Archive for the ‘High Mailing Priority’ Category

Weekend Reading: Hurricane Boost Dissipates

Courtesy of Lance Roberts, Real Investment Advice

The Trump Administration has taken a LOT of credit for the recent bumps in economic growth. We have warned this was not only dangerous, credibility-wise, but also an anomaly due to three massive hurricanes and two major wildfires that had the “broken window” fallacy working overtime.

“The fallacy of the ‘broken window’ narrative is that economic activity is only changed and not increased. The dollars used to pay for the window can no longer be used for their original intended purpose.”

If economic destruction led to long-term economic prosperity, then the U.S. should just regularly drop a nuke on a major city and then rebuild it. When you think about it in those terms, you realize just how silly the whole notion is.

However, in the short-term, natural disasters do “pull forward” consumption as individuals need to rebuild and replace what was previously lost. This activity does lead to a short-term boost in the economic data, but fades just as quickly.

A quick look at core retail sales over the last few months, following the hurricanes, shows the temporary bump now fading.

The other interesting aspect of this is the rise in consumer credit as a percent of disposable personal income. The chart below indexes both consumer credit to DPI and retail sales to 100 starting in 1993. What is interesting to note is the rising level of credit card debt required to sustain retail sales.

Given that retail sales make up roughly 40% of personal consumption expenditures which in turn comprises roughly 70% of GDP, the impact to sustained economic growth is important to consider.

Importantly, the latest CPI, inflation, report showed a strong rise that was directly attributable to rising rent, health care, and oil prices. Even the previous increases in retail sales were primarily comprised of gasoline, which directly impacts consumers ability to spend money on other stuff, and building products from rebuilding efforts.

Importantly, what the headlines miss is the growth in the population. The chart below shows retails sales divided by those actually counted as part of the labor force. (You’ve got to have a job to buy stuff, right?) 

The next chart below shows…
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No, artificial intelligence won’t steal your children’s jobs – it will make them more creative and productive

 

No, artificial intelligence won't steal your children's jobs – it will make them more creative and productive

File 20180213 44639 1jsz5ip.jpg?ixlib=rb 1.1

Artificial intelligence: promise or peril?

Courtesy of Marcos Lima, Pôle Léonard de Vinci – UGEI

“Whatever your job is the chances are that one of these machines can do it faster or better than you can.”

No, this is not a 2018 headline about self-driving cars or one of IBM’s new supercomputers. Instead, it was published by the Daily Mirror in 1955, when a computer took as much space as a large kitchen and had less power than a pocket calculator. They were called “electronic brains” back then, and evoked both hope and fear. And more than 20 years later, little had changed: In a 1978 BBC documentary about silicon chips, one commentator argued that “They are the reason why Japan is abandoning its shipbuilding and why our children will grow up without jobs to go to”.

Artificial intelligence hype is not new

If one types “artificial intelligence” (AI) on Google Books’ Ngram Viewer – a tool that allows us to check how often a term was printed in a book between 1800 and 2008 – we can clearly see that our modern-day hype, optimism and deep concern about AI are by no means a novelty.

Searches for the term ‘artificial intelligence’ on Google Books’ Ngram viewer. Author provided

The history of AI is a long series of booms and busts. The first “AI spring” took place between 1956 and 1974, with pioneers such as the young Marvin Minsky. This was followed by the “first AI winter” (1974-1980), when disillusion with the gap between machine learning and human cognitive capacities first led to disinvestment and disinterest in the topic. A second boom (1980-1987) was followed by another “winter” (1987-2001). Since the 2000s we’ve been surfing the third “AI spring”.

There’s plenty of reasons to believe this latest wave of interest for AI is going to be more durable. According to Gartner Research, technologies typically go from a “peak of inflated expectations” through a “trough…
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PhilStockWorld.com Weekly Trading Webinar – 02-14-18

 

PhilStockWorld.com Weekly Trading Webinar – 02-14-18

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here

Major Topics:

00:01:54 Checking on the Markets
00:03:37 Russell
00:12:33 CMG
00:17:47 CMG Trade Ideas
00:29:57 RB
00:38:25 CMG
00:39:45 CISCO
00:43:09 WPM
00:46:35 BBBY
00:53:49 Active Trader
01:04:50 Butterfly Portfoli
01:05:24 OIH
01:06:34 Money Talk Portfolio
01:09:18 Long Term Portfolio
01:11:20 Short Term Portfolio
01:15:30 Option Opportunity Portfolio
01:22:46 ABX
01:27:22 Checking on the Markets
01:31:31 Indexes

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!

