Phil's Newsletter

Faltering Friday – Eurozone GDP 0.3% From Recession

Will the G20 "fix" this? 

Now we're getting terrible GDP reports from all 19 Eurozone nations, coming in at an overall 0.3% in Q3, down from a not exciting 0.4% in Q2 and please keep in mind this is DESPITE TRILLIONS of DOLLARS in stimulus.  Draghi has already said he plans to do more of the same and we can expect all of the G20 nations to pledge to do SOMETHING to prevent a Global Recession – but can they?  Should they?  

What we need the G20 to do is to put shovels in the ground and fund some infrastructure projects that put real money into the economy and, more importantly, begin to burn of the massive surplus of raw materials that China's slowdown has left us with.  Pumping another $58.6Tn into the Top 1% (see Tuesday's post) isn't going to "fix" anything but the balance sheets of people rich enough to have balance sheets.

If you can't get Capitalists to pay their laborers more then the Government (the one that is supposed to be "of the people, by the people and FOR the people") then it is the JOB of the Government to compete with those Capitalists for cheap labor and cheap materials.  The Capitalists are not making efficient use of our workforce or our materials – that is an OPPORTUNITY for the Government to get a few home improvement projects done while they can be done cheaply.  

The same logic should apply to any industry that is being mismanaged.  If private enterprise is unable to efficiently deliver low-cost health care to all of the citizens, then why can't our Government compete to offer a service at a lower cost?  That's not socialism – that's real Capitalism. 

The thing we are doing now is nothing like Capitalism, it is Corporate Welfare on a massive scale and the worst thing about it is that, ultimately, the burden of all these debts we're incurring falls back on the same people we are making no effort to help – it makes no sense – unless you are the one getting the Corporate Welfare, of course

Not that…
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Two Thousand Dollar Thursday – Futures Profits While We Wait

Who says cash can't be fun?  

Yesterday, in the morning post, I noted the weak volume rally was a good shorting opportunity in the Futures – specifically the Russell (/TF) at 1,190 (pictured here, now 1,170 for a $2,000 gain!) and the Nikkei (/NKD) at 19,800 (now 19,635).  The Russell was good for a very quick $1,000 per contract gain and has hit $2,000 as of this morning (where we're done for now, expecting a bounce here) while the Nikkei took longer to grind out it's $1,000 win at 19,600 before bouncing back.  

A lot of traders have an irrational fear of trading the Futures (and options, for that matter) and it's one of the things we work on in our Weekly Webinars (replay available here).  The cost of initiating a Russell Futures Contract is $5,940 in margin (may vary by broker) and you simply bet long if you think the Russell will go higher or short if you think it will go lower and then you make (or lose) $100 for each point the Russell moves.  

The very great thing about the Futures is that you can play them in off hours, like yesterday morning – when we saw the Futures market rising for bad reasons ahead of what we thought would be a weak open based on the data that was coming in.  My comment at the time was:

The volume on yesterday's move up was a joke and this morning we're being pushed even higher in the Futures, back to 1,190 on the Russell (/TF) and 19.800 on the Nikkei (/NKD) along with 2,085 on the S&P (/ES), 17,800 on the Dow (/YM) and 4,660 on the Nasdaq (/NQ).  I listed the Russell and Nikkei first as they are going to be our key shorts – providing the others stay below their lines.

That's the real key to playing the Futures (and it's not very different with stocks or options) – pick a strong support or resistance line where several factors line up that lead you to take a stand and then, once you make your bet –
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Wednesday Reversal – G20 Hopes Trump Bad Data

More bad news from Japan and China.  

Industrial Production in China was once again revised lower – to 5.6% Growth from 5.7% in September while Fixed Asset Investments were only up 10.2%, slowing from 10.3% and, while these seem like good numbers, they are the slowest annual pace in over 20 years!  The Chinese Government's official PMI figure came in at 49.8 in October – still contracting while the private Markit Survey measured worse, at 48.2.

