Phil's Newsletter

Which Way Wednesday – Beige Book Edition

Image result for the new phone books are hereThe new Beige Book is here! 

Today we get the "anecdotal" information on the current economic conditions from each of the twelve Federal Districts, we find these reports useful as they give us some insight into what the Fed is seeing on the ground level and we'll go over it live, during our Live Trading Webinar at 1pm, EST today.

As noted yesterday, our trade ideas from the last Live Trading Webinar were good for thousands of Dollars worth of quick gains into the weekend and this morning oil (/CL) was kind enough to dip back to our $48.50 buy lone and gasoline (/RB) is back below the $1.60 line at $1.59 and we love it long over the $1.60 line with tight stops below.  See last week's Reports for options trade ideas we had for the Oil (USO) and Gasoline (UGA) ETFs at these levels as well as UVXY, which is still playable.  And the Dollar (/DX) is back at the 97 line, where we like that long as well.

I was over at the Nasdaq yesterday and we discussed 3 different ways to hedge your bubblicious Nasdaq positions like Amazon (AMZN) $1,000 or Tesla (TSLA) $335 or Netflix (NFLX) $165 – all of which are a good 33% over even the most generous interpretations of a fair value and, in a downturn, could drop 20% as fast as Bitcoins – which also seemed like they would never go down.  

I set up a link you can follow right here from our Live Member Chat room which lays out our 3 hedging ideas.  

I was just the 8:30 guest on Benzinga's Pre-Market Prep (35 mins in) and we discussed our oil and gasoline longs as well as the overall economic situation so no need to go over it again here.  At risk of having yet another post censored for political content, I will mention that Trump just pulled the US out
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Trump Error, Day 130 – The President Returns from Disastrous World Tour

Down the memory hole: Establishing "1984" for today's Trump-filled worldHe's back!  

After a relatively calm couple of weeks while the President was in Europe, we're back to the National nightmare of dealing with an Administration in turmoil (Trump now has a "war room" dedicated to staving off negative reports about his ties to Russia – at your expense, of course) with Trump's son-in-law, Jared Kushner, now under direct investigation and there are rumors of a major staff shake-up as suspected leakers are being fired now that the boss is back in town.

There are as yet unsubstantiated claims that Trump is now under indictment for his ties to Russian mobsters (but a sitting President has immunity so the case is "on hold").  Last week, the Trump campaign released an email to supporters entitled "SABOTAGE," in which the campaign said, "There are people within our own unelected bureaucracy that want to sabotage President Trump and our entire America First movement."

The White House has yet to announce any terminations or staff realignment. Instead, overnight Trump took another swipe at reports that his Twitter privileges may be removed, saying that "the Fake News Media works hard at disparaging & demeaning my use of social media because they don't want America to hear the real story!"

This kind of stuff is not really good for investor confidence.  Not only is Trump's domestic agenda in turmoil but he has single-handedly taken the mantle of World Leadership away from the US for the first time since World War II with Germany's Angela Merkel warning the G6 (who were all aligned with science against Trump on climate change this weekend) that reliable relations with her country’s closest post-World War II ally may be a thing of the past.

“The last few days have also shown me that the times when we could completely rely on others are to some extent over,” Merkel said in a speech at a climate conference in Berlin on Monday, echoing her language of the day before. “We are and remain close partners,” she said of the U.S. and Germany, “but we also know that we Europeans really must take our destiny into our own


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TGIF – Gold Flies Higher as Kushner Goes “Under Scrutiny” in Russia Probe

Image result for trump russia tiesThis is gettting interesting, isn't it?  

Jared Kushner, Trump's son-in-law, is now a "person of interest" in the FBI investigation into the Trump Administration's Russia ties.  That doesn't mean he's guilty but it does mean the investigation has moved closer to the President – to the guy married to his daughter, in fact.   The records of records of both Manafort and Flynn have been demanded by grand jury subpoenas, NBC News has reported.  

Kushner has already admited to meeting with Sergey Gorkov, who is the Chairman of VneshEconomBank, a Russian government-owned institution that has been under U.S. sanctions since July 2014.  Gorkov studied at the training school for the FSB, one of Russia's intelligence services.  To be fair to Kushner, you can't be part of Trump's Team and NOT have met with Russians – they are EVERYWHERE!  

