by phil - May 18th, 2016 8:18 am
You are very welcome!
Yesterday's morning post (which you can get, pre-market, every morning by subscribing HERE) was titled: "Trendless Tuesday – Watch Yesterday’s Fake Gains Disappear" and, if that wasn't enough of a hint of things to come, despite the Futures being positive at the time, I even let the free readers have a look at our Live Chat Trade Idea for playing the Indexes short, saying:
I've already put a note out to our Members to short the Futures in our Live Member Chat Room:
People are starting to notice China's debt and that's not a good thing. After a brief flirt higher, we're back to Dow 17,650 (/YM), S&P 2,060 (/ES), Nasdaq 4,375 (/NQ), Russell 1,112.50 (/TF) and Nikkei 16,720 (/NKD) and I wouldn't use /NKD but the others all make good shorting lines to play (if 2 are under, short the laggards, look for last others to confirm and tight stops if any go back over).
As you can see above, we had a nice $2,000 per contract gain on the Russell and the Dow hit 17,450 for a $1,000 per contract gain with the S&P hitting 2,040 for a $1,000 per contract gain and Nasdaq fell to 4,320 so 55 points at $20 per point is $1,100 gained on each of those contracts – not bad for a day's work!
Keep in mind though, that that comment was a quote from our Member Chat Room at 7:42. In the course of writing the post, we decided to add back the Nikkei short as well as it tested 16,700 and we caught a $750 gain per contract move to 16,550 after coming in just shy of our 16,500 target. All in all, that's $5,850 in winning trade…
by ilene - May 17th, 2016 10:50 pm
The artifice of corporate totalitarianism has been exposed. The citizens, disgusted by the lies and manipulation, have turned on the political establishment. But the game is not over. Corporate power has within its arsenal potent forms of control. It will use them. As the pretense of democracy is unmasked, the naked fist of state repression takes its place. America is about—unless we act quickly—to get ugly.
“Our political system is decaying,” said Ralph Nader when I reached him by phone in Washington, D.C. “It’s on the way to gangrene. It’s reaching a critical mass of citizen revolt.”
This moment in American history is what Antonio Gramsci called the “interregnum”—the period when a discredited regime is collapsing but a new one has yet to take its place. There is no guarantee that what comes next will be better. But this space, which will close soon, offers citizens the final chance to embrace a new vision and a new direction.
This vision will only be obtained through mass acts of civic mobilization and civil disobedience across the country. Nader, who sees this period in American history as crucial, perhaps the last opportunity to save us from tyranny, is planning to rally the left for three days, from May 23 to May 26 at Constitution Hall in Washington, D.C., in what he is calling “Breaking Through Power” or “Citizen’s Revolutionary Week.” He is bringing to the capital scores of activists and community leaders to speak, organize and attempt to mobilize to halt our slide into despotism.
“The two parties can implode politically,” Nader said. “They can be divided by different candidates and super PACs. But this doesn’t implode their paymasters.”
“Elections have become off-limits to democracy,” he went on. “They have become off-limits to democracy’s fundamental civil community or civil society. When that happens, the very roots shrivel and dry up. Politics is now a sideshow. Politics does not bother corporate power. Whoever wins, they win. Both parties represent Wall Street over Main Street. Wall Street is embedded in the federal government.”
by phil - May 17th, 2016 8:29 am
Here we go again.
As you can see from the SPY chart, volume during yesterday's "rally" was 20% lower than even our recent low average (about 100M), which is 50% below last summers levels already and so much of the volume comes in the last 15 minutes of each day and it's generally selling as the TradeBots dump shares into whatever buyers they've managed to attract but, on the whole, the smart money is pouring OUT of the markets. In fact, $7Bn came out of stock ETFs in April while $36.7Bn went into Bond ETFs – that should tell you something.
What it doesn't tell you, however, is that $11.3Bn have flowed out of stocks in the first two weeks of May! And, as usual, what earnings season is not telling you is that, if it weren't for another record-setting round of share buybacks by the S&P 500, we'd be looking at a 7.5% earnings contraction this quarter – much worse than Q4 and guidance has not been encouraging either – so what on Earth is there to rally about?
