Phil's Newsletter

Non-Farm Friday – Is America Working Bigly?

I'm hoping for a terrible jobs number.  

Just for the sheer comedy of seeing how Trump blames Obama for it after already taking full credit for all the jobs that were created in January and February.  He also took full credit for Consumer Comfort, which is back to where it was before the last crash so, Yay!, I guess but, if you dig into the CC number, you find something very interesting. 

It turns out that Republicans are unbelievably comfortable, some would say irrationally comfortable – as if they were ignoring fundamental realities and answering survey questions based on what they WISH were true, as opposed to what is factually true.  Democrats, on the other hand, are the least comfrotable they've been in 10 months with the biggest monthly drop since Sept, 2013, when Syria used chemical weapons and Obama authorized the use of force (that's the sort of thing that makes Democrats uncomfortable). 

This is not that unusual, of course.  Under Bush II, Democratic comfort was down around 20 while GOP comfort was in the 50s but GOP comfort fell off rapidly as the market collapsed and both were under 30 when Obama was elected and the Democrats perked up faster than the Republicans but both topped out early last year and, since then, it's been Republicans on the March.  

Keep in mind this is a "feeling" index that reflects jobs, inflation, spending habits, debt and it's a lagging indicator though it does ask consumers about what they THINK will happen – turn out consumers are generally as clueless as any economoron on that front (see 2008).  Most significantly, consumers are generally unaware of geopolitical risks or changing macro situations.  

8:30 Update:  We pulled our index shorts as we expected a strong report but we'll be shorting again once the market is done rallying off a positive jobs number because all it does is put the Fed squarely on the table for not only a March hike, but AT LEAST two more hikes this year and possibly even a 0.5% hike at some point.   Strong Comfort, Strong Jobs, Strong Market, Strong Dollar – if they aren't
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Thursday – Oil Failure Drags Down the Markets

Well that was kind of obvious.

As I noted for Reuters yesterday morning: "OPEC has unrealistic expectation as to what their production cuts can achieve, U.S. production over the next two years is expected to wipe out much of the OPEC cuts."  Yesterday afternoon, despite the 5% sell-off in oil during the day, I told our Members to expect another 2.5% drop this morning and we hit our $48.75 target on the nose just after 6am on the /CL Futures:

That comment box is from our Live Member Chat Room yesterday afternoon and we also had our Live Trading Webinar at 1pm yesterday, where we had a good discussion about what's going on in the commodities markets.  These are not hard calls to make because the oil market IS A SCAM!!!  If you keep that in mind and understand how the scam works – you can make lots of money trading it! 

This morning we decided Gasoline (/RB) has suffered enough at $1.62 though it may still go 1.25% lower ($1.60) before really turning up so our plan is to double down at $1.60 to average $1.61 into the weekend.  

Oil I'm less enthusiastic about going long on – there are massive long positions in oil that may have to unwind as more and more people are realizing OPEC's cuts were too little and too late to salvage 2017.

Not only is the US simply bursting with excess oil in our inventories but, in an attempt to get rid of it (and fake demand), our manipulator friends have taken advantage of deregulation to EXPORT 500,000 barrels of oil per day (3.5Mb/week) more than they did last year.  Isn't that insane?  We IMPORT 7Mbd but then export 1Mbd (total) or oil and another 1.8Mb/d of refined products.  That means the US is exporting 19.6Mb/week of oil, which is a full day of "use".  

So, the fact of the matter is that the US does not consumer 19Mb/d of oil, we consume 14% less or 16.3Mb/d and that is why almost every single consumption statistic you see is wrong and that is OPEC…
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Wednesday Wipeout – Trump Bumps Insurance Costs 200%

This will be great for consumers!  

The 20M people who were recently covered under the affordable care act will no longer get 75% of their insurance costs (average $1,000 per month, per couple) subsidized by the Government.  Instead they will get an income tax credit of $3,500, which means they need to come up with the other $8,500 on their own.  Of course, the tax credit doesn't do you much good if you are low-income and pay no taxes so the people who need help the most get no help at all under Trumps Unafforable Care Act.  

