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Phil's Newsletter

Non-Farm Friday – Is America Working?

SPY 5 MINUTESorry, but this "rally" is just too much BS for me. 

As you can see from Dave Fry's SPY chart, we're running up on ZERO volume in the Futures and then we sell off all day on very low volume (because there are no buyers and the Funds are exiting slowly) and then we have dip at the finish as the ETFs that HAVE to buy at MOC (Market on Close)pricing get shares jammed down their throats by the pumpers.  

It's a complete and utter farce and completely ignored by the MSM, especially the Financial Media, who just play along as if none of this matters.  While you may consider the manipulation of currency and metals markets to be news (both are under international investigation at the moment) – it doesn't rate a mention in the Financial Media, who's advertising revenue comes mainly from the companies that are being investigated for fraud and manipulation.  

SPY 5 MINUTEApril Fools! The above is what I wrote along with the chart on March 7th in "Non-Farm Friday – America Still Not Working." That was 30 days ago, we've come a long way since then because, THIS TIME, we have SPY at 188.63 coming into Non-Farm Payrolls, so take THAT 188.10 – IN YOUR FACE!  

Despite the month-long flatline, the bullish trade idea we had back on 3/7 was a big winner.  Our trade idea in that mornings post (which you can get delivered to your mailbox, pre-market by subscribing here) was:

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Free Money Thursday – Chinese Stimulus To the Rescue!


China gave the markets a big boost this morning by announcing an immediate $25Bn program for railway construction and another $50Bn a year for "more stuff."  That sent the Nikkei flying to 15,150 but then Chinese Non-Manufacturing PMI fell to 54.5 for March and the Nikkei gave back 75 points while the Hang Seng closed just 0.2% over flat and the Shanghai fell 0.75%, back to 2,043, just 5% over the lows they've been testing all year at that critical 2,000 line.  

Now to some extent we could say "what's the difference where the money comes from, as long as they keep giving it to us?" and that would be the correct attitude, if we were 8 years-old and had no concept of consequences!  As adults, we should wonder – WTF are all these Governments so afraid of that they can't even allow a small correction before jumping back in with "emergency measures"?

China's House of CardsThe simple answer is that IT'S A GIGANTIC CON, like the time they built a fake town in Blazing Saddles - it looked good, as long as you didn't look behind the facades.  If you actually tried to touch it, it would fall over like a house of cards.  That's what happens when you prop up an economy with stimulus – you haven't built a foundation – it's all a facade, so the Central Banks that built it are terrified to see it tested….

The con depends very much on people BELIEVING that the house of cards is a real house.  Without a constant inflow of investment Dollars, the slightest breeze can knock the whole thing over and we'd be right back to the wreck we had before.  And, of course, it's not just China that's built a house of cards.  The US, Europe, Japan – pretty much all the Central Banksters are participating because, rather than let the banks fail in 2009, they pretended everything was OK and went about trying to back-fill the $15Tn Global hole in their balance sheets by printing money and, not so subtly, handing it out to them.  

That's over $5Tn in debt (now, this…
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Will We Hold It Wednesday – The Lies We Tell Ourselves

SPY 5 MINUTES&P 1,886 – a new record!  

Sure only 86M shares were traded on SPY (see Dave Fry's chart), which is about what's usually traded on a holiday but why should we let that bother us.  As Dave noted in his post last night:

 Predicting market movements is a waste of time even for the best strategists. This is a period when following technical systems pays off especially remaining disciplined and systematic. This includes having cash available to move as conditions change. It’s fun to predict the future marked by witty and amusing comments. That’s just entertainment.

Following trends is no different than following the money. Over the past 5 years this has led to following gifts of liquidity from the Fed and other central banks. A more dangerous method is to guess central banks next move. Janet Yellen has already laid her marker down the Fed will continue to be accommodative for a long period ahead. Bulls interpret this as bullish for equities and being nobody’s fool, they’re just going with the 5-year historical trend. The ECB is expected to provide more stimulus at its next meeting Thursday. The PBOC is expected to do so as well soon even as the finance minister has said they wouldn’t. Bulls obviously bulls don’t believe him for now.

