Phil's Newsletter

Free Money Friday – Trump and the Fed Talk up the Markets

Image result for a chicken in every potMORE FREE MONEY!!! 

That's right, nothing gets the market going better than promising a chicken for  every pot and yesterday we had the President promising a "phenomenal" tax cut package in 2-3 weeks, as well as reiterating his pledge to "roll back burdensome regulations."  Meanwhile, the St. Louis Fed President Jim Bullard said rates can remain low through all of 2017, saying the Fed may only raise rates once this year  - two less than expected!  

This is nothing more than the classic 1920s Republican Playbook with Trade Tariffs, Deregulation of Industry, Lack of Financial Controls, etc. aimed at creating a false sense of prosperity while money is "hoovered" up by the rich until the economy collapses only this time they have to dismantle that pesky social safety net that was put in place after the last time they destroyed the lives of tens of Millions of families.  Go GOP, go!  

Meanwhile, as we expected, oil is being talked up into the weekend and we are very close to that $54 line again, boosted by the IEA report which says OPEC's cuts are 90% effective with production down 1Mb/d in January at 32.06Mb/d.  PLEASE forget the fact that production was 31.5Mb/d before OPEC ramped up production ahead of the "cuts".  Yes, I know, you already forgot, didn't you?  

Remember, their original plan was to ramp up production and drive US shale producers out of business.  That plan failed so their new plan is to stop producing all that oil nobody wanted anyway and call it a "production cut" and spin it as a reason to drive oil prices higher, which is working great so far as last February oil was $30/barrel and now $54 is up 80%, even though the US just had a 13.8Mb build and we are swimming in oil.  

It's all done in the name of screwing over the consumers.  Gasoline has jumped 10% from $1.46 on Tuesday to $1.60+ this morning (and a great short into the weekend at that price on /RB), which will cost US drivers about 0.20/gallon at the pump so about $3 per tank/per driver is a nice $150M bonus for "THEM" over the weekend (see this week's posts for more on…
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Thrilling Thursday – Shorting Oil at $53 – Again

Thank you sir, may I have another.

How many Thursdays in a row are they going to ramp oil prices up despite a poor inventory report and set it up for a nice short?  You can go back all the way to December and all the way to last summer, for that matter to see how many times we were able to short oil between $53 and $54 and make $250,$500, $1,000 per contract on our oil shorts.  At some point you would think this is an expensive habit for the pumpers who jack up the price – as they have to take some sort of loss on their bogus orders (none are ever actually delivered).

Stock price graphsBut, of course, the real game isn't to beat PSW Members out of a few Thousand Dollars, the game is to beat consumers out of a few Billion Dollars by jacking up the prices you pay at the pump or for products that use petroleum as a base.  Now $53 isn't the best short but it may be all we get after yesterday's MASSSIVE 13.8Bn barrel build in crude inventories – that's 2 full days of imports we didn't need at all!

This is happening despite the fact that we are now EXPORTING 2.6M barrels of refined products PER DAY (18.2Mb/week) - now making the US one of the largest petroleum exporters in the World.  We are swimming in oil and there is no sign of increasing demand and OPEC already cut the supply – this is a very poorly-balanced market.

By sending 18.2 Million barrels of refined product out of the country each week "THEY" fake US demand for oil and keep the prices high, $23 per barrel higher than they were last year and we use 16.1M barrels per day so this shell game they are playing is costing the American consumer an extra $370M/day or $2.6 BILLION per week or $135Bn a year – "THEY" just reach into your pocket and steal that money to the tune of $1,000 per working American over the course of a year.  

And, of course, this is just another disproportionate "tax" on the poor that transfers their income…
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Weakening Wednesday – Market Internals Flash CAUTION!

Actual earnings are missing by 1.6%.

December 30th expectations of $30.60 for S&P Q4 earnings are missing the mark by a wider and wider margin as each company makes it's report.  With 55% of the S&P 500 reporting through last Friday, sales are missing by 0.1% overall and earnings, even with financial engineering (non-GAAP reporting, buybacks, "one-time" exceptions) are only 4.6% above last year, when the S&P was at 1,850 (24% lower) on Q1 earnings. 

