Will We Hold It Wednesday – NYSE 12,800 Edition

Coming back or just bouncing?  

12,800 is the Must Hold line on the NYSE, meaning it's very bearish to be below that on the broad index and we finished the day yesterday at 12,638 and, so far, this morning's bounce isn't going to fix things.  Back on May 26th, when the NYSE last tested 12,800, my notes from the Morning Report were:

It's still all about the NYSE and whether it's over or under that 12,800 line but I remember a time when the Dow and the NYSE would run completely neck and neck.  That has gone completely out the Window as the headline index has been jammed 17% higher since Donald Trump was put in power by the USSR so thank you Putin – I guess…

The NYSE is right where we expected the market to be given that tax cuts, repatriation of capital and buybacks that have boosted the indexes over the past year plus.  On the other hand, the Dow is silly and the Nasdaq is sillier and we're back to a 1998/1999 market, where Fundamentals don't matter (for now) and people are paying ridiculous forward multiples for stocks in the belief that this party is never going to stop and there's no piper to be paid.  Is this time different?  Don't bet on it!  

The broad-market index has been trading in the lower part of a very tight range since February and, of course, the Dow is red for the year so the bulls are, at the moment, left with the over-priced Nasdaq and the narrowly-focused Russell 2000 Indexes to hang their hats on and we're still expecting a 10% correction in the Nasdaq, from 7,200 to 6,500 – before the summer ends.  That's why we haven't been jumping in to buy things – we don't think these little "sales" are bargains at all.

As you can see, the Nasdaq is way up in its range, over our 7,200 mark but we're not putting on the 7,500 hats just yet as that requires Apple (AAPL)…
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  • Speaking of the "Man Who Planted Trees", it really works. I bought BTU back in March at $49.87. I practically bought it at the tippy top. However, I soon afterward found this site, started learning Phil's methodology(and those in the strategy section) and began selling calls/puts regularly against my bad position. As of yesterday, I still own the original 100 shares, but have brought my basis down by over $11.00. Couldn't be happier, what started out as a really bad entry, I have managed to work down to a good basis. Had I not watched that video and learned your system, I would sold out of the position, and been kicking myself for making such a bad entry.

    Hoss

  • Phil/USO Adjustment~~ Thanks for showing us the make it even (maybe even profitable) tricks for 'fixing' a losing position. I would have never known the trick if you didn't explain it. The option adjustment techniques are very helpful. Trading stocks would probably never offer that kind of flexibilities! Thanks!

    Investwizard

  • I started with $250,000 in cash as of Oct 1 and have realized gains of $81,000 thru close of business. And that's in an IRA with no margin or naked trades. Whenever you are in Argentina or Chile I owe you a drink. I'm looking forward to it.

    Denlundy

  • Phil: I am always able to figure out your trades, including the rational when put in the right context of previous comments, etc. Keep doing what you're doing. It is much appreciated, and invaluable. Your hit rate of successful trades has been very high in my 1.5 months as a member, but even more importantly is your teaching of how to repair and DD positions that haven't gone your way yet. As with most members, we all have our ‘pet' trading interests, and learning how to think about trading is much more important than a specific trade, which could see the conditions behind it change an hour later. This is the classic case, of ‘Teach us to Fish', rather than just giving us a fish once in a while. Thank you!

    Neverworkagain

  • Thanks super helpful re: UGN example…..other inflation/market-correction-defensive-related play you threw out that has jammed UP in less than a month is TITN 6/14 $15 puts, up 40%. Excuse my enthusiasm but haven't had those types of gains in multiple plays in years let alone days doing it on my own…….maybe I should host the PSW infomercial!!!!

    stevegeb200

  • I have been with this site since the beginning and i have learned more the past 3 years than the previous 10. Information and great commentary are abound. The traders on the site are second to none and my portfolio has benefited greatly.

    Kustomz

  • 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 !

    1234Gel

  • Phil I have been telling you for a while how I feel like I am really understanding you now and thanking you. Well today may have been my most successful futures trading day since I began here and the week has been spectacular! It has just seemed so easy when you give us a range and I execute properly. Thanks once again for teaching me to fish. My portfolio gained over 10% this week which is just amazing.

