Phil's Newsletter

Manchurian Monday – $194,000,000,000 More Stimulus from China!


Is what I would have said if I had more room in the headline.  More monetary stimulus is not the answer to every Economic ill – especially in China where even infrastructure spending is failing them.  Why?  Because they tried to rush their economy from the early 19th (farming) to 21st (tech) Century without stopping to build a middle class that may demand the products they hope to build their economy on.  

China had their industrial revolution about 20 years ago – ours lasted from 1900 to 1960 and then we busted in the 70s and converted our economy in the 80s and 90s to a tech-driven one.  There was an economic hiccup in the 1930s, of course, but that happened because too much easy money given to Corporations and the Investing Class led to massive wealth disparity while the previous farming economy crumbled leading once-comfortable people into abject poverty while the top 1% popped champagne on their yachts – until the bubble burst and they all drowned together.  

Oct business cycle: support for stocksWell, thank goodness we've learned that lesson, right?  NO – not right at all!  We are idiots and we are making the same exact mistakes that led to the Great Depression and applying the same fixes that led to the Great Depression.  This is INSANE!!!  

These are normal business cycles and you can't wish them away and you can't paper over them.  All these so-called "stimulus" programs do is enrich the Top 1% on the backs of the Bottom 99% and push off the pain (eventual austerity or debt default) to a time AFTER the Top 1% have had a chance to pull out and move on to greener pastures.  

Take oil, for example, after getting a black eye on last week's sudden surge, we have recovered very nicely by sticking to our fundamental guns and shorting oil at the $58 line with a bit of conviction.  That's given our Members two excellent wins in the last two days of $1,000 per contract on Friday and another $1,500 today.  My comment to our Members on Friday morning in our
continue reading

PSW April Portfolio Review – Market Pullback Boosts our Gains!


That's how much our bearish Short-Term Portfolio is now up as of Friday's close.  In just three weeks of trading since our last Portfolio Review on March, 30th, where we very wisely cashed out the majority of our long positions ahead of the coming correction, we've added $19,055 in virtual gains.  

Even better, in our Long-Term Portfolio, we left our "losing" positions in the materials space in the energy and material space and, without any changes since other than adding a couple of new positions (we had a lot of cash, so why not), our larger Long-Term Portfolio has jumped $43,237 (6.1%) during the same period.  We could not have picked a more perfect combination of long and short positions to ride out the last 3 weeks of the market!  

That has driven the Primary Trading Strategy that we teach our Members at PSW (of keeping a Long-Term Bullish Portfolio with a Short-Term Bearish Portfolio) to a new record of $968,512, up $368,512 (61.4%) from our $600,000 start right after Thanksgiving in 2013 (17 months).  We have these gains, at the moment, because our timing was PERFECT.  But, our timing wasn't perfect by accident – it's the design of the Long/Short strategy that we are able to hold onto our positions when our timing is NOT perfect UNTIL it is.  It makes us look a lot smarter than we actually are!  

We were off track into the end of the year because we flipped bearish a bit too early but being off track wasn't so painful in the Short-Term Portfolio because we still had our long positions in the very bullish and much bigger Long-Term Portfolio.  More importantly, because we had a goal of making 20% a year, when the Long-Term Portfolio hit the 40% mark on March 30th, we decided it was ahead of schedule and cashed out our winners, letting the losers we still had faith in ride.

That left us very bullish on cyclical stocks while we dumped all the high-performing positions – even our beloved AAPL, as it had gotten too big, too fast for our liking.   There was also a bit
continue reading

Fickle Market Friday – Free Money Headlines Aren’t Enough?

[image]Oh no

They are pulling out all the guns this morning and firing blanks.  As you can see from the front page of the WSJ, our friendbuddypal Jon Hilsenrath (aka "The Fed Whisperer") has poked his head out like a groundhog and, scared of the economic shadows he sees – has proclaimed 6 more weeks of FREE MONEY for all!  

That gave us a nice little pop early this morning BUT, over in Europe, they are FLEEING into bonds, sending Germany's 10-year notes down to 0.07% – a new all-time low.  This is coming on the heels of Greece's Finance Minister accusing Europe's creditor powers of trying to force his country to its knees by "liquidity asphyxiation".

