Phil's Newsletter

TGIF – Indexes Turn Red for 2018, Japan in Turmoil

chartDown 6.9% for the month!

That's the damage on the Nikkei after yesterday's 4.5% dip, putting Japan's market down 10% for the year (so far).  China's Shanghai dropped 3.4% in response to Trump's Tariffs but, so far, China has not responded in kind so, as we expected, the indexes are finding a bit of support at S&P 2,640, which is exactly what we prediced they would do on Wednesday morning.

Remember:  I can only tell you what is likely to happen and how to make money trading it – that is the extent of my powers.  The rest is up to you!

In the case of our S&P call from Wednesday morning's report, the 80-point drop from 2,720 to 2,640 was good for gains of $4,000 per contract (you're welcome!) and now we'll see what kind of bounce we get on the way to a full correction at 2,400, which will be good for another $12,000 per contract if all goes well (or badly, I suppose).  

As 2,640 is the 20% line on our Big Chart (a level we drew more than a year ago) and as the fall from the 25% line at 2,750 was 110 points – we'll be looking for 22-point bounces to 2,666 (weak and satanic) and 2,688 (strong) and, if the weak bounce fails to hold today – look out below on Monday!  the next proper support for the S&P Futures (/ES) will be the 15% line at 2,530 and the next stop below that is our 2,400 goal (2,420 to be exact).  THEN we get excited to buy things – despite the Trade Wars.

Until then, we have plenty of longs and plenty of hedges so we just sit back and watch and wait.  The US and European markets are closed next Friday (my Birthday, actually Thurs but it's celbrated on Friday this year) and Easter is Sunday and that Monday will be slow and that whole week will be slow, as will the weak before (next week) so not the best time to determine what levels are holding up but a great time to take a break!

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Trade War Thursday – Trump Takes on China

Image result for trump trade war china cartoonWhat an exciting day.  

Trump will be rolling out his economic sanctions against China because what we really need now is more instability in the Global Economy.  Earlier this morning, the PBOC raised their rates in-line with the Fed so we can probably expect trade retaliation in-line with Trump against US manufacturers.  It's certainly going to be interesting, whatever the case.  

While it's very exciting to have International Diplomacy carried out via unilateral decisions announced on Twitter – it does undo DECADES of careful negotiations carried out via shuttle diplomacy by dozens of our Nation's most experienced representatives.  Sadly, once you break Humpty Dumpty, it's very hard to put him back together again but the century is still young – I'm sure we'll be able to fix it later…

Meanwhile, as we expected, the market was not too thrilled about the Fed hiking rates and we made some big money in yesterday's Live Trading Webinar (replay available here) playing them bearish into the meeting and even our Oil (/CL) and Gasoline (RB) shorts turned around this morning for $300 per contract gains as gasoline came back below $2 and oil fell back below $65 (both are our stop lines now and both good for new shorts with tight stops above those lines).

As I said in yesterday morning's Report, 2,640 is our immediate downside target on the S&P (/ES), on the way back to 2,400, which would be $15,000 per contract gains on shorts below the 2,700 line.  We checked our portfolio hedges in yesterday's Webinar and we're generally content with our positions and looking forward to a nce correction – so bring on the Trade War!

FaceBook's (FB) Mark Zuckerberg attempted to put the brakes on their crisis with a timeline that spun the narrative but people aren't having it and Facebook is down again this morning, back at $167 but it will be interesting to see how hard Congress comes down on them as the very data they are accused of mishandling was used by GOP operatives to swing the elections for several high-ranking members of Congress – not to mention the President himself!

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Federally Funded Wednesday – S&P About to Retest 2,640 as Fed Withdraws Stimulus

Yawn, are we there yet?

This is the same chart we were using since the beginning of February and, in March, the markets have been full of sound and fury which has signified nothing as all that bluster has us right back where we started, with the S&P 500 finishing yesterday's session at 2,716 – exactly 3 points higher than we were 30 days ago.  

When we did finally break out over the Strong Bounce Line at 2,728, the S&P flew all the way up to 2,800 (3/12 and 3/13) when I said we were going to short the S&P (/ES Futures) back to 2,400 and we hit 2,700 (up $5,000 per contract) on Monday and 2,720 is a weak bounce from that.  My comment on the overall market was:

"I said we plan on deploying more cash when the S&P drops to 2,400, which is 15% down from the current 2,800 but that includes people paying $1,600 for a share of Amazon (AMZN) that generated $4.56 in profit last year for a return of 0.285% – Japanese bond investors laugh at Amazon shareholders!  Come on folks, this is ridiculous – markets can't sustain these kinds of gains."  