China's Shanshui Cement will be the next major corporation to default on their bonds, heading into defaut on $314M next Thursday.  Shao Jiamin, who heads HFT Investment Management (China's top bond fund) predicts "a substantial correction in riskier debt as the restart of initial public offerings drives money back into shares."  Any collapse could damp Chinese investors’ enthusiasm for fixed-income, just as President Xi Jinping seeks to create a stable fundraising platform for small businesses and maintain access to financing for state-led infrastructure projects.   

Just to the east of China, Japanese Business Confidence is down for the 3rd consecutive month to a 2.5-year low at 3, down more than 50% from 7 in September reflecting fears that a China-led slowdown in overseas demand may have pushed the economy into recession.  The poor poll results will be followed by government data out on Monday, which is expected to show the economy slipped back into recession through September due to a drop in capital spending in the face of weak foreign and domestic demand.

 Meanwhile, Japan’s three biggest lenders will probably report a drop in second-quarter profit after Asia’s economic slowdown weakened overseas loan growth and global financial-market volatility crimped fee businesses.  Combined net income at Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. fell 24 percent from a year earlier to 597 billion yen ($4.8 billion) in the three months ended Sept. 30, according to calculations based on the average of five analyst estimates compiled by Bloomberg.

Portugal's center-right Government has toppled just two weeks after it was formed and an anti-austerity coalition has formed to challenge the EU over terms of their $85Bn bail-out.  

This forces the EU…
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Developing Market Debt Hits $58.6Tn on Bailout Mania

Here's another thing we can pretend doesn't matter.  

Emerging-market debt has grown $28Tn since 2009, according to the Institute of International Finance, which on Monday introduced a database tracking 18 developing markets. Global debt has soared $50Tn during the period to surpass a total of $240Tn, or 320% of global gross domestic product, in early 2015.  That's right, the Planet Earth is now more than 3 TIMES it's annual gross salary on debt!  

Non-financial corporate sector debt in emerging markets has risen $13Tn since 2009, increasing more than five-fold over the past decade to surpass $23.7Tn in the first quarter of 2015. The advance has been most concentrated in emerging Asia, where it rose to 125% of GDP.  As noted in the chart above, OVER 100% of the GDP growth since 2007 has simply been more debt:  more stimulus, more bailouts, more ZIRP policies by our Central Banksters – all masking NEGATIVE real economic growth.  

Take China… please.   Today we got a NEGATIVE 5.9% reading in their PPI Report with CPI up just 1.3% – clearly in a deflationary state yet The State continues to claim the economy is growing at a 6.9% annual pace.  That is totally and completely B*LLSH*T and shame on you for putting up with it!  

Yes, shame on you if you are a fellow Financial Analyst, shame on you if you are a Financial Writer and shame on you if you are a consumer of this information and just passively let yourself be lied to – SHAME!!!  Where is the outrage?  Don't you deserve to know the truth?  Shouldn't there be an investigation or are we so frightened of China that we don't even have the balls to demand an audit?  

That's right, China is our biggest trading partner – it is in the interest of the United States in general and investors in particular to have a fair and accurate assessment of their real economy.  Why does no one demand this?  Conveniently, we have a GOP debate tonight – let's ask the candidates what they plan to do about it!  

Chinese Imports fell 18.8% in October and Exports were down 6.9%
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Market Weak Ahead (not a typo)

First of all – let's talk jobs.  

The markets managed to end the week on a high note as a huge beat on the headline Non-Farm Payroll number stunned us all with 271,000 jobs added in October.  In our morning post on Friday, I noted we were skeptical and would be shorting into the weekend in our Live Member Chat Room and we did – fortunately.  

As it turns out, upon closer examination, pretty much all of those additional jobs were part-time jobs and, in fact, people in the prime working age group (25-54) LOST 35,000 jobs in October.  What seems to have happened is that full time jobs were replaced with part time jobs for retirees. Multiple job holders increased by 109,000 in October, an indication that people who lost full time jobs had to take two or more part time jobs in order to make ends meet.  

Also, 94.5M people dropped out of the work force, giving us the lowest labor-force participation rate since the recession of the 1970s.  If you want to know the story in just one chart – here's what's been happening in our economy since 2007 as the servant class increases dramatically while middle-class jobs disappear permanently:

11-6-2015 7-37-42 PM

Again, if you are in the Top 1%, congratulations – this is what "winning" looks like.  After all, we NEED more servants.  We need them more than we need our 20th car because silverware doesn't polish itself and each kid should have their own Nanny and why should we pay one person a lot of money to do a job when we can pay two people a little money instead?  When we pay two people part-time, neither gets benefits and neither one feels like they have any leverage over us – saving us lots of money down the road!  

