Phil's Newsletter

Tuesday Trump the Terrible Signs Death Warrant for Planet Earth

Image result for donald trump vaderToo political?  Well F you!  

Today, the lunatic in the White House will sign an executive order (no Congressional approval – just his own insane plan) to unravel the climate-change policies Barack Obama enacted in the hopes of saving the Planet Earth.  Oh, and fun fact for you Republican voters – WE LIVE ON PLANET EARTH!!!  

Now, I'm not asking you to believe in climate change.  I'm simply asking you to believe in logic. The Republicans like to say: "The science isn't conclusive" and let's say we accept the fact that your child has a high temperature that may prove fatal if it gets higher and 97 doctors you take him to say you need to IMMEDIATELY get his temperature down or he might die but 3 say – we don't know for sure it will kill him so let it run its course. 

So, what do you do?  Do you just let you child sweat and shiver and get worse and worse while you watch and do nothing or do you TRY to do something to make him or her better?  Well, Donald Trump just decided not only not to do anything but to stop every other parent on this planet from doing something.  In fact, although 97% of the scientists believe man-made carbon-dioxide is causing the problem – Donald J Trump (to be known as "Trump the Terrible – Destroyer of Earth" in our future) is also passing laws to INCREASE our production of CO2.  

Image result for rex tillerson signatureAs noted by Stephen Colbert, in that clip from 2014, Exxon (XOM) was a major force in the climate-denying movement and it is THEIR PAID SCIENTISTS that are the 3 out of 97 that deny climate change and, by the way, who signed their checks at the time – Rex Tillerson – our very own new Secretary of State, back when he was just the lowly CEO of Exxon.  

Image result for climate denialOf course it's not a "conspiracy" – it's simply a coincidence…
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TrumpDon’tCare Plan Fails to Pass – Will the TrumpDon’tTax Act be Next?

And down we go!  

I'll bet those hedges are looking better and better every day now, right?  Now that the enthusiastic GOP investors have learned their first (of many) political lessons of the Trump Error (and we had plenty under Obama when we had both houses), we'll see how their enthusiasm for the market holds up because, as we've noted before – there is/was a huge disparity between economic optimism of Republicans and Democrats and, if the Republicans begin to doubt to the Power of Trump – all those confidence numbers can drop like a rock tied to a bigger rock.

Even as I write this we're getting mail from people trying to explain gravity to us.  Yes, we get it, it was an expression!  On the other hand, a lot of the basics need to be explained to the Trump camp and their supporters if they are going to get anything other than executive orders passed this term (however long that lasts).  The Futures, meanwhile, are following through to the downside this morning and we ran our 5% Rule through the Charts in this morning's Alert to our Members.  Here are the Dow notes as an example:

So Dow 21,000 less 5% is 19,950 and 2.5% is 20,475 so we'll look for that for support and the 525 drop we can call 20,500 the line that matters with 100-point bounces to 20,600 and 20,700 but I'd start shorting at 20,600 – if we even make that.  Worse would be failing to retake 20,500 – then it's almost a certainty we drop another 500.

This is happening despite us being wrong about the Dollar on Friday morning, as 99.50 did not hold and we are now at 98.90, which is down $700 per contract (/DX) at the moment but I still have faith but, if I'm right, that will be bad news for the indexes as the weak Dollar is the only thing keeping them from those 5% corrections that we think are inevitable at this point (so you may was well lay back and enjoy it – hat tip
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Falling Friday – Market Wraps Up Worst Week of Trump Error

Image result for trump don't careUtter chaos!

As noted by the GOP leadership: "There is no Plan B" to the TrumpDon'tCare Act.  Either the GOP guts health care and takes insurance away from 24M Americans and begins to defund Medicaid or, as Trump now states "Obmacare Stays."  I know – WTF?  Is it possible that the GOP has purposely put forth an unpassable bill BECAUSE they realize Obmacare is too good to kill?

Keep in mind this is just the House Vote on Health Care, which was supposed to be easy, the Senate vote is next and the changes they made in the bill could cause it to fail simply under the parliamentary rules (because they changed it to a simple majority, which caused other rules to kick in).  

