Archive for the ‘High Mailing Priority’ Category

2 Charts That Show Smart Money And Dumb Money Are Moving In Opposite Directions – Here’s Why


2 Charts That Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why

By Stephen McBride, Mauldin Economics

While all seems calm in the markets, with stocks continuing to hit all-time highs, an interesting trend has emerged underneath the surface.

Combing through the latest Commitments of Traders report from the CFTC, we found that commercial traders (“smart money”) have a record number of short positions in the Dow Jones (DJIA).

At the same time, noncommercial traders (“dumb money”) have a record number of long positions.

You may be thinking “one group thinks stocks will go up, and the other thinks stocks will go down. What’s the big deal?”

Here’s the big deal.

Buy Low, Sell High—A Pro’s Game

There’s a strong negative correlation between commercial trader’s short positions and the Dow Jones Industrial Average (DJIA), as the below chart shows. When short positions increase, the DJIA usually falls… perfect timing!

Interesting, the opposite is also true. When noncommercial traders increase their long positions, the market usually drops shortly thereafter. It seems they have a habit of buying the market at exactly the wrong time.

Given that the “smart money” usually wins this tug of war, let’s focus on the reasons behind their negative outlook for stocks.

Here’s some of the reasons professional money managers may be growing cautious about stocks today.

Value Investors Say No, Here’s Why

Findings from Goldman Sachs Asset Management (GSAM) show that by just about every measure, stocks are expensive today.

Source: Mauldin Economics

But it’s not only US stocks, which are trading at all-time highs.

This chart from Deutsche Bank shows that, in their own words “we’re in a period of very elevated global asset prices—possibly the most elevated in history.”

Lofty valuations are likely a big factor in Warren Buffett and Seth Klarman’s reasoning for holding record levels of cash in their portfolios.

In September Warren Buffett’s Berkshire Hathaway had $99.7

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Blade Runner’s chillingly prescient vision of the future


Blade Runner's chillingly prescient vision of the future

Courtesy of Marsha Gordon, North Carolina State University

Can corporations become so powerful that they dictate the way we feel? Can machines get mad – like, really mad – at their makers? Can people learn to love machines?

These are a few of the questions raised by Ridley Scott’s influential sci-fi neo-noir film “Blade Runner” (1982), which imagines a corporation whose product tests the limits of the machine-man divide.

Looking back at the original theatrical release of “Blade Runner” – just as its sequel, “Blade Runner 2049” opens in theaters – I’m struck by the original’s ambivalence about technology and its chillingly prescient vision of corporate attempts to control human feelings.

From machine killer to machine lover

Even though the film was tepidly received at the time of its release, its detractors agreed that its imagining of Los Angeles in 2019 was wonderfully atmospheric and artfully disconcerting. Looming over a dingy, rain-soaked City of Angels is Tyrell Corporation, whose namesake, Dr. Tyrell (Joe Turkel), announces, “Commerce is our goal here at Tyrell. More human than human is our motto.”

Tyrell creates robots called replicants, which are difficult to differentiate from humans. They are designed to be worker-slaves – with designations like “combat model” or “pleasure model” – and to expire after four years.

Batty (Rutger Hauer) and Pris (Darryl Hannah) are two members of a small cohort of rebelling replicants who escape their enslavement and hope to extend their lives beyond the four years allotted them by their makers. These replicant models even possess fake memories, which Tyrell implanted as a way to buffer the machine’s anxieties. Instead, the memories create a longing for an unattainable future. The machines want to be treated like people, too.

Deckard (Harrison Ford), a policeman (and maybe a replicant too), is tasked with eliminating the escaped machines. During his search, he meets a special replicant who lacks the corporate safeguard of a four-year lifespan: the beautiful Rachael (Sean Young), who shoots and kills one of her own in order to save Deckard. This opens the door for Deckard to acknowledge growing feelings towards a machine who has developed the will to live…
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Economist who helped behavioral ‘nudges’ go mainstream wins Nobel


Economist who helped behavioral 'nudges' go mainstream wins Nobel

Courtesy of Jay L. ZagorskyThe Ohio State University

File 20171009 6960 9uqy7s

As a founder of behavioral economics, Thaler has helped change the way economists look at the world. AP Photo/Paul Beaty

The 2017 Nobel Prize in economics was awarded to University of Chicago’s Richard Thaler for his work in behavioral economics, which is the integration of economics with psychology.

