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  1. 1020

    Good Morning!

Which Way Wednesday – Rallying Back to the Highs (Again)

This is just amazing.

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). 

In drugstores and at airports, and on the online…
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Greenlight: “In Q4, Our Longs Went Up Less Than The Market And Our Shorts Went Up More”

Courtesy of Zero Hedge. View original post here.

2019 was a very strange year for the market, one in which stocks were up almost 30% despite no earnings growth and only multiple expansion, and yet not a single popular strategy worked. As a result, it was also an extremely painful year for hedge funds who were up for the year, but once again failed to catch up to the risk-free benchmark, the S&P500, and in fact, this was the 10th consecutive year in which active management underperformed the cheapest possible market investment, the S&P500 itself (and explains why there was a record-matching 8 consecutive months of hedge fund outflows in 2019). Most notably, it was a year in which despite the near record market performance, "bullish" strategies actually closed in the red.


Furthermore, as we reported in December, the max pain for hedge funds was Q4 when not only a variety of popular factors short-circuited following the quant crash of Sept 2019, but is also when the market got dislocated from any fundamental anchor on the back of the Fed's repo liquidity injection and QE4.

Today, none other than David Einhorn's Greenlight Capital confirmed just how painful both 2019 in general, and Q4 in particular, were for hedge funds – courtesy of the Fed's latest market interventions masking as repair for the repo market – when it published its latest investor letter in which it revealed that "for the year, our long portfolio contributed 37.4%, our short portfolio lost 20.1% and macro added 1.5% to the returns before fees".

Below are some of the key excerpts from the core of the letter (we will have more on Greenlight's latest portfolio comments in a subsequent post):

The Greenlight Capital funds (the “Partnerships”) returned 13.8% in 2019 compared to 31.5% for the S&P 500 index. Since its inception in May 1996, Greenlight Capital, L.P. has returned 1,592% cumulatively or 12.7% annualized, both net of fees and expenses. Greenlight’s investors have earned $4.5 billion, net of fees and expenses, since inception.

For the year, our long portfolio contributed 37.4%, our short portfolio lost 20.1% and macro added 1.5% to the returns before fees. All told, our longs went up slightly more than the

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Ray Dalio Says “Cash Is Trash”, Investors Should Diversify Portfolio With Gold

Courtesy of Zero Hedge. View original post here.

Bridgewater Associates founder Ray Dalio sat down with CNBC's Squawk Box at the World Economic Forum in Davos, Switzerland, on Tuesday.

Dalio said investors should ride the market melt-up but dump cash for a diversified portfolio as central bankers undergo unprecedented money printing.

"Cash is trash," Dalio said. "Get out of cash. There's still a lot of money in cash."


"You can't jump into cash. Cash is trash," says @RayDalio. "You have to have a well-diversified portfolio, you have to be global, and you have to have balance…and you have to have a certain amount of gold in your portfolio."

— Squawk Box (@SquawkCNBC) January 21, 2020

This is not the first time Dalio used Davos as a platform to accuse cash of being a terrible asset: back in 2018, he said that "if you're holding cash, you're going to feel pretty stupid." On Dec 31 of that year, cash would end up being the best-performing asset of the year. So perhaps just to hedge his call, this time Dalio also suggested diversifying into gold:

"You have to have balance … and I think you have to have a certain amount of gold in your portfolio," Dalio said, adding that gold will be a top asset to own in the years ahead as central banks will fail to normalize in the next downturn, which could've already started.

Meanwhile, with the market melt-up accelerating at an unprecedented pace, and hitting new all-time highs day after day even as broad S&P valuations are now at nosebleed levels last seen during the dot com bubble, something else that Bridgewater's co-CIO warned last week is that stocks are at "frothy" levels and predicted gold would soar to $2,000 and higher because the Fed and other central banks would let inflation run hot for a while and "there will no longer be an attempt by any of the developed world's major central banks to normalize interest rates."