If 3 GOP Senators defect, the Bill dies and, even if it passes, the Dems can tie it up in court for a long time.  Since they have a 44 vote advantage in the House (10%) and can't get them in line, it's reasonable to assume they are going to have trouble with at least 5 Senators and Senators have to Represent whole states – this is a suicide mission for Republican Senators from Democratic states.  It's very possible this battle will cost the GOP the Senate next year and the Senate gets to do all those fun investigations.  So that's the upside on the Bill – the downside is TOTAL CHAOS!

Image result for white house chaos cartoonOf course, that may be exactly what the White House wanted because, clearly, they did not have a real Health Care plan but, much more importantly, you forgot all about Trump's false accusations that Obama tapped his phone and, even though Devin Nunes jumped on a grenade for Trump and tried to convince the American People that mentions of the Trump team in some investigations justified Trump's paranioa (destroying his own reputation in the process) - no one really fell for it but, suddenly, Health Care distracted us – how convenient!  

Yesterday, I was on the Benzinga Pre-Market Report at 8:30 and they asked me how to play the Dow and I told them (20 minutes in): "Figure
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Thoughtless Thursday – TrumpDon’tCare Health Plan Gets a Vote

Image result for trump health careBig vote tonight.

If the TrumpDon'tCare Plan is approved (the CBO says it can no longer be called a health plan since the overall goal is to kill as many people as possible), then Trump's agenda is winning and the markets could leg higher.  If, on the other hand, the GOP revolts against The Donald, all Hell could break loose so ignore the politics if you want to but we're paying very close attention! 

Interestingly, the main GOP objection to TrumpDon'tCare is that it still cared about forcing Health Insurance Companies to provide minimum benefits to their customers.  That has now been removed by the White House and now the Insurance Companies don't have to do anything for anyone at any time – isn't that great?  As noted by Politico, however:

While altering the coverage requirements could help win over the Freedom Caucus members, it could drive away moderates — another coalition that House leaders need to build upon in the final 24 hours before the planned vote on Thursday. House leaders are still short of the 215 votes they need.

Image result for trump health care cartoonIt's going to be hard to bridge the gap because the bill still is not Draconian enough for the "Freedom Caucus":

Freedom Caucus members, led by Meadows, want at least some parts of Title One of the bill removed. Included in Title One are many of the Affordable Care Act's benefits, like a prohibition on insurers denying coverage over pre-existing conditions and a prohibition on lifetime and annual limits.

That's right, your pre-existing conditions can now stop you from getting coverage and, even if you are covered, there can be a cap – so don't get too sick or you'll be on your own!  Aside from leading to a great unwinding in the Health Care, Pharma and Biotech sectors, TrumpDon'tCare will put a huge burden on the bottom 99% and eat into their disposable income
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Weakening Wednesday – Trump Agenda Begins to Unravel

Where's my tax cut?  

The market is getting worried that TrumpDon'tCare is not only going to impoverish tens of Millions of Americans (bad for Retail) but that the fight over it will delay the things they really care about like MORE FREE MONEY in the form of lower taxes for the Top 1% and, of course, the dismantling of regulations as well as the regulatory agencies that are supposed to enforce them.  In short – where is our Gangster's Paradise?  

Fortunately, as members of the Top 1%, we are able to take full advantage of the chaos and the Biotech Short (IBB) from yesterday's morning Report opened at $4.45 and closed at $5.90 for a nice 32.5% gain on the day.  Of course that's nothing compared to the Monday morning Report's timely Tesla (TSLA) short, which was:

We're hoping TSLA goes higher but worried they won't so our trade for the moment is going to be:

  • Sell 3 TSLA April $265 calls for $9 ($2,700)
  • Buy 5 TSLA April $290 puts for $30 ($15,000)
  • Sell 5 TSLA April $275 puts for $19 ($9,500)

That nets you into the $7,500 spread for $3,300 so the upside potential is only $4,200 (127%) but, on the bright side, it's only 32 days away (April 21st) to expiration.  We only need TSLA to stay below $265 to collect the money and, if they go higher, we will roll our short calls to 6 May or June calls at higher strikes (the June $305 calls are $5 and the margin is $15,000 on 6 short ones)


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Testy Tuesday – 11,550 or Bust on the NYSE – STILL!

Treading water for two weeks.

