by Phil Davis - March 7th, 2014 7:10 am
Sorry but this "rally" is just too much BS for me.
As you can see from Dave Fry's SPY chart, we're running up on ZERO volume in the Futures and then we sell off all day on very low volume (because there are no buyers and the Funds are exiting slowly) and then we have dip at the finish as the ETFs that HAVE to buy at MOC (Market on Close) pricing get shares jammed down their throats by the pumpers.
It's a complete and utter farce and completely ignored by the MSM, especially the Financial Media, who just play along as if none of this matters. While you may consider the manipulation of currency and metals markets to be news (both are under international investigation at the moment) – it doesn't rate a mention in the Financial Media, who's advertising revenue comes mainly from the companies that are being investigated for fraud and manipulation.
You know about the LIBOR scandal, you know Credit Suisse helped their top 1% clients evade taxes (duh!) and finally got caught, you know JP Morgan was fined the GDP of Jamaica for various wrongdoings, as were BAC and other Banksters – yet you still have your money in those banks, don't you? Fraud, manipulation, tax evasion, forging mortgage documents…. it's all just the business the Banksters are in, isn't it? And we accept it – even though we are the people they are committing all these crimes against. What the f*ck is wrong with us?
And these same criminal organizations, these same fraudulent operations – are the same ones who are telling us to put all our money into the stock market by endlessly upgrading the companies they have banking relationships with – like Morgan Stanley's very questionable pumping of TSLA last week, the day before their bond sale – which was underwritten by Morgan Stanley.
There's not even an investigation about that one – it's just business as usual on Wall Street. Normally I don't care, because we love a rigged game – as long as we can figure out how it's rigged and play along with…
by Phil Davis - March 6th, 2014 8:15 am
MORE FREE MONEY!
Both the ECB and the BOE have maintained their record-low rate policies today, despite the "strong" economy that is pushing Global Markets to daily new highs. For the Bank of England, this is year 6 of monetrary stimulus, which means there are 30 year-old brokers out there who have never traded in an Economy that wasn't supported by a Central Bank.
Not only is GS alumni Mark Carney keeping rates at 0.5% in the midst of a real estate bubble that has tripled the price of London housing, but today they announce they will immediately reinvest funds from the asset-purchase facility that matures tomorrow – so not even a winding down (taper) is in sight. Carney says there’s “no rush” to remove the emergency stimulus put in place by his predecessor Mervyn King, even after the strongest expansion since 2007 pushed unemployment toward the 7 percent level at which officials had said they’d consider a rate increase.
Going Carney one better, former Managing Director of Goldman Sachs, Mario Draghi is leaving the ECB rates at 0.25% – keeping money free for his Bankster buddies (subsidized by the population of the EU, of course).
A rational person may wonder how strong does the economy have to be before it's no longer necessary to subsidize the top 1% by giving them free access to money for unlimited amounts of time. Fortunately, most rational people have gotten out of the market by now, and aren't around to bother the Central Banksters with their silly questions…
With Trillions and Trillions of Dollars flowing into "the system," the money has to go somewhere and, so far, it isn't going to pay more workers higher wages, is it? It's also not going into gold or oil or silver or copper – money isn't backed by anything anymore and Donald Trump is done gold-plating the 15th bathroom in his 10-bedroom home, so demand can't keep up and housing itself still hasn't come back in most places but STOCKS – stocks are a fun place to put money, aren't they?
by Phil Davis - March 5th, 2014 7:34 am
What is wrong with the NYSE?
The NYSE Composite Index consists of 1,600 US and 400 Foreign Corporations, it was re-weighted in Jan 2003 with a value of 5,000 points and hit 10,000 on June 1st, 2007 and topped out at 10,400 in Oct, 2007, dropping all the way back to 4,650 almost exactly 5 years ago, in March of 2009 – when I was pounding the table for 3 hours on TV, telling our Members to BUYBUYBUY.
Our 13 bullish trade ideas from that marathon broadcast (which included ideas for Blue Chips like GE, BAC, & DIS, as welll as TGT, AMZN and index plays on the Russell and Financials) turned $13,000 invested into $61,000 just 6 months later (up 469%) but opportunities like that only come along if you have CASH!!! to deploy.
