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Financial Markets and Economy

Why Brexit Is So Bad for the Global Economy (The Atlantic)

Great Britain’s decision to extricate itself from the EU has consequences that are at once far-reaching and unknown. By Friday morning, no market was immune. Great Britain’s currency, the pound, had fallen to its lowest levels since 1985, and the FTSE (an index of the London stock exchange) and DAX (a German stock index) plummeted. In the U.S., markets opened in the red, gold (a commodity that many investors flee to at times of uncertainty) was up, and traders around the globe prepared for a volatile day amid the question of what the future will look like with the U.K. untethered from the European Union.

Stocks Plummet As Brexit Punishes Global Markets (Sky News)

Global markets were plunged into turmoil after the UK voted to leave the EU, though the FTSE 100 was spared the worst of the pain by the time it closed in a roller-coaster session.

US stocks just wiped out their gains for the year (Quartz)

Hours after the UK voted to quit the European Union, investors put stocks on notice.

U.S. Politics Scares Overseas Investors (Bloomberg View)

Sometimes, an economic paper delivers such a disturbing result that you have no choice but to sit up and take notice. That was the case for me, when I saw this new study by Stony Brook University’s Marina Azzimonti. Azzimonti’s disquieting hypothesis is that political partisanship is deterring overseas investment in the U.S.

BrexitThe sky has not fallen after Brexit but we face years of hard labour (Telegraph)

It is time for Project Grit. We warned over the final weeks of the campaign that a vote to leave the EU would be traumatic, and that is what the country now faces as markets shudder and Westminster is thrown into turmoil.

The stunning upset last night marks a point of rupture for the post-war European order. 

Stocks Send an Inflation Signal (Wall Street Journal)

The message from the bond market this


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The Market’s Response To Crisis

 

The Market’s Response To Crisis

Courtesy of 

The most important thing long-term investors need to see today is the market’s response to crisis, courtesy of Dimensional Funds.

Screen Shot 2016-06-24 at 9.22.05 AM

The chart above should put the Brexit in perspective. Nobody knows yet what the implications will be, but I’m pretty confident that this is no more significant than any of the six events above. Now of course there are never any guarantees, that’s what risk means. And if you need the money in the next five years, you should not be subjecting it to the risk of the stock market anyhow.

I’m a believer in practicing what I preach, so today in my personal account, I added to the international side of my portfolio. This is definitely not a market call, I am not suggesting the bottom is in, but I also know not to look a gift horse in the mouth. When an entire index falls ten percent in a day, you hold your nose and hit the buy button. Investing is all about giving your future self a chance at a better life, and it’s days like today that determine whether or not you’ll be able to do so via the stock market.

I’m invoking article 50 and resurrecting a Warren Buffett quote, who had this to say when clients reached out to him after stocks fell in 1966:

After the Dow declined from 995 at the peak of February to about 865 in May, I received a few calls from partners suggesting that they thought stocks were going a lot lower. This always raises two questions in my mind: (1) if they knew in February that the Dow was going to 865 in May, why didn’t they let me in on it then and (2) if they didn’t know what was going to happen during the ensuing three months back in February, how do they know in May? There is also a voice or two after any hundred point or so decline suggesting we sell and wait until the future is clearer. Let me again suggest two points: (1) the future has never been clear to me (give us a call when the next few months are


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Friday Humor: What Comes After Brexit

Courtesy of Zero Hedge

On a day full of tears, jeers, and fears for many, we thought a little humor might help…

What comes after Brexit?

 

 

In other words…

 





Peter Boockvar: Now what?

 

Peter Boockvar: Now what?

