by phil - December 14th, 2013 5:08 am
"Build a better mousetrap, and the World will beat a path to your door."
Of course we know that's not entirely true – even if you build a better mousetrap, if you don't secure the patents and fail to develop adequate production, marketing and distribution systems or fail to adequately control your costs – the World can be a very unforgiving place.
Even if you do all those things right, you're only as good as your last quarter in the even more unforgiving stock market as the good people at BBRY can surely attest. While there is a lot of money to be made betting on the daily and monthly swings of the market – Warren Buffett has shown us that buy and hold still has a place in this World and, in fact, outperforms all the noise over time.
I'm not going to make this a post about Berkhshire – you can read my old post "Warren Buffett's Secret to Making 100% a Year" and you'll quickly get the gist of how much I like Warren and his company. Since 1965, each Dollar invested originally in Berkshire stock has grown 586,817% vs 7,433% for the S&P 500 – an outperformance of 79 TIMES in 45 years – averaging almost 2x the S&P average each year and then left to the miracles of compounding!
by phil - December 13th, 2013 7:59 am
Yuch, this is getting ugly!
The NYSE and the Russell, our erstwhile leaders, are now leading us down, having fallen over 2.5% from their Thanksgiving highs and, more importantly, finding no support at the 50-day moving averages. Even worse, there's no panic-selling yet, no volume spikes, just a relentless grind down that has, so far, earased all of November's "amazing" gains that had everyone so excited.
Well, not us, we were predicting doom and we got wisely to cash at the top but THEY (my fellow pundits) have never been more unified on the bull side and I had never felt more alone sticking to my guns while the market went up and up.
Could I have been more bullish right up to the last minute? Sure, but that would have put our MONEY at risk and we do not like to risk out money, plentiful though it may be in today's environment. So plentiful, in fact, that Argentina needs 26.8% more of it to buy the same goods and services they bought last year and the police are now on strike, demanding wages that keep up with the surging cost of living, allowing looters to have free reign of the streets. Government spending jumped 44% to keep up and relented to the police (33% raises) but now the public workers are threatening to strike too.
Is this the inflationary future for America? Argentina's debt to GDP is just 43.2%, that would be like America having just a $7Tn debt and not $17Tn and rising. Argentina will take a page out of the US book to fix inflation as well as their GDP – by adjusting the way they gather and report the data!
We've already forgotten that the US boosted their GDP by 0.5% last Q by changing the way they value intellectual property like TV shows and films, adding hundreds of Billions of Dollars of implied value to potential re-runs of the Kardasians. Not a mention of it last week, as we simply accept it as fact now – as if it's always been that way…
And if all others accepted
by phil - December 12th, 2013 8:04 am
I love it when a plan comes together. I'm not going to say "I told you so" – I think my 9am tweet on Tuesday already made that abundantly clear. That morning post had already been published for our Members at 8:08 am, where I said:
Why then, do I prefer cash when there is so much money to be made? Because, at this point in a bubble, it can all be taken away from you just as quickly, and the minute you lose site of that you are in BIG TROUBLE! My question to you is, if you can make 20%, 40%, 50% on short-term trades like these, why leave anything on the table? Make a trade, make your money and get back to cash. Don't stay at the table and play until you give it all back!
At 8:23, our first Futures Trade Idea in Member chat was shorting the Dow (/YM) at 16,000 and shorting the Russell (/TF) at 1,130 and we were in and out a few times since but we caught 15,800 on the Dow yesterday for $1,000 per contract gained in 2 days and 1,100 on the Russell for a whopping $3,000 per contract in less then 48 hours. This is what I was talking about – why leave money on the table when we can make hit and run plays like this?
At 9:01 I reminded our Members to short oil at the $98.50 line, we rode those down for $1,000+ gains per contact below $96.50 yesterday and we're hoping oil goes back to $98 this morning so we can short them again! As I said in last week's Webcast, where we made a short play on oil miles ahead of the drop, we saw no way that OPEC was going to get their act together to reign in the oversupply of crude.
We also focused on the Russell as our favorite short, using 20 TZA Jan $19/23 bull call spreads at $1.86, selling 20 Jan $17 puts for net $720. That spread finsihed the day yesterday at $2,180 for a $1,460 gain in a…
by phil - December 11th, 2013 8:02 am
We have a budget deal.
We don't have all the details yet but it seems like unemployment benefits won't be extended and that means about 1.5M people will no longer be considered unemployed – problem solved! The question for next week then is, will this cause the Fed to begin tapering and the answer is – NO!
Don't be silly, the Fed is not going to taper right before Christmas and we won't get the minutes of this meeting until late January so other than the usual 4-6 word change in the statement, what do people think is going to happen next Wednesday?
This will not stop the Financial Media from filling page after page and hour after hour of TV time with endless speculation on what the Fed will do next week and what it means for the economy and the markets but we're not going to play that game. They won't taper and then the media will seamlessly flip to speculating on the next meeting, giving no indication that they wasted your time for two weeks wondering about the last meeting.
