Archive for the ‘Uncategorized’ Category

$10,000,000,000,000 Tuesday – 6 Stocks are 25% of the Market


That's the market cap of Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL) Facebook (FB), Microsoft (MSFT) and TSLA these days.  Not only is that 25% of the S&P 500s market cap, it's closer to 1/3 of their earnings and, over at the Nasdaq, the Big 6 make up over 50% of that indexe's market cap (this chart was from earlier in the year, when they were still a bargain 49%).

AAPL, GOOGL and MSFT report today, FB tomorrow and AMZN reports on Thursday.  A slip from any of them could be a disaster.   TSLA reported last night and made $1Bn for the quarter which, if they can do that consistently, means their $640Bn market cap is only 160 times their earnings so, Yay!, I guess…

FB should do well judging from SNAP and TWTR's results.  AAPL is a monster you don't bet against and the others are pretty much cloud companies at this point – each with a different specialty core that gives them a user base of pretty much everyone on the planet (Software, Search and Stuff).   If we are heading into that Dystopian Future where a few dozen corporations control every aspect of life on this planet – it makes perfect sense that, at some point, 6 companies should be worth 1/3 as much as the other 12,000.  That's just a natural progression.

Consider the entire Nasdaq is $20Tn and it was $11.2Tn 2 years ago so it's gained $8.8Tn in market cap.  TSLA (left off because it broke the chart) was at $50Bn 2 years ago and is now at $640Bn so $590Bn of the Nasdaq's gain (6.7%) came from that one stock.  AAPL gained $1.6Tn (20%), MSFT gained $1.1Tn (12.5%), GOOGL gained $1Tn (11.4%), FB gained $500Bn (5.6%) and AMZN gained $900Bn (10.3%).

So our Big 6 companies gained $5.7Tn, accounting for 51% of the Nasdaq's total gain in price but NONE of those companies, except TSLA, have grown either earnings or revenues over 100% to justify the move.  Even AAPL, as great as they are, are "only" on track for $86Bn in profits on $355Bn in sales while in 2019, they made $55Bn on $260Bn in sales.  Yet in 2019,
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Monday Market Movement – Slight Jitters Ahead of the Fed

Lots of earnings this week.


We have no Fed speak until Friday as they are having their meeting this week and Powell will speak Wednesday afternoon, after their announcement and it's doubtful they do anything but fears are they will push up their timetable to combat the raging inflation they still won't admit is happening.  We also have our GDP Q2 Estimate on Thursday and leading Economorons are predicting 8% growth to keep up with our 10% Inflation – as with most things in this economy – it's an illusion.

I'm in Orlando this week and, though there are plenty of people out and about, it's not summer-crowded and there are still plenty of empty store-fronts.  Also plenty of help wanted sings and prices everywhere are out of control so it's clearly an economy in transition.  Over at Disney (DIS), there are a lot of pissed off "cast members" because, during the pandemic, Disney laid off almost all the food service workers but kept the customer service, show and costume types – since they were harder to find.  Then, when restrictions eased, they moved those workers to food jobs and now they can't find food workers so they still haven't moved the customer service types back to their old jobs.   

What they thought was pitching in and helping out the company they loved has led to a career they never wanted (or thought they had escaped).   Depressing!  People come to Disney from all over the World and they stand together in huge lines etc. and no one is wearing a mask!  I was very surprised at Sea World and Disney there are no mask rules at all and nowhere in Orlando were there mask requirements – unless you want to take an Uber, which still requires them to ride. 

On the whole, however, I'm not too worried as peple are watching Orlando closely to see if it's a "super-spreader" zone and, so far – it hasn't happened.  Most Americans are vaccinated and probably most park visitors – though it would be nice to see an actual study. Disney will, in fact, restart their cruise line on August 9th, after considering the park…
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15,000 Friday – Nasdaq Back to Record Highs

Here we are again.