Now you know what I meant by that comment – markets can't go up just because – there needs to be real money flowing in and a real economy to sustain it – we have neither of those things.  Yes, the economy is growing, but not fast enough to justify those kinds of market moves and that's why we have our 5% Lines™, especially our Must Hold Levels™ – to remind us where the REAL value is in the markets and that keeps us from losing our heads and chasing ridiculous valuations.  

It also tells us when things are too cheap and, just like there was a mania to buy stocks at sky-high valuations, there's a mania to sell perfectly good stocks like GE (GE), L Brands (LB) or Chipotle (CMG) at fire-sale prices – surprisingly in the midst of the same rally (see our March 12th Top Trade Review for those trade ideas). 

Even now, Amazon (AMZN) added back $41.50 (2.7%) yesterday as it retests $1,600,…
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Take It Back Tuesday – Breakdown, What Breakdown?

Well, we know Monday's are meaningless. 

In fact, next Monday is my last official Monday before I retire, at 55, from Mondays.  In five more years I will retire from Fridays too but, for now, I'll just be skipping Mondays – officially, though I'll still write a morning Report and pop in on chat – I'm just not going to commit to being around on Mondays so I can put a bit more time into PSW Investments, our Hedge Fund (Capital Ideas) and, of course, me.  

The only call I made during our Live Member Chat Room yesterday was my 10:14 comment to our Members, saying:

What craziness with FB, down 5.4% now.  /NQ holding 6,950 so far and we're still miles off the lows so it's really not very weak, considering.  More important to watch the S&P around 2,750 as that's the 50 dma it failed and NYSE is falling further away from 13,000 and even below the Must Hold at 12,800 so – NOT GOOD there.  

The Nas still has a very long way to go to catch up to the others on the downside and, since this news has a sweeping effect on many Nas companies and since analysts will only this week begin downgrading based on data concerns – /NQ is still my favorite short below 6,950 with tight stops or 6,975 or back at 7,000 but I can't see that happening.

Those kinds of calls, I will ALWAYS show up for!  What a great way to start the week.  At 1:50, we began playing for the bounces, though it was a rocky road for the first hour:

Looks like we found a

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Monday Market Movement – Trump Turmoil Roils Futures

Oops I Did It Again Snl GIF by Saturday Night LiveOops, he did it again.  

Our deal leader hit the Twitter this weekend, attacking Meuller and his team summarizing all the Team Trump talking points with the following (1 of 8):

The Mueller probe should never have been started in that there was no collusion and there was no crime. It was based on fraudulent activities and a Fake Dossier paid for by Crooked Hillary and the DNC, and improperly used in FISA COURT for surveillance of my campaign. WITCH HUNT!

That came after Trump opened the doors for every lawyer in America to request a retrial for anyone who was ever convicted by the FBI:

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TGIF – Closing out a Weak Week for the Markets

Not just a weak week but a weak 45 days since February.

After testing our 30% line on the S&P 500 at 2,860 at the end of January, we plunged down to our 20% line at 2,640 in early Feb and now, 5 weeks later, we have struggled to hold the 25% line, which has now become the 50-day moving average as well at 2,750.

The annotation on the chart is not our 5% Rule™ but a simply Fibonacci retracement and it shows you what a cleanly technical move the market is making.  That, in turn, indicates that the majority of this trading is being done by robots and those robots are not trading with emotion or enthusiasm – they are just trading their pre-programmed ranges and it won't take much of a change of human hearts to send the whole thing crashing back down another 10% from here.  

I told CNBC in Japan earlier this week that my number one Global concern was a Trade War and now, in addition to steel and washing machine tariffs, we (and NATO) are sanctioning Russia and Russia is retaliating against us and now Trump is readying "sweeping tariffs and investment restrictions on China" – this is what a trade war is folks – no one declares it, it just happens step by diplomatic step.  Suddenly, among Conservatives, "Globalism" and "Globalists" have become bad words, words used to describe their enemies the way they used to say "Communist" and "Socialist".  These are very dangerous times, folks.

Image result for globalism cartoon

Image result for globalism cartoon

This myopic, anti-Progressive, anti-progress, protectionist view of the World comes right out of the early 1900s and in fact, the first "America First" Committe was formed as an attempt to keep the US from "meddling" in World War II and was "characterized by anti-semitic and pro-fascist rhetoric."  Trump's form of Fascism isn't anti-semetic yet, just anti-Muslim and anti-Mexican and anti-African and anti-Poor so, as long as you aren't one of THOSE – you're good – for now.  

Hoover's America First protectionism and tariffs landed us in the Great Depression and Hoover, like Trump, literally promised his base "A Chicken for
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Faltering Thursday – Market Struggles Around 50 DMAs, Again

Here come those tears again

Just when I was getting over you

Just when I was going to make it through

Thinking I might just be strong enough after all – Browne

Here we go again. 