This will not, however, just affect poor people covered by Obamacare, the low-cost option of Obamacare has kept all healthcare costs low as insurers have had to compete on price against the Government option (in states where there is one) but now that's out the window and the Private Health Care Companies can now charge whatever they want again – I'm sure it will be less, right?  

They do still have to cover your pre-exisiting conditions but they get to charge you a 30% surcharge for having them.  After all, it's your own damned fault if you get sick – God's will and all that.  Older people can now be charged 5 times more than younger people under the same plan, another 66% increase on that little rule change.  

On the bright side, the Top 1% get a 3.8% decrease on their investment income, a nasty surcharge Obama asked the wealthy to pay in order to drastically lower costs for the bottom 99%.  Tanning beds will no longer be taxed, another cruel Obama charge aimed squarely at the rich and well-tanned (but please, NOT colored!).  

Image result for trump healthcare unaffordableWhile the proposed cuts will mean higher out-of-pocket costs for those who benefit from Obamacare’s subsidies, Rep. Jason Chaffetz (R-UT) has proposed that they could make up some of the difference by not buying iPhones.  

That, my friends, goes to the heart of the matter – the teardown of Obamacare will cost consumers roughly $170Bn per year and will cost states another $300Bn a year shouldering the burden of taking care of the uninsured, that $470Bn is
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Testy Tuesday – 11,550 or Bust on the NYSE

11,550.

That's the last 5% line on the Big Chart that will give us a sign that it's time to raise our Must Hold levels – raising the trading floor on the markets 10-15% (still TBD) to S&P 2,100ish.  That would then become the bottom of our trading range and will influence where we begin to put our CASH!!! to work – at much higher levels.  

As you can see from the chart, the NYSE (our broadest index and the hardest to manipulate) has been in a very tight range, between 9,500 and 11,000 since late 2013, which is when we drew up the lines on the Big Chart, predicting 11,000 would be fair value for our Must Hold floor by the end of 2014.  Since then, though tempted, we have not had reason to change our market valuation and we do currently think the market is OVER-valued – so we've been reluctant to move the needle, even as the NYSE has punched over on the Trump Rally.

Those of you who follow PSW know that our Big Chart has been all green on the Must Hold lines for quite a while and the NYSE is the lagging indicator and EITHER it is going to start catching up and that will signal a broad-based, sustained bullish change in the markets or (more likely) it indicates that the Dow, S&P, Nasdaq and Russell are all easily manipulated and show a picture of a market that simply isn't reflected in the reality of the action of 2,800 stock NYSE, which trades twice as many shares per day (3.2Bn) as the Nasdaq (1.7Bn).

In fact, yesterday's action was a good example of how manipulated the market is as there were 2,100 declining stocks and only 920 advancing stocks and the declining volume was 2.4Bn while advancing was 769M yet the indexes were essentially flat.  How is that possible?  Because, in the junior indexes, there are certain key stocks like Apple (AAPL), for example, that have ridiculously outsized weighting and you can keep that one stock afloat while selling 100 others and you can still give the Nasdaq a positive spin on the day.

By buying the "right" 920 stocks that most affect the index market manipulators keep the indexes looking strong while


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Trump Error Day 46 – Buyer’s Remorse?

Wow, things are getting crazy(er).

Over the weekend, President Trump accused former President Obama of tapping his phones during the election – a claim the FBI says is untrue (contradicting a sitting President) while Trump twitters away on an epic weekend rant covering the "cover up" as well as dissing Arnold Schwarzenegger and trying to remember "Who was it that secretly said to Russian President 'Tell Vladimir that after the election I'll have more flexibility?"  Yes, he tweeted that.  Geeze, Donald, use you inside voice when discussing possible acts of treason!  

Yes, we are discussing politics again because the President of the United States is making public accusations not just of Obama but the Intelligence Community of committing a Constitutional Crime and he's calling for Congress to investigate the matter – even though there is not one shred of evidence that such a thing ever happened.  These are the kind of things that should be kept on the QT in Washington – even if they are true.  