On March 7th, I wrote: "Testy Tuesday – 11,550 or Bust on the NYSE" and yesterday the NYSE closed at 11,556.9 so no harm in waiting around for the Fed.  At the time we pointed out that declining volume was greater than advancing volume and that was still the case yesterday with 1.86Bn shares in decline vs. 1.15M shares moving higher in light trading but yesterday's action was tainted by a failure at the closing auction.  After-hours trading was suspended at 4:13 and all open orders were cancelled. 

It seems to be working again this morning but it's very scary when a major market system – THE major market system, fails on you.  If that had happened during a trading day – it would have been total chaos of the "flash-crash" variety.  Have I mentioned how much I love CASH!!! lately?  Hedges too!  

Our well-hedged Long-Term Portfolio is up over $9,000 since our 3/10 review despite the market not making any progress.  That's because we SELL risk to stock market gamblers using our system which teaches our Members to Be the House – NOT the Gambler.  Notice we are 75% CASH!!! (have I mentioned how much I love CASH!!!) but the positions we do have are on track to make $250,000 this year as they use options to both hedge and leverage the cash we do have in play.  You don't need to risk a lot to make a lot.

By selling risk premium, we don't need an up market to make money – flat or even slightly down works for us and anything less than slightly down kicks in our hedges and keeps us from losing too much.  You don't hit a lot of home runs following this strategy but your batting average usually leads the league!  

Image result for stock market balanceBalance is also key in this kind of market, we're slightly bearish overall, maybe 60:40 but we're moving towards 70:30, which is as extreme as we ever get in our positions.  If you
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Fed Speak Week – 11 Fed Speakers Aim to Steer the Markets

Let the manipulation begin!  

After a 0.25% rate hike did nothing to deflate the market bubble, the Fed will take another swing at things this week by speaking to us 11 times and it will be Evans (Dove), Evans (Dove), George (Hawk), Mester (Hawk) and Rosengren (Dove) on Monday and Tuesday followed by Yellen (Dove), Kashkari (DOVE), Kaplan (Neutral) , Evans (Dove), Bullard (Hawk) and Williams (Neutral) on Thursday and Friday.  So an edge to the doves but the doves had a 3:1 edge last year, so it's a change in tone towards hawkish for sure.  Kashkari was the dissenting voter who did not wish to raise rates at last week's meeting – he speaks Thursday at noon.  

In their recent statement, the Fed says "The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal."  The word symmetric was added since January and indicates the Fed is warning that they do not intend to let inflation move over 2% for any period – that should be clarified a bit this week and it's a key indicator that the free money party is really winding down. 

As we noted in our Friday Morning Report, the recent Fed action has driven the Dollar to the bottom end of its range, back to where we bottomed out at the Feb 1st meeting, after which we climbed back 2.5% over the next month and, unless the Fed speakers come off surprisingly doveish this week, we can expect the Dollar to rapidly move back to its mid-range at 101.50 and that will put pressure on commodities as well as the indexes.  

Oil (USO) is already under rollover pressure with 3 days to trade April contracts (/CLJ7) and already we're down to $48.50 ($47.90 on April) and we hit our $49.50 shorting goal on the May contracts (/CLK7 – also from Friday's report) so you are welcome for that $1,000 per contract winner to start your week off with a smile.  Our index shorts (same post) have had minor pay-offs so far but, as noted in the Report, we're confident enough in our index shorts at this point that we're beginning to short specific stocks ahead of a broad-market "adjustment."

As we expected, our
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TGIF – Fed Week Ends, G20 Begins

So far the markets are staying "strong".  

That's good for our longs, bad for our hedges but that's why we have both – along with plenty of CASH!!! on the sidelines – just in case.  Unfortunately, the Fed action, along with the out-of-control Trump budget, took the Dollar down 1.5% and that made the markets seem stronger than they actually are (because the currency they are priced in got weaker).  This also boosted commodites, which kept the materials and energy sectors from dropping and now we'll see if they can hold up as the Dollar comes off the floor at 100 (and yes, long USD at 100 is a good FX play with tight stops below).

Our target range for the Dollar is 100 to 103 so we expect to be back at 101.50 soon and THEN we will have a better idea of what the real reaction to the Fed was.  So far, as we predicted (and you are welcome if you took yesterday's index shorts for huge wins), the post-Fed rally has pulled back a bit but the Russell (/TF) still makes a good short at 1,385, especially if the Dow (/YM) is below 20,900 and the S&P (/ES) is below 2,380 and the Nasdaq (/NQ) is below 5,420 AND the Dollar is over 100.  

