Archive for the ‘Appears on main page’ Category

Whipsaw Wednesday – Low Volume Futures Rallies Mask Market Losses

Wheeee, what a ride!  

The indexes fell off a cliff in afternoon trading but, not to worry because, as soon as the markets closes, the little manipulator gnomes went right to work and prettied things up for the Asian (9pm) and European (3am) opens – so no one even knew that the US sold off into the close and the total flat-line since 5am isn't the least bit suspicious – just normal human beings trading normally…  Move along – nothing to see here folks…

The stock market is becoming a farce and that makes for dangerous trading conditions so caution is strongly advised.  We are right back where we started the day yesterday so I won't bore you with a repeat of yesterday morning's PSW Report but I will point out that it doesn't count to get over the Strong Bounce lines if you can't hold them for 48 consecutive hours so, according to the 5% Rule™ – we're still not our of the woods on the recent correction.

This afternoon we get the FOMC Minutes from their July 31st meeting (2pm), when they gave Trump a 0.25% cut with Rosengren and Quarles objecting but the Minutes will give us color as to how supportive the rest of the Fed was as it's now widely believed that they will cut AT LEAST 0.25% at the Sept 18th meeting and Trump is asking for a 1% rate cut – which would be uprecedented and unhinged! 

Image result for fed rate cuts 2019Of course, as usual, the markets are reading it wrong and, as usual, traders have absolutely no grasp of history as, historically, the Fed raises rates in a GOOD market and LOWERS rates in a bad market – ESPECIALLY at the top of a bad market as they attempt to forestall a looming disaster so the cut of July 31st was a warning – not a bullish signal!

And notice the key is the Fed generally cuts rates about 5% during a market correction and now we are starting at 2.25% so are we going to go for -3% when the market begins to tumble?  -3% means you get paid to borrow money, which sounds good but no one is actually going to lend
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Hemp Boca Portfolio Review – 08-20-19

Hemp Boca Portfolio Review:  $43,205 is down $6,795 (13.6%) since we started so not off to a good start but that's why we scale into positions.  The market sell-off has given us some good opportunities to add to our current positions as well as pick up new ones but we don't want to deploy too much cash until we see the positions we have begin to stabilize.

  • IMAX – We're about even on this one and $21 is our goal so, if all goes well, this trade will pay us $4,000 but the current net is only $1,450 so $2,550 (175%) left to gain if IMAX can hold $21 through Jan 17th – not bad!  

  • M – Macy's fell very much out of favor along with the rest of the retail sector but we like them as a real estate play.  I'm still happy with the $23 target – even though it now seems far away but we do have 16 months to get there.  For the moment, let's roll the 15 2021 $20 calls at $1.15 ($1,725) to the $15 calls at $2.65 ($3,975) so we're spending net $2,250 to roll $7,500 lower


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Technical Tuesday – Markets Pause at Our Strong Bounce Lines

Well, here we are

As expected, we got to our strong bounce lines on yesterday's pre-market rally but then we went nowhere and now we'll have to wait and see if we go somewhere for the rest of the week.  After getting properly spanked by Wall Street for his latest China tweets, the President has been more conciliatory – other than his continued attacks on the Fed, where he is now demanding a 1% rate cut.  That too may backfire as it will be impossible for Powell to please the market with even a 0.5% rate cut and expectations are now over 85% that the Fed will cut at the next meeting.  

As you can see from our S&P 500 chart (SPY), we're at the Strong Bounce Line – which is the same line we've been using all month, predicting both the bottom and the top of the correction.  As you can see, the 50-day moving average is just above at 2,945 and the S&P is at 2,920 this morning and MUST HOLD that bounce line at 2,910, which I think it should do into the Fed.  Our other indexes are also right around their strong bounce lines:

  • Dow 25,000 is the mid-point and bounce lines are 25,550 (weak) and 26,100 (strong)
  • S&P 2,850 is the mid-point and bounce lines are 2,880 (weak) and 2,910 (strong)
  • Nasdaq 7,200 is the mid-point and bounce lines are 7,360 (weak) and 7,520 (strong)
  • Russell 1,440 is


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“Make It Stop”

 

“Make It Stop”

Courtesy of 

Every time the stock market falls, no really, every single time, a friend of mine texts me the same thing: “Make it stop.” And every time I tell him the same thing- “You should hope stocks go a lot lower.”

For people still contributing to their retirement accounts, they shouldn’t fear lower prices, they should pray for them.

Let’s look at a real world hypothetical example.

