Will We Hold It Wednesday – Nasdaq 7,000 Edition
by phil - April 25th, 2018 8:16 am
Wow, what a day!
Yesterday, in our pre-market Morning Report, we made a call to short the Nasdaq Futures (/NQ) if they failed to hold 6,700 and fail they did as we got a massive 200-point drop which paid us $20 per point per contract for $4,000 per contract same-day gains on the Futures – you're welcome! Our oil shorts also did nicely, racking up additional $1,500 per contract gains on the day as we pulled back from $69 to $67.50. This is why we take Monday's off now – we can make plenty of money on Tuesdays!
This morning we'll be looking for bounces but failing to hold the weak bounce lines will likely signal more pain ahead and, don't forget, we were already expecting a big move down on Thursday so this may be an early start to a proper 5% correction. I ran the numbers for our Members in yesterday's Live Chat Room into the close (3:40):
2,685 to 2,620 is 65 points so 13 points is 2,633 (weak), which is right where we failed.
24,600 to 23,800 is 800 points (wow) but I'll call it 150-point bounces to 23,950 and 24,100:
6,700 failed to 6,475 so 225 gives us 45-point bounces but call them 50 so 6,525 (weak) and 6,575 (strong)
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Posted in Appears on main page, Immediately available to public | Join Member's Chat - 8 Comments Here »
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Thank God for Phil. A few months ago (April) I didn´t even know what hedging was, and someone recommended I should check out some of Phil´s plays, especially on the retirement portfolio. When I first started to read it, none of it made a blind bit of sense to me, but I stuck with it and gradually began to work through some of the trades to see how it worked. Now I am putting on 5:1 SPY backspreads combined with bear put spreads, entering and leaving positions after consulting the VIX, and engaging in other esoteric maneuvers that are keeping my portfolio above water.
jmm1951
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WOW, glad I went bearish… Phil, thanks for the help on the QID calls yesterday, I turned it into a partial cover rolling down to the Feb 52s selling the 55s 1/2 covered. Sold 1/2 and now lowered my cost basis to $4.38 on the $52s (fully covered).
Texasmotion
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Phil has some great insight into the market. He's given me a different perspective on the market and I know I'm a better trader/investor because of it. I've been trading options since the late 80's and Phil is right. Unless you know what is going to happen (how can you, unless you have insider information), then do what the smart money does - be the house. Remember guys, we're allowed to sell options. If you're afraid to be short, then do a spread to limit your liability. When I think about the money I've made and lost on options, a good approximation is that I win 30% of the time when I do a straight buy; I win about 70% of the time when I do a spread; I win nearly 90% of the time when I sell naked.
Autolander
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SPY/Phil, I took a big swing on January 26th following your advice to another member and bought 1615 contracts of Mar 185/190 BCS on SPY that will expire ITM today paying $290,700 on the $500k bet. I thought it might be fun to see what a winning trade looks like. Great call on your part and looking back it seems pretty obvious.
Sibe14 (premium)
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Phil: Closed out ZION with 49 % gain!
RMM
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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.
Chaffey
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Phil, You were on the $ today with your calls almost exactly on the turns – Krap kuhn krup (Thai for thank you very much).
Jomptien
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Praising PSW for enlightenment is a bit akin to praising the Pope for being holy. I've been reading PSW for about two months now and have learned more about investing technique and the world in general than I've learned from the books and seminars I've paid for. Thanks for the enlightenment, the education, the guidance and the truth, which is not a commodity these days, but a virtue in short supply.
Andy Morris
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Nice call on the QQQ puts this morning Phil. I bought 10 at .13 this morning for fun day trade. Just closed at .95. Sweet hedge for the day!
RevTodd64
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Phil - I got your earlier trade a month or so ago on MSFT 2015 32/37 BCS, selling 2015 30 puts. Nice up 75% now!
Jomptien
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I did the same thing via your logic (sold puts that is). I glanced one time and they were already up 15% which is considered a good return for an overnight hold in most circles. This is PSW though and to us it's just another day…
Kwan
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Thanks Phil for helping make this a much, much better year this year than last. Your tutelage has been so very helpful. Don't think I can say Thanks enough. And I thanks all the members here who were work hard in helping us all to become better traders, and I would say better people as well. The support many of you offered when we evacuated during the fire this past year helped me immeasurably. Happy New Years to you all!