WAKE UP PEOPLE!!!  I know you are in some sort of complacent stupor because the Volatility Index (VIX) is at 11.49 (makes a good long here) but come on – can you really be so stunned by the political madness that you forgot how to value a company?  500 companies, for that matter…

Do you see where the PRICE of the S&P crossed way over earnings back in mid-2013?  That is when people began to lose their minds but we had a couple of corrections and sanity was almost restored until early last year, when the market went crazy and now, 24% later, hasn't looked back yet.  That's a 5 standard deviation move off the value line (actual earnings) for the S&P – investors are overpaying for stocks in the 15-20% range.  

Even worse, the growth in earnings is pretty much entirely tied to just two sectors: Financials and Utilities.  Telcom services are down 28%, Energy is down 5.4% and Industrials (like the Dow Jones Industrial Average) are down 8.2% with the Dow at its 20,000 all-time high. This does not make sense - Chewbacca!  

And don't even get me started on guidance!  

Energy companies have given no guidance because they have no f'ing idea what is going to happen.  Just yesterday we got an API Report showing the 2nd biggest build of oil (14.2Mb) in US history – what cutbacks?  If EIA confirms this number, we will have had 50 MILLION barrels of oil (10%) build up in our commercial inventories in the past 4 weeks – that's crazy!  

The energy sector has been…
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$1,200 Tuesday – Trading in Wonderland

You're welcome!  

In yesterday's Morning Report we called Oil Futures (/CL) short at $54 right in the 2nd paragraph (this one) and it was an easy call because oil was only up on a Trump tweet and nothing to do with fundamentals and we are, after all Fundamentalists.  Oil made a nice $1,000 intra-day decline, weakly bounced (our 5% Rule™) 0.20 to $53.20 and then fell another $500 to net a $1,200 decline. 

$1,200 pays for 6 months of a Trend Watcher Membership where you can view our Live Member Chat Room and learn how we make calls like this every day.  If you don't like learning, our Top Trades Membership just sends out select Trade Ideas and a whole year of those is just $1,495 while only $995 buys you an entire year of the PSW Report – all paid for by a single trade in a single day!  

We're done with oil and we took a poke long on Gasoline Futures (/RB) at the $1.50 line, but with tight stops below as it's just a technical bounce play.  Natural Gas (/NG) Futures made another $500 per contract on the move from $3.05 to $3.10 this morning and we went long on Silver Futures (/SI) in my morning note to our Members at $17.60 at 6:36 am and already we're up 0.05, which pays a very quick $250 per contact – enough for a healthy breakfast.  

Declining volume on the NYSE yesterday was 2M shares and advancing volume was 1M shares but this morning, on no volume, the Futures are blasting higher again and though they are a very tempting short, I warned our Members to be very careful attempting to use logic on these markets:

This is why we keep adding more longs to the LTP – the shorts simply don't work…

This is very much like 1999 where sure, it was ridiculous – but it

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Trump Error, Day 14 – What, You Think our Country is so Innocent?

"We've got a lot of killers."

That, and the headline above are things our President said on Fox ahead of the Superbowl.  That followed up on his tweet on Friday that Iran is "playing with fire" which has been keeping Oil (/CL) up around the $54 line so we can thank President Trump for another GREAT opportunity to short oil this morning below the $54 line.   

Trump has been on the warpath all weekend because hundreds of top business leaders are petitioning against his immigration ban and a the 9th US Circuit Court struck down his ban on Sunday, which led Trump to tweet: "What is our country coming to when a judge can halt a Homeland Security travel ban?"

Yeah, that system of checks and balances upon which our entire Constitutional system is based – what a disaster!  Despite overwhelming "fake news" polls that show the vast majority of the country think the Travel Ban is going too far, Team Trump is appealing the matter to the Federal Appeals Court in San Francisco but, you know – San Francisco – so it's likely this will fly (unlike Arab immigrants) towards the Supreme Court soon enough.  

Uncertainty is not a good thing for the stock markets and the CEOs that are protesting the ban are flat-out saying it's bad for their companies so, if Trump wins, companies like AAPL, FB, GOOGL, MSFT, HPQ are flat-out saying they will lose business and a long-term competitive edge?  It's a good time to have Ultra-Short Nasdaq (SQQQ) hedges!  

Open Borders are now closed, the era of Free Trade is ending, Financial Regulations are being reversed, 1/10th of the US Population is losing its Health Care, US policy on Climate Change has reversed and we're back to war talk in the Middle East and you think this isn't going to affect the markets?  

If everything that was happening for the past 8 years has been bullish – as the Dow climbed from 8,000 to 20,000 (up 150%) under the "terrible" Obama Administration, how will the opposite policies also be "GREAT" for the markets under the Trump Administration.  Are we saying that, in the…
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Non-Farm Friday – 3 More Winning Futures Trades!

