By the way thank you Phil for the DNDN idea. 3x till this morning and will 4x my small investment by next OE THANKS !!!!
Microflux
Phil I have been applying your arsenal (matresses, Edz plays, Ugl verticals etc.) to my gold holdings . So a big thank you for "teaching me how to fish" rather than just giving me the fish...
Magret
Thank you so much for the good daily news in review Phil. I love your commentary! It is such a breath of fresh air in the smog cluttered news networks.
RJRoberts
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
Thank you Phil for this site – the trade discussions on PSW are mind boggling. Future trading while learning to be a value investor. Priceless
Joseph
Thanks for you guidance – Your "student" will be passing on the McMuffins and having Lobster dinners tonight!
Aquila
I must add yet another paen to Phil's "cash and short" call, as my TZA shorts are past paying for Similac and Pampers and have now covered all doctors and Mt. Sinai hospital bills for young Charlotte, as TZA took the portfolio up 10%.
Zeroxzero
Phil-
I would like to echo the sentiments of dclark41. Joining this site was the best thing I have ever done to aid my growth as a trader/investor. There are so many smart and experienced people here sharing their ideas that regardless what your investing style is you will learn something daily. Thank you and all the regular contributors for your generosity.
Acd54
Opt, I think the hardest thing is being disciplined enough to trade with you. Atleast now when I see something go in the red I know how much I'm going to loose and that I will profit somewhere else and have enough money left at the end of the day to trade again. Thanks for all your hard work! My stress levels are down 75% and I have even made a small profit in the short time I've been here
Mopar
Thanks, I managed to make 2k today so I am happy…and feel like I am finally getting it. New equipment and a quiet place to work helps a lot. I am happy for all the members that took your /NKD advice….that was fun I am sure! coke Take your vitamins…I don't know how you do all this! but, keep it up!
Coke
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
I have to say, hands down, this is one of the best educational experiences I've had in my life. I've even gotten my wife (accountant) into the webinars and she wants to master this concept of selling premium and making smart, conservative investment decisions. She'll eventually use this knowledge to manage her clients' wealth and make smart investment choices for them. Bib big thanks Phil!!
AmalfiCoast
Phil - I just referred 10 people. Last week was a 50% gainer for me. There are companies that want to sell mentoring service for thousands of dollars. This is far better of a deal with very good advice.
Steve
Very nice in and out on those USO puts again, easy way to get the subscription covered in just a couple of hours.
Thanks again Phil and everyone here contributing to such intelligent and informative discussion! I have wasted countless hours reading "professional newsletters" and message board blather over the years. Have learned a great deal here in a very short time. I have sent out a number of invites to friends and family for stockworld!
Eyezz
Newer member here, but just wanted to say thank you too. I've learned so much and I hope you'll be around for a long time helping us learn along the way.
Where
Thanks, Phil. I really appreciate your sentiment and commitment! Just want to thank you for what you do for all of us.
JBaker
Phil, those OIH $80 p that you recommended last week for ~$1 are now worth $5.50!
Greg
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
Thanks, after years of blood and blunders, I have reached a significant milestone – I don't lose money. Net net, I rarely have a losing week, market up, market down. And that I owe to you. Balanced positions. More premium sold than bought. Fundamental criteria applied to good companies, not momentum/ news headlines/ stock du jour/ triangle squeezies. But rather earnings, P/E, dividends, competitive position — the boring stuff that takes study, thought,….and patience. You have been a great teacher, and I have embarassed myself repeatedly day with how slowly I learn.
And it's a funny thing – if you don't lose, the gains start to pile up. The arithmetic is cruel to the downside, and becomes a gift in the other direction. And I'm in this for the long run, having made myself unemployable through a need for diversification. Moreover, what I've learned here has also elided into other areas, including real estate and ex-U.S. investment. Pretty cool. Have a great weekend.
Zeroxzero
Phil… My portfolio, in the past few months, has acheived a high degree of stabilization. I've noticed that on up days, down days, even days, it doesn't matter, my portfolio rarely varies more than 2%. And over the long haul it just slowly increases in value. I attribute this not to investment choices, but to style. Thanks to you and others on this site I'm paying close attention to position size, delta neutrality, downside protection, and concentrating on selling premium rather than buying it. I've developed increasing patience, not having to trade daily, or even weekly. I'm concentrating on the finer points of trading, letting the profits come to me, rather than the other way around. I appreciate the help everyone here has given in getting me focused on this principle. I'm pumped!…in a calm sort of way.