JBur
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Phil you are great, and not only is your market info spot on but you have the courage to call it like it is and write about it in a great tone.
Flanger
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Phil - I just referred 10 people. Last week was a 50% gainer for me. There are companies that want to sell mentoring service for thousands of dollars. This is far better of a deal with very good advice.
Steve
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Phil: Once again thanks for those inciteful comments, and the old links to Sage's portfolio management (I hadn't read before). I'm an experienced stock trader, but over the last 3 or 4 months have come to appreciate options trading here at PSW, and the consistency of your many premium-selling strategies. It is liberating to have to worry less about getting direction right and being able to generate 5% MONTHLY returns with close to delta-neutral positioning. Much appreciated!
Neverworkagain
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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,
Deano
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Hey Phil, Your HOV suggestion about 3 months ago basically paid for my Philstockworld subscription for years to come. My average cost is about $1.
Ether
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Peter D: great write-up for Short Strangles, Part 1, looking forward to Part 2, particularly the adjustment part.
RMM
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Being a bear is easy (and I am not convinced we are doing all that well on the whole as an economy), but one cannot fight the trend (didn't Phil say that a while ago)? Just cover, make 5-10-15-20% and move on. It really does add up by chipping away. All I can say is I am back to 2007 levels in my account b'f the crash with this run up and some very nice help on this board….so kudos to us (and me!!)…
Pharmboy
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Phil// Cashing out of my LT holdings have been going on for over two weeks. However, I have elected not to cash all of the holdings including my AAPL, Jan 16 Short Puts at $470 and $480. Plus, I am being opportunistic in selectively putting on those positions for beat down stocks by selling 2016 Puts. That said, YTD harvested profits now stand at $135k on a current account balance of $683K or a 19.81% YTD return. Thanks for your expertise in teaching me how to be patient, be the banker, but also not being greedy, cashing out and harvesting profits.
IHS4GOD
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I want to thank you for sharing your wisdom with us. I've learned a lot (and still am) about your trading strategy, but also I see a man who truly cares about our country, America. Thank you.
Autolander
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Great calls this week!
SNS1
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Phil is a master at keeping you laughing, as well as making you money. - It is like " laughing all the way to the bank!"
Gel1
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Phil, thanks for the webinar and options subject…I wasn't shown as attending but I was there for most of it. Your memory amazes me, your speed on the computer amazes me, your math skills blow me away. coke
Coke
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I don't post much, but I guess this morning has brought me out. This site has made me tens of thousands, every year since I have become a member. It took me nearly two years devoting 3 hours per day to get on the ball, and actually understand portion sizing, and which trades fit my personal trading style. Before that I spent at least two years working on Buffet style fundamental investing. (Intellegent Investor, Security Analysis, ect.). This site really will teach you amazing things if you just pay attention. Literally it has changed my day to day life, has allowed my family and I to move back to the U.S. from overseas with confidence even with a paycut at my day job, and literally put me in a different league financially. Seriously my life and my children's is better because of this site.
Knightpilot
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Phil, have to thank you for saving me today. I think the discipline I have learned from this site has helped me as much if not more than the actual picks.
Rustle123
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I discovered PSW while reading up on the US economy and how it applies to all the poor folk of the world and to myself as a humble UK desk slave. This year I put time into learning options trading. I upgraded (with great administrative difficulty!) my stock dealing account to deal options. Now I am an avid reader of PSW and subscribed for voyeur membership. Initially feeling out of my depth struggling to keep up with the peculiar language of options traders, I unsubscribed feeling a little under confident and uncertain if the small stake I have to invest in options could generate enough to justify my PSW subscription. Nevertheless, I've benefited considerably from the member's material. From a small number of initial trades, I've exceeded profit targets enough to consider re-subscribing in some capacity. Thanks for the knowledge and more than anything I appreciate the human angle, the humour and the ecologically sympathetic approach rarely seen in other financial media. Best wishes all - Jon
Jon
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WISH TO EXTEND A BIG THANK YOU! I netted about $18,000 on the short Jan puts and the annualized ROI/M is mind boggling! Hope to meet you some day and buy you and your significant other a nice dinner. Best Regards Newt
Newthugger
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I picked up one of your recommended Gold plays, the July ABX 30s and sold the Feb 35s, which are now mostly intrinsic value. Is it time to roll these to the March 37.50s, or should I wait this spike out?
