Phil's Newsletter

Monday Market Movement – Back in the Bottom of our Range

Well this is no surprise

Back on April 15th, in our Live Chat Room, I said to our Members:

"What we really care about is the bigger picture and we know 2,850 is our old Must Hold and 2,300 (2,280) is our -20% line and 2,550 (2,565) is our -10% line and that's the range we expect to be in.  

Once things calm down, we should range up or down 10% around 2,850 for the 2nd half of the year but I think for the next few months, it's more likely we stay between 2,550 and 2,850 and consolidation there would be nice and healthy for a good move back to the top of the range that's more likely to stick."  

For more details on our trading range and how we took advantage of the move, see March 17th's:  "2,400 Tuesday – S&P Tests the Bottom of our Target Range"

We expected the top of the range to be a barrier and we lightened up on our longs and added more hedges at the top and, since then, we're pretty much right where we were at the time but this morning we're down yet again on the Futures, down 5% in the last 3 sessions as the Adminstrations "Blame China for Everything" strategy is not really inspiring investor confidence. 

Warren Buffett isn't buying this dip and that's kind of disturbing.  My long-time readers know how much I love Buffett but I don't always agree with hm these days as he's losing a few steps from what he was so, just because he says something doesn't mean it's true – as evidenced by his sudden love of airlines, now ended as he dumped them all – since he's not confident that industry will recover from the virus any time soon (and "soon" to Warren Buffett is years, not months!).  

Buffett said his $137Bn cash on hand "isn't that huge when you think about worst-case possibilities… We don't prepare ourselves for a single problem, we prepare ourselves for problems that
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Fall Back Friday – What a Good Time For a Trade War!

Coronavirus vs Trump: the US president's authoritarian bluster has ...Trump is officially out of control.

It's May 1st and the Federal Government just ordered 100,000 more body bags on top of the 60,000+ (more than the 20-year Vietnam War) citizens we've already buried.  It was literally just a month ago that Trump told Hannity (3/26) that he didn't think the medical equipment the Governors were asking for was needed – so he didn't send any of that.  Now he is ready to send 100,000 body bags instead – those only cost $5M – much cheaper than actually helping.  

This isn't about that, if you don't realize Donald J Trump has completely and totally bungled the job of fighting the Coronavirus – then there's no facts that will ever convince you otherwise – they are all out there already.  This is about the new disaster Trump is causing by seeking to distract people from his inept response to the virus and the deaths of 100,000 voters, who knew 1M other voters at least and, by election day, it could be 10M voters.

"In a transparent attempt to distract from his continuing failure to lead an effective response to a disastrous public health crisis, the great showrunner in the White House is in the process of introducing a new story arc: an epic battle with an evil China.

"It involves blaming China for a virus that was most likely uncontainable, making all sorts of dark insinuations and demanding that his intelligence services find grist for anti-Chinese conspiracy theories, and threatening massive economic retaliation, apparently even to the point of defaulting on U.S. debt." – Salon

Trump is threatening more tariffs, Trump likes tariffs, his base likes tariffs – China is fun to hate.  As Orwell predicted about Trump in 1984:

"The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps they even believed, that they had seized power unwillingly and


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Faltering Thursday – Wrapping up the Best Month Since 1974

Image result for money printing animated gifThe BEST month!

That's right, speaking of cognative dissonance, while you were locked up (Trump did promise he'd do that) for the month, the Stock Market had it's best month in almost 50 years, now up 34% from our March 23rd lows.  We just reviewed our Member Portfolios in our Live Trading Webinar and they are up along the same path.  Fortunately, rather than just recovering with the market, we called the bottom right on the money and added to our positions, leveraging the 34% gains quite nicely – so now we're having a great year – in captivity.

The difference between being able to act when they market is down and not being able to act is night and day for your overall returns, that's why we always keep a healthy amount of CASH!!! on the sidelines – even in the best of markets and we always scale into (and out of) our positions. Which brings us to today's topic – should we take our money off the table?  

CH 20200429 SP500 looking for a bottomWe have some truly ridiculous gains in our portfolios thanks to this epic bounce and we're coming back to test the 200-day moving average on the S&P at the 3,000 line and we didn't think we'd get back over our Must Hold line at 2,850 but, on the other hand – as I said back on March 24th: "Turnaround Tuesday – Yes, $3Tn is a LOT of Money!"

That was my estimate of the stimulus at the time and that's why we called the bottom but, by Wednesday, we knew that the Fed's contribution made it more like $6Tn (now $6.5Tn with the second round of SBA loans) as I qupted on 3/26: "Federally Funded Thursday: “We are Not Going to Run Out of Ammunition” – Powell."  The Fed Chairman reiterated that comment yesterday but also warned that the Fed can't do this alone and needs fiscal support from the Government as well.  Do I hear $9Tn?  