It's been quite a run for the Nasdaq – up 50% since last July and it only took $8Tn (40% of our GDP) in stimulus spending to get there.  9,736 was our pre-Covid high so all this hoopla is over and above where we were.  In fact, in 2019, the Nasdaq was generally at 7,500, so we're up 100% in two years – yay!

The current PE for the Nasdaq is 38.37 times earnings.  The S&P 500 is at 36.6 so just as crazy and the P/E for the Russell 2,000 has now broken the meter at the Wall Street Journal – having passed 100 times earnings.  Of course everyone ESTIMATES they will do better in the next 12 months and the last 12 momths were pretty bad but even the forward estimates of the Nasdaq peg them at 27.43 times forward earnings while the Russell is at 33.81 times earnings.

Warren Buffett's favorite stock market indicator isn't alone in hinting  stocks are long overdue for a breatherThat's a very long time to wait for payback on your investment.  In December, 2018, the PE ratio of the Nasdaq was 20.34 so going from 7,500 to 15,000 over the past 2 years has NOTHING to do with earnings growth and everything to do with price inflation.  You are simply paying twice as much money for each Dollar of earnings.  That is Fundamentally unsound as it's very unlikely to continue over the long-run but, in the short run – anything can happen.

Corrections can come hard and fast when the market is in a bubble so please be aware that this is NOT normal – even as "not normal" continues to be the norm.  We are back to Dot Com and 2008-high levels of valuation and, if you remember, people were partying until the very last minute then as well.  I have to call the Nasdaq a good short here on the /NQ Futures.  Below the 15,000 line with tight stops above would be the way to play.   

In our Short-Term Portfolio, which we reviewed last week, we're going to take advantage of this Nasdaq high to roll our 200 SQQQ Jan $10

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Thrill is Back Thursday – Markets Recover Ahead of the Fed Next Week

I don't know what people think is going to happen? 

The Fed meets next week and they certainly aren't going to LOWER rates, are they?  According to Powell and others, they are in no hurry to raise them but, as you can see from this chart, inflation is rising about twice as fast as wages so our workers are falling further and further behind in buying power.  This effect is, however, masked by stimulus checks that boost spending power – that's the key to our "great" economy this year.

Labor supply shortages are still evident across all sorts of industries. The latest survey of manufacturers from the Institute for Supply Management cites complaints from makers of furniture, chemical products, machinery and electrical products about the difficulties of fulfilling demand and that hurts growth and growth is what the economy is all about, right?

Rents are starting to rise sharply, according to a range of data sources. And businesses facing higher prices for Supplies and Labor may be in the early stages yet of passing on those higher costs to consumers. The Producer Price Index, which tracks the costs of the supplies and services that companies buy, rose 1% in June, an acceleration from April and May. This is a signal that inflationary forces may still be working their way through the economy.

It is supposed to be the Fed's job to prevent prices from going up more than 2% by raising rates but, with inflation up 4% in the first 6 months of the year, the Fed is too busy lying to us about how strong (but weak) the economy is, which gives them the excuse to keep printing up $120Bn per month and distributing it to their Bankster Buddies (keep in mind the Fed is not a Government body but a banking cartel that is blessed by the Government – after many contributions from Banksters).  

ImageMeanwhile, all this free money is keeping earnings afloat for most companies (so far) but next week will be telling as the bulk of the S&P 500 will be reporting.  So far, earnings have generally beaten fairly low expectations as few companies are matching their 2019 performance but that doesn't matter as they only compare
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Wednesday Recovery – Markets Bounce Right Back


Nothing seems to stop this market for more than a moment.  We flew right back to the strong bounce line (see yesterday's Report) at 4,292 and went all the way to 4,340 before pulling back to 4,322 this morning.  That is a very strong market and, as I said to our Members, the only caveat is that the volume is much lower (99M) on the way up than it has been on the way down (223M) in the past few days.  That means the recovery has, so far, left us weaker than we were when it started – with less actual dollars supporting the prices that failed to be supported before.  