Meanwhile, why are you here?  It's the Friday before a 3-day weekend, we didn't become investors so we could work every day, did we?  Go have some fun – I'm already on vacation, writing from my hotel room like a sensible fellow.  

Yesterday's big story was the collapse of oil after the OPEC meeting.  Despite extending the existing production cuts for 9 more month, the cartel failed to increase them and, since the current cuts have barely been effective and since the US production is already filling the gap and putting us back in a glut – a lot of oil longs finally gave up hope and bailed out, leading to a whopping 5% Rule™ correction on the day.

We're long here ($48.50) on the Oil Futures (/CL) as well as the Oil ETF (USO) at $10 as we are only just starting summer driving season and the July 4th holiday gives us another opportunity to see some gains in the coming month.  We may fall another $1 first, to $47.50 because Brent Crude (/BZ) is still at $51 and $50 is better support for them and $47.50 is better support for us but I would hate to miss the rally, so I'd rather get started now.  Gasoline (/RB) is also a good buy at $1.60.

In


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Federally Fueled Thursday – WTF?

The Futures went flying this morning.

Apparently, after having a strong day in the US yesterday and despite the Fed minutes that indicated imminent tightening, China decided to stick it in Moody's eye by strengthening the Yuan to boost their own markets.  The move drove the Shanghai Composite 1.4% higher for the day while the Hang Seng gained 0.77% and the subsequent plunge in the Dollar, to 96.80, goosed our own stock Futures to even higher highs

We're long on the Dollar (/DX) down here and we also have Dollar ETF (UUP) June $25 calls, now 0.24 with UUP at $25.08 as we think there are still strong odds the Fed tightens at their June 14th meeting.  We went over the minutes of the last meeting in yesterday's Live Trading Webinar and noted that the Fed was waiting for evidence that an "economic slowdown is transitory" since May 2nd and, since then, we've had generally bullish data that indicates the Fed will go ahead with the next phase of tightening sooner rather than later. 

Federal funds rate history and recessions.png

Goldman Sachs (GS) agrees with us and pegs the likelihood of a June hike at 80% with another rate hike in September, followed by the announcement of balance sheet normalization at the December meeting and possibly another hike there though I think they'll be more likely to hike on Nov 1st if the markets take the Sept hike well.  Citibank agrees with me there, saying:  "The fact that operational details are closer to being specified shows that the FOMC could be ready to announce tapering of its balance sheet earlier than previously expected. This increases the risk of a September announcement relative to our current view for an announcement in December."

The chart above is not complicated, Fed tightening ALWAYS leads to recession (grey lines) and recessions are rarely more than 10 years apart.  The markets are very likely enjoying their last harrah at the top but my advice is to SELL IN MAY (get back to CASH!!!) and go away until we have a proper correction.  Our Member Portfolios are roughly 80% CASH!!! (have I mentioned how much I like CASH!!! lately?) and we are very,…
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Will We Hold It Wednesday – Fed Minutes Edition

And here we are, yet again.

2,399.50 was the top for the S&P Futures (/ES) yesterday at noon so it's game on for our shorts as well as Russell (/TF) 1,380 and both are still hanging around those levels this morning.  As I said yesterday (and the 4 Tuesdays before that), we'll keep shorting at the top until it stops working.  Seems like a sensible plan, right?  

We're even more excited about our China Ultra-Shorts (FXP), which we've been tracking since April 3rd and currently, in our Options Opportunity Portfolio, we have 10 June $24 calls we paid $2 ($2,000) for on 5/15 after netting a $650 loss on our original spread so we're in for net $2,650 but FINALLY someone besides me has noticed how out of control China's debt situation is becoming as Moody's hits the Middle Kingdom with its first credit rating cut since 1989, saying that the outlook for the country’s financial strength will worsen, with debt rising and economic growth slowing.

"The downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government.