Iflantheman
Phil, i wanted to thank you again for helping me protect future stock allocations at work - finally, i feel like i am owning my own destiny with stocks vs. letting the market dictate what you get – thanks again.
Nramanuja
The strategy you have laid out pretty much mirrors much of my trading activity. I also mix in some momentum plays and "drop dead" bargains that come across my radar. My YTD trading profit is 63%. Back in March when Phil said "unless you think the world is coming to an end, then NOW is the time to start taking positions in Buy/Writes with the VIX so high." I jumped in with both feet - ( thanks, again Phil)
Chaps
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
Looking over your main themes last week, the "China may fall first" and "if you missed it previously, Thurs am gives you a second chance to short" were absolutely on target. I had to rely on stop-losses because of my schedule but just those two calls could have been worth a small fortune. Keep it up and I look forward to your new portfolio.
Ocelli
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
I have to thank you for excelling yourself during this past week. I have spent a good few hours going over your notes and comments and there are so many gems on repairing and rolling trades that I have been beavering away on paying special attention to my major positions and analysing them using your approach on Tuesday. Being able to look at a group of trades on the same underlying (in this case AAPL) and taking a detached view by assessing the impact of the underlying reaching different price points was extremely reassuring.
Winston
Thanks for the USO directions today. Made it 3 times (up/down/up) for a very nice win.
Doro165
AMZN ... thanks Phil; boy did they run a squeeze on everyone there ... made me sweat ... scaling helped! I think AMZN has an 85 handle tomorrow ... maybe lower.
Cap
Phil, thanks for the call on the SKF puts earlier, I'm riding that horsie downhill right now, giddyup!
MrMocha
Man, what a week: Bought C at 1.40, sold half at 1.59 (relatively big position), another quarter at 3.04 just now. Ran SKF down from 270 with one April put, still holding some 115's expiring in a couple days. I'm going to gamble this position like a champion Friday. Bought FAS at all sorts of levels and started cashing out. Long HOV, stock and some nickel calls for fun - Mocha up your buy-out from 5 to 8 and that's 10,900% return for the May-2.50's . Ha!
After serveral attempts to make some money shorting the Index Futures we hit the jackpot in yesterday Morning's PSW Report, when I said to our Members:
It doesn't matter what happens during the day, in the overnights, we rally to new highs. Oddly enough, we've been making our money on the short side (see last week's Webinar) by playing the indexes short when they peak and selling on the dips so this morning we're doing it again at 9,240 on the Nasdaq (/NQ) Futures, 3,335 on the S&P Futures (/ES) and 29,280 on the Dow (/YM) Futures.
Meanwhile, we're stubbornly long on Natural Gas (/NG), which is now at $1.90 but our average entry is $1.962 and we already have 4 long.
As you can see from the image above, we hit our goal this morning (as discussed in yesterday's Live Trading Webinar) so we're taking the money and running but we'll re-establish on a pullback. It's a nice $2,320 gain on the day, so we don't turn that away and we'll also cash out our Index Futures, now at 9,190 on /NQ for a $1,000 per contract gain, 3,313 on /ES for a $1,100 per contract gain and 29,050 on /YM for a $1,150 per contract gain. Now, wasn't yesterday's PSW Report worth your $3? If so, don't forget to SUBSCRIBE HERE!
We played yesterday bearish because there was now NEW news that justified the move up and, this morning, there's no NEW news justifying the move down so we'll cash out and wait for something interesting to happen. The most interesting thing happening at the moment is the Chinese coronavirus that has sent the Chinese markets down 5% already this week and our 5% Rule™ says a weak bounce is 1% and a…
This perhaps ill-chosen term (coined by physicist John Preskill) is meant to convey the huge speedup that processors based on quantum-mechanical systems are predicted to exhibit, relative to even the fastest classical computers.
Google’s benchmark was achieved on a new type of quantum processor, code-named Sycamore, consisting of 54 independently addressable superconducting junction devices (of which only 53 were working for the demonstration).
Each of these devices allows the storage of one bit of quantum information. In contrast to the bits in a classical computer, which can only store one of two states (0 or 1 in the digital language of binary code), a quantum bit – qbit — can store information in a coherent superposition state which can be considered to contain fractional amounts of both 0 and 1.
Sycamore uses technology developed by the superconductivity research group of physicist John Martinis at the University of California, Santa Barbara. The entire Sycamore system must be kept cold at cryogenic temperatures using special helium dilution refrigeration technology. Because of the immense challenge involved in keeping such a large system near the absolute zero of temperature, it is a technological tour de force.