That's OK, though, stocks don't actually need INVESTORS to go up in price.  Do you think people bought $500Bn worth of AAPL stock since June 1st?   Of course not!  AAPL trades an average of 84.5M $146.15 shares per day (and it was $122 at the start) so that's $12.3Bn/day and 30 days would be $370Bn so EVEN IF EVERY SINGLE TRADE ON AAPL was just a buyer and not a single seller (not possible) – we'd still be 30% short of the money we need to account for the gain in valuation over the last 45 days.  

That is because the stock market is a very distorted pricing mechanism that values the entire company based on the last price paid for a share.  Clearly that is idiotic and my favorite example is this.

Let's say you have a town with 100 potential drivers who make an average of $50,000 a year and can afford, generally, to buy a $25,000 car and they ALL want Beetles.  That's good news for the VW dealer, who has 100 Beetles on his lot that he bought from the factory for $20,000 ($2M).  Unfortunately, they all have cars now so he has to wait for people to decide they want new ones.

A parking lot full of vw beetles in 1968 watching Herbie the love bug |  Drive in theater, Volkswagen, Drive in movie theater  

So he sells 5 cars the first week at $25,000 and makes $5,000 per car, which is a $25,000 profit.  He can anticipate that his STOCK of Beetles is worth $25,000 per car

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Technical Tuesday – A Healthy Pullback or Down with the Sickness?

"Looking at my own reflection

When suddenly it changes

Violently it changes (oh no)" – Disturbed

Is the downturn anything to worry about?

Markets need corrections.  Every once in a while, even in the greatest rally, some people need to actually take their profits off the table and realize some of those gains.  It's often in the support levels we find during these sell-offs (when a volume of buyers show up), that we are finally able to discover the true price range of a stock.  Apple (AAPL), for example, has goine from $125 in early June to $150 last week, which is up 20% and, according to our fabulous 5% Rule™,  we expect a pullback of 20% of the run (weak) or 40% of the run (strong) so 5-point retracements to $145 or $140 and that's exactly what we're getting:

$150 for AAPL is over $2,500,000,000,000 in market cap.  The 20% run added $500Bn to AAPL's PRICE (not value) and that's more than the TOTAL market cap of all but 12 companies on the planet.  Did AAPL gain a Visa ($528Bn) or a Samsung ($462Bn) last month?  It took those companies decades to climb to that valuation but AAPL can gain or lose it overnight?  No, that's silly – the market is silly – don't take it seriously.  This is a runaway market and not following the normal rules of investing.

Which is why we have our hedges (see last week's portfolio reviews).  While the market was diving, we checked in on our paired Long and Short-Term Portfolios and found:

Well, the STP is sure working:

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Monday Market Delta – Virus Fears Pull Us Back

This is why we hedge.

Last week, as we were doing the Portfolio Reviews for our Members, we noticed a pattern of poor performance from our Small Cap Stocks, so we adjusted our hedges from favoring the Nasdaq (which never goes down far) to the Russell and boy has that worked well over the past week!  The Nasdaq is down too but only down 500 (3.3%) from the 15,000 top (where we shorted it, of course) while the Russell has now fallen 240 (10.25%) points from 2,340 at the start of the month.

I've been talking about the Delta Varient all month and here we are, on July 19th, and people are starting to pay attentionSurging cases of the coronavirus in many parts of the world, including highly-vaccinated countries such as the U.K., have prompted investors to dial down their expectations of economic growth in the coming months.  Some also are concerned that a steep rise in prices will pinch consumption and prompt central banks to withdraw stimulus, creating an environment of lower growth and higher inflation in which stocks tend to struggle.  