When I go to Chilie's, there's one waitress running around serving 5 or 6 tables and I have to wait for food which costs about $25 per person by the time I get my check and pay the tip.  When I go to Nobu, my waiter has perhaps 3 other tables but also support staff and I can barely put my…
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5% Portfolio Review – Month 3 – Up 15.5%

We are right on target.  

At the end of our 3rd month, our 5% Portfolio (now called the Options Opportunity Portfolio) is right on target with an overall portfolio balance of $115,538, which is up 15.5% from our August 8th starting date.  Even more impressive is the $26,521 (26.5%) we've made on the positions we've closed so far and we've re-invested some of those profits into new, aggressive long-term positions that we feel will bring us further net gains down the road.

The 5% (Monthly) Portfolio is a project we have been running with Seeking Alpha for readers who were interested in learning various option trading techniques that could generate a monthly income in a virtual tracking portfolio.  The name was changed to the Options Opportunity Portfolio, which is also descriptive but our goal remains using a $100,000 Portfolio with ordinary margin to generate $5,000 in monthly income.  As you can see, our current open positions are using just $13,000 in margin and we have $84,743 in cash, reflecting our very cautious stance in the current market environment.  

Another huge educational point we are trying to make here is that you don't have to risk a lot to get great returns.  Here is a rundown of all the positions we've closed to date – about 17 different stocks and ETFs we've identified over the same amount of weeks – not a very active portfolio but not one for passive traders either (and that reminds me that our Butterfly Portfolio Seminar will be next week in Washington DC!).  

It should be noted that our biggest winning position that we've closed, SQQQ (+$9,351), is also our biggest open loss that we haven't closed (-$8,050) and that's the focus of today's lesson.  SQQQ is an ultra-short Nasdaq ETF that moves 3 times the inverse to QQQ.  We use it as a hedge, as insurance, to protect our long-term positions and, like any insurance policy – we kind of hope it never pays off!  

Still, the nature of the market is that it goes up and down with great regularity and, currently, SQQQ is down a lot as the Nasdaq is back at all-time highs so we
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Non-Farm Friday – Is our Economy Working?

Only 37% of NYSE stocks are over their 200-day moving average.  

Usually, that's the kind of statistic you see in a bear market but, miraculously, our masterfully manipulated markets don't need broad participation to make record highs because the Banksters have very good algorithms that tell them exactly which key stocks to buy to give them maximum leverage while putting as little money as possible into any given index.  

You would thing the money men would hate anything with the phrase "Al Gor" in it but algorithms are the unsung heroes of the rally, used to manipulate stocks, options, ETFs, commodities, currencies – you name it and they can make it dance!  They also cause very harsh market swings that we human traders are able to take advantage of and our 5% Rule™ at Philstockworld is designed to detect and predict algorithmic trading patterns so we can bet against them – or go along for the ride – depending on what makes the most sense at any given time.  

It's very profitable, too.  Just yesterday, our long /NG (Natural Gas Futures) trade made over $1,100 per contract as we ran up from $2.26 in the morning to $2.37 in the afternoon.  

This morning, we made the call at $2.26 again and we just got a $300 run back to $2.29 and we can do this over and over and over again because the machines running the program never get tired or running the same pattern.  We can even flip around and short under $2.40 (until it finally breaks) and take those rides down back to $2.26 (until that breaks) and, when our range fails us – we simply wait for the next predictable pattern to form and do it again.  

That's pretty much all there is to Futures trading these days.  While we do pay attention to the overriding Fundamentals that are driving the market (in the case of /NG, we lean bullish because it's getting cold in the winter – duh!), mostly we look for good, predictable patterns in the algos that show up on the charts which we can then take advantage of.  Much as we complain about how the markets
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Don’t You Remember the 5th of November – ‘Twas Gunpowder Treason Day

One million people are marching in 500 cities tonight.

