Phil's Newsletter

2,100 Tuesday – S&P Just 10 Points From New Highs

SPX WEEKLYForget valuation.

Forget earnings, forget logic and LOOK AT THAT CHART!  What a thing of beauty.  We don't just hold the bottom of the rising channel but we LEAP away from it and make new highs, over and over again.  This is, of course, what markets do all the time, which explains why everyone is a Trillionaire, right?

Oh, I'm sorry, I mean everyone's a Trillionaire AND there's no inflation.  Because THAT is how things work in the economy, right?   The market goes up 15% in a year but all other prices remain steady and, in fact, oil, gold, copper, iron ore – all drop precipitiously even though EVERYTHING IS AWESOME!  

If anything in that chain of logic bothers you then you need to consider which one of these things does not belong.  Since low inflation/deflation is very much in line with declining demand and prices for materials, the problem seems to be in the market somewhere.  And what is distorting the market, you may wonder?  

Well, the Central Banksters have poured aprroximately $15Tn of QE liquidity into the markets over the past 6 years.  That's 20% of the Global GDP or about 3.5% of the Global GDP added each year.

Nonetheless, Global GDP still isn't even adding up to 3.5%, which means we're actually in a 6-year Depression with negative GDP that we've papered over with endless amounts of free money.  Now, I'm not saying this is a bad thing – an actual Depression would really suck (just ask your grandparents) and it's worth running up $15Tn in debt to avoid one, BUT (and it's a big but) there still needs to be a plan for dealing with the debt and the bublles it's caused. Just yesterday, the Fed's own Jim Bullard said:

The US risks inflating asset price bubbles with “devastating consequences” if it leaves interest rates at zero.  “When asset bubbles start, they keep going until they blow up out of control with devastating consequences.  Low inflation doesn’t rationalize policy rates of zero; it rationalises a policy rate below normal, but not zero.”

The real
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Monday Market Manipulation – Draghi and the Doves Talk us Up

Dove, dove, dove.

Dove, dove, dove – now that Fisher is gone, that's all we have at the Fed these days.  This week we hear from Mester, Williams, Bullard, Evans and Lockhart – all doves on the Fed and, of course Super Mario speaks at 10am (EST) to get our markets off to a good start for the week with his own special brand of doveishness

While our Fed, the ECB and the BOJ are doing all they can to talk the markets higher, China is warning its investors that the run that has pushed their market 75% in less than a year is unsustainable.  A spokesman for the China Securities Regulatory Commission said on Friday:

“Investors should be cautious about market risks.  We shouldn’t be thinking if we don’t buy now, we will miss it.”

A previous warning from the CSRC was ignored. The Shanghai Composite jumped 2.8% to surpass 3,000 on Dec 8th, the first trading day after the securities body on Dec 5th cautioned investors about growing market risks.  The valuations of some listed companies are “relatively high,” the CSRC spokesman said in Friday’s statement. “There are about 700 companies in the Shanghai and Shenzhen stock exchanges with a price-earnings ratio of above 100,” the spokesman said.

Stocks continue to rise in China on speculation that the Government will do whatever it takes to sustain a 7% growth rate, which means lots of FREE MONEY will have to be printed.  I think that's a fabulous idea – all Governments should print unlimited supplies of free money until all of our economies are growning at 7% and then everything will be AWESOME and nothing can possibly go wrong with that plan, can it?  

I certainly hope not, because that's the plan we're pursuing at the moment!  Meanwhile, Japan is starting to look like Zimbabwe and the 22% drop in the Euro in 2014 sent 124.4Bn Euros ($150Bn) out of the Union in the kind of negative cash-flows you expect to see in countries that are on…
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5,000-Point Friday – This Nasdaq Bubble Will NEVER Burst!

Up up and away!  

Not only is the Nasdaq popping back over 5,000 today but the Dow is back over 18,000 in the Futures and the Russell is already flying over 1,250 – well past the previous all-time high of 1,243 that was set on the first day of March

As we've noted earlier in the week, a rising market tide has NOT lifted all ships with 30% of the Dow and 1/4 of the Nasdaq at 52-week LOWS (mostly materials), which is why they had to stuff AAPL into the Dow – so it could at least keep pace with the Nasdaq going forward.  