If the markets were as strong as the Wall Street narrative suggests – they wouldn't keep failing the 50-day moving averages, would they?  Not only that but we STILL haven't gotten the broadest index, the NYSE, over their Must Hold level, which means we haven't even really confirmed a broad-market rally.  

Not only has the rally had a very narrow focus but, as it turns out, the main buyer of US Corporate stocks is — US Corporations!  Last week alone, US companies bought back $1.5Bn worth of stock through Bank America (BAC) alone – the biggest week they ever recorded.  In the past 3 months, $250Bn in additional buybacks have been announced, possibly pushing us to a $1Tn year in Corporate Buybacks or about 2.5% of the entire market.  

And, of course, they are not buying every stock, mostly their own so it's those big, Top 1% Corporations, 90 of the 9,000 listed companies – the ones who were given $1.5Tn worth of tax breaks by the Trump Administration – that are bringing back the cash they hid overseas to avoid paying taxes under Obama (at no penalty) – and are using it to buy back their own stock to mask the fact that earings are not actually improving by reducing the number of shares those earnings are divided by. 

All in all, it's just a huge Ponzi scheme where companies plow back declining profits into their own stock so the CEOs can justify their outrageous salaries and lure investors into their stock while insiders and Fund Managers (ie. "smart money") cashes out.  Then, when the whole thing ultimately collapses, they will say: "Who could have seen that coming?"  

I know it's complicated but
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World War Wednesday – “One Does Not Give 24 Hours Notice to a Nuclear Power!”

"Climbing up on Salisbury Hill

I could see the city light

Wind was blowing, time stood still

Standing, stretching every nerve

Had to listen, had no choice

I did not believe the information

Just had to trust my imagination" – Peter Gabriel

While you were sleeping…

You know that funny story about the former Russian spy and his daughter who were poisoined in the UK (Salisbury) on March 4th and how the British investigated it and, Monday, Theresa May told Parliament that it was "highly likely" the Russians were responsible?  Well the British demanded an immediate response from the Kremlin or Britain would immediately place sanctions on them and now it gets REALLY amusing as the Kremlin called May's speech to Parliament "a circus" and, when they say "circus" they mean the boring Russian kind with no animals!  

Then (and here's where it gets REALLY funny), Russian Foreign Ministry Spokeswoman Maria Zakharova replied (or threatened – it's hard to tell the difference with Russians):

"One does not give 24 hours notice to a nuclear poweradding that the "Skripal poisoning was not an incident but a colossal international provocation."

THEN things got really crazy (not Trump crazy, but crazy for normal people) as a Twitter war erupted between the UK and the Russian Embassy:

  • “Moscow will not respond to London’s ultimatum until it receives samples of the chemical substance to which the UK investigators are referring.

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Terrific Tuesday – Markets Blast Higher Just Because

Image result for no news is good newsNo news is good news.

That's true for the markets as the lack of negatives puts us back into default mode (up), despite there being any real positives to point to either.  We're well over our bearish levels now and in full-on recovery mode and, usually, I would make a comment about yesterday's comically low volume but that never seems to matter either – so we're just going to go with the flow and enjoy the ride until it stops.

This morning we had a calmer CPI number at 0.2% as energy prices came down and the Core CPI (ex food and energy) remains at 1.8%, which briefly blasted the markets higher but then Trump fired Rex Tillerson and we gave back half the gains but now Trump appointed the CIA Director (Pompeo) to be Secretary of State because, I guess, Director of the CIA isn't an important enough job.  Of course, Pompeo is a very loyal Tea Party Republican, appointed by Trump last year (he had previously been a Congressman).  

Image result for Gina HaspelThe good news is Pompeo is being replaced by Deputy Director Gina Haspel, who is an actual CIA lifer and was, in fact, Obama's Director of National Clandestine Services and I don't know exactly what it is but it sounds cool!  Essentially she's the female Jack Bauer, who's been on the ground all over the World fighting terrorism and she even ran a black site prison in Thailand – so she probably knows how to get people to talk!

Now, you would think, being a liberal, that I have a problem with this but I don't.  Terrorists don't play by the rules and you have to fight fire with fire – not that Haspel has been accused of anything very bad (other than, perhaps, "accidentally" deleting a few "interview" tapes).  What will be interesting now is how vigorously she will pursue Russian Election Hacking – something Pompeo hasn't touched during his year in office (though he did say the CIA concluded it definitely happened).  

Meanwhile, the Saudis have lost control of the price of oil (/CLand we
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Philstockworld Top Trade Review

Image result for top trade ideasYes, this is Monday morning's Report.

I don't have much to say about the markets, they are back near the highs and we'll see if they hold tomorrow, not today, as it's Monday and Monday's don't matter.  What we do need to do is bargain-hunt in case it is a real rally and the best way to do that is to look back on past trade ideas and see if we can find some that haven't gone up yet.  

