by phil - August 15th, 2014 8:15 am
At least we can count on one thing:
The markets are fixed, rigged, gamed, manipulated AND propped up by the Banksters and their pet Government - what can possibly go wrong? Nothing if you know how to play the game (and, sorry bottom 90%, but this game can only be played by people with margin accounts to keep out the riff-raff). That's why, last Thursday in our Live Member Chat Room, I was able to say:
S&P better have support at 1,905 on /ES, which is 1,910 on the index, which is $110 on SSO and you can buy SSO Aug (next week) $109/111.50 bull call spreads for $1.45 with 72% upside potential on a very small recovery next week. A good upside play if you are too bearish or want to lock in bearish gains.
For those of you not lucky enough to be a PSW Member (and you can join here before the September rate increase), I even mentioned the trade in the next morning's post and SSO was still under $110 that morning. Today is August expiration day and that contract should pay the full $2.50 for a nice 72% gain in 8 days – nice work if you can get it.
More importantly, we reviewed our Member Portfolios yesterday and our Short-Term Portfolio is still at $129,916 while our Long-Term Portfolio is at $598,115 for a total of $728,031, which is up $8,000 (1.1%) since last Friday and up a combined 21% for the year off our virtual $600,000 base for our main Member Portfolios.
As I mentioned last week (and the week before and the week before) – it's all about BALANCE. Balance and following our strategy of BEING THE HOUSE – Not the Gambler. Selling premium and staying balanced allows us to grind out a steady profit in most market conditions. We don't HAVE to guess which way the markets are going – plays like SSO are just a bonus, nice though they may be.
by phil - August 14th, 2014 8:05 am
Europe is not growing.
Italy, Romania and Cyprus are in Recession (2 consecutive negative quarters) and Belgium dropped 75%, Czech 100% (to zero), Germany down 130%, Latvia down 85%, Hungary down 30%, Poland down 45%… These are NOT GOOD numbers!
Yesterday we got a -1.7% reading on Japan, down over 200% from last quarter's +1.5%. Our own GDP grew at just 1% from last Q, which itself was down 0.5% from the quarter before it but, fortunately, last year's Q2 was so terrible that, by comparison to that – we improved by 2.4% – and that somehow made people happy.
The euro zone's three largest economies, which account for two-thirds of the region's €9.6T ($12.8T) GDP, all did not post any growth. German GDP shrank 0.2% from the first quarter and Italy's output fell at a similar pace. The French economy, the bloc's second largest behind Germany, stagnated for a second straight quarter. How, exactly, does this translate into a bullish signal for the markets?
The answer is: It doesn't. The bullishness is nothing more than anticipation of MORE FREE MONEY over longer periods of time and that is, indeed good for our Corporate Citizens and the top 1% Human Citizens lucky enough to own them (we own lots in our Long-Term Portfolios!) as they are able to refinance debt at record lows and buy back their own stock with free money and buy whole other companies with free money – all supplied their friendly Central Banksters as well as the suckers who put their hard-earned cash into banks and bonds at 1% interest.
That's right, the yeild on the German 10-Year Bund has dropped to 1% today. Auntie Angela will hold $1M of your money for 10 years and give you back $1,100,000 when she's done – isn't that FANTASTIC! It sure is for those of us who get to borrow that money – not so much for people trying to save.
by phil - August 13th, 2014 8:21 am
MORE FREE MONEY!!!
That's all this chart says to traders this morning, who are taking the European Markets up over half a point this morning and are goosing our Futures by half a point as well as bad news is good news and TERRIBLE news is even better in this Central Bank-sponsored market.
Private Consumption in Japan fell 5% in April, May and June and wages dropped 1.8% while sales taxes rose 3% and – PRESTO – there's your 5% decline in Private Consumption.
Obviously, giving the workers more money is out of the question in a Conservative Capitalist Economy like Japan and we're certainly not going to tax Corporations when we can raise sales taxes that disproportionately target the poor instead so the only solution is: MORE FREE MONEY!!!