Consumer spending climbed 5% in March after Congress and the White House enacted a $1.9 Trillion pandemic relief package that sent $1,400 checks to many households.  The money was reaching pocketbooks at the same time many people were getting vaccinated and venturing out more as service providers reopened their doors.  Monthly spending increases have slowed since then as the initial stimulus effect fades.  “You can’t eat out twice in a night,” said Steven Blitz, chief U.S. Economist at TS Lombard.

Los Angeles County on Sunday became the first major county to revert to requiring masks for all people indoors in public spaces.  Coronavirus case counts have risen sharply under the less stringent guidelines, especially as the highly transmissible Delta variant continues to spread.  The county’s daily average of new cases has more than doubled in each of the past two weeks, reaching almost 1,400 as of Saturday, and Covid hospitalizations are up 27 percent.  

“When you look back at the last seven days, obviously a whole lot has changed,” Hilda L. Solis, the chairwoman of the Los Angeles County Board of Supervisors,

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PhilStockWorld July Portfolio Review – The Butterfly Portfolio

Image result for one million dollars animated gif$1,151,934!   

That's up $62,254 since our last review and the Butterfly Portfolio is our oldest and most consistent portfolio as it truly follows the PSW mantra of "Be the House – NOT the Gambler!"  This is the only one of our portfolios we didn't cash out in September of 2019 since there's really no reason to – it's market-neutral.  Just like a casino, we are happy to take bets on either side of the roll and we simply collect the premiums along the way.  

Of course, we do make the occasional bet – that's why we have 160 Apple (AAPL) bull call spreads.  It didn't start out that way but they kept throwing a sale on AAPL and we kept buying it and now it's hit our target at $150 18 months ahead of schedule.  Even so, our 160 2023 $120/150 bull call spread with the short Sept puts and calls is "only" net $204,350 out of a potential $480,000 so there's $275,650 (134.8%) left to gain if AAPL simply holds $150 18 months from now.  Of course we're going to sell more short puts and calls for more income along the way (if they ever pull back).

The Butterfly Portfolio is a low-touch portfolio and we only add perhaps one trade per quarter but that's all we need and the returns compound over time so, after 3 active years (Jan 2nd, 2018), the returns are monstrous – as you can see:  

  • AAPL – Are we upset that we're down $42,600 on the short calls?  Not if it puts our $480,000 spread into the money.  We have 18 months to roll the calls and, of course, we gained on the short puts, which we can now buy back and wait for a dip to sell more put premium.  Our worst upside case is AAPL goes even higher and we have to buy another set of bullish spreads to cover and we make another $200,000 on that spread – oh no!   BECAUSE we have $654,439 on the side, we can do things like that.
  • AMZN – Another one where we're getting burned on short calls and

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PhilStockWorld July Portfolio Review – Part 2

Image result for one million dollars animated gifImage result for one million dollars animated gif$2,142,405!  

That is DOWN $4,838 since our last review as our Short-Term Portfolio (STP) hedges continue to be hammered by this relentless rally.  Of course, the Long-Term Portfolio (LTP) gained $39,937 and, in theory, we have locked in those gains with the STP, which has $585,435 of downside protection and that should be enough to cover our $886,945 worth of longs against a 20% drop.  We also have $1,072,340 in CASH!!! in our LTP and that too makes a nice hedge.  Keep in mind we started with a combined $600,000 – which is why we're so keen to protect our $1.5M in gains.

We did a detailed review last month, so I won't be doing that today.  Our positions at the time had the potential to gain $676,193 over the next 18 months and that means $40,000 per month is just about "on track" in an up market.  While $40,000 is "only" 2% of $1.9M, it's a whopping 4.5% monthly gain on the actual positions (not the cash).  Clearly we have an abundance of caution coming into Q2 earnings but I know I sleep a lot better at night knowing our portfolio is fairly shock-proof.  

Being well-hedged has allowed us to add new positions on BCS, ENVA, ING, KBH, MU and YETI in the past month – $21,000 worth of short puts and the MU spread is a $22,500 spread that is still a net $115 credit so, as we should do, we picked up another $43,500 worth of upside potential for the month to replace the $39,937 we have realized (and locked in with our hedges).  

