by phil - November 19th, 2014 8:30 am
Why not? Why not 3,000? 3,500? 4,000? Is there any number that will begin to sound ridiculous to top 1% traders, who are using the Fed's Free Money to make even more money for themselves? It's like the $50M balloon dog at Christies – what's the difference to people who have, essentially, infinite amounts of money to spend?
The Forbes 400, for example, made $1Tn MORE between 2009 and 2012 – an average of $300Bn a year. Last year, they added on another $400Bn bringing their total INCOME up to an average of $1,000,000,000 PER YEAR per Billionaire. Compared to the average household income of the average US Citizen of $52,000, that is, pretty much, INFINITELY more (19,230 times more, to be exact).
Meanwhile, over the same period of rampant QE, the average income of the Median Household FELL 4%, from $54,000 to $52,000.
Of course, that should be obvious, as it takes $2,000 from 150M working people just to come up with $300Bn of the $400Bn the top 400 made last year. That's how it works, folks – they take $2,000 from 150M people and the rich get richer and the poor (or the middle class) get poorer.
Yes, there is also some economic expansion – there has to be or where did the other $100Bn come from? No wonder record amounts of money (a mere $2Bn) were spent on the recent mid-term elections – in order to guarantee the top 1% that they'd get at least 2 more years of the same treatment.
And what do the top 0.0001% do with their money? Over $1Bn more pours in every day – they can't possibly spend it all on balloon dogs and $5,000 hamburgers – they HAVE to invest some of it!
Real estate left a bad taste in people's mouth very recently and, as noted by the chart below, there's not enough homes in the US for all these Billionaires to buy. Gold and silver have lost their shine, oil is a bust, bonds aren't paying any interest (also thanks to Fed meddling), so that makes equities the only…
by phil - November 18th, 2014 8:26 am
What a crock!
Though we were more or less flat yesterday, check out the huge discrepency in declining vs advancing stocks across the board. It's a stealth sell-off, the kind we often have before a major market plunge. This is what leads frustrated investors to wonder "How come the market is up but all my stocks are down?" It's a trick run by the Fund managers, who prop up momentum stocks and key index stocks to hide the fact that they are dumping the rest of their portfolios. This keeps retail traders complacent until it's far too late for them to get out safely.
We're already trading at Holiday volume levels and, as you can see from Dave Fry's SPY chart, it's the same old TradeBot pattern day after day with volume selling followed by a low volume move up and more selling into the close – all stealthy ways the Banksters and Fund Managers use to get out of the markets. As noted by Financial Sense:
Manipulation is an unfortunate fact of the financial market. Stocks and commodities have always been subject to manipulation, whether by individuals, pools, central banks or even governments. If you are unable to come to terms with this reality then it’s best to avoid participating in the market altogether. But if you’re able to come to grips with this then there is money to be made once you’re able to spot the tell-tale signs of manipulation, a skill which becomes better with experience.
That's what we teach our Members to do here at PSW, spot the manipulation and profit from it! We don't care IF the game is rigged, as long as we are able to understand HOW the game is rigged and play along with the winning side.
I balance my own moral books by pointing out the manipulation and calling for our regulators to put a stop to it and you would think that would risk our successful strategies but, in all these years, it never changes and, if anything, it gets worse, not better each year.
by phil - November 17th, 2014 8:19 am
We told you so!
Last Wednesday, right in our morning post, I told you how you could benefit from SUBSCRIBING to our newsletter because we would give you great trade ideas like this one, which we featured for free in that morning's post:
I also mentioned shorting EWJ in the morning post but, for our Live Chat Members, I sent out a Top Trade Alert specifically on the Jan $12 puts at 0.52 to go along with our call to short /NKD (Nikkei Futures) at 17,500 at 8:22 am (also in the morning post) and by 11pm last night we were close enough, at 17,490 and, already this morning, we're back at 17,100 – for a $1,950 per contract gain – all overnight and all "according to plan".
As you can see from the chart above, we had a fantastic chance to reload on the Nikkei futures (up over $2,500 per contract at the moment) as well as the EWJ puts, which should be up about 50% today – but we think we can do better than that as Japan's GDP was even worse than we thought it was going to be – declining 1.6% in Q3 and officially putting the economy back in Recession.
