Is This As Good As It Gets For the Stock Market?

 

Is This As Good As It Gets For the Stock Market?

Courtesy of 

Josh and I spoke recently  about the slow grind higher, the lack of volatility, and all the recent stock market records. The very first response in the comment section was, “market overdue for a pullback.”

This seems to be the prevailing narrative and I gotta be honest, I agree. I’m just as surprised as anyone that the market keeps grinding higher.

Here are a few data points, by way of the S&P 500.

  • The index has closed within 2% of the all-time high for 68 straight days
  • The index has gone 70 days without a 1% decline, the sixth longest streak over the last 20 years.
  • 87% of stocks are above their 200-day moving average
  • The S&P 500 is currently 11% above its 200-day moving average.

Rather than relying on our collective intuition that we’re due for a pullback, I wanted to look at what the data said. For this analysis, as a measurement of stocks being over extended, we looked at the S&P 500 when it was 10% above its 200-day moving average.

Before we go any further, there is nothing particularly special about the 200-day. We (Nick) also looked at the 50 and 100-day and they all told the same story. The chart below shows when the S&P 500 has been more than 10% above its 200-day moving average.

You’ll notice a few things right off the bat. This sort of thing, when stocks are extended, tends to happen at all-time highs and in deep drawdowns. The latter might be counter intuitive but think about huge bounces off the lows, like the GFC for example. By September 2009, the S&P 500 was 20% above its 200-day moving average even as it was sat 32% below all-time highs.

Since 1950, when the S&P 500 is at least 10% above its 200-day moving average, 59% of the time it was within 2% of its all-time high, and 13% of the time it was in a greater than 20% drawdown.

You can…
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  • 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 am a former portfolio manager and now retired. I have been following you for about six months and I now know why you have so many followers you are very insightful and knowledgeable.

    Mkozberg

  • Thanks, I managed to make 2k today so I am happy…and feel like I am finally getting it. New equipment and a quiet place to work helps a lot. I am happy for all the members that took your /NKD advice….that was fun I am sure! coke Take your vitamins…I don't know how you do all this! but, keep it up!

    Coke

  • /NKD- Kownichiwa Cowboy!! One week of patience and scaling in and out pays off. This is a testament to Phil's fundamental analysis with the PSW technique. Thanks Phil.

    JohnO

  • Its been a "perfect" month. Every stock I wrote calls against looks like it will be called away next week, every put I wrote will expire worthless. Thanks Phil, now I need some new buy/write candidates, or the new 100K portfolio….

    Barfinger

  • Thank you so much for the good daily news in review Phil. I love your commentary! It is such a breath of fresh air in the smog cluttered news networks.

    RJRoberts

  • Happy Thanksgiving Phil and to your family and associates. Also to all of the other fellow citizens of Phil's Stock World. I am particularly happy and thankful that I clicked on your article in Seeking Alpha a number of years ago. That opened the gate to Phil's Stock World and "being the house". My wallet thanks you as does my peace of mind in trading options, stocks and rarely futures. Your liberal views opened up my views—being a boot strapper (pulled myself out of a poor background) I was a CONSERVATIVE—cynical of others who weren't as driven. Now, I am much less so; you have taught me more than how to make money and manage risk. So, again I give thanks to you and the others of PSW!!

    Newthugger

  • Here I have learned and look differently at things. Over the years being with PSW I have first of all learned and gained in knowledge of trading. This to me is one of the biggest gains. I still remember the play on Caesar Palace, paid my trip to Atlanta!

    Yodi

  • Phil, You were on the $ today with your calls almost exactly on the turns – Krap kuhn krup (Thai for thank you very much).

    Jomptien

  • 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.

    Gel1

  • Best year I've ever had…sitting on a 52% YTD return. I would also echo Nat's shout out for Phil's talent. I've been a member for the 6 years or so. Just stay true to the strategy I've learned over the years of selling premium, keeping the bulk of my portfolio in long-term buy writes ("armchair" trades).

    JJennings

  • hil, I hit my targets for the year in my 401K (thanks in no small part to your site), so I cashed out of all positions a couple of weeks ago. Feels good... I'm conservative with this money –looking for 2% per month, which i've been able to do… thx.

    Lunar

  • I'm just starting my second year as a member, and I'd like to thank all of you for sharing your trading ideas and insight, and especially Phil of course for great all-around investing advice as well as trades! In addition to learning patience and profit-taking, I think one of the most important things I'm learning here is to stick to stocks and trades that suit my temperament. And wow, I had NO idea how hard it was to learn patience. I should say "practice" instead of "learn", because it seems to be a constant struggle. Phil, please keep reminding us how nice CASH is!

    Jerseyside

  • Best day ever trading the futures, thanks to Phil's excellent call this am, and his "play the laggard" instruction. Well done Phil!

