Phil's Newsletter

Philstockworld January Portfolio Review

Image result for one million dollars animated gif$1,609,027! 

Our combined portfolios are up over $1M (166%) in just over a year and the best thing is our Long-Term Portfolio (LTP) is back to about 50% CASH!!! – and you know I love my CASH!!!  In fact, we only made a couple of adjustments but let's please consider what happened to the 21 remaining positions since our Dec 16th review, where I said:  

We have 33% less positions, so it's easier to adjust if we do have a correction and we have 33% less longs for our Short-Term Portfolio to protect – lowering our insurance costs as well.  Those are the "consequences" we've suffered from "missing out" on a fantastic rally.  Certainly it's been a lot more relaxing and I aim to keep it that way into the New Year – just in case.  

So next time you feel compelled to trade due to a Fear of Missing Out (FOMO) – keep in mind – missing out on what?  We already made FANTASTIC returns for the year – why risk it just to make a tiny bit more?  

Did we miss out by cutting our positions?  No!  A month later the EXACT same positions are at $1,513,928 – gaining $113,643 (8.1%) in 27 days – and that's from a half CASH!!! position!  People say why don't we do a lot of new trades and I keep saying what trades could possibly be better than the ones we already have?  These are the remaining positions that ran the gauntlet of 2020 and were the best of the best of a portfolio that's now up 202.8% in 14 months.  Making gains like this with conservative plays in a toppy market is as much as we could ever hope for at this stage of the rally.

And that's not including the $300,000 we took off the table when we closed down our old Short-Term Portfolio (STP) and our new STP is down 52.8% but,…
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Which Way Wednesday – S&P 3,800 Edition

Monday's shorts are still going strong.

Of course we cashed most out already but even now (7:45), the Dow (/YM) Futures are still above the 31,000 line, which is our shorting line for /YM and the S&P Futures (/ES) only just crossed back below 3,800, which is our shorting line for /ESAs I noted in yesterday's Morning Report:

It's an interesting way to start the year and we'll see how things play out but we're still shorting those index lines at Dow (/YM) 31,00, S&P (/ES) 3,800, Nasdaq (/NQ) 13,000 and Russell (/RTY) 2,100 and we'd love to see Oil (/CL) closer to $55 so we can short that into tomorrow's inventory report as further OPEC cutbacks aren't going to make a dent in the surplus we have going on.  For now, we can use the $52.50 line as our shorting zone with very tight stops above

The hardest thing about trading the Futures is all the NOT trading the Futures you have to do in between.  It's been a long time since we've played the indexes but we now have a nice alignment of good, solid resistance points to guide us and market conditions that are truly toppy so the risk/reward profile brings us back to Futures trading for the first time in quite a while.

Unfortunately, I can only tell you what is likely to happen and how to profit from it – the rest is up to you.  On Monday, for example, I said:

According to our fabulous 5% Rule™, the Nasdaq topped out at 13,060 and 12,900 is the 7.5% line up from 12,000 and 13,200, of course would be the 10% line and a rejection of that 1,200-point run would be 240-points but we'll call it 250 and that make 12,950 the weak retrace line.  If that holds, we should be worried but, if it fails, the next support is way down at 12,700 so that's the next shorting zone we can play.

If you missed Monday's call (and you would not if you subscribed HERE) I would not chase the Nasdaq this morning but play the S&P as it crosses…
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Tuesday Turmoil – China Sells Off, Weather Gets Cold

China's stock benchmark falls from 13-year highThe weather isn't the only thing turning cold.

Chinese stocks fell the most in three weeks, led by consumer shares and commodity producers, amid concern valuations for the most popular stocks were stretched and as metal prices slumped.  The CSI 300 Index dropped as much 1.5% before paring losses to 1% at the close. Gauges tracking energy, consumer staples and materials producers slumped more than 2%.

Some 39 Chinese companies both domestically and offshore defaulted on nearly $30 billion of bonds in 2020, pushing the total value 14% above 2019’s.  Defaults by Chinese companies are likely to top last year’s record as tighter monetary policy squeezes borrowers, according to China Merchants Securities Co.

“The central bank will implement more prudent monetary policies this year,” said Yuze Li, a credit analyst at China Merchants Securities. “More companies may face refinancing pressure. As the maturities jump, the default amounts will climb by an estimated 10%-30% from the previous year,” he said, referring to both onshore and offshore defaults.