"More broadly, we forecast that economy-wide debt of the government, households and non-financial corporates will continue to rise, from 256% of GDP at the end of last year according to the Institute of International Finance. This is consistent with the gradual approach to deleveraging being taken by the Chinese authorities and will happen because economic activity is largely financed by debt in the absence of a sizeable equity market and sufficiently large surpluses in the corporate and government sectors. While such debt levels are not uncommon in highly-rated countries, they tend to be seen in countries which have much higher per capita incomes, deeper financial markets and stronger institutions than China's, features which enhance debt-servicing capacity and reduce the risk of contagion in the event of a negative shock."

Isn't that exactly what I've been…
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Terrible Tuesday – Children Murdered, Markets Make All-Time Highs

22 dead and 56 injured.  

For those who don't have teenagers, Ariana Grande is a former Disney Star who has a very wide appeal with young kids and about 2M people have seen her recent tour.  There's almost no one in the World with high-school children or grandchildren who can't imagine their kids standing next to the terrorist when the bomb went off at the concert.

Yet the machines that move the markets are mindlessly oblivious to the danger and, as it is Tuesday, they are pushing the S&P back to 2,400, which is fine for us as we predicted this, waited for it and now we'll make money shorting the S&P Futures (/ES) for the 5th week in a row:

The fact that the S&P STILL can't get over 2,400 DESPITE the weaker Dollar and the stronger Apple does not give me the warm fuzzies about the strength of this weekly rally so, once again – we are going to be shorting the indexes at the levels we keep shorting them at and once again, later in the week, I will tell you how much money we made and you will say: "why can't I ever catch trades like that."  It's a vicious cycle…

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Monday Market Movement – Recovering on Low Volume

Same old, same old.  

If it's Monday, we must be recovering back towards Toppy Tuesday's highs so we will wait patiently to begin shorting again.  With Trump out of the country, we haven't had a crisis all weekend and they are keeping the President too busy to tweet – so all is well(ish) at the moment.  Unfortunately, no one is keeping the Fed from speaking and we have 6, yes SIX Fed speeches TODAY and then 2 tomorrow, 2 on Wednesday (and the Fed minutes at 2pm) 3 on Thursday and one on Friday for 14 Fed speeches in 5 days – a new record!

Endless Fed meddling is likely to give us a wild week leading up to Friday's Q1 GDP Report, which will be the 2nd estimate but the Atlanta Fed has already pegged Q2 GDP growth at a blistering 4.1% (almost double the first Q1 estimate of 2.3%) and, if true, the Fed has no choice but to tighten at the next meeting before we whip into an inflation crisis.  

We're already seeing tightening labor hammer productivity while driving up wages and we could be looking at 3-4% inflation rates by the end of 2017, which means you need to deduct that from your market gains to determine your buying power and, more importantly, deducting even 3% from bond gains pushes most of them into negative territory – a factor that could stampede even more money into the markets in search of inflation-fighting returns.  

That's going to blow us off the scale re. valuation metrics on the S&P 500, which is already showing overvalued levels on 18 of 20 of the metrics tracked by Bank of America (BAC) with the Shiller P/E Ratio a whopping 74% above average and the Market Cap of the S&P is almost double its usual percentage of our GDP:

As noted in last week's Live Trading Webinar (replay available here), we have no shortage of long positions and we took advantage of the dip to add a few to our Member Portfolios last week but, on the whole, we're still aiming to keep a mainly neutral stance, waiting for the market to decide if it wants to break up…
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Fleeing Friday – Trump Escapes to Europe

Image result for trump europe cartoonWill Trump come back?  

Julian Assange is finally coming back after 8 years in hiding, I wonder where Trump will be seeking asylum – perhaps Mother Russia?  As noted by CNN: "Besieged at home, Trump sets off for 'do-or-die' foreign trip," stating "if President Donald Trump's crucial first foreign trip passes off without a disaster, it will be considered a success."  8 days without a disaster?  It's only been 114 days so far and I don't think we've gone 3 in a row without a new scandal!  

Not only that but Julian Assange is back – I can't wait to see WikiLeaks turn its sights on Donald's secrets.  Over in Europe, they want to know if Trump is really pulling out of the Paris Climate Accord in defiance of the entire rest of the World, who ratified the treaty – there's a good start.  That's the middle of his trip, which Trump ends with a NATO meeting, where he has to explain to the actual Members why he thinks they don't do their share but first, Trump heads over to the Middle East, where he has boasted he can fix things.  