With bulls believing the “all clear” has been sounded by Yellen, bulls can return to a “bad news is good” modus operandi enjoying or ignoring bad news.

SPX WEEKLYAs pointed out by Zero Hedge, "While QE may have tapered to a "measly" 55 billion per month, on just the first day of April risk assets experienced
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Triple Top Tuesday – 3rd Times a Charm?

Here we go again.  

This is our 3rd visit this year to 1,880 on the S&P and maybe this time will be different and, if so, we'll simply have to deploy some of our cash on some bullish plays.  Materials are still down, gold and silver are still low, Solars fell out of favor, Biotechs had a nice sell-off, China and Russia are low – plenty of things to buy if we're really breaking back up. 

In fact, with the Nasdaq below 4,200, down from 4,400, that's 5% off and TQQQ is the ultra-long 3x Nasdaq ETF and it's at $61.45, down from $70 last month and you can buy the April $65/68 bull call spread for just 0.55, selling the $51 puts for 0.45, risking just $10 of cash to make up to $300 per contract if TQQQ recovers in the next 2 weeks.  $51 happens to be the 200 dma on TQQQ, so it seems like reasonable support, especially if the Fed keeps pumping in cash at the extreme levels they hit at the end of this quarter (and the last):

3-31-2014 6-43-31 PM Reverse REPO

SPX WEEKLYWe were 3 full weeks into January before the market started collapsing so figure that's the ebb and flow of all this FREE MONEY that's being funnelled through the Banksters to keep up appearances.  We have a similar double top patten now and we'll see if this time is different and we break on through to new highs with this extra 25% injection of liquidity to top off the quarter.  

Of course, we're not really bullish until we see those highs broken so I'd rather sell an AAPL Jan $400 put for $5.90 ($590) and that's enough to buy 10 of the spreads for $450 and we make $3,000 if all goes well with a $140 credit still in our pockets and our worst-case scenario is owning AAPL for net $401.40 (25% off the current price).  That's a fun way to hedge to the upside, which is why we're in no hurry to pull our cash off the sidelines – we have lots of cool ways to make money. 

In fact, …
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Meaningless Monday Window Dressing – Waiting for Things to Get Real

 photo football5.gifHow can you tell when the markets are FAKED?

I've been telling you for years about the various ways the market is rigged and now Michael Lewis has written a whole book about it called Flash Boys, which was featured last night on 60 Minutes.  If you don't have time to read the book – at least PLEASE watch the 60 Minutes video.  

While I find it morally repugnant and I spend countless hours speaking out against it and doing my best to bring these systemic abuses to light, for the purposes of helping our Members make profits at PSW, we live by a very simple rule:

We don't care IF the markets are rigged, as long as we are able to understand HOW they are rigged – so we can place our bets accordingly.  

SPY 5 MINUTEBy understanding the mechanics of the BS that passes for the stock market these days and undersanding the process involved, we are able to line our bets up with the manipulors – or against the manipulated prices to take advantage of the counter-moves when the crooks are done playing with them.  Certainly we never go more than a day without finding a good example!  

While Lewis focuses on the blatant front-running scam by high-frequency traders, we tend to look at the broader picture of the manipulation of indexes and the media by funds who have a whole bag of tricks to stampede the sheeple in and out of positions almost at will

We do that by focusing on the VALUE of stocks, not the PRICE and when PRICE becomes removed from VALUE, we look for a trading opportunity.  It's not a complicated system really, once you accept the fact that prices are, in fact, manipulated.  Today happens to be one of the 4 most-manipulated days of the year – the last day of the first quarter, when all the Banksters push stocks in their brochures to levels that will paint a pretty picture on their performance graphs.  

Sure there are some people pushing down and some people pushing up but it's not an even…
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Philstockworld February Trade Review – Part III

trouble-finding-tradesWe had a lot of trade ideas for our Members in February.

In the first two parts of our Trade Review alone (Part 1 and Part 2), we had 85 trade ideas for our Members in just two weeks and 74 of them (87%) turned out to be winners.  As I noted at the close of Part 2, it's the losers that are most valuable during these reviews, as we often have a chance to take a great trade idea at an even better price than when we first liked it – all with the benefit of a little more retrospect.  