By not keeping our dirty laundry secret (if there is any dirty laundry and, if not, then the President is a paranoid maniac – so we can't win) we make America appear weak and tumultuous and that causes MASSIVE damage on the International Stage.  What do we do when we see countries in political turmoil?  We pull our investments, we stop lending them money, we hesitate to make deals with them until things calm down.  Bond rates soar, credit ratings crash and governments can topple over matters like these and you have how much of your money invested in America?  

In these days of evil Presidents

Working for the clampdown

But lately one or two has fully paid their due

For working for the clampdown

Kick over the wall 'cause government's to fall

How can you refuse it?

Let fury have the hour, anger can


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Philstockworld 2017 Watch List – 21 Stocks to Keep Our Eye On

Image result for stocks to watchTwo weeks ago we began compiling our 2017 Watch List.

A Watch List is not a Buy List, a Watch List is a list of stocks we'd LIKE to buy – IF they get cheaper.  Of course that's true of every stock but these are stocks we consider good values where they are now and are ALMOST cheap enough for us to want to get in and we want to be ready when they do give us a good entry – so we watch them!  

I like the Finviz charts because they constantly update, so any time you refresh this post, the charts will be updated to the day.  I've also put dates on the last round of picks because we've had a lot of movement since 2/17 and some of the stocks have gone higher (we are not chasting) and a couple have gotten cheaper and those we are likely to move on. 

The trading notes are the best idea we have AT THE TIME the stock is added to our list – our goal is to get a BETTER trade set-up than the one we highlight, NOT the one we are discussing – those are for reference purposes.  For example, Target (TGT) took a nice dive on earnings and are much cheaper now ($57.35) than the $65.55 we were watching them at.  $55 was our target for short puts but NOW you can sell the 2019 $55 puts for $7.25, $2 (40%) better than they were pre-earnings.

Even better, we can collect the $5.20 we wanted by selling the 2019 $50 puts and we will sell 10 of those in the LTP (buying back our 5 short Jan $67.50 puts) and now we can add 10 2019 $55 ($7.60)/65 ($3.60) bull call spreads for $4 which, as a new trade, is a net credit of $1.20 per contract ($1,200) which means the worst case is owning TGT for net $48.80 – THOSE are the kind of trades we love to be in!  

"The best thing that happens to us is when a great company gets into temporary trouble…We want to buy


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TGIF – Yellen and The People’s Congress

Image result for china people's congressIt's time for Congress to act. 

Not our clown show of a Congress, silly, I mean  The National People's Congress of China where 3,000 elected officials will unanimously vote to agree with President Xi Jinping.  What's more important is what Foreign Minister Wang Yi has to say about trade relations and possibly Donald Trump, who has used China as a whipping post in his rhetoric without, so far, much response from China.  

The People's Congress will set targets for economic growth and budgets and China recently was rocked by a budget scandal in Liaoning Province (rust belt) that has forced them to admit that yes, they have been faking their economic growth data (as we've been saying for years).  Given that this is now on the table – it's possible we will see a downward revision in China's GDP targets for the first time – ever.  

Image result for china us math scoresAlso on watch will be the size of China's budget deficit, which, like Japan, is approaching 250% of their GDP.  It will be difficult for China to control their deficit and fund promised infrastructure spending but perhaps they have learned from Donald Trump that you can just pretend you are going to do both.  Unfortunately, that may not work in China – because people there understand math!  

There will be no quick answers to these questions, the NPC usually runs close to two weeks and, interestingly, they should be done right about the same time the Federal Reserve (our ruling body) makes it's official rate decision on March 15th.  Janet Yellen speaks today and, as noted yesterday, the Atlanta Fed slashed their GDP forecast by 28% to 1.8% for Q1 and that was, finally, enough to shock the markets out of making another new high – giving us the worst day of 2017 (so far).

We had a fun trading day yesterday as the Dow Futures (/YM) shorts we featured in Wednesday's Live Trading Webinar (replay available here) at 21,110 dropped all the way to 20,950 for a gain of $800 per contract – just enough to get us out
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Federally Downgraded Thursday – Does GDP Matter?

Evolution of Atlanta Fed GDPNow real GDP forecastA 28% reduction!