Researchers at Google have been working on a quantum computer, which would revolutionize the industry.(Shutterstock)
Contentious findings
The Google researchers demonstrated that the performance of their quantum processor in sampling the output of a pseudo-random quantum circuit was vastly better than a classical computer chip — like the kind in our laptops — could achieve. Just how vastly became a point of contention, and the story was not without intrigue.
It doesn't matter what happens during the day, in the overnights, we rally to new highs. Oddly enough, we've been making our money on the short side (see last week's Webinar) by playing the indexes short when they peak and selling on the dips so this morning we're doing it again at 9,240 on the Nasdaq (/NQ) Futures, 3,335 on the S&P Futures (/ES) and 29,280 on the Dow (/YM) Futures.
Meanwhile, we're stubbornly long on Natural Gas (/NG), which is now at $1.90 but our average entry is $1.962 and we already have 4 long so we either get back to 2 even or we wait for $1.80 to add 2 more longs and bring the average below $1.90 (with a $6,000 loss on 6 contracts). It's a long-term conviction play and could get very painful as we're bucking the overall trend.
I reviewed our logic on the Natural Gas plays in yesterday's Live Member Chat Room and we're doing another Live Trading Webinar this afternoon at 1pm, EST, so I'm sure we can discuss it some more. The strong(ish) Dollar hasn't been helping the commodities very much. Oil is still down in the dumps at around $57.50, which is a nice place to go long (/CL) with tight stops below that line, which should match up with $64 on Brent (/BZ) – so if Brent fails to hold, don't play /CL long!
Not that the news seems to matter these days but President Trump is back to threatening tariffs on Europe in an attempt to force them to make a Trade Deal with him because he needs the distraction to take away from his impeachment trial. One thing that's distracting everybody at the moment is the Chinese virus scare, with 50% more cases today than there were yesterday (now 470) so no, it's not at all under control. The US case that panicked our markets yesterday was from a guy who was in China recently and it does seem to be contained (so far).
The big news this past week is that the S&P 500 got way out ahead of its 200-day moving average – more than 11% above, in fact.
Michael wrote about how shitty of a timing signal this measure is here, if you haven’t read it yet you CANNOT miss it.
In the meanwhile, Jon Krinsky notes that while we may be stretched based on recent history, in the 1990’s, the S&P was routinely more than 10% above the 200-day moving average, which led to consolidation periods followed by even higher new highs.
Here’s two charts from Jon:
It’s notable that this extreme breadth surge has happened with the SPX stretched vs. its 200 DMA. It is now at the widest spread (over 11%) since January 2018. Of course when momentum gets strong like it was two years ago, and it is now, there is no rule for how stretched things can become. It peaked at around 14% in Jan. ’18, and routinely was above 15% in the late 1990’s
By mid 1995, the SPX was 14% above its 200 DMA. You can see it routinely traded above that threshold over the last half of the decade, and while it did check back to its 200 DMA many times, there were other times where the market moved sideways or pushed even higher
Source:
What Happens When You Have a Breadth Surge and the SPX is Stretched?
Baycrest Partners – January 20th, 2020
Amazon has just taken another step in its assault of the pharmacy industry. Since the company acquired PillPack, a disruptive online pharmacy, back in 2018, pharmacy mainstays like CVS and Walgreens Boots Alliance have been rattled by the e-commerce and cloud-computing giant's move into their territory. Their shares dipped on Tuesday as CNBC reported that Amazon had just filed trademarks for its 'Amazon Pharmacy' brand in several foreign markets, including Australia, Canada and the UK.
Amazon unveiled its plans to rebrand PillPack as 'Amazon Pharmacy' late last year, signaling to the market that it intended to pursue its pharmacy aims despite a high bar set by regulators in the US.
The problem with selling pharmaceuticals in the US is that, although the market is probably the largest for pharmaceuticals on the planet, it's also extremely competitive and complex. Since the PillPack buy, Amazon has already run into problems, including being sued by some of its competitors, and facing resistance from incumbent pharmacies when requesting patient data.
So, PillPack has shifted focus, and is apparently aiming to build its foundation abroad. Of course, filing the patents doesn't necessarily guarantee that Amazon is expanding PillPack. The pharmacy old guard has done an admirable job protecting their turf, and some are skeptical of Amazon's ability to break in.