CASH!!! is our currently preferred position as the NYSE Summation Index is flasing a seriously overbought signal at us. This is not to say it can't get more overbought – just that we don't feel the need to participate in the Extraordinary Popular Delusions and the Madness of the Crowds at the moment.
The top 20 holding of the NYSE are XOM, JNJ, GE, WFC, BRK.B, CVX, PFE, PG, JPM, IBM, NVS, HSBC, VZ, BAC, T, MRK, KO, BP, TM and C. As I mentioned in yesterday's Live Webcast (replay availabale here), the Russell is pumped up by biotechs, like BDSI (up 670% last year), THLD (up 490%), ELU (405%), SNSS (395%), ARNA (350%), PCYC (325%), OREX (255%), etc. Think how many stocks would have to go to zero to offset gains like that!
So there's our Russell outperformance in a nutshell and the Nasdaq has had similar tech plays like TSLA and their 300% year (doubled already this year) and Musk's other pump-fest, SCTY, which was up 438% in 2013. Again, 7 normal companies could drop to $0 and those two would offet to keep things even.
by Phil Davis - March 4th, 2014 7:11 am
That was quick, wasn't it?
What's a little invasion between friends? Apparently, it was enough to cancel the US delegation to the Paralympics (but our athletes are still going), but not much else of note happened which is why, in a "sudden" crisis, we follow the tried and true strategy of "Don't Just Do Something, Stand There!" You can follow the link to get my logic on inaction but, suffice to say, we practice what we preach!
We opprtunistically went short on oil at $105 (now $103.50 for a $1,500 per contract gain), we also picked up the USO April $38 puts for $1.25 and we went long EWG, buying 10 of the July $30 calls for $1.60 and selling 10 of the April $31 calls for 0.65 in our $25,000 Portfolio – taking advantage of what we considered to be Germany's over-reaction to the "crisis".
We also added more AAPL, of course – but we do that any time they dip, so it had little to do with the Ukraine. Going long on /NG (Natural Gas Futures) is something we've been doing since last week and that trade has been very reliable for quick $500 per contract gains ($4.55) – over and over again. That's all we did yesterday – those few trades – because it was wiser to watch and wait than adjust our larger positions, when we didn't have all the facts yet.
Germany finished down 3.44% today, France down 2.66%, Italy down 3.34%, Spain down 2.33% and London down 1.49% so either they are way too worried or we are not worried enough…
We've been improving since they closed – hard to see how we can ignore things if they have
by Phil Davis - March 3rd, 2014 7:28 am
How long has it been since we worred about that one? For people in the Ukraine, the answer is "when did they leave?" as Russia has always had a major naval base in the Crimean Peninsula and, as I noted on Friday, they are securing their "vital interests" which, of course, makes everyone else nervous.
NATO (remember those guys?) is talking sanctions and that sent the Russian Market (RSX) down 11% this morning and the Russian Central Bank had to step in and boost rates from 5.5% to 7% to stem the outflow of money. Russia's economy ($2Tn GDP) is 50% oil and nat gas exports and tensions are a double boost for Putin, who drives up the prices (oil is $104.50, Natural Gas is $4.70 – up $2,000 per contract from Thursday Morning's Pick in the main post) and, since oil is priced in Dollars, he gets even more Rubles to play with. Where is his incentive to end the conflict?
Our Futures (7:15) are down about 1% across the board but the Russell is down 1.5%, at 1,164, which is fantastic for us as TZA (ultra-short Russell ETF) is our primary hedge and just Friday morning we added this one in our Member Chat Room:
TZA – Well, I'd adjust that now to April $14/17 bull cal spread at $1.05, selling $14 puts at .50 for net .55 on the $3 spread. That's nice weekend protection.
As I mentioned in Friday's post, and pretty much every day last week, we were worried about the market topping out and we were worried that the "rally" was nothing but weakly supported window dressing into the end of the month and I called for cashing out our bullish short-term positions into the move back to the market tops. Now we'll see if I was right. If it wasn't the Ukraine, it probably would have been something else taking down the markets – it was simply time.
