by Phil Davis - May 21st, 2014 8:31 am
Williams, Yellen, George and Kocherlakota.
It's the "murderer's row" of economic BS today as, starting at 10am, we have 4 consecutive hours of Fed speeches ahead of the release, at 2pm, of the minutes of the last meeting (4/30), whose statement led to a bit of a sell-off the following week – knocking us down to the mid-April lows. With the Russell already failing those lows and the Dow again failing the 50 dma - the Fed is pulling out all the stops to spin things back to bullish.
It's very hard to be bullish when THIS is the chart of existing home sales in the US. Keep in mind, this is WITH $85Bn per month in stimulus last year and RECORD low mortgage rates. The Fed's Charles Plosser sees "a ticking time bomb" of inflation and, if the Fed is forced to raise rates to combat inflation – how is that going to make housing more desireable?
Even this morning, MBA Mortgage Applications were down 3% on purchases. That's 3% lower than last month, when they used the weather as an excuse for that crappy performance. 6 years and $6,500,000,000,0000 worth of stimulus later, we're barely above the level of housing purchases we had after the first S&L crisis in the early 90s and we're still over 60% below our peak housing levels.
Keep in mind that this is the number of home that are sold in the US, so it's a number that should always be rising as the number of homes expands over time. In 1990, there were 35M less homes (97M) than there are now (132M) but between 1990 and 2010, we built 34M homes or about 1.7M per year. In the last 4 years, however, we have built only 720,000 homes or just 180,000 homes per year!
by Phil Davis - May 20th, 2014 8:11 am
Is this a joke?
As we thought, yesterday's volume was very low – it was actually the 2nd lowest day of the year, that didn't stop the Nikkei and the Hang Seng from following us up half a point but Shanghai was flat at 2,008, dropping 10 points from its pumped up open and I'm sorry but you are NUTS to be too bullish in this market when that index is in danger of failing 2,000.
I don't mean not bullish at all – our LTP is still 100% bullish but it's hedged by the STP, which is mostly bearish. Just – BE CAREFUL!!!
Did you catch that news item above? "Shinzo Abe turned to Nobel laureate Robert Shiller to try to
restore a vital ingredient of his economic revolution: optimism." That's the World we're living in now – Central Bankers aren't even ashamed to admit that they manipulate the news and take actions aimed at making you THINK the economy is recovering.
That's based on the old "truism" that, if people are optimistic, the economy will improve but it's FLAWED because consumers no longer have any discretionary income to spend and they don't have any savings and small businesses, who still employ 80% of the workers, don't have any money to spend either.
They have shifted the bulk of the discretionary GDP to the top 0.01% who don't spend it at all but use it to consolidate their empires. All these old economic rules don't apply to an oligarchy – every act of stimulus only serves to make the rich richer and push the rest of the country further into debt. Sure, the rich are in debt too but a guy with $1Bn owes the same $164,000 per family as the guy with $100,000 does.
by Phil Davis - May 19th, 2014 8:32 am
These are not good chart patterns:
We haven't gone anywhere on the Dow, S&P or NYSE since early March and we've lost 6% on the Nasdaq and 8.3% on the Russell yet, to hear the mainstream media tell it – there's no better time to invest.
Nazi propagandist Joseph Goebbels said: "If you tell a lie big enough and keep repeating it, people will eventually come to believe it." Clearly that's the template being used today by the MSM and even our politicians these days.
President Bush himself said: "See, in my line of work you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda." Unfortunately, no one told him he wasn't supposed to actually repeat what they told him in the strategy meeting to the general public – but we all know that's the way things work, don't we?
As you can see from Dave Fry's SPY chart, we got a very exciting pop into the close on Friday for no particular reason and now, for no particular reason the Futures have given back most of those gains. But don't worry, into the open, while the volume is still low, it's sure to get jammed back up again – just in time for the Funds to dump their shares on the retail crowd.
We don't care IF the game is rigged, as long as we can figure out HOW the game is rigged and play along. This morning I posted to our Members that Silver Futures (/SI ) were a long at $19.50 and that Gasoline Futures (/RB) were a short at $3. Already silver hit $19.65 for a $750 per contract gain and gasoline fell to $2.985 for a $630 per contract gain – and the Egg McMuffins are paid for!
We KNOW it's rigged and we KNOW the moves were fake so, when they hit good resistance points, we knew it was very unlikely they'd get past them. If they did get over the resistance, we'd take small, quick losses and be done with the trade. Of course we went over the news and the data from around the World to make sure our premise…
by Phil Davis - May 17th, 2014 8:33 am
Would you like a 20x return on your investments?
