Archive for the ‘Appears on main page’ Category

Weekend Reading: Yep… Still Looks Like A Trap

Courtesy of Lance Roberts of

Last week, I noted technical breakout of the market above the downtrend line from last May, such a move required an increase in exposure to equity risk. Two weeks ago, I wrote,

“With the breakout of the market yesterday, and given that ‘short-term buy signals’ are in place I began adding exposure back into portfolios. This is probably the most difficult ‘buy’ I can ever remember making.”

I also stated that it was probably a trap and that I will be stopped out in fairly short order. But that is the risk of managing money.

Well, since then the markets have gone, as of this writing, roughly nowhere as the market traded between roughly 2075 and 2100 all week. However, the following chart is what has me worried. 


The chart of the volatility index measures the “fear of a correction” that currently exists in the market. As a contrarian indicator, the “time to sell” is when there is relatively little “fear” in the market.  As the yellow highlighted bars suggest, that time is likely now.

Is the recent turn higher in the VIX signaling a market correction as it has done in the past? Possibly. If so, the question will be the depth of that correction. Will it be a mild pullback as saw in early 2015, or a more major decline as seen in August of last year? My bet is that it will likely be the latter given the weakening fundamental backdrop.

However, given the ongoing Central Bank interventions, verbal easing by the Federal Reserve and an excessiveness of “bullish hope,” there is still no telling what the markets will do next. This is why in this upcoming weekend’s newsletter (subscribe for free e-delivery) I will be discussing the possibility of “shorting against the box.”

Keith Fitz-Gerald once wisely stated:

“Always sit in an exit row.” 

This weekend’s reading is focused primarily on the events from last week – The Fed and the markets. I suspect things are about to get much more interesting.


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TGIF – Stop the Week Before Things Turn Ugly!

SPY 5 MINUTEWow, what a day!  

Now aren't you glad we added those hedges on Tuesday?  Keep in mind that I can only tell you what the market is going to do and how to profit from it – the rest is up to you…  Our trade idea from Tuesday morning's post was:

  • Buy 40 June SQQQ $17 calls for $2 ($8,000) 
  • Sell 40 June SQQQ $21 calls for 0.85 ($3,400) 
  • Sell 5 AAPL 2018 $85 puts for $7 ($3,500) 

The idea is we REALLY want to own 500 shares of AAPL at $85, so the $3,500 we collected for selling the puts is free money and AAPL only fell to $95 anyway, so we're feeling very good about our 2018 obligation.  Meanwhile, the Nasdaq Ultra-Short (SQQQ) June $17 calls are already $3.10 ($12,400) while the short June $21 calls are $1.15 ($4,600) so we could close that spread now for $7,800 off our $700 cash outlay on Monday and that's a gain of $7,100 (1,014%) in 4 days – you are very welcome indeed and THAT is how we hedge!  

That then leaves us with just the obligation to buy 500 shares of AAPL at $85 in Jan, 2018 if it is below $85.  The current ordinary margin on 5 short puts is $4,225 according to Think or Swim or we could buy them back for $9.80 ($4,900) and then we'd be cleanly out of the entire trade with a $2,200 gain (314%) in 5 days.  

Our portfolios, on the whole, took very little damage on the dip (so far), and keep in mind the upside on the SQQQ spread is $16,000 – so still good protection in case things don't improve…
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Visualizing China’s Rising Dominance In Trade (In 4 Shocking Maps)

Courtesy of ZeroHedge. View original post here.

We often use big, overarching ideas to help us understand the world and the opportunities contained within. These narratives, which can change over time, are used to create context. They give us a frame of reference for comprehending the news and events that affect our outlook on things.

As VisualCapitalist's Jeff Desjardins notes, China’s economic prowess is one of these new paradigms that has emerged, but many people still can’t really wrap their heads around the scale or scope of it.

It’s happened suddenly, and the ramifications are extremely relevant to our investments and understanding. Here’s four maps on China’s trade dominance that will help you think differently about the world:

China is the world’s #1 trade partner

China trading partners outnumbers US by a factor of two

Image courtesy of: Connectography

The United States is the number one trading partner for 56 countries, with important relationships throughout North America, South America, and Western Europe.