But if Jeff Bezos has proven anything during his multidecade push to transform Amazon into 'the Everything Store', it's that Amazon can be a surprisingly fierce competitor. And the industry stalwarts will need to rely on more than just the largesse of consolidation to beat Bezos.
It may end just as quickly as the GOP-controlled Senate is looking to acquit Trump as soon as possible, preferably without hearing from any witnesses or reviewing any evidence. This farce will be overseen by Chief Justice John Roberts – which is very sad for our rule of law, of course, as it legitimizes this behavior and sets a precedent for future dictators to rule our country by. Nonetheless, at least it will be interesting.
In his 30-minute address in front of a global audience, Mr. Trump did not mention the impeachment trial back home. But he delivered what amounted to a version of his campaign speech minus the red meat to his base, speaking little of international alliances other than touting America’s supremacy in the world.
The president also took a swipe at people demanding action on climate change, the lead agenda item at this year’s conference. Mr. Trump announced that the United States would join the 1 trillion trees initiative launched at the World Economic Forum. But he also declared that “we must reject the perennial prophets of doom.”
The message at Davos was very clear to all but Mr. Trump. So clear in fact that it was written on the roof of the building:
Global warming and climate change top the agenda items for the conference. A star speaker on Tuesday, alongside Mr. Trump, is the 16-year-old climate activist Greta Thunberg, who has said she wouldn’t “waste her time” speaking to Mr. Trump about climate change. Trump has withdrawn America from the…
The Baltic Exchange's main sea freight index hit a nine-month low on Monday, dragged down by falling rates of capesize and panamax segments as world trade continues to slump.
The Baltic Dry Index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities across the world, dropped 25 points, or 3.3%, to 729 (according to Refinitiv data), the lowest level since April 2019:
The capesize index .BACI dropped 119 points, or 16.7%, to 593 – its lowest since April 23.The index registered its 27th straight session of losses, and also its largest daily percentage loss since early April.
Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes including iron ore and coal, fell $592 to $7,760.
The panamax index .BPNI lost 4 points, or 0.5%, to 866.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, declined $39 to $7,791.
The supramax index .BSIS remained unchanged at 560 points.
We've noted how the "front-loading" effect ahead of tariff deadlines ended in late 3Q19 when the first signs of a trade resolution emerged between the U.S. and China. In the last four months, the Baltic index has crashed 70%, the most since 2008, and has confirmed our slowbalisation thoughts.
The chart below makes clear that the spike in shipping rates was a one-off event spurred by importers front-running tariffs in 2019, now that is over, shipping rates are plunging as a manufacturing recession in the U.S. deepens and across the world.
It's Martin Luther King day so the markets are closed.
It's a good day to read his "I Have a Dream" speech – really is amazing when you think of the great social change in this nation that was set in motion by one man with a vision. Here's a great video of the actual event.
It is a testament to the power and effectiveness of Dr. King's movement that, even to those of us who were alive at the time, it seems like it must have been another world where a man had to speak out against such injustice as if it wasn't obvious to the majority of people that segragation, whether by law or by practice, was an outrage.
Sadly, many of the lessons he taught us have already been forgotten, some great quotes:
Nonviolence is a powerful and just weapon. which cuts without wounding and ennobles the man who wields it. It is a sword that heals.
Nonviolence means avoiding not only external physical violence but also internal violence of spirit. You not only refuse to shoot a man, but you refuse to hate him.
It is not enough to say we must not wage war. It is necessary to love peace and sacrifice for it.
The hope of a secure and livable world lies with disciplined nonconformists who are dedicated to justice, peace and brotherhood.
Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.
Never forget that everything Hitler did in Germany was legal.
We will remember not the words of our enemies, but the silence of our friends.
The past is prophetic in that it asserts loudly that wars are poor chisels for carving out peaceful tomorrows.
A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.
The risk of oil supply disruptions from around the world has diminished, and rising non-OPEC production provides a “solid base from which to react to any escalation in geopolitical tension.”
In its January Oil Market Report, the International Energy Agency (IEA) said that there is plenty of oil sloshing around, despite the U.S. and Iran nearly going to war.
“We cannot know how the geopolitical situation will play out over time, but for now the risk of a major threat to oil supplies appears to have receded,” the IEA said.
“As was the case following the attacks on Saudi Arabia in September, once the initial fears of a sustained supply shock subsided, the Brent price rapidly gave up its $4/bbl spike.”
Oil inventories held in OECD countries is 9 million barrels above the five-year average, and there are also plenty of strategic stockpiles to call upon in the event of an outage, the agency said.