We haven't done a Top Trade Review since the end of Sept so it's a good time to do one of those and, as our Members well know, the vast majority of those trades turn positive so, when they're not, it's usually just a matter of time.  As of the September review, we had looked at Top Trades that were initiated in the first half of the year and, out of 27 trade ideas in 26 weeks, we had 21 winners and 6 losers but 2 of the winners turned around by Sept and that left is with 28 wins and 3 losses for a wonderful 90.3% winning percentatge.

Let's start by taking a look at our two losers and see how they are doing:

Tesla (TSLA) had jumped to $390 in Sept and though it was back to $340 by the 30th, we were worried about the 3 short Oct $300 calls we had sold for $30 were $43.50 so we rolled them ($13,050) to 4 short Jan $340 calls at $31.20 ($12,480) for net $570 less than the $9,000 we collected and THOSE short calls expired at $10.02 ($4,080) so we ended up with a net profit of $4,350 on that "loser" trade.  

Chesapeake Energy (CHK) is still a big loser and we still have the adjusted position (30 2020 $4 puts at $1.25 (now $1.56) and 20 short 2020 $2.50/5.50 bull call spreads at $1.25, now 0.85) so we are still down on them and I would now double down on the 2020 $250 calls at $1.35 and wait for a bounce to sell 20 more $5.50s for $1 (now 0.40)

IMax (IMAX) is running out of time to…
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Zero Hedge

Yahoo Japan Plans To Launch Cryptocurrency Exchange Amid FSA Crackdown

Courtesy of ZeroHedge. View original post here.

Japanese crypto regulators sent crypto prices spiraling lower earlier this month when they announced a heavy-handed crackdown on seven local cryptocurrency exchanges (and ordered month-long suspensions for two more).

As CoinTelegraph reports, the Japanese Financial Services Agency (FSA) has sent “punishment notices” to seven crypto exchanges and temporarily halted the activities of two more after a round of insp...

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Phil's Favorites

"People have said that I am a tool of some nameless adult"


“People have said that I am a tool of some nameless adult”

Courtesy of 

I caught some of the marches going on around the country on the news channels and on social media. I’m really proud to live in a country like this, where people can come out and stand up for themselves.

I’m also in awe of some of the young people who’ve been speaking out about their rights not to get shot in school or movie theaters or walking down the street. They have complete command of the issues, statistics and laws surrounding the topic, they speak with poise and confidence in a way I never...

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089: FFS... Please Send China A Fruit Basket

By Sovereign Man. Originally published at ValueWalk.

I was in the gym earlier today trying to ward off the effects of trans-Pacific travel and 12 hours of time zone changes when the news flashed across the TV that the US government was issuing another round of tariffs against China.

This may be the dumbest move they could possibly make.


See 2017 Hedge Fund Letters.

yangzuming7777 / Pixabay

It’s so stupid, in fact, that I couldn’t contain myself in print. For this, I had to go to audio… and record a pr...

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Insider Scoop

Strategic Action At Visteon Is Unlikely, Morgan Stanley Says In Double Downgrade

Courtesy of Benzinga.

Related VC 41 Biggest Movers From Yesterday 28 Stocks Moving In Thursday's Mid-Day Session

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Chart School

Bitcoin Cycles Review

Courtesy of Read the Ticker. uses Bartel's logic to find dominant cycles in a time series.

Cycles are present in markets, as shown below the 22 and 40 day cycles on calendar days looks like the best fit. Therefore the chart below suggest we can expect a bitcoin low either now or in a few weeks.

Bitcoin has not been effected by the SP500/Dow sell off which is a very bullish sign, bitcoin may see safe haven money chasing price very soon, add to this the sister coin, litecoin, isgetting ready for wider use with the massive e-commerce payment market (litepay, litepal, atomic swamps, lightening network).

The bitcoin move is not over!


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Digital Currencies

Why accountants of the future will need to speak blockchain and cryptocurrency if they want your money


Why accountants of the future will need to speak blockchain and cryptocurrency if they want your money


Courtesy of Anwar Halari, The Open University

If you haven’t already heard of Bitcoin, you either haven’t been paying attention or you’re a time traveller who just touched down in 2018. Because by now, most of us will have heard of Bitcoin and some of us have even jumped on the bandwagon, investing in cryptocurrencies.

But despite its popularity, many people still don’t understand the technology that underlines it: blockchain. In...

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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 ...

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How your brain is wired to just say 'yes' to opioids

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


How your brain is wired to just say ‘yes’ to opioids

A Philadelphia man, who struggles with opioid addiction, in 2017. AP Photo/Matt Rourke

Courtesy of Paul R. Sanberg, University of South Florida and Samantha Portis, University of South Florida


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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 ...

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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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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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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.


EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...

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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...

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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 >>