by phil - August 16th, 2016 7:47 am
Do you have cash?
If so and if that cash is in Dollars, your cash lost 1.5% of it's value since Friday – unless, of course, you used those Dollars to buy stocks, which only gained 1/10th of 1% since Friday's open, so you can still trade your declining Dollars for US stocks at the same prices they were Friday. The question is which one, if any, will hold their value better going forward.
Hammering the Dollar today is an unusual call for radical policy action from the San Fran Fed's John Williams (who also composed the theme for Star Wars) who is warning that our Empire is being threatened by factors beyond the Fed's control like an aging population and sluggish productivity gains which are braking growth.
That, in turn, is keeping interest rates from rising as far or as fast as in the past; Williams on Monday estimated U.S. short-term rates would likely rise only to 3% or 3.5%, even after the economy regains full health, and perhaps not even that.
Williams floated two monetary policy changes to cope with lower rates: raising the Fed's current 2% inflation goal, or replacing its current inflation-targeting regime with some form of nominal GDP targeting. Both approaches, he said, would give the Fed more scope to lower interest rates in response to downturns.
In other words, policy changes that will keep us in this QE cycle for A LOT longer than is currently expected.
That's why yesterday, on the day we set an all-time high on the S&P 500, the volume was the lowest level of the year, coming in at just 48.6M on the ETF (SPY), 20% below the previous day and barely more than 1/10th of the volume we dropped on in late June. That's right, the entirety of yesterday's SPY volume wouldn't even cover a single hour of selling on a down day – house of cards, indeed!
During this whole rally, the volume has been heading lower and lower, even as the index has headed higher and higher and the last time volume was this low was last Christmas, right before the S&P fell from 2,075 back to 1,850,…
by phil - August 15th, 2016 8:32 am
Forget the details of why this started.
What you should be concerned about is how easily a protest march in Wisconsin turned into a riot – to the point where Gov Scott Walker called out the National Guard in Milwaukee. Six businesses were set on fire during Saturday evening’s unrest, and three of them were destroyed. About 100 protesters had gathered for a demonstration Saturday evening when violence broke out. Chief Flynn said the city’s gunshot detection system was activated 48 times during the unrest, adding that some activations recorded several rounds being fired.
Koch-backed Walker has turned Wisconsin into a nightmarish state that is now ranked 49th in the US and is one of 5 states in the country with a contracting economy with a $2Bn budget shortfall in 2015. Walker has cut $1Bn from education, smashed unions, ended paid leave for sick days and maternity leave requirements and, of course, put in "right to work" laws that have stagnated wages for the past 6 years.
In short, Walker has implemented the GOPs 2016 platform and his state is in revolt. He even signed a bill that striped public employees of their collective bargaining rights, barred the traditional collection of union dues and forced workers to pay more for their health care and retirement benefits – things the national GOP want but don't dare put in writing – and this is the result!
The problem is, this is the end of all "cut taxes and cut social programs to pay for it" budget plans – it's only a question of when it is actually time to pay the piper and deploying the National Guard costs a whole lot more than buying a few kids a decent school lunch but then the money doesn't go to a contributing military contractor… politics sure are tricky!
Meanwhile, in the rest of the World, we're ignoring Japan's horrific 0.2% GDP Report this morning, which would have been negative if not for $276Bn in stimulus spending. Business investment fell 5.9% and exports fell as well so the only people who…
by phil - August 12th, 2016 7:53 am
What a week we are having!
We don't make public pick in July (earnings months) but we came back strong for the free readers in August and yesterday's long trade idea on Gasoline Futures (/RB) made $2,436 as /RB hit our goal at $1.35 and Natural Gas (/NG) is still at $2.57, so $0 there – for now. Add that to Wednesday's $3,600 gain on our Futures picks (per contract!) and that's over $5,000 profit in two days just from our morning PSW Report (sign up here so you don't miss them).
We also had a set-up yesterday morning for a long play on Kate Spade (KATE) and, even if you didn't play the options, you had to be pleased with the 8% gain for the day on the underlying stock. Someone in chat asked me why we don't have a lot of "short-term" trades and I pointed out that our long-term trades make great money in the short run AND they are much safer, as they have time to mature. Kate is a good example as our trade idea was:
The $15 puts opened at $2.45, the $15 calls opened at $5.10 and the $20 calls opened at $3.10 so the net was the same $450 credit we planned and, at the end of the day, the $15 puts fell to $2.10, the $15 calls are now $5.90 and the $20 calls are $3.37 for net $430 on…
by phil - August 11th, 2016 8:30 am
Wheeeeee – what fun!
Over and over again they take us back to 18,500 on the Dow Futures (/YM) and 2,180 on the S&P Futures (/ES) and over and over again we short them and pick up $250-500 per contract. It's a suckers game and we're the guys with the cups challenging the bulls to find the red ball and the bulls are certain it's under one of those cups – just never the one they pick.