Usually, we do our trade reviews through whatever arbitrary date we happen to be writing them but, since we FIRMLY went to CASH!!! in March, I am going to be teminating bullish plays from February on March expiration day (21st), the day we cashed our out Income Portfolio and they will be noted as such.  That is not the case with the 2/10 trades right below, as I added those on 3/15 and I'm just getting to the rest of the week now.  The rest will follow that rule for bullish trade ideas.  If, however, I still like the trade idea, I will include the current price as there is still an opportunity to profit from it.    

(**) still indicates trade ideas from our morning posts, which have been an incredibly successful group and are available pre-market, even to our Report Members.  

.SPX WEEKLYFeb 10:  Monday Market Movement – Bounced or Trounced?  

Our finish on Friday had just enough volume where we didn't want to be any more bearish, but we are cautious as we did a lot of bottom-fishing in our Income Portfolio and our Long-Term Portfolio, when the S&P bottomed out on Wednesday, the 29th (see our January Trade Review

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Fake Rally Friday – WTF Are People So Happy About?

146260 600 Sanctions on Russia cartoons

As I walk on through this wicked world,
Searching for light in the darkness of insanity,
I ask myself, Is all hope lost?
Is there only pain, and hatred, and misery? – Elvis and Lowe 

Once again the Futures are up in the morning and once again we have to wonder why?  

Now, don't get me wrong, we love a fake rally as much as the next guy, especially when it gives us great shorting opportunities.  Yesterday, even as I noted in the morning post that our Wednesday morning Futures shorts made $6,050 in 24 hours for Members who followed those trade ideas, our new suggested shorting lines of Dow (/YM) 16,200, S&P (/ES) 1,845 and Russell (/TF) 1,150 all came in and, before lunch, we hit 16,150 on the Dow for a $250 winner, 1,835 on the S&P for a $500 gain and 1,141 on the Russel for a $900 win.  

So PLEASE Mr. Market – feel free to run us up again!  Actually, this morning I sent out an Alert to our Members identifying the Nikkei (/NKD) as the best shorting opportunity of the day, week and probably the month of April as well.  Testing 14,795 this morning, we're short below 14,800, which is the level I predicted we'd run to at 9:50 am on Wednesday in our Member Chat Room, saying:

Nikkei/Eric – They are happy the Dollar is back up (80.27) and that means not a good short at the moment.  Over 14,500 has very little resistance up to 14,800 so not a good spot to short and maybe a good long, actually, but my heart isn't in longs at the moment. 

The long play was good for $1,500…
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Faltering Thursday (Again) – Another Week of Market Weakness

These are not happy charts:

The Nasdaq and Russell have gone from Spitting to Vomiting Cobra patterns, with 10% drops certainly looking like they are in the cards as things play out.  The Dow, S&P and NYSE are still putting on brave faces but, since we are coming into the end of Q1, we have to assume there's a window-dressing factor to keeping up appearances.  

In our Futures Trading Seminars (and we have a big, live one coming next Tuesday, you can register for HERE), we teach our Members to short the laggards when 2 of 3 or 3 of 5 of the contracts they are watching cross.  Well, here we have a similar opportunity with the slower-moving indexes as the Nasdaq may confirm a downtrend by crossing it's 25% line at 4,125 and the Russell will back that up by failing it's 15% line at 1,150.  If so, you can short the laggard (we already shorted the Russell, of course – it was our key short all month!), most likely the Dow.  

INDU WEEKLYIn fact, had IBM not popped 10 points in the past week, the Dow would already be 100 points lower, so it's a wonderful way to play catch-up at 16,269.  Again, our Members are already up $750 per contract shorting the Dow, as our first call of the morning in yesterday's Member Chat Room (8:34 am) was:

Durable Goods orders were not good.  Hard to blame the weather on that one but I'm sure they will.  