In the dollar-bond market, the financial sector accounted for about 43% of total defaults, followed by technology and energy. ?Five state-linked companies defaulted for the first time in the onshore bond market, the most since 2016.

Meanwhile, Global Warming is making us cold as it disrupts the normal air currents and sends the frigid air mass that usually circles the arctic down to the Northern Hemisphere which is, as they say in acedemia, bad.  The icy blasts threatening to sweep across North America, Europe and Asia starting in late January are from the same weather pattern that triggered the 2014 cold snap known as the polar vortex, which plunged temperatures in Chicago to minus 16 degrees Fahrenheit.

Enjoy your outdoor dining!

Natural Gas has already been spiking but still only $2.85 and we should hit $3 or more on the /NG Futures contracts with all this cold weather ahead along with a slowdown in shale production that is slowing the supply of Nat Gas. Natural Gas Futures pay $100 per point, per contract, and $2.85 is a good support line so tight stops below limit your losses while a
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Monday Market Movement – Down for a Change

Wheeee!  

As I noted on Friday, it doesn't take much to mkes a lot of money on the Futures shorts and Friday's plays are all paying off in spades this morning and we only just crossed back under the 13,000 line on the Nasdaq (/NQ), which pays us $20 per point, per contract – on the way down from here.  By keeping a tight stop (13,005) over the line, we limit the loss to $100 per contract but we have no such limit on a potential win and the Nasdaq is more than 1,000 points over-valued at 13,000 – so it doesn't take much of a push to get us lower.  

Of course, we don't want to be greedy and we lock in gains of $500 or $1,000 per contract by putting tight stops on 1/2 and, if those trigger, then tight stops on the other half so we don't lose more than 25% of our total gains.  Then we follow the 5% Rule™ to see if we have a weak or strong bounce and that tells us whether we should get out or double back down for the additional ride.  That's how we played the Nasdaq, which dropped to 12,940 on Friday before giving us a ride back to 13,120 and sticking with that has put us in a fantastic position on that index as well.

According to our fabulous 5% Rule™, the Nasdaq topped out at 13,060 and 12,900 is the 7.5% line up from 12,000 and 13,200, of course would be the 10% line and a rejection of that 1,200-point run would be 240-points but we'll call it 250 and that make 12,950 the weak retrace line.  If that holds, we should be worried but, if it fails, the next support is way down at 12,700 so that's the next shorting zone we can play.

Since we expect a bounce at 12,950 however, it's a good place to take 1/2 our profits off the table and, if we head higher, we set a stop on the rest at no less than 75% of our maximum gain, which will be $1,000 per contract.  Then we calculate a
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Non-Farm Friday – 4,000 Dead People Don’t Need Jobs Anyway

If this were a stock chart, what would you predict?

The only thing outperforming BitCoin and Tesla in 2020 is the number of people dying from the virus every day in the US and, just like the stock market, we are setting new records almost every day.  Over 4,000 Americans died yesterday but we're too distracted by the revolution to keep the asshole in power who got us into this mess to pay any attention to the actual mess.  

Certainly Donald Trump isn't paying any attention to the virus or the inept roll-out of the vaccine or the complete failure to provide PPE equipment to protect our people.  None of this has been on his agenda and President Thanos will do whatever it takes to stop Joe "Iron Man" Biden from doing something about it.  365,000 people have died in the US so far from Covid-19 (yes, it's been a full year as it's now 21) yet, if 4,000 of them died yesterday, that's a pace of 365,000 in 91 days.  So, at this pace – which is accelerating rapidly – as many people will die in the next 3 months as have died in the last 9 months.  

So far, we have vaccinated 5M people in the first month and that's a bit less than 2% of the population so only about 50 months and we'll get to everyone.  Since the vaccine doesn't stop people from spreading the disease – it will have very little effect on slowing the spread until about 1/3 of us are vaccinated which, at the current pace, will be mid-2022.  Hopefully Joe Biden will do better than Donald Trump and, thankfully, Mitch McConnell will no longer have the power to stop him.

The market, meanwhile, does not stop going higher – no matter what happens.  This is fantastic for those of us who own stocks but not very good for the rest of humanity, who are seeing the largest wealth gap in modern history grow away from them day by day.  

