by phil - September 7th, 2014 8:13 am
Just a quick post to consolidate our virtual portfolio reviews for easy reference:
What we're stressing this year, above all else is our "BE THE HOUSE - Not the Gambler" strategy, in which we try to be the sellers, not buyers of options premium. Another very key strategy we're practicing is BALANCE – our Income Portfolio is a very conservative retirement portfolio, aimed at generating a 10% annual income with as little risk as possible while our much more aggressive Long-Term and Short-Term Portfolios balance each other – aiming for 20% annual gains.
Both sets are very much on track for their goals and, at this point, we're more concerned with protecting the profits we have than taking new risks but that doesn't stop us from adding prudent positions, especially as long as the market continues to make new weekly highs. In fact, we just added an IRBT position to the LTP on Friday (not yet reflected in this update)!
Short-Term Portfolio Update (STP): Back to $135,000 (up 35% for the year), that's a good sign as we were down to $125,000 earlier in the week so we gain $10K on a little dip means we're doing our job protecting the LTP. You never really know if your mix is right until it's tested under pressure.
- CAKE – Well, I hate naked long calls but we bought back the short calls from this spread and this is what we're left with. I'm not sure we'll get the pop we need if the indexes are dragging us down but there's also no particular reason to pull this trade so let's see what happens next week. Our premise here is lower food costs = more profits.
- DXD – One of our anchor hedges, just out of the money at $24.54 with 42 days left.
- GMCR – My white whale at this point. Earnings not until mid-November.
- XLE – Persistently low oil prices will gradually break XLE down, 42 days left.
- XRT – We bought back the short puts here when it spiked up, I'm happy with these puts, hopefully we get $8+ as XRT heads back to $85.
- CI, CMG, FB,
by phil - September 5th, 2014 7:51 am
That's $2,200 in two days playing with us!
Not bad for free picks, right? On Wednesday, we played the Nasdaq Futures (/NQ) short at 4,100 and those gave us a nice, $700 per contract gain in just a few hours. Yesterday, we reviewed that trade idea right in the morning post (which you can have delivered to you every morning, pre-market, by SUBSCRIBING HERE) and I added:
That's why, today, right now, we are once again shorting the Futures at 17,100 in /YM(Dow) and 2,005 on /ES (S&P) and 1,175 on /TF(Russell). Yesterday we shorted the Nasdaq(/NQ) at 4,100 – a trade idea I outlined in the morning post for our subscribers – and that trade made $700 per contract by noon. Not a bad day's work, right?
Futures trading is a useful skill as we can make adjustments to our trading almost anytime we get some new information – even when the market is closed.
We played bullish on Draghi fever early in the morning and then, in our Live Member Chat Room, at 10:35, we nailed the turn for a re-entry at 1,180 on the Russell (/TF Futures), 17,150 on the Dow (/YM) and 2,010 on the S&P (/ES) as well as $95 on oil (/CL) and we were rewarded with moves down to 1,160 (+$2,000 per contract), 17,025 (+$625 per contract), 1,990 (+$1,000 per contract) and $94.25 (+$750 per contract).
As I said yesterday, we can make trades like this because the market is RIGGED and we understand how it's rigged, which enables us to play along and profit from the manipulation. We don't like it, we don't endorse it but, since it happens every day – we may as well bet on it, right?
Of course there are other ways to make money on pullback and we teach those as well at PSW. Here's a couple of trade ideas we had for our Members recently under the category of Porfolio Protection:
- Member Chat, 8/25: Of course the
by phil - September 4th, 2014 8:06 am
How low can rates go?
Well, we've entered a Brave New World now where putting money into the ECB COSTS YOU 0.2% per year. That's right – if you give them $1,000,000,000 to hold for a year, they will give you back just $998M – and people will do it! Meanwhile, the refinancing rate at the ECB has been cut from 0.15% to 0.05% – so borrowing $1Bn for a year will only cost the Banksters $500,000 in interest while they use it to manipulate the equity and commodity markets.