Still, while geopolitical risk has “faded,” it has not gone away entirely. The Trump administration may have refrained from all-out war against Iran, but the assassination of General Soleimani took the confrontation to new heights.
While Trump’s speech earlier this month was widely interpreted as one of “de-escalation,” he also prefaced his comments by saying Iran would never have a nuclear weapon. But, sanctions, “maximum pressure,” and the assassination of one of its top leaders will obviously provoke a response. With little left to lose, Tehran is backing out of most of its commitments under the 2015 nuclear agreement, a deal that the U.S. already exited nearly two years ago.
All of which is to say the countries are seemingly locked on a collision course. The world breathed a sigh of relief when the two countries backed away from the brink, but there are decent odds that the conflict flares up again in the not-so-distant future. There are few pathways for actual de-escalation, absent an overhaul of U.S. policy.
At the same time, Iran has already lost much of its oil supply due to sanctions. So, the additional supply risk is concentrated in Iraq,
Josh and I spoke recently about the slow grind higher, the lack of volatility, and all the recent stock market records. The very first response in the comment section was, “market overdue for a pullback.”
This seems to be the prevailing narrative and I gotta be honest, I agree. I’m just as surprised as anyone that the market keeps grinding higher.
Here are a few data points, by way of the S&P 500.
The index has closed within 2% of the all-time high for 68 straight days
The index has gone 70 days without a 1% decline, the sixth longest streak over the last 20 years.
87% of stocks are above their 200-day moving average
The S&P 500 is currently 11% above its 200-day moving average.
Rather than relying on our collective intuition that we’re due for a pullback, I wanted to look at what the data said. For this analysis, as a measurement of stocks being over extended, we looked at the S&P 500 when it was 10% above its 200-day moving average.
Before we go any further, there is nothing particularly special about the 200-day. We (Nick) also looked at the 50 and 100-day and they all told the same story. The chart below shows when the S&P 500 has been more than 10% above its 200-day moving average.
You’ll notice a few things right off the bat. This sort of thing, when stocks are extended, tends to happen at all-time highs and in deep drawdowns. The latter might be counter intuitive but think about huge bounces off the lows, like the GFC for example. By September 2009, the S&P 500 was 20% above its 200-day moving average even as it was sat 32% below all-time highs.
Since 1950, when the S&P 500 is at least 10% above its 200-day moving average, 59% of the time it was within 2% of its all-time high, and 13% of the time it was in a greater than 20% drawdown.
Submitted by Joe Carson, former Chief Economist & Director of Global Economic Research for Alliance Bernstein
2019 operating profits will show no growth for the 5th consecutive year. That would mark the longest stretch of no earnings growth since the late 1990s. Prospects for 2020-profit growth look slim as well given consensus GDP growth estimates of around 2%, slow global growth and rising costs pressure from labor.
Operating Profits
Q4 GDP and the full year 2019 operating profit numbers will not be released until March, but one...
Pareteum, Inc. (NASDAQ: TEUM) stock moved upwards by 4.5% to $0.87 during Thursday's pre-market session.
Comcast, Inc. (NASDAQ: CMCSA) shares rose 2.0% to $48.40. The most recent rating by Wells Fargo, on January 16, is at Overweight, with a price target of $51.00.
Vodafone Group, Inc. (NASDAQ: VOD) shares moved upwards by 1.4% to $20.22.
Chris Vermeulen joins me today to shares his trading strategy for 4 different markets. While most of these markets are not correlated he has reasons for why he is long in each. Pick and choose where you want to deploy your capital.
David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.
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...
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Well, it had to happen some time.
We played yesterday bearish because there was now NEW news that justified the move up and, this morning, there's no NEW news justifying the move down so we'll cash out and wait for something interesting to happen. The most interesting thing happening at the moment is the Chinese coronavirus that has sent the Chinese markets down 5% already this week and our 5% Rule™ says a weak bounce is 1% and a…
The problem with selling pharmaceuticals in the US is that, although the market is probably the largest for pharmaceuticals on the planet, it's also extremely competitive and complex. Since the PillPack buy, Amazon has already run into problems, including being sued by some of its competitors, and facing resistance from incumbent pharmacies /arc-anglerfish-arc2-prod-sltrib.s3.amazonaws.com/public/2STTLO77QRAHBJBKY3AGSPDPRI.jpg)
Impeachment begins in earnest this week.
It's Martin Luther King day so the markets are closed.
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