"Toying with Grexit, or amputating Greece, is profoundly anti-European. Anybody who says they know what will happen if Greece is pushed out of the euro is deluded," he said.  The warnings were echoed by Eric Rosengren, head of the Boston Federal Reserve, who said Europe risks sitting off uncontrollable contagion if it mishandles the Greek crisis, even though Greece may look too small to matter.

"I would say to some European analysts who assume that a Greek exit would not be a problem, people thought that Lehman wouldn't be a problem. If you measured the size of Lehman relative to the size of the US economy it was quite small," he told a group at Chatham House.

Greek bonds, of course, went flying higher.  Up to about 13% this morning.  Watch that 15% line, which is where Europe begin to melt down back in 2011.  The 4-year bonds already jumped 4.5% this morning and are now hovering around 27% and the 2:1 inverted yield curve indicates investors are once again seeing a very high possibility of default.

Even worse, the last time Greek yields were flying there were two rounds of bailouts to help stem the tide.  This time, the ECB and the IMF are demanding PAYMENT instead of offering a hand.  Greece simply cannot afford to pay out money and be forced to borrow more short-term money at 27% – even an economoron understands that much, don't they?

Overall the
continue reading

Thursday Flip Flop – Earnings Send Us Off Again

SPY  5  MINUTEI was going to say something nice about yesterday's gains – but they are GONE already

That's right, the Futures have reversed all of yesterday's BS low-volume gains so fast, I didn't even have a chance to say that I don't trust the gains because they were based on low-volume BS BUT the long-term technicals were starting to shape up.  But they're now gone.

Have I mentioned how happy we are to be in CASH!!! lately?  

Still, I hear a lot of you silly people are still playing this ridiculous game so let's pretend it's not all just manipulated BS aimed at tricking you out of your money and talk about earnings and the economy as if they matter – OK?  

Oil shot up 5% yesterday, from $54 (/CLK5) to $56.70 on the nose which made the weak retrace line $56.16 and the strong retrace line $55.62 per our 5% Rule™, which works best when a market is being entirely traded by machines that are programmed to take your money.  I'll let you be the judge of whether or not that's happening:

While it's possible to have healthy consolidation at the strong retrace line ($55.62) a failure there can quickly lead to a 50% pullback ($55.35) but a failure at the 50% line means the whole move was BS and you can expect to see $54 tested again before you'll get another run-up.  We got off on the wrong side of oil on Tuesday, shorting into the NYMEX contract rollover next week, but those of us caught with open contracts scaled into a break-even at $55.50, so now we're just watching that line to see what happens.  

Those are the technicals but FUNDAMENTALLY, OPEC is reporting a huge surge in production, further feeding the glut with a predicted surplus of 1.5M barrels per day projected for 2015 despite optimistic projections of "steady" demand (or lack thereof).  The bullish case for oil rests entirely on the HOPE that US production will be cut back in the second half of 2015 (but it's only April 16th).  

Last November, when OPEC also announced…
continue reading

Wednesday’s Worrying Time Bomb – Global Debt Past $200Tn

How much does prosperity cost?  

In 2008, the global GDP was $62.86 TRILLION and now, 6 years later, it's $75.59Tn – up $12.73Tn (20%).  To some extent, that's to be expected, as we also added 600M more people (10%) to the World's population (I know, scary) – so there's half the growth accounted for right there but the other $6.4Tn a year was growth

I'm sorry if it doesn't feel like growth to you because that means you must be poor because we in the top 1% and especially those of us in the top 0.01% have had a FABULOUS 6 years since the crash.  While earnings actually fell 1.7% for the bottom 80%, equities held by the top 20% (and especially the top 1%) have jumped from $6Tn to $25Tn in the US alone – that's a gain of $19Tn for us!  Of course, those stock gains come, in part, because we're paying our workers less and making more money so – thanks little guys – we couldn't have done it without you (but we're sure going to try!).  