Dow 16,350 (/YM) is the best shorting line confirmed by /ES 1,865, /NQ 3,640 and /TF 1,180 – all still over so far.  Oil $99.65 is a no short ahead of inventories, gold $1,312, Dollar 80.19.  Siver $20.025, copper $2.9865, nat gas $4.39 and gasoline $2.89 and don't forget we expect a build in gasoline and distillates due to the ship channel closed but maybe a big draw in oil for the same reason.  

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Wednesday’s Worry – Will Alibaba Destroy the World?

"The Word ends not with a bang, but a whimper."  

As TS Elliot noted:  "Between the idea and the reality, between the motion and the act falls the shadow."  Whether or not Elliot was referring to "shadow banking" in 1925, 100 years later his words certainly ring true as "Vampire Internet Funds" like Alibaba's Yu'E Bao are draining liquidity out of China's financial system at an alarming rate.  

In less than on year, 81M people have opened Yu'E Bao accounts at an average of $1,000 each, totaling $80Bn of deposits.  Compare that with only 67M investors in China's entire stock market – after 23 years of operation!  Yu'E Bao gives depositors 6% interest and allows the funds to be used at any time, making payments by smart phone or straight withdrawls anywhere in the World vs 0.35% in a Chinese bank, subject to all sorts of restrictions.  

People gather in front of a branch of Jiangsu Sheyang Rural Commercial Bank, in Yancheng, Jiangsu province, March 25, 2014. REUTERS/StringerDeposit money draining away from the banks is freaking China out and it won't be long before it starts spreading (because it makes perfect sense for depositors) and suddenly we will end up with either a global liquidity crunch OR banks will have to begin paying fair market rates for deposits, which would also lead to a major crisis as rates rise sharply.

There's already been a run on the Jiangsu Sheyahg Rural Commercial Bank (picture above, yesterday) and you can ignore it if you want to – the way you ignored Northern Trust in 2007 or the Icelandic Banks that same year – who cares, right?  It's too far away to affect you, isn't it?  Our bankers are far too smart to get caught up in that kind of mess, aren't they?  

Legislators, Bankers, Government Officials and, of course, Billionaires were invited to discuss this issue at the National (rich) People's Congress in Beijing (and let he who has a Congressperson not in the top 10% cast the first stone!) where Chinese Banksters, ironically, called for MORE REGULATION:

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Tricky Tuesday – Cobra Spits, Investors Split

What an exciting start to the week!

As you can see from our Big Chart, we have the classic "Spitting Cobra" pattern forming with the Nasdaq already breaking sharply lower, but saved by the 50 dma and the 27.5% line at 4,200-4,220.  

That's going to be our critical hold this week and we also have to keep an eye on 1,840 on the S&P and 10,250 on the NYSE – whichever way 2 of those 3 go should tell us the story.  

Of course we made gobs and gobs of money on yesterday's sell-off in the Russell.  It was right there for you in our morning post and we also extensively discussed the Russell as our primary short last week, and in our Live Trading Seminar last Tuesday (and you can watch today's live Webcast HERE at 1pm).  Here's a nice chart from Chris Kimble that illustrates our point:

In Friday's post, I noted we had tweeted out a call to short the Russell Futures (/TF) at the 1,200 line (and you can follow me on Twitter HERE) and that day's drop was good for $1,000 per contract, down the the 1,190 line.  Yesterday morning, at 8:50 am in our Member Chat Room, I reiterated my call to continue to short the Russell at 1,190 – which would come as no surprise to anyone who read my morning post.   The Russell proceeded to fall below 1,170 – good for $2,000 per contract gains less than two hours later.  

RUT WEEKLYFor the Futures-challenged, we went with a TZA (ultra-short on the Russell) April $14/16 bull call spread at .64 at 9:41 in Friday's Member Chat and those have already popped to .97, up 51% on that small correction in the Russell.  THAT is how you hedge!  Also in Friday's post, we suggested the NFLX April $400 puts at $6.75 which finished at $28.50 yesterday – up 322% in two days – not bad for a free trade idea!  We also laid out this bearish spread on Chiplotle (CMG):

  • Buy 1 CMG Jan $650/750 bull call spread at $27.50 
  • Sell 1 CMG

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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.


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Insider Scoop

Apache Agrees To Sell Western Canada Assets For US$374M

Courtesy of Benzinga.