Bill Hoffman
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Phil - DIA 107 Calls. As suggested I am taking the money and running to home depot for some shelter supplies! This is the grand finale of several successful trades from you through this roller-coster and as you have further suggested it is time for me to sit back and relax in cash. May even be able to talk my wife into the premium membership after these intelligent trades in a stupid market.
DOStrade
Why Big Tech is Plotting an Invasion of the Healthcare Market
by ilene - April 24th, 2018 5:53 pm
Why Big Tech is Plotting an Invasion of the Healthcare Market
Courtesy of Jeff Desjardins, Visual Capitalist
The idea of using modern tech to transform the multi-trillion dollar healthcare industry has been around for a long time.
In 1996, legendary Silicon Valley entrepreneur Jim Clark launched his third startup, Healtheon, which was focused on what he called the “Magic Diamond”. The diamond represented the $1.5 healthcare market in the U.S. and its shape came from the doctors, providers, payers, and consumers slotted into the four outer points.
In the middle of the diamond, Clark had placed his new company Healtheon, which he expected to profit immensely from connecting the healthcare world together with the internet.
BEFORE ITS TIME?
Healtheon had a successful IPO in the middle of the Dotcom bubble, but it never was able to truly achieve its bold and original vision. As signals mounted that Dotcom stocks would implode, the fledgling company merged with WebMD in 1999.
Despite the fate of Healtheon, the dream of tech invading the healthcare market lives on – and today, big tech companies like Amazon, IBM, Alphabet, and Apple all have plans to enter the sector in a big way.
Today’s infographic from Koeppel Direct shows how this is all playing out, as well as the specific initiatives that big technology companies are using to gain a foothold in a market that’s ripe for change.
The story is no longer about the startups coming in to “disrupt” healthcare – unfortunately, the industry seems to have too much red tape, regulation, and bureaucracy for this to be possible in the conventional way. Instead, it’s the big companies like Amazon, Apple, IBM, and Alphabet that are eyeing to invade the space.
And for technology companies focused on big data, the healthcare market is a compelling opportunity.
HEALTHCARE MARKET POTENTIAL
By the numbers, here is a snapshot of the healthcare market, and why big tech wants in:
- Global healthcare spending is expected to reach $8.7 trillion by 2020
- In the U.S., there will be 98.2 million people
…
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Testy Tuesday – Nasdaq 6,750 or Bust Edition
by phil - April 24th, 2018 8:15 am
Here come those tears again6,750 is the 25% line on the Nasdaq and we've been here a few times and the bulls were very excited to buy the dip at 6,650, as that's where we popped in early March but, as I noted to our Members in yesterday's Live Chat Room, we're simply repeating a pattern that was supposed to give us an up and down day yesterday that ended flat and today we should be up 30 points on the S&P and tomorrow 25 more and then we crash back to where we started to finish the week.
Can the market really be that programmed? It will be interesting to see if the news and data actually matter or if we're simply doomed to repeat the behavior we observed from Feb 22nd-28th after two weeks of mirroring the behavior from Feb 5th-21st (see yesterday's morning report). There's a fine line between being locked in a range and being trapped in a market that is being driven by trading bots.
When the markets are thinly traded, the Bots do dominate the trading and, if no one has a solid reason to re-program them, then they are going to keep trading the same way, over and over again until someone breaks the cycle. According to Yahoo, the average volume of the S&P ETF (SPY) is 120M shares a day, but here's how it's been trading for the past week:
| Date | Open | High | Low | Close* | Adj Close** | Volume |
|---|---|---|---|---|---|---|
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Any Fool Can Be a Stock Market Genius
by ilene - April 24th, 2018 2:27 am
Any Fool Can Be a Stock Market Genius
Courtesy of Michael Batnick
Last week Barry sat down for an amazing conversation with Joel Greenblatt, author of You Can Be a Stock Market Genius (originally titled Any Fool Can Be a Stock Market Genius).