Of course, wasting your time is what the Media is all about. 160M Americans don't work at all and 40M of the 140M that do work are only working part-time so the MSM better distract the proles before they look around and realize how badly they are being screwed by the top 10M people, who have made 95% of the economic gains in the past 30 years.
As long as we can keep our lower classess comfortably numb, all is well and we can keep on raking in the big bucks. We held our weekly Webinar yesterday at 2pm and, at about 2:40, I showed our Members a simple way to profit from the end of day market manipulations on the Russell by selling TNA puts. In this case, we sold the TNA weekly $72 puts for $2.22 into the close and they closed at $1.95, which was up 12% in about an hour and should do even better this morning. Beats working at Wal-Mart, right?
Even a Wal-Mart worker could have put some cash into our weekend trade on ABX (in a post we tweeted…
by phil - December 10th, 2013 8:08 am
Nothing but blue skies on our Big Chart this week.
The S&P came within inches of making a new all-time high and the Nasdaq made their new 13-year high while the Dow, NYSE and Nasdaq also reach for the skies in what David Stockman calls:
"The kind of speculative froth you get at the top of a cycle where valuation loses any anchor in the real world; from earnings or the prospects of the economy."
Well, Jimmy Crack Corn and we're in cash (so we don't care) but just yesterday, both Bullard and Fisher from the Fed said tapering is on the table at next week's meeting (but Fisher always says this) and,. more notably, Gov Lacker also said it would be discussed. Discussion is not action but we may be getting close.
While the official unemployment reports have us down to 7%, the chart on the left from Zero Hedge gives you a much better idea of what's going on in the real World. The number of employees actually working at the 2,000 companies that make up the Russell has dropped by 50% since 2007 and has made little, if any recovery since bottoming out in 2011.
The index, however, is up 169% since the 2008 low so the message to corporate America is clearly to cut the dead weight (employees) and don't go back to the old ways. "America's Economy is Officially Inside-Out" says the Harvard Business Review, with the top 1% making 95% of the gains in this so-called recovery. According to HRB: "The plain fact is that the average household is poorer in the “recovery” than during the “recession.”
When growth rises and living standards fall, that begins to hint that there is something wrong—very wrong, perhaps terribly wrong—with the way things are. It suggest that what is happening to this society is not merely a simple, passing, self-healing ailment; but a chronic, possibly permanent, definitely debilitating condition. Not a flu—but a cancer.
by phil - December 9th, 2013 8:14 am
That's what Richard Gere said to Lou Gosset in "An Officer and a Gentleman" and that's what the markets are saying to us as the Fed attempts to force them into a no-lose situation in which there is literally nowhere else to put your money other than equities. The bank won't pay you interest, inflation erodes your cash, bonds pay next to nothing and margin interest has never been lower – why not play equities – you can't lose?
Or can you? As Dave Fry notes in his Dow chart, it's a micro-managed environment for equities and everyone knows "you can't fight the Fed" and bears can certainly attest to that this year as we've had a pretty relentless 3,000-point climb in the Dow. We did run into a spot of trouble in the Summer, but that was fixed in October as GS, NKE and V were added to change the mix, which helped to goose the index another 1,000 points.
It doesn't matter how the Dow gained 23% this year, as long as they get to print that fact on the brochures, right? Just like it didn't matter how Bitcoin came to print such a bullish picture as it rocketed up from $500 to $1,200, rewarding all dip buyers along the way. These things always work out fantastically well – until they don't!
One of the hardest things to teach traders is the value of PRESEVING wealth, as opposed to just making more of it. If the market is going to go up and up and up in 2014, then we have hundreds of ways to make much, much more than 23%. I'm just putting together a list of those ideas for our Members and, just like the beginning of 2013, when I had 3 bullish picks on January 5th, we can start 2014 off with some bullish selections as well – especially since we have such lovely support levels (16,000 on the Dow, 1,800 on the S&P, 4,000 on the Nasdaq, 10,000 on the NYSE and 1,100 on the Russell) to let us know when it will be time to get out.
by phil - December 7th, 2013 8:23 am
Up and up the markets go, where they stop, no one knows!
Well, we do know where they SHOULD stop, and that's here. In fact, to be very clear – WE ARE SHORT THE MARKET HERE – many of our Members have gone to cash and our short-term trades are BEARISH, looking for a correction back to that 22-week moving average that you can see as a "gap too large" on Dave Fry's Nasdaq chart.
BUT (and it's a Big But) just like we hedge to the downside on the way up (in case we're wrong), we should hedge to the upside too – just in case that correction never comes. That's why we regularly run our series of "5 Trade Ideas that can Make 500% in a Rising Market" – those are the kind of high-leverage hedges every bear should have in their portfolio and, yesterday, in our Member Chat Room, I reviewed our most recent 5 trade ideas, from our pre-Thanksgiving post:
by phil - December 6th, 2013 8:37 am
The Futures are bouncing already (8am).
We'll see how this pans out but it's been a crappy week and we'll yet again be watching our strong and weak bounce lines on the Big Chart, which I laid out for our Members in Wednesday's Chat, which prevented us from falling for the weak bounce that day and yesterday's lame pump job at the open – both of which ended up failing.