    Deano

  • Market manipulation…. One of the things I've gained from this site is the concept of market manipulation. I never thought it was so prevalent, but now I know it is. I actually consider its effect when I make trades. Several days ago, when AAPL was moving toward 220 I sold 210 calls. My reasoning was that they will probably pin this month at 210. They came in big time as the stock moved ever closer to 210. I agree with Phil's comment that one of the things we need to do is find out what they are manipulating, and how, and hitch a ride. They are doing this with several equities. I've actually seen one article describing several equities that were being manipulated to pin at expiration each month, and describing how it was done, and of course Phil has described it well. In some ways it's easier to figure this out than it is a ‘normal' market behavior, and thus easier to make money in certain equities.

    Iflantheman

  • 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

  • Cory Booker for President. :) . Thanks for all the good futures guidance Phil! Having one of my best months yet. Account is up 75% YTD!

    Traderd

  • 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

  • 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

  • Sold the BG puts I got yesterday at $1.30 for $2 just now. Might be a little early, but I'm happy with that gain. Thanks Phil.

    Smasher

  • TBT - Many thanks, Phil. I join you in your opinion favoring the Jan expirations. That's a great play. I can never thank you enough for what I have gained educationally as well as monitarily. Here it is late Sunday evening and I am able to get world class advice, just by asking for it. I feel like I am staying in a 5 star hotel, and room service is just a telephone call away!

    Gel1

  • 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

  • Phil — gotta thank you for your advice this week, and especially today. I took many aspects of your advice this morning, with all of my shorts -- being prepared on the short side, selling into intial excitement, taking the money and running, not being greedy. I also made money on the your /QM and /YM calls. It used to be I would be terrified of weeks like this one. Now, it feels somewhat comfortable, for want of a better word.

    Escohen5

  • Phil, 26% on the week for the 20% I day-trade, and since drinking the kool-aid last fall, the whole portfolio has doubled. Have a great weekend !!

    JRW III

  • 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

  • PHIL: The most important lesson I have learned is how to hedge using SQQQ, SDS and TZA. A big thanks.

    IHS4God

  • Phil & Ephmen85: I hadn't thought about selling the covered calls. That should be the easiest strategy for me since I'm a beginner. Thanks a bunch!

    JWick1981

  • 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

  • Joined last year and and started profitably trading options thanks to everything I have learned here. THANK YOU!!

    OnWisconsin

  • Phil, I'm up 34x what I paid in fees for your service, and that only counts the trades I didn't think of myself. Thanks!

    Barfinger

400 Point Friday – Another Week, Another Record High

Will this rally ever stop – or even pause?

We've already added 400 points this week and, as you can see from the chart, almost the entire move came at the open yesterday and Wednesday and this morning the Dow (/YM) Futures are up another 66.6 points (0.25%), capping off a 1.5% move higher for the week (if we hold it).  It's a bold move into earnings season, as it will be very hard to justify these price increases for the average component but we'll just have to wait and see as this rally shows no signs of slowing – despite all logic

I know no one wants to hear about boring old macros but, while we were sleeping, China announced that their economy was growing at a 30-year low 6.1% as Trade, Investment, Consumer Spending and Business Confidence all come under pressure.  The country also faces longer-term stresses like an aging population, which was highlighted by Friday data showing births had fallen to their lowest level since 1961.  Nomura economists calculate the trade war, coupled with slower global growth, shaved one percentage point off China’s 2019 GDP figure. 

Nontrade factors, too, weighed on sentiment, including mass protests that roiled next-door Hong Kong for more than half a year, clouding the business outlook and drawing global attention to the risk of social unrest in the authoritarian nation. Shenzhen’s celebrated technology sector, including hometown companies like telecommunications equipment maker Huawei Technologies Co. and drone maker SZ DJI Technology Co., is facing new scrutiny from the U.S. and elsewhere.

Despite the slowing growth, trade issues and 6 months of protests in Hong Kong, the Shanghai Composite Index rose 22% last year because – why not? – everyone else is ignoring the macros, why shouldn't Chinese Traders too?

Increasingly, Chinese industrial prices have also headed downhill in a sign of weak demand, and producer prices overall last year fell 0.3%. Car sales slumped 8.2% in 2019, while consumers – whose incomes expanded slower than the economy at 5.8% – were squeezed by pricey pork and an upward creep in crude oil.  In cities like Shenzhen and Shanghai, office vacancy rates are solidly in the double-digit percentage points as companies quietly downsize. Property is a
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The PhilStockWorld.com Weekly Webinar – 01-15-2020

 

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

 

Major Topics:

00:01:54 – Checking on the Market
00:03:22 – Petroleum Status Report
00:10:40 – Trading Techniques
00:13:18 – XLE | OIH
00:15:11 – Butterfly Portfolio Review
00:28:34 – AAPL | Yahoo Finance
00:45:59 – IMAX
00:55:01 – More Trading Techniques 
00:57:21 – GM | F | HMC | TM | NSANY | DDAIF
00:58:33 – TSLA
01:04:35 – More Trading Techniques 
01:05:17 – TM
01:10:40 – Northern Dynasty
01:19:59 – FED Beige Book
01:28:32 – AAPL Premiums
01:34:44 – Portfolio Reviews

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – click here to join us at PSW!

