Phil's Newsletter

Philstockworld September Portfolio Review – Still Too Bullish?


That's up from our $600,000 start on our paired portfolios in just under 3 years (November anniversary) and, more importantly, up $52,975 (8.8%) since our July 4th review – not bad for 2 months where we were mostly playing defense!  

We were wrong (so far) to heavily hedge our Short-Term Portfolio, which lost $22,581 as our hedges tended to expire worthless but having those hedges in place allowed us not to touch our Long-Term Portfolio positions, which gained $73,902 almost without touching our bullish positions all summer.  That's right, if you had just read our review on July 4th and copied our Long-Term Portfolio positions, which only had a net market value of $123,955 at the time (we are 80% in cash), they are now net $186,397 (as of Friday's close) - up $62,442 (50%) against the cash requirement (and the LTP is currently using $339,750 in margin so the return on margin was 18% on margin in 2 months).

The reason some of the numbers are different is we did the individual reviews during the week and Friday's close was a little different but not very.  Also, it's very important to note that the LTP is, by nature, 100% bullish while it is the responsibility of the STP to carry our protective hedges so the STP is SUPPOSED to lose money when the LTP is making money – that is it's very sad fate.  Also, I will repeat our note from last time as it is still, obviously, very relevant:

To you day traders out there – I implore you  - please read the July, April and December reviews and look over those positions and check out those same positions 3 months later and CONSIDER – please consider – that day-trading may not be the best way to play the market.  Yes, the LTP goes up and down too but, when it's down, we have cash on the side to buy bigger positions (which is what we did last year) while they are cheap.  Since those positions are INVESTMENTS, we end up with something of great value when the market comes back.

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Non Farm Friday – Is America Working?

Whatever the jobs number, G20 lies ahead.

As you can see from the chart on the right, the macro data for August has taken a very sharp downturn so it seems unlikely that we'll be matching last month's level of 255,000 jobs created and, in fact, 180,000 is the whisper number and that would be nice, if the US population wasn't growing by 220,000 per month.  Adding anything less than 220,000 jobs is falling behind in total employment. 

That's why we don't care much about the headline number - which is estimated out of 165M jobs so 50,000 jobs up or down is a 0.03% tracking error which is why it's idiotic to see these figures taken so seriously every month.  No one in the MSM ever tells you these things because you tune in or click on the Non-Farm Payroll Report and hundreds of highly-paid pundits make a living discussing the NFP so none of them are going to turn around and tell you what complete and utter BS the number is, are they?  

So we're expecting a miss this morning, even from the lower expectations and we only need one chart (above) to make that prediction and I will be on TV Tuesday morning to discuss it and they won't let me decry the whole thing as a farce – not if I want to be invited back!  

Our working theory was to hold Gasoline Futures (/RB) longs overnight in expectations of a weak jobs report weakening the Dollar and popping /RB back over the $1.30 line after yesterday's 4.5% sell-off.  We're hoping for $1.32 or better as we're coming into the holiday weekend but anything over $1.30 is a keep – so tight stops over the line.

By the way, those USO Sept $11.50 puts we told you about finished the day at $1.49, up 186% for the week and we're done with those, obviously, as we flipped long into the weekend, as planned.  Rembmer, we can only tell you what the market is going to do and how to make money trading it – the rest is up to you!  

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Thursday’s Financial Flight – Welcome Dumb Money!

Are you the dumb money? 

Pretty much, by definition, you wouldn't know it if you were, would you?  The "smart" money, as we've noted all summer, has been flowing out of US equities but, according to the WSJ, it's gushing out of Europe at a pace that puts ours to shame.  Last week marked a record-breaking 29 consecutive weeks of outflows from European stock funds – 2 weeks more than the run that came ahead of the 2008 financial crisis.

This year's outflows ($86Bn) have reversed 2/3 of last year's inflows ($123Bn) with 1/3 of the year left or, in other words, ALL of the money is being withdrawn at the same pace it went in.  This makes perfect sense to us as we're about 2/3 cash too in our 4 Member Portfolios but, after all – we're the smart money!  

