Phil's Newsletter

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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Thank Trump It’s Friday – Market Madness Continues Despite Massive Uncertainty

And we're short again!  

Nasdaq (/NQ) 7,000 seems like a lovely shorting line and we grabbed a couple this morning in our Live Member Chat Room along with Russell (/RTY) shorts at 1,580 – these are now the June contracts, so they are a little higher than our shorting lines earlier in the week but essentially the same.  Not only that but we bought back half the covers on our primary SQQQ short yesterday afternoon – essentially flipping us much more bearish into the weekend.  

We're expecting a pullback on the Nasdaq next week (not today) to at least 6,850 and 150 /NQ points is good for $3,000 per contract gains and we weigh that against stopping out over 7,005 with a $100 per contract loss – so it's a very nice reward vs a fairly small risk – the kind of trades we love to take in the Futures.  The same with the Russell but 1,580.50 only costs us $25 per contract vs 1,550 would be a gain of $1,500 each.  

We have Non-Farm Payrolls out at 8:30 and economists expect 200,000 jobs to be created, which is the same amount of jobs we always create – there has been no improvement at all under Trump and, in fact, we've been drifting lower but hourly earnings are on the rise (due to Obama-era Minimum Wage increases that are kicking in now) and that's good for the economy – though not so great for Corporate Margins.

With unemployment hovering around 4% – everyone is working so the labor market is tight and we're expecting to see some serious wage inflation over the next few years that, in turn, sparks a broader inflationary cycle in the economy.  In fact, China was ahead of us in increasing wages (still much lower than ours) and now they have 2.9% inflation – double what it was a month ago but possibly a blip from the New Year celebrations last month.  

Meahwhile, the GDP estimates are in free-fall and no one seems to notice, no one seems to care as the Atlanta Fed has taken their ridiculously optimistic GDP Now forecast down from 5%, which rallied
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Full-Throttle Thursday – Nasdaq Blasts Back to All-Time Highs

We’re back baby!

Not our posts – we’re still having WordPress issues and I can’t format but the market is roaring back on news the Trump may go easy on Canada and Mexico with his tariffs but I think he’ll sign a bill with no exemptions this afternoon and tank the markets again so we’ll look for shorting opportunities – especially as the Nasdaq (/NQ) closes in on that 7,000 line (now 6,962 on the 100).

As long as the S&P (/ES) holds it’s strong bounce line at 2,728 – it’s silly to short but below that, we will look for 1,575 on the Russell (/RTY) and 6,950 on /NQ and 24,850 on the Dow (/YM) to confirm weakness and short the laggards on the way down (with tight stops if any of them pop back over, of course).

Yesterday, in our Live Trading Webinar, we made $445 trading the Russell and Nasdaq Futures – not bad for 2 hours’ “work”. Our longs from the Morning Report yesterday on the Dow (/YM) paid of very well at 24,800, good for gains of $1,500 per contract on the day.

We reviewed our Member Portfolios during the Webinar and all are in great shape but the paired Long-Term/Short-Term Portfolios (LTP/STP) are simply performing fantastically as we have, so far, played the channel very well. This will be the Nasdaq’s 3rd attempt at the 7,000 line and the first time (Jan) we fell back over 10%, to 6,300 and the 2nd time, late last month, we fell only 300 points (5%) to 6,750 so, even if we’re getting stronger – I still think we see a 150-point dip back to 6,850 and 150 point on the Nasdaq Futures pays $3,000 per contract vs the risk of getting stopped out with a $100 loss if we pop over – that’s the kind of reward/risk set-ups we love to play in the Futures!

But we’re not there yet – let’s look for 24,850 on /YM and 1,577.50 on /RTY to fail this morning with very tight stops over each while we wait to for the Nas to make a move.

Hopefully the posts will be fixed tomorrow but I’ll continue my commentary in chat today.

Whipsaw Wednesday – Mo Quits, Larry and Curly Running the Country!

Wow, what a night!

We’re having technical difficulties this morning and are unable to post our PSW Report but it is available to our Members in our Live Chat Room HERE as well as below (poorly formatted):

Hopefully we’ll have this spot fixed shortly.