JPow Jerome Powell GIF - JPow JeromePowell MoneyPrinting ...As investors, we don't really care, FREE MONEY is FREE MONEY
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Which Way Wednesday – Virtual Fed Meeting Edition

Comic: Addicted Markets Beg Powell For More Fed Rate Cuts As S&P ...Will Powell be wearing pants?

That is the burning question on everyone's mind as the Chairman of the Federal Reserve will be zooming in his address to the nation at 2:30 this afternoon.  Powell has already said (3 week ago) that the Fed will act "forcefully" to help the US recover and that the economy can be "robust" once the virus is contained.  Traders are assuming that means more of the same today but today it's Powell's job to assess whether or not the virus is contained – so that's a potential point of disappointment as well as the strong likelihood that Powell will have a "wait and see" approach as clearly they can't possibly have spent the $4Tn they have been allocated yet, so those expecting more from the Fed are likely to be disappointed.  

We are certainly waiting and seeing this morning and we have a list of 16 positions we are thinking about trimming from our Member Portfolios, about 20% of the total and we'll discuss two of them here in our Money Talk Portfolio Review, as I'll be on the show this evening (BNN at 7:30) and we only adjust the portfolio on show days. 

The last time I was on the show was March 11th, a bit before we hit bottom and I made a call for jumping into blue chips and I made a call for selling puts on stocks you want to buy, using Valero (VLO) and Ford (F) as examples.  We also added Tanger Factory Outlets (SKT) as a long-term dividend play.  Our Money Talk Portfolio was down 8.4% at the time and we made a series of aggressive moves I detailed in that morning's PSW Report – in order to take advantage of the market decline.  

We had the advantage of being mostly in CASH!!!  In fact, we had $99,235 of cash in the portfolio while the positions themselves were worth -$7,670 for net $91,565 out of our original $100,000 we began with back on 11/13/19.  We had stayed "Cashy and Cautious" – as we did with all of our Member Portfolios, as we felt fairly certain that SOMETHING was going to cause the market to sell off – we just didn't expect…
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Terrific Tuesday – Talk of Another $2.2 Trillion Stimulus, Re-Opening Boosts Market

Trump gives governors 3-phase plan to reopen economyCognative Dissonance.

That's the mental state experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.  On the one hand, the President and Fox News are pushing the idea of "Opening Up America Again" as if their lives depend on it and, politically, Trump's does because if he doesn't "beat" this virus, he won't be re-elected and, if Trump isn't re-elected, he is very likely to go on trial for all sorts of things he's currently being protected from.

 On the other hand, the Senate is about to look at a relief packgage aimed to shore up the states, including paying unemployment benefits (like they are supposed to) for 24M newly unemployed Americans and that "CARES 2" package is looking like ANOTHER $2.2Tn.  So are we ready to open up Amercia just 6 weeks after we locked it down or is this a lingering crisis that requires $4.4Tn of direct Government aid PLUS $4Tn from the FED?  That's cognative dissonance – they can't both be true – but we're acting as if they both are.

All this talk of throwing MORE FREE MONEY around is driving the Dollar down and boosting the market and our Futures are up another 1% as the Dollar drops another 0.5% – which is pretty much the usual relationship between the two.  

It's not much of a rally when the buying power of the currency your stocks are priced in keeps falling but it undoes a lot of technical damage as yesterday the S&P 500 pushed over our Must Hold line at 2,850 and we're also back above the 50-day moving average at 2,800 so, if we can hold that today without going under, next stop is testing the 200 dma at 3,000 and that's just 15% off the all-time high – what virus?

A "recovery" like this sows the seeds of its own destruction as we're going up on stimulus and ignoring the reality of businesses opening up at 25-50% of capacity and the very real possibility that we're re-opening America far too soon (as most medical experts are warning), which will ultimately prolong
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Monday Morning Math Notes – Looking Ahead in a Viral Market

Should we stay or should we go?  

THAT is the question I've been pondering this weekend as we've had an excellent run in the markets off the bottom and all of our Member Portfolios, except the Dividend Portfolio, are back in the black and we should be THRILLED, in this kind of market – just to get our money back.  Still, the thing is – if we go back to cash – then what?  This is where the Fear of Missing Out (FOMO) comes in because, while we are comfortable that we can take our cash and make money in any kind of market – we still don't want to miss out on deals of the century, do we?

