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Wednesday, July 6, 2022

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Which Way Wednesday – Breaking Out or Breaking Down?

Three out of five indexes look very good!  

The same can be said about a dog with three legs and no tail, I suppose.  So, the question is, is the market a dog in a nice sweater or whatever the metaphor would be for something where 3 healthy guys drag two dead guys around and win the race.  

Hmmm, I guess there is no metaphor for that – BECAUSE IT'S RIDICULOUS, isn't it?  A healthy market looks like a healthy market and this does NOT look like a healthy market.  

You can ignore Russia invading Ukraine, you can ignore China's exploding debt bubble, you can ignore collapsing German Investor Confidence, you can ignore Japanese Inflation, you can ignore all the stuff we already talked about in this morning's news alert – but that's not going to make it go away!  

SPY 5 MINUTEYes, we made new highs yesterday but look at the crap volume.  The volume on the Friday after Thanksgiving (half a day) was 55M on SPY, the volume on Dec 26th was 63M and New Year's Eve was 86M – that's how ridiculous yesterday's volume was.  

We're still in the pattern of the market rising on low volumes and selling off on high volume, which is simply the way the Banksters pump up their holdings into the opens and then dump them on what few retail suckers are participating into the closes.

You can hear their media puppets ramping up the rhetoric at the same time, wagging their fingers at the retail investors and telling them they are "missing" the rally.  Why weren't they saying that when the markets were 50% cheaper?  Why not when they were 25% cheaper?  No, only at a market top does the Corporate Media tell you to BUYBUYBUY because their masters already bought their fill and now they need someone to hold the bag.  Same as it ever was.  

[image]Check out the front page of Mr. Murdoch's Wall Street Journal, nothing about Russia and they spin the Administration's attempt to boost Housing as a positive when it's actually a reaction to the horrific numbers (but a reaction we bet on with our HOV and KBH plays, so thank you Obama!).  Below the fold in this morning's Journal is the spin article "Tech Firms' Cash Hoards Cool Fears of a Meltdown," right next to "The Buxom Boys of Bawdy Birding."

The WSJ practices what Zero Hedge rightly calls "drop box journalism" as the 150-year tradition of excellence the Journal fought hard for is now being squandered to support a single Billionaire's agenda.  It's not just the Journal, of course, most of the media has been corrupted and a majority of the information we get these days is more like propaganda – hardly surprising when just 6 companies control virtually everything you see or hear:

Do any of these companies or the Billionaires who own them want to tell you anything is wrong with the economy?  They certainly don't want you to sell their stocks or stop buying their sponsors' products, do they?  Why is German consumer confidence plunging for five straight months while ours is rising?  Could it be that we're not reading the same news?  

Not for long though – Uncle Rupert is making a play to take control of BSkyB in Europe – a deal that was previously struck down by regulators in the wake of the UK "hacking scandals."  BSkyB's strategy mimics that of Murdoch's occasional rival John Malone, who has spent billions over the last decade building Liberty Global's cable TV empire. Last year he spent £15bn acquiring Virgin Media, bringing his global customer base to more than 24 million, with 80% of revenues coming from its pan-European operation.

IEV WEEKLYBSkyB has a more sophisticated operation than its German and Italian sister companies and believes it can boost the proportion of customers that take multiple products, such as TV and broadband, as well as introduce services such as the internet streaming service Now TV and the film service Sky Store.  BSkyB's UK and Ireland operation can reach 27m households, while Sky Europe would have a target of 94M households across five countries.

One thing's for sure, if this deal isn't stopped, it will be the last you hear of an objection to it because, like the US, it will put almost all of the media in Europe under control of just a few Billionaires.  We can expect investor confidence to get right back on track once we weed out all those annoyingly negative stories, right?

INDU WEEKLYAs we discussed in yesterday's Live Webinar, I'm a value investor (and we discussed value trade ideas on RRD, WEN, KBH, IGT, WFM, HOV, IRBT and TASR) and, at the moment, I'm not seeing value in many stocks.  Not none, of course – those 9 were just the first in a series we're considering – IF the S&P can take out 1,900 and hold it.  If not, we're already "Cashy and Cautious" and happy to wait and see which of our picks get cheaper and THOSE will be the ones we end up adding to our portfolios (which we'll be reviewing today in our Live Member Chat Room).  

At the moment, we're long on gold, long on silver, short on the Dow, short on oil (see this morning's conviction trade guidelines) and, looking at Dave Fry's IEV chart above, I think we'll go short on that as well!  

Why do we like gold and silver?  Our Producer Price index was up 0.6% this month, 3x the 0.2% expected and even core PPI was up an undeniable 0.5% – essentially making a hockey-stick move on this chart which, of course, is being downplayed by the Corporate Media as we speak.  

0.6% – that's OFF THE CHART!!!  0.5% is the top of the chart!  What inflation?  The Fed doesn't see any inflation, the media doesn't see any inflation – do you?  Gold is touching $1,310 and silver (/SI) just hit our goal at $20 and you can see our longs coming off the table with $4,500 per contract gains from our entry back at $19.10 last week.  We also have SLW in our Short-Term Portfolio along with a bear put spread on GLL (ultra-short gold) in our Long-Term Portfolio so we have been firmly in the bull camp all year – as I noted, $20 is where we take profits on our Futures trade but, long-term, we think there's a lot more upside to come as the reality of inflation kicks in.

