Phil's Newsletter

Thrilling Thursday – Back to our Bounce Lines (Again)

I don't know what people are so excited about?

During our Live Trading Webinar yesterday, we called a long on the Russell Futures (/TF) and nailed the bottom at 1,200 with a target of 1,203, paying $300 per contract.  We quickly made that money but then there was another chance at 8pm and another at 4am and another at 5am and now the Russell is up at 1,206 with $1,500 worth of gains just from making the same trade over and over and over again.  

If you are going to be a day trader – learning to identify channels is the most important thing you can do.  We had similar success with our S&P longs (/ES) off the 2,125 line and we just passed our strong bounce line at 2,140 this morning – which is a good place to cash out with a $750 per contract gain on those (see yesterday's post for bounce lines).  

As we're flashing more green this morning, we're not looking to go short unless we get signals to do so.  You can see what the Labor Market Conditions Index looks like (yuch!) and we have Durable goods at 8:30, Consumer Comfort at 9:45, Pending Home Sales at 10 and the Kansas City Fed Report at 11 – so plenty of data to chew on along with about 200 earnings reports.  I see a lot of reds in those reports but the markets are in the mood to rally – so get out of their way for now.  

How fragile is this recovery?  Well, here's one of those WikiLeak Emails from the new head of the DNC to John Podesta about the mood of the American people:

Here's some quick charts from Harvard via ZeroHedge that illustrate the state of our economy:

You get the picture, but it's a picture that doesn't match the markets, which are still skating along at their all-time highs.  Why is it that Apple (AAPL) can have great earnings and great revenues and
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Which Way Wednesday – Helter Skelter – Again

Image result for helter skelter

"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 

If you think you have deja vu, you are right.  The title of our Wednesday post two weeks ago was "Wednesday Weakness: Controlled Descent or Helter Skelter?" and we predicted the recent movement, saying:

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.  

And so, exactly two weeks later, we are back to the bottom of the slide and just as likely to go back to the top where we'll stop and we'll turn and we'll go for another ride until we get to the bottom and we do it again – yeah, yeah, yeah!  

There's nothing wrong with a repetitive market pattern, we're doing fantastically well getting in and out of futures plays and, as I noted that Wednesday, there are plenty of stocks we do like and we're doing plenty of bottom-fishing along the way because, while we're looking for a market correction in the short-term, in the long run we're pretty bullish.  Meanwhile, we're simply looking for the same Futures bounce lines we outlined at the time to confirm a real recovery:

  • Dow (/YM) 18,075 (weak) and 18,150 (strong)


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Tuesday Trauma – Credit Card Delinquencies Hit Post-Crisis Highs

Good news for Visa!  

You know how you get that "teaser" rate on your credit cards or no interest for 12 months when you start?  Well, that all goes away when you have a delinquency and then they get to hit you with 22% interest FOR LIFE AND penalties and then you are DOOMED!!!!  Well, 2.2% of credit card holders are now in that category, the most since the market collapsed in the sub-prime loan crisis.  

Of course, we'd never make that mistake again, right?  So what have our beloved credit card companies been doing about it?  Well, they issued over 20M new credit cards to subprime borrowers in 2015 and that's up 56% from 2013.  And the borrowers paying those crazy penalty rates are, of course, the ones who can least afford them:

Missed payments in states with large oil or energy sectors continue to worsen. The share of card balances that were at least 90 days past due increased 12% in Oklahoma, 10% in Texas and 20% in Wyoming in the third quarter from a year prior, according to TransUnion. The Wall Street Journal reported in April that rising unemployment in the energy sector was pushing up delinquencies on credit cards and auto loans, raising the risk of new losses for banks.

Wells Fargo account scandal impactDon't worry about bank losses – we'll bail them out – where's the risk in that?  Speaking of criminal banking institutions, 14% of Wells Fargo (WFC) customers have decided to leave the bank, the other 86% seem oblivious to the news.  Of course the other banks are eager to meet the former WFC customers, so they can cross-sell the crap out of them!  This is how the free market is supposed to work, where the customers punish wrongdoers by withdrawing their support.  Unfortunately, you wouldn't know there we wrongdoers without regulatory oversight and, even then, it apparently takes years and years to uncover.

Bank app download rates after scandalRather than put our money into WFC and expecting a recovery (and they are only down about 20% despite the fact
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Manic Monday Markets – Propped Up Futures Give Us Another Opportunity

Just another manic Monday.  

Europe gapped higher at their open (3am) and took our indexes up with it as no volume, of course, so we'll have to see what sticks but I already put up shorting lines for our Members in this morning's Live Member Chat Room.  Essentially, we're just shorting at the same bounce lines I laid out last Tuesday so nothing has changed – except it's Monday, not Tuesday.  Today though, we added the Nikkei (/NKD) short at 17,350, as strong data from Europe should strengthen the Euro and weaken the Dollar a bit (98.60).

This has, of course, been going on all year in a generally flat market, though that hasn't stopped us from ranging between 1,800 and 2,200 on the S&P – more than a 20% variance from highs to lows.  Logically, 2,000 is then, the middle of the range yet, despite 65% of the S&P 500 trading below their 50-Day Moving Average, we're still much closer to the high end of our trading range.  