So I have been reading and thinking all weekend and watching the virus counts and looking at what's happening around the World and considering the data and here's what I think:

21% of 1,300 people tested randomly in New York City and 14% of the people in New York State had antibodies for the Coronavirus.  That means 1 out of 6 people have been exposed enough to have had a reaction – it doesn't mean they are definitely immune but we're talking about 15%(ish) of 20M people (that's 3M for Fox viewers) and "only" 300,000 (so far) had symptoms that were noticable enough to get counted while the rest developed anti-bodies after apparently mild exposures.

In New York City, about 21 percent tested positive for coronavirus antibodies during the state survey. The rate was about 17 percent on Long Island, nearly 12 percent in Westchester and Rockland Counties and less than 4 percent in the rest of the state.  State researchers sampled blood from the approximately 3,000 people they had tested over two days, including about 1,300 in New York City, at grocery and big-box stores. The results were sent to the state’s Wadsworth facility in Albany, a respected public health lab.

In California, antibody testing in two studies found rates of exposure as hign as 4% in Santa Clara County and 5% in Los Angeles County.  Keep in mnd the sampling, at stores, may disproportionately include those who have either already had the illness, or those who naturally tend to go out more and so…
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26 Million Out of Work, 50,000 Deaths, 870,000 Infections – Are We Great Yet?

I WAS going to write an upbeat article.

Then Trump suggested injecting disinfectants into infected people's lungs AND NO ONE CONTRADICTED HIM!!!  That was yesterday's live press briefing at the White House where Trump suggested injecting poison and also using ultra-violet light inside the body – since it seems to hinder the growth of the virus in the environment.  

Trump said that just seconds after those items were mentioned (not in the same way) by DHS's Bill Bryan (yet another Trump unconfirmed appointment) and it was very clear that Trump himself is only getting the information for the first time at the briefing and then he makes ridiculous and dangerous inferences from what he misunderstands and, because this is all being done on camera – no one has the guts to contradict him – no matter how insane his comments are.  

“This notion of injecting or ingesting any type of cleansing product into the body is irresponsible and it’s dangerous," said Dr. Vin Gupta. "It’s a common method that people utilize when they want to kill themselves."

"As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route)," said a spokesperson for Reckitt Benckiser, the United Kingdom-based owner of Lysol, in a statement to NBC News.

Yes, this is what America has come to.  Lysol has to issue official statements telling people not to listen to the President and inject yourself with their product.  While I certainly don't think anyone reading this is going to start shooting up Lysol just because the President said it's a promising treatment – people have died from taking hydroxyclhloroquine after the President called that a miracle cure.  It turns out to be not at all effective against Covid-19 but, to be fair, we haven't tested injecting Lysol yet – BECAUSE IT'S BAT-SHIT CRAZY!!!

Not proving something doesn't
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Faltering Thursday – Rally Grinds to a Halt as We Wait for More Stimulus

Oil is back over $15.

As you can see from the chart, the number of people piling into the Oil ETF (USO) is skyrocketing as the price becomes an apparent bargain, now $2.50 but the ETF is broken and now it's a chicken and egg thing as the bargain-hunters buy USO and that forces USO to buy oil contracts which has NOTHING To do with the fundamentals of oil but drives up the price of oil briefly but USO MUST dump the contracts (as they don't take delivery) by the end of the month at any price and that dump has rules and those rules can then be taken advantage of by traders who profit off the rollover.  Given the situation – I think we'll have to dump out of USO for the duration – long before the month ends.  

Stock price graphsThe ETF is reverse-splitting 1 for 8 as of April 29th, so we'll have to be out by then as it's more likely than not that oil will plunge into negative numbers again at the May, taking USO down with it, no matter what price they reset it too.  So far, Trump has offered to buy 75M barrels of oil for the SPR and Trump has attempted to raise hostilities with Iran in attempts to boost the price of oil and it's working somewhat, with oil back to $15 but we just had a 25M barrel build in inventores yesterday so even if they fill the Strategic Petroleum Reserve to the brim – we still can't handle 4 more weeks of build like that!

Keep in mind the chart above represents all the storage in the US and we're only 20M barrels below the all-time high.  They may find SOME additional storage but it's doubtful they find 50M (10%) more barrels worth to take us up to 600M – there's a limit to how many broom closets refineries can fill up.  Even more immedite is the storage situation at the US's main hub in Cushing, OK, which has a very well-defined capacity of 80M barrels.  

Figure 2. Cushing, Oklahoma commercial crude oil inventories

At least, that's what it says on the
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Wednesday Weakcovery – Does $500Bn Even Help Anymore?

dc gifs Page 2 | WiffleGifAnother $500Bn is being thrown on the fire.

