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Phil's Newsletter

Testy Tuesday – 17,600 on the Dow and 2,020 on S&P Must Hold

SPY  5  MINUTEWow, what a downer yesterday was.  

Our Members were loving it as we reviewed our Short-Term Portfolio on Friday afternoon and it was up just 68.7% for the year at $168,680 and, of course, we were bearish into the weekend.  Those same positions, with no adjustments, finished the day yesterday up 81.7%, at $181,680 – gaining $13,000 on that little dip – not bad for a "down" day!

Today we expect a bit of a bounce in the market but we already had our fun this morning playing oil long in our Live Member Chat Room beginning at 5:18 am with a bullish trade idea at $48.80 on /CL (Oil Futures).  We already stopped out of that at $49.25 for a nice $450 per contract gain – enough money to buy a nice breakfast while we wait for the markets to open.  

We also went long on /NG (Natural Gas Futures) in our Live Member Chat at $2.825 this morning and, already we're up to $2.90 on those for a $750 per contract gain on those contracts.  This is why we love trading the Futures.  We'll discuss Futures trading in our Live Webinar today at 1pm (EST) and, since this is our first official one of the year, it will be FREE to join AT THIS LINK.  If you want to learn more about how we make these trades – come join us!  

As I said yesterday, we simply trade on the Fundamentals but it's also important to learn how to make those trades and to have a trading discipline.  We discussed some scaling techniqes this morning and you can learn more about that by checking out our Strategy and Education sections but, to learn advanced techniques like Futures Trading, the live Webinars seem to be most effective

I can tell you what we're trading in the morning post (this newsletter has 17,720 active subscribers) like, for example, this morning we will re-enter a bullish position on oil (/CL) back at $48.85 and stop out at $48.75 and re-enter on a cross back over $48.85 (same plan as I told you yesterday) and then again at $48.50 - baiting our hook with $100 worms while…
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Monday Market Momentum – Gathering Downhill Steam

Watch that 2,040 line on /ES (S&P Futures).

If that breaks, as you can see from TradingView's 90-day chart, we have a big gap to fill back to 1,984 and, if that fails – we're goingt o be looking at the October lows again (1,800) – a potential 10% drop to kick off 2015.  Ahead of that, we may get a bounce off the 2,040 line, but don't hold your breath (more on that below).

The Euro has continued to collapse over the weekend (see this morning's Tweet for maket news), down below the $1.19 mark this morning and that's sent the Dollar back to 92, which is putting pressure on commodities, especially oil, which is now testing the $51 line, where we'll take a long (/CL) with a stop at $50.90 and then again at $50.50 with a stop at $50.40 and again at $50, with a stop at $49.90, risking 3 $100 losses in the hopes of catching a $500+ winner (a 0.50 move up).  

We laid out our expectations for a pop in oil this week way back in 2014 (on 12/23), so I won't go into it all again but I will point out that our premise on Natural Gas has already played out and our long call at $3 on /NG (Nat Gas Futures) is already at $3.12 for a $12,000 gain on a 10-contract block and our long call on UNG at $15 should also be going well this morning.  

There was nothing complicated in our bullish call on /NG, we simply paid attention to the weather patterns and this morning we're getting the news we expected weeks ago, that an Arctic Polar Blast has punched through the boarder and will be dragging cold air into much of this country for the next week.  (Image on right via Zero Hedge)

Duh!  In other words, it gets cold in the Winter and, since PSW Members are also the smartest 1% of the country, we KNOW that Winter BEGINS on Dec 21st, yet the Natural Gas Futures were trading like it ended already.  That's the basis of Fundamental Investing – look for places where the market simply has
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First Friday of ’15 – Trading Trends for the Coming Year

SPY  5  MINUTEHappy New Year!

We've already posted our Trade of the Year for AAPL, rolling it out live on Money Talk back on the 19th and, before that, it was our Top Trade Idea for Dec 17th, along with our runner-up trade on BHI, which we also added to our Long-Term Portfolio (which we reviewed on Wednesday).  On the 18th, Top Trades featured DBA, which became one of our "Secret Santa's Inflation Hedges" on the 21st.  That should have you all caught up – in case you are just getting back from vacation.     