We're playing the S&P Futures (/ES) short at the 3,800 line – simply because it's
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Thursday Thrills – Democracy in Danger, Market at All-Time Highs

Trump supporters storm Capitol, clash with police; 1 dead | Deccan HeraldWho needs law and order?

Not the stock market.  Despite all the turmoil, the market is still chugging along at the highs.  Of course, the Democrats took control of the Senate yesterday and Mike Pence didn't violate the constitution and certified the election so it looks like our long, National Nightmare will finally come to a close a week from next Wednesday (Jan 20th) but, unfortunately, like many nightmares – the worst part comes just before you wake up.

Did Trump incite the riot that led to an assault on Congress and our Capitol?  We report, you decide:

All of us here today do not want to see our election victory stolen by emboldened radical left Democrats, which is what they’re doing and stolen by the fake news media. That’s what they’ve done and what they’re doing. We will never give up. We will never concede, it doesn’t happen. You don’t concede when there’s theft involved.

Crowd: (07:11)  Fight for Trump! Fight for Trump! Fight for Trump!

We want to go back, and we want to get this right because we’re going to have somebody in there that should not be in there and our country will be destroyed, and we’re not going to stand for that.

You know what the world says about us now? They said we don’t have free and fair elections and you know what else? We don’t have a free and fair press.

Our media is not free. It’s not fair. It suppresses thought. It suppresses speech, and it’s become the enemy of the people. It’s become the enemy of the people. 

You’ll never take back our country with weakness. You have to show strength, and you


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Wednesday Rebound – Russell Jumps 3% Pre-Market

ImageIs this Democratic Rotation?

With the Democrats looking to take both Senate seats (and control of the Senate) away from the Republicans, the small-cap Russell 2000 Index has gone crazy this morning, jumping 3% pre-market on the assumption that the first thing Joe Biden will want to do is make America great again for small businesses and the middle class.  The Nasdaq, on the other hand, has become a haven for Oligopolists and there may be some trust-busting coming their way as now Tech is becomming "too big to fail".  

”The market is pulling in implications of what a Democrat win would mean for the economic recovery,” said Peter Rosenstreich, head of market strategy at Swissquote Bank. “Expected increase in fiscal stimulus and infrastructure spending would bode well for cyclical or growth stocks. Tech stocks may not benefit as much, and that may have something to do with their stretched valuations.”

As we know from our fabulous 5% Rule™, 3% is too much for an index to move in a session so we should expect at least a 0.5% retrace (10 points) back from the 2,040 line on /RTY (Russell Futures) back to 2,030 and, if that fails, another 10 points to 2,020 will be the proper test so see if we're going to hold the bullish uptrend.  

Meanwhile, speaking of Oiligarchs, 53 people were arrested in Hong Kong this morning for the crime of "subverting state power" during the pro-democracy sessions last summer.  In a blatant display of Fascist refusal to recognize the Democratic process, the majority party refused to allow a newly elected official to be sworn in – promting a walk-out by the minority party in protest.  

Oh, wait a minute, that happened in Pennsylvania, not China.  China hasn't gone that far off the rails yet…  

Republican Sen. Jake Corman, the top-ranking senator, said Monday he wouldn’t permit Mr. Brewster to be sworn in because of Ms. Ziccarelli’s pending lawsuit in federal court. The suit alleges that


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30,000 Tuesday – Is this the New Normal?

We'll be testing Dow 30,000 again today.

After yesterday's wild ride, dropping 900 points and then getting 300 of them back into the close – traders are somewhat jittery this morning and, as I mentioned yesterday, we're about to get early earnings reports on Thursday and it will not be good if they disappoint.  

I have pointed out on serveral occasions that the earnings don't justify these valuations so we'll be watching the Dow components very closely to see if they can justify their 29.73x p/e ratio, which is up 39% from an uninfected 21.35x one year ago.  That's nothing compared to the 39.45x the Nasdaq is trading at (27.55 last year) or the 40.40x the S&P is now at (25.53 last year). 

Let's assume, for a moment, that the virus is a negative or, in the very least, not a positive event.  Corporate Profits are lower than they were last year so what is the new valuation based on if not stimulus and the pace of stimulus last year was $3.3Tn direct from the Government and another $2.8Tn from the Fed – pretty much $500Bn a month to buy us that 40% increase in valuations.