Apache Corporation (NYSE, Nasdaq: APA) and its subsidiaries today announced an agreement to sell producing oil and gas assets in the Deep Basin area of western Alberta and British Columbia, Canada, for $374 million.

Incremental to Apache's earlier $2 billion share re-purchase announcement, the company plans to use the proceeds of this transaction to buy back Apache common shares under the 30-million-share repurchase program that was authorized by Apache's Board of Directors in 2013.

Apache is selling primarily dry gas-producing properties comprising 622,600 gross acres (328,400 net acres) in the Ojay, Noel and Wapiti areas in Alberta and British Columbia. In the Wapiti area, Apache will retain 100 percent of its working interest in horizons below the Cre... more from Insider

Phil's Favorites

The 5 Faces Of Income Inequality

Courtesy of Lance Roberts of STA Wealth Management,

Since Easter is a time of family, compassion, forgiveness and resurrection, I thought this would be a good weekend to think about the income inequality/wealth gap which will be part of the mid-term election debate. There are many questions that must be answered from not only “how” to solve the issue, but also “should” it be?

There is no historical evidence that wealth redistribution leads to stronger economic outcomes as it discourages “hard work.” However, there is also little argument that the current state of crony capitalism and corporate greed has gotten more than just a bit out of hand.

To start our thought process in this week’s things to ponder here is a study on the wealth inequality gap in America by P...

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Chart School

Weekly Market Summary

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The set-up coming into this past week was clean: SPX and NDX exhibited breadth extremes from which they usually bounce and April Opex is a seasonally strong week (post).

In the event, SPX rose nearly 3%. In the process it exhibited a familiar pattern: overnight gaps in the past 4 days accounted 60% of the week's gain. Cash hours, when liquidity is greatest, was not where the meat of the gains took place. That was even more true for RUT and NDX which only posted cash hour gains during two of the four days.

After a sharp drop and a strong bounce, where does that leave the markets? Let's run through each of our market indicators...

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Market Shadows

Canary In the Yen Shaft: $10 trillion JGBs; No Bids!

Two guest authors, David Stockman and long-time contributor John Rubino, write about the current state of Abenomics. 

Canary In the Yen Shaft: $10 trillion JGBs; No Bids!


This one matters a lot. Abenomics was predicated on a lunatic notion—namely, that the economic ills from Japan’s massive debt overhang could be cured by a central bank bond buying spree that was designed to be nearly 3X larger relative to its GDP than that of the Fed. Yet anyone with a modicum of common sense and market...

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Option Review

Wild Ride For Chipotle

Shares in Chipotle Mexican Grill Inc. (Ticker: CMG) opened higher on Thursday morning, rising more than 6.0% to $589.00, after the restaurant operator reported better than expected first-quarter sales ahead of the opening bell. But, the stock began to falter just before lunchtime on concerns the burrito-maker will increase menu prices for the first time in three years. The price of Chipotle’s shares have since fallen into negative territory and currently trade down 3.5% on the session at $532.89 as of 1:50 p.m. ET.

Chart – Shares in Chipotle cool by lunchtime


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All About Trends

Mid-Day Update

Reminder: David 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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What the Market Wants: Positive News and Stocks at Bargain Prices

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Last week’s market performance was nasty again, especially for the Small-cap Growth style/cap, down 4%.  Large-caps faired the best, losing only 2.7%.  That’s ugly and today’s market seemed likely to be uglier today with escalating tensions over the weekend in Ukraine. 

But once again, positive economic trumped the beating of the war drums. Retail Sales jumped up 1.1% over a projected 0.8% and last month’s tepid 0.3%, which was revised up to 0.7%.  While autos led, sales were up solidly overall.  Business inventories were about as expected with a positive tone.  Citigroup (C) handily beat estimates to add to the morning’s surprises.  As a result, the market was positive through most of the day, led by the DJI, up 0.91%, and the S&P 500, up 0.82%.  NASDAQ had a less...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...

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Swing trading portfolio - week of April 14th 2014

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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See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...

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Here We Go Again - Pharma & Biotechs 2014

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

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...

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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 >>

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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 >>