As you can see from the chart above, we all borrowed $57Tn to get those 6 years of $6.4Tn gains, which is only $38.4Tn so I'll grant you it's not the most efficient way to force an economy higher but hey, we're all in this together, right?  Well, by we I mean you, of course as WE (in the top 1%) have been able to refinance our debt at incredibly low rates so it's mostly YOU who are struggling and in debt that are financing our incredible gains in wealth and, on behalf of the entire top 1%, I just want to say to you – don't forget your next payment is due on the 15th.  cheeky

Hey, remember that time Bush was President and we passed the, ROFL!, "Consumer Protection Act of 2005" and we made Credit Card debt non-dischargable in Bankruptcy?  We did it for Student Loans too because we (the Banksters) knew that we had lent you WAY too much money and we wanted to make sure we got it back.  

continue reading

Testy Tuesday – Big Chart Levels Breaking Down?

This could turn ugly.

As predicted yesterday, without an upside catalyst, the indexes drifted lower and, as you can see from our Big Chart, we are testing a lot of critical lines – lines we expect to fail as the earnings reports come in and disappoint the bulls:

Dow 18,020 is the 2.5% line, failing to get back over that and then failing the 50-day moving average at 17,915 can send us quickly back to the Must Hold line at 17,600.

  • S&P 2,080 is the 12.5% line, so either the Dow is wrong and should easily plow higher or the S&P has a LONG way to fall.  It's also the 50 dma, so a failure there would be TERRIBLE and the /ES Futures are already testing it (and that's a gain of $500 per contract from the short idea we gave you yesterday – you're welcome!).
  • Nasdaq 4,988 is 30% over our Must Hold line in our own country's version of a bubble.  We tested 5,000 yesterday and failed and it's all about AAPL's earnings on the 27th since it's 16% of the Nasdaq and 3.5% of the S&P and 5% of the Dow – so do or die on their earnings in two weeks.  Meanwhile, I don't see many of the tech companies living up to the hype but NFLX has a chance to prove me wrong tomorrow (now $480) and INTC reports this evening.
  • NYSE is the broadest measure of the markets and it's also barely above it's Must Hold line at 11,000 (11,057).  That, of course, MUST HOLD or the other indices are very likely to go down with the big ship.  The 50 dma is 10,946, so a bit below the line and that, of course, would be a very critical failure – hopefully that does not happen.
  • Russell had been our upside leader but has run out of gas just 5% above our Must Hold line at 1,200.  That makes 1,260 a very important line not to fail and the 50 dma is right at the 2.5% line at 1,232 and that's another one we'd hate to see tested.  

SPY DAILYWe are, of course, in CASH!!! - so we don't really…
continue reading

Monday Market Movement – No Free Money Today?


It's Monday and there are no major M&A deals and no QE announcements to goose the markets.  China is still going like gangbusters as lots of bad economic data over there is getting traders expecting more stimulus announcements by the PBOC, so 100% is no longer a reason to pause after 6 months of gains, is it?  

We picked up 40 of the FXI May $48 puts on Thursday and those should be down around 0.70 this morning.  So far, so wrong on our entry though as FXI is up 5% since we went short just 2 sessions ago.  At this rate, Chineese markets will be double again by the end of the month – no wonder traders are rushing to get in desptie the World Bank downgrading their growth projections this morning.  After all, who needs economic growth when you have market growth, right?  

China's March Exports were down 15% y/y but don't worry, Imports were down 12.7% to match, so even must be a good thing and that explains the rally.  

Imports have now been in freefall for 5 consecutive months and that's a drag on the whole Asian economy and Exports were sucking too except for the Feb shipment of IPhones and IWatches to the US that bumped the numbers 50% from last year but back to our usual crap numbers already in March.  

Isn't this the kind of data that makes you want to pay an average of 100% more for the companies that are participating in this economy?  If you are a Chinese trader, the answer is – OF COURSE!   Things are slowing down so fast in China that Feb Power Consumption was off 6.3% from last year, due exclusively to a 2.5% drop in consumption by Primary Industries, who are the primary users of power in China (remember when we used to manufacture stuff?). 

BNPs Chief Economist, Richard Iley calls China a "self feeding frenzy of speculation" that is using margin debt to finance "speculative gains built on unsustainable increases in leverage."  There's no hidden meaning here, folks – the man is telling you to GET THE F OUT of the Chinese market!  Q1…
continue reading

$50Bn Friday – GE Swallows it’s Own Tail to Lift Markets

Another day, another $50Bn.  