Courtesy of

My friend and fave policy bear Peter Boockvar has some unanswered questions worth considering in the wake of the historic events of this week…

Ok, so let’s now deal with what’s next. I acknowledge the chaotic response and the shock on the part of many to what took place. The disruptions will be plentiful. For the UK, businesses will reign in investments and decision making may get paralyzed but I believe this would only be short term in nature. The UK will adjust, deals will get redone, lawyers will have a field day and at some point in coming years the UK will deal with the EU just as Switzerland and Norway do today. Of course what becomes of the EU in coming years is now the vital question. Is this the needed wake up call to a EU Parliament that has 40,000 employees doing god knows what except implementing rules and if some of those rules get broken, like debt and deficit limits, there are no consequences? Does this expose the European social welfare state as hitting its limits of excessive debt and too little growth? Does the ECB realize that all they’ve done was bought time and that time is now up? Will the poison of NIRP be revealed for what it really is, a tax on capital and a deprivation of yield that is damaging the entire European financial system. Will QE be revealed as a massive bubble blower of assets that will at some point reverse? Will Hollande and Renzi, to name a few, follow thru on their attempts to liberalize their economies? Will the onset of this potential crisis be the force that tells the bureaucracy that business as usual is over?

Source:

Peter Boockvar
Managing Director and Chief Market Analyst
The Lindsey Group LLC





Comment by scottmi

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  1. scottmi

    Monday, Monday/Phil…. will recovery start or take another leg down..? What would be a good new hedge for a downward continuation and how far might it run (given 5% levels, etc)?
     







My Little Trick for Coping with a Correction

Courtesy of Joshua Brown, The Reformed Broker

Good morning and welcome to the end of civilization as we knew it. Just kidding, but wow – what a stunning development in Europe. Even some of the people who voted for Brexit are telling reporters it was just to vent, they never thought it would actually happen. Welp…

Anyway, last August, with the markets in free-fall after the surprise devaluation of the yuan, I published the below and subsequently received an ocean of feedback from people who were helped by it. I actually did the Facebook and Netflix buys personally, at absurd prices, shortly after. This time around, who knows?

I republish My Little Trick for Coping with a Correction in full here today, hope it helps you too. It’s important to point out that today is merely day one, and things could get worse for awhile. Stay woke out there. – JB

***

It’s going to be bad this morning. China was down over 8% last night. Europe is down close to 5% this morning. As of this writing, the Dow Jones looks like it’s going to open down another 600 points, after losing 1000 points last week.

It’s official, we’re experiencing the 28th 10% correction since WWII.

How do you cope? There are some tricks.

The first is, you remind yourself that this is what diversification and strategy are for. But it’s too late to start thinking about this now. If you don’t have anything in place to mitigate the volatility of the stock market already, nothing you do today is going to make a difference.

But there is one thing that anyone can do right now that could be very helpful as a coping mechanism to get them through today and whatever is to come. It’s a psychological trick I picked up somewhere along the way during my 17 years trading and investing in the markets.

Before I lay this trick out, a standard disclaimer is in order: I do not know you personally nor do I know anything about your financial situation. I don’t dispense advice here on this site for exactly this reason. I share my thoughts and a bit about my own process, but I never tell strangers what they themselves ought to…
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Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment. 

What bothers me the most was that some of the undertone of the Leave campaign had a certain xenophobic message that leaves a bad taste. I understand the frustration of people with the European structure but that undertone is what leads to the killing of the MP we saw there. Most of the congratulation messages coming in right now in Europe come from far right parties that also have that xenophobic undertone.  

BTW, Trump seemed to be happy, but I wonder how he will feel if Scotland leaves the UK and applies to the EU again. His golf courses will be in the EU again!





T (Told You So) GIF – Brexit Victory Rocks the Market

Prime Minister David Cameron said he would resign after the U.K. voted to leave the European Union. He said a new leader will be in place by October.Wheeeeeee – what fun! 

What do you want me to say?  I could not possibly have warned you more, I couldn't possibly have said CASH!!! or "Cashy and Cautious" one more time without sounding like an idiot and I could not have given out more hedging ideas or better shorting lines on the Futures to save you from being "surprised" by the vote by the UK to leave the EU and the market repercussions we're seeing today.  In fact, right in yesterday's morning post I told you:  

Nice test of 2,100 on /ES, which is a good shorting line along with 17,8000 on /YM, 4,450 on /NQ and 1,160 on /TF and 16,600 on /NKD is ridiculous since the Dollar is down half a point (93.23) but safer to short the US indexes since the Dollar coming back would be good for /NKD.