That's how much the Atlanta Fed chopped off their GDP forecast for Q1 after getting a look at yesterday's Personal Consumption and Expenditures data.  The forecast is now for an anemic 1.8% growth and the market is up 13% since last Q so traders are currently paying 700% for growth at these prices – really smart…  

The market gapped up the next morning when the Fed put out a 3.4% estimate on Jan 31st (reports are end of day) so will they gap down now that we have reversed the move off the 2.25% base-line estimate?  Not only are the economic outlooks collapsing but more and more Fed Governors are telegraphing a March 15th rate hike with Lael Brainard, one of the top Fed doves, saying last night that the Fed should raise rates "soon."  

The Fed HAS to raise rates or we risk a worst-case economic situation – a stagnant economy plus inflation or STAGFLATION – a trap the Fed really needs to keep us out of.  Inflation already looks poised to get out of control thanks in large part to our friends at OPEC (and in the White House) artificially pushing up the price of oil, which is a stealth tax on consumers, draining their discretionary spending accounts.  

I don't have a more recent graph but, as you can see, the resurgence of the US Consumer in the past couple of years has been a direct result of oil prices going from $100 to $40 and now we're back at $53 (up 33%) already, erasing 20% of the drop in prices.  Will we also erase 20% of the 120% gain in Personal Consumption – early indications noted by the Atlanta Fed say yes – that's why they chopped 28% off their GDP forecast. 

Speaking of oil – we're keeping ahead of inflation with very nice $1,000 per contract gains from yesterday's Live Trading Webinar on our Oil Futures (/CL) position – now at goal at $53 so don't be greedy and at least 1/2 off the table with right stops ($53.25) on the remainder.  Any time you make $1,000 per contract in less than 24
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Wednesday Rally – Trump Promises More Chickens in More Pots

What a fantastic speech! 

Well, not really but for the low bar we set for President Trump, it was a good speech although I, like many Americans, was put off a bit by Trump's shameless use of the Widow of Ryan Owens (the guy who died on Trump's first mission) as a prop to push forth his agenda.  As noted by the liberal media:

"What Trump did with Carryn Owens was not presidential at all; it was obscene. He authorized an attack that killed her husband, tweeted during the raid, shifted the blame for said raid, unapologetically milked her husband's story for applause, and then proceeded to brag about the size of applause from the story. Please stop lowering the bar for this man."

?"When you lose a $75 million airplane and, more importantly, an American life is lost … I don't believe you can call it a success," Senator John McCain told NBC News in early February.

Image result for trump ryan owensSome are accusing Trump of political posturing as Owens' father has been calling for an investigation into the botched mission that killed his son.  This was a big, political grandstanding play that will either diffuse the situation or blow up in Trump's face (most likely when a reporter next week asks Trump the name of the guy he said the nation would never forget).  Other than that, the speech was forgettable but it did manage to promise something to everyone – and that seems to be enough to take us, yet again, to record highs.  

Fortunately, we put off making adjustments to our hedges yesterday but we'll sure be making them this morning as this is just getting silly.  How many times can the market rip higher on the same empty promises?  There were no specifics offered up yesterday and what few specifics we've seen, like the GOP Health Care Bill, are horrifying (see Monday's post).  

If you are a trader – you may…
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Tuesday Troubles – The State of the Union is???

STRONG! 

That is what every single President since Andrew Johnson has said in their State of the Union message and, tonight, it's very likely that President Trump will break with that tradition because, for the past year, he has talked about nothing but America being in crisis (despite overwhelming evidence to the contrary), so it would be difficult for him to now turn around and tell Congress how great things are.  

That will make this an interesting experiment as we will see how the markets react to what may be a doom and gloom speech while stocks are testing their all-time highs.  We will be pressing our hedges – just in case!  

One hedge that's working well already are the Oil (/CL) Futures Shorts from last week's Live Trading Webinar and you are very welcome, non-Members as we even published that one for you on Thursday Morning and now we're up $2,270 less than a week later – a nice way to finish the month.  Don't forget not to subscribe so you can continue to miss opportunities like these!  