"None of the 18 economists surveyed by The Wall Street Journal had forecast a contraction; the median forecast was for a 2.25% expansion." – That's why we were able to make so much money betting on it – we're smarter than the WSJ's 18 economorons!
Another trade idea we gave away FOR FREE in Wednesday morning's post was a TZA hedge, using the Jan $12/16 bull call spread at $1.20 and already on Friday, TZA closed at $13.46, putting the spread $1.46 in the money, which is up 21.6% in the money if TZA closes there – not bad for a 2-day hedge… Of course the potential for the hedge, if the Russell keeps…
by phil - November 14th, 2014 8:16 am
Testing 2,040 on the S&P.
That's what we're doing while oil is at $74.50, copper is $3, and gasoline is $2. The Eurozone's GDP was out this morning and Germany's GDP is up 0.1%, avoiding Recession by a whopping 0.2% and France has pulled into the lead, up 0.3%, less than 1/10th of the US growth trend. Forecasts going forward are for the whole Eurozone to grow 0.1% in Q4 – the smallest miss puts them back into Recession.
The euro area’s fragile "recovery" has been in peril since economic malaise took hold of countries in the region’s core. With the revival stuttering and inflation close to the lowest level in five years, the European Central Bank has deployed unprecedented stimulus and urged governments to invest and deliver structural reforms to support growth.
Italian GDP fell 0.1% in the three months, marking the 13th consecutive quarter in which the Euro region’s 3rd-largest economy failed to grow. The Bank of Italy said yesterday that the country needs to avoid a “recessionary demand spiral” due to the “persistence of economic difficulties, which have been exceptional in terms of duration and depth.”
Meanwhile, the Euro is down 11% since May, now just $1.24 buys you one and you get 116 Yen for a Dollar, which is why our Dollar index is now popping 88 and putting massive pressure on commodities, which are also suffering from weak demand. This, of course, is collapsing Russia's commodity-based economy (along with the sanctions), with the entire Russian Stock Market's value falling below that of just Apple, Inc.
Tempting though it may be, we're not shorting the US markets while the rest of the World is swirling down the drain. Shorting US equities has been a suicide play for the past 5 years. Of course we have our bearish hedges but our main hedge is CASH!!! going into the holidays. Let Santa have his rally – we're out!
by phil - November 13th, 2014 8:24 am
What is the Fed so afraid of?
Yesterday, at about 1:45, as the market was dipping, Fed President Kocherlakota decided it would be a good time to say it would be a MISTAKE for the Fed to raise rates any time in 2015:
“It would be inappropriate for the [Federal Open Market Committee] to raise the target range for the fed funds rate at any such meeting” occurring in 2015, Mr. Kocherlakota said.
As a voting member of the FOMC, Kocherlakota's words carry a lot of weight but he was already the dissenting opinion to the Fed's last vote, so this was not NEW information – but it was enough to re-energize the bulls, as there's nothing they love more than FREE MONEY!!!
Our Futures were dipping back down this morning until 3am, when it suddenly became urgent for NY Fed President Bill Dudley to say it was "still too early to raise rates." Noting there could be a significant benefit from letting the economy run "slightly hot." Speaking at the Central Bank of the United Arab Emirates in Abu Dhabi this morning, Dudley called for "patience" on an increase in the Fed funds rate as the risk of tightening prematurely is greater than the risk of tightening too late.
It's amazing to look at the chart above and consider that Greenspan "took away the punch bowl" when rates were 5%. THAT was a rate he considered far too accommodative but his VERY BRIEF attempts to raise rates to 7% were quickly reversed as the markets collapsed in 2000 and then, of course, 9/11 happened and rates were dropped to near zero to goose the economy – leading to our 2007 housing bubble that almost destroyed the Universe.
This time, of course, is different because – well because it is, right? Sure it could be argued that bubble #1 came during the dot com boom, when Clinton was in office and everyone had jobs and the deficit was low and the economy was booming and…
by phil - November 12th, 2014 8:16 am
So close, and yet so far.
Our 5% Rule™ dictates that we need to have two consecutive DAYS (not just closes) above one of our support levels before we consider it as a real sign and, yesterday, the Dow did FINALLY hold its critical "Must Hold" line at 17,600.