Perhaps this will be the new normal and our Government will just keep pumping $500Bn/month into the economy but, even then, will earnings ever actually catch up or is it always going to be speculation that things will improve – one day?  Corporate profits were $2.3Tn in Q4 of 2019 and Q2 of 2020 came in at $1.8Tn, which were down 21.7%.  Q3, not on the chart, was worse, at $1.6Tn but estimates are we should "bounce back" in Q4.  That's already baked in – what if the market disappoints?  

And, of course, even bouncing back only gets us back to about $2Tn, still around 15% below last year yet we're left paying 40% more for the same companies.  Will it never correct?  That's a pretty rough premise to hang your investing hat on, isn't it?  

China has a message for companies expecting another year of stimulus to keep the lights on – "Toughen up or Prepare to Fail".  After letting inefficient firms survive for years, Beijing is now allowing them to fail. Bond defaults rose to a…
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Marco Island Monday

See the source imageGreetings from Marco Island.

I'm still on vacation with the family, heading home tomorrow afternoon but I'll do my best to keep up with the market as we start the new year.  It's only the other side of the state from where I live so we get sunsets at the beach instead of sunrises but it's just nice to be anywhere else for a few days as we approach a full year in quarantine.

This week will be dominated by the upcoming election in Georgia and good old President Trump is still trying to overturn the election, also in Georgia, where he's no in trouble for blatantly tampering in a recorded conversation with Georgia Election Officials which was, of course, full of lies and conspiracy theories.  Don't worry though, Trump fans – as we know, Trump never actually faces any consequences for anything he does – he's just too cute to prosecute!

Judges across the country, and a Supreme Court with a conservative majority, have rejected nearly 60 attempts by Mr. Trump and his allies to challenge the results.  “Look, they can do whatever they want,” said Senator Chuck Schumer of New York, the Democratic leader. “On Jan. 20, Joe Biden will be president and Kamala Harris will be vice president no matter what they try to do.  I think they are hurting themselves and hurting the democracy,” he added, “all to try to please somebody who has no fidelity to elections or even the truth.”

Bitcoin price dives to $27.7K to fill giant futures gap in biggest drop since $20KBitCoin finally stopped going up over the weekend, dropping from $34,000 all the way back to $27,7000 before settling in at $31,000.  I would point out that you can't realistically transact in a "currency" that swings 20% in a day but pointing out anything logical regarding BitCoin gets you in trouble these days so this is one I'm just watching from the sidelines. 

"If we want to see some support zones on Bitcoin and expecting where we're going to move from, the first area is around $29,600, second area is around $27,600," Bitcoin analyst, Michael van de Poppe, said just before the…
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Happy New Year from Philstockworld!

Its Always Something GIFs - Get the best GIF on GIPHYThis was a LONG year.

I was in Thailand this time last year, working on a project with the Thai Government to bring medicinal cannabis to the country with Hemp Boca and New Age – two of our PSW Investments partners.  As with most things in 2020, that project is now on hold but it seems like a different world where I went to an airport and got on a plane and walked around a crowded terminal without a mask on, etc.  

I'm 57 years old and there's been no point in my lifetime where the world has changed so drastically.  World War I was the "war to end all wars" and then there was the 1918 Pandemic and then the Great Depression and then World War II (since the "war to end all wars" didn't, they decided just to start numbering them) and then we had a nuclear arms race then a global recession in the 70s and then the financial system melted down and now this – it's always something, isn't it?  

My Grandpa Max was born in 1903 and died in 1999 – having caught most of the action and it always gave me the perspective that "this too shall pass" though, while you are in the thick of things – it sure doesn't seem so, does it?  

We started this year optimistically with "2020 Vision – Looking at the Year Ahead in the Markets" and we called for a long on Oil (/CL) at $61 and a long on Natural Gas (/NG) at $2.16 and Natural Gas topped out at $3.40 in November but Oil hit $65 in January but then collapsed to $10 in April and is only back to $48 now.

On January 15th it was: "Working it Out Wednesday – Is the Trade Deal the Beginning or End of the Rally?" – remember the trade deal with China?  Hard to believe that was our top concern a year ago.  That day, our Money…
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ValueWalk

GameStop's Dead Cat Bounce; Munger's Annual Meeting

By Jacob Wolinsky. Originally published at ValueWalk.