I sorted all twenty-year rolling returns for the S&P 500 and plucked returns near the median. Stocks had nearly identical compound annual growth rates in the twenty years from December 1933-November 1953 and December 1954-November 1973 (10.791%/10.779%).The chart below shows that $1 invested had the same ending values over each of these twenty-year periods.

The next chart shows what would have happened (this is make believe land) if an investor started with $100 and bought stocks every month, increasing their contributions by 0.5% with each purchase.

 

Although they had the same compound annual growth rate, the one that got the pain out of the way early was left with 65% more money after 20 years.

The massive difference is due to the timing of market declines. The gray line experienced a brutal bear market in the fourth year (1937) while the other didn’t experience one until the 16th year, when the percent decline had a much bigger effect on the overall dollars.

Of course the path of stocks are completely out of our control, and it’s worth mentioning the obvious; what’s good for people contributing to their portfolios is not good for people who are drawing from them.

Young investors should not try to avoid lower prices, they should welcome them with open arms. And while it sure feels good to see stocks go higher every month, what feels best in the present isn’t what’s best for us in the future.





Monday Market Movement – Up We Go Again

Image result for fed money printingTrump says we're "talking with China" and that's all it takes.

The Dow is up 300 points (1%), pre-market, as are the other indexes but I think it's the Fed's Jackson Hole Conference everyone is looking forward to as the rumor is the Fed is going to give us MORE FREE MONEY!!! – and we do love MORE FREE MONEY!!! – don't we?  Not only are hopes high for Jackson Hole (Friday and over the weekend) but Asian Central Banks are expected to be easing as well and there are rumors that even fiscally conservative Germany is now talking about Government stimulus to boost the economy.

It's a very big deal if even Germany is going to start stimulating the economy – that should be enough to boost things though it's all rumor at the moment and why these Governments are in such a panic to support markets at or near their all-time highs is a bit of a mystery – because they already have negative interest rates and low unemployment, which means they have very little room to move if we do get into a real recession and, if you don't act during a Recession – things can get Depressing!

Weak economic data from Germany and China last week triggered a stock-market selloff and a bond-market rally, with yields on 30-year Treasury bonds falling to their lowest levels ever. The reaction illustrated the growing sensitivity of investors to worries about trade tensions and global growth.  Unfortunately, Trump only used the last Fed Cut to launch additional tariffs on China, which are the real problem and, if the Fed gives Trump more cuts at the Sept 18th meeting – that might be the signal for Trump to attack China again – and that's the real catalyst that's spooking the markets.

Still, for now, like last week, the Fed is generally quiet and the markets can run back up on rumors.  Only Randy Quarles speaks at 6pm tomorrow ahead of Powell's big speack from Jackson Hole Friday morning and it's a fairly light data week so not much to stand in the way of a good economic rumor as we bounce back towards recovery.


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What is an inverted yield curve? Why is it panicking markets, and why is there talk of recession?

 

What is an inverted yield curve? Why is it panicking markets, and why is there talk of recession?

Markets know what has happened each time the yield curve has turned negative. The idea of a negative curve without a a recession would take some getting used to. Shutterstock

Courtesy of Mark Crosby, Monash University

Since President Trump tweeted about imposing new tariffs on China, global equity markets have gone into a tailspin.

Trump’s more recent announcement that the new tariffs would be delayed has not calmed the markets, with recent days seeing very large falls in most major stock markets.

Another factor particularly spooking the markets in recent days has been the “inversion of the yield curve” in the United States.

The yield curve is a graph showing the relationship between interest rates earned on lending money for different durations.

Normally, someone who lent to the government or a corporation for one year (by buying a one-year government or corporate bond) would expect to get a lower interest rate than someone who lent for five or ten years, making the yield curve upward-sloping.

An inverted curve slopes down

A simple way to get an idea of the slope of the yield curve is to compare a short-duration government interest rate for a two- or three-year government bond with the rate on a ten-year government bond.

In Australia the ten-year government bond rate has just fallen to a record low 0.891%, only slightly above the three-year rate at around 0.7%.

CNBC.

In the US in recent days the ten-year bond rate has fallen to the point at which the ten-year rate is below the two-year rate – so the yield curve is inverted.

What has made the markets so nervous is that there has been a yield curve inversion before each of the past seven recessions.

The graph below plots the difference between the US ten-year government bond rate and the US two-year government bond right back to the 1970s.