Despite ALL of the money being removed, like our own S&P holding up on no volume, the Euro Stoxx 600 is down just 3.4% and still a bit higher than it was at the start of 2015 – it's a magic trick who's fund-manager secret is to leave the index-leading stocks high (like AAPL in the US) while cashing in all the issues that won't move the needle much.  That keeps the dumb money flowing in – even while you are heading for the exits.

One big difference between Euro Stoxx and the S&P is the honesty of European companies in their guidance.  European companies have guided their earnings outlook down 30% for 2017 while S&P 500 CEOs are guiding up 17% – it's as if they do business on two different planets, not two different continents!  They don't lend to the same planet either with Euro Stoxx banks down 25% while US Banks are flat for the year.  

Even compared to the S&P 500's aggressive forward earnings guidance, market PRICES  are clearly out of control.  This FactSet chart, in fact, clearly illustrates why 1,850 is our Must Hold Line on our Big Chart – if prices were tracking earnings the way they usually do – that's where the S&P would be today but we're at 2,175 – 17.5% (325 points) above fair
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Window Dressing Wednesday – End of Month Market Prop Job

Flat enough for you? 

As you can see, yesterday's prediction to short the S&P at 2,180 is, so far, up $250 per contract, so you're welcome for that but it was up $500 per contract at 2,170 in the afternoon and shame on you if you didn't take that single-day money and run.  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!  

This morning, for example, we sent out an Alert to our Members at 6:50 (and a tweet to our followers) with short and long ideas to start the day off.  Our shorting lines on the indexes are the same as they were yesterday and we still have a chance to short my favorite index, so take a look if you're interested. 

It took 6 months but Shell (RDS.A) finally agrees with my Trade of the Year idea on Natural Gas (UNG) (/NG Futures), though a bit late as it's already up 40% since my call.  Shell expects LNG consumption to rise 5-7% per year and we should be right on track for our predictions through Jan, 2018.  

We announced our Trade of the Year idea on Feb 11th on Money Talk and, as above, I was subsequently interviewed about it in various places, including a Forbes interview, so it wasn't a secret and our trade was:

  • Sell 10 UNG 2018 $5 puts for $1 ($1,000) 
  • Buy 20 UNG 2018 $5 calls for $2.10 ($4,200) 
  • Sell 20 UNG 2018 $9 calls for $0.95 ($1,900)

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One Bad Tax Deal for Apple May Spoil the Whole S&P 500

In November of 1863, Lincoln said that:

"The government of the people, by the people, for the people… Oh, not you.  Or you, or you, or you, or you, maybe that guy with the nice hat, no, not you, or you, not you either, maybe you…"

They edited some of that out but clearly our first Republican President's (back when Republican meant a rejection of the aristocricy, not the worship of it) selectivity was taken to heart as the wealth of the top 10% has more than doubled in the last 30 years while the rest are, of course, flat or down (because where do you think they took the wealth from?).  The above chart is from the CBO's Report to Congress and, of course, our Republican Congress will take it as a sign of success, not failure.  

Here's a lovely chart that highlights what's been happening to the Middle Class since the Reagan Years – the only thing shocking about this is the fact that people aren't rioting:

And how have things been going for our nation's 75M poorest citizens?

They went from ZERO to -$13,000 as we cut back on aid.  That's $390Bn we took from 30M families to transfer up to the Top 1% (and the CBO, ordered by Congress, is not allowed to break down groups smaller than 10% or these charts would seem really outrageous).  Fortunately, Think Progress was able to break things down a bit further on the income side and made this chart to illustrate how much money the Top 1% (30M Americans) and the Top 0.001% (30,000):

And yes, of course their net effective tax rate is higher so they contribute more.  The average person who makes over $62M per year paid 17% of their income in taxes while those welfare queens making $36,000 paid just 14% – it is indeed an outrage because 17% of $62M is $10.5M leaving them with only $51.5M to spend for the year while 14% of $36,000 is just $5,000 – why even
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Meditative Monday Markets – Contemplating the Fed

It's the last week of summer. 

