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Monday Mayhem – FBI Busts 22 Penny Stock Scammers

Operation "Penny Pincher" nabbed 22 penny stock pumpers.

As I often point out to our Members, a stock doesn't have to be a penny to be a penny stock – any stock with a market cap under $100M is generally what we're talking about – regardless of the share price.  

That's because the stock can be easily influenced by exactly the kind of action the FBI proved is RAMPANT in this industry – a single trader can, for a fee, move money into the stock and send the prices skyrocketing – then press releases are put out to whip retail investors into a frenzy and they follow with their money and, usually, get burned.  

Of course, the same thing happens with mid-cap stocks as well and even large-caps – it's just that the people manipulating those stocks are generally better at covering their tracks!  22 is the number of people the FBI caught in the short period of time an operation like this can run before word gets out that their cover people are conducting a sting.  Imagine how many other must be out there!

Obviously the markets are manipulated.  We know CEOs and their Boards worry about the stock price – the minute they begin to worry about the stock price, manipulation is sure to follow.  That's the way the system is designed.  We have a Fed who worries about the price of the market and they manipulate it too!  It's our job simply to be aware of the manipulation and take it into account in our trading and investing decisions.  

Back on June 12th, I began a series of articles pointing out that oil and gasoline prices were being manipulated into the holiday weekend.  Oil shot up to $107.68 that day and stayed between $105 and $107.50 through June but the EXTREME lack of actual demand we warned you about.  This morning, oil is below $104 and up $3,500 per contract from a short at $107.50 – a trade idea we highlighted for our readers Friday morning, June 13th

You can subscribe to Philstockworld and get interesting trade ideas


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America About to Turn 238 – Rally Turns 2.5

Happy Birthday America! 

The markets are closed tomorrow and today is a half day but the trend is certainly our friend on the S&P as we haven't been below the 200 day moving average since December of 2011 (except a couple of very brief dips).  Though the average volume is about 30% lower than it was back then – it's still an impressive feat.  

Of course, if 10% of the market was manipulated before and the manipulators haven't left (they certainly haven't) – even if the level of manipulation remained the same, 30% of the 90% that wasn't manipulated (retail investors) did leave (possibly BECAUSE of the manipulation) and that means now manipulators control 10% of the remaining 70%, a 42% increase in manipulation!  Of course we know it's much worse than that because now the Central Banksters perform their own brand of market manipulation.  As noted by Salient Partners in a great article about PBOC Manipulation:

The explicit purpose of recent monetary policy is: to paper over anemic real economic growth with financial asset inflation. It’s a brilliant political solution to the political problem of low growth in the West, because our political stability does not depend on robust real economic growth. So long as we avoid outright negative growth (and even that’s okay so long as it can be explained away by “the weather” or some such rationale) and prop up the financial asset values that in turn support a levered system, we can very slowly grow or inflate our way out of debt. Or not. The debt can hang out there … forever, essentially … so long as there’s no exogenous shock. A low-growth zombie financial system where credit is treated as a government utility is a perfectly stable outcome in the West. 

So China has indeed learned the most valuable lesson of Capitalism – that money is a meaningless contstruct that can be freely manipulated to fit whatever narrative the Government wishes to spin and that debt is not to be feared, but embraced, especially by our Corporate Masters – because our National Debt becomes their Private Profits!  


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Will We Hold It Wednesday – NYSE 11,000 Edition

Wheeeeeee – a new record! 

Actually, we shouldn't get too excited as it's a new record every day but it's still fun to celebrate while the all-time highs are lasting.  The Dow fell just 2 points shy of 17,000 but ended up 44 points short – that's one we'll watch closely today, along with NYSE 11,000 – a level I have long stated will force us to turn more bullish if it holds

Unfortunately, with the low-volume holiday trading, we won't be able to confirm these moves until next week but that doesn't bother TA people, who ignore everything but the squiggly lines on the charts and they say RALLY!!!  I imagaine this weekend we'll see "Dow 20,000" on a magazine or two but that's still a far cry short of the 36,000 we were promised on the cover of the Atlantic back in January of 2000.

The Dow topped out that month at just under 12,000 so 17,000 is, in fact, good progress but still over 50% short of the level we were supposed to hit 10 years ago and let's not forget that we visited 6,600 first!  So, maybe not the right time-frame and maybe not a smoothe ride – but we're heading in the right direction – now.

Not wanted to fight the mega-trends, we went wtih the flow and added Dow laggard IBM on Monday at noon in our Live Member Chat Room with the following trade idea:

IBM is on our Buy List but not in our Portfolio yet as I was hoping they'd have a weak Q2 and go down a bit but I'm nervous my theory on Watson will gain traction and send IBM back up so let's add 5 short 2016 $160 puts at $9.40 to the LTP and, if IBM goes lower, we'll be happy to sell 10 more and add a bull call spread.