It should be like shooting fish in a barrel, making money in this market yet the average hedge fund is up 2% for the year, well behind the 6.5% gain in the S&P. Yesterday, as we predicted in our Morning Alert to our Members (and tweeted to the general public – as we do from time to time) the market took a nice dive and though it "recovered" to 2,175 on the S&P, the huge declining volume told a very different story.
I simply run out of ways to tell you what a horribly rigged market this is and that the "rally" is nothing more than a prop job to keep you buying at the top while the "smart money" runs for the hills. What I said to our Members at 6am was:
Dollar is still diving, testing 95.50 and the indexes are up a lot less than the Dollar is down so huge grain of salt to be taken on the Futures, which are at 18,500 (short on /YM there), 2,180 (good on /ES too), 4,800 (good short for /NQ), 1,232.50 on/TF (also a good short) and 16,800 on /NKD (yet another good short). Well – I guess I still like the shorts here!
The Dow bottomed out at 18,420 for a $400 per contract gain.
The S&P bottomed out at 2,168 for a $600 per contract gain.
The Nasdaq bottomed out at 4,770 for a $600 per contract gain.
The Russell bottomed out at 1,220 for a $1,250 per contract gain.
by phil - August 10th, 2016 8:29 am
There's not much gas left in this tank.
Try as we might, we still can't get bullish on this rally. As I noted in Monday's live interview, it's a ridiculously low-volume rally and that's just not the way you make record highs that stick. It's actually more like the way that Banksters manipulate the markets to reel in the suckers to offload the last of their shares right before they pull the rug out from under the markets but, what do I know – we're only up 377% in the Short-Term Portfolio (follow us here) where I've successfully predicted every market dip since November of 2013…
This isn't about bragging, this is about establishing some credibility so perhaps you listen to me when I say THIS MARKET DOES NOT FEEL RIGHT. I've written extensively about what I think is wrong with this rally and so far, so wrong as far as getting a summer drop and it's August 10th and I said I'd give up and put some of our cash ($470,376) back to work.
BUT, there are still 21 days left in August and last August 10th we looked pretty good too and all seemed very well until August 14th (Friday) when suddenly, on Monday the 17th, it wasn't. That led us to a horrific 250-point (12%) slide in the S&P in just over a week which tested the 1,850 line where we decided to BUYBUYBUY at the time – so it worked out great for us because our headlines were self-explanatory:
- July 8th: Which Way Wednesday – China is Down 5%, Why are you Looking at Greece???
- July 10th: Friday Market Fakery – Dollar Dip Does the TRICK!
- July 20th: Monday Market Manipulation – Everything is Awesome!
- July 21st: 2,130 Tuesdsay – 5th Time’s a Charm?
- July 22nd: Wednesday – Will AAPL $120 Cost Us Nasdaq 5,000?
- July 25th: Using Stock Futures to Hedge Against Market Corrections
- July 27th: China Meltdown Part II – NOW Are You Paying Attention?
- July 31st: Final Friday for Bull Run – Dow Death Cross Dead Ahead
- August 4th: Technically Troubling Tuesday – Collapsing Commodities Cause Concern
- Aug 11th: Technically F’d Tuesday – Death Crosses
by phil - August 9th, 2016 8:32 am
Big push or last gasp?
2,200 is the top of our likely range at the moment and it's just 20 points away on the S&P and that's 400 points higher (22%) than we were in February and, according to our 5% Rule™, a 20% move up with a 2% overshoot is very likely to lead to a 4% pullback to about 2,120 before we'll see anything higher.
The volume gets lower and lower while the market climbs higher and higher and that's exactly the sort of thing Willie Wonka says just before something horrible happens. I'm just saying…
We're having lots of fun scalping profits intra-day but we still have a generally bearish stance. This morning, in our Live Member Chat Room, we already had a nice $250 per contract winner on the oil dip from $43.25 to $43 and now (8:15) we're back at $43.25 and, you know what? We can do it again! That's the nice thing about fake market moves – you can bet against them over and over.
I was over at the Nasdaq yesterday discussing my broad market outlook on FaceBook Live, so you can watch that and save us the trouble of going over it again. Needless to say we're still using yesterday's shorting lines on the Futures as, much like oil – they made great money yesterday and they can make great money again today as the market bucks like a bronco, trying to toss off the bears before it gets too tired to fight the gravity.
Remember, I can only tell you what the market is going to do and how to make money trading it – the rest is up to you!
We did pick up a long this morning in the Futures and that's an old favorite as well. It's good not to have all your bets in the same direction but our conviction trade is the oil (/CL) short – that's a melt-down waiting to happen (also outlined in yesterday's post). Gasoline (/RB) is already well off the highs of $1.39, back to $1.36 and that would put oil back at…
by phil - August 8th, 2016 5:33 am
What will it take to stop this market?
Like Rasputin, the market has been Poisoned (by bad earnings), Shot (by Brexit), Stabbed (by negative economic reports including 50% reductions in GDP forecasts) and is clearly Drowning in debt – yet it will not die!!! What is up with that? Not even the threat of Donald Trump becoming President of the United States is enough to spook the bulls – so far.