The big story of 2015 is going to be whether or not a strong US economy will be able to ignite what is an otherwise lackluster (almost recessionary) Global GDP.  Just this morning we got TERRIBLE news on Euro-Zone Manufacturing PMI (50.6), which is barely over the 50 line that marks declines while CHINA only cleared the bar bay 0.1 on Saturday.  

"Euro zone factory activity more or less stagnated again in December," says Markit. "The weakness of factory output, combined with the subdued service sector growth signaled by the flash PMI, suggests the eurozone economy grew by just 0.1% percent in the fourth quarter."  That's 1/4 of the World's economy flatlining along with Japan and the BRICs (another 1/4) – not a good start:

Only China and the US are actually growing and China's growth is slowing and the US changed the way they measure their GDP and much of our "exciting" growth in GDP has been related not to actual growth, but to the new way we calculate the same old growth.  Even our made-up numbers aren't that thrilling, with 3.1% expected for 2015 and that's WITH the Fed pumping in another $800Bn.  

What?  You thought the Fed stopped QE?  Silly investor – the Fed didn't STOP QE, they just stopped increasing the amount of QE.  They are STILL rolling over $800Bn worth of TBills as they mature each year and, in fact, as our need to borrow has been decreasing (thanks to that Socialist, Health-Care Providing, Job Creating, Anti-Business with the World's best-performing Economy Obama!),
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Wednesday Wind Up – Closing Out 2014

Happy New Year!  

What a year it's been, too.  We added 2.7M jobs this year and that's good because we also added 2.7M people to our population so, essentially, we didn't lose any ground.  As more and more people left the labor force (retired, discouraged) however, official unemployment fell from 7% to 5.8%.  

We still have 2M less people working thant we did in 2007 – despite adding about 20M people (now 320M).  I guess it's progres if one in 10 people are able to find a job, right?

Of course, none of that stuff matters as long as the rich get richer and boy did they – with the Forbes 400 adding $98Bn to their pile of cash in 2014.  Now $98Bn is a lot of money for just 400 people to spend – so some of that trickles down to us poor folks who have humble financial newseletters or make expensive cars or pilot privat jets – you know, regular Joes in the top 10% – it's been a very good year for us.

It's been a very good year for the markets with the Nasdaq leading us with a 14.4% gain on the year followed by the S&P at 12.4%, Dow 8.5%, NYSE 5.2% and Russell 4.25%.  More impressive than the S&P's 12.4% gain was the fact that we went the ENTIRE YEAR without having more than 3 consecutive down days.  That has NEVER happened before, NEVER.  We can thank the World's Central Banksters for that – these markets are now so manipulated, they can't go down anymore.  

We spent 2014 emphasizing our "Be the House – Not the Gambler" investing strategy and, although the carefully controlled market performance led to low implied volatility (giving us less premium to sell), we still managed to scratch out impressive gains on all five of the virtual portfolios we track for our Members.   

  • Our Short-Term Portfolio acts as a hedge for both our Long-Term Portfolio and our Income Portfolio.  It began the year with $100,000 and, generally, we made bearish bets to offset our more bullish portfolios.  As

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Technical Tuesday – Nasdaq 5,000 Back in Sight

Nasdaq 5,000!  

There's a level we haven't seen since the Dot-Com days.  After 15 years, we're back over 4,800 for the first time and it would be a real shame to fly so close to the sun without getting a chance to melt our feathers at 5,000 once again, wouldn't it?

While I doubt we'll get there by the end of the year (tomorrow), 2015 would have to be a serious disappointment if we can't make 200 more points (5%) on the Nasdaq.  AAPL is once again our Stock of the Year for 2015, so we do expect it to happen – as AAPL is about 15% of the Nasdaq but, heading into the holidays, we're SHORT on the Nasdaq as we don't like that HUGE gap down to the 40-MONTH moving average at 3,750, which not at all coincidentally is a 50% retracement of the current stimulated run-up.  

What will bring the Nasdaq back to Earth, I can't say for sure but, like the Ghostbusters, we shall CHOOSE the form of the destructor and it will come for us.  There are SO MANY potential ways the markets can sell off: Oil, Russia, Greece, China, Climate, Liquidity, Deflation, Inflation – these are all problems that are going on in different parts of the World that we are, for the most part, ignoring at the moment.  