While the award was not a total surprise, since Thaler’s name was floated earlier on the list of potential winners, it highlights the growing importance of incorporating how humans actually behave into economic thinking. It marks the second time a pioneer in the burgeoning field of behavioral economics – which hardly existed a few decades ago – has won a Nobel, the first being psychologist Daniel Kahneman in 2002.

It may be hard to believe, but before these scholars came along, many economists assumed that humans acted like Spock on “Star Trek.” People were supposed to be perfectly rational calculating machines that looked at all the information and made correct choices. However, even a most casual view of the real world suggests this is not a good assumption.

So who is Thaler and what’s so important about his work?

Before Thaler and his peers came along, economists assumed people behaved a lot like Spock. AP Photo/Bob Galbraith

Thaler’s impact

Richard Thaler was born in 1945 in East Orange, New Jersey. He studied at Case Western and the University of Rochester, where he earned a Ph.D. in economics in 1974.

His doctoral thesis offered one of the earliest estimates of the value of saving a life, calculations that governments and businesses use to determine how much they should spend to prevent fatalities. For example, when the government is considering new air quality regulations that will cost companies money, it compares the price tag against the value of lives saved if the changes are implemented.

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World-saving solutions and inspirations… and what’s really in that tax bill


World-saving solutions and inspirations… and what's really in that tax bill

Courtesy of David BrinContrary Brin

[David Brin is an astrophysicist, futurist, best-selling author, tech-consultant, and speaker. David's international best-selling novels include The PostmanEarth, and Existence. To read more of David's blog posts, novels, and short stories, visit the Contrary Brin blog and David's website.]

Problem solving solutions
The simple-minded genetic determinism of ignorant white nationalists is backfiring on them. They are getting genetic tests to prove how Caucasian they are, and very few of them are getting the results they expect. Anthropologist Raymond Firth wrote a long time ago that whenever two populations meet, they may or may not bleed, but they will most certainly breed.
This raises a potentially effective – and hilarious – way to combat these groups.  Show up at their rallies and hand out coupons for 23 & Me or…or some cheaper site… to get their haplotype inheritance markers tested.  At minimum, you’ll roil their pot, isolating the extreme racial purists and getting them acting hateful to many of their own recruits!  Even better, some of the marchers may get drawn toward both science and acceptance of complexity, plus identification with more than one simplistic (and actually nonexistent) “European” stock.  Heck, talk those Silicon Valley types into doing this in a test somewhere, then fund giving spit kits away at every rally!
What the "Tax Bill" really is about
Gliding onward from "repeal and replace," now it's taxes. An architect of Republican Supply Side Economics reveals that he is sapient by admitting that evidence should change one’s mind. And evidence shows that Supply Side has always bee utter voodoo. Tax cuts for the rich have never – not once, ever- had any of the stimulative effects promised. And the Clinton tax increases led directly to the best growth since the 1970s.  Wealth transfers to the aristocracy are not invested in R&D or productive “supply” capacity – but instead inflate asset bubbles. Are you similarly sapient? Is your mad uncle?  “I helped create the GOP tax myth. Trump is wrong: Tax cuts don’t equal growth.”
Moreover, GOP tax cuts always led to skyrocketing deficits. So, where are all the budget balancers and

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Uncle Sam’s Unfunded Promises


Uncle Sam’s Unfunded Promises

Courtesy of John Mauldin, Thoughts from the Frontline 

Here’s a surprisingly profound question: What is a promise? Dictionaries offer various definitions. I like this one: “An express assurance on which expectation is to be based.”

Image: Simon James via Flickr

That definition captures the two-sided nature of a promise. One party offers an assurance, which the other converts into an expectation. You deposit money in your checking account, and the bank assures you that you can have it back on demand. You expect that the bank will fulfill its promise when you visit an ATM.

