The Dow is at 16,580 so all must be well, right? The fact that we're up here on low volume and even lower earnings is just one of those nit-picky things that won't matter a year from now, when TA people use the movement to draw new, bullish trend lines.
That's what the Fed is controlling, they are painting charts in broad strokes to keep things moving along – even when they aren't.
Sure the US economy is only growing at a 0.1% annual pace and sure that's down shockingly from 2.6% last quarter but, hey, we EXPECTED to only grow at 1% – so it's ONLY a 90% miss – what, us worry?
The Fed says it's just bad weather slowing us down and, whether or not you believe that, they also promise to continue to stimulate the economy long after it is necessary. The Fed is like Santa Claus, only they don't have to put in any effort to make their toys, so Christmas comes 365 days a year for the top 0.01%. For the bottom 99.99% – well, it's 0.1% growth on the "trickle down" effect.
In fact, if you take out the Banksters, who are piling up the Fed's free money in their vaults and using it to manipulate the stock and commodity markets (and higher costs for Energy, Food and Health Care were the only reason our GDP wasn't -1% instead of +0.1%), then you can see that those companies not protected by the Fed are in big trouble.
Not since 1999 has there been less cash relative to debt in Corporate America. Yes, money is cheap, so why not borrow some but that money isn't being used to invest in plants, equipment or, God forbid, hiring and training more people – it's being used to buy back stock and pay out dividends to give the ILLUSION that earnings are improving, when it's actually only the share count that's being reduced.
As you can see from this chart of the S&P, earnings are up just 25% from where they were in 2009, when the market…
Do you find yourself on a performance roller coaster? This is a situation in which you make money for a while, begin to think you have it all figured out, only to fall back, lose money, and feel like a rookie all over again.
A while back, I wrote about the performance roller coaster and some of the emotional factors that sustain it. The gist of that important post was that how we process wins and losses affects our subsequent trading--and sometimes contributes to winning and losing streaks.
I just finished an enjoyable interview with Mark Wolfinger of the Options for Rookies site. One topic that came up was the way in which traders identify with their P/L. Once a trader’s sense of identity and esteem becomes caught up in profits and losses, the trader begins an emotional roller coaster simply due to the natural ups and downs of markets.
The following is a collection of podcasts and videos from the Options Clearing Corporation and selected others.
The cover a lot of ground and new ones are occasionally added to their site. They are not as good as the coursework from MarketTamer, who are Option Sage’s excellent group but these are free (as opposed to $99 a month with Sage’s PSW special) so take a peek at the subjects that interest you:
Joe Harwood from the OIC Help Desk reviews some basic options concepts and terminology. Without getting into complicated jargon and abstract concepts, he covers options’ place in the financial markets, explains how they can be used in broad terms, and then slowly works into some of the first fundamental lessons.
Created from the Options Basics webcast utilizing new technology and interactive elements, this podcast covers options basics and is presented by Bill Ryan, a member of our OIC Help Desk (1-888-OPTIONS). From the history of options to the basics of puts and calls, Bill Ryan engages you in a webcast unlike anything we’ve offered before.
Editor’s Note: For those interested in both winners and losers, the 8 beliefs of unsuccessful traders can be found here.
One bright day in the middle of night, 2 dead boys rose to fight. Back to back they faced each other, drew their swords and shot one another. A deaf policeman heard the noise, and saved the lives of the 2 dead boys. If you don’t believe this lie is true, ask the blind man, he saw it too. -Author Unknown
We’re hard-wired to believe — and to hold on to our convictions — often in the face of contradictory evidence. In life outside the markets, this may actually be a source of strength. However, it doesn’t usually serve a trader well. One of the most important questions for the trader to ask every day is: What do I believe that’s not true?
So how do we know the truth? The markets tell us. It really is that simple — and yet, it’s so difficult for most to accept and practice on a daily basis.
It’s important for traders to be able to assess their beliefs regularly, because — at any given market moment — they’re a composite of those principles. Fortunately (for some) and frustratingly (for others), beliefs about the markets are fungible and fluid; they can change from minute to minute.
The successful trader is in the flexible flow with this — and changes accordingly.
