Phil's Newsletter

Non-Farm Friday – Is America Working?

SPX DAILYWhat a crazy start to 2016!  

Of course, it is no crazier than the 3rd quarter of 2015 so far, when we had our August crash followed by a slow September bounce that led into a mega-rally that closed our year off back at the highs.  At the moment, we are playing with the premise that it's the highs that were wrong – NOT our current 1,900 level on the S&P.  We're not expecting any big rally here – just consolidation

This is nothing new, of course.  Back on December, 2nd, in: "Which Way Wednesday – S&P 2,100 Yet Again," I noted:

The S&P gets to 2,100 and we short /ES Futures at 2,100 (with tight stops above the line) and Russell (/TF) Futures below the 1,200 line and Nikkei (/NKD) Futures below the 20,000 line and then, tomorrow or Friday, I'll tell you how much money we made shorting and you'll say "why do I never catch these great trade ideas" and I'll say it's because you're not patient enough to wait for the pattern to reset itself and just make the obvious play.  

This is the 11th time the S&P has been over 2,100 since May and, so far, it's been like a little money machine for us all year long on the short side.  I know this time may be different and the last 10 times may have been different too, which is why we stop out if we don't get confirmation from the other indexes that things are toppy but, when it works – it's good for $250, $500, $1,000+ PER CONTRACT in the Futures at $50 per point to the downside. 

By the way, I know we've been talking a lot about the Futures lately and that's because our portfolios are mainly in CASH!!!  That means we have plenty on the sidelines to play with and the quick in and out…
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Thrilling Thursday – Another Webinar, Another $1,000 Profit

That's right, we did it again!

Yesterday's Live Trading Webinar was open to the public (see yesterday's post) and, during the session, we found a trade on the Russell 2000 that made $500 per contract and, into the close of the Webinar, we decided to go long on the Nikkei (/NKD) at 16,985, looking to get back to 17,200 and we NAILED IT into the close for a $1,075 per contract win in just hours!  Futures trading is fun – don't be afraid – check out our Options Opportunity Portfolio and get access to all of our Live Trading Webinars.

Also in yesterday's morning post (and on our Twitter feed) I mentioned the Alert we sent out to our Members in the morning, noting the following long plays in the Futures:

  • 1,900 on the S&P (/ES), closed 1,907 – up $350 per contract 
  • 16,100 on the Dow (/YM), closed at 16,320 – up $1,100 per contract 
  • 0.975 on Gasoline (/RB), closed at $1.045 – up $2,940 per contract 
  • $30 on Oil (/CL), closed at $32.50 – up $2,500 per contract

Yes the futures are risky (and we were down before we were up in the Webinar) but they give you a tremendous advantage in volatile markets as you can use them to better balance your portfolio before the market opens or after it closes – rather than sitting and sweating while you wait for the opening bell to trade.  Since we practice a generally Balanced Portfolio Approach at Philstockworld, we mostly play the Futures for fun but the experience we get while having fun really comes in handy when there is an after-hours surprise in the market.  You've probably seen this commercial recently:

And no, it doesn't matter who your broker is (most of us use TD's Think or Swim) but this commercial hits it right on the head – being able to trade the Futures gives you a tremendous edge on the market.  Let's say you only used one of our trade ideas and made just $1,000 yesterday on a single contract.  What percentage of your portfolio is that?  How…
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Which Way Wednesday – Groundhog Day Again!

SPX DAILYI was almost going to just put up my Jan 13th post again.  

That one was titled "Weak Bounce Wednesday" and we opened that day at S&P 1,923 after bouncing almost exactly as high as we had predicted in Monday's (Jan 11) "Meaningless Monday Market Movement."  This is why "Groundhog Day" is one of my favorite movies of all time.  In that movie, Bill Murray plays Phil (great name), a weatherman, who gets trapped living the same day over and over again – yet he's the only one who is aware of it – for everyone else, they've never seen that day before.  

That sums up my job very nicely.  All day long I talk to people and reporters who are constantly surprised by things I have seen happen over and over and over again.  Each time, they have no idea what will happen next and, while there certainly are variations from time to time – I'm able to predict the outcomes with a pretty good degree of accuracy, not because I'm smart – but simply because I'm paying attention.  And I'm not the only one – this is from Dave Fry this morning:

Like Bill Murray it feels like a bad Groundhog’s Day again as markets moved right back down in volatile, what I believe, is a descending spiral.