Governments likewise make promises, but those are different. Government is the ultimate enforcer of promises, but we have no recourse if it chooses to break them – except at the ballot box. As we’ve seen in recent weeks regarding public pensions, that’s ineffective when the promises were made long ago by officials who are no longer in office.

The federal government’s keeping its promises is important for everyone in the US, because almost all of us are part of the largest public pension system: Social Security. We pay taxes our whole working lives and expect the government to give us retirement benefits. But what happens if it can’t?

Three weeks ago we visited the problems with local and state pensions. Last week we looked at European pensions. This week we are going to take a hard look at the unfunded liabilities and debt of the US government. And even though the federal unfunded pension liabilities dwarf those of state and local pensions, I want to make it clear that I believe the state and local problems will be far more intractable.

I have to warn you: You may be hopping mad when you finish reading this.

Doubled Debt

In the United States we have two national programs to care for the elderly. Social Security provides a small pension, and Medicare covers medical expenses. All workers pay taxes that supposedly fund the benefits we may someday receive. That’s actually not true, as we will see in a little bit.

Neither of these programs is comprehensive. Living on Social Security benefits alone is a pretty meager existence.…
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“This May Be The End Of Europe As We Know It”: The Pension Storm Is Coming

Courtesy of John Mauldin,

I’ve written a lot about US public pension funds lately. Many of them are underfunded and will never be able to pay workers the promised benefits – at least without dumping a huge and unwelcome bill on taxpayers.

And since taxpayers are generally voters, it’s not at all clear they will pay that bill.

Readers outside the US might have felt safe reading those stories. There go those Americans again… However, if you live outside the US, your country may be more like ours than you think.

This week the spotlight will be on Europe.

The UK Is Headed to a Retirement Implosion

The UK now has a $4 trillion retirement savings shortfall, which is projected to rise 4% a year and reach $33 trillion by 2050.

This in a country whose total GDP is $3 trillion. That means the shortfall is already bigger than the entire economy, and even if inflation is modest, the situation is going to get worse.

Plus, these figures are based mostly on calculations made before the UK left the European Union. Brexit is a major economic shift that could certainly change the retirement outlook. Whether it would change it for better or worse, we don’t yet know.

A 2015 OECD study found workers in the developed world could expect governmental programs to replace on average 63% of their working-age incomes. Not so bad. But in the UK that figure is only 38%, the lowest in all OECD countries.

This means UK workers must either build larger personal savings or severely tighten their belts when they retire. Working past retirement age is another choice, but it could put younger workers out of the job market.

UK retirees have had a kind of safety valve: the ability to retire in EU countries with lower living costs. Depending how Brexit negotiations go, that option could disappear.

Turning next to the Green Isle, 80% of the Irish who have pensions don’t think they will have sufficient income in retirement, and 47% don’t even have pensions. I think you would find similar statistics throughout much of Europe.

A report this

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The Innovation Is the Blockchain…


The Innovation Is the Blockchain…

Scott's deep dive into cryptocurrency, blockchain and initial coin offerings with NYU Stern finance professor David Yermack. Pre-order Scott's new book, "The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google."

Also watch,

Blockchain: Massively Simplified

Richie Etwaru, discusses the opportunity and implications of blockchain as a paradigm to slow/chose the expanding trust gap in commerce. He unpacks blockchain to a level of simplicity to be consumed by those that are just starting to understand and explore the paradigm. He lays out a current state of commerce, suggesting that every company is currently at risk of being disrupted or incurring severe strain from a blockchain version of itself.

Professionally, Richie Etwaru is a c-level at a Fortune 500 Company, an author, the owner of international patents, the founder of multiple ventures, an experienced keynote speaker, an angel investor, a member of advisory boards, and a recognized thought leader in the area of digital, technology, and design.


Blockchain is Eating Wall Street

Author of best seller "blockchain revolution", Alex share in this talk about how the blockchain the technology behind bitcoin Is changing money, business, and the world. Alex Tapscott is the CEO and Founder of Northwest Passage Ventures, a consulting firm focused on early-stage, high growth companies in the Canadian and U.S. Capital markets.




