're A Kid Living In New Orleans, Move To Salt Lake City!

Courtesy of ZeroHedge. View original post here.

In the long-standing psychology debate on nature versus nurture, the question is whether it is our genes or our experiences that hold the keys to our future.

As Visual Capitalist's Jeff Desjardins notes, the short answer to this question, according to many of today’s scientists and psychologists, is that nature and nurture are always working together. In other words, genes do what they do depending on their context, and nature and nurture work to inf...

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Chart School

Selecting gold stocks by relative strength

Courtesy of Read the Ticker.

Before you make your investment decisions stop and review the relative strength of the stock to the sector or index.

 More from RTT Tv

NOTE: does allow users to load objects and text on charts, however some annotations are by a free third party image tool named

Investing Quote...

...“After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this:  It never was my thinking that made the big money fo...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Merkel Rules out Assistance for Deutsche Bank, Focus Reports (Bloomberg)

Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, Focus magazine reported, citing unidentified government officials.

A divided town in Connecticut shows that finance is ruining Ame...

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Kimble Charting Solutions

Crude Oil attempting key breakout, says Joe Friday

Courtesy of Chris Kimble.

Below looks at Crude Oil on a “Monthly Closing” basis, since the early 1980’s.

Crude Oil started tanking in 2014 and its low earlier this year, took place at dual long-term support at (1) below.


Two support lines, that date back over a decade, came into play at (1) and so far have held. Crude remains in a down trend and this down trend is being tested at this time.

Joe ...

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Swing trading portfolio - week of September 19th, 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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Members' Corner

Market Liquidity and Macroeconomic Bullshit


Market Liquidity and Macroeconomic Bullshit

Courtesy of The Nattering Naybob

STJL - "Apparently macroeconomics is all bullshit – ROFL! Paging Naybob now… Famous Economist Paul Romer Says Macroeconomics Is All Bullshit."

The Nattering One muses... Macroeconomics as practiced by academics and those in charge is pure voodoo. Better to chant over goat blood, bird feathers and scattered entrails...

As for reality, overnight CNH HIBOR (...

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Mapping The Market

Here's a Cautionary Tale of Pension Privatization From Chile

Via Jean-Luc:

"When you let the free market take over, the little people get screwed and bankers get rich. Chile tried privatizing retirement plans and surprise, surprise, fund manager ate the profits… Pretty sure the results would be the same here..."  ~ Jean-Luc

Here's a Cautionary Tale of Pension Privatization From Chile

By KEVIN DRUM, Mother Jones

Among free-market fans, Chile's privatized pension plan has long been held up as a model for us to follow. The problem, as the Financial Times notes today, is ...

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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.


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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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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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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! 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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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...

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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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