SLV WEEKLYInflation was the theme we were playing for early this year as well.  DBA was one of our big winners already this year as well as ABX, which is still playable (see yesterday's post for all of our early 2014 trade ideas), since it's "only" up 213% out of a potential 566%, so it can still more than double from here and all gold has to do is tick up just a little and we should get a home run!  

Inflation is the reason we remain long-term bullish on the market (we expect a short-term correction).  Stocks are, after all, priced in Dollars and inflation will eat away at the buying power of those Dollars and you'll need more and more of them to buy the same stocks.  

Also, earnings will expand with inflation, only the net earnings will be worth less – but that hasn't stopped Japanese stocks from running higher and higher as the Yen has gotten lower and lower.  There's no reason we can't have fun as well.  

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ETF Trading Range:

http://www.bespokeinvest.com/thinkbig/2014/5/14/sector-and-industry-group-trading-range-screen.html

As you can see in the table, there is a lot of divergence going on between the various sectors and groups.  A lot are overbought, a lot are neutral, and quite a few are oversold as well.  During normal uptrending or downtrending environments, you'll typically see a large majority of ETFs on one side of their 50-days.  This is a good example showing the chopiness that investors are experiencing so far this year.

Stats / Phil – I guess if the underlying instruments (options) is based on stats, might as well look at them ourselves to try to beat the dealer…

Stj, thanks for sharing the list. I added them all into a watchlist. I can track US economy in my screen. lol

Indeed Invest… I have them in Stockcharts with some tech indicators. Not all of them are great though, some are a bit too specific or overlap. 

Stj, yup, it’s not perfect, but it covered most of them. Anyways, I’m wondering what are other tech indicators did you include in Stockcharts?

I'm wondering why a great number of people on the list uses Stockcharts.com ?

i used to use them but TOS covers about 90% of my needs. 

You guys just on different trading platforms ?

Stockcharts / Invest – I can't go crazy with indicators. I need something that's going to give me the general trend. When you are trading long term setups, it's all you need. I like their SCTR indicator because it's a combination of many indicators (MA, RSI and others). No need to have a million lines there. Also, they just merged with Decision Point and they have their PMO custom indicator and that also looks useful. You can add a volume indicator like OBV if you want and you are set. For example IWM:

Stockcharts / Wombat – The charts in TOS are pretty good, but there are also blogs, commentaries on Stockcharts that make it useful. And it's not that expensive… I also use Amibroker for custom stuff and backtesting.

Speaking of StockCharts

My guess is that we have another down day tomorrow however, looking at the charts, we have had few consecutive big down days in these indices. It's been big down day, bottom with either a small down move or a flat day and upward movement again. So who knows…. 

And the strangles expire tomorrow:

Statistically, very good chances of expiring worthless…

StJ // SC
REally. Didn't know that. I remember getting in a tuff with them about not being able to have multiple ports – they wanted to double my subscription fee for a rudimentary functionality.
Anyway, since Phil doesn't want us looking at charts ; > and the only thing I miss is the P/F charts – meh.
Backtesting – you're such a geek ; >

Oh, BTW – I feel obligated to put this out there. Many of you may remember Hummer and I going on about /CL calendar spreads ; retesting lots of theories. Well, it turns out that Hummer stumbled on ( or really figured out ) a pretty interesting way to play /CL hassle free. We've been using it for the last 4 months – every cycle with a gain. We just found out today that many hedge funds and banks use this – its called 'Goldman Roll Arbitrage' ; if anyone is really interested I can send you the research.

Phil // Keepin up
So, ever since we left the warm embrace of StJ's google docs , I've been really struggling to keep up with the current portfolios. Like many of us, I'm sure, we don't have separate ports, but have jumbled everything together because how our brokers work or limiting functionality on the platform.
I have a few suggestions and questions.
While your posts of the portfolios are useful ( and necessary), they aren't readable off-screen ; meaning the jpg quality is so low, when you print them out they'e intelligible. I thinkI have a solution. Instead of continually reposting them ( more work for you ) just name the files the same as they were. You can make a backup file if you want to archive them by month BUT the big advantage for your users, is I have all the portfolios bookmarked now ( which are totally legible in the browser ) by taking the image to a different window and adding that URL to a 'bucket'. At least that's whats it's called on a Mac. I hit PSW in my bookmark top bar, and it brings up about 10 different pages, from earnings to Facebook pages. If these were simply updated with the same name, we could be on the same page AND they would never change.