Gold to $2,000: 

Jensen also said gold could rise 30% from its current price of $1,550 and should be…
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Oil Is The Only Way Back Up For Venezuela

Courtesy of, Editorial Dept.

There’s only one path to rebuilding Venezuela, and it’s paved with oil. For the time being, that path leads nowhere.

The key to controlling everything now lies with the National Assembly, the only body with the power to hand out oil licenses—and Maduro’s recent scheme to retake control of the country’s oil may just have been foiled by more Trump sanctions. 

Venezuela is the 12th largest oil producer in the world and home to the world’s largest oil reserves--all of which is irrelevant as long as it remains in the throes of a deep economic and humanitarian crisis amid runaway corruption, a devalued currency and crippling sanctions by the U.S. and the EU.

Maduro’s attempt to cling to power is relentless, but in his quest this past week to take control of the oil industry, Washington was paying close attention. And now, the rogue president and his government have suffered another major blow, with the US imposing fresh sanctions on seven Maduro acolytes. 

Legislative Crisis

Last week, Venezuela plunged into a major legislative crisis after soldiers and pro-Maduro supporters barred U.S.-backed opposition leader Juan Guaidó and his deputies from entry into congress before quickly naming Luis Parra, a former opposition lawmaker who recently defected to the Maduro camp, as head of a pro-government assembly.

Maduro loyalists and Guaidó’s opposition legislators engaged in a showdown of claims and counterclaims that left neither side with clear control of the assembly.

Diplomats and energy consultants see the latest drama as a move by Maduro to continue to cling to power by gaining control of congress and legitimizing investments by Russian, Chinese and other deep-pocketed investors in a bid to revive the country’s collapsing oil industry. 

Russia, China, India and Turkey have been demanding legal security from Caracas even as they look to tap the country’s cheap energy and mining assets.

Venezuela’s national assembly is the last independent government institution with the sole mandate to legally approve oil-licensing deals, thanks to a law crafted by Maduro’s leftist predecessor, the late Hugo Chávez, which gave state oil monopoly PDVSA (Petróleos de Venezuela) majority financial stakes and mandatory operational control. 

Had the congress takeover been successful, Maduro’s supporters would have been…
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Brazil Charges Glenn Greenwald With Cybercrimes

Courtesy of Zero Hedge. View original post here.

Prosecutors in Brazil charged American journalist Glenn Greenwald with cybercrimes on Tuesday for his role in spreading embarrassing text messages that exposed corruption within the Brazilian judicial system, according to the New York Times.


In a 91-page criminal complaint made public on Tuesday, Greenwald is accused of participating in a "criminal organization" that spread text messages which called into question the "integrity, professionalism and motives of key members of Brazil’s justice system — particularly of figures directly involved in the investigation of a vast corruption scheme that resulted in the imprisonment of powerful business and political figures."

Greenwald – who moved to Brazil in 2005 with his husband David Miranda – now a congressman, went beyond simply receiving the texts and publishing newsworthy information according to prosecutors.

Citing intercepted messages between Mr. Greenwald and the hackers, prosecutors say the journalist played a “clear role in facilitating the commission of a crime.”

For instance, prosecutors contend that Mr. Greenwald encouraged the hackers to delete archives that had already been shared with The Intercept Brasil, in order to cover their tracks.

Prosecutors also say that Mr. Greenwald was communicating with the hackers while they were actively monitoring private chats on Telegram, a messaging app. -New York Times

Greenwald – an attorney, rose to international prominence in 2013 for his role in the release of classified documents revealing America's extensive NSA surveillance apparatus, after National Security Agency whistleblower Edward Snowden leaked documents to Greenwald, who worked for The Guardian at the time.



In 2016, Greenwald launched The Intercept Brasil, which began publishing articles based on the leaked text exchanges last June.