If that is a surprise to you, you must be being held hostage but the American Mainstream Media who, for the 3rd consecutive year, seem very determined to pretend what is now a major, Global Anti-Capitalism protest gets no airtime at all.  You would think it was a Bernie Sanders rally the way the MSM is ignoring this event...

That's right, the US Corporate Media has ZERO (0) mentions of this massive, world-wide event on the first page of a Google search for "Million Mask March 2015" (as of 8:12 am) and, since it begins at 1pm, EST, we've safely cleared the morning news cycle so there's little danger of anyone in the US getting any ideas about protesting Capitalism (those that haven't already had their brains beaten in during Occupy Wall Street, that is).  Even my own Huffington Post only mentions it in their UK edition.  

What you will hear instead today, is that Chinese markets are back in "bull market territory" because they have rallied 20% off their August lows.  I told our Members we should make this a drinking game today and have a shot every time we hear someone on TV say China Bull Market to describe what is really nothing more than a dead cat bounce:

Let's have a reality check, shall we?  The Shanghai was up to 5,200 and fell to 2,800, which is 46% and now, that 46% has gained 20%, which is 9% out of the 46% it lost.  Saying this is a 20% rally is nothing more than a math trick, designed to lure the next round of suckers in to buy out the shares that the Media Elite and their Top 1% sponsors are still stuck with.  This is not sour grapes because we are short the China ETF (FXI), this is a no BS analysis of what is happening.  

It's a scam!  The people on TV are lying to you.  You KNOW they are covering up anti-Capitalism protests – that is very obvious – so why would you not believe they are lying to you about other things like China,
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Which Way Wednesday – 5 Fed Speakers Move the Market

Brainard, Harker, Yellen, Dudley and Fisher.  

Today we get the Federal Reserve's version of Murderer's Row and, if they strike out – we have another 7 speeches lined up tomorrow and Friday.  Imagine the chaos that lies ahead for the next 3 market days with all this Fed speak coming at us every few hours throughout each day.  

On Monday we speculated that we'd run up to test the market highs again (check) ahead of the Fed Speak but we also posited that the reason for all the Fed Speak scheduled was that something bad was going to happen and they were trying to get in front of it.  What that is, we're not sure yet but today we have International Trade, Mortgage Applications, ADP Jobs, Gallup Job Creation, PMI Services, ISM Services and Oil Inventories – all while Yellen testifies before Congress.  

This morning we'll get a chance to press our FXI short bet because China's Shanghai Index popped 4% today on news that the country would further open its markets to foreign investment by establishing a trading link between Shenzhen and Hong Kong by the end of the year.  While that is very exciting-sounding – it's also the same news that popped the market 6 months ago and was re-released this morning to make it LOOK like it was a new announcement from the Plenary Session.  

As you can see from the Bloomberg chart above, AFTER the close, people realized the "news" was not new and the market quickly corrected but that won't stop the China ETF (FXI) from opening near $40, where we can press our short bets for a likely quick gain.  This would be the "Opportunity" portion of our Options Opportunity Portfolio that we love to take advantage of.  Our current position is the Jan $41 puts, which we bought for $3.20 back on 10/19 and we shorted the Nov $38 puts at $1.17 on 10/12.

Given the likely action, we'll buy back the short $38 puts for 0.40 or less and we will roll up our Jan $41 puts to probably the $43 puts for less than $1, buying $2 of
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Triple-Top Tuesday – 2,100 and Bust Again on S&P 500?

SPY  5  MINUTEHere we go again!  

Yet another low-volume, BS rally takes us back to the "breakout" level of S&P 2,100 and we get moves like this because TA sheeple are so easy to fool that fooling them has essentially turned into a profit center at many iBanks and Hedge Funds.

After all, what is the value of a stock if not whatever the last idiot paid for it?  Since that actually sounds like a puzzle to most of the people reading it – we Fundamental investors will always have a tremendous advantage in almost any kind of market – EXCEPT THIS ONE!  

This market, like any bubble market, is a fool's paradise that rewards the rats for hitting the BUYBUYBUY button – over and over again.  Train them well enough and, long after the cheese stops coming, the rat will still keep hitting that button, over and over again – until they have no money left to buy with – and then they seem downright surprised when they get dissected at the end of the experiment!  