    Craiga620

  • Phil/CLK4 – Perfect! Saw the answer 1 min after my post…out with $740 on two contracts. Thanks again for the education.

    Jeffdoc2004

  • Thanks Phil, I have adjusted my position by getting rid of the IYF puts, and selling the FAZ puts. You have so many of these awesome little tricks in your playbook that it really amazes me. I toally love your analogy by the way: Do you want insurance that you have to pay for, or do you want insurance that pays you?

    Craigzooka

  • Greetings Phil, I am an Economist at Harvard and some of my colleagues and I would like to let you know that we follow your posts on SA, and find your analysis refreshing, rigorous, and acute. Great work! Though many of us (including myself) have our work covered in the Wall St Journal, in many ways your macro commentary is more fearless and accurate than what is generally found in that venerable publication. Kind regards, Daniel

    Daniel

  • Hey Phil - writing to thank you! First of all, and I know you have heard this a few times form some others - the portfolio updates you have done - with entries and targets and even margin reqs are invaluable! I find myself understanding what is done here IN THEORY most of the time..however, there is a much bigger difference in placing and setting up the hedges properly than just understanding…This has been eye opening for me and Ifeel like I just took a major step in trading during the last week.

    Bcfla

  • Phil - I know I am small change compared to most others members, but I just wanted to let you know that during the last two weeks with the shorts you and others suggested I have 6 winners and 5 losers. My losers were small because I tried to follow your guidelines as best I could. On the other hand my winners on average were around 50%. Consequently, I am up $2000 in 14 days. Thank you for your patience and help. I think I am making progress getting rid of some of my poor trading habits of the past!

    DCalrk41

  • Phil, I just wanted to say thanks for being there. The world needs more of you. Your site continues to positively change my life daily.

    Chasw

  • It is amazing how much confidence you engender, Phil………..I knew the 1% a day trades and repeated often were possible as I had done in stretches, and I knew kill zone trades were also possible and 5% to 10% returns per month were very possible with practice, experience and smart risk management all without having to take a lot of risk, but I guess I was talking to the disbelievers and since I have dropped them into my 'why bother to try to explain it' file and come over to the dark side at PSW I feel soooo much more content not only with the returns, but with the company and a comments and the obvious opportunity to learn and learn and learn some more. It all helps the mental and emotional discipline of the trading too. So thanks again.

    Roro

  • It was a nice day thanks to your help! Made over $1100 shorting TF every time it came up near 1260 and even more by going long oil before inventory under $46 and then waited patiently for the spike up into the close where I shorted it at 47.70 or so. Phil you gave me a road map and I simply followed the signs along the way.

    Craigsa620

  • Thanks, Phil. I really appreciate your sentiment and commitment! Just want to thank you for what you do for all of us.

    JBaker

  • Thanks Phil for all you do. I feel like I don't read all the newsprint because when I check in with you I know I get the "real" scoop. Your service is number Uno in my book for all the knowledge and teaching. I ignored the aapl spin and am now enjoying some rewards. Every AM I get my Phil fix and throughout the day any important links. Mucho gracias. It leaves me time for my volunteer work besides the investing.

    Pirateinvestor

  • Phil/BCS - Didn't realise they traded here. Should've known really. Thanks for the tip. managed to pick some up just before the close at a 15% discount to the UK closing price.

    DB

  • Phil/thankyou. Phil, I went over the recording of last weeks webinar. I liked it a lot and wanted to thank you. I thought the case studies (company reviews) were detailed, I learned more about selling puts process and also what happens if stock continues to go down after that, I liked the fact that we discuss so many different avenues like stocks, optiond, futures, oil, commodities etc… I replayed portions of it multiple times to make sure I was grasping it but wanted to say good job. Thanks…

    Nramanuja

  • 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.

    Seeking Truth

  • 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

  • Thank you Phil for this site – the trade discussions on PSW are mind boggling. Future trading while learning to be a value investor. Priceless

    Joseph

  • I must give kudos to Phil for changing my way of thinking. I'm a gambler by nature and used to just play the indexes with 3x etf's… well I still do, but the options give far better returns than I ever dreamed of. With these wild swings I've been catching 50-100% winners in days.