This morning I called longs on our indexes in a 3:38 am Alert to our Members and we caught a nice move up and I'm not even going to talk about how profitable yesterday's Futures shorting ideas were since it seems like crazy, unrealistic money when you catch a 5% correction and, anyway, if you missed it – it's not like these happen every day, week, month or year.

That's why I was making such a big deal about it – how often are we able to get ourselves ahead of a major market correction?  As I have been saying, the RISK of the market making new highs and us regretting missing a bit of a move higher were/are nothing compared to the REWARD we now have from flipping short and moving to CASH!!!, where we now get to go bargain-hunting on all those stocks people are panicking out of.

We're in no hurry to do anything, however – let the chips fall where they may over the weekend and we'll see how sentiment is running over the weekend.  Our morning longs have already stopped out and, on the whole, the S&P
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News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Brexit Upends Global Markets as Stocks, Pound Plunge; Yen Soars (Bloomberg)

Global markets buckled as Britain’s vote on European Union membership infected every asset class.

The pound plunged by a record and the euro slid by the most since it was introduced in 1999 as the BBC projected a victory for the "Leave" campaign with most votes counted in Britain’s referendum on membership of the European Union. South Africa’s rand led slides among the currencies of commodity-exporting nations as oil sank to about $47 a barrel and industrial metals slumped. The yen surged and gold soared with sovereign debt as investors piled into haven assets. European and U.S. futures tumbled as Asian stocks dropped by the most in five years.

Brexit: what happens when Britain leaves the EU (Vox)

Britain's exit will affect the British economy, immigration policy, and lots more. It will take years for the full consequences to become clear. But here are some of the most important changes we can expect in the coming months.

The process of leaving the EU will take years

A Brexit vote is not legally binding, and there are a few ways it could theoretically be blocked or overturned. However, as the BBC notes, "it would be seen as political suicide to go against the will of the people as expressed in a referendum."

A dangerous 'confluence of forces' is threatening the US economy (Business Insider)

The International Monetary Fund released a preliminary report on Wednesday that predicted the US economy will grow 2.2% this year, and 2.5% in 2017.

US stock futures are getting slammed after early Brexit surprises (Business Insider)

After early surprises in the UK's EU referendum, US stock futures have turned negative.

Britains Stock-Index Futures Drop as Referendum Results Come In (Bloomberg)

U.K. index futures fell as the initial results of the referendum on European Union membership signaled a closer race than expected.


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Two Deadly Wealth Management Assumptions

 

Two Deadly Wealth Management Assumptions

Courtesy of 

Financial scams are rolling off the assembly line double-time these days, as clients are sold products and services appealing to their post-crisis fears of volatility rather than their now-chastened esprit de greed.

Investors (and their advisors) are targeted easily by people promising “non-correlated” returns without market exposure or sophisticated hedges that will “protect” them from swings in the market. As though a market swing were a risk on par with a total loss of capital…and, of course, it is not.

The deadly assumptions investors make are myriad, but two classic ones came to the fore in this week’s headlines.

The first deadly assumption we’ll look at today:

The guy belongs to my church / temple / country club / ethnic group, of course he’ll look out for me. 

Maybe he will, but is affinity a good enough reason to trust a financial advisor?

Journeyman quarterback Mark Sanchez found out the hard way that this sort of thinking can easily lead one into the arms of a predator…

From ThinkAdvisor:

Former New York Jets quarterback Mark Sanchez and other professional athletes said they were cheated out of millions of dollars in a Ponzi-like scheme orchestrated by an investment advisor who appealed to their Christian faith.

Sanchez and Major League Baseball pitchers Jake Peavy and Roy Oswalt were defrauded out of about $30 million, according to a recently unsealed U.S. Securities and Exchange Commission lawsuit in Dallas federal court. The athletes all used the same broker, Ash Narayan, formerly of RGT Capital Management. The advisor gained their trust through religion and their interest in charitable works, the SEC said.