Unfortunately, that lasted all of 2 hours and then the Futures re-opened 20-points lower and, since then, we've lost another 50 points. So REJECTED so far on our first test of the middle for the Dow, which has long been the laggard in getting up to our expected trading range for 2015 (the Big Chart is always a year ahead).
The Nasdaq, on the other hand, has long been our leader (thanks to our Stock of the Year, AAPL, gaining 46% and contributing 9% to the Nasdaq's 23% move). Perhaps we should have realized that, if we were right about AAPL, we should have set more aggressive targets for the Nasdaq in the first place.
As Dave Fry notes on his Nasdaq chart, it's hard to write anything meaningful about the movement of the last few weeks other than, as I pointed out yesterday – it's Bullshit. The Nasdaq has popped 400 points (10%) in 4 weeks and is on pace to be up 130% by next December OR, if that doesn't seem likely to you, then maybe you see why it's our key short in our Short-Term Portfolio.
Our Short-Term Portfolio has, in fact, taken a beating this past month – as it's full of hedges that are getting slaughtered. Now we're only up 70% for the year (down from over 100%) but the trade-off is, of course, that our bullish (and 5x larger) Long-Term Portfolio is now up 23.5% for the year. That's pretty good as they aren't both supposed to be up at the same time anyway.
We haven't changed our aggressively bearish short-term position, despite losing 30% of our gains on this rally, because the volume simply isn't confirming the breakout and that means that all these gains can be just a quickly reversed – and we sure don't want to…
by phil - November 11th, 2014 8:22 am
MORE FREE MONEY!!!
How many ways can they goose these markets? Too many to count as Japan's QUADRILLION Yen debt soars to new highs as the Government backs away from using a sales tax to attempt to balance (as in slow the deficit slightly) the budget. After all, once you pass the Quadrillion mark in debt, what's a few Trillion more in debt between friends?
The BOJ's friendship is a wonderful thing for the Nikkei and the Japanese exporters that are part of the index. It's not so wonderful for the Japanese people, who have seen 30% of their purchasing power disappear in the past two years and that allows Abe's Government to point to low inflation (because people can't afford to buy things) as an excuse to devalue the currency further – enriching the investor class at the expense of everyone else on the island:
It's a SCAM people, this is nothing more than an illusion of market prosperity – they are simply repricing the currency the stocks (and earnings) are measured in to give you the impression that things are getting better – BUT THEY ARE NOT – they are getting worse. Infinite debt is no free lunch and it's really starting to concern me that US and European markets are following Japan higher when Japan's move is total BULLSHIT!
We're going to be shorting the Nikkei, of coures (17,370 on /NKD and $12 on EWJ), as it tests it's all-time high – hopefully at 17,500 but we're not going to let 17,350 fail without jumping on that bandwagon as this is complete and utter BS. Did I mention this was BS? I want to make sure that's clear. BS. Totally….
We already took a short position with conviction on /TF (Russell Futures) as it tested 1,180 this morning in our Live Member Chat room as well as during yesterday's Live Trading Seminar in Las Vegas (my last day here ). I've been urging our Members to take the money and run into the holidays, taking advantage of this rally to get back to mainly cash and, as we pointed out in our…
by phil - November 10th, 2014 8:19 am
What a fun weekend we've been having in Vegas!
We had a great dinner at Nobu on Saturday night (co-sponsored by TradeStation), followed by some poker and yesterday we had our first seminar day where we looked at the Global Macros, discussed trading techniques and made a few new picks for 2015. That was followed by another great dinner at Rao's last night and this morning we are getting started at 6am Vegas time and will be doing live trading all day long. We will be simulcasting in our Live Chat Room via WebEx – Greg will post a link when it's ready.
Meanwhile, all quiet on the Global front over the weekend or, at least, just the normal nonsense so the markets continue to drift along at the highs but it's a very busy week and we'll have to wait PATIENTLY to see how things play out. We have 4 Fed Speakers this week but not too much data, which will keep the focus on the tail end of earnings. So far, so blah on that front:
As noted by the WSJ: "While profit gains have generally been solid, many blue-chip companies are posting weak sales growth or outright year-over-year revenue declines, causing worries about their long-term growth prospects. Others are reporting earnings increases driven by factors that don’t reflect sustainable improvements in their business, such as share buybacks and cost-cutting efforts."