That's something my kids are keenly aware of as they head back to high school.  Turns out Jackie's (14) summer bucket list included a weekend at Martha's Vineyard and she was devastated to find out that telling me this on Thursday last week wasn't adequate notice to plan a trip for next weekend, even if I were so inclined.  

The Fed schedules their Jackson Hole conference for the last week of summer because they know no one on Wall Street does anything until after Labor Day (9/5) so the purpose of the whole circus is to give us something to chew on over the holiday, when the G20 Meeting will be held in Hangzhou, China.  As you can see from JackDamn's SPY chart, the market has been running hot all summer but we're having a lot of trouble at that top channel and there's very little support below 2,160 on the S&P all the way back to 2,100.

Hope, though, springs eternal into the fall as bullish investors are still salivating over the possibility (they think certainty) of another major round of fiscal stimulus and God help us all if the G20 disappoints on that front next weekend because the Fed certainly gave us no clear direction out of their meeting.

What Yellen said on Friday (key quote) was:

"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months."

"I believe" is not the same as "we believe" and a divided Fed is what has given us this choppy summer trading pattern.  Vice Chairman Fisher seemed to have more of the team spirit saying: "We should be on a program of gradual rate increases," though he added, "We can afford to be patient" when it comes to acting.  The Fed Governors were all over the place in their statements, however but, generally, all hedged towards data-dependence:

  • "If we had a lot of good news and we got into the September meeting and other people wanted to go, I could

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Philstockworld Top Trade Review

The hits just keep on coming.  

When we left off in June, our Top Trades had 70 winners out of 91 trade ideas but 5 of those trade ideas were for Lumber Liquidators (yes, I liked them that much) and they are all winners now so our winning percentage has jumped to 75 of 91 (82%) – not bad!  Of course, a few of the other losers have turned around too but LL was one I simply pounded the table on (which is why I picked them 5 times) so I will move those to the win column.  For the rest – wherever we are when we do our review (usually 2 or 3 months later) is where we mark it.  

Our June review took us to the end of April, for example, where we had 16 winners and only two losers but one of those losers was a Chevron (CVX) short, who subsequently took a nice dive and the other was SuperValue, which was a 2018 $3/5 bull call spread with short $5 puts and we bought 20 for $880 on March 3rd and, as of our June 5th review, they were $670, down $210 for our other loss of the period. 

Now SVU is back at $5.36 and the spread is $1.25 and the short puts are $1 so net $25 x 20 contracts is $500 – still a loser (worse, actually) but what a great trade as all SVU has to do is hold $5 through Jan 2018 and the trade returns $4,000 – that would be a $3,500 gain from here (700%), so still great as a new trade!  

That's why it pays to read our Portfolio Review section over at Philstockworld – many hidden gems there – especially in our "losing" trades – rare though they may be!  That's because we're FUNDAMENTAL investors and, while the charts may go against us for some period of time, if we get the fundamentals right we know that, at some point, the market usually catches on to what we're seeing.  

Top Trades is a fairly new section at PSW, we began it last August so this is our one-year anniversary and we've put out over 100 Alerts, so averaging better than 2
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Fed Up Friday – FOMC Meets with Protesters

I don’t want to be sacrificed in your war against an inflation enemy that isn’t here.”

11 Fed officials met with "Fed Up" protesters yesterday who told them: "You will be leaving us behind,” if the Fed rushes to raise rates, accusing the Fed of “pulling the ladder right up after you have climbed it.  Our communities are still in a great recession” and “Let our wages grow”.  

The protest, misguided though it is, exemplifies how uneven the US economy has become as 8 years of easy Fed policies have done nothing for the Bottom 80% – things have actually gotten worse just below the top of the economic ladder.  Sadly, the Fed doesn't work for the Bottom 80% and the Fed is not the Government, the Fed is a Banking Cartel and the kind of inflation they seek to contain is WAGE inflation – exactly what the Fed Up crowd wants them to "fix".  