Hey, who are we to complain?  This week's rally gave us a nice $4,300 gain on Wednesday's Top Trade Alert and a 5% comeback on our Long-Term Portfolio, which is closing back in on a 30% gain, albeit at the expense of our more bearish Short-Term Portfolio, which has fallen back to up just 77.6% but it's 1/5th the size of the LTP, so GO BULLS – I guess…

Despite our success, I'm not happy with this rally but I wasn't happy in 1999 or 2007 either and that made me miss out on some nice gains so we're keeping our LTP open (though, as you can see, over 50% in cash) so we don't "miss out" on the madness.  

And it is madness – there's no connection between valuations and earnings and, as you can see from this chart, the Macro Outlook is deteriorating rapidly, even in the US.  In fact – THE FED JUST SAID SO!!!  Unfortunately (for us "rational" investors) bad news is still good news to the markets as it only brings wave after wave of MORE FREE MONEY – so much free money that we are drowning in it.  

What does "drowning in money" mean?  Here's some jokes for you -

  • Money doesn't get no respect.  Why, there's so much money in the World these days that you've gotta pay the banks to hold it for you!  
  • There's so much money in


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$4,300 Thursday – Our Top Trades Pay off Nicely

Embedded image permalinkOver $4,300 in one day.

Not bad for sitting at a computer, right?  Yesterday morning, at 9:37, we sent out a Top Trade Alert to our Members (which comes via Text and Email as well as in our Live Member Chat Room) to take advantatage of the morning plunge in oil to $44 a barrel on the May contracts

We had, of course, been discussing oil trades all week but it's always special when we make something a Top Trade Idea and this was the moment we had been waiting to take advantage of, when the rollover of the April contracts caused a panic sell-off at the NYMEX ahead of an inventory report that was expected to be disappointing – a perfect storm!  

That caused us to send out this Top Trade Alert for SCO, where we sold 3 of the April $110 puts for $10.50 (chart above) as well as a long entry on /CL (oil Futures) at $44.  After the Fed announcement, we had oil at $47 for a $3,000 per contract gain and the 3 short SCO contracts that paid us $3,150 in the morning were available to buy back in the afternoon at just $1,800 (+42% on the day), for another $1,350 gain.

That's $4,350 of that single Alert in a single day – not bad!  Of course we have no reason to buy back the short SCO calls and we expect to make another $1,800 on the trade between now and April 15th (contract expiration) but we took the money and ran on the volatile Futures trade.   

Unfortunately, not everyone can trade the Futures so, at 10:14, we sent out a second Top Trade Alert to allow our Members to take advantage of the oil lows with the following trade ideas:

I like UCO July $5/9 bull call spread at $1.35, selling the Jan $5 puts for $1 for net 0.35 on the $4 spread.  

USO has less decay so safer to sell puts on though there is some decay over time.  Jan $13 puts can be sold for $1.25 to pay for the UCO play or you can establish a


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Which Way Wednesday – Waiting on the Fed

waiting animated GIF Not much to do this morning but wait patiently.  

Oil fell all the way to $42.05 in overnight trading but not the contract we were trading (thank goodness), it was the soon-to-expire April /CLJ5 contract that we knew was heading lower still (see yesterday's post).  We're back around yesterday's lows this morning and you can still take advantage of our long trade ideas on USO and UCO from yesterday's Live Trading Webinar as prices should still be good today.  

Oil inventories are at 10:30 and the API report has already indicated a huge 10Mb build is to be expected.  The wild-card is whether or not that takes into account Obama's purchase of 5Mb for the SPR last week.  Since the announcement came on Friday – it's very possible that it wasn't recorded in the current week's inventories, which are taken on Sunday.   This is why we went long on the MAY contracts (/CLK5) and not the Aprils…

I sent out a news alert earlier this morning and our Chart of the Day is cerrtainly this alarming picture of Greek 3-Year Bond Yields, which have jumped back over 20% again – something people really have to learn not to ignore!  