For bulls, just when you think markets are ready for a big time rally, (nearly 400 points higher just last Friday), bears moved back in taking charge once again. I further projected on just last week Thursday we could expect a countertrend rally in the S&P from 1902 to 1956. We hit 1940 on Friday and have fallen once again to close at 1904.

Paying attention to repeating patterns does more than make our Members look smart – it makes them lots of MONEY because we're able to place our bets accordingly.  

Like yesterday –…
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Oil Falls Back to $30 and BP Leads Europe Lower

Ted Cruz won Iowa.  

That is the scariest thing I have to say this morning.  The Koch-powered Conservative is the GOP's leading Climate denier and, if he becomes President of the United States, you can pretty much guarantee he'll put a stop to the agreements we made in Paris last year to work with the rest of the World to help stop Global Warming – especially as it's projected to be a $12Tn effort over 25 years on our part.  

Of course, many (almost all) scientists would argue that a failure to do this will lead to the extinction of the Human Race but that's considered a win for Cruz's Father's ministry "Purifying Fire International" who are anxious to finally get to the end of days they've all been praying for.  Don't take my word for it – listen to his Dad

Anyway, enough about Cruz, hopefully this is a one-off and the World will not end because Americans make the worst possible choice come November.  Meanwhile, it may in fact be the end of days for oil, as it's back to $30 after an aborted (sorry Ted) run at $35 just last week.  Low oil prices hit BP so hard that profits are down 90% from last year and, unadjusted, BP is taking a $6.5Bn loss but officially a 2015 net profit of $196M, down from $2.2Bn last year.  In good news for oil prices, however, the World's 4th largest oil company is cutting production in 2016.  

So, despite oil being down 2.5%, we think $30 will hold and you can refer back to our UCO/USO bullish spread (see last week's post) and we're also liking Natural Gas (/NG Futures) again as we dip back to $2.00.  We are not, however, playing the front-month March contract (/NGH6) but the /NGK6 May contract, which is trading a bit higher at $2.10 this morning. 

Our logic on Natural Gas (and UNG is the ETF you can play at $7.50, which is our Trade of the Year for 2016 - beating IBM at the last minute!).  In our Live Trading Webinar on 12/16, we had called a play on the April Natural Gas
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Monday Mandarin Manufacturing Meltdown

Embedded image permalinkOh no, there goes China again!  

This weekend it was more horrific PMI numbers out of China as January manufacturing activity contracted at its fastest pace in 3 years, suggesting the world's second largest economy is off to a weak start in 2016 (and adding to the case for near-term stimulus).  The official Purchasing Managers' Index stood at 49.4 in January, compared with the previous month's reading of 49.7, below the 50-point mark that separates growth from contraction on a monthly basis. It is the weakest index reading since Aug, 2012 and below the median 49.6 forecast from a Reuters poll of leading economorons.

The PMI marks the sixth consecutive month of factory activity contraction, highlighting a manufacturing complex under severe pressure from falling prices and overcapacity in key sectors including steel and energy.  "The electricity production remained sluggish and the crude steel output continued the weak trend in January, reflecting an ongoing deleveraging process in the industrial sectors," said Zhou Hao, an economist at Commerzbank.  "In the meantime, China has started an aggressive capacity reduction in many sectors, which could add downward pressure on the bulk commodity prices over time."

 China's slowdown has sent Korea's eports plunging at the fastest rate since Aug, 2009, down 18.5% in January and now the 13th month in a row of declining exports.  Imports fell 20.1% – spreading the contagion further to other trading partners.  South Korean data are viewed as a proxy for the global trade picturebecause of the Asian nation’s heavy dependence on imports of raw materials and exports of goods such as cars and phones. The Korean data also give a reading of the health of the Chinese economy because around a quarter of South Korea’s exports are sent to China.  

All this bad news out of Asia (Japan's PMI also negative) has sent oil crashing back to Earth, back to $32.23 this morning after topping out at $34.50 on Friday.  As I said to our Members in Friday's Live Chat Room (2:44):

I think oil is still up in hopes that the false rumor re. a production cut is going to be somehow supported over the weekend and,

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Free Money Friday – Japan Goes Negative and “Saves” Asia (for now)

More free money?