    Mkucstars1

  • Phil: Thank You! Scaling, Scaling, and Scaling… then patience, patience, patience I'm 2 to 1 short and even on a day the broad market is up I had my largest one day gain in years. The last 6 weeks in fact have been great. I really feel I've learned to use some tools that will enable me to deal with the turbulence ahead. Selling short calls is definitely my preferred approach. Even allowed me to play golf this afternoon while the premium melted away and shoot a career low round. I owe you man!

    Lincoln

  • There are a lot of us that have been here a long time and we all learn something everyday. Just keep asking questions, there are a lot of smart people here and they are willing to help and then of course, you have Phil.

    Jr Mints

  • Phil, Passed a milestone today since joining 2 months ago. 25% of my account is in buy/writes, bull call spreads and disaster hedges. A majority of the trades were taken directly from your ideas or someone else`s contributions. Some were daytrades that became spreads. That part of my account is up 30% as of today. I don`t worry about it, or mess with it much, did a few rolls etc. Rest of the account is there to day trade, cover the writes and take advantage of opportunities. Thanks to everyone who contributes here, what a sweet way to trade, so many opportunities.

    Ben1Be

  • Phil - Thanks for the welcoming gift of the POT at a buck Just paid for this month and my membership is not even 24 hours old! looking forward to many more - bk

    Bjkeck

  • Phil - I'm with you just little bit longer than a month and you can not imagine how happy I am now, and not just because my P/L improved ( and I'm sure that it will be even better), but I found that the worst thing in trader's carrier is a LONELINESS. Here I found so many bright good guys, I looked for this service for years. THANK YOU AND TAKE GOOD CARE OF YOURSELF BECAUSE I PLAN TO STAY HERE AND RIDE THIS CREASY MARKET WITH YOU FOR ANOTHER 20-30 YEARS

    Tchayipov

  • Phil, you are the man. My positions in ABX and CLF are up massively this year, and doing very nicely with USO and UNG. TSR is another winner. Just waiting for the TSLA short now!

    Rookie IRA Investor

Chart o’ the Day: US Stocks > Everything

 

Chart o’ the Day: US Stocks > Everything

Courtesy of 

Last year was a great year for US stocks but an even better year for markets around the world.

So far, at almost the halfway point of 2018, this has mostly reversed itself. The world is being led by the Nasdaq 100, followed by the Russell 2000 index of US small caps, followed by the S&P 500’s US large cap index.

Just about everything else has reversed into the negative.

Here’s what it looks like:

Only the US has seen massive tax cut activity and the economic stimulus that’s come along with it. The question becomes whether or not this ends up being a transitory boost that wears off when we begin lapping this data in the first quarter of 2019 – or, if it becomes a self-sustaining “virtuous cycle” where people and corporations spend more because they’re making more.

It’s interesting to see this considering the fact that the US is the only major economy to have hiked interest rates and a complete cessation of emergency stimulus measures. Japan and Europe are still engaging in extraordinary measures and god only knows what China is doing.





Trade War Tuesday – Trump Fires off Another $200Bn in Tarrifs, China Fires Back

Image result for trump china trade warWheeeeeeee!!! 

Isn't this fun?  Diplomacy via twitter is a case of voters getting exactly what they deserve and we'll see how much the market suffers for it.  We gave you hedges yesterday that can turn $2,000 into $10,000 and it's the same hedge I gave you two weeks ago that could turn $500 into $10,000 so I don't feel at all bad when I say "I told you so" as I ranted on and on all month about how this was going to escalate and end badly

This, by the way, is not the end, this is just the beginning as Trump the First has asked for ANOTHER $200Bn worth of tariffs on Chinese goods in retaliation for the $34Bn worth of tariffs they put on our goods which was a retailiation against the $50Bn we put on their goods first.   

The new duties will go into effect "if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," the president said in a statement provided by the White House late on Monday.  Meanwhile, Trump is fighing Congress tooth and nail to REMOVE sanctions against ZTE – because he was paid $500M to do that, so the real message to China is "PAY ME!"  This is why you don't negotiate with terrorists – it only makes them come back for more…

Beijing has already said they will retailiate, saying: "This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the international community. The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends," the Commerce Ministry said.