Meanwhile, China is the top partner for 124 countries, dominating trade in Asia, Eastern Europe, Africa, and Australia.

China’s Sphere of Influence

This map shows the portion of trade conducted by each country with China in Southeast Asia.

China's trade with ASEAN

Image courtesy of: Stratfor

The influence that China has with nations in Southeast Asia is significant. Most trade is in double-digit percentages, and China views this as its immediate sphere of influence. Throughout history, territories in this region would even pay tribute to China to gain access to trade.

“In East Asia’s tribute system, China was the superior state, and many of its neighboring states were vassal states, and they maintained a relationship of tribute and rewards,” writes Liu Mingfu in The China Dream, a popular book about China’s plans to return to power.

Maintaining influence in Southeast Asia is part of the reason that Beijing is posturing in the South China Sea. In fact, China’s coastguard is growing so fast that in 10 years it will have…
continue reading Weekly Trading Webinar – 04-27-16 Weekly Trading Webinar – 04-27-16

One of Phil's strategies made $1,500 in 30 minutes during yesterday's Live Trading Webinar!

(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!)

Major Topics:
00:01:13 Tempting Tuesday – Cash! Cash, cash, cash and more cash!! Trade Idea
00:08:14 Trade Ideas
00:14:47 AAPL: ’13 ’14 ’15 stock of the year. Product Cycle. Charts. Trade Ideas
00:34:14 AAPL: Spread. Trade Idea
00:38:36 AAPL: Long Term Portfolio
00:42:21 Checking on the Markets: YG, SI, DOW, NASDAQ, TWTR, RUSSEL, NIKKEI, AAPL, BA, CL, WYNN, AMZN, TSLA, NG, VIX, TLT, XLF
00:46:20 Top Trade: TWTR
00:54:14 FOMC Meeting
00:59:21 GSPC comparing to UUP
01:01:48 Trade Ideas
01:14:26 Checking on the Markets after FOMC Meeting: YG, SI, DOW, NASDAQ, TWTR, RUSSEL, NIKKEI, AAPL, BA, CL, WYNN, AMZN, TSLA, NG, VIX, TLT
01:17:58 FOMC
01:23:32 More Trade Ideas….

Thursday Failure – BOJ and Fed Disappoint the Bulls

I told you so!  

Yes, I say that a lot these days and that's because I regret not being more emphatic with my cash calls in 2007 and 2008 when I was a less-experienced writer and felt "silly" being the only analyst who was worried about the irrational exuberance of the time.  A good example is our November Wrap-Up from 2007 and, specifically, November 6th, when I said:  

I don't like to play the role of Chicken Little but I feel like the casting is forced on me because almost everyone else I talk to is a bull.  I said my piece about the housing disaster on Monday and that's only ONE of the things I think are really terrible in the economy!

This is the problem with the markets, we are rallying on leaders and, in the case of oil companies, the worst kind of leaders, while the rest of the market; retail, regional manufacturing, services, dining, discretionary… is in the doldrums.  Rallying the market based on the energy sector is like a group of hemophiliacs electing a vampire as their leader, it's a recipe for disaster.  And who are our other "leaders"?  Commodities stoking inflation!  Holy cow people, does anyone actually live on the planet we're investing in? 

Sound familiar?  On October 29th, 2007, I had pointed out that the MSM was "yadda yadding" over the bad news saying:

Back in August I told readers about the dirty little secret of the financial press, they are ratings whores just like every other aspect of the media, and that means they will tell you whatever you want to hear!  Newsletters (like this one) are no different because we rely on subscribers to pay the bills and subscribers don't like to hear bad news any more than the average person who

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Sell in May And Buy Back Higher In November


Sell in May And Buy Back Higher In November

Courtesy of 

Summary: The "summer months" start next week. The period from May through October is known as the "worst 6 months" of the year for stocks. True, the probability of a truly bad month is higher and the probability of a really great stretch of months is lower during the summer than in the winter. But, overall, the expected return over the next 6 months is positive: median returns in winter and summer since 1970 are nearly the same. You might very well sell in May and buy back higher in November.

* * *

One of the axioms of Wall Street is 'sell in May and buy after Halloween'.  Mark Hulbert says that over the past 50 years, the Dow has an average return of 7.5% from November through April ("winter") versus an average loss of 0.1% from May through October ("summer").