11-2-2015 6-17-05 PM

Look who "won" the most recent round of S&P madness.  All the most shorted stocks led the rally – almost as if SOMEONE were purposely squeezing the stocks to force people to capitulate and buy some of the worst stocks in the index – just to provide enough energy to get us back over that 2,100 mark one more time.  How manipulated was the action?  So much so that, at 10:35 am, I was able to say to our Members:

As the moment we have Dow (/YM) 17,684 (85 off the recent high), S&P (/ES) 2,085 (9 short), Nasdaq (/NQ) 4,669 (21 shy) and Russell (/TF) 1,166 (down 10).  Figure they make an effort to get those back and a failure at 17,750 or 2,100 or 4,700 or 1,175 are all good potential short entries. 

We hit our targets right on the button so, at 3:05 pm in our Live Chat Room, I said:

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Phil's Favorites

What Doug Jones's win means for Mitch McConnell, Steve Bannon and the Democrats


What Doug Jones's win means for Mitch McConnell, Steve Bannon and the Democrats

Courtesy of David C. BarkerAmerican University

Senate Majority Leader Mitch McConnell calls for Roy Moore to step aside. He later said “let the voters decide.” AP Photo/J. Scott Applewhite

Here’s the thing about selling your soul: The devil had better deliver. It’s one thing to be damned; it’s another to be a damned loser.

This is the difficult lesson that the Republican National Committee and much of the GOP are learning right now, in the wake of Ro...

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Zero Hedge

Alibaba Launches Giant Car Vending Machines In China

Courtesy of Zero Hedge

Shares of Alibaba fell on Thursday morning, despite an exciting news story involving the Chinese e-commerce juggernaut, which is rushing to shake up the way people buy cars in China. Alibaba seems to be taking a page from Amazon’s acquisition of Whole Foods, with the continued push into physical retail. The plan outlined by Alibaba, is to open two giant car vending machines in early 2018, shaped like a futuristic tubular building with a giant cat’s head on top.

Having monopolized the online world, Alibaba continues to push offline with investments in Chinese bricks and mortar retailers.

Alibaba CEO Daniel Zhang said back in November, “physical store...

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Chart School

Tape Reading - Dow Jones Price Waves

Courtesy of Read the Ticker.

This is a continuation of price wave analysis.

More from RTT Tv

RTT Volume wave analysis like this helps the retail investor find price action that is true. The reference to 'tape reading' is by the definition of Richard Wyckoff (section 5M of the Wyckoff Course), you can learn more about RTT Volume Wave here.

NOTE: does allow users to load objects and text on charts, however some annotations are by a free third party image tool named ...

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Insider Scoop

Attention Contrarians: This Analyst Says Set Up Could Be In Your Favor

Courtesy of Benzinga.

Related JD Want Some Exposure To China's Growth? Stifel Says Buy JD Or Alibaba Q3 13F Roundup: How Buffett... more from Insider


Designer proteins that package genetic material could help deliver gene therapy

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


Designer proteins that package genetic material could help deliver gene therapy

Courtesy of Ian HaydonUniversity of Washington

Delivering genetic material is a key challenge in gene therapy. Invitation image created by Kstudio, CC BY

If you’ve ever bought a new iPhone, you’ve experienced good packaging.

The way the lid slowly separates from the box. The pull...

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Digital Currencies

Not A Bubble?

Courtesy of ZeroHedge. View original post here.

Meet The Crypto Company - up almost 20,000% since inception in September...

To a market cap of over $12.6 billion...

Grant's Interest Rate Observer drew the world's attention to this 'company' yesterday.....

more from Bitcoin


Tax Bill May Spark Exodus From High-Tax States

Courtesy of via

The following is a summary of our recent podcast, “Exodus – The Major Wealth Migration,” which can be listened to on our site here on on iTunes here.

It’s looking increasingl...

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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...

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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!


more from M.T.M.


Swing trading portfolio - week of September 11th, 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


NewsWare: Watch Today's Webinar!


We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.


EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...

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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...

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 >>