Amplifying those concerns is a softening global economic outlook. U.S. multinational firms are now contending with slowing economic growth in key markets like Europe and China, and a strengthening dollar that threatens to further damp revenue by reducing the value of payments collected in foreign currencies when converted into dollars.
Few investors expect a sustained stock decline. But many traders and analysts say they fear future growth at U.S. companies won’t be robust enough to meet the high expectations currently implied by the above-average valuations on blue-chip shares. Friday’s employment report for October, which showed another month of modest job gains tempered by only slight increases in wages, underscored those concerns.
by phil - November 7th, 2014 8:29 am
Productivity was down and costs were up.
That's the news we got yesterday as we say a 30% drop in productivity, from 2.9% to 2% along with a drastic increase in unit quarterly labor costs – from -0.5% to 0.3%, which bumped the annual labor costs up by 60%, from 1.5% to 2.4%. Not surprisingly, this led to employers cutting the number of hours worked by 0.2% to save some of the rising costs that they have been unable to pass on to consumers.
These are, of course, not great numbers but that didn't stop the market from flowing higher – kind of like that lava in Hawaii that can't be stopped. Also like the lava – it's a fairly low-volume flow but, if you are bearish – it's very destructive!
Keep in mind that we're hitting these highs only after a TREMENDOUS amount of stimulus from Japan and Europe on top of very doveish outlook from our own Fed (even though they have stopped increasing QE – it's not over by a mile).
As tempting as it is for us to cut our bearish positions and join the party, here we face another weekend full of Global uncertainty, so we're going to stay covered and watch to see if the S&P can hit our 2,035 goal (see Wednesday's predictions) and actually hold it.
Now that we're here, we'll be looking for the following retracements next week:
- S&P 2,035 is our 10% line and we'll be looking for a pullback to 2,018 (weak) and 2,000 (strong).
- Dow 17,600 is our Must Hold and that makes a weak pullback 17,250 and 16,900 would be a strong retrace.
- Nasdaq 4,600 is our 15% line and we're over that without a retrace (so far) to 4,480 (weak) or 4,360 (strong).
- NYSE Must Hold 11,000 (it's been there before) and below that we look for 10,760 (weak) and 10,520 (strong) for pullbacks. The fact that the NYSE is in a range such that even our strong pullback isn't 5% is a bullish indicator for the rest over the long-term and our long-term
by phil - November 6th, 2014 7:49 am
It was another low-volume "rally" yesterday.
Hard to call it a rally when we spike off on no volume in pre-market and then spend the rest of the day selling off. The much less-reliable Dow, on the other hand, put up a record high – all the way to 17,485 and now we're less than 1% shy of our Must Hold target – only two years after we set it and right on schedule for the end of 2014.
As we discussed in yesterday's post, "If it's a real rally, the Dow should have no trouble at all at 17,500 and should be able to get to 17,600 before there is any serious pullback and, if that doesn't happen – the rest of our lines will tell the tale." So Far, so good on the Dow as it gained 94 points yesterday (0.54%) but 17,484 is not 17,500 – hence today's headline, written long before the market opens (now 7:30).
What am I concerned about? Well, so far is been all stimulus and today Draghi holds a press conference an hour before our markets open and, unless he has more red flags to wave at the bulls – all this excitement may calm down a bit. Fed Gov Powell speaks at 1:30 and he's a bit bearish, followed by Mester this evening (7pm), who is more bearish.
Tomorrows retail sales report is likely to be bad and Non-Farm Payrolls are a wild-card but Yellen speaks at 10:15 tommorw, so she'll be able to keep any sell-off shallow into the weekend. We're not overly bearish – more like a "watch and wait" sort of thing at the moment as our Long-Term Portfolio is up 20.9% for the year and our Income Portfolio is up 18.1% for the year and the Short-Term Portfolio which hedges them is up a ridiculous 85.2% for the year.
All we are trying to do, at this point in the year, is to protect our gains into the holidays and tomorrow's NFP report is a major wild-card, as is Draghi's press conference this morning. Our long-term portfolios are 5x larger than the STP so we error…