 





Fallback Thursday – Tesla (TSLA) Down 10% Already – Where Will Reality Strike Next?

Wheee, what a ride!  

Tesla stock hit peak stupidity Tuesday at $550 per share in mid-day action but it finished the day at $530 and, this morning, we're down to $500 after I ranted about it in our Weekly Webinar (we are short TSLA).  No, I don't think I caused it – I think Tesla, having kissed a $100Bn market cap, had a run-in with reality two weeks ahead of an earnings report that will theoretically show them making $150M for the Quarter (though I think they miss), which is still a run rate of $600M for 2020 or 1/166.6 of $100Bn.  

Even if you assume amazing growth on the top and bottom line, it will be 2025 before you could concievably be close to justifying $100Bn – even if every Musk fanboy's wildest fantasies come true.  I REALITY though, there ARE real, live other car companies and real, live other battery companies and real, live other solar panel makers who run real, live businesses with real, live profits and NONE of them come close to the kind of valuations given to TSLA who, so far, have proven to LOSE money in all 3 of those ventures. 

See – I'm still ranting.  These guys just annoy me!  

Related imageI mean, seriously, TSLA is delivering about 100,000 cars in Q4 and about 350,000 cars for the year while Nissan delivers 350,000 cares PER QUARTER – and they are in 5th place in US Sales (where Tesla only sold 36,000 cars as the rest are global sales).  This is part of the problem traders have as they don't differentiate numbers when they hear about Tesla's "amazing" market share.  It's not amazing at all – it's only slightly better than Volvo in the US and, internationally, Volvo kicks their ass!

Yet TSLA is now valued twice as high as all of them, except Toyota (TM) at $200Bn, perhaps because they sell more than 50 TIMES more cars than TSLA in the US and 100 TIMES more cars than TSLA world-wide or maybe it's because TM MAKES $20Bn a year while TSLA loses $1Bn.  JUST the Prius sold 500,00 units in 2019 – mostly to Uber drivers...

Nonetheless, TSLA is just our poster…
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Apple’s share price has doubled, but there is a crunch coming – investors should watch out

 

Apple's share price has doubled, but there is a crunch coming – investors should watch out

Core blimey. Supergilr Justfly

Courtesy of Arturo Bris, International Institute for Management Development (IMD)

Apple shareholders must be extremely happy with the company’s performance in the past 12 months. The stock price is up 111% since the end of 2018, not to mention the US$3 (£2.31) per share that the company has paid in dividends over the period. While Apple’s full-year 2019 results will not be released until later in January, it generated operating income of US$15.6 billion in the third quarter of the year. That translates to about US$60 billion a year, or about the same size as the economy of Luxembourg.

If you had invested US$100 in Apple at the beginning of 2019, you would have more than doubled your money in just one year. But we also need to look at this from the other side of the market. New investors must now pay over double the price they would have paid for Apple shares one year ago.

This depends on what I call the stupid investor theory. This states that for a short-term investor to profit from buying these shares at the start of 2019, they must be able to sell their shares to a “stupid” investor now that they have appreciated in value. This buyer will be forward-looking, probably short-termist as well, trading on the expectation that they will find a third “stupid” investor later willing to pay an even higher price.

The important thing to take away is that this cannot go on indefinitely. And as we shall see, there is a reason why it probably can’t go on for much longer at all.

Shooting stock, profits plunging

To see how long this pattern can hold, we need to assess whether Apple’s performance is sustainable. When you compare the last four quarters’ operating income – from fourth quarter 2018 to third quarter 2019 – with the previous four, you’re looking at a fall of 10%. Over the same period, the company’s revenues dropped by more than 5%. The main culprits were falling sales of iPhones, in a…
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Working it Out Wednesday – Is the Trade Deal the Beginning or End of the Rally?

Image result for trump trade deal cartoonToday is the day!  

Trump will sign a deal today (11:30) with China that puts off the new tariffs he threatened them with until "after the election" and China agrees to buy $200Bn in US Goods and Services over 2 years, which is double their normal pace so, in theory, it could add 0.5% ($100Bn) to our GDP, assuming we actually produce more Goods and Services and don't just end up selling China things we would have sold to someone else.  Boeing (BA) has several hundred grounded 737s China can have – that's a good start!