 





The World’s Largest Migration Is About To Begin

Courtesy of Zero Hedge

This Friday, China is going to celebrate its new year, kicking off one of the planet's great migrations.

Also known as Spring Festival or Lunar New Year, Statista's Niall McCarthy notes that this the event sees hundreds of millions of people leave their cities in order to visit their families in more rural parts of the country. In fact, practically all of China takes holiday at once, making the new year the biggest human event on earth.

Infographic: The World's Largest Migration Is About To Begin  | Statista

Find more infographics at Statista

This year, the number traveling to welcome the Year of the Dog will be approximately 385 million, marking a 12 percent increase on 2017 according to China News. 

Comparing China's largest annual migration with North America's is a good way to gauge its sheer size.

Thanksgiving 2017 saw 50.9 million travelers negotiate long tailbacks on the interstate and overcrowded airports. Even though Thanksgiving is a major travel event, China's new year is still seven times bigger, with its massive population making a big difference of course.

Known as "chunyun", the annual new year migration in China also easily surpasses the world's biggest pilgrimages in scale with Arba'een and the Hajj not even coming close.





The ‘real’ St. Valentine was no patron of love

 

The 'real' St. Valentine was no patron of love

File 20180209 51703 10w4gt5.jpg?ixlib=rb 1.1

Relics of St. Valentine of Terni at the basilica of Saint Mary in Cosmedin. Dnalor 01 (Own work) , CC BY-SA

Courtesy of Lisa Bitel, University of Southern California – Dornsife College of Letters, Arts and Sciences

On Feb. 14, sweethearts of all ages will exchange cards, flowers, candy, and more lavish gifts in the name of St. Valentine. But as a historian of Christianity, I can tell you that at the root of our modern holiday is a beautiful fiction. St. Valentine was no lover or patron of love.

Valentine’s Day, in fact, originated as a liturgical feast to celebrate the decapitation of a third-century Christian martyr, or perhaps two. So, how did we get from beheading to betrothing on Valentine’s Day?

Early origins of St. Valentine

Ancient sources reveal that there were several St. Valentines who died on Feb. 14. Two of them were executed during the reign of Roman Emperor Claudius Gothicus in 269-270 A.D., at a time when persecution of Christians was common.

How do we know this? Because, an order of Belgian monks spent three centuries collecting evidence for the lives of saints from manuscript archives around the known world.

They were called Bollandists after Jean Bolland, a Jesuit scholar who began publishing the massive 68-folio volumes of “Acta Sanctorum,” or “Lives of the Saints,” beginning in 1643.

Since then, successive generations of monks continued the work until the last volume was published in 1940. The Brothers dug up every scrap of information about every saint on the liturgical calendar and printed the texts arranged according to the saint’s feast day.

The Valentine martyrs

The volume encompassing Feb. 14 contains the stories of a handful of “Valentini,” including the earliest three of whom died in the third century.

St. Valentine blessing an epileptic. Wellcome Images, CC BY

The earliest Valentinus is said to have died in Africa, along with 24 soldiers. Unfortunately, even…
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See Phil at the New York TradersExpo – Feb 25 – 27, 2018

 

Email_Hdr-NYOT18-3.jpg


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An Unprecedented Decline

 

An Unprecedented Decline

Courtesy of 

Conventional wisdom goes that tops are a process. This makes sense when you think about market psychology. In a rising market, every pullback is bought, which conditions us to expect future dips to behave like previous ones. But eventually, bounces are met with less enthusiasm and the rallying cry of buy the dip morphs into sell the rip. This typically plays out over weeks and months because in a bull market, investor psychology doesn’t stop on a dime, but rather it turns around like a cruise ship. The 1969 top provides a good visual of what this looks like.

Markets usually to start roll over before they fall through the elevator shaft.

By October 1929, the Dow was already 30% off its August highs and had spent more than a month below its 50-day moving average. On October 18, 1987, the Friday before the crash, the Dow was 18% lower than its August highs and again, had spent a few weeks below its 50-day moving average. I don’t believe the 50-day is some magic line that is any more important than the 20-day, I just use it here to make the point that at previous market tops, there was some deterioration before a vertical plunge lower.