Japan has increased their monetary base by 50% since last year and this year they are on track to add another 25% to pump it up to 270,000,000,000,000 Yen. In March of 2000, there were just 50Tn Yen in circulation so a 5x increase in the money supply and NONE of it ended up in the hands of the bottom 80% who, just like in America, saw their standard of living DECREASE over the past decade and a half.
It's a great race to the bottom in annual GDP growth overall as essentially all of the economic gains in Japan and the US accrue to the top 10% (people and corporations) while the bottom 90% circle the drain on the "Road to Serfdom" that Hayek warned us about 70 years ago:
“It is one of the saddest spectacles of our time to see a great democratic movement support a policy which must lead to the destruction of democracy and which meanwhile can benefit only a minority of the masses who support it. Yet it is this support of the tendencies toward monopoly which make them so irresistible and the prospects of the future so dark.
"If we face a monopolist we are at his absolute mercy. And an authority directing the
by phil - August 12th, 2014 8:28 am
"Forgive us our debts, as we have also forgiven our debtors."
Hah – what a crock! How many people who have recited that prayer have forgiven any debts? How many have had debts forgiven? Certainly none of the G20, who owe each other tens of Trillions of Dollars and certainly not Argentina's bondholders, who drove the nation to default and certainly not the bondholders of THREE Atlantic City Casinos that are on the verge of shutting down and putting 10,000+ people out of work in a county of 275,000 so about 5% of the working population.
Are casinos simply a bad business or is the economy not quite as strong as we are led to believe?
In the past 14 years, we have more than tripled the debt of the first 224 years of our nation's existence and, in the next 7 years, we are on track to add 150% more (than the $5Bn we had when Clinton left office).
The $2.4Bn Revel Casino opened in March of 2012 and was $1.5Bn in debt at the beginning of 2013 but did a pre-packaged bankruptcy last year that cut the debt to $272M but it's been hemorrhaging money since and the value of the casino has been slashed to $450M yet an auction scheduled for yesterday got ZERO bidders, which may now lead to yet another bankruptcy – making it an annual event.
This is no run-down property, this is a beautiful, modern building that LOOKS like $2.4Bn was spent to build it. It's a beautiful property with nice restaurants and great rooms and a nice beach and a swim out pool on the deck so you can use it even in the winter – no expense was spared but, like many grand projects, the cash flow isn't there to support the great dreams of the creators.
Even at $450M, if you could sell the 1,400 rooms (57 floors) into condos and got $300,000 for 1 bedroom apartments, that's only $420M and wouldn't be worth the effort. So, if you can't do that and you need 3,800 people to run the casino/hotel – that's a pretty big nut to cover each month. The casino loses roughly $3M per…
by phil - August 11th, 2014 8:22 am
"Thruppence and sixpence every day
Just to drive to my baby
I don't care how much I pay (Too much, Magic Bus)
I wanna drive my bus to my baby each day (Too much, Magic Bus)
I don't want to cause no fuss (Too much, Magic Bus)
But can I buy your Magic Bus? (Too much, Magic Bus) " – The Who
This is certainly one Magic Bus of a market, flipping on a dime or, more accurately, bouncing off the Dow's 200 day moving average at 16,350 back towards our predicted strong bounce line at 16,650. The Transports are also bouncing right off the 100 dma at 142, down from 152 and. per our 5% Rule™, we expect 146 to be tested this morning. This is not "surprising", this is what we said would happen on Friday morning.
As we discussed all of last week, BALANCE is the key in a choppy market and our Long-Term Portfolio finished Friday at $590K, up exactly 18% for the year, while our Short-Term Portfolio jumped to $136,000, up 36% for the year and together they are $726,000, up over 20% for the year on our two primary virtual portfolios.
Having well-balanced portfolios allowed us to ride out the dip and, in fact, buy more longs while the market was pulling back, rather than panicking out of positions that, for the most part, only went down with the market – rather than because there was any actual weakness in the stock.
Our general strategy of Being the House – Not the Gambler is also a great help in consistently making progress in our portfolios, even when the market has such a choppy week.