Today is option expiration day and quarterly expirations can be very tricky so a good day to take off and come back Tuesday (Mondays are pointless) to see what's up.  By the way, if you don't feel comfortable walking away from the markets for a few days – you REALLY need our help because a good portfolio should run itself – not run you!  

The weak Dollar has also pushed oil back to $49.50 into the weekend and, hopefully, they either test $50 today or hold $49.50 into Monday so we can short them again (/CL).  Again, since we don't think the Dollar is going any lower then, other than the US manipulation into the weekend – we don't see any reason for oil to be stronger.

Tesla (TSLA) is another short we are…
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Thursday Thrills – A Chance to Short at Dow 21,000 Again!

Evolution of Atlanta Fed GDPNow real GDP forecastI love a good short!  

As you can see from the Fed's own GDP forecast, Q1 expectations are now down to 0.9%, down 0.3% from just last week on weaker than expected Consumer Spending Growth which went hand-in-hand with weaker than expected Retail Sales Reports.  

Nonetheless, on the same day the Fed was releasing a 25% downgrade to our GDP, they also chose to raise rates 0.25% and the market went crazy and rallied us all the way back to our highs, which you would think we'd be upset about but now we can (as I noted to our Members this morning) put on the following shorts:

  • Dow Futures (/YM) at 2,100
  • S&P Futures (/ES) at 2,390
  • Nasdaq Futures (/NQ) at 5,440
  • Russell Futures (/TF) at 1,390

These are dangerous plays and we need to be mindful that the markets are very irrational and could go higher so if any two are over the line, it's a no play.  At the moment, on the Nasdaq is at the line so that's our short for the moment (and we also have Nasdaq Ultra-Short ETF (SQQQ) as a hedge, see yesterday's post).  Those contracts pay $20 per point and a 25-point move in the Nasdaq is a big day so $500 would be a nice win but $250 is just fine on a pullback if the markets aren't looking too weak.

If the Futures start heading lower we begin using a strategy called "shorting the laggard" where we wait for 2 of the 4 indexes to cross below the next support and then short the others with tight stops (and out if either of the first two go back above). 

Aside from the Fed's downgrade to our overall GDP, we're very concerned with the effect Trump's Budget will have on the market as these spending cuts are effectively money that will come straight out of the economy and, as you can see from this chart, it's impacting every sector but Defense/HomeSec/Veterans and Transportation and before you get excited about
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Rate Hike Wednesday – How Will the Markets React?

Image result for Fed hike gdpThere is a 100% chance the Fed will raise rates today.

That's the consensus and I, of course, agree as I've been saying they HAVE to hike since the last meeting.  Now that everyone agrees with me, let's move on to contemplating the result of the Fed hiking and what it means for the year ahead.  Clearly, as you can see from the chart, the Fed is not hiking rates because the economy is booming.  The Fed is hiking rates to ward off inflation because a stagnant economy with inflation (stagflation) is even worse than a recession from the Fed's point of view.

Also, the markets are what Allan Greenspan liked to call "irrationally exuberant," which is also clear from the chart and it's also not good to see so much money chasing so little profit as it's a classic misallocation of resources and, while investors may not feel the need to worry about the future consequences of their current actions – the Fed certainly does and it is their job to pop these bubbles – as gently as possible.

We are very well-hedged for a correction in our Member Tracking Portfolios and I began a full review last night in our Live Member Chat Room.  In our Options Opportunity Portfolio, which is tracked over at Seeking Alpha, where we raised more cash and added more hedges on March 1st and that didn't stop our bullish positions from adding $7,000 over the past two weeks – with no adjustments – so I'd have to say we're very well-balanced at the moment.

Having a well-balanced portfolio is the key to long-term success.  You can't only make money in bullish markets or only make money in bearish markets or those dry spells can kill you.  Smart Portfolio Management is more like surfing, where we look for a good wave to ride and then try to stay on board for as long as we can and try to cash out before the wipeout.  When it's over, we paddle our cash back out to sea and look for the next exciting opportunity.  

Image result for stock market correctionsThough
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Zero Hedge

Trump Extends Feud With "Wacky Wilson" To Sixth Day, Says Fake News "Finally Sinking In"

Courtesy of ZeroHedge. View original post here.