So, is the summer period that awful?

Using SPX instead of the Dow, the data since 1970 still favors winter over summer: the average return is 6% in winter versus 2% in summer.

But this data is skewed by a few outliers; stocks fell 37% in the summer of 2008, by 20% in 1974, and by 15% in 1987, to name a few.

Using median values, winter's return is 5% versus 4% in summer. That's a very small difference. The returns in summer are typically positive, meaning, you might very well sell in May and buy back higher in November.

Overall, 76% of winters since 1970 have been positive; fewer summers are positive (67%), but the difference is slight.

So why do investors fear the summer months?  There are two reasons.

First: since 1970, 64% of the worst months (in which stocks fell 5% or more) occurred during the summer.  A bad month is twice as likely during the summer as the winter. 

Moreover, really bad seasons with losses of more than 10% occur more often in the summer: 13% of summers experience a "correction" versus only 4% of winters. 

Second: great…
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Waiting for the Fed Wednesday – AAPL Gives Us Huge Wins

I told you so!  

Aside from saying CASH!!! 9 times in the morning post (and 3 more in our Live Member Chat Room during the day), we laid out a perfect hedge on the Nasdaq using the Ultra-Short (SQQQ) that will now be over $8,000 in the money off our $1,100 outlay with another $8,000 to gain if the Nasdaq gets any worse – not bad for a day's work, right?  Actually, the real money was made in the evening, as my last trade idea for our Members in Live Chat (3:19 pm) was:

Into the close I kind of like shorting Nikkei Futures (/NKD) at 17,530 as long as it stays below 17,550.  If we go down – they'll go down but if we go up, they are already up and I doubt the pop so fast as you can't stop out.  Obviously, if AAPL earnings are good – get out.  

As you can see on the /NKD chart, we nailed the move and caught a 230-point drop to the 17,300 line for a $1,150 per contract gain.  We'll be doing one of our World famous Live Trading Webinars this afternoon (1pm, EST) where, among other things, we teach the fine points of Futures trading.  

In last week's Webinar (replay available here), we left off with 11 short oil contracts (/CL) at $43.54 and 3 short S&P (/ES) contracts at 2,101 and the S&P fell to 2,080 the next day (21st) for a $3,150 gain and oil hit our goal at $43 for a $5,940 gain.  This morning, we shorted oil again at the $45 line, but with tight stops above as we're wary of the inventory report at 10:30.

Futures trading is how we amuse ourselves at Philstockworld, as we're not day traders and long-term trades – if done properly – are BORING!  Our Long-Term Portfolio, however, is not boring at all – closing out yesterday up 94%, though we'll take a little hit on Apple (AAPL) this morning.  Speaking of AAPL, the details are on our main page but
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Apple Tumbles After Missing Sales And Earnings, Guides Below Lowest Estimate

Courtesy of ZeroHedge. View original post here.

First it was Twitter, now it is consumer tech titan AAPL's turn to tumble. For those pressed for time, here is the breakdown:

  • APPLE Q2 REVENUE $51.56BN, EST 251.97BN
  • APPLE Q2 EPS $1.90, EST $2.00
  • APPLE SEES 3Q REV. $41B-$43B, EST. $47.4B
  • APPLE SOLD 4.03M MACS IN 2Q, EST. 4.6M
  • APPLE 2Q IPHONE ASP $641.83, EST. $651

And now the details:

Moments ago AAPL reported Q2 EPS of $1.90, missing expectations of $2.00 on revenue of $50.56BN which not only plunged by 13% from ayear ago, but also significantly missed expectations of $52 Billion. Perhaps the biggest driver for this was both the sequential and annual plunge in Chinese sales, which dropped to $12.5 billion from $16.8 billion a year ago.

And while Apple beat expectations on iPhone sales, selling 51.2 million units in the quarter, above the 50.7 million expected, if still 16% lower than a year ago, it did so on both a lower than expected margin of 39.4%, and lower iPhone ASPs, which dropped to $641.8 below the $651 estimate.