We went 3 for 3 yesterday.  

After hitting 9 out of 10 of our picks on Wednesday (7 out of 10 for greedy people), yesterday's 3 Futures Trade Ideas made $2,560 on 3 single contracts led by Gasoline (/RB) which gave us a quick 3-cent fall that paid $1,260 per contract just 60 minutes after the bell.   

Oil gave us an equally quick $500 per contract gain and Natural Gas (/NG) took 3 hours to make us $800 as it topped out at $3.20 – talk about working hard for our money!  After all that money-making, we were too exhausted to trade but it was a fun morning and we also found long we liked on Nokia (NOK), Starbucks (SBUX), Harley-Davidson (HOG) and Macy's (M) for our Members in our Live Chat Room.

I apologize to our Seeking Alpha readers because they missed the opportunity to profit from yesterday's trades as our Morning Report was not published there for the following reason:

Dear Philip Davis,

Hi Phil – I think this one is too politically-weighted for us, noting that even the title isn't investment-related, and taking a personal shot at the VP. Would you be amenable to modifying today's report to remove the political commentary?

Sincerely Yours,
SA Editors

Image result for mike pence heartYes, I did insinuate that Mike Pence did not have a heart but that is what I believe and wouldn't Mike Pence want us to believe whatever we want to – no matter what "alternative facts" are presented?  If he does have a heart, I apologize but I've never seen it (or any indication of it) but maybe he can hold a press conference and
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Groundhog Day – I Woke Up and Trump Was Still President!

Image result for groundhog day animated gifWhen will the madness end?

In the great, great movie, Groundhog Day, Bill Murray wakes up every day and, to his dismay, finds it's the same day as yesterday.  No matter what he does, he is trapped in a loop, living the same day over and over again.  This is how I feel when I wake up and read President Trump's latest tweets – I cannot believe this guy is really the President of the United States of America – certainly not the one they taught us about in history class.  Well, since 1863, anyway

Since yesterday, Donald J Trump has threatened UC Berkeley with cutting off federal funds, put Iran "ON NOTICE" and gotten into an argument with the President of Australia over immigrants – just another day in Trupmerica.  Not surprisingly, the markets are down again but gold is doing very well and oil got a pop with all the war talk with Iran and, of course, Exxon's (XOM) Rex Tillerson being sworn in as Secretary of State – just a heartbeat away from the Presidency (it would be Pence, but he has no heart). 

Image result for america oil company armyImagine if Rex Tillerson becomes President?  America will become exactly what we've been accused of being for all these years – since we first started toppling Governments in Iran and putting in our puppets so many years ago.  Ah, good times!  

America is indeed an oil company with an army and Trump's Secretary of State, the man who negotiates our trade and makes all those sensitive deals around the World, has worked for Exxon since 1975 and ran the company since 2006, when oil ran up to $140 a barrel and gasoline was approaching $5/gallon, which is $210 a barrel – but that's a different story of greed and corruption.

Well, since I mentioned it – consider the fact that a barrel of oil now costs $54 and a gallon of gasoline (there's 42 gallons per barrel) costs $1.57, which is $65.94 so the mark-up from oil to gas is 22% but, more importantly, it's $11.94 – that's the cost of refining the oil into gasoline.  When the price of oil
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Wednesday – Apple Earnings Today Keep the Bears at Bay

Go Apple go! 

Once again, Apple (AAPL) puts in a stunning quarter and we couldn't be more pleased as AAPL is one of the largest positions in our Long-Term Portfolio as well as our Options Opportunity Portfolio.  Our target in the LTP is $130 by next January and, if we hit it, our net $14.50 Jan $100/130 bull call spread (from 10/20) will return $30 for a very nice $15.50 (107%) gain.  There's no margin in a bull call spread, a nice options trade for beginners however, we got a little fancier in the OOP and our position looks like this:

The net cash outlay of the position was $22,650 and, if all goes well, it will pay $90,000 at $130 for a $67,350 profit less whatever we owe the short callers, probably $20,000 at $130 so net/net $47,350 profit is still over 200% back on cash on the biggest position in our portfolio – we can live with that!