In our Weekly Webcast on Tuesday (replay available here), we discussed various ways you can make a nice retirement nest-egg for yourself as well as various stock and option strategies (and 9 new trade ideas to go with them) that can put you on the road to becomming a millionaire.
Unfortunately, none of these are "instant" – these are not lottery tickets but long-term, time-tested strategies that can give you everything you ever dreamed of – IF you are willing to work for it.
These same strategies can also be applied to generate an income off your retirement savings without digging back into your principal each year.
We don't sell magic beans at Philstockworld, we teach our Members HOW to invest and put them on the road to wealth but it requires hard work and dedication on your part. If you are willing to make the effort, though, we are happy to show you how to make the climb.
In the Webinar, we discussed turning $100,000 into $1M, $2M and $5M over various periods of time but we neglected to talk about strategies for people starting our with smaller amounts, say $25,000 to start. We do run a virtual $25,000 Portfolio for our Members – to identify simple trades that require no margin and no day-trading (you really can't day-trade with $25,000 and, most likely, you have a job to do during the day anyway!) yet are still able to generate nice returns.
Before we start, I want to get you comfortable with the math involved. Money Chimp has a very nice Compound Interest Calculator which I'm using for my calculations and on the left is the model for the base premise of this article. Follow the link and play with it so you can see how different strategies affect your Future Value.
by Phil Davis - May 16th, 2014 8:08 am
Another crazy day ahead.
What else is new in this market? As you can see from Dave Fry's SPY chart, the pattern is holding up of high-volume (relatively) sell-offs following low-volume run-ups. This is how the Institutional Investors manipulate the markets to dump unwanted shares on retail investors. I've been telling you all week how it works and now we can see it in action.
Of course, it's nice to have this knowledge ahead of time – that's the edge we strive to give to our Members at Philstockworld. Even if you are just reading us for free and don't have access to our Live Member Chat Room, you would have done very well to follow our advice on Tuesday and go with the DIA puts at $166.80 and the DXD longs at $26.20 – it was right there on top of the morning post (which you can have mailed to you every day, pre-market by SUBSCRIBING HERE)! In our Member Chat, the previous day, our trade ideas were:
A 5% pullback on DIA is 8.3 points (830 Dow points), back to $158.40 from here. The June $161 puts are .95 so, if you have $100K to protect against a 10% drop, you can buy $5K worth of the June $161 puts and a 5% drop pays you back $8,000 and a 10% drop to $150 (15,000) would net you $11 per contract so a 10x return is $55,000 back – that's overhedged actually!
On DXD, the July $25/28 spread is $1.10 and is $1.25 in the money so you get all the upside on DXD up to a 140% profit on a very small move down in the Dow. We already have July $28 calls in the STP and it's a little too soon to roll but we will.
On a new trade – you can just get out if the S&P holds 1,900 for more than a day – that's not too far from here.
by Phil Davis - May 15th, 2014 8:42 am
Options expire on Friday and last expiration day (4/18), we were 2.5% higher on the Russell and Nasdaq , which is about how much higher the Dow, S&P and NYSE are from where they were at the time.
It's been an interesting month watching our indexes diverge but, as we discussed in our Tug Boat Example last week, this sort of behavoir simply doesn't last very long. The end of that discussion (last Thursday) was:
As you can see from Dave Fry's Russell Chart, the RUT resolved it's triangle sqeezy thingy to the downside – after the requisite head-fake and now we're back to the…
by Phil Davis - May 14th, 2014 1:33 pm
$25,000 Portfolio Review ($25KP):
Not much to report here, GMCR burned us but now we can turn that into a nice winner if it comes back down. Since we made $5 on the short puts, our break-even is $14.50 and we're almost there already. USO not going to well but not worth adjusting either. I'd like to roll up to the $39 puts, now $1.99 for .50 or less if oil goes higher (now $102.45). NFLX we just added today.
Butterfly Catching Portfolio:
I cannot stress enough how great this portfolio is for the conservative investor. We're using just 1/6 of our buying power and generating 20% profits on the whole portfolio. That means that 1/6th that's working is up 120% so far! You never want to go more than 50% invested – just in case one of your positions blows out and you have to adjust but we have plenty of room to add more – when we identify another stock with options that are priced more volatile than we expect the stock to be. It's a rough criteria but we seem to find them often enough. The low VIX makes it rough at the moment. Still, up 5% since last month – not too shabby!
- BTU – That one has been a wild ride and we'll need to roll the May $16 caller ($3.15) to the Sept $17 calls ($2.70) for net .45. We're getting more confident in the long story here, so we'll spend $450 to move up $1,000 in strike on our 10 contracts. Don't forget, these trades don't terminate in 2016 – we'll simply roll our long positions out to 2017 or 2018 when the time is right and keep on rolling the short positions - RAWHIDE!
