Phil – great calls this past week, esp. friday and monday. in the old days I would have let Prechter et al scare me into trimming my longs and going short at just the wrong time. your feel for the markets is Tiger-esque. CHK, HOV, BX, TLT and XLF are big winners for me today. My biggest up day in a long time. Thanks!
Peter D: great write-up for Short Strangles, Part 1, looking forward to Part 2, particularly the adjustment part.
I have been very fortunate over the years as an investor. Last year was on of my best in terms of percentage gains. I have to attribute much of this success to my membership in PSW which gave me the best education available anywhere when it comes to the understanding of option trading , discipline and general trading strategies. I will be forever grateful to Phil and the many "highly skilled" traders that have offered their advice.
Well I want to thank P. Davis for his style and for the fact that he affirmed my thoughts for a correction. He was right and his confirmation of my bias saved me thousands. Mr. Davis is amoral when it comes to money. He realizes the poor are screwed but we must fight to win. A measure of sarcasm and dark humour and it is great reading. 100% right on the correction.
I have been here a year, and made most of my money back from the 14K fall. The people here are more than willing to help whe Phil cannot get to it. FWIW - This site is my brokerage firm, I was with Wells Fargo Portfolio and it was costing a fortune to trade, the costs here are more than offset with the data, trade ideas and profits you should make.. and I get a chuckle out of Cap and Phil's rantings on healtcare, guns, oh, yeah, and government….
Have been a member for about 6 months or there abouts. Signed up for a quarter at first and then for a year. To me, and it's only my opinion, it's an investment and I have made the membership fees back many times over on the strategy advice. Since joining and implementing the strategy of buy/writes and hedges I have cut my portfolio losses for the year and have a really good chance of going positive this year. If I would have continued down the road I was on, I would still have been fumbling around without a strategy and completely inept in what I was doing. I feel now the strategy is working and I am far more comfortable with the risks I am taking. I still have a lot to learn but I feel the fees have been one of the best investments I have made. The returns have been fantastic. Still have problems with the politics but hey nobody is perfect
WOW, look at DRYS go. Nice call on the entry the other week Phil. I got 200 at $6.66 and sold a 7.5 call for $.50, then on the tear today sold another 7.5 call for $1. This should puts me in at an average of $5.91 and called away at $7.5 for a profit of $300+ after commisions. Once again another Phil trade pays for this months membership.
Phil, I don't know how I can thank you enough for your guidance this past week. I'm up significantly in my portfolio and I've never been so relaxed watching the market panic. Thanks once again for being here for us.
I've recently done exactly what Phil described. I upgraded my ability to trade the IRA acct. by transferring acct. from TDA to TOS. TDA would not allow spreads; TOS does. Neither will allow naked options. With spreads I am able to buy calls or puts several months out then sell front month calls or puts over and over. This allows me to collect premium, which is, of course, the goal. This wasn't an original idea. Phil put me onto it. Since the transfer I've substantially increased my performance in the IRA!
Phil is a fundamentalist to his fingertips. His ability to value a stock goes well beyond p/e, as he understands the essence of many businesses, what gives them value and how they make their money. As such, his recommendations are invaluable to a investor who takes a value-oriented approach.
I enjoy your informative materials, Phil... as it is obviously beneficial to so many "styles" of trading the markets... long term, swing or day trading the market moves.
As a longer term trader, I really like you long term calls, as I for one recognize the difficulty of calling these, because the further out you go in time, projecting price movement becomes more difficult.
I have to congratulate you for your accuracy... You called the March 2009 market upward reversal almost to the day, and the AAPL reversal to THE day. Only one who has been a student of the economy and the markets over a period of time could have done this, and so many other accurate calls. I'm sure it was difficult and consistent work, but it did pay off... thanks from one who benefited big time !
Phil – just wanted to say a sincere thank you for teaching me how to offset, hedge, roll, and not panic. My account is up 10% in the last two weeks, and far from panic, this is becoming great fun. Thanks again,
I am an investor, not a trader. The information at Phil's World is top-notch and always relevant. It is great to see your website thriving.
Thanks to your teaching and guidance, I was able to make a killing on my /TF shorts. I averaged into 12 shorts at 1252 and got out of 6 at 1242 and 6 more at 1235. Last week I did the same with /CL, though I got out too early and left $2 on the table. Thank you!
Killed it tonight trading copper. Anyone who jumped in right after election is up about 75k on one contract!
GLD I took out my callers and rolled down my longs this morning, woo hoo!
Phil - I caught the interview…. terrific!. Your host recommended that the viewers should " go to your site, as you will be entertained ". That is for sure if you consider entertainment is laughing while you read, learn and make unbelievable leveraged profits that you never thought were possible. That is my kind of entertainment !
Newer member here, but just wanted to say thank you too. I've learned so much and I hope you'll be around for a long time helping us learn along the way.
Kudos on the POT puts! I studied the charts last night and you couldn't have hit the inflection points more perfectly. Since there are often many head fakes in the charts, that was very well done. I know they can't all work this well, but that was an extra unexpected bonus yesterday.
Phil - Another excellent teaching article - when you write like that it blows me away. Thank you!