Image result for putin laughing animated gifSeriously people, let's step back for a second to consider that CHINA has just accused the US of BLACKMAIL and of violating International Laws and undermining diplomacy – all in one paragraph!  President Trump is undoing 70 years of hard-faught diplomatic steps that have given us 70 years of relative peace and prosperity.  Who actually benefits from Trump single-handedly upending the World Order? 

The clock is now…
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These Are the Goods

 

These Are the Goods

Courtesy of 

Articles

What I thought was a major career failure turned out to be the best thing that ever happened to my career ~ by Blair duQuesnay

Learn to love the micro-stakes arena ~ by Tommy Tranfo

If things like research department headcount or manager tenure had any predictive value, then you could throw away your Bloomberg terminal and just use LinkedIn ~ by Josh Brown

Capital gains is a hell of a drug. ~ by Nick Maggiulli

Debt is a perennial worry ~ by Urban Carmel

We all begin as novice investors ~ by Barry Ritholtz

Social Security is the greatest source of income for the typical American household ~ by Tony Isola

He didn’t care who’s son I was and for that, I thank him ~ by Phil Huber

Needless to say, “staying away” from positive returns is not the best investment strategy ~ by Charlie Bilello

The only difference between the lucky and the rest is that the lucky just live a little farther inland ~ by Damon Young

Then in the summer of 1915, something unexpected happened — the economy took off like a rocket. ~ by Ben Carlson

Investment mythology is littered with Ragnarok-styled blow-ups ~ by Corey Hoffstein

The rhymes between today and the late-’90s are close enough that some veteran market participants are singing along ~ by Michael Santoli

Podcasts

There’s a lot of information in the world that’s not in the market ~ with Patrick O’Shaughnessy and Michael Reece

There is our memory and there is the truth, and the two are not the same ~ with Malcolm Gladwell

One dollar is the best price point god ever made ~ with Barry Ritholtz and Cal Turner Jr. 

It wasn’t just making money, you were backing a horse ~ with Ted Seides and Tom Lydon

People get mad at inevitability ~ with Bill Simmons and Bryan Curtis

Books

The long term is fuzzy at best ~ by Brian Portnoy

All pictures via Pixabay.





Monday Market Meltdown – Merkel Mayhem Makes Markets Morose

Wheeeeeee!!!

It's about time our hedges made some money!  As you know, we've remained cautious, even while making money on the long side and, just this weekend, in our June Portfolio Review, I said to our Members:  "I'm still very risk-adverse in this market and yes, we could be making more if we were more aggressive but then again, we could blow it too – and that is what we're trying to avoid."  

We're very well-hedged so a dip like this is simply amusing and it's miles to go before we even get back to the strong bounce line at 2,728, which had been the top of our range since February.  Unless we fall back below that line on the S&P (/ES) this is just a minor pullback and we're still in bullish territory though failing at the 2,800 line (again), which is where we ran into trouble in March before pulling back 200 points (7%).  

7% is right about the pullback we are expecting but we expected it from 2,728 – this move back to 2,800 has been a bonus round so far.  Above the 2,800 line, we have to capitulate and get more bullish – no matter how much we don't trust the rally but that certainly isn't a problem we'll have to deal with today, as we're down around 2,764 so far in the Futures.

If you feel under-hedged, you can use a play similar to the DXD play we gave you in our 6/7 Morning Report, when I said:

That's how hedges are supposed to work – they are insurance policies and keeping our portfolios well-hedged is the only way we can sensibly keep long positions after they've already gained 20% for the year.  

Maybe this is a full-blown 1998/1999 rally but we've got PLENTY of longs so all we're worried about now is whether or not we


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Phil's Favorites

Misinformation and biases infect social media, both intentionally and accidentally

 

Misinformation and biases infect social media, both intentionally and accidentally

People who share potential misinformation on Twitter (in purple) rarely get to see corrections or fact-checking (in orange). Shao et al., CC BY-ND

Courtesy of Giovanni Luca Ciampaglia, Indiana University and Filippo Menczer, Indiana University

Social media are among the ...



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Chart School

Small Caps Add To Gains

Courtesy of Declan.