Worse, the company's guidance for Q3 revenues was absolutely abysmal, and now sees only $41-$43BN in Q3 sales, well below not only the median estimate of $47.35bn but below the lowest sellside estimate of $43.95bn.

But the scariest chart is probably the one showing the sharp slow down in sales across virtually all geographies.

For those curious about AAPL's crash, the gross cash rose once again to a new record high…

… but net cash after deducting AAPL's rapidly rising debt shows that it is virtually unchanged for 3 years:

According to Tim Cook, "our team executed extremely well in the face of strong macroeconomic headwinds. We are very…
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Tempting Tuesday – S&P 2,100 is Still the Line to Watch Ahead of the Fed

Here we go again!  

Back in the summer, EVERYONE said we were going to break out to new highs and the analysts were tripping over themselves to predict a higher goal for the S&P and, after calling for caution since May, I virtually screamed for people to get to cash on July 20th in "Monday Market Manipulation – Everything is Awesome" in which I said:

CASH!!! People! Cash, cash, Cash and more CASH!!! I can only tell you and show you that the conditions we are seeing now – INCLUDING the market-boosting government bailouts – are VERY similar to what happened in 2007/8 leading up to the collapse. That is the limit of my ability. In 2007 and early 2008 I also was "wrong" and the markets went up and I said it was ridiculous and the markets went up and I warned people to go to cash and the markets went up and my only regret was that I didn't do MORE to warn people how dangerous the markets were at the time.

Fortunately, we followed our own advice and cashed in our Member portfolios – getting out at the red line on our Big Chart (+15%) and getting back in at the green line (Must Hold) and THAT is why we have AVERAGE gains of over 100% since last summer – especially as we did it all over again in November!  Our timing could not have been better.  PERHAPS this time is different but I have that same sense of foreboding I had in July but not so imminent that we've gone to all cash – but we do have $120,000 worth of downside hedges in our Short-Term Portfolio and we did tightly cover our Long-Term, Butterfly and Option Opportunity Portfolios (see weekend review).

In fact, we gained about $8,000 (1.3%) in our paired Long and Short-Term Portfolios on yesterday's little dip so I think we're bearish enough there but the OOP lose $2,000 (2%) and the Butterfly Portfolio, God bless it, was flat (it's supposed to be). Portfolio balance is a tricky thing and it's important, when you are worried about market direction – to have a very good idea of how a 1% rise or fall will affect your overall balance.  …
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The Most Dangerous Divergence

Courtesy of Jim Quinn of The Burning Platform

The chart below would appear to be in conflict with the results of a recent Gallup poll regarding stock ownership by Americans. The ratio of household equities to money market fund assets is near a record high, 60% above the 2007 high and 30% above the 1999 internet bubble high. The chart would appear to prove irrational exuberance among the general populace.

In reality, the lowest percentage of Americans currently own stock over the last two decades. With the stock market within spitting distance of all-time highs, only 52% of Americans own stock, down from 65% in 2007. As the stock market has gone up, average Americans have left the market. They realize it is a rigged game and they are nothing but muppets to the Wall Street shysters.


The reason the ratio of household equities to money market funds is so high is due to the Federal Reserve’s “Save a Wall Street Banker” policies implemented over the last seven years. When you purposely destroy the lives of senior citizens by reducing interest rates to “emergency” levels of 0% and keep them there six years after the great recession is over, it tends to reduce the amount of savings in money market funds. The divergence created by the Fed’s insane policies is borne out by the data.

The average middle class American has experienced two Fed induced financial collapses since 2000, with another coming down the tracks in the very near future. They have been impoverished by the Fed’s ZIRP and QE policies, sold to the masses as saving Main Street, but really designed to save and further enrich Wall Street. The entire engineered stock market rally has been designed by the Fed, Wall Street bankers, and the CEO’s of corporate America who have bought back hundreds of billions of their stock, in order to enrich the .1% and their lackeys.

The average middle class American has rationally exited the rigged stock market and refuse to be lured back in. Back in 2007, nearly three in four middle-class Americans, with annual household incomes ranging from $30,000 to $74,999, said they invested money in the stock market  according to Gallup polling.


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Pension Funds - Taking the Long View: The Dangers of Short-Termism

By Jacob Wolinsky. Originally published at ValueWalk.