The articles raised questions about the integrity, professionalism and motives of key members of Brazil’s justice system — particularly of figures directly

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CVS, Walgreens Shares Slide As Amazon Files International Trademarks For Pharmacy Business

Courtesy of ZeroHedge

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.


Comment by phil

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  1. phil

    BA getting smacked down a full 5% today:

    Boeing reportedly sees no 737 MAX signoff until summer

    • Boeing (BA -4.6%) plunges to a 52-week low following a CNBC report that it does not expect regulators to sign off on the 737 MAX return until June or July, months later than previously expected.
    • The delay would pose another headache for carriers who already missed one peak travel season without the planes.

    BA/Maya – I need to read more on where they are given production halt.   Huge danger they resolves something and fly up on you overnight – not a risk I would take – especially considering $300 is still my long-term buy mark for BA.  

    Almost there!

Kudlow: Fed’s T-Bill Purchases Are “Basically” QE

Courtesy of Zero Hedge. View original post here.

Back in October, when the Fed restarted permanent open market operations in the form of $60BN in T-Bills purchases each month, Powell scrambled to convince the market that his panicked effort to inject reserves into banks (such as JPMorgan which single-handedly triggered the repo crisis) so that trillions in levered hedge fund pair trades did not collapse on themselves once their repo funding was pulled, he said "growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis" and just to make sure there was no confusion, added "This is not QE. In no sense is this QE."

Ever since then, anyone who was ideologically aligned with the Fed (i.e., a wealth-redistributionist, either for the people or the big banks, and in some confused cases, both), would blindly parrot Powell's mantra, even though as we and others admitted "The Fed's "NOT QE" Is Indeed QE… And Could Lead To Financial Collapse."

This semantic insanity, of refusing to expose the money-printing emperor as naked, peaked last week when arguably the most intellectually-challenged Fed member, Neel Kashkari (who lacks a formal economic education and yet whose earnest desire to replace Powell has not been lost on anyone), under pressure from a barrage of media, strategists, traders, even his own Fed peers and anyone who is still capable of independent thought finally admitting that "NOT QE" is in fact "QE",  exploded and tweeted:

QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short term risk free instrument (reserves) for another short term risk free instrument (t-bills) leads to equity repricing. I don’t see it.



QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short term risk free instrument (reserves) for another short term risk free instrument (t-bills) leads to equity repricing. I don’t see it. /end

— Neel Kashkari (@neelkashkari) January 17, 2020

Well, we saw it, and we explained to Neel exactly how the Fed's QE4, i.e., swapping of cash for T-Bills, leads to equity repricing. Alas, we doubt that for Neel…
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Calling Things By Their Real Names

Courtesy of Charles Hugh Smith via OfTwoMinds blog

One does not need money to convey one's thoughts, but what money does allow is the drowning out of speech of those without money by those with a lot of money.

In last week's explanation of why the Federal Reserve is evil, I invoked the principle of calling things by their real names, a concept that drew an insightful commentary from longtime correspondent Chad D.:

Thank you, Charles, for calling out the Fed for their evil ways. We have to properly name things before we can properly address them. I would add that the Fed's endless creation of "money" to hand out to connected bankers (not all bankers) is just one facet of the evil. The evil also manifests itself as extraordinary political-economical power in a system that allows legalized bribery disguised as free speech.

One does not need money to speak/write to convey one's thoughts, but what money does allow is the drowning out of speech of those without money by those with a lot of money. In essence, the ultra-rich (i.e. the top .01%) get a huge megaphone to blare their thoughts, many of which are deliberately used to disorient and confuse the common man through the major media and so-called higher institutions of learning. Hence, we get common folk actively fighting for policies and laws that are against their own personal interests, such as promoting "free trade" agreements that are really managed trade agreements, whereby domestic workers are forced to complete with workers in other countries who make a pittance and are not protected by labor or environmental laws.

These agreements are part of a legal, yet unjust, framework that gives unfair, competitive advantages to large, multinational businesses at the expense of their smaller domestic and international competitors, which includes the abridgment of basic rights to settle disputes in a real court of law, not some kangaroo arbitration process with biased "judges".