Of course the real purpose of the trip is to sell arms to the Saudis and we have our LMT and RTN back from when Trump was first elected (see: "Merry Trumpmas – Looking Forward to a Wild New Year").  Raytheon (RTN) is already over our $145 target and our trade idea for them was:

We also like Raytheon (RTN), who get paid almost $2M every time the US fires a Tomahawk missile (and we do that a lot!).   So, to bet on the escalating cold war (and the proxy wars we love to fight), we like:

  • Sell 5 RTN 2019 $120 puts for $8.50 ($4,200) 


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Throwback Thursday – Russians, Russians Everywhere and a President Who Doesn’t Think

Image result for communist witch huntLet the witch hunt begin!  

Direct from Central Casting we now have former FBI Director, Robert Mueller III playing the role of Special Counsel to investigate what the President alleges are non-existent ties between Russia and Team Trump as well as to determine the extent to which Russia worked to undermine the US elections.  

A lot of people are saying if we end up impeaching Trump then Pence will become President but if we're impeaching Trump because the Russians helped him steal the election – why would we then put his running-mate in charge?  I guess we'll cross that bridge when we come to it but clearly Mike Pence couldn't get elected dog catcher in 80% of this country.  Even now, when I went to the Wikipedia page to check on some Pence facts, I am reminded of the fact that the people had already spoken and they did not vote in favor of him or Trump:

America is one of the only remaining countries on the planet that doesn't elect their leaders using the popular vote and look what a mess we have already – just 112 days into Trump/Pence.  Clearly the markets were not pleased with the speed at which this Administration is coming apart at the seams and, of course, as toppy as they were – they were ripe for a nice fall anyway.  

A fall is certainly what we got yesterday, with both the Nasdaq (QQQ) and Russell (IWM) falling over 2.5% on the day.  According to our 5% Rule™, it it more likely we follow through for another 2.5% drop today and tomorrow than recover and that suits us just fine as we're bearish anyway (and congrats to all who used our bearish index hedges or SVXY hedge from Tuesday morning's PSW Report, which you would never miss by subscribing here).  

For the morning, we're looking to see if we get a weak bounce off yesterday's drop and, in the Futures, the Nasdaq (/NQ) fell from 5,700 to 5,550 which is 150 points so the bounce should be 20% of the drop or 30 points, back to 5,580 for a weak bounce
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Risky Wednesday – White House Turmoil Worries Markets

"Don't compare it to Watergate!"  

That is the GOP talking point du jour as an Army of Trump apologists storm the media to counter claims that President Trump asked the F.B.I. director, James B. Comey, to shut down the federal investigation into Trump’s former national security adviser, Michael T. Flynn, in an Oval Office meeting in February, according to a memo Mr. Comey wrote shortly after the meeting.  

The documentation of Mr. Trump’s request is the clearest evidence that the president has tried to directly influence the Justice Department and F.B.I. investigation into links between Mr. Trump’s associates and Russia. Late Tuesday, Representative Jason Chaffetz, the Republican chairman of the House Oversight Committee, demanded that the F.B.I. turn over all “memoranda, notes, summaries and recordings” of discussions between Mr. Trump and Mr. Comey.  Such documents, Mr. Chaffetz wrote, would “raise questions as to whether the president attempted to influence or impede” the F.B.I.

So you see, it's nothing like Watergate, where Nixon was attempting to "stonewall" the investigation – not impede.  Totally different this time…

The Watergate incident, like Russia meddling in the US election, took place during the time before the President took office and, like Watergate, Trumpgate is unfolding in May and will likely come to a head in the Summer.  In Nixon's case, the break-in happened in June of 1972, Nixon won by a landslide in November of 1972 and a year later, a defiant Nixon said "I am not a crook" and it wasn't until August 8th, 1974 when Nixon finally gave up, two weeks after Congress began impeachment proceedings.  

We're still waiting for this generation's "Deep Throat" to step forward and please, be careful if you Google that phrase!

