Phil's Newsletter

Freaky Friday – Trump Beats Up Assad, World Very Impressed

WAR!!! What is it good for?

Well, it's good for a $1 pop in oil – that's for sure!  President Trump pulled out the big guns last night and launched 59 Tomahawk Missiles ($120M worth) at Syria in retaliation for the chemical weapons attack Syria claims was a set-up to give Trump an excuse to distract us from his horrific administration's bungling of the rest of his agenda – not to mention the web of intrigue surrounding all those Russian ties.

Buy hey, isn't Syria Russia's ally?  Well, then attacking them "proves" Trump isn't working with Russia so case closed – call off the investigations…  

Image result for tomahawk missile strike animated gifOf course, it's a little strange that 59 of these missiles reportedly only destroyed 6 planes and killed 5 people and left the runway intact at the base when a single Tomahawk missile destroys a building but that's something for the military experts to contemplate – we should be more concerned about the impact on the markets.  

Well, for one thing, we took the opportunity to add more oil shorts (/CL) this morning at $52.50 because Syria only produces 400,000 barrels of oil per day and this strike did nothing to disrupt their production nor is it likely to expand into something bigger because of some other reason than Trump is Putin's puppet but that's the only one I can think of at the moment.  There was a quick $500 per contract gain on the move back to $52 and now we're waiting and seeing but still net behind from our original shorts, now needing $51.25 to break even.

We also took a stab at shorting the Russell at 1,360 (still there) but risky ahead of the Non-Farm Payroll Report, which should be well over 200,000 as ADP was a blowout 263,000 – almost 50% over expectations.  Last month we had 235,000 jobs added on March 10th, but the market turned down the following 2 days, from S&P 2,372 to 2,357 but we closed yesterday at 2,357 – back at those lows.

While it's nice to add jobs, strong…
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Free Money Thursday – Draghi Says No to Tapering

Image result for don quixote and sancho picasso

“When life itself seems lunatic, who knows where madness lies? Perhaps to be too practical is madness. To surrender dreams — this may be madness. Too much sanity may be madness — and maddest of all: to see life as it is, and not as it should be!”  -  Miguel de Cervantes SaavedraDon Quixote

To short the unshortable market.

This is our quest, to follow the logic, no matter how hopeless, no matter how far out of whack valuations become.  To fight for the proper valuations, without question or pause, to be willing to hedge into rallies that run without pause.  And we know, if we'll only be true, to this simple strategy, that our hearts will be peaceful and calm, when the market's depressed.  

Yes, we feel a bit quixotic shorting the markets these days, especially when the whole World is literally against us.  This morning, it was Goldman's pet ECB Chairman, Mario Draghi, who saved the markets, saying the ECB will not follow the Fed and will maintain their Free Money policy for as long as it takes – longer even:

“I do not see cause to deviate from the indications we have been consistently providing in the introductory statement to our press conferences,” the ECB President said in a speech in Frankfurt on Thursday. “We have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook — which remains conditional on a very substantial degree of monetary accommodation.”

The ECB president countered such demands (to end easing) saying that the current policy path — which expects that


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Will We Hold It Wednesday – High Hopes at 5,440 (again)

Image result for monks roller coaster

Here we go again!  

The Nasdaq has run up to our 5,440 shorting line (/NQ) but, sadly, none of the other indexes are following suit.  Back on our March 16th PSW Report, the levels we laid out for shorting were:

  • 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

In our live Member Chat Room, the week before (11th) I had laid out the shorting lines and expected bottoms for all of our Futures indexes with charts and graphs and I'll reprint them here as they are still aprropriate – even 3 weeks later:

2,380 to 2,340 is 1.7% and we expect 8-point bounce to 2,348 (check) and 2,356 and notice 2,356, not 55 is a good line to short again.

Have to call this 21,000 – even though we didn't make it and call the fall 420, even though it didn't and we have 20,580 with 85-point bounces to 20,666 (because who doesn't like Satan?) and 20,750 will…
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Tuesday Turmoil – Tesla Valuation Reaches Peak Insanity

$48 BILLION Dollars!  

Not a bad valuation for a company that lost $2Bn last year.  That's a p/e of infinity and beyond.  Of course, you have to hand it to Tesla as they did deliver 25,000 cars in Q1 and that's up 25% from last year so they are well on their way to missing their 500,000 car projection by next year by only 350,000 cars – well done Elon!  