When the…
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What I Learned at Camp Kotok

 

What I Learned at Camp Kotok

Courtesy of John Mauldin, Thoughts from the Frontline


Photo: David Kotok

I am back from my 14th annual Maine fishing camp and the mood was decidedly different this year. The private event at Leen’s Lodge is generally called Camp Kotok in honor of David Kotok of Cumberland Advisors who started these outings many years ago. CNBC and others began calling it the “Shadow Fed” but it is really just a meeting of wickedly smart people focused on economics and markets. (I am allowed to attend for comic relief.) Throw in a little fishing, more fabulous food and wine than anyone should consume, formal debates and informal Q&A, and it really is one of the highlights of my year.

All this happens at a fishing lodge without many luxuries except for the food which is off the charts in the evenings. For lunch, all the boats meet at one spot and the guides cook what we catch in a 2+ hour experience. (Only the hardcore go out fishing afterwards.) The lunch conversations are simply fascinating.

I am still absorbing what I learned, but for me the general mood stood out more. We will get to that below. First, a point of personal privilege.

I first started writing Thoughts from the Frontline in August 2000. That makes this the beginning of my 20th year. I started with 2,000 email addresses from an earlier writing incarnation. I was still writing a print publication which I sold through the mail and thought I would just stick my letter on the internet for free and see what happened. Within two years I had canceled the print letter as the free publication’s growth went through the roof. Even now, I meet people all the time who say they read it from the beginning (or shortly thereafter).

Words cannot express my genuine gratitude that so many of you have read these letters for so long and continue doing so. Simply saying “thank you” doesn’t adequately express how truly, profoundly thankful I am you give me the single most important part of your life—your attention—when we are all so inundated with emails, TV,


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Everybody Knows Everything

 

Everybody Knows Everything

Courtesy of 

My wife sent me the following text message this morning:

“There is a whole thread about this in a NYC DOE teacher Facebook group I’m in.” The text was followed by the image below.

 

A TDA, or tax-deferred annuity, is a 403(b), which is the equivalent of a 401(k) for teachers, hospital workers, and other not-for-profit organizations.

 

Emotion was running high in this thread. Some people were blaming the economy and other people blaming the media. But they all pretty much had the same question, “what do we do now?” The answers were all over the place, as you might imagine.

Josh wrote the best post on how to think about investing in your retirement accounts, which I would encourage everybody to read if you haven’t already. He said, “volatility is not risk, it is the source of future returns.” Amen brother.

The real question isn’t what should they do in their retirement accounts, but rather why they’re talking about the stock market and the warning it gave for an impending recession.

The simple answer is that news travels faster today than it has at any point in history. I will show you the evidence in two charts.

Below is the yield curve in black, with the red dots representing every time The New York Times mentioned yield curve and “inversion” or “inverted” in an article. You can see that the yield curve, despite a steep inversion in the late 70s and early 80s, wasn’t something that the media, and therefore investors, were so fixated on.


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TGIF – The ECB Takes a Turn at the Stimulus Wheel

Image result for ecb stimulusMore free money!  

That's what's got the markets rebounding this morning as the European Central Bank says they are preparing a "very strong package" of stimulus measures for its next policy meeting in September.  Speaking in his offices in Finland’s capital on Thursday, Olli Rehn said the slowing global economy would see the ECB rolling out fresh stimulus measures that should include “substantial and sufficient” bond purchases as well as cuts to the bank’s key interest rate.

“It’s important that we come up with a significant and impactful policy package in September.  When you’re working with financial markets, it’s often better to overshoot than undershoot, and better to have a very strong package of policy measures than to tinker.”   

ECB President Mario Draghi last month raised the prospect of fresh ECB action in September, but the new comments from Mr. Rehn indicate that the level of stimulus is likely to be at the upper end of analysts’ expectations.  By raising market expectations for the ECB’s September meeting, Mr Rehn’s comments could put pressure on any ECB policy makers critical of a large stimulus package to fall into line.

In my view, there is a certain weakening of the economic outlook for Europe in the last couple of months,” Mr. Rehn said. That worsening economic backdrop “justifies taking further action in monetary policy, as we intend to do in September,” Mr. Rehn said.  Investors are now expecting the ECB to cut their rate to MINUS 0.7% and keep them that low through 2024.  Additionally, the ECB is expected to expand it's already massive bond-buying program – all very bullish for the market but it brings to mind the phrase "desperate times call for desperate measures." 

As we expected, the Central Banksters are teriffied…
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The PhilStockWorld.com Weekly Trading Webinar – 08-14-19

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

Major Topics:

00:01:38 Checking on the Markets
00:06:12 SPWR
00:09:37 WPM
00:13:41 Metals: Silver and Gold
00:19:28 SPY
00:39:43 Trade Ideas
00:50:38 MO
01:02:05 Hemp Boca Portfolio
01:06:53 TAP
01:17:01 M Trade Ideas
01:22:24 Market Charts
01:25:12 EIA
01:35:48 Dow
01:38:56 A few pointers before wrap-up
01:42:15 Nikkei

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – click here to join us at PSW!