Good news for momentum traders as the Russell 2000 continued its good run. The Russell 200 will start to get hot when it gets into the 15% profit take zone at 1,732 - a zone last seen tested in December 2016; if we are looking at February 2011 levels (the 5% historic zone) then the Russell 2000 would be tagging 1,813. Start taking profits, or sell covered calls, when we get into these levels.


The S&P reversed off resistance in early June and hasn't yet mounted a challenge to break it - today's gain off its 20-day M...

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Zero Hedge

Someone Just Dumped A Record $320 Million Of Emerging Market Bond ETF

Courtesy of ZeroHedge. View original post here.

No matter where you look in Emerging Markets, there's blood on the streets. And while the sell-side seems sure that this is the next dip to buy, or falling knife to catch, markets remain unimpressed and judging by the massive sale in EM Debt today... so is at least one other whale.

The VanEck Vectors J.P. Morgan EM Local Currency Bond ETF, or EMLC, absorbed a single, massive block sale of almost 19 million shares, worth ...



more from Tyler

Insider Scoop

Munster: Even If China Levies Taxes On iPhones, Your Cost Will Likely Stay The Same

Courtesy of Benzinga.

Related AAPL Selling Pressure Seems Ready To Ebb A Bit, But Trade Fears Haven't Vanished Citi: F5 Networks S...

http://www.insidercow.com/ more from Insider

Digital Currencies

BIS Blasts Cryptos In Special Report: "Beyond The Hype"

Courtesy of Mike Shedlock, MishTalk

The BIS blasts cryptos over scaling issues, energy, and trust. The BIS is correct. Cryptos are fatally flawed as money.

A Bank of International Settlements (BIS) report examines cryptocurrencies in depth. The study, called "Looking Beyond the Hype" investigates whether cryptocurrencies could play any role as money.

Bloomberg, Reuters, and the Bitcoin Exchange guide all have articles on the report but not one of the bothered to link to it.

After a bit of digging, I found the crypto report is part of an upcoming BIS annual report. The BIS pre-released the crypto report today (as chapter 5).

Here's a l...



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Biotech

Mind molding psychedelic drugs could treat depression, and other mental illnesses

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Mind molding psychedelic drugs could treat depression, and other mental illnesses

By agsandrew/shutterstock.com

Courtesy of David E. Olson, University of California, Davis

It seems that psychedelics do more than simply alter perception. According to the latest research from my colleagues and me, they change the structures of neurons th...



more from Biotech

ValueWalk

Buffett At His Best

By csinvesting. Originally published at ValueWalk.

Bear with me as I share a bit of my history that helped me create SkyVu and the Battle Bears games. The University of Nebraska gave me my first job after college. I mostly pushed TV carts around, edited videos for professors or the occasional speaker event. One day, Warren Buffet came to campus to speak to the College of Business. I didn’t think much of this speech at the time but I saved it for some reason. 15 years later, as a founder of my own company, I watch and listen to this particular speech every year to remind myself of the fundamentals and values Mr. Buffett looks for. He’s addressing business students at his alma mater, so I think his style here is a bit more ‘close to home’ than in his other speeches. Hopefully many of you find great value in this video like I have. Sorry for the VHS...



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Kimble Charting Solutions

The Stock Bull Market Stops Here!

 

The Stock Bull Market Stops Here!

Courtesy of Kimble Charting

 

The definition of a bull market or bull trends widely vary. One of the more common criteria for bull markets is determined by the asset being above or below its 200 day moving average.

In my humble opinion, each index above remains in a bull trend, as triple support (200-day moving averages, 2-year rising support lines, and February lows) are still in play ...



more from Kimble C.S.

Members' Corner

Cambridge Analytica and the 2016 Election: What you need to know (updated)

 

"If you want to fundamentally reshape society, you first have to break it." ~ Christopher Wylie

[Interview: Cambridge Analytica whistleblower: 'We spent $1m harvesting millions of Facebook profiles' – video]

"You’ve probably heard by now that Cambridge Analytica, which is backed by the borderline-psychotic Mercer family and was formerly chaired by Steve Bannon, had a decisive role in manipulating voters on a one-by-one basis – using their own personal data to push them toward voting ...



more from Our Members

Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

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 ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

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...

Learn more About Phil >>


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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>