This time, there was very little warning. Now, what just happened is nothing compared to the crashes of 1929 and 1987, but the recent move is unprecedented in terms of how quickly stocks fell from an all-time high. CTAs – which are expected to provide protection in a down market – didn’t have time to react, due to the nature of the decline. The CTA index experienced its worst 5-day return since 2007.

On January 26th, 2018, the Dow Jones Industrial Average closed at an all-time high. On Thursday, nine days later, it closed more than 10% below those highs. This is the first time ever (going back to 1900) that the Dow closed at an all-time high and declined 10% over the next nine days (1928 saw an all-time high then declined 9% in nine days).

The V-top we just experienced is a great reminder that anything can happen, and just because something has never happened doesn’t mean it can’t.…
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Passive My A**

 

Passive My A**

Courtesy of 

How about this, party people – Listerine was originally invented 135 years ago to cure gonorrhea. And then forty years later it became a mouthwash. True story.

I’ll do you one better – Viagra was originally expected to be a treatment for hypertension, angina, and other symptoms of heart disease. It failed to treat these problems in Phase I, but there was a delightful side effect reported by male patients in the study…

Brandy was invented 900 years ago by merchants who had boiled all the water out of their wine in order to transport it more cheaply. Then they tried the distillate and discovered they now had two drinkable potions rather than one.

Play-Doh was invented to be a wallpaper cleaner. Coca-Cola was originally sold to cure morphine addiction, etc. I could go on and on.

One of the biggest misunderstandings about the ETF and indexing revolution is in the usage of the funds. The popularity of these products should not be looked at as some sort of dramatic sea change in the underlying fear-and-greed driven behavior of investors. Just because people are using ETFs, doesn’t mean they’re using them well or that they’ve somehow all become disciplined investors.

Passive products, ironically, have become well established as ubiquitous trading vehicles over the last two decades. Tallying up ETF assets and concluding that there’s been a behavioral revolution would be a major mistake. Everyone’s calmly passive until their experience their first 10% loss.

The net flow figures out of SPY last week are bonkers. And I think they go a long way to illustrate how foolish it is to use the terms passive and index funds interchangeably.

Eric Balchunas at Bloomberg:

Outflows amounted to 8 percent of the fund’s total assets at the start of the week, a rate of withdrawals not seen since August 2010.

The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6 billion in SPY’s assets. That’s nearly double the second-worst showing of $19.4 billion in asset shrinkage during the week ending Aug. 21, 2015.

Josh here – 8% of the ETF’s total assets came out in five days! LOL, passive my a**.





Be Terrified

 

Be Terrified

Courtesy of 

You are going to run into people who are so certain of what higher volatility means for the markets that it’s as if they are reciting their own name and phone number. Be terrified of their indefatigability about a topic like this. Imagine the sheer arrogance and borderline mental illness required for a person to assume that they can accurately foretell the actions of a hundred million investors around the world.

You will come into contact with investment professionals who give you direct, unflinching answers about what the impact of higher rates will be on the stock market. Despite the fact that a million other variables will simultaneously inflict their own unquantifiable influence on outcomes for each of the components of the Dow Jones, the S&P 500 and the Nasdaq Composite. Be terrified and slowly back away, for you are talking with an undeniably unscrupulous or insane person.

You will meet all sorts of people bearing rules, formulas and equations for why this thing should most assuredly follow that thing – as though there is some fundamental, physical law that can merely be looked up in a library and adhered to by anyone who bothers to search. Be terrified, for you are in discussions with the delusional and the deranged.

You may end up conversing with a person swearing by some rule of thumb or another as though any kind of constant can be applied to a complex, adaptive, biological system like the investment markets. The only response is to be terrified that someone could possibly not know better than to think some fragment of Old Wives Tale wisdom or age-old aphorism could ever be universally applied, in all situations, to satisfactory ends.

If there were ironclad rules, we would all be following them.

If there were inter-market relationships we could set our watches by, everyone would always know what time it was.

If there were immutable formulas, we’d all have adopted them a long time ago.

If there were an answer, we’d have all had the whisper of it imprinted on our very souls.

If there were a shortcut or a cheat code, every little boy…
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The Definition

 

The Definition

Courtesy of 

So, it’s official – we’ve had a stock market correction, according to the universally agreed upon definition of a 10% drawdown from the recent high.