 
 
 

Phil's Favorites

South Africa is caught in the global hype of the fourth industrial revolution

 

South Africa is caught in the global hype of the fourth industrial revolution

There’s nothing inherent in Fourth Industrial Revolution technologies that will result in economic growth. Shutterstock

Courtesy of Alison Gillwald, University of Cape Town

South Africa is caught up in the global hype of the Fourth Industrial Revolution (4IR). This is distracting it from the unfinished business of redressing inequality and creating the preconditions for an inclusive digital economy and society.

Reinvented by Klaus Schwab of the World Econo...



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Zero Hedge

Yield Curve Tumbles Back Into Inversion As Fed Sparks Mid-Cycle Maelstrom

Courtesy of ZeroHedge View original post here.

Today's chaos was brought to you by the the words "mid-cycle" (market threw a tantrum that The Fed Minutes were not more dovish) and "inverted" (the much-watched 2s10s curve tumbled back into inversion)  and the number '16' (line in the sand for VIX and gamma)

Chinese stocks trod water overnight...

Source: Bloomberg

Source: Bloomberg

European stocks surged on the day, led by Italy...

...



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Kimble Charting Solutions

Gold Is Knocking On Key Breakout Level

Courtesy of Chris Kimble

In 2013, Gold broke below its 23 percent Fibonacci retracement level and a bearish trend change took place at (1).

This was the beginning of a bigger decline that saw gold fall another 450 dollars.

Nearly six years later, Gold returns to this “breakdown” level in hopes of making it a new “breakout” level at (2).

If Gold can breakout at (2) it will send a very bullish message to the market.

Stay tuned – gold bulls are knocking on heaven’s door!

If pattern opportunities in Gold, Silver, Copper and Miners is imp...



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Insider Scoop

Earnings Scheduled For August 21, 2019

Courtesy of Benzinga

Companies Reporting Before The Bell
  • Analog Devices, Inc. (NASDAQ: ADI) is estimated to report quarterly earnings at $1.22 per share on revenue of $1.45 billion.
  • Lowe's Companies, Inc. (NYSE: LOW) is expected to report quarterly earnings at $2 per share on revenue of $20.94 billion.
  • Target Corporation (NYS...


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Lee's Free Thinking

Watch Out Bears! Fed POMO Is Back!

Courtesy of Lee Adler

That’s right. The Fed is doing POMO again.  POMO means Permanent Open Market Operations. It’s a fancy way of saying that the Fed is buying Treasuries, pumping money into the financial markets.

Over the past 6 days, the Fed has bought $8.6 billion in T-bills and coupons. These are the first regular Fed POMO Treasury operations since the Fed ended outright QE in 2014.

Who is the Fed buying those Treasuries from?

The Primary Dealers. Who are the Primary Dealers?  I’ll let the New York Fed tell you:

Primary dealers are trading counterparties of the New York Fed in its implementation of monetary policy. They are also expected to make markets for the New York Fed on behalf of its official accountholders as needed, and to bid on a ...



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The Technical Traders

Fed Too Late To Prevent A Housing Market Crash?

Courtesy of Technical Traders

Real Estate is one of the biggest purchases anyone will make in their lifetime.  It can account for 30x to 300x one’s annual income and take over 30 years to pay off.  After you’re done paying for your property, now you have to keep paying to maintain it and to support the property taxes to keep it.  What has happened to the US Real Estate market since the 2008-09 global credit market collapse and is the US Fed behind the curve?

Case-Shiller Home Price Index

One of the most common indicators used to measure national housing affordability and price trend is the Case-Shiller Home Price Index.  In this chart, we are displaying the Case-Shiller National Home ...



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Chart School

Bitcoin 2019 fractal with Gold 2013

Courtesy of Read the Ticker

Funny how price action patterns repeat, double tops, head and shoulders. These are simply market fractals of supply and demand.

More from RTT Tv

Ref: US Crypto Holders Only Have a Few Days to Reply to the IRS 6173 Letter

Today's news from the US IRS has been blamed for the recent price slump, yet the bitcoin fractal like the gold fractal suggest the market players have set bitcoin up for a slump to $9000 USD long before the IRS news hit the wire.

Get the impression some market players missed out on the b...

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Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

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.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>