Image result for nixon watergate doonesbury

Market-wise, the S&P was at 142 when Nixon was sworn in in January of 1973 and fell 39% to 86 by the time he resigned in August of 1974 as people's faith in the US economy deteriorated along with their faith in it's President.  We've all enjoyed the benefits of the "Trump Rally" with the S&P up 317 points (15%) but, as I noted yesterday morning (and 4 Tuesdays…
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Phil's Favorites

Ray Dalio on CNBC

 

Ray Dalio on CNBC

Courtesy of , The Reformed Broker 

Hedge fund legend Ray Dalio generally despises doing media and doesn’t make much of a secret about it. Fortunately for us all, though, he really wants his new book, Principles: Life and Work, to reach a big audience. And it should.

Anyway, Ray made a rare TV appearance this morning on CNBC’s Squawk Box. Obviously, podcasts are better for this sort of thing, so don’t miss the two hour ...



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Zero Hedge

A Startling Anecdote About Online Ad Fraud From Uber

Courtesy of ZeroHedge. View original post here.

One week ago we said that Category 1 storm clouds are gathering over what has traditionally been one of the most lucrative, and perhaps only profitable, sectors to come out of Silicon Valley in decades: online advertising. We directed readers' attention to the recent Global Retailing Conference organized by Goldman Sachs, in which Restoration Hardware's delightfully colorful CEO, Gary Friedman, divulged the following striking anecdote about the company's online marketing strate...



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Digital Currencies

Cryptocurrency Concentration - Just 4% Own Over 95% Of Bitcoin

Courtesy of ZeroHedge. View original post here.

Bitcoin has been making a lot of news lately. The cryptocurrency shot up in value by over 200% in 2017, making many people fear that the market is in a bubble. Last week, China...



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Chart School

Minor Changes: Yesterday's and Weekend Comments Remain Valid

Courtesy of Declan.

I don't want to overplay today's action as little changed in the broader scheme of things. Days like today are welcomed and help shape up swing trades for those trading in near term timeframes.

The tight doji in the S&P could be used for a swing trade; buy a break of the high/short loss of low - stop on flip side. High whipsaw risk but look for 3:1 risk:reward and maybe trail stops if deciding to go with partial profits.


Tech averages are still set up for a breakout. While not an ...

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ValueWalk

FBN Beats CNBC Even During Delivering Alpha Week

By VWArticles. Originally published at ValueWalk.

Fox Business Network ratings for the week of September 11th – September  15th.  FBN beat CNBC even during their big annual Delivering Alpha Conference which is one of the biggest investment conferences of the year with Lou Dobbs leading the pack – another big win for FBN – see more details below

FOX BUSINESS NETWORK SWEEPS CNBC IN BUSINESS DAY FOR EIGHTH TIME THIS YEAR

]]> Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your de...



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Insider Scoop

Considering Implications For Hasbro And Mattel From The Toys 'R' Us Bankruptcy

Courtesy of Benzinga.

Related HAS Toy Stocks Mostly Lower After Toys 'R' Us Confirms Bankruptcy Watch These 8 Huge Put Purchases In Tuesday Trade ...

http://www.insidercow.com/ more from Insider

Members' Corner

"Citron Exposes Ubiquiti Networks"

What do you think?

"CITRON EXPOSES UBIQUITI NETWORKS" 

Does Ubiquiti Networks (NASDAQ:UBNT) actually have real products that sell to consumers? Of course! So did Valeant and WorldCom, but that does not stop its financials from having every indication of being completely fraudulent.

Citron will detail a series of alarming red flags and detail how Ubiquiti Networks is deceiving the investing public.

Read the full report here.

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Can low doses of chemicals affect your health? A new report weighs the evidence

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

 

Can low doses of chemicals affect your health? A new report weighs the evidence

Courtesy of Rachel ShafferUniversity of Washington

Assessing the data. LightField Studios/shutterstock.com

Toxicology’s founding father, Paracelsus, is famous for proclaiming that “...



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Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

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

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

Just click here at 1 pm est and join in!

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



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Kimble Charting Solutions

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

Courtesy of Chris Kimble.

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

CLICK ON CHART TO ENLARGE

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

If EWZ b...



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All About Trends

Mid-Day Update

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

Click here for the full report.




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

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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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