Whitney Tilson’s email to investors discussing GameStop’s dead cat bounce; stop the speculative and manipulative madness; and Munger’s Daily Journal annual meeting.

Q4 2020 hedge fund letters, conferences and more

GameStop's Dead Cat Bounce

1) The behavior of speculators these days boggles my mind...

Only a few weeks after losing more than 90% of their money as shares of GameStop (GME) – or "GameStink," as I've been calling it – col...



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Phil's Favorites

Wall Street Sends a Message to the Fed: We Have Run Out of Places to Stuff Your Treasuries

Courtesy of Pam Martens

By Pam Martens and Russ Martens: February 26, 2021 ~

The action in the U.S. Treasury market yesterday reminded us of the classic “I Love Lucy” episode at the chocolate factory. As the conveyor belt churns out chocolate balls faster than Lucy and Ethel can handle them, they resort to stuffing them in their mouths, their hats, and their shirts. Lucy remarks: “I think we’re fighting a losing game.” (See video clip below.)

That was the scene in the Treasury market yesterday – ...



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Zero Hedge

Bond Bloodbath Blows Up Stocks As Redditors-Revenge Hammers Hedgies (Again)

Courtesy of ZeroHedge View original post here.

Bonds and stocks were both battered today...

Source: Bloomberg

Which is why we wheeled out the deer!

Today was the worst day for equity/bond investors since March 2020...

...



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Politics

What is fascism?

 

What is fascism?

A Donald Trump supporter wears a gas mask and holds a bust of him after he and hundreds of others stormed the Capitol building on Jan. 6, 2021. Roberto Schmidt/AFP via Getty Images

Courtesy of John Broich, Case Western Reserve University

Since before Donald Trump took office, historians have debated whether he is a fascist.

As a teacher of World War II history...



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Biotech/COVID-19

How does the Johnson & Johnson vaccine compare to other coronavirus vaccines? 4 questions answered

 

How does the Johnson & Johnson vaccine compare to other coronavirus vaccines? 4 questions answered

The Johnson & Johnson vaccine only requires one dose. Phill Magoke/AFP via Getty Images

Courtesy of Maureen Ferran, Rochester Institute of Technology

Editor’s note: On Tuesday, Feb. 24, the U.S. Food and Drug Administration released the results of its trial of the Johnson & Johnson coronavirus vaccine. The FDA found the vaccine to be safe...



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Chart School

The Fastest Money

Courtesy of Read the Ticker

The fast money happens near the end of the long trend.

Securities which attract a popular following by both the public and professionals investors tend to repeat the same sentiment over their bull phase. The chart below is the map of said sentiment.







Video on the subject.







Charts in the video


Click for popup. Clear your browser cache if image is not showing.





Click for popup. Clear your b...



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Digital Currencies

Bridgewater Explains When It Will Invest In Bitcoin

Courtesy of ZeroHedge

Two weeks ago, Bridgewater founder Ray Dalio called Bitcoin "one hell of an invention" adding that:

"I expect Bridgewater to soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity, and Bitcoin won’t escape our scrutiny.”

And now, after significant attention that his comments received, Senior Portfolio Strategist Jim Haskel sits dow...



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Kimble Charting Solutions

Is Rising Inflation About To Hit U.S. Economy In Big Way?

Courtesy of Chris Kimble

Inflation seems to be a thing of the past… but current trading in bond and commodity markets tell us that it could become a thing of the future!

Inflation hasn’t been an issue, or even on our radar, since the 1980s. Sure, the 2007 surge in oil prices offered some concern but the financial crisis killed any thoughts of inflation.

So what’s got us concerned about inflation in 2021?

Today we take a look at long-term charts of two potential inflation indicators: Crude Oil ...



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Mapping The Market

The Countries With The Most COVID-19 Cases

 

The Countries With The Most COVID-19 Cases

By Martin Armstrong, Statista, Jan 12, 2021

This regularly updated infographic keeps track of the countries with the most confirmed Covid-19 cases. The United States is still at the top of the list, with a total now exceeding the 22 million mark, according to Johns Hopkins University figures. The total global figure is now over 85 million, while there have been more than 1.9 million deaths.

You will find more infographics at ...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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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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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. Contact Ilene to learn about our affiliate and content sharing programs.