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 29th, 2014 8:28 am
Some of the people all of the time.
That's the basis for this rally – or what's left of it – as we see this pattern almost daily: A big(comparatively) volume sell-off followed by a "rally" on 1/3 to 1/4 of the volume that sold and then, once we hit a pre-programmed peak (about where we got to in the no-volume Futures), we have a bit of volume selling into the close.
This is how you can see those charts that show all the "smart money" running out of the market, even as the market goes higher. Why would they leave? Why would anyone leave this exciting market? The answer is, because those fund managers are well aware that, at some point, the music will stop and there will be no buyers to save them then. Best to get out now and avoid the rush.
That time was also "different," wasn't it? We had invented the Internet (well, Al Gore did) and easy monetary policy led to bank mergers and NAFTA ushered in an era of free trade that send tens of millions of jobs overseas, causing profits for US Corporations to soar and those good times were never going to end – until they did.
It's very hard to say when a rally like this will finally run out of gas but, when we stop making new highs and we have these BS daily, manipulative run-ups to cover the selling – that's probably a good time to get more cautious.
As noted on Dave Fry's S&P chart, it's ALL about the Fed and how much FREE MONEY the Fed will pump in and how long they will keep pumping it in, etc. You would think we'd be tired of the same old song and dance but why should we, when we GET PAID to join in?
Yesterday, for example, in our Live Member Chat Room, I called for a bottom on the Russell Futures (/TF), saying:
/TF below 1,130! One would hope that's it. Playable for a bounce over that line
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 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 9th, 2014 8:29 am
Fed day (again).
Yesterday was TERRIBLE, with volume finally coming back – and it was all downhill, with 3x more declining volume than advancing. Still, as you can see from Dave Fry's SPY chart, the fix was in and the failure to hold $196.50 during trading hours was corrected at the bell by the powers that be, forcing the Market-on-Close suckers (401K, IRA, ETFs) to pay an extra 0.2% for their fills.
There's something strangely comforting about playing a rigged game like this. I yesterday's live webcast, we were able to make a quick $150 per contract playing a very predictable bounce in the Russell Futures (you can see the Webinar Replay HERE).
Of course that was small potoatoes compared to the trade ideas we gave you in yesterday's morning post (which you can have delivered to you every day by subscribing here) as the TZA Aug $14 calls shot up from 0.91 to $1.20 - up 32% for the day.
The QQQ calls I mentioned were the July $97 puts and we closed those out at $2.30, up 47% in less than a full day.
With returns like that, we could compound $1,000 into $1M in no time at all!
Though they were, in fact, small positions, our entire Short-Term Portfolio jumped up 2% on the day – as it's positioned bearish to protect our much larger and still bullish ($500K) Long-Term Portfolio, which is weathering this little storm quite nicely as we wisely moved it to mainly cash when we thought the market was toppy.
Now we anxiously anticipate earnings and the potential to bargain-hunt some more.
As you can see from our Big Chart, the Nasdaq and Russell were saved by their 5% lines (2.5% on the RUT) but the NYSE failed their critical 11,000 line and now we are 3 of 5 bearish and that means we lean bearish until one of our 3 lagging indices gets back over their line.
by Phil Davis - July 7th, 2014 8:23 am
Operation "Penny Pincher" nabbed 22 penny stock pumpers.
As I often point out to our Members, a stock doesn't have to be a penny to be a penny stock – any stock with a market cap under $100M is generally what we're talking about – regardless of the share price.
That's because the stock can be easily influenced by exactly the kind of action the FBI proved is RAMPANT in this industry – a single trader can, for a fee, move money into the stock and send the prices skyrocketing – then press releases are put out to whip retail investors into a frenzy and they follow with their money and, usually, get burned.
Of course, the same thing happens with mid-cap stocks as well and even large-caps – it's just that the people manipulating those stocks are generally better at covering their tracks! 22 is the number of people the FBI caught in the short period of time an operation like this can run before word gets out that their cover people are conducting a sting. Imagine how many other must be out there!