Beliefs of Successful Traders
1. The markets provide a constant stream of opportunities.
2. If I miss an opportunity, another will come along.
3. If my position is stopped out, the hypothesis that got me into the trade was incorrect.
4. I take one trade at a time, and stay in the moment with it.
5. I strive for excellence, not perfection.
6. I maximize profits by losing small.
7. I am not my trade.
8. I take complete responsibility for my thoughts, feelings, and actions in the markets.
2. If I lose on a trade, I feel angry, frustrated, sad, or sick. If I win on a trade, I’m a happy camper.
3. If I don’t get on board with the hot tip of the day, I’ll miss out.
4. The markets are out to get me.
5. I’m unwilling to take the stop-out, so I’m turning this trade into an investment.
6. If I just keep studying, looking, and reading, I’ll find the magical formula/indicator/guru to lead me to riches.
7. Everything has to be perfect for me to get into a trade
8. If I win, I was skillful. If I lose, I was unlucky.
It’s only through daily assessment of convictions — and with radical honesty -- that a trader grows, develops, and thrives. Diligent examination of beliefs and the courage to change them is an ongoing challenge that must be conquered if the trader is to move to higher levels of success.
"Believe nothing just because a so-called wise person said it. Believe nothing just because a belief is generally held. Believe nothing just because it’s said in ancient books. Believe nothing just because it’s said to be of divine origin. Believe nothing just because someone else believes it."
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 firstname.lastname@example.org 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.
The other day I posted what I consider to be an elemental chart about income growth (or lack thereof) since the recovery began. Neil Irwin explained that the only people who’ve seen a recovery in wage growth were those who were already doing well anyway.
This has had a huge impact on the rich-poor divide that everyone’s been talking about these past few years. Here is another possible root cause behind the new dynamic, via Richard Kirshenbaum at the New York Observer:
In the past month, a group of radical Islamic extremists based in the Middle East beheaded at least 23 people and enforced a ban on Christianity by arresting a group of people for practicing the faith in a private home.
No, I’m not talking about ISIS. The real culprit is the Kingdom of Saudi Arabia, one of the America&rsqu...
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Price Deflation Hits Italy First Time in 55 Years
The Italian National Institute of Statistics (ISTAT) reports that consumer price inflation declined by 0.1% from August 2013 to August 2014.
Italian consumer prices fell 0.1 percent year-on-year in August of 2014, matching preliminary estimates. The country’s annual inflation rate touched the negative territory for the first time in nearly 55 years due to a drop in energy prices.
Year-on-year, prices of energy fell 3.6 percent in August, mainly driven by a 1.2 percent drop in cost of non-regulated energy products. Additional downward pressures came from food ...
If GOOGLE, the NSA, and Bill Gates all got together in a room with the task of building the most accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you… they never got around to building it, but my colleagues at Market Tamer did.
Although the stock market displayed weakness last week as I suggested it would, bulls aren’t going down easily. In fact, they’re going down swinging, absorbing most of the blows delivered by hesitant bears. Despite holding up admirably when weakness was both expected and warranted, and although I still see higher highs ahead, I am still not convinced that we have seen the ultimate lows for this pullback. A number of signs point to more weakness ahead.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-r...
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
In a report published Monday, Compass Point analyst Michael Tarkan reiterated a Buy rating and $21.00 price target on Navient Corp (NASDAQ: NAVI).
In the report, Compass Point noted, “We reiterate our Buy rating on NAVI shares after analyzing updated credit data within the company's private student loan trusts, which indicate continued YOY improvement in delinquency and default rates. The data captures statistics for trusts originated from 2002 through 2014 for the three months ended August 31, 2014, providing a good leading indicator for 3Q14 credit trends. The ongoing improvement should give management flexibility to continue to lower provision expenses to drive earnings higher.”
The CBOE Vix Index is in positive territory on Friday morning as shares in the S&P 500 Index move slightly lower. Currently the VIX is up roughly 2.75% on the session at 13.16 as of 11:35 am ET. Earlier in the session big prints in October expiry call options caught our attention as one large options market participants appears to have purchased roughly 106,000 of the Oct 22.0 strike calls for a premium of around $0.45 each. The VIX has not topped 22.0 since the end of 2012, but it would not take such a dramatic move in the spot index in order to lift premium on the contracts. The far out-of-the-money calls would likely increase in value in the event that S&P500 Index stocks slip in the near term. The VIX traded up to a 52-week high of 21.48 back in February. Next week’s release of the FOMC meeting minutes f...
Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.
Opinions differ as to what constitutes "money."
The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...
Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
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 MaddJack Enterprises, 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.