I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure.
I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options.
You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone.
Phil – I think I finally figured out your "crystal ball" time frame. You're about 5-14 days AHEAD of what the market is going to do. It's taken me a long time to realize this, but boy it's been profitable. I go in when you recommend something at about 25% allocation, and then add to it each day it "goes the wrong way" Then BOOM, one day it's all good…. The long put list was literally exact in it's timing.
Dear Phil, I have followed along with your commentary and alerts and have been flabbergasted at your quick analytical skills and your journalistic skills to explain it clearly. In a little over three weeks I have cleared almost 1000.00 dollars and got an intensive education at the same time. I would like to immediately upgrade my membership. It is hard for me to follow all evening as I am in Tokyo but I can join you at the beginning of the market and read the next day.
As a fellow "low-end" investor I like Phil's Buy/Write strategy on solid stocks. Before I came here I loved to try to "figure things out" with very little success "TRYING TO FIGURE THINGS OUT"! I traded too much and fell in love with stocks that "should have done" what they didn't do. Now a majority of my accounts are in Buy/Writes suggested here or cash (waiting for a better time for more Buy/Writes). I use 15-20% of my total holding to short term trade and hedge. This is manageable with my full time job as a business owner. I have found Phil's system a more discipline way to achieve the returns I want without relying on my ability (more like inability to "figure things out").
Thanks for the oil tip Phil: Bot & sold the USO May 29 calls for net $125. Not bad for few minutes work.
Brilliant covering of the arcane, the profane , but never the mundane!
Easy to understand the reason for your huge following, Phil, and why you have become a must read on my daily agenda. Please accept my complete appreciation.
Thanks to Phil (again) for the lessons on the art of the roll, selling premium and hanging tight under fire (particularly in the first hour of trading-MADNESS). Watching you manage the $25KP has really helped my trading in a big way.
Phil – In the event of a mkt meltdown, which of the indices, in your opinion do you think has the most potential for % move down. I'm looking at call options on SDS and the DXD. Any thoughts? Ideas?
Thanks .. and thanks for being a great teacher! I've learned so much in only a month!
I have been trading for quite a few years and in good years made about 25%. After joining PSW, I followed closely the PSW strategy and my trading profit for this year is close to 70% to date. For fun, I like to mix in a few "Hail Mary" plays that really worked out well, but overall the simpler Buy/Write strategy, as presented by Phil so often, created the majority of the profit.
Just closed out my V put for 50% in 24 hours thanks Phil!
Phil/CLK4 – Perfect! Saw the answer 1 min after my post…out with $740 on two contracts. Thanks again for the education.
Theory: the dumb money (that’s us) has left the party leaving the bots (smart money) to pass the stocks back and forth between themselves. And to mix metaphors, the bots act like a herd all pretty much stampeding one way or another. While retail investors seek not to get trampled another time. – Ilene
The stock market has turned into a schizophrenic herd of sheep. Correlations have entirely converged in recent months as money simply flows from bullish to bearish depending on the current mood of our bi-polar friend. Jeff Saut of Raymond James says it is in large part due to the small investor throwing in the towel:
“The chart on page 3 shows the correlation of S&P 500 stocks to the S&P 500 Index. Studying the chart one finds that the correlation from September 2009 through early May 2010 ranged between 55 – 65. However, following the May 6th “flash crash” the correlation leaps to ~78 and eventually ~82, which is indeed the highest correlation since the 1987 crash. So what caused this fairly rare event? In my opinion it is because the retail investor – disgusted with high-frequency trading, dark pools, trading huddles, inter-market sweep orders, etc. – simply left the game, leaving the “pros” to trade among themselves. Obviously, when the alleged “dumb money” left the party correlation had to rise. Adding to the situation has been Exchange-Traded Funds (ETFs). To wit, when volume increases in say the Powershares Consumer Discretionary ETF (PEZ/$21.08), that ETF automatically goes in and buys ALL 60 of the mid-cap stocks within the fund. Plainly, that causes correlation to rise.”
I think it’s even simpler than that. This is classic herd mentality. The entire herd is either all grazing or all running scared at the same. Currently, the herd is grazing happily with not a care in the world. But don’t be fooled – when something spooks them you’ll get trampled if you don’t run with them…..
In today’s segment of bull versus bear we pit a bullish Jeff Saut against an ultra bearish Nouriel Roubini. Mr. Saut, who helps oversee $235B at Raymond James, says there is not a whole lot of downside to U.S. stocks and that there is a “bubble in pessimism”. Roubini, on the other hand, believes we are on the verge of a double dip.
Interesting commentary from Jeff Saut, Chief Equity Strategist at Raymond James this morning on the old investment saying “sell in May and go away.” Mr. Saut believes investors should be selling before May in anticipation of what other investors might do:
“Obviously we have modified that old axiom this morning given our statement – “Don’t wait for May to go away!” Nevertheless, despite having been too soon’ly cautious since S&P 1150 – 1160, which is tantamount to being wrong, we are “stepping up” our cautionary counsel this week.”