Courtesy of 

The S&P 500 closed at an all-time high yesterday for the sixth straight day. The last time this occurred was June 1997. Why is this happening?

Are markets pricing in tax reform? Is it looking forward to higher earnings over the next twelve months?  Is it because North Korea hasn’t been in the headlines for a week or two? You can search for all the reasons you want, but the one that matters is this, rising prices attract buyers. In finance, this is called momentum.

If you looked at the cheapest quintile of an investment universe and sorted on price-to-book,  price-to-earnings, or enterprise value-to-EBITDA,  you’re going to end up with three portfolios that wind up in a similar range (don’t @ me value nerds). Cheap is cheap however you decide to measure it. Momentum on the other hand can mean different things to different people. For instance, are you looking at absolute or relative momentum? And relative to what?  And how often are you measuring this, six months or one year? And how are you weighting this portfolio? And how many holdings are there? And how often is it reconstituted? All of these things can lead to momentum portfolios with returns wide enough to drive a truck through them.

With over $4 billion, iShares MTUM is the largest momentum ETF by assets. iShares uses “A risk adjusted price momentum, defined as the excess return over the risk-free rate divided by the annualized standard deviation of weekly returns over the past 3-years, is calculated for each security in the parent index over 6- and 12-month time periods. The 6- and 12- month risk-adjusted price momentum calculations are then standardized at +/-3 standard deviations and the standardized z-scores are translated into an average momentum score. Approximately 100-350 securities with the highest momentum scores are selected for inclusion in the Underlying Index. The weight of each Underlying Index constituent is determined by multiplying the security’s momentum score by its free-float market capitalization.”

The second biggest momentum ETF is sponsored by State Street. Their fund “Is designed to reflect the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors (high value, high quality, and…
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5 Charts Highlight The Growing Wealth Inequality In America Over The Past 50 Years

Courtesy of Zero Hedge

Americans across the income spectrum have generally grown wealthier over the past 50 years but those at the top (A.K.A. the "millionaire, billionaire, private jet owners" to use the parlance of our times) have made out much better than the rest of us.  As the Urban Institute pointed out today, in 1963, families in the top 90th percentile of household wealth had roughly six times the wealth of families in the middle. By 2016, that had doubled to 12 times.

Here's how that evolution of wealth distribution looks graphically:

Of course, part of the problem is annual household income distributions.  As the charts below reveal, the gap between real earnings of the top and bottom 10% of households in the country has nearly doubled over the past 50 years with 90th percentile families today making 13x more than the families at the bottom of the income spectrum, compared to 7x in 1963.

Meanwhile, the Urban Institute figures the growing wealth gap is at least partially attributable to homeownership rates for minorities being persistently stuck ~20 points below those observed among Whites.

Blacks and Hispanics are less likely to own homes, so they more often miss out on this powerful wealth-building tool. Homeownership makes the most of automatic payments—homeowners must make mortgage payments every month—to build equity.

In 1976, 68 percent of white families owned their home, compared with 44 percent of black families and 43 percent of Hispanic families. By 2016, the homeownership gap had narrowed slightly for Hispanics but widened for blacks. Black and Hispanic families were also less likely to own homes than white families with similar incomes.

And while they didn't cover it, we're going to go out on a limb and suggest that the growing wealth divide might have something to do with the Fed's decisions to do this…

…which resulted in this…


Of course, only the people who were already wealthy were able to take advantage of the Fed's "official" policy decisions designed to inflate one massive asset bubble after another over the past 35 years. Weekly Trading Webinar Weekly Trading Webinar – 10-04-17

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00:01:54 Active Trader
00:13:11 Trade Ideas
00:20:44 Indexes
00:21:41 $SPX
00:27:50 Russell 2000 Chart
00:31:15 Nasdaq 100
00:35:00 5% Portfolio
00:39:31 Oil Charts
00:47:31 TEVA Charts
00:50:57 TEVA Financials
01:00:22 TF Active Trader
01:05:18 TEVA Charts – Yahoo Finance
01:15:27 Checking on the Markets
01:23:25 Checking on the Portfolios
01:30:01 SCO
01:38:48 TEVA
01:45:23 FTR
01:50:48 More on 5% Portfolio
01:54:39 Butterfly Portfolio
01:56:49 Long-Term Portfolio
02:00:18 Good Trades

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!