Dave Fry's RSX chart does not include today's 11% drop, that's 2.5x more than Friday's drop – back below that $22 line that held up last May and the October before that. Our markets quickly…
by Phil Davis - February 28th, 2014 8:16 am
Up and up we go.
Sure it's low-volume, sure it's coming on a day when the Fed put $4Bn worth of POMO into the system and sure it came on Yellen's second day of Free Money-Chanting before Congress but 1,854!!! 1,854!!! 1,854!!! If we keep saying it, it will begin to sound "normal."
I don't want to be a party-pooper but I was bullish yesterday and I can't bite my tongue all the way into the weekend. We are "Cashy and Cautious" once again (see our February Trade Review) at the top of the rally. Today is the last day of the month and ANYTHING can happen as Fund Managers square off their bets and Banksters manipulate the markets to match the brochures they already sent to the printer.
Turns out the President of the Ukraine did not step down and is not a wanted criminal, he's just on vacation in Moscow! That is, according to the Russians, who have now occupied two of the Ukraine's major airports with armed soldiers.
Vlad the Inhaler (of Billions of Rubles) put out a statement this morning instructing his government to “continue contacts with partners in Kiev” and it was just announced that Viktor Yanukovych (ousted President) will hold a press conference in Moscow this morning, but on a 10-minute delay (to make sure he sticks to Putin's script).
Ukraine’s interior minister, Arsen Avakov, said on Friday that Russian forces had seized two airports in Crimea. In a statement on his Facebook page, Mr. Avakov said he considered the actions “armed invasion and occupation in violation of all international agreements and norms.” He would have made the statement from his office, but Russian troops have also taken over those buildings!
Now, before we start booing Russia for their heavy-handed action, let's keep in mind that Sevastopol is a major Russian Naval Port and it cannot be denied that they have VITAL interests in that region. What does the US do when their is unrest in places we have "vital" (ie. oil) interests in? We send in "peacekeepers," don't we? Of course, that's how we spin it – in the countries…
by Phil Davis - February 27th, 2014 6:52 pm
What an interesting month this has been!
It will be even more interesting as we begin our trade reviews with the last week of the previous month and, when we left off in our January Trade Review, on the 24th, we had been shorting like crazy on the way down. Despite the massive flip-flop in the market, we caught it pretty well and came up with 118 winning trade ideas in January against 27 misses for an 81% success rate.
Always keep in mind that it's fairly arbitrary when we do the review vs. when we initiated the trade – especially in a market that fluctuates as wildly as this one. As long as you follow strategy rules for stopping out, stay balanced and portion your trades appropriately, all you need to do is pick a few more winners than losers and the money should take care of itself.
January 25th was the day we began our January Trade Review (Part 1 here) and we were thrilled with the drop at the time. It's always a good exercise to go over the month with the benefit of hindsight – aside from seeing which premises played out and which did not – you also may find some trades that are real hidden gems – ones that we still like but are cheaper than our original entries. Here we go:
What a lovely correction!
As noted in our Weekend Trade Reviews, we saw this dip coming from a mile away and, from the outset, we were never expecting more than 10% at most. We're not even close to 10% so far but is it already time to fish the bottom or should we maintain a "Cashy and Cautious" stance?
by Phil Davis - February 27th, 2014 7:35 am
On Tuesday, the 11th, we found our thrill on Capitol Hill when Janet Yellen testified before Congress (summarized in my Wednesday post) and the markets took off like a bat out of Hell and today, after a snow delay, is the second part of her double feature testimony over at the Frankenstien place we like to call the United States Senate.
Will the markets do a time warp and repeat the rocketing performance she set off that week or have we already taken all she has to give (see yesterday's post for my market angst – today I'm staying positive!)? As you can see from Dave Fry's chart – so far, my prediction of pump and dump action at the top of the channel is paying off and we're having tons of fun trading the Futures but today it's put up or shut up for the Bulls – as finishing this week without taking new highs will not be good enough.