AAPL was our Trade of the Year in 2013, 2014 and 2015 but last year it was Natural Gas (UNG) and this year it's Silver Wheaton (SLW) and both, of course, are in our Options Opportunity Portfolio as well as our Long-Term Portfolio.  Our 2015 Trade of the Year on AAPL just expired with AAPL right at our $120 target on Jan 20th and that cashed us out of that one at the full $90,000 from our initial $8,000 cash outlay (we were more aggressive with put sales then) for a very nice $82,000 (1,025%) profit in less than two years.  

By the way, do not spend $3/day to subscribe to our newsletter or you will see trade ideas like this all the time!

Having hopefully established my bona fides as an Apple bull, let's talk about why they are no longer our Trade of the Year.  70% of the company's sales are iPhones, that's a little worrying but, then again, if my company had to have all its eggs in one basket – that's a pretty good one!  Bears use it as a knock but 90% of GMs sales are cars, 90% of Nike's sales are sneakers…  We get it, AAPL is…
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Terrific Tuesday – Our Webinar Play Makes Members $3,000


I love a nice pullback.  Lord Trump knows we waited long enough but our decision to stick with our Dow Futures (/YM) shorts over the weekend was a good one.  Even if you aren't a Member and didn't get to see our weekly Live Trading Webinar, we still gave that trade idea away FOR FREE in Thursday morning's post – so don't complain if you missed it.  

We also had our Oil Short (/CL) at $53.50 and those were good for $1,000 per contract as oil hit $52.50 in yesterday's dip.  This morning, we flipped long on Natural Gas (/NG) as the Dollar fell below 100 to prop up the markets, which might give a boost to commodities and the Northeast will be cooling off for the next two weeks but it's just a quick trade as global warming continues to spoil Winter, overall.

By the way, we don't only trade Futures at Phil's Stock World or the name wouldn't make any sense.  We trade stocks and options but those are more conservative and relatively boring – so they don't make the headlines on a daily basis.  In fact, our Long-Term Portfolio, despite yesterday's pullback, has 54 stock and option positions and is up over 145% in 3 years and we just added 2 positions yesterday as a few bargains presented themselves (see our Top Trade Alert).  

This morning, we are looking to add to our Teva (TEVA) position, as we feel the sell-off is overdone (see notes in Member Chat).  We will probably add it to our Options Opportunity Portfolio as well and that's a much more aggressive portfolio that has gained almost 150% since it's inception on 8/8/15 and, in fact, GAINED yesterday as our hedged kicked in to offset the drop. 

So let's talk about hedging.  It's one thing to get trade ideas from this service or that but if you don't incorporate those trades into a BALANCED and HEDGED portfolio, your fate is tied to the market.  For the last 8 years (the Obama years), that has been a good thing but now it's the Trump Error

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Trump Error, Day 7 – Waiting on the Fed

Well, now what?  

The World was shocked at the US's sweeping Muslim ban with another round of anti-Trump protests at home and abroad and the Global Markets are tumbling and the Volatility Index (VIX) is rising as even Green-Card Holders were banned from returning to the US on a sudden executive order that stranded thousands of legal immigrants overseas this weekend

I'd love to not talk about politics but politics is driving the markets at the moment so responsible analysts NEED to discuss politics or they are doing you a tremendous disservices.  I'm not going to get into the back and forth of the thing – that's all over the papers but we also declared a trade war with Mexico and China is now saying:

"'A war within the president's term', 'war breaking out tonight' are not just slogans, but the reality." 

The commentary was first reported by South China Morning Post on Friday, and comes amid concerns about a trade war between the world's two largest economies. "The Chinese government is quite concerned about the potential for direct confrontation with the Trump administration," said Ian Bremmer of the Eurasia Group. "Chinese officials are preparing for the worst, and they expect to retaliate decisively in response to any U.S. policies they perceive as against their interests."

So happy Monday to you on Day 7 of the Trump Error.  Over in Europe, Germany is now worried about too much inflation and is calling for the ECB to start tightening monetary policy but poor Italy is still having bank troubles (and Europe is down 1% this morning with Italy down 2%) and Greece and Puerto Rico are both heading into debt crises (again).

Peurto Rico got an extension but the IMF just said Greece's debt, at 275% of their GDP is "explosive and highly unsustainable".  Explosive and unsustainable is what they say about collapsing stars - not economies inside the solar system!  And if the IMF says this about Greece, then why are Japan and China still getting a pass – both of whom have over 250% debt to GDP (assuming you can even believe China's GDP number).