As I noted in yesterday's Live Webinar and as you can see on the chart, our timing was perfect and IBM led the Dow higher in yesterday's rally and the short options we
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Tricky Tuesday – Fed Funds Fake EOQ

6-30-2014 6-10-45 PM Fixed RateThank you Fed may we have another?

And, by another, I mean another $340Bn that the Fed paid out to their Bankster buddies in "Reverse Repo" purchases at the end of the month.  That's right, the Fed essentially bought THE ENTIRE STOCK MARKET (in terms of transaction value) from the banks over the last few days of June and THAT injection of cash is how they kept the rally going into the end of the quarter.  

As you can see from the NY Fed's own chart (via Dave Fry and Zero Hedge), this kind of charity buying isn't unusual for the Fed – more like Standard Operating Procedure to inflate equity prices into the end of each quarter.  Does it work?  Sure, look at the results:

As you can see - as the market gets more and more expensive, it takes more and more money to push it higher.  Also note the Fed tweaked (hopefully not twerked – there's an image of Yellen I don't want burned in my mind!) their timing to move it close and closer to the very last day, to maximize their bang for the buck.  

SPX WEEKLYUNFORTUNATELY, as you can see from the S&P chart above, these effects are short-term and demand a correction in the not too distant future. 

What's very interesting is that our stimulus theory is still holding up.  We developed this back in 2012, through observation of the effect of Central Banksters market meddling on Global Equities and it turns out that $10Bn per quarter buys 1 S&P point.  Look how perfectly that aligns on the chart!  

Bill Dudley, New York Fed president, warned last month that if use of the repo facility were to grow too quickly it might “result in a large amount of disintermediation out of banks through money market funds and other financial intermediaries into the facility. This could encourage further enlargement of the shadow banking system.”

Hey, a little enlargement of the Shadow Banking system never hurt anyone, did it China?  China, in fact, also pitched in with more stimulus of their own by changing the…
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Wealth Levels, Wealth Inequality and the Great Recession

By Fabian T. Pfeffer, Sheldon Danziger and Robert F. Schoeni

Pfeffer Danziger Schoeni Wealth Levels

 


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Monday Misgivings – CASH!!! Is King as we Begin Q3

SPY 5 MINUTEI'm NOT going to depress you.

If you want to be depressed about the market, check out my Twitter Account, where I posted our Morning Alert to Philstockworld Members (and you can become one of those HERE) in which I aired my concerns with the Global Macros.  

As you can see from Dave Fry's SPY chart, the volume on Friday was very low – incredibly so as it was a Russell re-balancing day, when we can usually expect very HEAVY volume.  Today is, in fact, the very last day of Q2, so we expect "window-dressing" to hold us up for at least another day but then there's only 2 and 1/2 days until the 3-day weekend, so perhaps the charade can continue all week.  

Last week we discussed the various forms of market manipulation that are keeping us at record highs and, on Friday, I asked "How Many Countries are Faking Economic Data?"  

I didn't mention the US because we've already had extensive discussion of how the US changed the rules on GDP calculations last year to add 3% to our GDP but NOW I need to mention the US's contribution to data manipulation because it turns out that a revision to the way Pensions are being accounted for has goosed Corporate profits by 6%, adding another $500Bn (3%) to our GDP!  

Even worse, it's retroactive (see chart above) and improves HISTORICAL EARNINGS as well!  This smoothes out the GDP charts and doesn't make it look like we did something in 2014 to pump it up – isn't that clever?  Not only does it pretty up the GDP and boost Corporate Earnings (so the S&P's p/e looks like 18.5 when it's well over 20), but it also fools investors into thinking that pension obligations at blue-chip companies are not as bad as they really are.  

No wonder the volume in the market is approaching zero – who can play in a game where they change the rules every few months (and surreptitiously, at that!)?  Even with the record amount of buybacks by US Corporations in 2013, GAAP (Generally…
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Friday Fakery – How Many Countries are Faking Economic Data?

I forgot to talk about something important yesterday.

Turkey was caught FAKING their trade data, with Prime Minister Erdogan, working with Economic Minister Caglayan LAST YEAR to manipulate their $800Bn economy by sending gold overseas to boost their export numbers.  How a team that included Turkey’s economy minister sought to manage the current account deficit, as the gap is called, by juicing exports to Iran is laid out in a 300-page document prepared by Turkish investigators in 2013. Caglayan and his collaborators also came away with tens of millions of dollars in bribes, according to the document, which has been cited in parliament by opposition lawmakers

The covert efforts that Caglayan and his associates undertook eventually swelled to a multi-billion dollar enterprise that reached from Ghana to China, according to the investigation. Tons of gold flowed from Turkey to Iran, much of it via Dubai. That freed up Iranian money trapped in Turkish banks, in turn boosting Turkish exports.