Don't get me wrong, we can ignore problems for quite a long time.  We're very good at ignoring problems and even pretending they don't exist (cough, global warming, cough, cough) in order to just get on with our lives and avoid dealing with things.  Baseball, apple pie and burying our heads in the sand like ostriches is the American way these days and I'm not saying we should buck the trend – let's just make sure we're aware of it.  

We're still long-term long and will remain so until the Fed(s) run out of money (or the ink they use to print more money with) but, short-term, we're well-hedged for a correction over the next 60 days that could take us halfway to that 3,750 mark (back…
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Monday’s Melting Markets – $800Bn Isn’t Enough Anymore?


That's the amount of money China's reserve adjustment is putting into the market in 2015.  “Beijing is trying to stimulate lending and they are trying not to use strong measures,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong. “Policy makers across the globe are trying to boost demand by increasing bank lending, especially to businesses."  In other words MORE FREE MONEY – for the top 1%.

As you can see from the CNN chart, $800Bn is really just a drop in the bucket but it all ads up as Global Stimulus since 2009 is now approaching the $20Tn mark, or about 5% of Global GDP per year for the past 6 years.  Since Global GDP growth is still less than 5%, you can imagine what would happen to us if we DIDN'T get another $3-4Tn this year, so China is simply doing their part with a timely announcement of next year's contribution.

12-26-2014 6-23-51 PM cHARTUnfortunately, the situation for the bottom 90% continues to deteriorate but, fortunately, none of them can even afford to read this article because they have to get up and work more hours for declining wages so we (the top 10%) can make more money even though we're selling the same amount of stuff for the same prices.

Of course, the joke's on all of us as even our money is being paid to us in devalued currencies.  The Dollar had a good year but it still doesn't buy what it did in 2007 and the last time the markets were as high as they are now was 1999, when the Dollar index was at 120 – more than 20% higher than it is today.  

So, if you are getting $208 for a share of the SPY (S&P 500) ETF because the S&P is at 2,080, that $208 only buys you about $165 worth of stuff in 199 terms.  SPY was only $150 back in 1999 so you are a bit ahead – just not as ahead as you think you are.  

More stimulus means more money for the top 1% and we now have SO MUCH MONEY that we are trickling it down on the next 9% and they are…
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Using Options to Pay Yourself Monthly Dividends up to 10%

Sometimes we forget the basics.

In our video series, there's a lesson called "The Secret to Consistent 20-40% Annual Returns on Stocks" and I hope you've seen it.  While the low implied volatility of the market has made it a rough year for option selling, we were still able to scratch out just under 30% profits in our long and short-term portfolios.  We also cashed out out Income Portfolio with a 20% profit earlier in the year and we did it by following the BASIC strategies we teach at Philstockworld, not by gambling! 

Not that we're adverse to gambling, gambling is fun – but fun means fun, which means it's a small part of our total investing portfolio while the vast bulk of our money is SENSIBLY INVESTED in safer strategies that are designed to grind out consistently good returns over many years.  Two weeks ago we discussed the long-term advantages of compounding annual growth in "How to Get Rich Slowly" and now we'll begin discussing some basic strategies that can generate those consistent annual returns.

In the "7 Steps" video, we're discussing a basic covered call strategy and we delve into the Fundamentals of stock selection.  At the time (Sept 2013), we were using ABX, which was trading at $19.15 and we sold the November $19 calls (45 days out) for $1.30.  The simple instructions were to wash, rinse and repeat to make up to 40% a year by simply selling calls against the stock.  

As you can see, ABX has dropped to $10.58 since then, down about 40% BUT, had you followed through and kept selling calls, we had a lovely 12-month period in which it stayed in our range and that would have given us 8 opportunities to collect at least $1 for $8 back before the stock turned down in September of this year.  That would have dropped the net outlay below $10 and stopping out at $15 would have been a 50% gain for the year – even as the stock dropped 22% (from $19.15 to $15).

You can't get more basic than that – just mindlessly selling covered calls every month or two and, even when the
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Boxing Day Boost – Everything is Awesome!