It was also pointed out this morning, in Bloomberg, that while Greece is scrambling to pay German Banksters 20% interest rates, there's no plan at all for paying the $1.59Bn in MONTHLY retirement benefits due to 5.5M Greeks. Greece’s economy has shrunk by a quarter under the conditions laid down by Germany and other euro-area nations in bailout terms. The jobless rate increased in the fourth quarter as the economy began shrinking again and a political standoff rekindled concern the country could leave the euro area. The percentage of adults living in households where no one works rose to 19.6 percent in 2013 to 1.1 million, from 7.5 percent in 2008.

[image]In the midst of this looming crisis, Greek PM Alexis Tsiparis is not heading to Franfurt but to Russia, as he's heard that Vladimir Putin is a kind and reasonable man – compared to the German Banksters he's been dealing with.  Meanwhile, in
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Tumbling Tuesday – Oil Falls to $42.50 as Fake Contracts Hit Inventory Wall

Oil is down 10% this week (so far).

This is being caused by FAKE!!! orders that have been placed at the NYMEX where traders pretended to demand hundreds of millions of barrels of oil in order to inflate prices during the summer.  Now they are suffering for their scam as the physical inventories have filled up and they are forced to roll (now 5% of the contract cost per month) or cancel their fake orders when there are no buyers present.  

In other words, this is EXACTLY what I told you would happen when oil was at $107 in June!  As I said at the time:

Forget peak oil, we're seeing PEAK DEMAND for oil pass us by!  Keep in mind that the non-OECD line on the chart above is just 1/4 of all demand and that is barely positive while OECD demand (66M out of 90Mbd demand) has been NEGATIVE since 2008 with the very brief exception of 2011 but, of course, that was only up 2% compated to 2010, which was flat to 2009s 5% decline.  

In other words, the demand NEVER CAME BACK but that fact is being covered up by a cartel of Billionaires who own the supply of oil as well as the media that they control (see excellent History Channel report on the subject).  As I noted yesterday, the "demand" on the NYMEX for 172M barrels of oil that is scheduled to be delivered to the US in July is completely and utterly FAKE and those contracts will almost all be cancelled by next Friday – purposely shorting our country's oil just at the start of summer driving season.

Our play at the time was shorting the /CL oil futures at $107.  At $47, those shorts were already up $60,000 per contract and, for non-futures players, I
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Meaningless Monday Market Movement

What a crazy week that was!  

As you can see on our Big Chart, we were down sharply, then back up and then down to finish down just 20 points (1%) on the S&P after all that fuss.  Of course, our headline last Monday was "Watch Out for Violent Swings in the Market" so, if you are reading this – unlike the Media Morons – you were probably not surprised by the action

We've been having fun getting in and out of Futures plays on the indexes, taking advantage of the swings to pick up a few bucks while we wait to see how the Fed Meeting (and Yellen's speech) move the markets on Wednesday.    

Before any FACTS are out that might let investors make intelligent decisions, we have rumors and speculation and this morning it's China's turn to rain MORE FREE MONEY down on the markets with Premier Li saying that "the government has room to step in and has “more tools in our toolbox” should growth flag and affect employment."  Isn't it kind of scary when the Premier of China is reading off the same script as Janet Yellen?  

Unlike Yellen, this is Li's ONLY press conference of the year but look how much fun he's having – maybe he'll start doing them more often (by comparison NJ's Governor Christie has done 170 in 5 years).  

On the economy, Mr. Li said that the government is trying to strike a balance between keeping growth at a relatively high rate and pushing structural reforms. Growth, he said, faces downward pressure but if it begins to affect jobs and income, then the government would take more forceful measures.

The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth,” Mr. Li said during the two-hour-long televised news conference.  Keep in mind that when Li says “We still have more tools in our toolbox,” that a Chinese toolbox looks like this:

How can you bet against an economy where EVERY Government is doing whatever it takes to prop it up?  Well,


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PSW March Top Trade Review – Navigating Choppy Markets

What an exciting start to the year this has been.  

It's been a difficult trading environment, to say the least and this will be the first full year featuring our new Top Trade Alerts™ (Members Only) and I look forward to doing these educational review sessions at least each quarter (our last one was January) to review both our trade ideas and our use of options to make those trade ideas as profitable as possible.  