When the gold trade was foiled by tightening American sanctions starting in July 2013, Sarraf and his collaborators kept exporting. They sent thousands of tons of overpriced — and sometimes fictitious — food onto ships steaming between Dubai and Iran, according to the document.

That's how things are being done in the World's 18th-largest economy and, notice CHINA (3rd) is one of the countries participating in this scam, as is Iran (21st) and Dubai in the UAE (30th).  We already know China is involved in all sorts of economic manipulation, including building entire empty cities just to boost their GDP numbers.  China, in fact, is in the midst of another set of scandals, with tens of Billions (GS estimates $160Bn) in bank loans backed by silver and copper collarteral that does not, in fact, exist (maybe they "got it" from Turkey?).  

So what is the REAL Global GDP?  Clearly they aren't manipulating the numbers LOWER, so
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Thursday Thrust – Painting those Windows for the EOQ

SPY 5 MINUTEWhat a fantastic market!  

We went UP yesterday despite a 3% drop in GDP.  Imagine what would happen if we had a positive GDP – watch out Dow 20,000!  Of course the volume was stupidly low (20% less than Tuesday's much bigger sell-off) and the rally was led by the broadcast media broadcasters, large-cap companies that jumped 5%ish on the Supreme Court decision against Aereo.  

But who cares?  A rally is a rally.  Our multi-national Corporate Masters don't care that the US economy is tanking – that just means more free money from the Fed and a cheaper labor force for them and we are investing in the stock of those companies, not the US economy!  

Are we perhaps getting a bit overbought?  Well, sure, if you want to compare us to markets in which the World's Central Banking Cartel wasn't pumping in an average of $5 TRILLION per year into the markets (via their Banskter buddies, of course).  $29Tn is right about 25% of the total value of global equities and it's no coincidence that the S&P (and other major indexes) are now 25% higher than they were at the last market top:

Investor Psychology Cycle 040814

Yes, it's true:  If you put 25% more water (liquidity) into a bathtub you will get 25% more water in the tub – AMAZING!!!  At some point, you tub will runneth over but getting back to about where we were before the crash (liquidity drained out of the tub) probably isn't going to do it.  As I pointed out way back in June of 2010 with "The Worst Case Scenario: Getting Real With Global GDP!", we didn't break the tub – which is why, at the time, we bullishly expected it to be refilled at some point.  

SP500 WallStreet Innovation 062414As noted by Business Insider, what we have now is a Liquidity Bubble, where money is forced into the system and flows through the path of least resistance which, with the Fed artificially depressing bond rates, leads only to equites.  

It doesn't matter if your GDP is going down 3% or…
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Wednesday Worries – Will GDP Be Revised Down Again?

Does this look healthy to you?

We did manage to pull out of a tailspin back in 2011 – the last time our GDP went negative but, funny story – in July of 2011, the S&P fell from 1,350 to 1,100 by August 9th and it gyrated between 1,100 and 1,200 until October when the Fed's "Operation Twist" (because "Operation Screw the Poor" got bad test scores) gave us a boost.

Notice how this post picks up right where yesterday's post left off – I'm clever that way!  Yesterday we had the chart that showed us that 10% of our GDP ($1.5Tn) is the result of Fed fiddling and, without it, the GDP would be right back at those 2009 lows.  Whether or not you THINK QE will ever end, you sure as hell better have a plan for what you will do in case it does!  

Russell Investments put out their Economic Indicators Dashboard yesterday and it's a nice snapshot of the where the economy is.   

The lines over the boxes are the 3-month trends and, thanks to the Fed, 10-year yeilds are just 2.48% and that's keeping home prices high (because you don't buy a home, you buy a mortgage).

Inflation is creeping up and expansion (today's topic) is negative and getting lower.  Meanwhile, consumers remain oblivious as the Corporate Media fills them with happy talk.  Meanwhile, this BLS chart (via Barry Ritholtz) says it all as manufacturing (good) jobs continue to leave our country at alarming rates:

Almost all of the growth spots are from fracking with a little auto production picking up as well.  Overall, 1.6M net manufacturing jobs have been lost since 2007 and, much more alarming, the median household income for those lucky enough to still have jobs is down almost 10% over the same period of time.  

In other words, if it wasn't for Fed Money, we'd have no money at all!  In yesterday's Webinar (replay available here) we talked about how the Fed is like a…
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Tempting Tuesday – Looking for the New Normal

The new Big Chart is here:

Oooh, ahhh – look how high those levels have gotten.  We discussed the whys for these adjustments in our weekend post and how is, of course, The Fed – along with the other Central Banksters who have been pumping up the economy by giving so much money to the top 0.001% that they have nowhere left to put it but equities and, so, we rally!  