That does not stop the Tesla (TSLA) bulls from BUYBUYBUYing the stock though.  Even by the companies own projections – if they can do all the BS they claim they can do and if they find enough money to stay open in 2017, they only project making $2 per $300 share (p/e 150) in 2018 – that's a 0.666% return on your money over 2 years (not counting the $2 they'll lose this year – then it's net zero).  

General Motors (GM) MAKES $6 per share and their shares are $34.  That's infinity times what TSLA makes and 3 times what they TSLA wishes it would make and the stock is about 1/10th the price yet GM LOST 3.3% yesterday while TSLA gained 7% – this is MADNESS!  

Oh, and I forgot to mention that GM also pays you a 4.3% ($1.52) dividend while you own their fine stock.  GM is also makes the new Chevy Bolt (the Volt is their old model), which is essentially everything the Tesla Model 3 is supposed to be only the Bolt is already shipping and GM already makes 10M cars a year, 100 TIMES more cars than TSLA makes.  That's current, proven capacity – not fantasy capacity.  

Image result for chevy boltThe Bolt is priced at $37,000 WITHOUT the rebate that TSLA includes in their "starting price" and, with the rebate, the net on a Bolt can be less than $30,000 – about 20% cheaper than the non-existent Model 3.  Even worse for Tesla, the Bolt gets 238 miles of range and they didn't have to spend $2Bn building a "GigaFactory" to do it.  

If GM can buy, off the shelf, batteries that are as…
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Trump Error, Day 75 – “I Regret Nothing”

"I regret nothing

That's what Trump said this weekend in his Financial Times Interview and I wonder if Trump knows that's what Deputy Fuhrer Rudolf Hess said at his Nurenberg trial?  Among other non-regrets Trump discussed is his tweet about Obama wire-tapping his phone, which he claims "is being proven" and the TrumpDon'tCare Bill, which he claims is "still in negotiations."  Trump doesn't just not learn from his mistakes – he doesn't believe his mistakes actually happened.  

It's a very dangerous week in Trumpland as the President meets with President Xi of China at Mar a Lago because nothing says "man of the people" like a 126-room, 110,000 square foot house with 58 bedrooms (but only 33 bathrooms so a real bummer when everyone is getting ready at the same time!).  Leading up to the historic meeting with China, Trump decided to open with an ultimatum, saying: "If China is not going to solve North Korea, we will.”    

We'll see how that plays out on the World stage, there's already a rumor that North Korea is planning to test another nuclear missile to coincide with the meeting on Thursday and Friday – so expect lots of market turmoil ahead this week as the rumor mill swings into full gear.  

China is very likely to be see as a loser in these talks, even if they win because Team Trump will spin it their way, regardless of reality.  Meanwhile, China has bigger fish to fry as bond defaults are ticking up with 9 in the first quarter vs 29 all of last year.

As you can see from this Bloomberg Chart, rates have been rising fast as the PBOC has put the brakes on leverage and, like our Fed and most Central Banks is also seen on a rate-raising path. This has caused about $20Bn worth of bond sales to be scrapped in Q1 due to the "unfavorable" environment but, if the environment continues to be unfavorable – there will be a serious lack of funds and a lot of these companies are juggling the books to stay alive as it is:


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End of Quarter Window-Dressing

It's time to prop up those indexes and paint a pretty picture!  

As you can see in AfraidToTrade's S&P chart, we burst back over our 2,360 line on the S&P and now we just need to get back over the yellow zone and it's on to all-time highs and, dare we dream, multiple of 25 times forward earnings on our stocks?  

It's very exciting, usually only bond holders accept 4% on their money because bonds are supposed to be a safe, risk-free asset so investors are willing to accept a lower return in exchange for safety.  Now stocks are only returning 4% on our money and people seem fine with that and a 10-year note pays 2% and your checking account pays 0.2% – if you are lucky.

The gist of that is that the money you make, that you work hard for, is not rewarded when you either save or invest it. That then forces you to give your money, VERY CHEAPLY, to the Top 1% – to the Banksters (savings, checking) and the CEOs (stocks, bonds, labor).

You work hard, they pay you less and then, when you want to save or invest your pay – they pay you less again – and then they blame YOU for not working hard enough to get through life without Government handouts (ie. taxing them).  You would think this Administration would be making that shockingly clear to voters by now but CNN did an amazing interview with 6 Trump voters and, after two months, all but one gave him an "A" for performance and the guy that gave him a "B" said he simply never gives As or he would have.  

