by Phil Davis - August 28th, 2014 8:12 am
The Futures are off a bit today and that's no surprise to those of us who have been paying attention to the volume, or lack thereof, as we made our final approach at the 2,000 line on the S&P 500. Jim Cramer was literally foaming at the mouth this week as he and his CNBC co-conspirators herded the sheeple into the markets to participate in the tail end of the rally, where the suckers could hold the bags for their Corporate Masters.
Why am I angry at Cramer today? Because yesterday he committed the same crime he commtted in 2008 that cost so many people their life's savings – he told people not to sell their stocks on a pullback. "Don't take profits" is the message for the viewing public. But, I would ask, if people don't take profits – when will they ever get profits? What kind of stupid message is that? Well, it's the message that leaves you holding the bag while his hedge fund buddies head for the exits. It's not much different than telling one group of people not to leave a burning building while you make sure all your friends are getting out safely.
"This is not just my opinion. I can prove it to you empirically. See, as I was preparing to write my book "Get Rich Carefully," I went over the previous five years of trades made by my charitable trust. And as I reviewed those trades I noticed that far too often, my good judgment would be overcome by excessive skepticism."
If the "proof" Jim is talking about is his Action Alerts Plus, then I'd say you really should think long and hard about following his advice here (via Kirk Lindstrom – who does compete with Cramer):
I guess, sure, Jim legitimately should regret that he wasn't more bullish from 2008 to 2013, when the market popped 200% and his trust gained about 100% but don't you think the lesson Cramer should be taking from that experience is to CUT YOUR LOSSES, not…
by Phil Davis - August 6th, 2014 7:23 am
Well, same old, same old really. As the US and Europe ratchet up the sanctions, Putin has ordered "retaliatory measures" of an unspecified nature and has massed more troops along the Ukraine boarder:
"Political tools of economic pressure are unacceptable, they contradict all norms and rules," he said. "In that connection, the government of Russia has already proposed a series of retaliatory measures against the so-called sanctions of certain countries. I think that in current conditions, with the goal of protecting the interests of domestic producers, we could certainly think about that." he added.
In recent days, Russian regulators have banned shipments of some European fruits and vegetables and raised questions about the safety of products from MCD in Russia, threatening to ban their sale. Officials deny any political motivation for those moves.
Russia's Vedomosti newspaper reported Tuesday that the government was considering a partial or total ban on overflights of Siberia by European airlines, which use the route to shorten trips from Europe to Asia.
European markets are already suffering with Italy dropping 2.9% this morning on news that it has officially slipped back into a Recession with GDP falling 0.2% in Q2 – a far cry from the +0.2% predicted by leading economorons. The IMF has cut their optimistic growth estimate for Italy to 0.3% in 2014 and dropped Spain to 1.3%. Spanish markets are down 2% today as well.
We decided this was a good time to buy this morning and, at 6:58 this morning, I put up this chart for Members in our Live Chat Room, saying:
Check this out – all hitting the S1 lines so far:
It's certainly worth playing for a small bounce at
by Phil Davis - August 5th, 2014 7:40 am
Actually it's a rule of thumb at PSW that dip buyers need to get burned 3 times before they wise up to a proper correction, so they still have at least another try in them before they finally walk away from this crazy market. As you can see from Oppenheimer's S&P chart, 56% of the S&P has plunged back below their 50 dma in the past 30 days.
This is EXACTLY what I've been warning you about. At the same time the indexes LOOKED like they were rallying, MOST stocks were actually being dumped while a few (AAPL, for expample) were kept aloft to maintain the ILLUSION that the market was still strong. That's how they keep the retail buyers moving in while the institutional investors head for the hills. Yesterday's action was nothing but another low-volume bounce – the kind we teach our Members to ignore:
Short-term, we're certainly oversold but we'll be very critical of a low-volume recovery until we see those 50 dmas retaken on the indexes. Those are way up at 16,877 on the Dow, 1,954 on the S&P, 4,368 on the Nasdaq, 10,912 on the NYSE and 1,160 on the Russell. Anything less than that and there's nothing to be particularly bullish about.