As you can see from the top chart, this is making a complete joke out of the Euro, but that's what the ECB wants as member nations are Trillions upon Trillions of Euros in debt and the ECB's moves serve to force rates lower (so debt can be rolled over cheaply) and allow countries to pay back maturing debt in Euros that are worth less (worthless?) than what they were borrowed at – saving the big 5 over $1Tn in 2014 alone.
Will there ever be consequences to this type of behavior? Not, as I said on Tuesday, if everyone is doing it. However, if some people stop while others go on – it could be BIG TROUBLE for countries that need to borrow money using a combination of worthless currency and negative interest payments. What can possibly go wrong? Everything.
That's why, today, right now, we are once again shorting the Futures at 17,100 in /YM (Dow) and 2,005 on /ES (S&P) and 1,175 on /TF (Russell). Yesterday we shorted the Nasdaq (/NQ) at 4,100 – a trade idea I outlined in the morning post for our subscribers – and that trade made $700 per contract by noon. Not a bad day's work, right?
We already made our Egg McMuffin money this morning in our Live Member Chat Room (and you can join the fun here) as we caught a $200 bullish move on the S&P (/ES) Futures and $400 on the Russell (/TF) Futures early this morning. I made a call to get out ahead of the ECB announcement, as it was…
by phil - September 3rd, 2014 7:35 am
What a fantastic ride!
As you can see from Dave Fry's intraday SPY chart, we had that big, fake pop at the open which I told you to short (see yesterday's post) and we had a fantastic ride down until 1pm and we turned up about a half hour later but not before giving us some very nice gains from our morning short picks in our Live Member Chat Room:
- /NKD (Nikkei Futures) fell from 15,800 to 15,700 – up $500 per contract
- /YM (Dow) fell from 17,120 to 17,000 – up $100 per contract
- /ES (S&P) fell from 2,005 to 1,993 – up $350 per contract
- /NQ (Nasdaq) fell from 4,093 to 4,078 – up $300 per contract
- /TF (Russell) fell from 1,179.50 to 1,171.50 – up $800 per contract
As usual, the Russell was the most fun and this morning we already hit it again as it popped to 1,187.50 and back to 1,183.50 for a nice $400 per contract pre-dawn gain (so far). We prefer to take short pokes on the Futures as we're still generally long in our Member Portfolios, so it's better to balance our off-hours picks. On the whole, the way this market is going – it's probably easier just to go long off the bottoms!
We are long Silver Futures (/SI) at $19.20 and Gold Futures (/YG) at $1,270 but tight stops below those lines and only if the Dollar is below 83 (now 82.88). Futures can give you some fantastic, quick gains – but also have the potential to deal devastating losses as well.
This morning's pop in the Futures came on news of a cease-fire in the Ukraine, which sent the EU markets flying at the open but it seemed like the usual political nonsense to us and that's why we shorted into the excitement. Even as I write this (7:30), we're down to 1,182 on the Russell (/TF) futures (stop at 1,182.50) and now looking for some real breakdowns on the Dow (target 17,100), S&P (target 2,005) and the Nasdaq (target 4,100) to confirm a bigger downtrend and start shorting again.
by phil - September 2nd, 2014 7:50 am
MORE FREE MONEY!!!
Terrible numbers from China's Manufacturing Industry led to rumors of more stimulus from Beijing for Q4 and that propelled Asian markets higher this morning. The HSBC PMI report fell to 50.2 (barely expanding) for August and China's "official" PMI fell from 51.7 to 51.1.
The manufacturing slowdown adds to signs that China's "economy still faces considerable downside risks to growth in the second half of the year, which warrant further policy easing to ensure a steady growth recovery," said HSBC economist Hongbin Qu.
That's all Europe had to hear to put on their own rally caps as they've already got Draghi fever over there, in anticipation of Thursday's ECB rate decision, where a cut is widely expected to stop the Euro Zone from plunging into free-fall with Italy and others practically in a Depression at this point. That's pushing EU markets up half a point in early trading and boosting US Futures (which we're shorting).
Back to China though. As you can see above, we have a cool chart of collapsing housing prices leading one analyst to say: "The way prices have fallen, it's as if there is a global financial crisis." Ha Ha Ha – silly analyst! That's the way things would look if we were in the REAL World but this is not the real world, this is the Central Bankster's Paradise!