- Phil

Overnight, we lost the “adult in the room”, Gary “Moe” Cohn, as he quit the White House rather than pretend he was in favor of the trade tariffs. I’m sure Cohns everywhere are breathing a sigh of relief that their names won’t go down in history next to Smoots and Hawleys in the annals of poor economic decisions. Speaking of anals – Stormy Daniels is suing Trump – just had to mention that! Meanwhile, in referring to the 1930 Tariff Act, I noticed the full name of the Act was:

“An Act To provide revenue, to regulate commerce with foreign countries, to encourage the industries of the United States, to protect American labor, and for other purposes.”

I guess the long name for the new Tariff Act should be the “We never f’ing learn Act of 2018, where the American people fall for the same dog-whistle BS over and over again for the purposes of distracting them from a massive criminal investigation of pretty much the entire White House.”

As I said to our Members this morning: “As to Cohn, I think the panic is over losing the adult in the room. Now it’s like the 3 Stooges came over to do your plumbing but Moe quit. The whole job was going to be a mess but at least, with Moe, there was a chance that it would get done. Now there is no chance and things are likely to get much worse. ” That’s why the market are freaking out this morning, with the Dow down over 300 points.

Overall, this is the kind of panic we see when a company loses its CEO – people sell into the uncertainty. Trump could fix this by appointing someone like Warren Buffett or Janet Yellen to be his Senior Economic Advisor but he’ll more likely choose a spineless toady like Larry Kudlow or the current head of the Council of Advisers, Kevin Hassett, whose primary claim to fame is publishing “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market” in 1999.

Speaking of…
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Phil's Favorites

QOTD: The Uphill Battle


QOTD: The Uphill Battle

Courtesy of 

The New York Times:

One central tension at Facebook has been that of the legal and policy teams versus the security team. The security team generally pushed for more disclosure about how nation states had misused the site, but the legal and policy teams have prioritized business imperatives, said the people briefed on the matter.

“The people whose job is to protect the user always are fighting an uphill battle against the people whose job is to make money for...

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Zero Hedge

Tempe Police Say "No Fault By Uber" In Fatal Crash

Courtesy of ZeroHedge. View original post here.

Following yesterday's market-moving report of a fatal accident involving a self-driving Uber car on the roads of Tempe, Arizona, legal experts immediately chimed in, saying this case presents many thorny legal issues - chief among which is the issue of who could be at fault.

Since it was the first recorded fatality involving a self-driving car, would investigators point the finger at the car's human driver? Uber? The car's manufacturer? Some combination of the three (or none of the above).


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Peter Thiel: Need To Rethink Tariffs In Light Of Trade Deficit With China; SF Sucks, Bitcoin Rocks

By VW Staff. Originally published at ValueWalk.

PayPal cofounder Peter Thiel in a wide-ranging interview on President Trump’s trade tariffs, China’s economy, technology regulations and his outlook for bitcoin.


Check out our H2 hedge fund letters here.

Peter Thiel: Need To Rethink Tariffs In Light Of Trade Deficit With China

Peter Thiel On Leaving Silicon Valley For Los Angeles

Billionaire investor Peter Thiel argues Silicon Valley is is a ‘totalitarian place’ where people are not allowed to have dissenting views.


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Chart School

Weekly Market Recap Mar 18, 2017

Courtesy of Blain.

Indexes were coming off a massive week and entered this past week somewhat overbought, so certainly were due for some sort of rest.   For the week, the S&P lost 1.2%, and the NASDAQ 1%.  While most of this political mumbo jumbo stuff is not really market moving for more than a hot minute while the algorithms scramble to react, it is worth noting the movement in key economic positions.  To that end:

Lawrence Kudlow of CNBC fame has been officially named as director of the National Economic Council to replace Gary Cohn, who resigned earlier this month. Kudlow has supported Trump’s tax cuts but opposes tariffs.

Trump said ...

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Insider Scoop

The Market In 5 Minutes: AT&T, Facebook Data, Apple Screens, Google Shopping And More

Courtesy of Benzinga.

Related SPY What You Need To Know About Larry Kudlow, Trump's New Economic Advisor Appeals Court Overturns Fiduciar... more from Insider

Digital Currencies

Bitcoin Soars $1000 Off The Lows After G-20 Rejects Crypto Crackdown

Courtesy of ZeroHedge. View original post here.

While advertising bans and Mt.Gox Trustee overhangs remain, the FUD of a possible global regulatory crackdown in the G-20 Communique was a major driver of this weekend's weakness... until Les Echos confirms FSB has rejected calls for regulation.

After headlines suggesting a global crackdown on cryptocurrencies spooked the markets on Friday, ...

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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...

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 >>