That doesn't stop us, of course, from picking individual short-term longs. On Wednesday, for example, I was on TV on Money Talk and we featured this play on GTAT as my "Options Play of the Month." Last night, GTAT knocked it out of the park on earnings and the stock shot up over 10% to $15+ already in pre-market trading. That will put us well on track to the full $14,000 return on this spread and a 1,650% gain on cash ($13,200 profit on the $800 we invested)! Not bad for a few day's work, right?
By the way, if you never want to miss trade ideas like GTAT again – sign up right here for Membership and you will be among the first to hear about our new trade ideas every day!
by Phil Davis - August 1st, 2014 7:07 am
What fun this is! Well, it's fun for us because we were playing for this drop and not only did our bearish Short-Term Portfolio pop 10% yesterday but our bullish Long-Term Portfolio crossed over the 20% line for the first time this year. How is that possible? Because we are using our "Be the House – Not the Gambler™" strategy to SELL premium to suckers who think they know what the market is going to do!
This allows us to make money in any market direction while remaining well-hedged for the downturns. It also allows us to put up these spectacular gains while using less than 50% of our cash – keeping it on the sidelines and ready to deploy when we catch a good bargain on one of our Buy Lists to add to our virtual portfolios. We had not one but two special Live Trading Webinars yesterday for our Members, where we cashed out the XOM puts I mentioned FOR FREE last Friday for a 300% gain.
If you want to get our morning posts delivered to you each day, in progress, at 8:30 each day with access to the full posts pre-market – just sign up right here.
Last Friday I also suggested our SCO (ultra-short oil) longs and that $1,200 position in our Short-Term Portfolio closed yesterday at $3,400 – up a very nice 183% and the SQQQ trade I aslo put up in last Friday's morning post for a net $400 credit (also featured on TV on this Wednesday's Money Show) finished yesterday's session at $1,060 – up $1,400 (350%) in less than a week!
Another hedge we discussed were the TZA Aug $14 calls which were $1.67 on Wednesday (more FREE picks in the morning post), which was already up 153% from 0.66 when I first mentioned them (outside of our Live Member Chat Room) in our July 8th post. As of yesterday's close, they were $2.51 – up 50% from Wednesday and up 280% overall.
by Phil Davis - July 31st, 2014 8:05 am
I warned you about Argentina!
We discussed them way back in December as they faked their own GDP data, that it was nothing more than window-dressing to keep them from LOOKING like they were in default – even though they were clearly heading that way.
So it should come as no surprise that, as the deadline finally comes, there is no surprising rescue for the World's 26th largest economy ($477Bn vs $499Bn for Norway, $394Bn for Austria, $385Bn for Thailand and $248Bn for Greece). Since it's not a surprise, we took the opportunity this morning to go long in the Futures, as the 1% dip around 4am seemed overdone. I sent out a special Alert to all of our Members, saying:
Still, I like /TF for a bullish over the 1,130 line (testing now) and /YM at 16,700 and /ES 1,950 for bounces but VERY TIGHT STOPS if any of them fail.
Fortunately, they did not fail and already (8am) we have /TF 1,135 (up $500 per contract), /YM 16,732 (up $160 per contract) and /ES 1,955 (up $250 per contract) and our Egg McMuffins are paid for and those trades are now off the table (tight stops at least), as we expect more selling at the open!
It's nice to play the Futures to offset bearish bets, like the SQQQ (ultra-short Nasdaq) trade we discussed in yesterday's morning post and the QQQ weekly $96 puts we added for .22 in yesterday's live Member Chat ahead of the Fed – as we expected the statement would disappoint. Those should come out well this morning and going long on the Futures locks in those potential gains for us.
Now, getting back to Argentina, ARGT is UP 32% this year and that is just silly so ARGT makes a nice short at $23.20 and you can, in fact, buy the Oct $23 puts for $1.45 and, if they give back that 32%, they'll be back to $19 and you'll have $4+ for a $2.55 gain (175%) – that's a fun way to play it.
by Phil Davis - July 25th, 2014 7:55 am
If you read yesterday's post and took action on our trade idea to short Oil Futures (/CL) at the $103 line, then you were able to pocket $1,000 PER CONTRACT in just 3 hours. In the Morning post (delivered to our Members via Email at 8:35 am), the trade idea was:
"We're still shorting Oil (/CL) Futures at that $103 line and we hit it again this morning and, hopefully, we'll get a nice pullback around 10:30 – after the natural gas report shows a nice build."