Top Trade Alerts are sent out once or twice a week via EMail and Text Message from our Basic and Premium Live Member's Chat Room.  These trades are just a very small portion of what we discuss during chat each day, but hopefully a good representative sample of the dozens of trade ideas we share with our Members each week in our Live Member Chat Room as well as our Weekly Live Webinars (replays can be seen here).  

Keep in mind these are just snapshots of trades as of today – it's up to you to take good trades off the table and cut the losses (or make adjustments) on ones that go bad.  We're always discussing adjustments in our Live Member Chat Room – join us there for follow-ups.   

Our first top trade idea for 2015 was UCO on Jan 5th and UCO did have a nice pop and we cashed them out of the $25,000 Portfolio with a nice profit on February's pop to $9.50+.

 UCO has since pulled back and the July $14s fell all the way to 0.15 but now the July $8s are just 0.95 and make a nice way to go long on oil or, you can be more conservative and buy the $6 calls for $1.85 and sell the $9s for 0.70 for net $1.15 on the $3 spread.  

On Jan 8th we took a poke at RIG when they fell to $16.15, selling the 2017 $8 puts for $1.70 for a net $6.30 entry, paired with the 2017 $10/15 bull call spread at $2.50 for net 0.80 on the $5 spread.  RIG has fallen off considerably since, to…
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Fragile Friday – Can Low-Volume Bounce Hold into the Weekend?

SPY  5  MINUTEWhat total BS.

The volume on the S&P to the upside has been pathetic and yesterday was no exception with just 92M shares trading on SPY.  To put that into context (which we reviewed in yesterday's Live Member Chat Room) – we've had 4 up days and 5 down days in March and the SPY volume on the 5 down days has been 647M while the volume on the 4 up days has been 344M – just half of what the down volume has been.  

Nonetheless, despite the massive outflow of funds, SPY is only 3 points below where it started the month, at 210.  Even if we give the benefit of the doubt and pretend this isn't a blatant act of market manipulation designed to fool retail investors into buying the dips while Fund Managers and Banksters run for the exits – it's still an indication that this "rally" has a very weak base and could easily collapse in a dramatic fashion.  

Date Open High Low Close Volume Adj Close*
Mar 12, 2015


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Thursday Fake-Out – Strong Bounces or Bust

The Dollar is down so the markets are up this morning

This isn't complicated, folks, we've seen this dance before.  The S&P almost hit our goaaaalllllll!!! of 2,035 at 2,039 yesterday and was saved by the bell and this morning we have a bit of a recovery – but only because the Dollar has fallen almost 1% to prop up the markets.

Whether Dollar-driven or not, our 5% Rule™ dictates we still need to see strong bounces before letting ourselves get more bullish.  So far, we have just the Russell making a turn off their 50 dma line at 1,203 – if that line WASN'T bouncy, things would be very bad indeed.  Keep in mind that domestic small caps are least affected by the strong Dolllar while big-cap exporters and commodity producers are most affected.  

SPY DAILYLikewise, as you can see from Dave Fry's SPY chart, we're testing the 200 dma on the S&P and that had better be bouncy or look out below.  The bounces we'll be looking for are:

  • Dow 18,200 to 17,600 is 600 points (3.3%) and we look for 120-point bounces to 17,720 (weak) and 17,840 (strong).  
  • S&P 2,120 to 2,040 is 80 points (3.7%) and we look for 16-point bounces to 2,056 (weak) and 2,071 (strong).
  • Nasdaq 5,000 to 4,850 is 150 points (3%) and we look for 30-point bounces to 4,880 (weak) and 4,910 (strong)
  • NYSE 11,100 to 10,650 is 450 points (4%) and we look for 90-point bounces but may as well round to 100 and call it 10,750 (weak) and 10,850 (strong).
  • Russell 1,240 to 1,210 is 30 points and we already closed at 1,216 (weak bounce) and we'll expect to see 1,122 (strong) today in the very least and that's where we just jumped in short (1,224) on our Live Member Chat Room as Retail Sales were disappointing.  