Greenblatt tells a story about when he went to a school in Harlem to talk with kids about investing. To explain how markets work and how they influence behavior, he brought a jar of jelly beans into the class room and had the kids write down how many beans they thought were in the jar. The average guess was 1771, remarkably close to the actual number, 1776. Before he revealed the average guess, he went around the room one by one asking the kids publicly how many beans were in the jar. This time the average was 850. The second guess is the stock market.
To be a good stock picker is to be cold and calculating and not easily influenced by the crowd. Easy to say, damn hard to do. Oh yeah, and you have to be right more often than you’re wrong. That’s also important.
This was my favorite MIB of the year, highly recommend taking the time to listen.
Source:
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Monday Market Movement – No News is Good News
by phil - April 23rd, 2018 8:50 am
The Futures are up, of course.
The Futures are always up on Monday morning as it's a low-volume event and "THEY" can start the week off on a good note. Since lat night, at 6pm, the Dow was up at 24,550, down to 24,350 and now back to 24,450, which is 50-points better than Friday's crappy close so YAY!, I guess. It's all total BS, of course and I don't even work Mondays anymore (this isn't me, this is PhilBot 3000, my AI work in progress that will take all of your jobs, starting with mine) so it just doesn't matter but, for the sake of having a post – we'll pretend that it does…
Both the IMF and the World Bank had meetings this weekend in Washington, DC and the general consensus there was that the Global Economy is good but Debt and Trade Wars risk making it bad again. Since Debt and Trade Wars are Donald Trump's go-to policy moves – we're probably screwed. A communique by the IMF’s main advisory committee, released Saturday, represented a ratcheting-up of pessimism since the group’s last semiannual meeting in October. “I don’t know where the trade dispute is going quite frankly,” Budget Secretary Diokno said in an interview. “President Trump keeps changing his mind.”
Central bankers sounded the alert that a trade war would leave them worrying more about the economic fallout than any boost tariffs would give to inflation. Colombia’s central bank president said a trade war would be "catastrophic," his Paraguayan peer said it would be "bad for everyone," while Japan’s chief described protectionism as "very undesirable." Across the board, 2019 growth forecasts are moving lower while debt is getting quickly out of control.
In particular, according to Bloomberg, the IMF is worried that markets might be underestimating the threat of an inflation shock in the U.S., where the Trump administration is increasing fiscal stimulus with the economy at or near full employment. A surge in inflation might force the Federal Reserve to raise interest rates faster than expected, a move that might cause turbulence in emerging market. The fund warned that global public and private debt has reached a record $164 trillion. A spike in interest rates would test the ability of borrowers to refinance…
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2008 financial crisis still seems like only yesterday for single women
by ilene - April 22nd, 2018 2:09 pm
2008 financial crisis still seems like only yesterday for single women
A woman walks by the New York Stock Exchange. AP Photo/Richard Drew
Courtesy of Melanie G. Long, Colorado State University
For many Americans, the financial crisis that plunged the global economy into recession a decade ago may seem like a distant memory.
Household net worth – the difference between assets and debts – reached a record US$98.7 trillion in the last quarter of 2017, up from $56.2 trillion in 2008.
Yet net wealth, by itself, masks a lot of information that could signal troubling trends. For example, this measure doesn’t tell us which households are getting richer. It also doesn’t reveal how much borrowing is fueling these ostensibly swelling balance sheets.
More specifically, it doesn’t show that for households headed by women, particularly poorer ones, the financial picture is still very cloudy. That’s in part because, as my soon-to-be-published research shows, low-income single women borrowed a lot more than single men in the years leading up to the crisis. And their indebtedness relative to their income and wealth remains far more elevated than is the case for pretty much everyone else.
This is especially worrying because female-headed households are vulnerable to begin with – and so are at risk again if another crisis looms on the horizon.
Why debt matters
To understand why debt is so integral to household financial health, it’s helpful to look at what happened during the 2008 financial crisis.
Overall household debt grew dramatically in the early 2000s, driven in large part by the subprime mortgage boom. This borrowing eventually reached levels that proved to be unsustainable and, after interest rates began rising in 2004, forced millions into foreclosure.
While things have recovered, the significant gains in net worth are illusory, in part because they have gone disproportionately to the richest households. Moreover, they have been financed through a lot more borrowing.
Total household debt reached a record $13.15 trillion at the end of 2017, up about $2 trillion since the most recent trough in 2013. Nonhousing debt like credit cards and student loans made…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