Top 0.001% (out of 7Bn people on Earth, that's 70,000 and, of course, that includes about 20,000 Corporate Citizens as well – even thought they are often owned by wealthy individuals – a double bonus for them!) corporations have so much money, they are running around buying each other and buying their own stock – anything they can think of to get rid of all the money the Central Banks are handing out.  Well, anything but hiring people or investing in R&D, Infrastructure, Cap Ex or anything that would actually GROW the businesses.  

What the World's wealthiest businesses and individuals DO spend their money on is teams of accountants and lawyers who help them to shuffle their money around through various overseas shell corporations in order to avoid paying taxes.  Here's how Google knocks their tax rate down to just 2.4% in 4 easy steps:

Now we have companies flat-out leaving the US to avoid taxes but it's not US taxes they are avoiding – it's ALL taxes.  Medtronic (MDT), for example is acquiring Covidien (COV) for $43Bn and the combined group will be domiciled in low-tax Ireland, the official home of its merger partner, COV.

Medtronic’s executives will stay in Minneapolis and Covidien’s will remain in Mansfield, Mass. Covidien, then part of Tyco, left America for Bermuda in 1997 before moving to Ireland in 2009. The deal thus involves an inversion with a “foreign” firm that has itself already inverted: a sort of “inversion squared.

All this juggling will save MDT about $750M a year in taxes, which every single US taxpayer will then pay $5 each to make up for.  Over the
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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 jennifersurovy@yahoo.com 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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Zero Hedge

Top Scientist Warns This Version Of Ebola Looks Like "A Very Different Bug"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Michael Snyder via The Economic Collapse blog,

Barack Obama and the head of the CDC need to quit saying that we know exactly how Ebola spreads.  Because the truth is that there is much about this virus that we simply do not know.  For example, a top Ebola scientist that is working in the heart of the outbreak in Liberia says that this version of Ebola looks like it could be "a very different bug" from past versions.  Other leading scientists are echoing his concerns.  And yet Barack Obama and Thomas Frieden c...



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Chart School

Weekly Gasoline Price Update: Down Another Nine Cents

Courtesy of Doug Short.

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny Regular dropped another nine cents and Premium eight cents. Regular is now at its lowest price since January 2011.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon. The highest continental average price is in California at 3.49. Missouri has the cheapest Regular at $2.76.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer.

...



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Phil's Favorites

M&A Deals Fail At Highest Rate Since 2008

Courtesy of Mish.

In yet another potential market topping sign, M&A Deals Fail At Highest Rate Since 2008
The value of deals that fail to complete has reached its highest level since 2008, in the latest sign that the best year for mergers and acquisitions since the financial crisis will also feature a number of high-profile failures.

Three large deals collapsed last week, adding to the list of wrecked deals and coinciding with a sharp jump in equity market volatility that sapped confidence in stocks and put a chill on the market for initial public offerings.

The biggest blow to dealmaking prospects came as US pharmaceutical group AbbVie unexpectedly dropped its support for a $55...



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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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OpTrader

Swing trading portfolio - week of October 20th, 2014

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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Insider Scoop

UPDATE: Bank Of America Reiterates On ITT Educational Services As Shares Surge But Risks Remain

Courtesy of Benzinga.

Related ESI Urban Outfitters Drops On Q4 Profit Warning; Mead Johnson Nutrition Shares Spike Higher ITT Educational Services Shares Soar On Preliminary Results

In a report published Monday, Bank of America analyst Sara Gubins reiterated an Underperform rating on ITT Educational Services, Inc. (NYSE: ESI), and raised the price target from $7.00 to $8.00.

In the report, Bank of America noted, “ESI shares rall...



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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

...

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Sabrient

Sector Detector: Semiconductors get slammed as investors scramble to protect profits

Courtesy of Sabrient Systems and Gradient Analytics

Volatility continues to increase in the stock market and many of the leaders are breaking down. In particular, semiconductors took a rather big hit when one of the bellwethers warned of weakening global demand. Nevertheless, despite the significant headwinds, I do not think this spells the end of the bull market. But the technical damage to the charts is severe, particularly to the small caps, which are in full-blown correction mode. The large caps must show leadership and rally immediately -- or it will put at risk the critical and widely-anticipated year-end rally.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up ...



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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Digital Currencies

Bitcoin Has Been Getting Obliterated

Joe has found a place for Bitcoins, and if you hold a lot of them, you won't like it.

Bitcoin Has Been Getting Obliterated

Courtesy of 

Remember Bitcoin?

There's not much to say about it, except that it's doing TERRIBLY.

Here's a chart going back to earlier this summer. Charts don't get uglier than this.

Bitcoinwisdom

Interestingly, the Bitcoin industry continues to be quite excited about the prospects for the digital currency, and there continue to be announcements about expand...



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Promotions

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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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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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