As long as we continue to do this in an up market – even if we end up burning the entire $183,290 balance in our STP, we'll still be about $300,000 ahead for the year – that's without doing anything smart along the way!  BALANCE, Danielson, BALANCE is the key to everything.  If you have balance, like a good surfer, you can make little adjustments and ride almost any wave.  If not – Wipeout!  

Short Puts – We have 22 of them now with about $90,000 of upside potential remaining.  On the whole we…
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Animal Spirits: High School Reunion


Animal Spirits: High School Reunion

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Today’s Animal Spirits is brought to you by Masterworks. Go to to skip the waitlist.

In today’s show we discuss:


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Can't Be Bearish


Can’t Be Bearish

Courtesy of 

You can’t be bearish on the stock market unless you’re bearish on the biggest group of stocks in said market. And it’s hard to be bearish when you see the type of numbers they’re putting up.

We’ll get to big tech’s results in a minute, but first, I want to look at how they’ve been acting before their earnings, which are coming out right now.

The big 5 are all at or near all-time highs (red dots), with a combined market cap approaching $10 trillion.


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Zero Hedge

Bezos' Blue Origin To NASA: We'll Pay To Build You A Lunar-Lander

Courtesy of ZeroHedge View original post here.

Authored by John Sexton via,

Earlier this month Jeff Bezos flew about 66 miles up on his Blue Origin New Shepard launch vehicle.

Today, Bezos is making a play for the next step in Blue Origin’s development. He’s asking NASA to reconsider it’s decision to aw...

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Digital Currencies

Is Amazon About To Start Accepting Crypto?

Courtesy of ZeroHedge

For the first time ever, Amazon has shown itself to be interested in crypto with a new major hire within its payments-focused team.

Posted on Thursday, the new role seeks an experienced product leader with expertise in blockchain, central bank digital currencies and cryptocurrencies to “develop the case for the capabilities which should be developed” and drive overall product vision.

The Payments Acceptance & Experience team is seeking an experienced product leader to develop Amazon’s Digital Currency and Blockchain strategy and product roadmap

The Amazon Payment Acceptance & Experie...

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US is split between the vaccinated and unvaccinated - and deaths and hospitalizations reflect this divide


US is split between the vaccinated and unvaccinated – and deaths and hospitalizations reflect this divide

As coronavirus cases surge, unvaccinated people are accounting for nearly all hospitalizations and deaths. Fat Camera/E+ via Getty Images

Courtesy of Rodney E. Rohde, Texas State University and Ryan McNamara, University of North Carolina at Chapel Hill ...

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Chart School

Investing with Channels - Review

Courtesy of Read the Ticker

The US has a lot of debt, to sell more units of the debt to non US buyers the FED and Treasury must get the unit price of the debt down.

This video assumes a 'risk on' bullish bias into the Nov 2022 US mid terms. The bias assumes a US dollar trending down from it current high price of $93 on the DXY.

Chart 1 - US Dollar Channels

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

Chart 2 - Ethereum/USD

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

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New York defines illegal firearms use as a 'public nuisance' in bid to pierce gun industry's powerful liability shield


New York defines illegal firearms use as a ‘public nuisance’ in bid to pierce gun industry’s powerful liability shield

Illegal gun use is now a public nuisance in New York. AP Photo/Bebeto Matthews

Courtesy of Timothy D. Lytton, Georgia State University

Could calling the illegal use of firearms a “public nuisance” bring an end to the gun industry’s immunity from civil lawsuits? ...

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Free Webinar Wednesday: July 7, 1:00 pm EST


Don't miss Phil's Webinar on July 7 at 1:00 pm EST. It's FREE and open to all who wish to join.

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Join us to learn Phil's trading tactics and strategies in real-time!


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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...

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Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...

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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt


Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...

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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House


Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...

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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
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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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