Pension Funds – Taking the Long View: The Dangers of Short-Termism

Scott Minerd, Managing Partner, Chairman of Investments and Global Chief Investment Officer, Guggenheim Partners

Christopher Ailman, Chief Investment Officer, California State Teachers? Retirement System; Co-Chair, Global Capital Markets Advisory Council, Milken Institute
Scott Evans, Deputy Comptroller, Asset Management, and Chief Investment Officer, New York City Retirement Systems
Vicki Fuller, Chief Investment Officer, New York State Common Retirement Fund
Hiromichi Mizuno, Executive Managing Director and Chief Investment Officer, Government Pension Investment Fund, Japan

Intensifying global competition, flagging corporate earnings and emboldened activist investors ...

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Zero Hedge

Buchanan: If There's A 2nd Cold War, Did Russia Really Start It?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Patrick Buchanan via,

Friday, a Russian SU-27 did a barrel roll over a U.S. RC-135 over the Baltic, the second time in two weeks.

Also in April, the U.S. destroyer Donald Cook, off Russia’s Baltic enclave of Kaliningrad, was twice buzzed by Russian planes.

Vladimir Putin’s message: Keep your spy planes and ships a respectable distance away from us. Apparently, we have not received it.

Friday, Deputy Secr...

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Phil's Favorites

Insider Buying at Infinera

By Ilene

Infinera Corporation (INFN) -- an optical transport networking equipment, software and services company -- experienced one of those brutal selloffs last week, with the stock falling from over $15 down to around $12. For perspective, that's a 20% decline in market capitalization in response to a weak outlook for this quarter's revenue, which was reduced from expectations of $272 million to $250 - $260 million -- a drop of around 6% at the midpoint.

Yesterday, both the CEO and the CFO of the company decided to buy shares (May 3). Their buys were filed after hours, and the stock gapped higher this morning from its close on Tuesday of $11.52 back to $12.02 today.


[From Insider Cow - type INFN in Insider Cow's sear...

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Chart School

S&P 500 Snapshot: Another Down Day

Courtesy of Doug Short's Advisor Perspectives.

Global markets had another down day. The Nikkei took a holiday, the Shanghai Composite slipped a fraction 0.05%, the SENSEX fell 0.51%, and the Hang Seng fell 0.73%. The Euro STOXX 50 dropped a more disappointing 1.19%. Our benchmark S&P 500 opened lower and sold off it waves to its -0.86% mid-afternoon low. A bit of afternoon buying trimmed the closing loss to -0.59%.

The yield on the 10-year note closed at 1.79%, down two basis points from the previous.

Here is a snapshot of past five sessions in the S&P 500.

Here is a daily chart of the index. Volume in today's decline was unremarkable.

A Perspective on Drawdowns

Here's a snapshot of selloffs since the 2009 trough.


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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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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Global stocks are falling again (Business Insider)

Global stocks are under pressure once again and US futures point to extended losses for the stock market from Tuesday.

These 4 things could rattle the global economy (Business Insider)

After the darkness at the start to 2016, the world economy actually looks pretty good right now.


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Kimble Charting Solutions

Junk Bonds- Potential breakdown at triple resistance zone

Courtesy of Chris Kimble.

Many like to watch the price action of Junk Bonds, because they can send important messages about the strength or lack of in the stock market. Below looks at Junk Bond ETF JNK


As you can see, JNK looks to have created a double top in 2013 and 2014 and weakness in the sector soon followed. Once weakness really started to take place in this sector (2015), stocks didn’t have much luck moving higher.

JNK created a bullish reversal pattern (bullish wick pattern) the week of 2/5 and started turning high...

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Digital Currencies

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On 'Satoshi Nakamoto'

Courtesy of ZeroHedge. View original post here.

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On ‘Satoshi Nakamoto’

By Mark O' 

Craig Wright, an Australian computer scientist, self-declared cyber security expert and entrepreneur, has claimed to be the creator of Bitcoin, the elusive &l...

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Swing trading portfolio - week of May 2nd, 2016

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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PRGO, VRX and an Overpriced Papa

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

By Ilene 

Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote, 

"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today. 

Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...

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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...

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PSW is more than just stock talk!


We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

Thank you for you time!

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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