Today, we're back to the weak bounce lines in the Futures, kicked off by a weak Dollar (80.35), which will go up fast (and take down the markets) if more than 250,000 jobs are added – so good news likely to be bad news again today. The bounce lines we're going to be watching are:
- Dow 15,910 (weak) and 15,970 (strong)
- S&P 1,794 (weak) and 1,800 (strong)
- Nas 4,030 (weak) and 4,040 (strong).
- NYSE 10,060 (weak) and 10,100 (strong).
- RUT 1,125 (weak) and 1,130 (strong).
As you can see from our Big Chart, we have some serious tests at 4,040 on the Nasdaq, 10,000 on the NYSE and 1,120 on the Russell – all of which we should be above this morning. Let's say that failing 2 of 3 of those lines would be a very bearish indicator and the quick money can be made by shorting the Nasdaq, who haven't come down much, at 3,490 in the Futures (/NQ) or below the $85.50 line on QQQ, where we should be able to buy the Dec $84 puts for .50 or less and a $1 move down in the Qs (1.2%) to approximately 3,990, should net us a quck 50% gain.
We had a lot of excitement in the oil pits yesterday with oil rising all the way to $98 at 10am but it was rejected there and back to as low as $97.20, before settling between $97.25 and $97.50, where we were able to play for nickels and dimes since.
As promised, I sent out a tweet letting our followers know that we were shoring oil at 1:42 at $97.76 and that price held through 2pm, after which it was a very profitable…
by phil - December 5th, 2013 8:11 am
Wheeeeee, what a ride!
We played oil short on the way up yesterda in our Member Chat and I know that sounds strange but oil was $97.50 in the morning, when we first shorted it and fluctuated around that line until the 10:30 inventories when, as expected, we got a nice $1 drop to $96.50, which was good for gains of $1,000 PER CONTRACT on the /CL Futures. My idea to put 10 of those contracts into the Long-Term Portfolio was good for $10,000 just 3 hours after I wrote the post – not bad for a day's work. Even better – this morning we're lined up to do it all again!
We had another nice drop from our $97.50 shorting line back to $97 for another $500 PER CONTRACT gain (x 10 = $5,000) and this morning we once again can do the same at $97.50 so please, don't say I didn't tell you so – because this is me telling your so! Of course, if you want to make REAL money, you've gotta be a Bankstser like Blackstone (BX), who made AT LEAST $15.6M by buying a Credit Default Swap against a loan made by GSO Capital Partners to Codere SA in Spain (a transaction BX had no interest in).
BX then arranged a $130M loan to Codere ON THE CONDITION THAT THEY DEFAULT ON THE GSO LOAN, which triggered the swaps and made BX instant profts of about 10% of their loan as a bonus. I know it sounds like insurance fraud but it's actually legal (maybe not moral, but who cares if it makes money, right?) and BX was not the only Codere lender to benefit. The company is complete junk (rated) and the more they borrow, the more the CDS's pay off!
So no reason to feel guilty about paricipating in the NYMEX scam – we're saints compared to the Big Boys! Don't forget, just like running up the price of oil and gasoline on weekends to screw US consumers out of Billions of Dollars each weekend at…
by phil - December 4th, 2013 8:12 am
It's happening again.
Futures pump-jobs, big volume sell-offs at the open, low volume recoveries into the close and then a massive volume sell-off right at the bell to stick all the 401K and IRA suckers with all the crap stocks that are indexed under headliners like AAPL that the Banksters keep pumped up to cover their tracks while they head for the doors in the Christmas edition of Grand Theft – Stock Market.
Speaking of Grand Theft, the EU fined C, DB, RBS, JPM and SCGLF $2.3Bn for rate rigging on Libor but only gave wrist-slaps to UBS, BCS and C for being good little whistle-blowers, which is funny because UBS and BCS were essentially the ring-leaders.
HSBC, CRARF and JPM are still on the hot-seat for rigging Euribor and Tibor rates but the real news is that we may, in fact, have a free market going forward (yeah, right). Still, being forced to play on a level playing field gave GS and excuse to slap a 2-notch downgrade on rival C and, of course, this and many, many, many more fines and regulations to come are why we aggressively shorted XLF on Monday with our FAZ spread.
We were "only" up 233% at yesterday's close after our first two days and that's merely "on track" for what we hope will be a 3,900% gain on the .15 cash we used to fund the FAZ April $24/30 bull call spread at $1.20, offset with the short April $20 puts at $1.05. Also doing well today should be Monday's FXI short 2016 $33 puts ($3.20), which more than paid for the 2015 $40/48 bull call spread ($2.20) for a net $1 credit – but that's a longer-term play with "only" 900% upside potential – hardly worth mentioning…
This morning, I already put out an early Alert to our Members, noting all the rotten economic news. You can read all about it on my Twitter account, which you should really follow if you want to find out cool things earlier than everyone else. Since then, we saw a 12.8% drop in Mortgage Applications and it seems that the …