This morning the Asian markets were flying, led by Japan gaining 2.5% off the strong US jobs report that led to a strong Dollar and a weak Yen, which makes all the Japanese exporters happy, for as long as that lasts, anyway. Also lifting the markets are fresh rumors of an OPEC production cut, which had oil (/CL) hitting $42.50 along with $45 on Brent (/BZ) this morning and had us getting back on the Futures shorts in our Live Member Chat Room earlier.
We're also shorting the Futures at Dow (/YM) 18,500, S&P (/ES) 2,180, Nasdaq (/NQ) 4,800, Russell (/TF) 1,230 and Nikkei (/NKD) 16,700 but only if 3 of 5 cross under in which case we short the next one to cross and that's then confirmed by the 5th cross under and then we stop out if ANY of them cross back over – very simple and it stops you from losing much money while letting a winner run wild.
If you are bullish you can play it the other way but I'm not and neither are:
by phil - August 7th, 2016 11:36 am
I did an extensive review of the OOP during our Live Trading Webinar on Wednesday (@ 38:35) where we looked over our current positions and determined we were well on track to gain another $60,000 (60%) next year but, of course, we won't be just sitting on our laurels – there will be lots of fun trades to make over the next 12 months.
After our first year (we initiated the portfolio on Aug 8th, 2015) we are now the Top Performing Premium Portfolio over at Seeking Alpha and, in fact, our strategy is outperforming even America's best performing hedge fund (Gerbina Gold Group) by a wide margin. In fact the 2nd best performing hedge fund is also a gold fund (AIS) and is only up 33.7% for the year – so our diverse portfolio, using our "Be the House – NOT the Gambler" philosophy is proving itself in this market.
by phil - August 5th, 2016 8:10 am
It's jobs day!
On April 8th, we added 144,000 jobs and the S&P went from 2,045 to 2,060 to 2,040 and settled at 2,047. On May 6th we added only 11,000 jobs and the S&P went from 2,047 to 2,057 to 2,039 and settled at 2,057. On June 3rd we added 287,000 jobs and the S&P went from 2,104 (was the high) and fell to 2,085 and settled at 2,100.
So, there's really not much of a pattern other than we're likely to finish where we started and we're starting the day at 2,163 and we've been in a very tight range and we can expect Non-Farm Payrolls to revert to the mean and come in around 160,000 jobs at 8:30. What's more important is whether we make a little progress in the 4.9% Unemployment Rate – that has stopped going down lately.
From a market standpoint, we'd like to see hourly earnings continue to rise because, if we're going to move towards any kind of sustainable recovery, we have to begin to put more money in the pockets of our bottom 90% consumers.
Now the S&P is at 2,164 and that's up 6% since April and I don't see what job outcome would drive it higher than it is now. Either way, we're going to be hedging a bit bearish into the weekend as the Olympics open tonight in Brazil, which is a country that's in political and economic turmoil and right next to Venezuela, which is a country on the verge of collapse.
With 60,000 hours of TV coverage scheduled for the Olympics, I imagine the political and economic situation will get some air time and most people in the US are not aware of what sort of disaster is going on south of Trump's wall.
8:30 Update: Wow, 255,000 jobs were created in July – a total blow-out, way beyond expectations. Unemployment stayed at 4.9% indicating more and more people are coming back to the labor force, which is good and hourly earnings went up another 0.3% – also good. The initial market reaction was a quick pop in the indexes, but only 0.25%, tempered by a stronger Dollar,…
by phil - August 4th, 2016 8:31 am
"Whatever it takes."
That's what Goldman Stooge (yes, it's an official position, so we capitalize) Mark Carney says he is willing to do to get investors to ignore the fact that the Bank of England had to severely reduce their outlook for 2017 GDP, from 2.3% to 0.8% while, at the same time stating that: "recent surveys of business activity, confidence and optimism suggest that the United (for now) Kingdom is likely to see little growth in GDP in the second half of this year."
Today's move drops the UK's benchmark rate to 0.25%, half of what it's been for the last 7 years and Carney left the door open for even more easing – though not too much, apparently:
“I’m not a fan of negative interest rates,” says Carney. “We have other options to provide more stimulus if needed.”
“We see the effective lower bound as a positive number, close to zero, but a positive number.”
A positive number – but clearly not a positive whole number – that ship has sailed long ago! The FSTE jumped 1.5% on news that their economy will be right on the edge of recession next year but, of course, that's because the BOE is now pumping $50Bn PER MONTH into the $2.6Tn economy, which would be like our Fed tossing $380Bn/month onto the fire. That is a staggering amount of QE funneled through the banks by Goldman Sach's former Executive Director – just a coincidence, I'm sure.
Speaking of Goldman Sachs getting caught using their connections to manipulate the market – the firm was ordered to pay $36.3M to settle a case after they hired a Fed employee and used confidential information he provided to bring in clients to access their access. This went on for 2 years and involved Billions of Dollars worth of transactions and, in response to the $36M penalty, a GS spokesman said "Ow, my wrist!"