These are the net incomes per share AFTER the companies have bought back 1.6% of their shares, on average, for the past 4 years. That's 6.4% LESS shares that these earnings are being divided by and they are STILL DOWN 7.5% – that's pathetic! The effect of the buybacks should be exponentially positive to EPS over time – we're going the other way and, aside from indicating a very poor earnings environment – it's a huge red flag that most of these companies have made very poor investments by diverting so much money into their own stocks, rather than investing in turning around their businesses.
I've already put a note out to our Members to short the Futures in our Live Member Chat Room:
People are starting to notice China's debt and that's not a good thing. After a brief flirt higher, we're back to 17,650, 2,060, 4,375, 1,112.50 and 16,720 and I wouldn't use /NKD but the others all make good shorting lines to play (if 2 are under, short the laggards, look for last others to confirm and tight stops
by ilene - May 16th, 2016 5:06 pm
Courtesy of The Banker
One of The Donald’s great strengths is that he latches onto a partial truth – or an unspoken but widely held belief – and then expands upon it for his own purposes. Obviously this can veer into disgusting territory, when it comes to expressing sexually insecure men’s feelings about women, or insecure workers’ feelings about economic threats from China or Mexico. As Matt Taibbi eloquently expressed, he effectively uses this same talent of partial truth-telling to bash government and media elites who do, in fact, disdain, misunderstand, or ignore ‘regular Americans.’ Trump scores these points against Establishment elites because really, we sense some truth in what he says, that others before him won’t say.
Earlier in the week Trump stepped in a pile of it when he expressed truths about US sovereign debt which political leaders cannot openly discuss. Unconstrained by good taste, judicious character, or political consistency – he can pop off in any direction, occasionally hitting on an important point that more people should understand. The Donald said:
“I’ve borrowed knowing that you can pay back with discounts. I’d borrow [as President, on behalf of the US] knowing that if the economy crashed, you could made a deal.”
This is so crazy that he said it – as a person running for President – that you kind of have to laugh at his gall. On the other hand, he’s right. This is what happens when countries borrow too much. And also, we don’t really know – or have any kind of open discussion in this country – about what constitutes too much national borrowing.
Those fingers tho…
When I worked as an emerging market bond salesman in the late 1990s – slinging bonds from places like Pakistan, Ukraine, Ecuador, Argentina, Russia, and Ivory Coast – we used to put out economic research for our clients that pointed out that a 70% Debt/GDP ratio marked a kind of scary ‘Do Not Cross’ line. If the total amount of sovereign debt exceeded 70% of the economic output of country, you might have to start worrying about whether that country could reliably pay back its bonds. Once you hit 100% Debt/GDP,
by phil - May 16th, 2016 8:21 am
Rent-A-Rebel to the rescue!
That's right, whenever the oil market needs a lift, there are hundreds of reliable groups of kids with guns and outboard motors who are able to shut down oil production and transportation around the World. This week, with just 5 days to go until the contract rollover on Friday and 239M barrels of fake, Fake, FAKE!!! orders piled up at the NYMEX, the best way to boost interest in the contracts you are dumping is to funnel $50,000 to some starving teenagers and promise another $50,000 if they can interrupt the oil supply enough to get you an extra Dollar for your $239M barrels. This week, it's a brand new group in Nigeria driving up prices by issuing this ultimatum:
“The Niger Delta Avengers is giving two weeks ultimatum to all oil companies in our region to shut down and evacuates their staff. To international oil companies, this is just the beginning and you have not seen anything yet. We will make you suffer as you have made the people of the Niger Delta suffer over the years from environmental degradation and environment pollution,” the group said in a statement signed by spokesman Mudoch Agbinibo.
“If at the end of the ultimatum and you’re still operating. We will blow up all the locations. It will be bloody. So, just shut down your operations and leave,” it added.