Everything is awesome!  

Yes, I've been watching the Lego Movie with my kids but it does sum up the mood in the markets as we finish up the week with MORE FREE MONEY from our Chinese masters.  That's right, In order to keep the party going, the PBOC has set their non-bank deposit rate to ZERO, essentially allowing their financial institutions to lend exponentially more money as ANYTHING can now be counted as a deposit and used for leverage – AWESOME!

This AWESOME flood of new money into the global markets sent the Shanghai Composite up 2.77% this morning.  Hang Seng is closed and Europe is closed but our markets are open and our Futures are up a bit but we'll short the Russell (/TF) yet again under 1,208.50 as it would be awesome if it fell back to 1,200 again and made another $850 per contract.

More Free Money finally woke gold up and it popped $25 overnight, back to $1,200 per ounce and silver is back over $16.20 and that's awesome because we're long on both.  Oil is still just $56.20 with an awesome opportunity to go long on USO ($21.05) still available (we're already long through June – see Tuesday's post for our reasons why).  

We're telling you how to get your own share of the FREE MONEY folks – they are just giving it away to rich folks like us who can afford to play the market.  In our Long-Term Portfolio, for example, we're going to double down on our USO 2017 $23 calls, now $4 to bring our total to 50 long contracts.  It would be awesome if USO just got back to $30, which have been the lows of the past few years – as that would drop $35,000 back in our pockets – a nice way to offset rising gas prices over the next couple of years.  

Our entire Long-Term Portfolio has been awesome, up $83,690 as we prepare to close out the year but surprisingly dwarfed by the 60% gain in our Short-Term Portfolio, which we pair with the LTP to provide generally bearish balance as we navigate through the year.  Both
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Merry Christmas from Philstockworld!

Why it’s almost Christmas Eve, Mr. Scrooge!  

The Global markets are closed tomorrow and we’re bound to have a very slow day – if you are looking for a Santa Clause rally on today’s trading, you are very likely to be disappointed.  Today is a day for relaxation and reflection.  Remember, the words of Jacob Marley, who said:

Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!

Marley was a man who worked and worked until the day he died and regretted it every day after.  If you don’t believe in an afterlife and you don’t believe in leaving behind the World a better place than you found it, at least find some time for yourself so people don’t call you "a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner" after you’re gone.  

142233 600 New Years cartoonsI was inspired by an old post on Barry’s site titled "Give and You Will Receive" listing 13 good ways we can all give every day. 

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Tree-Topping Tuesday – Putting Tinsel on the Markets

Good morning!  

I feel like I work at Pravda when I say "Markets are heading up this morning" – doesn't matter what's real, that's the news we're going to report.  The crops are always new records, factory production is always up and the 5-year plan is always on track…

Nothing can be further from the truth than the Shanghai Stock Exchange, which opened down 2.5% flew back to positive and then decided to finish down 3% after all – manipulation failed for the day over there. 

Problems in China are caused by their FAILURE to just lie back and accept the market manipulation going on on that side of the World.  Goldman Sachs (GS) has been finally chased out of metals trading as a Senate subcommittee began examining their "alleged" manipulation of commodities and, over in China, the Securities Regulatory Commission is probing the same kind of index manipulation that is commonplace in our own markets

Of course, if you want to see EPIC manipulation, you can't beat da boyz at the NYMEX, where they canceled all but 1,693 out of over 300,000 FAKE!!!! open orders that were placed in January, effectively shorting the US of over 20M barrels of oil in January.

Each contract represents 1,000 barrels scheduled for delivery to Cushing, OK, where the weekly inventory reports are tabulated and, by cancelling 99.4% of all the orders – the CRIMINALS at the NYMEX have deprived the United States of America of an economically vital resource in order to create an ENTIRELY ARTIFICIAL shortage of oil next month that their MEDIA LACKEYS will spin as an indication of demand increasing.  