- CZR – This one is like a little cash machine. Looks like we're on the nose this month and that means we're profiting almost all of the $3,200 worth of puts and calls that we sold on 3/31 (45 days) against our $6,600 long position, so that's 48%
by Phil Davis - May 14th, 2014 8:50 am
Three out of five indexes look very good!
The same can be said about a dog with three legs and no tail, I suppose. So, the question is, is the market a dog in a nice sweater or whatever the metaphor would be for something where 3 healthy guys drag two dead guys around and win the race.
Hmmm, I guess there is no metaphor for that – BECAUSE IT'S RIDICULOUS, isn't it? A healthy market looks like a healthy market and this does NOT look like a healthy market.
You can ignore Russia invading Ukraine, you can ignore China's exploding debt bubble, you can ignore collapsing German Investor Confidence, you can ignore Japanese Inflation, you can ignore all the stuff we already talked about in this morning's news alert – but that's not going to make it go away!
Yes, we made new highs yesterday but look at the crap volume. The volume on the Friday after Thanksgiving (half a day) was 55M on SPY, the volume on Dec 26th was 63M and New Year's Eve was 86M – that's how ridiculous yesterday's volume was.
We're still in the pattern of the market rising on low volumes and selling off on high volume, which is simply the way the Banksters pump up their holdings into the opens and then dump them on what few retail suckers are participating into the closes.
You can hear their media puppets ramping up the rhetoric at the same time, wagging their fingers at the retail investors and telling them they are "missing" the rally. Why weren't they saying that when the markets were 50% cheaper? Why not when they were 25% cheaper? No, only at a market top does the Corporate Media tell you to BUYBUYBUY because their masters already bought their fill and now they need someone to hold the bag. Same as it ever was.
by Phil Davis - May 13th, 2014 9:27 am
This is ridiculous.
As noted on Dave Fry's chart, the S&P made a new record high with narrow participation and essentially all of the gains were one big move in the Futures to reprice the index. I said yesterday we have been getting 50% of the day's volumes in the close and yesterday was no different and that closing volume is all dumping into the ETF, IRA and 401K suckers that are forced to buy.
We took a couple of big bats against the Dow's move up yesterday, adding a DIA put at $166.80 (see yesterday's Member Chat for details) as well as going long on DXD at $26.20 – both with leveraged options plays, of course.
We still have plenty of bullish trades to protect but, when we bein to cash out our winners and start buying short plays on the index – you can tell the winds are changing. Our 500% trade on DDM from Thanksgiving was scheduled to top out in April anyway – and we sold in May to go away.
That trade was one of our "10 Trade Ideas That Can Make (and some have already made) 500% in a Rising Market" and I had just as much trouble convincing people to go long in November as I'm having convincing people it's time to cash out in May.
Not all the trades are done, but a quick summary of those positions is:
by Phil Davis - May 12th, 2014 8:29 am
All-time highs on the Dow.
That's all that really seem to matter in the Global markets as we shake off terrible Japanese trade numbers, which was somewhat counterbalanced by China's plan to open up its capital markets – by 2020.
It's never too early to start celebrating, I suppose but should we be celebrating at all when the Nasdaq and the Russell are DOWN more than 5% for the year?
There are 2,000 stocks in the Russell and 3,000 stocks in the Nasdaq Compositie index vs. 30 stocks in the Dow and 500 in the S&P. As pointed out by Business Insider, even on the Dow, the AVERAGE stock is down 5% and within the S&P, 8% the average stock id DOWN 8% while the Nasdaq and Russell (10 times more stocks!) are clearly in bear market territory – down over 20% from their highs.
While investors may not have learned anything from the last crash, the Banksters have learned that you can manipulate just a few key, heavily-weighted stocks in order to make an entire index seem to be performing better than the sum of its parts. This allows the IBanks to dump their shares into ETF suckers, who are forced to buy the crap they are selling (at the day's closing price) as long as they can game the overall index to LOOK like it is doing well.
That's why we see thise constant "stick saves" into almost every close. Half the day's volume is done after the bell at what they call "market on close" orders that are automatically generated by ETFs and IRA drips, which forces the retail suckers with IRAs and 401Ks to buy at Top Dollar – no matter how relentless the selling volume was during the actual trading session.
Don't be shocked, that's why the Banksters designed IRAs and 401Ks and ETFs in the first place! Really, did you think they were doing it for your benefit? On the whole, the stock market is nothing more than a Three Card Monte Game, where pretty much everyone…