8:30 Update:  As I just noted, Retail Sales have come in disappointing at -0.6% in February, miles below the +0.3% expected but in-line with -0.8% in January.  They are, of course, blaming the weather because who would have thought it would
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Zero Hedge

The Central Bankers Dilemma: The Pendulum's Back Swing

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mark St. Cyr

The Central Bankers Dilemma: The Pendulum’s Back Swing

Today, July 5th, a referendum is to be voted on in Greece as to whether they should vote “Yes” for the austerity measures demanded by the bankers of the Euro Zone (EZ.) Or, vote “No” against such demands. Where a “no” vote will in effect all but ensure an exit from it (whether voluntarily or not.) How this vote will come down no one knows. For when a populace is scared, many tim...



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Digital Currencies

Bitcoin Surges After Initial Forecasts Show "No" Vote Ahead

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If the early bitcoin markets are an indication of what will happen once New Zealand opens for illiquid FX trade, it will be a risk off kinda day.

And that doesn't even take into account the pandemonium that will be unleashed in China in a few hours after the PBOC just went all-in to halt the crashing stock market. What if it fails to get a green close before tomorrow's US open?

Source: ...



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Phil's Favorites

Panic: China Central Bank Steps In To Bailout Stocks

As Greece votes 'No' on Sunday's Referendum, China is experiencing its own troubles. The popping of the Chinese equity bubble has prompted the People's Bank of China to step in and provide "liquidity support" to brokerages to keep stock prices from falling further. In essence, the "PBoC is now in the business of financing leveraged stock buying."  

Panic: China Central Bank Steps In To Bailout Stocks

Courtesy of ZeroHedge

China’s equity miracle — the one bright spot that has so far served to distract the masses from rapidly decelerating economic growth and a bursting real estate bubble &mdash...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

China's slowdown is bad news for the world's big industrial exporters (Business Insider)

China's slowing economy is a serious concern for the economies of the nearly 50 nations that count China as their top export destination.

According to economists at UBS, not only will it impact the countries where the goods are coming from, but individual industries will also be hit harder than others.

Brett Arends's ROI: Why I’d vote ‘no’ ...



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Insider Scoop

Why CarMax Is A 'Favorite' Stock At Oppenheimer

Courtesy of Benzinga.

Related KMX KeyBanc Foresees Consolidation Among Auto Retailers CarMax Shares Sputter Following Lower Revenues

In a report published Friday, Oppenheimer analyst Brian Nagel maintained an Outperform rating on CarMax, Inc (NYSE: ...



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Chart School

Chinese SSEC rally with Wyckoff Logic

Courtesy of Read the Ticker.

Supply and demand is the leading force within stock prices, you must know the tea leaves. Richard Wyckoff logic is the only known method of understanding supply and demand with the stock market.Readtheticker.com provides all the tools you need to be a Wyckoff master analyst.More from RTT Tv

NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party ima...

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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

Shanghai index creates historic reversal pattern like 2007

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Much of the attention around the world seems to be revolving around a small country called Greece. What about the most populated country in the world (China), any key messages coming from there of late?

Well another Month, Quarter and Half a year are in the books. With this in mind I wanted to look at Monthly action of the hottest stock market in the world, the Shanghai Index. Above looks at the Shanghai index over the past 25-years. The 100%+ rally over the past year has pushed the Shanghai index up to its 23% Fibonacci ratio and a long-term resistance line, that has been in play for 25-years at (1) above.

As the Shanghai index was hitting this...



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OpTrader

Swing trading portfolio - week of June 29th., 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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Sabrient

Sector Detector: Bulls under the gun to muster troops, while bears lie in wait

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

Courtesy of Sabrient Systems and Gradient Analytics

Two weeks ago, bulls seemed ready to push stocks higher as long-standing support reliably kicked in. But with just one full week to go before the Independence Day holiday week arrives, we will see if bulls can muster some reinforcements and make another run at the May highs. Small caps and NASDAQ are already there, but it is questionable whether those segments can drag along the broader market. To be sure, there is plenty of potential fuel floating around in the form of a friendly Fed and abundant global liquidity seeking the safety and strength of US stocks and bonds. While the technical picture has glimmers of strength, summer bears lie in wait.

In this weekly ...



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Pharmboy

Baxter's Spinoff

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

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

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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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!




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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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