In a relatively tame by his weekend standards Twitter outburst, President Trump on Sunday again ripped into Rep. Frederica Wilson, extending his feud with the "wacky" Florida Democrat into its sixth day, over the contents of his call to the widow of a fallen U.S. soldier. "Wacky Congresswoman Wilson is the gift that keeps on giving for the Republican Party, a disaster for Dems. You watch her in action & vote R!" Trump tweeted.

Wacky Congresswoman Wilson is the gift that keeps on giving for the Repu...



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Phil's Favorites

Bearish Fund Traders Head For Early Hibernation

 

Bearish Fund Traders Head For Early Hibernation

Courtesy of Dana Lyons, with introduction by Zero Hedge 

'Speculators' have never been so confidently complacent that 'all is well'.

Speculative positioning in VIX futures and options remains at its most short in history as traders refuse to back away from 'what works' as realized volatility collapses to its lowest in over 60 years......



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Chart School

Gold Cycle Update

Courtesy of Read the Ticker.

Why has gold not fallen below $1000 (well so far), what is the golden canary telling us?

Previous Posts:
SP500 Kitchin Cycle says trouble brewing - Update
SP500 How much higher ?

In short, the old heads out there know there is a ying for a yang! Currently the SP500 screaming higher, massive debt, low very !VIX. But as well all know this wont last forever, and the flip side could be very scary. Hence the hedge into metals, and building of the 4.5 year gold base, and as a ...

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ValueWalk

Full Transcript Of Donald Trump Interview With Maria Bartiromo [PREVIEW]

By VWArticles. Originally published at ValueWalk.

Please see below for the full transcript of FOX Business Network’s Maria Bartiromo. The interview with President Donald Trump today that will be airing across FOX Business Network’s (FBN) Mornings with Maria (6-9AM/ET) and FOX News Channel’s (FNC) Sunday Morning Futures 10AM/ET).

]]> Know more about Russia than your friends:

Get our free ebook on how the Soviet Union became Putin's Russia.

When:

Part 1 - Sunday, October 22nd  on FOX News Channel’s Sunday Morning Futures (10-11AM/ET)

Part 2 - Monday, October 23rd on FOX Business Network’s Mornings with Maria (6-9AM/ET)

...



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Insider Scoop

There Could Be 109% Upside In uniQure As Company Advances Gene Therapy Into Clinical Trials

Courtesy of Benzinga.

Related QURE 32 Stocks Moving In Friday's Mid-Day Session Wall Street's M&A Chatter From October 19: Uniqure, Ulta, Sally Beauty,...

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

Digital Currencies

The World's Largest ICO Is Imploding After Just 3 Months

Courtesy of Zero Hedge

Earlier this summer, Tezos smashed existing sales records in the white-hot IPO market after the company’s pitch to build a better blockchain for cryptocurrencies made it one of the buzziest ICOs in the world. As we noted at the time, the company capitalized on that buzz by courting VC firms and other institutional investors with a $50 million token pre-sale. After the company opened up selling to the broader public, demand soared as investors greedily bought up tokens in spite of glitches that threatened to derail the sale early on. By the end of its weeks-long token sale in July, Tezos had sold more than $230 million.

Now, Tezos is proving that authorities in the US and China were on to something when they decided to crack down on the ICO market, which has become a cesspool of...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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Biotech

Circadian rhythm Nobel: what they discovered and why it matters

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

 

Circadian rhythm Nobel: what they discovered and why it matters

Courtesy of Sally Ferguson, CQUniversity Australia

Today, the “beautiful mechanism” of the body clock, and the group of cells in our brain where it all happens, have shot to prominence. The 2017 Nobel Prize in Physiology or Medicine has been awarded to Jeffrey C. Hall, Michael Rosbash and Michael W. Young for their work on describing the molecular cogs and wheels inside our biological clock.

In the 18th century an astronomer by the name of Jean Jacques d'Ortuous de Ma...



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Members' Corner

Day of Last Dances

News today has been relentlessly terrible. A horrific mass murder happened last night in Las Vegas. (Our politician's abject failure to address gun control is beyond sickening.) And today, reports that Tom Petty died of a heart attack, followed by reports that Tom Petty is not dead, and now reports confirming that Tom Petty has passed away. 

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

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

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

Just click here at 1 pm est and join in!

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



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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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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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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