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Zero Hedge

Truth... Hurts

Courtesy of ZeroHedge. View original post here.

What a difference one word can make...



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Advanced Brain Science: Optogenetics and Expansion Microscopy | Ed Boyden

By Jacob Wolinsky. Originally published at ValueWalk.

Published on Feb 25, 2017

Despite library shelves sagging under the weight of neurology books, what we know about the brain so far is unfledged. MIT professor Edward Boyden explains how research teams are using expansion microscopy to map the densely packed neurons so we can understand how the brain is wired and apply that to human therapies. He also explains a technology called optogenetics (using light to control cells) that he hopes will do many things lik...

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Phil's Favorites

Cybersecurity of the power grid: A growing challenge


Cybersecurity of the power grid: A growing challenge

Courtesy of Manimaran Govindarasu, Iowa State University and Adam Hahn, Washington State University

Called the “largest interconnected machine,” the U.S. electricity grid is a complex digital and physical system crucial to life and commerce in this country. Today, it is made up of more than 7,000 power plants, 55,000 substations, 160,000 miles of high-voltage transmission lines and millions of miles of low-volta...

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Chart School

Buyers Keep Shorts At Bay

Courtesy of Declan.

Just when it looks like shorts may have something to attack, buyers step in to make up the lost ground. The rally is out on a limb, but not enough to place it at the outer extremes of historic price action. So while there hasn't been any big pullback since the election, there isn't much to suggest a pullback is coming soon either.

The weakest of the indices is the Russell 2000 as 2017 continues to see money rotate out of speculative stocks into more defensive Large Caps.  However, Friday did offer some healthy a backtest of former resistance turned support, and buyers have a relatively low risk opportunity to take advantage; helped by the proximity of 20-day and 50-day MAs.


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Swing trading portfolio - week of February 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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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

The story of the week is Trump, Russia and the FBI. The rest is a distraction (The Guardian)

Narrative switching. That is what the Trump administration is desperately trying to do around Russia right now. The White House reportedly interfered with the FBI in the middle of an active investigation involving counter-intelligence. This was not only foolhardy but also suspicious, as it directly undermined their apparent objective: distracting us.

On 14 February, the New York Times reported that advisers and associates of Donald Trump may have been in direct and cont...

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Mapping The Market

Why Facts Don't Change Our Minds

Courtesy of Jean Luc

Good article about facts and why we reject them:


New discoveries about the human mind show the limitations of reason.

By Elizabeth Kolbert

In “Denying to the Grave: Why We Ignore the Facts That Will Save Us” (Oxford), Jack Gorman, a psychiatrist, and his daughter, Sara Gorman, a public-health specialist, probe the gap between what science tells us and what we tell ourselves. Their concern is with those persistent beliefs which are not just demonstrably false but also potentially deadly, like the conviction that vaccines are hazardous. Of course, what’s hazardous is not being vaccinated; that’s why vaccines were created in the first place. “Immunization is one of the triumphs of modern medicine,” the Gormans no...

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Digital Currencies

As Bitcoin Surges To Record High, China Prepares Its Own Digital Currency

Courtesy of Mike Shedlock (Mish)

Bitcoin hit an all-time high over $1200 today.

Traders are happy because the SEC is expected to rule on a Bitcoin ETF by March 11.

Meanwhile, Bloomberg reports China Is Developing its Own Digital Currency.

After assembling a research team in 2014, the People’s Bank of China has done trial runs of its prototype cryptocurrency. That’s taking it a step closer to becoming one of the first major central...

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Kimble Charting Solutions

Crude Oil; Energy stocks suggesting its about to fall, says Joe Friday

Courtesy of Chris Kimble.

Below takes a look at the price action of Crude Oil, Energy ETF (XLE) and Oil & Gas Exploration ETF (XOP) over the past three years.

Could Energy stocks be suggesting the next big move in Crude Oil again? Which direction are they suggesting?


At this time the intermediate trend in Cru...

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Members' Corner

The Manchurian President


The Manchurian President

Courtesy of  at

As the Trump presidency unravels, unraveling the country along with it, there is no real political antecedent, no lessons from American history on which to draw and provide guidance. We are in entirely uncharted waters.

But there is an antecedent in our popular culture that provides a prism through which to view the contemporary calamity, especially the alleged collusion between Trump’s henchmen and Russian intelligence to deny Hillary Clinton the presidency. I am not the first observer who has ...

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Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas


Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...

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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...

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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.

Market Shadows >>