And we must not forget the bailouts, lack of prosecution for economic crimes, such as fraud and monopolistic and deceptive trade practices, and tax loopholes, all of which are bought in one way or another from the compromised "representatives" and "public servants" within the system.

The evil manifests itself as an enabler and

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Phil's Favorites

How Iran's military outsources its cyberthreat forces


How Iran's military outsources its cyberthreat forces

Courtesy of Dorothy Denning, Naval Postgraduate School

In the wake of the U.S. killing of a top Iranian general and Iran’s retaliatory missile strike, should the U.S. be concerned about the cyberthreat from Iran? Already, pro-Iranian hackers have defaced several U.S. websites to protest the killing of General Qassem Soleimani. One group wrote “This is only a small part of Iran’s cyber capability” on one of the hacked sites.

Two years ago, I wrote that Iran’s cyberwarfare capabilities lagged behind th...

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Zero Hedge

"Buying Momentum Has Fizzled Out": Hedge Funds, CTAs Are Now All-In

Courtesy of ZeroHedge

When it comes to investor positioning and flows, we have been quite clear over the past two weeks: with stocks hitting all time highs on a daily basis, we first reported on Jan 11 that "Institutions, Retail And Algos Are Now All-In" and then again one week later, "Never Before Seen Market Complacency, As Everyone Goes Even More "All In"."

Confirming one part of this, overnight Goldman showed that equity net future positioning of hedge funds has hit an all time high, meaning there is little marginal space l...

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The Technical Traders

Junior Gold Miners Setting Up For Another Rally

Courtesy of Technical Traders

Our recent research suggests the US stock market may be entering a period of volatility that may include a broad market rotation/reversion event.  We believe this volatility event could begin to happen anytime over the next 10 to 30+ days.  The rally in the US stock market ending 2019 and carrying into 2020 appears to be setting up a “rally to a peak” type of price pattern. Please take a minute to review the following articles we’ve posted recently about this topic and how it relates to opportunities in

January 20, 2020: ...

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Insider Scoop

Benzinga Pro's Top 5 Stocks To Watch For Wed., Jan. 22, 2020: NFLX, TSLA, NNVC, SKT, SPCE

Courtesy of Benzinga

Benzinga Pro's Stocks To Watch For Wednesday

  • Netflix (NFLX) - Shares were up just 0.4% following a Q4 beat and mixed Q1 guidance. The company said it expects Q1 global streaming paid net subscriber additions of about 7 million subs.
  • Tesla (TSLA) - With Tesla shares up 5% in pre-market activity, the company's market cap, at market open, will hit $100 billion for the first time in its history. While a Neutral-rated Wedbush analyst, Daniel Ives, raised his price target on the stock from $370 to $550 this morning, this news item isn't necessarily driving the stock Wednesday as this analyst was mostly playing catch up after not having updated his price targ... more from Insider

Kimble Charting Solutions

Hang Seng Index Double Topping At 2007 Highs?

Courtesy of Chris Kimble

Could the Hang Seng Index be “Double Topping” at its 2007 highs? Possible, yet not proven!

The Hang Seng Index attempted to break above its 2007 highs at (1), only to see a key reversal pattern take place the following month.

After the reversal pattern, the index has created a series of lower highs, just below falling resistance.

So far this month, the index is attempting to break above falling resistance, where it could be created a bearish reversal monthly pattern at (2).

What would it take to prove that a double top was i...

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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.

Date Found: Monday, 16 September 2019, 05:22:48 PM

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

Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)

Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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

Comment: This would be gold!


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Members' Corner

The War on All Fact People


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.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires


Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:


The ‘experts’ I hear from keep saying that once 300B more in reserves have ...

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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...


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Why telling people with diabetes to use Walmart insulin can be dangerous advice

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


Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:


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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.

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