Phil's Favorites

Hooray! Discretionary Services Spending Finally Back to 2007 Level


Hooray! Discretionary Services Spending Finally Back to 2007 Level Courtesy of  The current economic expansion is now the third-longest expansion in U.S. history. It's also extraordinarily weak. It took 10 years for consumer discretionary spending to reach the level hit in 2007.

Depth of Decline and Extent of Recovery

Liberty Street Economics, a publication of the New York Fed, has the details i...

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Zero Hedge

Amazon Strikes Deal With Landlords To Install Lockers In Apartment Buildings

Courtesy of ZeroHedge. View original post here.

Since the dawn of the e-commerce era, the largest US landlords have loudly complained about the crush of packages flooding mailrooms at apartment properties across the country.

One apartment owner went so far as to stop accepting packages altogether, while others have experimented with increasingly novel ways to process residents’ mail.

Now, Amazon is stepping in with a solution to a problem that it’s largely responsible for creating. ...

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Marc Faber's America in Black and White

By Steve Slavin. Originally published at ValueWalk.

It is truly amazing that even in our era of supposed political correctness, a respected financial advisor like Marc Faber, aka Dr. Doom, could publicly make the claim that the United States is much better off than it would have been if it had been colonized by blacks rather than whites. Even in the age of Trump, it seems that only the extreme rightwing hate groups have openly expressed such racist views.

In fairness, Faber did get one thing right: If America had been colonized by blacks instead of whites, our nation would certainly have been a very different place from what it is today.


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Chart School

More of the Same

Courtesy of Declan.

There was little change on the day-to-day machinations of the market. The S&P is riding along upper channel resistance with technicals still bullish.

The Nasdaq is caught in a halfway house with bullish technicals and a relative advantage of the index against the S&P.

The Russell 2000 is...

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Digital Currencies

BDC's Crypto Corner


BDC’s Crypto Corner

By Biodieselchris

Hello fellow PSW-ers. I've been interested in cryptocurrencies (informally, "cryptos" or "coins") since 2011 when I first heard about Bitcoin, Since that time I've become somewhat of a subject matter expert and personal investor in Bitcoin and other alternative cryptocurrencies ("altcoins"). I have even started one of my own!

I've been posting comments about cryptos in Phil's daily post from time to time. Recently, Phil and I got on a call and he asked if I would like to run a blog on his site specifically about cryptos, which I thought was a great idea. My goal would be to educate members on what I know about how coins work, how I research coins (what I find interesting), how exactly one can...

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Insider Scoop

Subscriber Growth Strength Bolsters Netflix Q3

Courtesy of Benzinga.

Related NFLX The Market In 5 Minutes: Netflix, Goldman Sachs, And Morgan Stanley Keep The Earnings Beats Going ... more from Insider

Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!


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Circadian rhythm Nobel: what they discovered and why it matters

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


Circadian rhythm Nobel: what they discovered and why it matters

Courtesy of Sally Ferguson, CQUniversity Australia

Today, the “beautiful mechanism” of the body clock, and the group of cells in our brain where it all happens, have shot to prominence. The 2017 Nobel Prize in Physiology or Medicine has been awarded to Jeffrey C. Hall, Michael Rosbash and Michael W. Young for their work on describing the molecular cogs and wheels inside our biological clock.

In the 18th century an astronomer by the name of Jean Jacques d'Ortuous de Ma...

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Members' Corner

Day of Last Dances

News today has been relentlessly terrible. A horrific mass murder happened last night in Las Vegas. (Our politician's abject failure to address gun control is beyond sickening.) And today, reports that Tom Petty died of a heart attack, followed by reports that Tom Petty is not dead, and now reports confirming that Tom Petty has passed away. 


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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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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.


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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