No, the BOJ did not increase stimulus this morning.  What they did is join Switzerland, Denmark and Sweden in the negative reserve club after dropping their rate from 0.1% to -0.1% this morning.  Excess reserves are, simply, the bank reserves deposited in the Central Banks by their members in EXCESS of the reserve requirement set by the Central Banks.  Usually, they are paid a deposit rate for these ultra-safe, ultra-liquid funds so what the negative reserve rates are TRYING to accomplish is to get the banks to do something else with the TRILLIONS of Dollars the Central Banks have handed out over the past 7 years.  

Hopefully that something will be lending money to the bottom 99% (the Top 1% already get all they need), who can use it to refinance debt or actually build things – rather than the endless, non-productive, financial engineering that the Top 1% has been using all the free money for in the past 7 years – stagnating the Global Economy while increasing the wealth gap substantially.  

The problem with Corporations (also legal citizens of the Top 1%, thanks to the Supreme Court) is that they use the low-interest debt to buy other companies and then downsize production so they can raise prices and increase margins.  This lowers the amount of available jobs and raises costs to the consumers.  They also use cheap money to buy back their own stock, which does nothing at all to grow the business (or the economy) but makes their earnings per share LOOK better, which tricks the sheeple to BUYBUYBUY at higher multiples (something we've been warning our Members away from all of last year).  

All the money that's been created going to the Top 1% and put to no particular good use has led to the VELOCITY of that money dropping precipitously – down almost 50% from where we were before the crash.  So the Fed and their fellow Central Banksters can print all the money they want but, if they don't get it into the hands of people who will actually spend it on things that GROW the economy – it's all a big waste of time.  

Negative reserve rates don't happen by…
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Thrill-Ride Thursday – Hilsenrath Spins the Fed, Spooks Investors

Curse you Jon Hilsenrath!

This guy (who writes for the WSJ) has WAY too much influence over the market due to his supposedly tight relationship with the Fed.  At this point, it no longer matters what the Fed actually says – what matters is what Jon Hilsenrath tells you the Fed said.  In this case, we had a nice uptick on reading the very doveish 2pm Fed minutes that lasted all the way until 2:03, when Hilsenrath opined in the article pictured here.

I had to use this screenshot (which, fortunately we captured during our Live Webinar) because, after I called him out for being totally WRONG in his snap interpretation of the Fed Statement (and we went long on the Dow Futures (/YM) into the sell-off) - his article has been DRASTICALLY altered.  Now it reads:

Federal Reserve officials expressed renewed worry about financial-market turbulence and slow economic growth abroad, leaving doubts about whether the central bank will raise interest rates as early as March.

the policy statement, released Wednesday after a two-day meeting, raised questions about whether the Fed would follow through with a rate move when it gathers again on March 15-16. Futures markets place just a 25% probability on rate increase by then. 

Raised questions?  I was the one raising the questions!!!  If you want to hear me screaming about this live, you can check out our Webinar Replay later today (not ready yet) but, as far as investors who were not lucky enough to have me calling shenanigans on Hilsenrath and the Wall Street Journal – the damage was already done.  The WSJ didn't even point out that the article was corrected – they just shoved their tail between their legs and tried to pretend they didn't make a mistake that cost the Dow 300 points.

Of course, the great thing about participating in one of our Live Webinars (see yesterday's post for your invite) is that we know how to trade this kind of market BS and what we did was take a long position on the Dow Futures (/YM), averaging into a position at 15,879 and exiting early this morning at
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Which Way Wednesday – Waiting on the Fed

Waiting to cut out the deadwood

Waiting to clean up the city

Waiting to weed out the weaklings

Waiting for the final solution

To strengthen the strain

Waiting to follow the wormsFloyd 

Now comes the fun part of the week!  

I told you Monday's drop would be meaningless and we had a full reversal yesterday and now we're right back where we finished on Friday, which isn't really such a good place, barely holding that weak-bounce 1,900 line on the S&P but at least it is holding and our Futures plays from yesterday morning put us in fantastic shape for today as my morning note to our Members was:

Futures – I like TF on a cross over 1,000 with tight stops but not too excited about anything else.