It's onlly a start though as the deal does not address Cybersecurity or China’s tight controls over how companies handle data and Cloud Computing.  China rejected American demands to include promises to refrain from hacking American firms in the text, insisting it was not a trade issue.  The Chinese have also rebuffed requests for broader changes to the structure of their economy. That includes a pattern of subsidizing and supporting key industries, like solar and steel, that American firms say have allowed China to dump cheap products it makes into the United States.

In the interim, the remaining tariffs will continue to inflict financial pain on American businesses that rely on Chinese imports and the consumers who buy their products.  Is that going to be good enough to continue to boost the market or will the reality of the trade deal's mediocrity begin to weigh on forward-looking sentiment.  Pay close attention to Corporate Guidance, now that they are taking the signed deal into account.  

Earnings have been going well so far but Goldman Sachs (GS) missed this morning by almost 20% – that was a surprise.  BAC, BLK, PNC, USB and UNH all beat along with WAFD last night and only WFC screwed up yesterday so it's so good, so far in the Financial Sector but, of course, shouldn't it be with the market up about 30% in 2019 and up another 2% in the first two weeks of 2020?

The Producer Price Index came in weak this morning at 0.1%, half of what was expected and that indicates that, despite "strong" retail sales, the Consumers are unwilling…
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Phil's Favorites

Is This As Good As It Gets For the Stock Market?

 

Is This As Good As It Gets For the Stock Market?

Courtesy of 

Josh and I spoke recently  about the slow grind higher, the lack of volatility, and all the recent stock market records. The very first response in the comment section was, “market overdue for a pullback.”

This seems to be the prevailing narrative and I gotta be honest, I agree. I’m just as surprised as anyone that the market keeps grinding higher.

Here are a few data points, by way of the S&am...



more from Ilene

Zero Hedge

Neel Kashkari Appeals To "QE Conspiracists": Show Me How The Fed Is Moving Stock Prices... So Here It Is

Courtesy of ZeroHedge View original post here.

Things are starting to get surprisingly heated at the Fed, now that not only Wall Street strategists, and traders but also Fed presidents are starting to tell the truth about how the Fed's "NOT QE", which sorry but we will call it by its real name QE 4, is pus...



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The Technical Traders

Energy Continues Basing Setup - Breakout Expected Near January 24th

Courtesy of Technical Traders

After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.

We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher.  Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.

Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:

December: Generally l...



more from Tech. Traders

Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Citigroup lifted Caterpillar Inc. (NYSE: CAT) price target from $145 to $170. Caterpillar closed at $147.87 on Thursday.
  • UBS cut Twitter Inc (NYSE: TWTR) price target from $37 to $35. Twitter shares closed at $34.19 on Thursday.
  • Morgan Stanley boosted the price target for Yum! Brands, Inc. (NYSE: YUM) from $113 to $118. Yum! Brands closed at $102.16 on Thursday.
  • Jefferies lifted the price target on Ventas, Inc. (NYSE: ...


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

Kimble Charting Solutions

Tesla About To Run Out Of Energy Here? Short-Term Peak Possible?

Courtesy of Chris Kimble

Tesla (TSLA) has been screaming higher of late, as very impressive gains have taken place.

Is Tesla about to run out of energy/take a break/experience some selling pressure? A unique price setup is in play, that bulls might want want to be aware of.

This chart applies Fibonacci to the 2016 lows and 2017 highs at each (1). The impressive rally of late has it testing its 161% extension level, based upon those price points.

At the same time, it is hitting its 161% extension level, it finds itself at the top of a 7-year rising channel, with momentum hitting the highest ...



more from Kimble C.S.

Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

The new year of 2020 has gold is poised to break out higher. Why is gold going higher? Maybe the FED's economists can explain .... or not.

Maybe these could be on the list:

- FED repo hundreds of billions a day.
- ECB made up tools to keep the European banks solvent.
- A sugar high stock market with Apple Inc and Microsoft looking like Bitcoin 2017.
- The US bond market is NOT confirming a strong stock market.
- Corporate profits have flat lined for 3 years while stocks soared each year.
- Knowing an US election year needs stimulus, and a lower US dollar is a first choice.
- China deal, will have a currency element to make it easier to do business. Lower US dollar.



Gold Gann Angle ...

more from Chart School

Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



more from Lee

Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



more from Bitcoin

Members' Corner

Tobin Smith: Foxocracy, the 2020 Election, and the Stock Market

 

For decades, Fox News has been spreading false information and hooking its audience into an angry, xenophobic and paranoid worldview. It's no mystery that Fox was instrumental in the 2016 election -- but how did it do it? How did it gain so much influence? Tobin Smith, CEO of Transformity Research, Inc. and former Fox News contributor and talk show host, explores this phenomenon and discusses Fox News’ emotionally predatory and partisan propaganda media strategies and tactics in his new book, ...



more from Our Members

Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

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.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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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...

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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.

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