Clearly the so-called smart money has been fleeing the markets all year, as evidenced by JackDamn's cash flow chart, which illustrates the massive outflow of money from the 500 in 2016.  Think of each block of outflows like Jenga pegs that are being removed – even as the tower is built higher and higher.  You KNOW what will eventually happen – you just don't know exactly when the whole thing will collapse.  Given that the outflows are increasing at the moment – we should keep a careful eye on this indicator. 

Oil (/CL) Futures tested $51 again early this morning but is already back to $50.34 so too late to short it if you weren't paying any attention to the last 3 week's worth of posts, where we shorted at $51 over and over again.  Speaking of last week's picks – you can still pick up Natural Gas (/NG) long as it crosses over the $3 line and use that line as a stop so very little to lose and much to gain on those futures.  

Meanwhile, the markets have gone
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Philstockworld Top Trade Review

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 trades 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). 


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$500 Friday – A Ridiculous Week Comes to a Close

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).

Image result for oil inventoriesAlso, 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…
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$4,000 Thursday – Our Live Trade Ideas Make our Members Money!

Wheeeeee! 

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
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WTF Wednesday? China’s “Perfect” GDP Data is a Joke

Image result for corporate newsOh 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!  


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Turnaround Tuesday – Market Rallies Back to our Shorting Lines

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:

JO is already blasting over our goal at $23.18 as of yesterday's close and, if we stay over $22 through March, this net $1,650 trade will return $4,500 for a $2,850 gain on cash (172%) in just 6…
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Monday Market Quagmire – More Stimulus, Less Results

$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…
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Zero Hedge

"Let's Burn Down The Universities"

Courtesy of ZeroHedge. View original post here.

Authored by JC Collins via Philosophy of Metrics blog,

An Offensive Act of Self Defence to Save the Great School of Western Thought

It should be clear to all reasoning people with the ability for critical thinking that a pattern of cultural warfare has been unfolding against the Western world since at least the end of World War Two. The contrast between what was then and what is now is stark and frightening. It should serve as all the evidence we require to make the final determination about what has been happening.

The...



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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Stock Bears See Hong Kong's Greatest Short in Great Wall Motor (Bloomberg)

Short-sellers crowding into Great Wall Motor Co. are being vindicated -- and they’re lining up for more.

Shares in China’s largest SUV maker have retreated 19 percent from a February peak in Hong Kong as sales of its aging Haval H6 model fell and the company reported a quarterly profit decline.

Australian Mortgage Bond Sales Are Climbing Despite Housing Warnings (Bloomberg)

Investors are lapping up mortgage...



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ValueWalk

North Korea Puts Strain On U.S.-South Korea Ties

By insidesources. Originally published at ValueWalk.

SEOUL — Hope for South Korea’s liberal President Moon Jae-in “engaging” the North in dialogue is in danger of running afoul of North Korean leader Kim Jong-un’s refusal to stop developing missiles capable of carrying a nuclear warhead to the United States. With a mere 41 percent of the votes in this month’s presidential election, Moon has no mandate to jettison the pro-American policies of Korean presidents since the founding of the Republic of Korea under Syngman Rhee in 1948.

Public_Domain_Photography / Pixabay

Kim Jong-un, overseeing two missile tests since Moon’s...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Producers Set to Extend Cuts as Rally Stalls: OPEC Reality Check (Bloomberg)

Reeling from the worst oil-market rout in a generation, producers controlling about 60 percent of the world’s supply came together last year determined to put an end to the global glut. 

OPEC's Worst Cheater Will Get Harder to Ignore as Curbs ...



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OpTrader

Swing trading portfolio - week of May 22nd, 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 ...



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Chart School

Relief Rally Approaches Resistance

Courtesy of Declan.

Wednesday's gap created a significant reversal, stalling the mini-rallies kicked off in April. Thursday and Friday generated some come back against last week's loss, bringing many of the markets back to the highs of the gap down.

The S&P is in a position where shorts may look to attack the gap. Friday's spike high put itself inside the gap, recovering the 50-day MA in the process. This gain was supported by a 'buy' trigger in On-Balance-Volume. While shorts might have the better risk:reward option, a move above 2,389 opens up for a retest of 2,405.

...

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Digital Currencies

Bitcoin Soars Above $2000 For First Time Ever

Courtesy of Zero Hedge

Bitcoin is now up over 100% in 2017, amid global political uncertainty and increased interest in Asia, suddenly spiking above $2000 this afternoon for the first time ever...

That is a year-over-year gain of more than 350%. The move comes, as CoinDesk notes, amid a broader boost in the cryptocurrency market, which broke the $60bn barrier today. The increase has taken place amid strong surges from Ripple's XRP, which seeks to lower costs in enterprise cross-border payments, and ethereum's ether token, a cryptographic asse...



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Biotech

Beyond just promise, CRISPR is delivering in the lab today

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

Beyond just promise, CRISPR is delivering in the lab today

Courtesy of Ian HaydonUniversity of Washington

Precision editing DNA allows for some amazing applications. Ian Haydon, CC BY-ND

There’s a revolution happening in biology, and its name is CRISPR.

CRISPR (pronounced “crisper”) is a powerful technique for editing DNA. It has received an enormous amount of attention in the scientific and popular press, largely based on the promise of what this powerful gene e...



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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...



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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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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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