Already this morning, we picked up our Egg McMuffin money with an early short from Dow (/YM) 16,200 to 16,050 ($750 per contract) and Russell (/TF) 1,080 to 1,070 but now we flipped bullish again at 16,100 (7:08 am) with tight stops – hoping Janet can once again make a new man out of the markets and rose tint our World (had to get in a last Rocky Horror reference).
We were nice and bullish after Yellen's testimony on 2/12, with 9 bullish picks right in the morning post but we got killed on a WYNN short (so far) and AAPL is back to $515 but we added to our long positions yesterday – as it's only the pullback we expected. AAPL is often held back to be used as rocket fuel when a push to new highs is needed. Since it's about 15% of the Nasdaq and 4% of the S&P, just manipulating that one stock can give you total control of the markets.
by Phil Davis - February 26th, 2014 8:19 am
So close – and yet so far.
All but the Dow have fully recovered from the January drop and the Nasdaq is making up for it by going 50 points over the previous 4,250 high (1.2%). Is it a clear indication of a breakout or a silly spike higher with heavyweights like NFLX, TSLA, GOOG and PCLN acting like 1999-style dot com stocks?
TSLA is priced at 100 times FORWARD earnings, NFLX about the same, PCLN (26) and GOOG (23) are relative bargains by comparison and AAPL (our trade of the year), with a market cap of $465Bn against $40Bn of earnings would seem like a great deal, by comparison (even if you ignore their $180Bn in cash), yet they have, so far, been sitting out the market rally at $520.
This is just what it was like in 1998 and 1999, when people who owned "sensible" stocks like IBM, GE, AT&T, McDonalds, Ford, etc. were punsihed while Webvan (the old Amazon), Microstrategy (survivor), WorldCom (the old MCI), Inktomi (the old Oracle), Lycos (the old Google), Pets.com (the old nothing), Broadcast.com (the old NFLX), etc were valued at 100x earnings and more (the average p/e for the Nasdaq in 1999 was 78 times earnings).
A contrarian investor would have done very well for themselves in the 2000-2003 collapse, but only if they survived the run-up! That's why I called for CASH!!! last week, not shorting, other than a few 500% hedges that are to be pulled with small losses if the indexes do manage to get over their previous highs (3 of 5, and it has to hold for 2 full days) of Dow 16,588, S&P 1,850, Nasdaq 4,250, NYSE 1,0406 and Russell 1,182.
If they can do that, we can get more bullish but, if they can't – why should we? Sometimes, the only winning move is not to play and this is a very good time not to be playing.
by Phil Davis - February 25th, 2014 7:39 am
How many stock market newsletters make you $10,000 in 3 days?
Last Friday, we talked about hedges for a market correction and, as I do on occasion, I shared a trade idea from our Member Chat Room (and you can join right here) to short the Natural Gas Futures (/NGH4) saying:
In our Member Chat Room this morning, we shorted Natural Gas Futures (/NGH4) at $6.25 and Oil Futures (/CLJ4) at $102.50 but those are day hedges. We also shorted UNG (Natural Gas ETF) in Tuesday's Live Futures Trading Workshop, so those are great hedges for day-trading and short-term covers.
I also tweeted that one out (follow me here), just to make sure no one missed it.
Yesterday, we had the biggest single-day drop in Natural Gas in 5 YEARS and each one of those /NGH4 contracts made $10,000 at $5.25 while our UNG short position from Tuesday's Live Trading Webcast (and we have another one today at 1pm EST) was cashed out in that same dip in an Alert Message I sent out to our Members at 2:51pm with a 67% gain in less than a week.
This stuff isn't an accident. We spent a week discussing WHY we were going to go short on /NG, as well as how to time it (into the contract expiration) and yesterday afternoon, I said to our Members:
Interesting to see how high Nat gas will bounce into the close. It's like the end of trading places – where Eddie Murphy and Dan Aykroyd have to square up all their sells with buys.
This morning we flipped long on the new contract (/NGJ4). Today is still going to be choppy, but the point of this post isn't to give you a Natural Gas Trading Seminar, rather to emphasize why it's important to understand the FUNDAMENTALS of investing, so that you can take…