For most traders, it's "thruppence and sixpence every day" just to hold on to their positions as they gyrate up and down. As sellers of premium, we own the Magic Bus and we collect those daily pennies instead of selling them and that acts as a tremendous buffer to our long-term investing, where simply hanging on to a position allows…
by phil - August 8th, 2014 7:59 am
Iraq, Ukraine, Ebola…
PLENTY of things to worry about and we've ONLY corrected 10 points (7.5%) on the Russell – exactly what we predicted under our fabulous 5% Rule™! None of the other major indexes have fallen as far, so we continue to watch that line very closely for support.
This morning we played the S&P (/ES Futures) bullish in our Live Member Chat Room (you can join us here) off the 1,900 line and were rewarded with a quick 10-point gain (+$500 per contract) already (7:45) as our assessment of the Global situation (that it's not all that bad) seems to be playing out with Russia making a few conciliatory noises over in Ukraine though, of course, any good game of brinksmanship involves a bit of give and take – so it ain't over until it's over.
As you can see from our Big Chart, we're still down 3 of 5 Must Hold lines and, when the Must Hold lines don't hold – we stay bearish! Not too bearish, mind you, we've pretty much shifted to neutral in our Member Portfolios and our Long-Term Portfolio closed the day at $587,490 (up 17.5% for the year) while our Short-Term Porfolio finished at $132,314 (up 32.3% for the year) for a combined $720K up $1,000 for the week and down $4K on the day as we added more BULLISH positions (bottom fishing) into the weekend.
We'll quickly abandon our hopes for a bounce if the Dow fails to hold it's 200 dma at 16,343 and we're keeping an eye on the Transports, where IYT is testing it's 100 dma at 142, which Scott Murray's chart shows us has held firm for two years now.
Having well-balanced portfolios let's us quickly pivot to take advantage of changing conditions and this is an inflection point, so we have bullish and bearish trades ready to trigger – depending on how these lines play out.
While we're waiting, we have tons of fun with our Futures Trading. In yesterday's moring post, I mentioned that we were going short on /TF (Russell Futures) at…
by phil - August 7th, 2014 7:05 am
Victory in our time!
They said it couldn't be done, they said that people in a "Democracy" would never allow it to happen but, in the past 5 years we have actually taken 15% of the income AWAY from the bottom 90% of American wage-earners and re-distributed it to the top 10% and, since there are much less of them, it has boosted our top 10% incomes by 115% over the same period!
In the words of the great Winston Churchill (as redefined by the Conservative Bible): "Never was so much taken from so many for so few." As you can see from the chart above, the Reagan Revolution successfully reversed years of gains for the average American and began shoveling all of the economic progresss to the top 10% for the last 30 years but only in the last 5 has this policy gone into overdrive as we have begun to actively TAKE the money from the bottom 90%, Look how rich that makes us – no wonder we are all voting to keep this policy going!
As noted by Zero Hedge:
"Inequality in the U.S. today is near its historical highs, largely because the Federal Reserve’s policies have succeeded in achieving their aim: namely, higher asset prices (especially the prices of stocks, bonds and high-end real estate), which are generally owned by taxpayers in the upper-income brackets.
The Fed is doing all the work, because the President’s policies are growth-suppressive. In the absence of the Fed’s money printing and ZIRP, the economy would either be softer or actually in a new recession."
It's not just our Fed, of course, this morning we are getting more doveish noises from the ECB press conference as Draghi promises MORE FREE MONEY (for those of us with the credit scores or balance sheets to qualify) and that is already (8:30) pushing our Futures up half a point in pre-market trading. We're still watching our bounce levels (and shorting /TF at 1,130), as there…
by phil - August 6th, 2014 7:23 am
Well, same old, same old really. As the US and Europe ratchet up the sanctions, Putin has ordered "retaliatory measures" of an unspecified nature and has massed more troops along the Ukraine boarder:
"Political tools of economic pressure are unacceptable, they contradict all norms and rules," he said. "In that connection, the government of Russia has already proposed a series of retaliatory measures against the so-called sanctions of certain countries. I think that in current conditions, with the goal of protecting the interests of domestic producers, we could certainly think about that." he added.
In recent days, Russian regulators have banned shipments of some European fruits and vegetables and raised questions about the safety of products from MCD in Russia, threatening to ban their sale. Officials deny any political motivation for those moves.