Speaking of fantastic FREE trades we gave out last week.  Goldman Sachs (GS) decided I was right last Wednesday and downgraded Tesla (TSLA) to sell for all the same reasons I laid out for you in Wednesday Morning's post.  Our trade idea for shorting Tesla into earnings was:

That spread was net $2,163 on Wednesday morning and now, as of yesterday's close:  

Now net $11,588 so that's up $9,425 (435%) in 6 days so, once again, you are welcome.  This is why you should not subscribe to Philstockworld, the taxes you have to pay on gains are so annoying!  We've lost interest in TSLA and have moved on, this trade has a $12,500 potential so it's essentially over – we're doing another Live Trading Webinar tomorrow at 1pm, EST - tune in then for more trade ideas.

Meanwhile, Trump better hurry up and create some jobs because Wendy's (WEN) took a big step in destroying…
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Zero Hedge

"They're Baaack! And Why You Should Be Worried - Very Worried"

Courtesy of ZeroHedge. View original post here.

Authored by Mark St.Cyr,

Bubbles are easy to spot – pinpointing when they’ll pop – is quite another.

I coined that phrase a while back which is nothing more than adding my own spin combining two very old catch phrases used by seasoned traders and investors. I use the word “seasoned” for a reason. Why?

Because they’re the ones that have been around (and been burned themselves) yet lived to trad...



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ValueWalk

The Buffett Series - A Changing Media Landscape

By Investment Master Class. Originally published at ValueWalk.

By Investment Master Class

The Buffett Series explores some of the interesting and timeless investment concepts discussed by Mr. Buffett in his annual Berkshire letters.  Over the years I’ve found there isn’t a lot that Mr. Buffett and his partner Mr. Munger haven’t worked out when it comes to investing. I am constantly discovering hidden investment gems, and new ways of thinking about businesses and the investment process.

]]> Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your ...



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Phil's Favorites

EU Ponders Opening Its Brexit Strategy Book, Asks UK to Do the Same

Courtesy of Mish.

Here’s a negotiating strategy I am quite certain Donald Trump would never consider: EU looks at revealing negotiating positions for Brexit.

Brussels is considering publishing its main negotiating positions in Brexit talks, adopting a policy of full transparency that may wrongfoot the more secretive British side.

“The unity of the 27 will be stronger when based on full transparency and public debate,” Mr. Barnier said in a comment piece for the Financial Times. “We have nothing to hide.”

Theresa May, Britain’s prime minister, has, by contrast, said it is vital to “maintain discipline” and avoid disclosures tha...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Treasury Bears on Reflation Train Face Peaking Price Pressures (Bloomberg)

Investors need to contend with the waning impact of energy base effects on inflation and a terminal rate that lacks momentum before they can aspire to push interest rates higher.

One of Wall Street's most steadfast bulls is worried about stocks (Business Insider)

In a note sent to clients on Friday, Lee said several factors that had supported his views on the market, including attractive valuations and central-bank support, had turned neutral or possibly ne...



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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?

Summary

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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Kimble Charting Solutions

Fund flows of this size could mark a top, says Joe Friday

Courtesy of Chris Kimble.

A year ago flows into ETFs were extremely low, actually the lowest in years, as many stock market indices were testing rising support off the 2009 lows. The crowd wasn’t adding money to ETFs as lows were taking place. In hindsight, this was a mistake by the majority. Below I look at ETF flows over the past few years with an inset chart of the S&P 500.

CLICK ON CHART TO ENLARGE

Nearly three months into this year, fund flows have surpassed mone...



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Chart School

Indecision Strikes

Courtesy of Declan.

It was no real surprise to see indices slow down in their recovery. Across the board doji mark a balance between buyers and sellers. The one index which bucked the trend a little was the Russell 2000. It staged a modest recovery which brought it back to former support turned resistance. However, technicals remain firmly bearish, and will stay this way even if there are additional gains.

The S&P closed on light volume with a doji below resistance. The narrow intraday trading range offers a low risk opportunity with a break and ...

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OpTrader

Swing trading portfolio - week of March 20th, 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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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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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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Biotech

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 insidercow.com.

Chart below from Yahoo.com

...

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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 >>