That's about on par for our Futures trading as we demonstrated LIVE in Tuesday's Live Trading Webinar $300 of Futures profits in less than an hour (replay available here). We'll be doing more Futures Webinars for our Members aside from our usual Tuesday Live Trading Webcasts (sign up for your Membership here so you don't miss our trade ideas).
How to trade the Futures is one of the many things we learn at Philstockworld – another thing is PATIENCE! Patience has kept us from chasing this rally as we once again top out the market. On Tuesday we took a nice, speculative bullish trade (but did not officially add it to our Portfolios) - just in case we do have a breakout – but, otherwise, we've been working on our downside protection.
We are FUNDAMENTAL traders who just so happen to use Options and Futures for leverage and hedging – simply because they are convenient and profitable instruments when used correctly. What we teach is not all that complicated – but it isn't easy either. That's why not many people trade Options and Futures – it requires discipline and takes time and practice to master – not really the kind of thing our education system prepares our students for these days….
YOU, however, should not be intimidated away from making money. Our basic concepts are VERY SIMPLE and the concepts are explained in quick videos like "How To Buy a Stock for a 15-20% Discount" and "The Secret to Consistent 20-40% Annual Returns" – something we are demonstrating this year in the 5 Virtual Portfolios we track for our Members.
by Phil Davis - July 22nd, 2014 8:13 am
How would you like to make $10,000?
If the Russell can finish this option period (24 days) 2.5% higher, at 1,178 or higher, we can turn net $1,000 or less cash into $10,000 for you. After all, if the Fed is going to give away money – why shouldn't we get our share?
I'll preface this by saying that our Members are already long on Russell Futures at the 1,150 line, as we made that call in our live Member Chat Room (become a Member here) earlier this morning.
If the market is going to remain bullet-proof (and missile-proof too, it seems) then the RUT is now the lagging index and we can construct a play to take advantage of it breaking back up by making a play on TNA, the 3x Ultra-Long Russell ETF.
Very simply, if we buy the August $72.50 calls for $3.45 and we sell the Aug $76.50 calls for $1.70, we have a net cost of $1.75 on the $4 spread that's $4.64 out of the money (at goal) and that's 6.4% out of the money so, to be safe, we'll need a 2.5% gain on the Russell, from 1,150 to 1,178.75 to make the full $4. 25 contracts at $4 = $10,000 so we can work with that.
But what about the cost of the 25 contracts (at $1.70 x 2,500, that's $4,250)? Well, there's a couple of ways to offset that. One way is to sell 25 TNA Aug $65 puts for $1.70 to offset the cost. The danger there is, if the Russell goes down 2.5% (to 1,121) or lower, we'll be assigned 2,500 shares of TNA for $65 ($162,500) – that could be unpleasant.
Instead, we can commit to being long TNA at $45 in 2016 by selling just 5 2016 $45 puts for $8, and that raises $4,000 and commits us to owning "just" 500 shares of TNA at $45 per share ($22,500).
Now, if you don't want to be bullish on the Russell when TNA is down 37% (Russell 1,006), then why are you long on it at 1,150?
by Phil Davis - July 21st, 2014 8:31 am
We all go down for a piece of the moment
Watch another burn to the death to the core
And the roadshow thrills pack the freaks and the phonies
Sing: now is now, yeah! – Rob Zombie
There is just no way to win betting against this market!
Well, actually, there is one way and that's betting that each pop is nonsense and tends to have a subsequent pullback intra-day but, long-term, the cumulative effect of all that low-volume pumping has been a rousing success, to say the least.
As you can see from Andy Thrasher's S&P chart, there has been some amazing underlying deterioration since the July 4th weekend with the Advance/Decline line falling back to trend and stocks above their 200-Day Moving Average dropping 15% in 3 weeks. Stocks above the 200 DMA is a fantastic leading indicator for downside move – ignore it at your own risk.
People are panicking into bonds, dropping the 10-Year Yield 20%, from 3.1% to 2.45% this year but it doesn't matter because Central Banksters are pumping SO MUCH MONEY into the Global Markets that there's enough to buy all asset classes simultaneously – something that is unprecedented in Financial History – what could go wrong?