Things are very fixed, as far as the Fed is concerned.  In fact, in the past 3 months, US banks made $43.6 BILLION in profits, beating the previous record of $43.01Bn in Q2 of 2015.  So the Fed is doing exactly the job they are supposed to be doing.  They don't want higher wages – they want "full employment" – in other words, they want a high supply of labor but that doesn't mean they have any interest in those employees making a living wage – that would be inflationary!  

As noted by discount store, Dollar General's (DG) CEO last night after announcing weak sales and earnings:

I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that's out there, that demographic, things have not gotten any better for her, and arguably, they're worse. And they're worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.

Making matters worse, he added that the company's core consumers

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$1,500 Thursday – Our Futures Shorts Pay off Big!

Aren't you glad we're back?  

What a great week to start doing free picks again as we started off with Monday's Toll Brothers (TOL) trade idea, which has already gone from a $300 credit to $1,250 for a $1,550 gain (516%) in 3 days, so you're welcome for that one and it's only "on track" to our full 1,433% expectation so, if you want, you could still play it for $1,550 and look to get the full $4,300 in Jan 2018, which is up another $2,750 (177%) from here – but those are just our table scraps at this point!  

Even if you don't subscribe to PhilStockWorld (PSW), where you get these articles EMailed to you pre-market every morning, you can follow us on Twitter or read us on Seeking Alpha, where they had Monday's post ready by 10am - not too bad of a delay for free picks, right?  On Tuesday our 8:38 article was ready on SA at 9:55, just a little behind the Huffington Post (9:36), where we picked up a short play on GameStop (GME) and I called for shorting the indexes:

Still, with the Dollar (/DX) down at 94.30, it should be bouncy here and there's no particular reason for the markets to go higher so I like shorting the Futures, with VERY tight stops, at the following levels:

Dow (/YM) 18,550, S&P (/ES) 2,185, Nasdaq (/NQ) 4,825 and Russell (/TF) 1,242.50.  We can't short the Nikkei (/NKD, now 16,550) because the Nikkei likes a strong Dollar, so it's too risky but a bounce in the Dollar back over 95 will drive Oil (/CL) and Gold (/YG) lower and knock down two big sectors of the S&P. 

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Which Way Wednesday – The Oil Demand Scam


Not a very exciting market while we wait for Friday's Fed Speak but we have been amusing ourselves picking up some cheap positions – in case the free money train is going to keep on rolling.  The nice thing about sideline cash is you get to deploy it, which is so much more fun that being full of positions you're stuck with and praying they don't drop.  In addition to all those free trade ideas we gave you yesterday (and TOL is up over 10% since Monday's featured pick!), we added 3 more long trade ideas in yesterday's Live Member Chat Room, including IMAX, which spiked higher as we sent out our Top Trade Alert for that stock.  

Our shorting lines remain the same as yesterday and you have to be nimble with those S&P (/ES) (SPY) contracts but the trading range allows for many opportunities to pick up $250-$500 pretty much every day though yesterday we firmed up on shorting the Russell (/TF) at 1,250, with tight stops above that line.  On the Russell, it's $100 per point per contract – so a little more aggressive.


We're doing a Live Trading Webinar today at 1pm, EST and we'll do a little Futures Training.  Oil should be in play today with inventories out at 10:30 but we already saw an API Report that indicates an unexpected (by economorons) 4Mb build and that should be good for those USO puts we told you about last week.  Keep in mind the reason for the build is mainly the 500Kb/d Exxon (XOM) refinery is off-line and 7 x 500,000 = 3.5M barrels that weren't refined – duh!  

Of more concern to the oil bulls is the ever-declining demand for gasoline, as evidenced by the EIA revising their gasoline consumption expectations from +4-5% in January to +1.5% in their July estimate and even that may be revised down as US consumption, according to our friends at CNBC, had missed 10Mb/d estimates by 200,000 (2%) all summer.  

Of course, those guys are full of crap and totally misleading you because US consumption is actually 8.1Mb/d so either CNBC and their analysts are incompetent…
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Phil's Favorites

News You Can Use From Phil's Stock World


Financial Markets and Economy

US consumer confidence explodes to the highest level since 2000 (Business Insider)

US consumer confidence spiked to a 16-year high in March, according to the Conference Board's monthly survey. 