"The rental can't even cover the mortgage for these high-end investments – they want to offload but there are no takers."
by phil - September 1st, 2014 8:14 am
Don't you just love lists?
Apparently, most American's do because the posts that get the most clicks are the ones with lists and quizzes. I don't do lists very often yet, somehow, I still manage to be fairly popular but let's see what happens when I make a list with a catchy headline.
This list is an update of our original 2014 Buy List, which was written on June 6th and originlaly had 20 trade ideas for the 2nd half of the year. That list quickly grew to 29 and, today, we're adding 11 more to make 40 top stock picks to take us into Q4. Those first 29 picks are already 82% successful with only HOV, IRBT, RIG, TEX and WEN failing to make gains so far and, on average, we're up 72% on our picks in just 3 months.
That's about par for the course with our winning percentages on trade ideas but what makes the Buy List special is that these are the ones we are comfortable committing long-term allocation blocks to, not just messing around with short-term trading. In fact, our 5 "losers" all represent great entry opportunities at lower prices and none are being kicked off the list as our general outlook for these stocks is measured in years, not months!
The strategy we are following is summed up nicely in this video:
As we did in building our Long-Term Portfolio, we're not going to rush in and buy everything. We will do exactly what we did in January where, following our Fall Buy List, we simply added stocks from our list whenever they became cheap. While our Members are able to pick up our trade ideas as they are released, we don't always add them to our virtual portfolios right away. As with the first half's Long-Term Portfolio, we will track every entry and exit in both our Live Weekly Webcasts, as well as in our Live Member Chat Room and alerts will be sent to our subscribers (you can join here, Basic and Premium Members get full access).
by phil - August 29th, 2014 8:24 am
Saved by the bad news!
August has been a spectacular month in which we ignored the most bad news ever ignored by a species that is still not extinct. With any luck, an asteriod will head straight for us next month and we can rally the markets another 5% in anticipation of more Fed easing on impact. The asteriod struck the other side of the Earth this morning as Russia Invaded Ukraine and Euro Zone Inflation plunged to 0.3%, miles below the 2.0% target considered "healthy".
This is, of course, GREAT NEWS, because it means Super Mario is free to go ahead and do something – like he always says he will do but never does. That doesn't stop people from believing it because they WANT TO BELIEVE – they want to think someone is going to save them and make all their hardships go away. 11.5% of the people in Europe are still out of work, double the rate in the US. Over 25% of the people under 25 are out of work, about the same as the US. These are horrific figures – of course people are eager to hear the words of a potential savior.
Since it's Friday, we're not going to debate the merits or discuss what a farce it all is – we've done that this week. Today we'll talk about making money.
On Tuesday, in the morning post, I suggested the TNA Sept $72.50/76.50 bull call spread at $2, selling the Sept $68 puts for $2. 10 of those would not have cost you a penny (since it netted out to $0), though about $7,500 in margin on the short puts. Today the spread is $2.50 and the short puts are $1.15 for net $1.35 or +$1,350 in 3 days, which is an 18% gain on the committed margin despite the fact that TNA has essentially gone nowhere.
I don't point this out to brag, we have plenty of trade ideas that have done much better – I point this out because it was a free trade idea, right in the morning post which anyone could have done and it…
by phil - August 28th, 2014 8:12 am
The Futures are off a bit today and that's no surprise to those of us who have been paying attention to the volume, or lack thereof, as we made our final approach at the 2,000 line on the S&P 500. Jim Cramer was literally foaming at the mouth this week as he and his CNBC co-conspirators herded the sheeple into the markets to participate in the tail end of the rally, where the suckers could hold the bags for their Corporate Masters.
Why am I angry at Cramer today? Because yesterday he committed the same crime he commtted in 2008 that cost so many people their life's savings – he told people not to sell their stocks on a pullback. "Don't take profits" is the message for the viewing public. But, I would ask, if people don't take profits – when will they ever get profits? What kind of stupid message is that? Well, it's the message that leaves you holding the bag while his hedge fund buddies head for the exits. It's not much different than telling one group of people not to leave a burning building while you make sure all your friends are getting out safely.