Saut’s cautious tone is driven by a series of technical and sentiment factors that are often followed by weaker market action:
“Our increased caution is driven by a number of metrics. To wit, preliminary data suggests last Friday was the first 90% Downside Day since February, our sentiment gauges are back to as bullish as they were in 1987 (read that bearishly), the CBOE equity put/call ratio is at 0.32, for its heaviest “call volume” relative to “put volume” since August of 2000, stocks are the most overbought since the rally began in March 2009, some of the leading stocks are not responding to good news, Thursday was session 34 in the “buying stampede” that began on February 26th (rarely do such skeins last more than 30 sessions), we’ve gotten that peak-a-boo “look” into the long envisioned target zone of 1200 – 1250, volatility is back to the complacent 2008 levels, and the list goes on.”
But that doesn’t mean Saut is turning full-blown bearish. He still sees upside in the market following a near-term correction:
“As for the ‘here and now,’ we are increasingly cautious, believing a near-term “top” in the equity markets has been registered. Longer-term, we remain bullish, thinking the profit-cycle recovery is alive and well. To that point, it’s worth considering that bottom-up operating earnings peaked in 2007 at ~$91 per share for the S&P 500 (SPX/1192.13). And, except for Japan, price-to-peak earnings power (PPE) has always made new highs, cycle after cycle. Again, as the good folks at GaveKal note, ‘Except during the bubble years of 1997 – 2001, the PPE for the SPX has fluctuated in a range of 10x to 20x (peak earnings);
Raymond James strategist Jeff Saut continues to present a cautious tone in his first research note of the year
Last Monday we wrote, "As we enter the New Year, we are once again turning cautious because the Treasury market is breaking down (higher rates) and the U.S. dollar is rallying. . . . Therefore, we think it prudent to ‘bank’ some trading profits and hedge some investment positions as we approach the new year."
Moreover, one of the lessons we have learned is that the beginning of a new year is often punctuated with head fakes, both on the upside as well as the downside. One of the greatest upside head fakes was in January 1973 when in the first two weeks of that year the DJIA rallied to a new all-time high of 1051.70 before sliding ~20%. While we are clearly not predicting that, what we have indeed experienced since the March "lows" is the second greatest percentage rally (69%), adjusted for time (nine months), since the 1933 rally. Following that 1933 explosion of 116% in just five months came a pretty decent downside correction. Since we tend to be "odds players," prudence suggests some caution is again warranted.
“we think the upside should continue to be driven by ‘game theory,’ which suggests that the under-invested institutional portfolio managers have to buy stocks into year-end driven by their under-performance, their subsequent ‘bonus risk’, and ultimately their ‘job risk.’ Verily, many of the portfolio managers we know remain under extreme pressure to commit their outsized cash positions in an attempt to ‘catch up’ to their benchmarks between now and year-end (see the nearby Credit Suisse institutional cash versus retail cash on the sidelines chart).”
“As the S&P 500 traded out to new reaction ‘highs’ in the first part of last week we heard a cacophony of crybabies. First was Meredith Whiney, banking analyst now turned strategist, who stated, ‘I have not been this bearish in over a year!’ One-upping her was Nouriel Roubini who exclaimed, ‘The worst is yet to come’….Despite such cantankerous cries, we have indeed entered the strongest seasonality of the year and we remain constructive. As the sagacious Bespoke Investment Group writes, “Since 1941, the Dow has averaged a gain of 0.50% in the week before Thanksgiving.” That said, we would not like to see the S&P 500 break below 1083. And speaking of breaking down, the Japanese stock market is breaking down and we are close to ‘uncle points’ on those recommendations.”
How does Saut recommend playing the year-end rally? Saut has been mindful of the recent divergence between large caps and small caps. He believes the trend will continue as breadth narrows and investors reallocate capital from the best performers to a bit of more defensive posture. This means large caps will outperform. In particular, he likes pharma stocks:
Flanigan’s Enterprises, Inc. (Flanigan’s) operates a chain of full-service restaurants and package liquor stores in South Florida. The company operates package liquor stores under the Big Daddy’s Liquors name, which offer private label liquors, beer, and wines; and restaurants under ...
The damage was done premarket and value buyers were quick to take advantage. The index which benefited the most was the Nasdaq. It started today just above the 50-day MA and rallied off that. Volume wasn't great and the technical picture didn't really improve, but action like today's can prove to be a good starting point for a swing low.
Despite the gain in the Nasdaq, Breadth metrics are weakening but are neither overbought nor oversold. The next strong swing low will likely take a tag of the light green ...
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Since the summer of 2016, stocks have done very well and bonds have been thumped, as rates have risen sharply. Is it time for these trends to take a break? Below compares the performance of the S&P 500, with the popular bond ETF TLT over the past 9-months.
CLICK ON CHART TO ENLARGE
The performance spread between stocks and bonds over the past 9-months is a big one! Rare to see the spread between the two...
Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.
A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.
As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates th...
ISPs will soon be able to sell your most private data without your consent.
As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the res...
Phil has a chapter in a newly-released eBook that we think you’ll enjoy.
In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.
This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither PSW Investments, LLC d/b/a PhilStockWorld (PSW)
nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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