I'm NOT joking, this is an act of economic terrorism that is happening right now, in this country, that will affect YOU in two weeks (the first January inventory report on the 7th) and will drive up the price of oil through market supply manipulation followed by a propaganda campaign that will sucker people into taking long positions (off the hands of the Banksters who are currently…
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Phil's Favorites

Hoisington Quarterly Review and Outlook: First Quarter 2015

Outside the Box: Hoisington Quarterly Review and Outlook: First Quarter 2015

By John Mauldin

I think it was almost two years ago that I was in Cyprus. Cyprus had just come through its crisis and was still in shell shock. I was there to get a feel for what it was like, and a number of my readers had courteously arranged for me to meet with all sorts of people and do a few presentations. A local group arranged for me to speak at the lecture hall of the Central Bank of Cyprus in Nicosia.

There were about 50 people in the room. I was busily working on Code Red at the time and had money flows, quantitative easing, and currency wars at the front of my brain. As part of my presentation, I talked about how countries would seek to use currency devaluation in order to gain an advantage over other countries – that we were getting ready to enter an era of currency wars, which would be dis...

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Zero Hedge

Ron Paul Tells Obama: "It's Time To Try Something New"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Last week two prominent Ukrainian opposition figures were gunned down in broad daylight. They join as many as ten others who have been killed or committed suicide under suspicious circumstances just this year. These individuals have one important thing in common: they were either part of or friendly with the Yanukovych government, which a US-backed coup overthrew last year. They include members of the Ukrainian parliament and former chief editors of major opposition new...

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Chart School

Bulls Regain Friday's Lost Ground

Courtesy of Declan.

It was a good response from buyers to push markets higher through the day. However, the gains didn't really change the larger picture where markets remain range bound. In the case of the S&P, bulls really need a break of 2120 to bring confidence back to buyers. The S&P is also enjoying the start of a relative performance advantage against the Russell 2000.  It's early days, but today was a good start. The Nasdaq closed the 'breakdown gap,' but it hasn't yet done enough to challenge the March 'bull trap.' The Nasdaq also enjoys a relative advantage against the S&P. This might be the index to lead out tomorrow. ...

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All About Trends

Mid-Day Update

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

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

Google on 11-year support, another buying opportunity?

Courtesy of Chris Kimble.


Google has had a disappointing year when comparing it to the S&P 500 and other tech stocks. As you can see above, it has under performed the Nasdaq 100 index by nearly 19% and it has lagged the broad market by more than 10% in the past year.

Did Google create a double top over the past year, prior to this under performance? The jury is out on this question at this time.

This under performance by Google now has it testing a support line that dates back to its IPO price over a decade ago.


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Swing trading portfolio - week of April 20th, 2015

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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Sector Detector: Earnings and GDP temporarily take investor spotlight off the Fed

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

Courtesy of Sabrient Systems and Gradient Analytics

As we get into the heart of earnings season and anticipate the GDP report for Q1, the investor spotlight has been taken off the Federal Reserve and timing of its first interest rate hike, at least temporarily. Even though Q1 economic growth will undoubtedly look weak, the future remains bright for the U.S economy – even though many multinationals will struggle with top-line growth due to the strong dollar – and any near-term selloff resulting from weak economic or earnings news should be bought yet again in expectation of better results for the balance of the year. High sector correlations remain a concern, reflectin...

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Digital Currencies

SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin

SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin

Courtesy of ZeroHedge. View original post here.

As noted earlier, with equities now a barren wasteland of volume (and liquidity), the last remaining HFT master (of whale order frontrunning) has been forced to go to those asset classes where organic flow is still abundant such as FX, courtesy of central banks engaged in global currency wars. However, HFTs rea...

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Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene


The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.


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Mapping The Market

S&P 500 Leverage and Hedges Options - Part 2

Courtesy of Jean-Luc Saillard.

In my last post (Part 1 of this article), I looked at alternative ETFs that could be used as hedges against the corrections that we have seen during that long 2 year bull run. Looking at the results, it seems that for short (less than a month) corrections, a VIX ETF like VXX could actually be a viable candidate to hedge or speculate on the way down. Another alternative ETF was TMF, a long Treasuries ETF which banks on the fact that when markets go down, money tends to pack into treasuries viewed as safe instruments. In some cases, TMF even outperformed the usual hedging instruments like leveraged ETFs. There could of course be other factors at play since some of 2014 corrections were related to geopolitical events which are certain...

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2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

Thank you for you time!

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.

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