The complaint alleges that the “advisor” steered client money into a private venture that he controlled, and when they balked or expressed concern, he forged documents to steer even more into the collapsing company:

In mid-2011, Sanchez agreed to make a $100,000 investment in TTR. Instead, Narayan forged documents and directed more than $7 million of Sanchez’s money to the ticket company, the SEC said. In total, Narayan transferred more than $33 million from all investors to TTR, earning almost $2 million in


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OpTrader

Swing trading portfolio - Week of June 27th, 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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Zero Hedge

US Services Economy Disappoints As 'Optimism' Plunges To Record Lows

Courtesy of ZeroHedge. View original post here.

The June flash Services PMI printed 51.3, flat to May but below 52.0 bounce expectations with both employment down (3rd monthly drop in a row to lowest since Dec 2014) and optimism tumbling - "service providers indicated another drop in confidence regarding the year-ahead business outlook, with the latest reading the weakest since the survey began in late-2009."

Commenting on the flash PMI data, Chris Williamson, chief economi...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Why Brexit Really Is a Big Deal for the U.S. Economy (Time)

Politicians and technocrats of all stripes are trying to reassure Americans that Britain’s vote last week to leave the EU won’t affect them economically. They are wrong.

Brexit has already caused a number of dominos to fall

World leaders and economic experts react: Brexit is 'as significant as post-9/11' (B...



more from Paul

Kimble Charting Solutions

Global Leading Indicators, testing 6-year rising support channels

Courtesy of Chris Kimble.

Long before last weeks Brexit vote, Germany’s DAX index has been an upside and downside global stock market leader, over the past few years. Below looks at the pattern the DAX has created over the past decade.

CLICK ON CHART TO ENLARGE

Since mid 2009 the DAX has remained inside of rising channel (A). The top of this channel was hit in April of 2015. Since hitting rising channel resistance, the DAX has ...



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ValueWalk

Two Centuries of Parasitic Economics

By Jacob Wolinsky. Originally published at ValueWalk.

The work of independent scholar, Basil Al-Nakeeb, ‘Two Centuries of Parasitic Economics: The Struggle for Economic and Political Democracy on the Eve of the Financial Collapse of the West’ walks readers through a chronology of flawed economic thought and the inferior theories produced as a result. But Al-Nakeeb takes his arguments one step further – by proposing an alternative and efficient macroeconomic blueprint built on a foundation of efficient taxes, finance and fair, just political democracy.

Two Centuries of Parasitic Economics: The Struggle for Economic and Political Democracy on the Eve of the Financial Collapse of the West

Basil Al-Nakeeb poses many stark...



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Phil's Favorites

Understanding Brexit: The Powerless Press Their Thumb In The Eye Of The Power Elite

Courtesy of Charles Hugh-Smith at OfTwoMinds

The premier strategy for retaining power is to give the powerless a carefully managed illusion of decision-making and autonomy. Having a say over one's life and choices is called agency, and it is the illusion of agency that makes democracy such a powerful tool of control.

The second most effective means of maintaining power is to limit the choices offered the powerless. Offering the powerless false choices, i.e. the choice between two functionally equivalent options, provides the comforting illusion of agency while insuring that the status quo Power Elites remains in charge, regardless of the choice made by the powerless.

For example, give the powerless a choice between Tweedle-Dum (Republicans/Tories) and Tweedle-Dee (Democrats/Labour). Whomever they elect...



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Chart School

Best Stock Market Indicator Update

Courtesy of Doug Short's Advisor Perspectives.

We continue to receive requests for updates to the "Best Stock Market Indicator", which used to be a regular guest post from John Carlucci. Here is an update of the "Carlucci" indicator along with a summary of John's explanation on how he uses it.

As John described it: "The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money."

Latest Indicator Position

According to this system, the market ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Promotions

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!

PhilStockWorld.com 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 jennifersurovy@yahoo.com 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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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