The problem with the pyramid above is that our Top 20% are now so rich that there's nothing left to take from the bottom 80%.  Once they finish taking your Social Security and Medicare money – there won't be anything left to take (other than jobs through automation, of course) but, before they leave you destitute, they have to first dismantle the Social Safety Net, lest someone points out that it is their duty to feed or educate starving children or some other Liberal nonsense.  


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Thursday Bounce Line Failure – Trouble Ahead?

This is not what the bulls wanted to see.

In yesterday's PSW Report "Weak Bounce Wednesday – B-B-B-Brexit Baby!," we called for shorts below 20,600 on the Dow Futures (/YM), 2,350 on the S&P Futures (/ES), 5,406 on the Nasdaq (/NQ) and 1,360 on the Russell (/TF) but we had a pop in the morning and only the Dow went below our line but, in our Live Trading Webinar, we decided to short /TF anyway with 4 short at an average of 1,371 and, now that we're below that line, we can take 2 contract off at 1,369 for a $400 profit and put a stop on the last two at 1,370 to lock in at least $500.  

We're also excited about an opportunity to short oil again as it tests the $50 line this morning (/CL).  Brent crude (/BZ) is also at resistance at $52.50 and we won't short /CL with much enthusiasm (so very tight stops) if  Brent is over but $50 is a tough line for /CL to cross – so it's well worth a short as we get over $49.85 with tight stops over the $50 line, which limits our losses to $150 per contract.   

Over at the NYMEX, there's more than 3 weeks left to FAKE!!! demand but they are already faking demand for over One BILLION barrels of oil for delivery between now and July 20th.  That's only 113 days away so the open contracts on the NYMEX are PRETENDING that they are going to order 9.5 MILLION barrels a day to be delivered to Cushing, OK, a facility that can only handle 90M barrels TOTAL, IF it were not full – which it is.

Of course, it's not a great day to short anything as we're into the normal end-of-month window-dressing so we can expect everything to be propped up a bit.  Even the Dollar is back over 100 (good for $500 per contract on /DX, you are welcome!) and Apple (AAPL) is testing $145, which is now over $1,000 per share pre-split (7:1), up from $85 (pre-split) when I used to foam…
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Weak Bounce Wednesday – B-B-B-Brexit Baby!

Oh baby you know what I like
Chantilly lace and a pretty face
And a pony tail a hangin' down
That wiggle in the walk 
And giggle in the talk
Makes the world go round
There ain't nothin' in the world
Like a big eyed girl
That makes me act so funny
Make me spend my money

Well Brexit is official as the UK finally sent it's breakup letter to the EU (not a text, mind you, the UK is classy that way) and now there is a definitive 2-year countdown clock before they officially divorce – unless they decide to extend it – then it could be longer.  Makes you kind of wonder what all the panic was about.  It's like when your parents get divorced but keep living in the same house.

The markets continue to be divorced from reality as we watch the S&P run a textbook 5% Rule™ correction as it falls 2.5% to 2,340 from 2,400 and that's a 60-point drop so our fabulous 5% Rule™ predicts a 20% weak bounce (12-points) to 2,352 and a 40% strong bounce to 2,364 which, no coincidentally at all, happens to be the 50-day moving average on the S&P.

Of course we are shorting at the 50 dma.  I put a note out to our Members this morning in our Live Chat Room, saying:  

/YM testing 20,600 from above – off a bit from yesterday's close.  /ES 2,350, /NQ 5,406 and /TF 1,361 – all off their highs and we can play the laggards below those lines (5,400 on /NQ and 1,360 on /TF).

As noted above, these are just the weak bounce lines we expected to get to (and fail) after last week's sell-off so, if we're breaking down here – it's a good sign to short the indexes again.


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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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Zero Hedge

Target2 & Secret Bailouts: Will Germany Be Forced Into Fiscal Union With Rest Of Eurozone?

Courtesy of ZeroHedge. View original post here.

Authored by Mike Shedlock via MishTalk.com,

Project Syndicate writer, Hans-Werner Sinn, explains why the ECB’s asset purchases and Target2 imbalances constitute “Europe’s Secret Bailout”.