That was just what the oil bull doctor ordered and oil blasted up from $46 to $47.25 (2.5%) on that "news" completing the exact 5% move from $45 and right back to our shorting range at $47 (if it crosses back under). While a small group of students "incapacitate" dozens of multi-Billion Dollar energy firms and their extensive security forces (and if so, what hope is there against terrorism), the reality is Nigeria is still putting out 1.7Mb/day of crude, 800,000 of their peak capacity, which isn't nothing but only 1/3 of the 3Mbd global glut we're in at the moment.
by ilene - May 15th, 2016 3:03 pm
“Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.”
– Frederick Douglass
“I am for doing good to the poor, but I differ in opinion about the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it.”
– Benjamin Franklin
Like many of you, I’m trying to understand an economic landscape that’s changing by the day – and rarely for the better, at least from the standpoint of the middle and lower classes. I am also trying to understand how in the world the two great US political parties have conspired to give us a choice, as Peggy Noonan has said, of “Crazy Man vs. Criminal.”
I think these two questions are related, and not just in the United States. Populist angst is taking hold around the world. Like all anger, it isn’t necessarily rational and may not bring the desired changes, but the anger and frustration are real. People have real problems, and increasingly they don’t trust traditional leaders to solve them.
Last week I had the privilege of meeting first privately and then publicly with Peggy Noonan. For those who don’t know, she was President Reagan’s speech writer and is now aWall Street Journal columnist and celebrated author. As a writer, she is one of my heroes, perhaps the greatest essayist of my generation – a true wordsmith.
Back in February, with the presidential campaign in full force, Peggy wrote a column that has been on my mind ever since. She titled it “Trump and the Rise of the Unprotected.” Everyone should read it, preferably several times. It is that good.
by phil - May 14th, 2016 7:54 am
Sometimes we forget the basics.
In our video series, there's a lesson called "The Secret to Consistent 20-40% Annual Returns on Stocks" and I hope you've seen it. Although the low implied volatility of the market has made it a rough year for option selling, we were still able to scratch out just over 40% profits in four months in our paired Long-Term and Short-Term Portfolios. Our other virtual portfolios are also performing very well with the Options Opportunity Portfolio up over 30% in 2016 and, surprisingly, our very conservative Butterfly Portfolio is up over 60% due to some not very conservative bullish adjustments we made in the February dip. On the whole, though, we accomplished all this by following the BASIC strategies we teach at Philstockworld, not by gambling!
Not that we're adverse to gambling, gambling is fun – but fun means fun, which means it's a small part of our total investing portfolio while the vast bulk of our money is SENSIBLY INVESTED in safer strategies that are designed to grind out consistently good returns over many years. We have discussed the long-term advantages of compounding annual growth in "How to Get Rich Slowly" and now we'll begin discussing some basic strategies that will help you generate those consistent annual returns to put you on a path to a healthy, wealthy retirement.
In the "7 Steps" video, we're discussing a basic covered call strategy and we delve into the Fundamentals of stock selection. At the time (Sept 2013), we were using ABX, which was trading at $19.15 and we sold the November $19 calls (45 days out) for $1.30. The simple instructions were to wash, rinse and repeat to make up to 40% a year by simply selling calls against the stock.
As you can see, ABX has dropped as low as $6.57 since then, down about 65% BUT, had you followed through and kept selling calls, we had a lovely 12-month period in which it stayed in our range and that would have given us 8 opportunities to collect at least $1 for $8 back before the stock turned down in September of 2014. That would have dropped the net outlay below $10 and stopping out at $15 would have been a…
by ilene - May 13th, 2016 4:30 pm
Courtesy of Lance Roberts of Real Investment Advice
Another week of choppy market action and the end result was a move to “nowhere.” As I stated previously, the current action is either a consolidation process or a topping process:
“First of all, it is worth noting that despite all of the recent excitement of the markets advance, it remains extremely confined in a sideways trading range. This can either be good or bad news.
The Good: Sideways consolidations during bullishly biased markets provides the ability to work off excesses built up during the previous advance to provide the “fuel” necessary for the next leg higher.
The Bad: However, sideways consolidations can also mark the end of the previous bullish advance and the beginning of a bearish decline.