That's how much of their own stock GE will be buying back (20% of the company) after selling most of their GE Capital Assets to Blackston (BX) and others.  Keep in mind $50Bn is about what the big Central Banksters pour into the markets in a whole month and GE is now the 2nd public company to match them this week (RDS.A dropped $70Bn on the markets on Tuesday).

Though the markets are taking it as a positive (GE must be undervalued, right?), I take it as a sign that GE is worried about Commercial Real Estate again and they are cashing out while they can and, since there is nothing worth buying with $35Bn and since money is cheap, they are using the cash to fund a massive buyback to reduce the number of shares their shrinking earnings are divided by in order for the board of directors to keep their phony-baloney jobs.  

After all, you don't need to pay out tens of Millions in salaries, bonuses, stock options, etc. to have Immelt and his Board preside over a liquidation sale – do you?  That's why it can't LOOK like a liquidation sale – it needs to look like restructuring for the 21st Century or some such nonsense you can expect to read about in the annual report.  

Don't get me wrong, I love GE.  We were buying it hand over fist when it was under $10 back in the crisis but, at $25+, we liquidated our positions because we (like GE, apparently) couldn't see how they could generate good returns off the current conglomerate mix they cem into 2014 with.  So a radical restructuring is a good idea if they ever want to see $50 again but this isn't a restructuring, this is a retreat.  

Selling $35Bn worth of assets it took decades to accumulate and borrowing another $15Bn to buy back your own stock is NOT about building for the Future – it's about propping up the present!

We already took adavantage of the early excitement to short the /ES (S&P) futures at 2,090 in our Live Member Chat Room.  We expect a sell-off into the uncertain weekend and…
continue reading

Thursday Thrust – Peak China Achieved


That's what the Shanghai blasted up to at the open, though we pulled back to 3,957 by the close as some people decided that a 100% run in 6 months called for a little profit-taking.  Don't worry, it's all part of the "new normal" for equities and nothing bad can possibly happen – it's just that, 6 months ago, traders didn't know value when they saw it but NOW we are much smarter and these prices are here to stay, right?  According to UBS: 

With no significant change in China's macro or corporate fundamentals, the visible rebound in China's A-share market since November appears to have been largely liquidity driven. We think this, in turn, may have been fuelled by a number of factors including:

  1.  New funds flowing into the stock market from household saving, real estate, commodities and trust markets;
  2.  Banks' bridge loans provided to investors who lost access to other high-yield shadow banking products as the result of tighter regulation;
  3.  The PBC's easing of liquidity conditions via a variety of "targeted easing" tools (e.g. MSL, PSL, etc.);
  4.  The official launch of Mutual Market Access (MMA) between the Hong Kong and Shanghai exchanges;
  5.  Long-term expectations for SOE reform and A-shares entering the MSCI index next June;
  6.  Increased use of leverage by retail investors via margin trading; and
  7.  Market sentiment being boosted by expectations for further policy easing.

This has been a "New Deal" for Chinese stocks as the Government attempts to paper over a slowing economy by giving the people record market highs to "prove" how well things are going.  Now, BNP is out with a note calling China’s equity bubble “a microcosm for the overall economy: unsustainable growth in leverage masking ever-deteriorating fundamentals and increasing future downside risks.”

We mentioned shorting FXI (China ETF) in yesterday's post but we couldn't give a specific option play because we were waiting for that 4,000 mark in Shanghai.  It turns out $50 is the magic number on FXI and we like that line for a short and we like the May…
continue reading

Will We Hold It Wednesday – 50 DMA Edition

And the wild ride continues.

As you can see from our Big Chart, we're testing the 50-Day Moving Averages on the Dow (17,870), S&P (2,074) and Nasdaq (4,877) while, as usual, the Russell and NYSE are leading us higher.  The NYSE has finally popped back over it's Must Hold line at 11,000 and that MUST HOLD for us to get bullish but we already added a bank play in yesterday's Live Member Chat Room (also sent out as a Top Trade Alert) as we have plenty of sidelined cash to deploy.  