Questions //
I've been here for a while now ( even though I don't have a color ; > ) so I feel I have at least informed questions. I've watched your process for a long time ; I know you're trying to get it right. SImply put – we have too many portfolios. For example, I've been here 2 years, and I"m still amiss trying to explain the Income Portfolio from the Long Term Portfolio. I think we need to come up with a set of portfolios and stick with them – period.
Also, it would be great if we could add a portfolio for IRA's. It seems we nibble at this but never really commit to have an IRA space. I've doubled my parents portfolio in a year ( probably much of it was luck, but I did it on my own ). It would really fill out the information of this was a regular addition ( 60% of my cash is in an IRA )
Food for thought – let me know if yoiu have any questions, or anything his unclear.

Phil/IRBT, I am in the Dec 35/40 BCS and sold the 30 puts. Bought Dec. 35 calls for 5.10 and sold the 40 calls for 3.30, sold the 30 puts for 3.62 for a credit of 1.82. Thinking of rolling the 35 calls down to the 30 calls (now 5.10) as the 35's are down 34% . Time to roll down and let the short 40's ride? Thanks

Wombat.

Comments to your portfolio dilemma.

It amazes me how many members just follow Phil's plays like a blind bat. Obtaining option play I just do not follow or even set up plays just recommended. I pick and chose after I myself have investigated the play. I do not blindly follow a play. So all the different option portfolios Phil runs on his records of Power option is his way of controlling his different plays. I used to have power options some time back good but if you discontinue with there service you lose all info.

I feel every one should have his own system to bring the entered plays under control, long play short plays or what ever you have, TOS only lists the actual plays which are active in your account but does not show a record of past positions, as you may show a loss in the active TOS position but overall you show a profit over the history of particular play.

I must agree that the reproduction of Phil's power option plays are hardly readable same as his presentation with a black back ground on his seminars. I try to make that point before but he blames me that there is something wrong with my eye site. It is his problem if some people do not follow the presentation because they can not read it.

But in deed one should establish once own system to feel comfortable.

Yodi // Comments.
Well, Yodi all that would be fine if Phil and I were just 'buds' and we were on a free listing service. Phil runs a service, or even a very lucrative business, so I would assume that it would be to his advantage to make his 'portfolios' public and 'readable' top please his subscribers.
I missed in my post where I mentioned that I mirror Phils picks. I would go farther and say in my entire collection of portfolios probably 30% of my positions follow Phil's positions in some manner or form. As a matter of fact, one my most successful strategies has been to follow Phil's picks virtually, look for the ones that dump, and pick them up on the cheap if I still agree with his analysis. Pretty clever for a blind bat don't you think ?
You're correct that over time, everyone should have their own plays. But what you're missing is that Phil's magnetism / emphasis is on teaching, not dictating ; there are plenty of services that will simply give you picks every month if you don't want to think. I don't think that's why the majority of people are here. Teach a man to fish – that's why I'm here.
Phil puts up his powershares screens for convenience because thats why he decides to use ( you don't see me demanding Phil to use TOS, do you ? )
In answering your 'question', TOS does allow you to see profits on your position from any date you choose. Go to your settings and add 'Profit YTD' and this includes everything, or go to your account statement and you can go back as far as you want.
I agree with you that the presentation backgrounds on the webcasts are hard on the eyes ( black background ), however that is Phil's personal decision and doesn't effect the content.
My comments were based around how to make ALL the fragmented portfolios simpler, and keep them available easily online for reference, for subscribers to reference. Out of the 500 premium members, I'm sure every one of those is used for tracking.

Wombat,

Yes we do pay for a service, one can recommend improvements and as you will agree most of us have different opinions, Phil has set ways and it is hard to change his views. In deed I tried, but still it is his site and a free choice to take it or leave it.

Yes I do know there are all sorts of records on TOS but still prefer to use my own system. I can imagine it is hard for Phil to follow every once questions and requests. I think the guy hardly sleeps but that is where he possible finds his enthusiasm. I do not know any sites where you get that type of personal attention even that the same question is answered already 3x before. But obviously for a new comer or a beginner it is always hard to think for themselves. So it is his idea if you do not understand what I am saying do not enter the trade like a blind fool, which in return makes you think a bit harder to analyze  a given trade.

Have a nice day mine already started 9.00 AM now. I see you on the board later Yodi 

Regarding tools for tracking trades as well as maintaining historical trades, one tool I have used in the past is based on excel with super duper add-in macros. The add-in essentially grabs options data from various sources and excel templates sing and dance to carry out all kinds of analysis. I am not affiliated with this in any way – Hoadley Finance add-in for Excel (come to think of it I may have mentioned it before). It requires a bit of work to enter all trades – but for those looking for some structure in managing the admin side of their option business it may appear.

Phil, Forget the IRBT question, I just saw your roll from earlier. Hazards of living in Asia time wise.

As a side note, I have to reccommend TradingDiaryPro.  It's cheap, and the nice thing it allows you to do long term analysis on a underlying.  For example, I've played AAPL about 25 different ways, but with the software it has a record of all trades, open and close, that I've done.  I set it to All Positions, Group by Symbol, Sum PnL, and wa-la.. good tangible info.

It's great to keep track of a trade with lots of rolls as well to keep the Pnl in check.

Phil// WMT missing and down now.  Does it mean that it is a good time to initiate or load some XRT and TZA options?  Thanks.

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