How do we know the difference? Normally, fundamentals tell the story. When earnings are still rising, market consolidations tend to resume to the upside. However, declining earnings have historically marked market topping processes much as we see today.”
While this time could certainly be different, historically such has not been the case. At this juncture, the market has yet to confirm whether the recent price action is just part of a broader topping process or if the now somewhat well-aged bull market is setting up for a final advance. The most interesting aspect is the similarity between the current market action and that seen prior to the beginning of this year.
With summer fast approaching, the markets still appear to be very fragile exposing investors to a similar “swoon” in the months ahead. This is particularly the case with both the economic and fundamental underpinnings still showing signs of deterioration.
The inherent problem of “eternal bullishness” is the “willful blindness” to the underlying data in an effort to chase short-term returns. This leads to the unfortunate problem of being “all-in” on every hand which has a devastating consequence when a mean reverting event occurs.
In the end, it does not matter IF you are “bullish” or “bearish.” The reality is that both “bulls” and “bears” are owned by the “broken clock” syndrome during the full-market cycle. However, what is grossly important in achieving long-term investment success is not necessarily being…
by phil - May 13th, 2016 8:29 am
I know often those of you who don't subscribe to the PSW Report don't get these trade ideas after the market opens and miss out on some of our Futures trades but yesterday oil didn't even hit our target short at $47 until 9:20 and was still at $46.75 even after my free post went up over at Seeking Alpha with that very, very specific trade idea and target. We actually published the trade idea at 5:53 am in our live Member Chat room – so our Members had hours to get on board and you can actually see our initiation of the trade all the way back on Wednesday, during our Live Trading Webinar at 2pm (where I also called Retail dead the day before the big Retail sell off (at 00:56:10)!
As it worked out, we nailed the top and nailed the bottom on that oil call and no, I'm not psychic – we're merely using the 5% Rule™ – one of the essential tools we teach to our Members at PSW every day!
We even made money on the move back up in our Live Member Chat Room, calling the turn at 11:17, a full hour before it began to go higher. We also had similar success on our Gasoline Futures play (/RB), where we had called the short in the Webinar at $1.575 and we caught a 0.02 drop at $420 per penny, per contract, which paid $840 on a single contract and $3,360 for 4 to push us well over the $5,000 mark from Wednesday's Webinar Trade Ideas – keeping our 2016 streak of winning trade ideas alive.
Remember – I can only tell you what is going to happen in the markets and how to make money playing it – the rest is up to you!
We had an extensive macro discussion this morning on oil and the Global Economy in our chat room, so I won't go over that again but the key takeaway was the Abe/Kuroda one-two punch this morning that sent the Yen lower but has failed to lift the Nikkei as people simply no longer believe in the Banksters who…
by ilene - May 12th, 2016 10:29 pm
00:01:48 Checking on the Markets: CL, NASDAQ, DX, RUSSEL, NKD, NG
00:11:13 Natural Gas: Futures, Trade Idea
00:19:10 Seeking Alpha News: Amazon, Nikkei, Retail Sales, Apple, Fed Hike, Boeing’s Buybacks, Disney, Grubhub
00:31:57 Checking on the Markets: CL, NKD
00:32:40 AAL: PE, Puts and Calls, Trade Idea
00:41:16 COGO: Puts, Trade Idea
00:46:25 Disney: Bull Calls Spread, Trade Idea
00:56:10 “Retail is Dead”
01:06:17 Petroleum Status Report
01:10:28 Checking on the Markets: CL, RB, DOW
01:15:10 Goldman: No Fed Hike Until December
01:16:42 Checking on the Markets
01:20:14 Trade Idea
01:21:54 RB: Shorts
01:24:26 Options Opportunity Portfolio
01:25:54 Butterfly Portfolio
01:26:15 Short-Term Portfolio
01:26:36 Long Term Portfolio
01:27:37 Checking on the Markets
01:30:50 More Trade Ideas…
Don't miss next week's webinar in real-time. Get LIVE access to Phil's Weekly Webinars by joining us at Phil's Stock World — click here!)