We're certainly not ready to throw in the towel on our bearish bets yet (and you can still pick up those TZA plays super-cheap from Thursday's post if you want some great hedges) – all the problems we've been discussing are still out there but we have certainly learned that you can't fight the Fed(s) and the Feds are not done pushing us higher – not by a long-shot.  

SPY  5  MINUTEYesterday morning, we got a goose from Minneapolis Fed President Kocherlakota who said: "In light of the outlook for unduly low employment and unduly low inflation, the [Fed] can be both late and slow in reducing the level of monetary accommodation," which was enough to push the markets higher but, as you can see from Dave Fry's SPY chart – the rest of the day was all downhill from there.

And that was despite the fact that Kocherlakota also said: "There is even a theoretical argument to be made for making asset purchases now if the economy faltered.”  That would be, if you are keeping track, QE4 – or QE Infinity + 1, since the last program still hasn't even begun to unwind and continues to pump $80Bn a month into the US economy as the Fed rolls over their $4.5Bn balance sheet.  

4-7-2015 5-55-17 PM changeWe certainly need SOMETHING to goose this economy as Revolving Consumer Credit (charge cards) fell $3.7Bn for the 4th drop in 5 months while Auto Loans (mostly sub-prime) and Student Loans (see Monday's rant) move up to record levels.  

So consumers are going deeper and deeper into long-term…
continue reading


Zero Hedge

MISOC: The U.S. Military's Secret Brand Of Fake News

Courtesy of ZeroHedge. View original post here.


PSYOP/MISOC targets foreign governments, groups, and individuals. The government program is similar to journalism, a mode of communication that spreads information, but often spins the narrative, according to Colonel Curtis D. B...

more from Tyler

Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

How North Korea gets its oil from China: lifeline in question at U.N. meeting (Reuters)

As the United Nations Security Council decides whether to tighten the sanctions screws on North Korea, the country's increasingly isolated government could lose a lifeline provided by state-owned China National Petroleum Corp (CNPC).

Anything-But-Soft Earnings Data Starting to Smack of Rally Years (Bloomberg)

Among the spate of bullish trends visible after three weeks of earnings reports: analysts, who almost always cut full-year estimates in April, are now raising them, pu...

more from Paul

Digital Currencies

Is The Blockchain About To Disrupt This $7 Trillion Industry?

By Teeka Tiwari, International Man

[Posted at Zero Hedge]

Recently, I wrote about a small $100,000 trade of cheese and butter.


This one trade changed 400 years of history in just four hours.

How so? Normally, it would take 10 days to handle the paperwork. But this trade concluded in less than fou...

more from Bitcoin


The First (and Last?) Competitive Advantage

By VWArticles. Originally published at ValueWalk.

Farnam Street Q1 letter to investors

Also see

2017 Hedge Fund Letters Hedge Fund Letters: 2016

The First (and Last?) Competitive Advantage

“Capitalism is a pretty brutal place.”

– Charlie Munger

]]> 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 ...

more from ValueWalk

Kimble Charting Solutions

Gold Miners; Largest outflows in history could be bullish, says Joe Friday

Courtesy of Chris Kimble.

Could historical outflows present an opportunity? Yesterday reported that outflows from Gold Miners ETF’s GDX and GDXJ topped $800 million on 4/26, the largest single day outflows in history. 

Below looks at Gold Miners ETF GDX, reflecting where these large outflows took place.


The long-term trend since...

more from Kimble C.S.

Chart School

Semiconductors Tick Along

Courtesy of Declan.

It was another quiet day for indices but the Semiconductor index was able to add over 1% on the day. This also helped post gains to the Nasdaq 100, although there was a relative gain for the Semiconductor Index against the latter index.

The Nasdaq 100 registered an accumulation day despite its underperformance against Small Caps. The index remains well placed to make a move to upper channel resistance.


more from Chart School


Swing trading portfolio - week of April 24th, 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 ...

more from OpTrader

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)


more from Our Members

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:


more from M.T.M.


CAR-T & CRISPR - the Future is Now

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

PSW 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...

more from Biotech


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


more from Promotions

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...

more from David

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 >>

As Seen On:

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 >>