Under the ECB’s QE program, which started in March 2015, eurozone members’ central banks buy private market securities for €...



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Digital Currencies

BDC's Crypto Corner

Hello fellow PSW-ers, it's biodieselchris here. I've been an interested in cryptocurrencies (informally, "cryptos" or "coins") since 2011 when I first heard about Bitcoin, Since that time I've become somewhat of a subject matter expert and personal investor in Bitcoin and other alternative cryptocurrencies ("altcoins"). I have even started one of my own!

I've been posting comments about cryptos in Phil's daily post from time to time. Recently, Phil and I got on a call and he asked if I would like to run a blog on his site specifically about cryptos, which I thought was a great idea. My goal would be to educate members on what I know about how coins work, how I research coins (what I find interesting), how exactly one can invest (buy, hold, and sell) coins and a basic, easy-to-follow general how-to on all things crypto. In addition, other members have expressed an interest in learning more direc...



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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Now's a great time to be a stock picker (Business Insider)

Companies in the S&P 500 are moving independently of one another to an extent rarely seen, and that's good news for stock pickers.

The World’s Advanced Economies Should Think Twice About Curbing Migration (Bloomberg)

Analysis of United Nations data by Fitch Ratings shows halting immigration would drastically reduce the potential working population of Group-of-Seven nations, leaving aging societies more dependent on a smaller labor force and resulting in greater f...



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ValueWalk

Schwarzman Makes 'A Rigged Game Worse,' Democrats Say

By International Business Times. Originally published at ValueWalk.

Schwarzman Makes ‘A Rigged Game Worse,’ Democrats Say

Wisconsin Democratic Sen. Tammy Baldwin became the first federal lawmaker to call for Blackstone CEO Stephen Schwarzman to recuse himself from Trump administration policy that affects Schwarzman’s private equity firm. Baldwin’s criticism was echoed by the senior Democrat on the Senate Banking Committee, which oversees many of the economic issues Schwarzman has been working on with…

]]>

By Financial Times [CC BY 2.0], vi...

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Chart School

The Tax Cuts are Coming! It's the Stock Trader Weekly Recap.

Courtesy of Blain.

Forgetting the traditional market news, as we began last week both the NASDAQ and Russell 2000 were at critical support.  A rally Monday showed those support levels held, giving bulls breathing room.  We’ll discuss this more below after we get through the more fundamental news items that transpired.   Traders seemed to breath easier on Monday seeing no escalation with North Korea and came in ready for a bit of a relief rally.

The lack of a nuclear test from North Korea over the weekend did much to reverse defensive positions adopted by traders heading into the weekend, said Ian Winer, director of equity trading at Wedbush Securities.

It was a very heavy week of S&P 500 type earnings with banks leading the way in the first half of the week. Then a series of large sized companies ac...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Wall Street gears up for busiest earnings week in years (Reuters)

Corporate America is set to unleash its biggest profit-reporting fest in at least a decade next week, with more than 190 members of the S&P 500 index .SPX delivering quarterly scorecards, according to S&P Dow Jones Indices data.

Draghi Says ECB Hasn’t Seen Evidence of Durable Eurozone Infl...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

...

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Kimble Charting Solutions

Banks at risk if this support gives ways, says Joe Friday

Courtesy of Chris Kimble.

Regional and Large banks have done well since the election. Of late they have lagged the broad market and find themselves testing what could be very important support levels. Below looks at regional bank ETF (KRE).

CLICK ON CHART TO ENLARGE

KRE has experienced a rally that started in February of 2016. This rally picked up speed following the election last November, as KRE almost went verti...



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Insider Scoop

15 Biggest Mid-Day Gainers For Friday

Courtesy of Benzinga.

  • China Digital TV Holding Co., Ltd.(ADR) (NYSE: STV) shares jumped 33.9 percent to $1.70. China Digital TV declared a special cash dividend of US$1.50 per ordinary share.
  • Carver Bancorp Inc (NASDAQ: CARV) shares surged 31 percent to $5.23.
  • CAI International Inc (NYSE: CAI) rose 21.3 percent to $18.75 after the company reported upbeat quarterly profit.
  • Pernix Therapeutics Holdings Inc (NASDAQ: PTX) shares...


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OpTrader

Swing trading portfolio - week of April 17th, 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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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Biotech

CAR-T & CRISPR - the Future is Now

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

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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Promotions

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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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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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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