The headline index jumped to 125.6, the highest since December 2000. Economists had forecast that the index dipped in March to 114.0 from a 15-year high of 114.8, according to Bloomberg. 

Traders betting against Wall Street's favorite Trump trade are making a killing...

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Nepal's Military Will Soon Be Invincible

By Guest Post. Originally published at ValueWalk.

By Col. Jitendra J. Karki (Retired, Nepal Army) and Dr. David Leffler

Nepal’s army schools are finishing their first stage implementation of Invincible Defense Technology (IDT). The ultimate goal of IDT is to prevent enemies from arising by reducing the collective societal stress that culminates in war, terrorism, and crime. IDT involves use of the Transcendental Meditation (TM) technique and its advanced practices, ideally by the military, to reduce this collective societal stress. Extensive peer-reviewed research has documented the efficacy of this approach. Militaries and police worldwide have successfully field-tested and are now using this approach (see Review Ne...

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Zero Hedge

Brodsky: "A Socialized Market With Guaranteed Positive Returns For All Must Fail"

Courtesy of ZeroHedge. View original post here.

Submitted by Paul Brodsky via


In Passive Aggressive, we made the case that ETFs can be useful vehicles for thoughtful active investors. A few people agreed with our self-assessment in the piece that we were being self-serving because we are launching a modestly priced pro-volatility fund that actively manages ETFs. To s...

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Chart School

Rallies Come Through

Courtesy of Declan.

Bulls were able to deliver across the board gains, helping to position yesterday's action as a swing low. Weakness at this point would offer itself as a buying opportunity, but markets wouldn't tolerate more than a couple of days of losses if they were to go down this route.

The S&P is at resistance of the prior swing low and the 20-day MA, but today's action is looking good for an upside break tomorrow? Technicals are firmly in the red and need more than today's gain to fix them.

The Nasdaq did today...

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Kimble Charting Solutions

Silver bear market could end here!

Courtesy of Chris Kimble.

Below looks at the performance of Silver, Gold and the S&P 500 year to date. Metals and miners are off to a good start in 2017. Even though the stock market has received a good deal of attention this year, metals have done even better. Is the performance in 2017 the start of something even bigger for Silver & Gold?


It’s been a long time since buy and holders have experienced a bull market in Silver. How long has it been? Silver has created a series of lower highs since 2011. The trend ...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

The Biggest Risk From the Dollar's Drop May Not Be What You Would Guess (Bloomberg)

Whipsawed by the greenback and confronted by U.S. policy confusion, carry trades were supposed to be a rare bright spot for investors who want to stay away from the world’s biggest reserve currency.

These Charts Show Alarm Bells Ringing on the Trump Trade (Bloomberg)

Investors on Monday further unwound trades initiated in November resting on the idea that the election of Donald Trump and a Republican Congress meant...

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Swing trading portfolio - week of March 27th, 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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Members' Corner

More Natterings

Courtesy of The Nattering Naybob

[Click on the titles for the full articles.]

A Quick $20 Trick?


Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:

  • Last time out, Sinbad The Sailor, QuickLogic.
  • GlobalFoundries, Jha, Smartron and cricket.
  • Quick money, fungible, demographics, QUIK focus.

Last Time Out

Monetary policy is just one form of policy that effects capital,...

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Digital Currencies

Bitcoin Tumbles Below Gold As China Tightens Regulations

Courtesy of Zero Hedge

Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.

A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.

As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates th...

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Mapping The Market

Congress begins rolling back Obama's broadband privacy rules

Courtesy of Jean Luc

I am trying to remember who on this board said that people wanted to Trump because they want their freedom back. Well….

Congress begins rolling back Obama's broadband privacy rules

By Daniel Cooper, Endgadget

ISPs will soon be able to sell your most private data without your consent.

As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the res...

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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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The Medicines Company: Insider Buying

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

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene




Insider transaction table and buying vs. selling graphic above from

Chart below from


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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...

Learn more About Phil >>

As Seen On:

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.

Market Shadows >>