From the New York Times, a recent history:

Too soon to know if this correction will turn into a bear market (regarded by most as a 20% drawdown). My director of research Michael Batnick notes that of the fifteen true corrections from record highs since 1928 (prior to this one), ten turned into full-blown bear markets while five did not.

More importantly, stocks have spent 55% of the time since 1928 in a 10% drawdown, so it’s fair to say that we’re in a completely normal environment.

The only thing that’s abnormal is the speed with which this 10% drawdown took place. Here’s my pal Ryan Detrick of LPL:

Perhaps we deserved that speed of decline. The S&P 500 chart was ridiculously extended to the upside.

Here’s Mike’s tweet and chart illustrating this:

Now, the good news:
 
54 million Americans are actively contributing to 401(k)s, in 550,000 plus corporate retirement plans across the country. Should current levels stand, next week they’ll be adding to their accounts from their Feb 15 paychecks en masse. They’ll be able to buy 10% more of the stock mutual funds they allocate to without doing anything. This is fantastic for everyone who is funding a goal years out into the future.
 
As for investors who are currently in retirement and drawing on their investment accounts to meet living expenses – provided they have planned well and allocated according to these plans, a 10% normal drawdown in stocks should not have any material impact beyond the merely psychological.

And for those who’ve been hurt disproportionately due to excessive risk taking, leverage or poorly constructed portfolios, it serves as a perfect wake-up call that they may need to consult a professional on either their plan, their portfolio or, most likely, both.

Namaste.

Soundtrack:

Links:





 
 
 

ValueWalk

Peter Lynch Top 5 Keys

By joniferdingcong. Originally published at ValueWalk.

Your Road to Financial Freedom – Value Investing Singapore

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Zero Hedge

Assange Hits Back At The Intercept - Claims "Obsessive And Obscenity-Laden" Campaign Against Him

Courtesy of ZeroHedge. View original post here.

Julian Assange hit back at The Intercept over a February 14 article claiming he backed Donald Trump's presidential campaign in leaked group chats from a disgruntled former WikiLeaks associate who set up the chat room. 

[I]n the fall of 2015, Trump was polling at less than 30 percent among Republican voters, neck-and-neck with neurosurgeon Ben Carson, and Assange spoke freely about why WikiLeaks wanted Clinton and the Democrats to lose the election.

We believe it would be much better for GOP...



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Phil's Favorites

Russian interventions in other people's elections: A brief history

 

Russian interventions in other people's elections: A brief history

Demonstrators against Russian military actions in Ukraine rally in New York, March 2, 2014. AP Photo/John Minchillo

Courtesy of Eric Lohr, American University

U.S. Special counsel Robert Mueller on Feb. 16 indicted Russian individuals and entities for interference in the U.S. presidential election.

This is not a one-off act of Russian interference. In the previous nine years, Russia has invaded its ne...



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Insider Scoop

Walmart, Target Are Susquehanna's Top Picks Ahead Of Retail Earnings Season

Courtesy of Benzinga.

Related WMT Upcoming Earnings: Hurricane Effects Still Trickling Through For Home Depot? Did Walmart Meet It...

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Chart School

Rallies Continue But Still Considered Relief Bounces

Courtesy of Declan.

The bounces playing out for markets still have the look of relief bounces - at least until technicals confirm net bullishness.

However,  long opportunities present themselves. For the S&P, price action looks to be confirming a double bottom which should be enough to see a challenge of 2,873. Today's volume was lighter which suggests the rally from here will be a struggle but 'climbing the wall of worry' will suit bulls at this point.


The Nasdaq played out a similar move to the S&...

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Digital Currencies

Bitcoin Volatility Sparks Surge In Crypto Hedge Funds

Courtesy of ZeroHedge. View original post here.

Despite Bitcoin being down 30% in 2018, new data shows a the number of hedge funds focused on cryptocurrency trading has doubled in recent months, seemingly confirming Mike Novogratz (and others) forecast that rising institutional interest would spark the next leg higher.

It's not been a pretty year for cryptos so far...

But ...



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Biotech

What is 'right to try,' and could it help?

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

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

Morten Wendelbo, Texas A&M University and Timothy Callaghan, ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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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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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.

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Just click here at 1 pm est and join in!

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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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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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