Obviously the markets are manipulated. We know CEOs and their Boards worry about the stock price – the minute they begin to worry about the stock price, manipulation is sure to follow. That's the way the system is designed. We have a Fed who worries about the price of the market and they manipulate it too! It's our job simply to be aware of the manipulation and take it into account in our trading and investing decisions.
Back on June 12th, I began a series of articles pointing out that oil and gasoline prices were being manipulated into the holiday weekend. Oil shot up to $107.68 that day and stayed between $105 and $107.50 through June but the EXTREME lack of actual demand we warned you about. This morning, oil is below $104 and up $3,500 per contract from a short at $107.50 – a trade idea we highlighted for our readers Friday morning, June 13th.
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by Phil Davis - June 20th, 2014 8:16 am
Help, we're being attacked!
Not by foreign terrorists, but by the market manipulators who trade at the NYMEX and FAKE Billions of barrels of orders each month in order to drive the price of petroleum higher for US Consumers. Not only do the FAKE demand during the month, but they also then CANCEL the FAKE orders in order to create ARTIFICIAL supply shortages – just ahead of the summer driving season.
This is Financial Terrorism of the highest order yet our Government sends no troops out to the trading floor and orders no drone strikes on the ivory towers where the Banksters mastermind these attacks on the US economy every month, costing American Citizens hundred for Billions of Dollars every year in excess energy costs.
Last Friday, I told you that the 172,551 open contracts that guaranteed delivery of 172,551,000 barrels of crude to the US in July were FAKE and that all but 20,000 of them would be canceled by today. This morning, there are only 28,550 open contracts remaining. That means that 144 MILLION barrels of oil that were scheduled for delivery to supply the US in July have been CANCELED, in order to create an artificial shortage of 36M barrels per week next month.
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by Phil Davis - June 16th, 2014 8:28 am
“A well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.”
Iraqi citizens are taking it to the streets to stop the Sunni Militant advance that has now moved on to
Saadiya, a "city" of 20,000 people which leads the US media morons to conclude that they are just about to take Baghdad, a city of 5,672,513. The MSM plays on American's complete lack of geographical knowledge and poor math skills to excuse the profiteering by their sponsors (Banksters and Energy Companies) that has driven the price of oil in America up 7% this month – even though oil wasn't this high during most of the actual war in Iraq.
Anyone who actually knows anything about war knows that the ISIL doesn't have the men, equipment or supply lines to hold what they have now, let alone march on Baghdad, let alone move another 200 miles south towards the nation's oil fields – but that doesn't fit the story the media is spinning, so it doesn't get any play.
As noted by the New York Times (and pretty much no other paper) the goal of the ISIL is to provoke a civil war in Iraq and many of their clams of captured cities and Shi'ite executions are nothing but propaganda meant to incite riots. As I said last week, if you follow the money, it trickles down from the $2Bn monthly windfall this unrest is giving NYMEX traders, not to mention the 90M barrels of Global oil sold each day for +$7 ($19Bn per month), 2M of which (+$420M per month) comes from Iraq itself.
Despite all the unrest, our $107.50 oil short from Friday's post is still going strong at $107 this morning (up $500 per contract) and we're still shorting at the $107 line (those of us not so crazy as to leave shorts on over the weekend) as we're hoping to see some capitulation on the 154,000 contract that remain open (1,000…
by Phil Davis - June 13th, 2014 8:26 am
In just 5 minutes we made our first $250 (per contract) of the morning and then we got a chance to re-load at $107.50 at 3:50 where we shorted it again (also noted in our Live Member Chat Room) and second time was already a charm as we got a much nicer run – this time all the way down to $106.75 for a $750 PER CONTRACT gain.
We're still shorting oil as it retests the $107 line and, if you read yesterday's post, you know why we are shorting oil already but this morning, if you want the late, authoritive word on the subject, the IEA just (7:58 EST) released a statement: