Personally I admire and respect you disciplined approach to investing. My style is at the extreme side of aggressive and I have to learn how to be less that way. If I yell " Let it Ride" at my house, no one says a word so I can't use that to temper my behavior. Phil has done a pretty good job of knocking some of my potential moves and as a result, I have increased my portfolio value by almost 25% since late July.
DoubleD
Best year I've ever had…sitting on a 52% YTD return. I would also echo Nat's shout out for Phil's talent. I've been a member for the 6 years or so. Just stay true to the strategy I've learned over the years of selling premium, keeping the bulk of my portfolio in long-term buy writes ("armchair" trades).
JJennings
Cory Booker for President. :) . Thanks for all the good futures guidance Phil! Having one of my best months yet. Account is up 75% YTD!
Traderd
USO, QQQ- Phil, thanks for these plays. Out of USO for about 65% gain today and just keeping 1/4 QQQ.
Ksone88
Simply the best blogger with the greatest group of members a person could surround himself with on trading day. I've been trading for quite some time now and the insights & suggestions offered by Phil and the members keep me on a continuous learning cycle.
DDay
Phil — gotta thank you for your advice this week, and especially today. I took many aspects of your advice this morning, with all of my shorts -- being prepared on the short side, selling into intial excitement, taking the money and running, not being greedy. I also made money on the your /QM and /YM calls. It used to be I would be terrified of weeks like this one. Now, it feels somewhat comfortable, for want of a better word.
Escohen5
Phil/BCS - Didn't realise they traded here. Should've known really. Thanks for the tip. managed to pick some up just before the close at a 15% discount to the UK closing price.
DB
Just closed out my V put for 50% in 24 hours thanks Phil!
Humvee
I cannot believe the success I have had in the last 6 months because of what I have learned here! It has been truly life changing. It's like the old adage about teaching someone how to fish instead of just giving them a fish. Thank you Phil, I am forever grateful and hope I have helped someone else along the way.
Craigsa620
Thank God for Phil.
A few months ago (April) I didn´t even know what hedging was, and someone recommended I should check out some of Phil´s plays, especially on the retirement portfolio. When I first started to read it, none of it made a blind bit of sense to me, but I stuck with it and gradually began to work through some of the trades to see how it worked. Now I am putting on 5:1 SPY backspreads combined with bear put spreads, entering and leaving positions after consulting the VIX, and engaging in other esoteric maneuvers that are keeping my portfolio above water.
jmm1951
Hey Phil - writing to thank you!
First of all, and I know you have heard this a few times form some others - the portfolio updates you have done - with entries and targets and even margin reqs are invaluable!
I find myself understanding what is done here IN THEORY most of the time..however, there is a much bigger difference in placing and setting up the hedges properly than just understanding…This has been eye opening for me and Ifeel like I just took a major step in trading during the last week.
Bcfla
I must give kudos to Phil for changing my way of thinking. I'm a gambler by nature and used to just play the indexes with 3x etf's… well I still do, but the options give far better returns than I ever dreamed of. With these wild swings I've been catching 50-100% winners in days.
Mkucstars1
Peace of mind / I have a portfolio mainly consisting of long term long calls, short term short calls and puts, and long term BCS. Three years, ago when I started my journey on this board I would be freaking out panicking as to what to do, as many of the short calls are ITM, Three years later (today) I look at the screen and serenely process the information. Three years ago, I inevitably made the wrong decisions which cost me a lot of money. Three years on I calmly roll the positions to whatever makes sense. No drama, no hair pulling, and a great cost saver. I guess they call that the power of education.
Winston
Phil - Another excellent teaching article - when you write like that it blows me away. Thank you!
I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure.
I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options.
You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone.
Redfern1
Phil & Ephmen85: I hadn't thought about selling the covered calls. That should be the easiest strategy for me since I'm a beginner. Thanks a bunch!
JWick1981
GIVE THANKS/PHIL
Have not done my 10,000 hours, but a couple of years at PSW, and moved from fishing with a single line to owner of a commercial trawler (metaphorically speaking). Now I fish with many lines. It is amazing when you go over the same information time and time again, eventually it clicks. Like planting trees; being the house, 20% sale items, selling into the excitement. and patience. I just sold an AAPL Jan 12 340/390 BCS financed by the sales of Jan 12 275 Put. The trade was put on one year ago for a net credit and exited five minutes ago for a 49 dollar per contract profit. No point in waiting till opex to see what happens, and I will just sell 10 of those VLO puts to make myself net the round 50.
I no longer worry about opex coming as I have adjusted well in time for most positions that go against me. I still make some howlers (RIMM, TBT, TRGT) but I play the percentages and my winners outdistance my losers by many miles.
I would never be in this position if it were not for Phil. He is a treasure, pure and simple. The goose that lays the golden egg if we care to listen and practice. Phil, a mighty big thank you.
Winston
I really would like to meet all of the posters here who seem like an intriguing bunch of intelligent, opinionated (without being obnoxious or condescending most of the time), and well spoken people. Not so easy to find in this age of instant gratification and me first attitudes. Usually this results in groups where misinformation is used to gain an advantage, or whatever it takes to beat the other guys. I love the one for all, all for one vibe here, sharing your best ideas and helping each other work together for a common goal, to be successful investors!
craigsa620
Phil – Great calls yesterday, you were in top form. As I was reading your postings, I had hindsight of what the day brought. The calls were uncanny!
Jfawcett
Phil/thankyou. Phil, I went over the recording of last weeks webinar. I liked it a lot and wanted to thank you. I thought the case studies (company reviews) were detailed, I learned more about selling puts process and also what happens if stock continues to go down after that, I liked the fact that we discuss so many different avenues like stocks, optiond, futures, oil, commodities etc… I replayed portions of it multiple times to make sure I was grasping it but wanted to say good job. Thanks…
Nramanuja
Phil,
thank you for the thorough response(s). I joined this group last week to take my education to the next level. the school i am involved with very good at calling out levels but very little live trading and little help in managing a position going against you.
I like the combo of knowing where the major levels are coupled with your approach to getting in. learned a lot this week.
thank you!
DawnR
Phil – Not that you dont usually, but you have DEFINITELY earned your money this week. THe recommendations have been PERFECT. Selling into the initial excitement (MULTIPLE TIMES), hedges, everything. Im reading this when I get home from work and want to cry b/c I cant trade at work! I might have to start getting up at 3 AM though to catch those trades bc youre killing it then too! May you and yours have a blessed weekend!
Jromeha
I don't post much, but I guess this morning has brought me out. This site has made me tens of thousands, every year since I have become a member. It took me nearly two years devoting 3 hours per day to get on the ball, and actually understand portion sizing, and which trades fit my personal trading style. Before that I spent at least two years working on Buffet style fundamental investing. (Intellegent Investor, Security Analysis, ect.). This site really will teach you amazing things if you just pay attention. Literally it has changed my day to day life, has allowed my family and I to move back to the U.S. from overseas with confidence even with a paycut at my day job, and literally put me in a different league financially. Seriously my life and my children's is better because of this site.
Knightpilot
Way to go Phil! Have I said how much I appreciate your site lately! Your ability to teach and your willingless to give others a forum to demonstrate their own skill sets makes your site remarkable. I got great help from you, jmm1951, and Iflantheman (special thanks!) today. Hell, if I have many more days like this I may even be able to sign up for a full year rather than doing it just quarterly. Tomorrow is another day but, fabulous job today!
dclark41
On Optrader's section yesterday he was asked how he works with AAPL as an investment. He replied that he just ‘plays with the covers'. I've got a separate portfolio where I use primarily this technique over the past 6 months. Up 60% The principles involved are stock selection, patience, patience, using covers to protect profits, rolling covers to maximize premium return, and exiting when covers are gone and stock price is high. Sometimes it's hard to remember where you learn to do this stuff, but much of it is from integrating principles I've learned here with thing I already knew. Thanks for the help on this, Phil and others.
Iflantheman
Phil, thanks for the call on the SKF puts earlier, I'm riding that horsie downhill right now, giddyup!
MrMocha
You are doing a fantastic job. I think most of us our very well balanced and consequently have learned how to manage through these ever so short declines in the market without panic.
Dclark41
WOW, look at DRYS go. Nice call on the entry the other week Phil. I got 200 at $6.66 and sold a 7.5 call for $.50, then on the tear today sold another 7.5 call for $1. This should puts me in at an average of $5.91 and called away at $7.5 for a profit of $300+ after commisions. Once again another Phil trade pays for this months membership.
Craigzooka
Phil- I want to let you know that you really helped me make some money this morning when I probably would have lost on my own. I was stuck in doctors waiting rooms most of the morning starting at 8AM. By following the game plan you laid out and using my smartphone, I went short on oil whenever we got to 61.50 and long at 61 waiting for the spikes ahead of inventory. When 10:30 rolled around I was out after selling longs at 61.60 a few minutes earlier. I went short at 61.75-61.80 and voila, rode it down to 60.60 or so. Thank you.
craigsa620
Phil/ Thanks to your obsessive bearish anxiety over the last few weeks, I made money on the long side this month, phased gradually to bearish, came in net short today and managed to make money both long and short all week, ending today [and each day this week] in the green. I don't know how you do it, but thank you.
Zeroxzero
By the way thank you Phil for the DNDN idea. 3x till this morning and will 4x my small investment by next OE THANKS !!!!
Historically Stocks, Yields and Doc Copper often trend in the same direction. Unless its different this time, one asset(s) is way out of whack!
This chart looks at the S&P 500, Doc Copper and the Yield on the 10-year note over the past 5-years.
From late 2015 until late 2018, correlations between the three were pretty decent, especially at the 2016 lows.
A big correlation change has taken place since December of 2018. Since then, the S&P has rallied while Yields and Copper have experienced declines, creating one of the largest spreads between the three in many a blue moon!
Joe Friday, Just The Facts Ma’am; This historically large spread should narrow, odds are low it will continue for months to come.
The billion-dollar question is this; which asset(s) will play the biggest game of “Catch-Up???” Are stocks overextended or has Copper/Yields declined way more than they should have?
To become a member of Kimble Charting Solutions, click here.
If the saying “So Goes Doc Copper, So Goes The Global Economy” is true, what Ole Doc Copper does from current levels will send an important message to global markets!
Doc Copper has spent the majority of the past two decades inside of bullish rising channel (1), as it has created higher lower and higher highs.
Since the 2011 highs, Doc Copper has spent a good deal of time creating lower highs and lower lows.
This downward price action has Copper attempting to break below its 20-year rising channel.
A horizontal support line has been created by Copper at the $2.50 level over the past few years.
Doc Copper is again testing the key support level this week at (2). What Doc Copper does at the $2.50 zone could well send an important message to the global markets!
To become a member of Kimble Charting Solutions, click here.
Check out my Chart o’ the Day from Jon Krinsky, I love this stuff. It gets right to heart of all the things we talk about here – cyclical vs secular, and how to tell which is which, value vs growth, innovation vs entrenchment, etc.
Energy vs. Technology – the daily RSI hit 9 yesterday, the lowest reading since we have GICS data back to 1990. Interestingly, the ratio itself is nearing its all-time low made on March 24th, 2000 which was of course the all-time high for the Nasdaq 100.
Source:
Stranger Things… Energy vs. Tech spread most oversold since at least 1990, reversion likely…
Baycrest Partners – February 5th, 2020
Tesla have been charging higher since the lows of last May, as it has rallied from $200 a share to nearly $800! Is it about to run out of juice?
This chart looks at Tesla (TSLA) over the past 9-years. It has spent the majority of the past 7-years, inside of bullish rising channel (1). It touched the bottom of the channel last May, where the powerful rally got started.
The rally off the May low has TSLA testing the top of the rising channel, as its Fibonacci 261% extension level of the 2016 lows and 2017 highs at (2).
While testing the underside of the channel and the 261% extension level, TSLA could be creating a very large weekly bearish reversal pattern, near mid-week.
I’m wondering this morning if; This is an 800-pound resistance test? Will the bearish reversal pattern still be in play at weeks end? Is TSLA completing an “Eiffel Tower” topping pattern at these resistance levels?
Where TSLA finishes the week should go a long way towards giving us a clue to these answers!
To become a member of Kimble Charting Solutions, click here.
Now this is just breathtaking – I have no skin in the game on this one but cannot stop watching it. I think what’s happened with Tesla recently represents the greatest short squeeze of all time. A rally since around October when they surprised to the upside in an earnings report has just culminated in an explosive 100% year-to-date gain at this morning’s open.
In the top pane (blue) I’m showing total return over the last 6 months of 285%!
In the middle pane I’ve got growth in market capitalization (orange), which soared alongside the stock price, going from $50 billion to over $130 billion, which it make it more valuable than Costco, Lockheed Martin, Goldman Sachs, Starbucks and 400 other components of the S&P 500!
Finally, you can see the short interest as a percentage of shares outstanding. Six months ago, roughly 25% of all the shares outstanding were being borrowed by short-sellers and sold. These shares must be replaced by the short-seller buying them back (or covering their short), which would be profitable if the stock had declined. Needless to say, covering your short in Tesla after the stock has tripled in value would produce the opposite effect – massive, ruinous losses, especially for the unsophisticated who were naked and hadn’t hedged this losing bet in the options market.
I’m not sure we’ll ever see a short squeeze this epic ever again in our lifetimes. In dollar terms it has to be the biggest for the United States. In Europe, during the financial crisis, there was an epic short squeeze in shares of Volkswagen, which was driven up to 1,000 euros per share for a brief moment, making it worth $420 billion, or the single largest company on earth. Its market cap, on paper had eclipsed the value of PetroChina, Microsoft and ExxonMobil, three of the largest in the world at that time, as desperate hedge funds caught leaning the wrong way were forced to cover and run. You can read more about that story here.
No matter what happens from here, this will certainly become one for the books! And it may not even be over yet.
Oil prices plunged to one-year lows, with WTI back below $50 for the first time since Jan 2019 as global demand concerns trumped OPEC+ jawboning that they could do something to stall the decline.
“We’re getting close to the bottom and it’s clear OPEC is not going to sit on their hands,” said Phil Flynn, an analyst at Price Futures Group Inc.
“There’s some dire predictions being priced in right now.“
As Bloomberg reports, the deadly virus has menaced markets by upending trade flows and is estimated to have cut 20% from China’s oil demand as quarantined cities and closed factories cripple industrial activity in the second largest economy in the world. Refineries are curbing operations, while the nation’s top processor is trying to resell millions of barrels of crude it no longer needs.
“How much OPEC decides to cut production will be a deciding factor for price stabilization,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB.
But for now, the machines will focus on inventories…
API
Crude +4.18mm (+3mm exp)
Cushing +960k
Gasoline +1.96mm (+1.8mm exp)
Distillates -1.78mm (-200k exp)
After a surprise build in the previous week, analysts expected another sizable build for crude and API reported a bigger than expected 4.,18mm build (and another build for gasoline stocks)…
Source: Bloomberg
Investors will be keenly focused on refinery utilization, says Andrew Lebow, senior partner at Commodity Research Group. “Refiners are beginning maintenance, which is why we can expect to see an inventory build.”
Ahead of the API print, WTI was trading around $49.60 and dipped modestly lower on the data…
But for now the $50 line in the sand is what matters…
“WTI is trying to hold on to that $50 support level,” says Olivier Jakob, analyst at Petromatrix.
“But it’s going to be difficult unless OPEC takes decisive action, otherwise we’ll get to the lows of 2018.”
And finally, we note that the front-end time-spreads for Brent have flipped negative once again…
Is Crude Oil bottoming for the 4th time the last 8-months? Is Crude Oil suggesting that stocks are at a low about to experience a strong rally?
Crude Oilhas rallied off support line (1), which is the $50 level, three different times since May of 2019. Each time Crude turned higher off the $50 level, it experienced at least 15% rally.
At the same time, Crude was pushing higher off support, the S&P 500 was at a low and about to experience a quality rally as well.
Oil and Stock bulls are keeping a close eye on what Crude does at (2) this week, as Crude could be sending a positive message to markets for the 4th time in the past 8-months.
To become a member of Kimble Charting Solutions, click here.
On a morning when one of Tesla's biggest bulls, New Street's Ferragu downgrades the stock, saying:
"Limited sources of further appreciation in the next 12 months. .. We see 2020 playing out fine, but it is largely expected, and we see some risks on the stock: end of the short squeeze, 1Q20 miss on gross margins"
It is up almost 15% in the pre-market – topping $900 for the first time ever…
But Ron Baron was on CNBC earlier saying he isn't selling a single share and sees Tesla rising to $1TN in revenue in 10 years.
Nothing to see here…
So where does it stop?
If it's like Bitcoin, maybe $1200?
It it's like the VW squeeze in 2008, maybe $1600?
And it it's the South Sea Company, it could hit $1800…
The world is changing because the US FED is considering capping the US 10 yr interest rate under the US inflation rate, or negative real interest rates forever. Further massive destruction of the US dollar purchasing power.
When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong. This is when a seriously over valued market is screaming at you.
Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). We may be there, 'helicopter money lite'. If the intention is to cap interest rates under inflation, this is a form of massive easy money (or easy debt).
Of course the effect of negative real interest rates is the US 10 yr is now broken because it does not protect you from inflation, this is interest rates suppression, or fake. The US FED has enacted this policy before, during WW2, are we in WW3? No. Yet the debt levels as a percentage of GDP suggest we are. Crazy.
This means investors will hunt for a UST 10 yr alternative, hence utility stocks with their high dividends will attract a lot more investor interest. Yes a water company may go to a P/E of 40.
This means demand for quality utility stocks around the world will be strong, and if the US dollar falls, utility stock in other parts of the world will be attractive.
A good place to hunt for Wyckoff, cycles and Gann angles. Long term channels
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Crude Oil has seen some pretty wide price swings over the years.
And, as we wrote about earlier this month, stock market bulls don’t like it when crude oil prices reverse lower.
In today’s chart, we look at crude oil’s latest turn lower and why bulls need prices to firm up ASAP.
The trend for crude oil remains up, as prices have remained inside the rising trend channel (1) since the 2015 lows.
Support is support until broken and a strong support test is in play at this time!!!
BUT the recent price reversal lower has crude oil testing dual support at (2). This area is marked by lateral support and its rising trend support line.
Crude Oil bulls may need to take cover if this dual support area fails to hold. Stay tuned!
In a recent Wall Street Journal article, Mary Anastasia O’Grady writes that Venezuela’s “National Superintendency for the Defense of Socio-Economic Rights is reportedly pressuring stores to accept the government’s new digital fiat currency, the petro.” The Venezuelan government claims its digital...
As we continue to get more and more information related to the Coronavirus spreading across Asia and Europe, the one thing we really must consider is the longer-term possibility that major global economies may contract in some manner as the Chinese economy is currently doing. The news suggests over 700+ million people in China are quarantined. This is a staggering number of people – nearly double the total population of the entire United States.
If the numbers presented by the Chinese are accurate, the Coronavirus has a very high infection rate, yet a moderately small mortality rate (2~3%). Still, if this virus continues to spread throughout the world and infects m...
Imagine you’re a fossil hunter. You spend months in the heat of Arizona digging up bones only to find that what you’ve uncovered is from a previously discovered dinosaur.
That’s how the search for antibiotics has panned out recently. The relatively few antibiotic hunters out there ...
Is King$ and the Euro facing important breakout/breakdown tests at the same time? It looks like it in this chart!
The US$ trend remains up, as it has created a series of higher lows since the start of 2018. The opposite can be said for the Euro, as it has created a series of lower highs since early 2018.
The US$ is currently testing the top of its 18-month rising channel, as the Euro is testing the bottom of its falling channel.
With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.
Phil has a chapter in a newly-released eBook that we think you’ll enjoy.
In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.
This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.
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...
The world is changing because the US FED is considering capping the US 10 yr interest rate under the US inflation rate, or negative real interest rates forever. Further massive destruction of the US dollar purchasing power.
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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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