"This is not just my opinion. I can prove it to you empirically. See, as I was preparing to write my book "Get Rich Carefully," I went over the previous five years of trades made by my charitable trust. And as I reviewed those trades I noticed that far too often, my good judgment would be overcome by excessive skepticism."
If the "proof" Jim is talking about is his Action Alerts Plus, then I'd say you really should think long and hard about following his advice here (via Kirk Lindstrom – who does compete with Cramer):
I guess, sure, Jim legitimately should regret that he wasn't more bullish from 2008 to 2013, when the market popped 200% and his trust gained about 100% but don't you think the lesson Cramer should be taking from that experience is to CUT YOUR LOSSES, not…
by phil - August 27th, 2014 8:09 am
2,000.02 – We did it!!!
Unfortunately, we can't afford to pop the champagne because the 0.03 we spend on it would put us back under – so we'll watch and we'll wait another day before celebrating a milestone we've been expecting since last week (see "Will Jackson Hole Give Us S&P 2,000?") and we went with that TNA trade we discussed in yesterday's post to cover the expected bull run.
We also picked up long plays on BAC and DBA in our Live Member Chat Room and BAC has already rocketed on the settlement news but DBA is only just making the turn and still makes an excellent play that we'll be adding to our Buy List (Members Only) along with 10 more picks we'll be making this week.
As you can see from Dave Fry's SPY chart, we have set a new record for this decade for low volume on a full market day. Last Christmas Eve was 43M on a half day, for example, but the Christmas Eve before that was 53M and those were the lowest two days I could find before I got bored looking (very scientific).
Anyway, the point is that 38.9M is VERY LOW VOLUME – so low that paying attention to a dot on a chart that is drawn in such a light touch is just silly. That makes yesterday's jaunt over 2,000 completely meaningless and more so with the additional evidence of the intraday action which, as Dave notes, could not have been more manipulated.
This is why we have been pressing our bear bets. Even though we have peace in Gaza and peace in Ukraine (for today) and even though we've forgotten about Europe's negative GDP and China's plunging property prices and Ebola – we still couldn't find more than 38.9M buyers for SPY – that's just sad!
Speaking of China, last Monday, for FREE, right in the morning post, we picked the following on FXI:
We shorted India last week (EPI) and now FXI has got my mouth
by phil - August 26th, 2014 8:05 am
S&P 2,000 – YAY!!!
We did it, congratulations, fantastic, go markets! OK, now what? Now we'll see if we can pop 17,160 on the Dow, which is 2.5% below the Must Hold Line on our Big Chart. We also need to firm up over 11,000 on the NYSE (another Must Hold Line) and then we'll be looking for 1,200 on the Russell and 17,600 on the Dow and THEN we are into the next leg of our rally.
Until then, we need to be just a little bit cautious. Fortunately, we already placed our hedges and now we're ready to BUYBUYBUY off our Buy List as well as 10 new bullish trade ideas we'll be discussing in today's Webcast (1pm, EST). This one is going to be Members only though, as we're picking new positions for our portfolios.
As you can see from our Big Chart, the Russell is our lagging index and has already been to the promised land over 1,200. That's why, last Thursday morning in our Live Member Chat Room, we added an aggressive long using TNA, the ultra-long Russell ETF:
With TNA at $73.30 today, the same logic applies and the Sept $72.50/76.50 bull call spread is $2 and the Sept $68 puts can be sold for $2 to offset or maybe the ABB March $24 puts at $2 instead. As with last month, this isn't a portfolio play for us as we're already very bullish in the portfolios – this is to cover yourself if you think you are too bearish and a pop over the highs will kill you.
It's only been 3 sessions but TNA has already popped to $75.10 and the Sept $68 puts have already fallen to $1.30 and the spread is now $2.40 for net $110 gained per contract – up infinity from the net zero cash basis! The ABB puts are a little slower moving at $1.50, but still very nice for a more conservative play.