Oh, sorry, NQ over 4,200 would work too or NKD over 16,900.

/TF is the Russell 2,000 Futures and they popped up to 1,015 which may not seem like much but they pay $100 per point, per contract so +$1,500 on those and this morning we went long at 1,005 (since we didn't think we'd get back to 1,000 pre-market) and we'll see how that goes but already we're up $350 per contract at 1,008.50 and we set a stop at 1,007.50 to lock in $250 and, once again, the Egg McMuffins are paid for!  

The Nasdaq (/NQ) made it to 4,240 but that's a dull $400 per contract gain while the real show was the Nikkei (/NKD), which jumped to 17,200 for a lovely $1,500 per contract gain.  All in a day's work at Philstockworld and today we will have a LIVE Trading Webinar at 1pm (Members only – join HERE) - right into the Fed Release at 2pm so we'll hopefully be able to make some intelligent trades to take advantage of whatever comes our way this afternoon.

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Tricky Tuesday – China, Apple and the Fed!

shanghai stocks jan 26 Shanghai fell 6.4% last night.

The worst part was the way they sold off into the close DESPITE ANOTHER $70 BILLION that China has pumped into the market through reverse-repo operations this week.  The Shanghai is now down 900 points since Dec 22nd and that's just a touch shy of 25%, which is drastic by any account and now lower than the Aug 26th low of 2,927 (20% off) by a wide margin (5%) but still very much in-line with what our 5% Rule™ predicted for China's 2nd downturn.  If we (and I think Wi is the Finance Minister) can turn China back around this week, back over 2,927 – all shall be, surprisingly, well.

All is well(ish) according to Siemens CEO, Joe Keaser, who told CNBC this morning that: "The real economy in China is a lot better than people are talking about right now. There is obviously some weakness in terms of real estate and the finance sector but as far as our business is concerned, we do see some decent growth in healthcare, which was very, very strong with double-digit growth in China."

We'll get a nice peek into the Chinese consumer market with Apple (AAPL) earnings this evening and we're playing AAPL to beat, but not too aggressively as we'll be much happier to get a discount if they disappoint.  The big disappointment out of China this morning that sent their stocks plummeting was the realization that their Trade Data is fake, Fake, FAKE!!! and heavily exaggerated.  

While this may shock retail investors – this is a story we've been covering at PSW since 2013 (and, more recently, see: October's "Monday Mandarin Meltdown – China’s Fake GDP Still Sucks!") so, we're not selling on this "news" just because the rest of the World is clueless as to what's really going on.  Tuesday’s data from Hong Kong tallied imports in the territory from the mainland at HK$183.7 billion ($23.7 billion) in December while, on Jan 13th, the Beijing-based Customs General Administration announced December trade data showing shipments to Hong Kong had surged 10.8% to $46 billion – a 100% "exaggeration."  

What people don't understand, as they finally realize China is much smaller, economically,…
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Meaningless Monday – Waiting on the Fed (again)


Nothing really matters
Anyone can see
Nothing really matters

nothing really matters to me – Queen 

Is this the real life?

Is this just fantasy?  Caught in a landslide, no escape from reality?  

Yes, that's about the tone of the markets this week as we wait on the Central Banksters at the Federal Reserve to once again steer the markets off a cliff or into the stratosphere or whatever the opposite of their stated intentions – as seems to be too often the case.  We finished last week right where we began on the S&P, back just over the 1,900 line – but it's nothing to be proud of as we're still down from 2,050 (7.3%) from Jan 1st and 9.5% off our 2,100 high, last visited on the morning of Dec 2nd, when I said:

This is getting tedious

The S&P gets to 2,100 and we short ES Futures at 2,100 (with tight stops above the line) and Russell (TF) Futures below the 1,200 line and Nikkei (NKD) Futures below the 20,000 line and then, tomorrow or Friday, I'll tell you how much money we made shorting and you'll say "why do I never catch these great trade ideas" and I'll say it's because you're not patient enough to wait for the pattern to reset itself and just make the obvious play.  