Russia's Vedomosti newspaper reported Tuesday that the government was considering a partial or total ban on overflights of Siberia by European airlines, which use the route to shorten trips from Europe to Asia.
European markets are already suffering with Italy dropping 2.9% this morning on news that it has officially slipped back into a Recession with GDP falling 0.2% in Q2 – a far cry from the +0.2% predicted by leading economorons. The IMF has cut their optimistic growth estimate for Italy to 0.3% in 2014 and dropped Spain to 1.3%. Spanish markets are down 2% today as well.
We decided this was a good time to buy this morning and, at 6:58 this morning, I put up this chart for Members in our Live Chat Room, saying:
Check this out – all hitting the S1 lines so far:
It's certainly worth playing for a small bounce at
by phil - August 5th, 2014 7:40 am
Actually it's a rule of thumb at PSW that dip buyers need to get burned 3 times before they wise up to a proper correction, so they still have at least another try in them before they finally walk away from this crazy market. As you can see from Oppenheimer's S&P chart, 56% of the S&P has plunged back below their 50 dma in the past 30 days.
This is EXACTLY what I've been warning you about. At the same time the indexes LOOKED like they were rallying, MOST stocks were actually being dumped while a few (AAPL, for expample) were kept aloft to maintain the ILLUSION that the market was still strong. That's how they keep the retail buyers moving in while the institutional investors head for the hills. Yesterday's action was nothing but another low-volume bounce – the kind we teach our Members to ignore:
Short-term, we're certainly oversold but we'll be very critical of a low-volume recovery until we see those 50 dmas retaken on the indexes. Those are way up at 16,877 on the Dow, 1,954 on the S&P, 4,368 on the Nasdaq, 10,912 on the NYSE and 1,160 on the Russell. Anything less than that and there's nothing to be particularly bullish about.
That doesn't stop us, of course, from picking individual short-term longs. On Wednesday, for example, I was on TV on Money Talk and we featured this play on GTAT as my "Options Play of the Month." Last night, GTAT knocked it out of the park on earnings and the stock shot up over 10% to $15+ already in pre-market trading. That will put us well on track to the full $14,000 return on this spread and a 1,650% gain on cash ($13,200 profit on the $800 we invested)! Not bad for a few day's work, right?
By the way, if you never want to miss trade ideas like GTAT again – sign up right here for Membership and you will be among the first to hear about our new trade ideas every day!
by phil - August 4th, 2014 7:56 am
Wheeeeee, what a ride!
As you can see from our Big Chart, we took a dive with some conviction last week, giving up all of June AND July's gains in just a few days. Just like a roller coaster – it takes a long ride to get to the top but then it's a really quick ride back down as gravity takes it's toll.
This is why I urged people to hedge to the downside and get to more CASH!!! on TV last Wednesday as our expectations were (and are) for a 5-10% correction. The SQQQ Dec $40/50 bull call spread we suggested at $2.25 have already popped 20% to $2.71 on that little 1.5% drop in the Nasdaq, which is a perfect hedge as we like to get 10 times the drop on our insurance plays. With the offsetting LULU puts (see broadcast), the net $400 credit now pays another $400 for a 200% gain on each unit of the spread – an excellent hedge overall and still another potential $19,600 to be made if the Nasadq keeps falling this year and, if not – then we didn't need the hedge!
As is often the case with Monday's, we're not going to be reading much into the action today, especially if the volume is light after last week's heavy selling volume poured in. As you can see from the above chart from KimbleChartingSolutions, we may still need the next 4,900% of upside potential on our SQQQ hedges to combat a potential downtrend in the markets.
As you can see from these views on the Russell and Mid-Caps, we're experiencing a technical breakdown that hasn't occurred in many years and maybe it's telling us something of maybe it isn't but, as we were discussing in Member Chat over the weekend (per Jeff Mackie):
“… This isn't a time for over thinking. It's a time for taking a measure of your emotions. If you're scared now you'll be more frightened later. Control your risk. If you didn't sleep last night you're too long stocks. If you're afraid of your statements it's because a little