Not that we don't need it, our economy is on fire and our people are in peril but here we are, after being locked into our homes and out of our jobs for over a month and WHERE are the stimulus checks?  Very few people have gotten their promised $1,200 so far and almost no small businesses have gotten their Paycheck loans, which were meant to allow them to pay their employees -that's what Congress is supposed to be doubling down on this morning but what is preventing 75%-80% of this money from being misdirected to big businesses as well?

PPP vs SBARepublicans had initially wanted only to replenish the small-business fund (which they looted), while Democrats wanted to also boost money for hospitals, testing, food stamps and state and local governments. Although under pressure last week from some centrist Democrats uncomfortable with delaying the small-business aid, Democratic leaders saw several of their requests met in the emerging deal.

It took two weeks for the money allocated in March to reach the banks and then it took only 3 days before the banks ran out of money and the Republicans act like that's shocking but the money is supposed to cover 2 months of salaries and rents and utilities and small businesses employ 50% of the people in this country and those people earn $6Tn a year so $500Bn a month so salaries alone for 2 months are $1,000Bn so STOP BEING SHOCKED THAT $350Bn WASN'T ENOUGH MONEY!

F'ing MATH people – look into it….

Meanwhile a lot of businesses, in good faith, hung onto their staff and kept paying their bills because the President assured them those bills would be covered and then the first round of loans was completely inadequate and now the 2nd round of loans is still inadequate and I doubt many small businesses can afford to keep paying their staff for 2 months based on empty promises – so look for lots more layoffs.

“People are feeling like they’ve lost everything,” CNBC quotes Allie Fleder, chief


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Tumblin’ Tuesday – They Will PAY You to Take Their Oil

$38.50 per barrel.  

That's how much you get PAID at the NYMEX for agreeing to take a 1,000-barrel contract off their hands.  The problem is (and the reason it's so cheap) what are you going to do with 1,000 barrels of oil and $38,500?  The barrels are 42-gallon drums and weigh 300 pounds each and you have to pick them up in Cushing, OK no later than the end of the next month and picking up means from a pipeline – you have to bring your own barrels.

You can buy the barrels for about $20 each but they are 3 foot tall by 2 foot in diameter (12 cubic feet) and a standard semi truck has about 2,400 cubic feet of spaces so, if you were to fill up 1,000 barrels you'd need 5 semi trucks to take them to your storage facility and you'd have to pay 5 teams to load them and unload them and then pay for storage until you find a seller.

No fuel price reduction yet, despite 20% price drop in crude oil ...Still if you are doing the math, you might be able to make all that work for under $38,500 but then you still need to find someone who will buy the oil from you for less than zero and, while -$38.50 did not last long – oil is still trading at -$4 this morning.  Those are the contracts that expire today for May delivery as there is simply nowhere left to put the oil.  

Not only are the storage facilities full but the pipelines are full so you can't even transport the stuff and the oil tankers are being used for storage and good luck finding a tanker truck or tanker car on a train.  Go to your local gas station and he'll tell you he's full too – those tanks hold 12,000-24,000 gallons and that's just 250-500 barrels at a gas station but that is, of course, refined gasoline – you would be buying unrefined crude so your only potential buyer is a refinery and, guess what – they're FULL!!!

So the oil market is, currently, broken and will not magically get unbroken as long as no one is driving their…
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Phil's Favorites

Trump Tweeting As Much As Ever Amid Twitter Standoff

 

Trump Tweeting As Much As Ever Amid Twitter Standoff

By , Statista

President Trump has signed an executive order which aims to remove some of the legal protection given to social media companies, though it is expected to face significant legal hurdles. In a nutshell, it sets out to clarify the Communications Decency Act, handing regulators the power to file legal proceedings against social media companies for the way they police content on their platforms. Trump's decision to take action comes two days after Twitter attached a fact check to one of his tweets lambasting mail-in voting. He then threatened to close ...



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ValueWalk

Gold supply chain in recovery mode after pandemic shutdown

By Michelle Jones. Originally published at ValueWalk.

The gold supply chain was largely shut down as the COVID-19 pandemic spread around the world. However, things are starting to open back up, and production is beginning again. The World Gold Council studied the gold supply chain, how it was impacted by the pandemic, and how the disruption of the supply chain has affected investment demand for the yellow metal.

Q1 2020 hedge fund letters, conferences and more

Disruption to the gold supply chain

The World Gold Council said the gold supply chain is entirely global because the metal is mined on evert continent except Antarctica and refined in nume...



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Biotech/COVID-19

Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate

 

Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...



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Zero Hedge

Ted Cruz Accuses Twitter Of Violating Sanctions Against Iran, Demands DoJ Probe

Courtesy of ZeroHedge View original post here.

We've mentioned in nearly every single one of our posts about this week's dustup between the president and Twitter that the Ayato...



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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.