Well, one thing that could go wrong is you putting your money into Mutual Funds. As it turns out, in an S&P study of actively managed Mutual Funds, only 2 (two) out of 2,862 actually beat the S&P over ANY of the fund's lifetimes (limited to 12 months or longer).
That's even worse than the average performace of hedge funds, which only averaged a 0.59% annual loss when compared to just putting your money directly into the S&P.
This dovetails with a conversation we were having this weekend in our Member Chat Room, where I identified 4 trade ideas for a $50,000 Portfolio that only used 1/4 of the buying power to generate $365,512 in projected profits over the next 15 years using CONSERVATIVE options strategies designed to MATCH the S&P, not beat it.…
by Phil Davis - July 18th, 2014 8:15 am
Can we possibly be this jaded?
Even on Wall Street, where ruining the lives of the middle class is a sporting event, you would think that the tragic death of 298 people being shot down in an airplane would AT LEAST cause the markets to pause for more than a few hours. That's not what the Futures would have you believe – they are moving up this morning (7:30) as if shooting planes out of the sky isn't a reason not to trade stocks at their all-time highs.
While our long trade ideas from yesterday's morning post worked out fantastically, we were very fortunately NOT GREEDY at 10:03, when I said to our Members:
Philly Fed up huge (like NY), 23.9 vs 10 expected though 17.8 last month means they were just being too pessimistic. That should give us a nice pop but I'd take those Futures profits off this run!
As you can see from Dave Fry's SPY chart, our timing was near perfect as things turned sour very quickly. That then worked out well for our oil shorts, which went from the $103 conviction target I laid out in the morning post (subscribe here to get them pre-market every day) back below $102, where I said to our Members at 11:34:
There goes $102 on oil! Congrats to the players! That's the new stop line, of course.
That was a very quick $1,000 PER CONTRACT profit on /CL and, right after that, we got the plane crash news so we increased our hedges in our Short-Term Portfolio and we added BA July $128 puts at $1.25 (because it was a BA plane involved in the incident) and they finished the day at $2.18 (up 74%) as well as DAL Aug $37 puts at $1.50, which were already $1.92 by the day's end (up 28%). I don't like to take advantage of tragedies like that – but it was the fastest way to add good protection to our portfolios.
by Phil Davis - July 10th, 2014 8:31 am
That's how much money yesterday's Alert to Members made as of this morning as the Russell Futures crossed our goal line at 1,150. The alert went out at 9:52 am and we had all day to enter as the Russell drifted along that line until, finally, we got our big drop this morning.
My call in the morning was:
I still like the /TF play below the 1,170 line – that's got $2,000 written all over it (down to 1,150).
We actually oveshot that mark with the bottom coming at 1,140, which is our -5% line on the Big Chart, which uses our 5% Rule™ to make these amazingly profitable predictions. Those extra 10 points were ANOTHER $1,000 per contract for those who hung on past our goaaaaalllllll!!!
Even if you are a free reader, you got your money's worth – as we gave away, FOR FREE, our TZA Aug $14 calls at .91 on Tuesday's post. Sure it was 50% after our Members got the trade at .66 on July 3rd, but beggers can't be choosers, right? Still, even if you only began following our hedge at .91, those calls are now $1.50 in the money, so up another 50% this morning for a $1,180 profit on the 20 we suggested in just two days!
That's just one of the many ways we teach our Members to make money by hedging at PSW (you can subcribe here) we expected this sell-off (see last two week's worth of posts) and positioned for it with trades like:
- DXD Aug $25/27 bull call spread (6/27 in main post) at net 0.60, now $1.15 – up 91%
- TZA Aug $15s calls (6/27 at 11:26) at .70, selling Jan $12 puts for $1 for net .30 credit, now 0.45 – up .75 (250%)
- 40 SQQQ Aug $40/44 bull call spreads (1/3 at 11:29) at $1.15 ($4,600), now $2.15 – up $4,000 (86%)
- 20 QQQ July $97 puts (1/7 at 9:35) at $1.59 ($3,180), now $3 ($6,000) – up $2,820 (88%)