Also in that 12/2 post (and you can get them by Email every morning for just $2 per day!), we noted our Short-Term Portfolio (STP) was up 213.2% and we were loaded for a bear market with our positions and, as of Friday's close, our STP was up 309.8% – a gain of $996,000 in 7 weeks – which is very good protection against a 10% market drop, even if you don't know how to play the Futures.  In fact, we even gave away an options play so our non Futures-playing readers could hedge against the downturn:

  • Sell 20 SDS March $19 puts for $1.25 ($2,500 credit) 
  • Buy 20 SDS Jan $18 calls for $1.20

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Phil's Favorites

"If you want to fundamentally change society, you first have to break it."


Here are a number of related, overlapping articles discussing an enormous social experiment called the US 2016 presidential election. Key players include Cambridge Analytica (a voter-profiling company with "an arsenal of weapons" to fight a culture war), billionaire Robert Mercer, Stephen Bannon, the Trump campaign, Facebook, algorithms, the American people, Christopher Wylie (whistleblower who worked at Cambridge Analytica), Alexander Nix (Cambridge Analytica's CEO), and the Russian oil giant, Lukoil.

How Trump Consultants Exploited the Facebook Data of Millions (NY Times)

LONDON — As the upstart voter-profiling company Cambridge Analytica prepared to wade into the 2014 American midterm elections, it had a problem.

The firm had secured a $15 million ...

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Members' Corner

"If you want to fundamentally change society, you first have to break it."


Here are a number of related, overlapping articles discussing an enormous social experiment called the US 2016 presidential election. Key players include Cambridge Analytica (a voter-profiling company with "an arsenal of weapons" to fight a culture war), billionaire Robert Mercer, Stephen Bannon, the Trump campaign, Facebook, algorithms, the American people, Christopher Wylie (whistleblower who worked at Cambridge Analytica), Alexander Nix (Cambridge Analytica's CEO), and the Russian oil giant, Lukoil.

How Trump Consultants Exploited the Facebook Data of Millions (NY Times)

LONDON — As the upstart voter-profiling company Cambridge Analytica prepared to wade into the 2014 American midterm elections, it had a problem.

The firm had secured a $15 million ...

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Zero Hedge

And The US Town With The Highest Average Income Is...

Courtesy of ZeroHedge. View original post here.

A few days ago, we published a Property Shark analysis of the wealthiest zip codes in America, and found that - to our complete lack of surprise - the wealthiest towns are clustered around the Bay Area and New York City A, attend their own schools, shop at their own stores and live in their own exclusive enclaves of wealth.

While those data were largely anticipated, that study also ...

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Digital Currencies

"We've Been Hearing A Lot Of Complaints" - City Passes First US Bitcoin Mining Ban

Courtesy of Zere Hedge

In sleepy upstate New York, one small post-industrial city has adopted what's widely believed to be the first bitcoin mining ban in the US. On Thursday evening, the city council in Plattsburgh New York voted unanimously to impose an 18-month moratorium on bitcoin mining, per Motherboard.

As we pointed out earlier this month, two large-scale bitcoin mining operations in the town had become a tremendous drain on the local utilities. This is a problem because, according to the Municipal Electric Utility Association, since the 19...

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Chart School

Bitcoin Update, demand is present

Courtesy of Read the Ticker.

When a Wyckoff trader looks at a stock chart of price and volume one looks for foot prints of material demand and supply. The current bitcoin chart shows very significant demand prints.

More from RTT Tv

Sure fundamentals do matter, and so does market timing (entry, stops and exit), here at we believe a combination of Gann Angles, Cycles...

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Connor Browne - FAANG Stocks Dominance

By VW Staff. Originally published at ValueWalk.

They are known as the FAANGs but Facebook, Amazon, Apple, Netflix and Google/Alphabet should also be dubbed the great disruptors. They have created new businesses and destroyed old ones, changing the way we conduct our personal and business lives in the process.

]]> Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Check out our H2 hedge fund letters here.


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Insider Scoop

BofA: Lyft, Magna Could Be The First Of Many Autonomous Vehicle Partnerships

Courtesy of Benzinga.

Related MGA Benzinga Pro's 5 Stocks To Watch Today Earnings Scheduled For February 22, 2018 ... more from Insider


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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As Seen On:

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 >>